Chapter 10

The ______ organizational structure is a variation of the divisional organizational structure in which the divisions have a high degree of autonomy from other divisions and from the corporate headquarters.

holding company

True or false: Barrier-free organizations can create successful relationships with external constituencies, including competitors.

True

True or false: Divisional managers are often evaluated on common measures, which may discourage sharing ideas and resources among divisions.

True

A simple organizational structure works best for which of the following types of organizations?

Very small companies with a single or very narrow product line

A ______ organizational design refers to an organization in which the boundaries, including vertical, horizontal, external, and geographic boundaries, are permeable.

boundaryless

Which of the following are factors that managers must consider in selecting an appropriate organizational design? (Check all that apply.)

communications technology horizontal organizational structures, systems, and processes common culture

Which are important qualities for successful teams? (Choose all that apply.)

creativity high-performing employees agility

A ______ organizational structure is an organizational form in which products, projects, or product markets are grouped internally.

divisional

Which of the following are characteristics of horizontal organizational structures? (Check all that apply.)

employee job rotation consistency in employee training cross-functional teams and interdivisional committees to improve understanding and cooperation among operating units

A ______ structure is an organizational form in which the major functions of the firm are grouped internally.

functional

Which two of the following structures are organizational forms in which international operations are in separate, autonomous divisions? (Check all that apply.)

geographic-area division international division

Handling opposing demands in ambidextrous organizational structures is difficult for managers, because ______.

there will always be some degree of conflict

A(n) ______ organization is a continually evolving network of independent companies that are linked together to share skills, costs, and access to one another's markets.

virtual

Which of the following are types of approaches for making boundaries more permeable? (Check all that apply.)

virtual barrier-free modular

Barrier-free organizational designs have replaced more bureaucratic designs, because ______.

work roles are less defined and more fluid

Firms with relatively low levels of product diversity may opt for which of the following types of organizational structure?

worldwide product division

Three approaches to facilitate the widespread sharing of knowledge and information across the boundaries of an organization are the ______.

barrier-free, modular, and virtual types

The formalized patterns of interactions that link a firm's tasks, technologies, and people is known as ______.

organizational structure

Which of the following international organizational structures work well when using a multidomestic strategy? (Check all that apply.)

International division Geographic-area division Worldwide matrix

Successful barrier-free organizations must establish communication flows and mutually beneficial relationships with which of the following? (Check all that apply.)

Internal constituencies, such as employees Competitors External constituencies, such as customers

Which of the following are possible consequences for a company that outsources manufacturing? (Check all that apply.)

A company may lose cross-functional skills needed for the manufacture of essential components. A company may lose control over a supplier. A company can lose critical skills or develop the wrong skills.

Which of the following are disadvantages of the strategic business unit organizational structure? (Check all that apply.)

Achieving synergies across units is sometimes difficult. Personnel and overhead expenses tend to be high. The corporate office may not be aware of key developments that may have a major effect on the overall company.

Which of the following is the organizational design in which firms bridge real differences in culture, function, and goals to find common ground that facilitates information sharing and other forms of cooperative behavior?

Barrier-free

True or false: A new approach being followed by U.S. companies that seek international markets is to expand internationally only after the full potential for domestic growth has been exhausted.

False

Which of the following statements are keys to success for global start-up firms? (Check all that apply.)

Boundaryless organizational designs are well suited for global start-up companies. Managers should have a great deal of international experience. Outsourcing less important activities can save capital.

Which of the following are advantages of a functional organizational structure? (Check all that apply.)

Career paths and professional development are facilitated. There is more efficient use of managerial and technical talent. A company is able to enhance its coordination and control within each functional area.

Strategic planning involves tremendous challenges for virtual organizations, because the plan must address which of the following? (Check all that apply.)

Combining core competencies The need for a common vision among the partners Diminished operational control

Which of the following statements regarding global start-up management's challenges are true? (Check all that apply.)

Communication and coordination with different cultures can be difficult. Communication and coordination across time zones is problematic. Global start-ups usually have few resources.

Which of the following statements about the disadvantages of a matrix organizational structure are true? (Check all that apply.)

Decision making is made more difficult and time consuming due to the diffusion of responsibility. The dual reporting structures can result in uncertainty and lead to power struggles over personnel and resources. Working relationships are more complicated.

Which of the following are disadvantages of a functional organizational structure? (Check all that apply.)

Departments may view themselves as isolated, self-contained "silos." There may be short-term thinking based on what is best for a particular functional area instead of the entire organization. Communication and coordination between functional areas can become impeded.

Which of the following statements about divisional organizational structures are true? (Check all that apply.)

Divisions are relatively autonomous units governed by a central corporate office. Each division has its own functional specialists who are organized into departments. They are sometimes called multidivisional structures or M-Form.

Which of the following statements about the strategic business unit organizational structure are correct? (Check all that apply.)

Each strategic unit operates as a profit center. Divisions with similar products, markets, or technologies are grouped into homogeneous units. One goal of using strategic business units is to leverage core competencies.

Which of the following are disadvantages of a simple structure? (Check all that apply.)

Employees may not clearly understand their responsibilities. A flat structure limits promotion opportunities. Employees may act in their own self-interest, since there are generally few rules.

True or false: A divisional structure unifies strategic and operating control.

False

Which of the following are advantages of outsourcing non-core functions for a modular company? (Check all that apply.)

Firms can decrease overall costs, stimulate new product development, and avoid idle capacity. Firms can focus scarce resources on the areas where it holds a competitive advantage. Firms can tap into the knowledge and expertise of its specialized supply-chain partners.

Which of the following is a business organization that from inception seeks to derive significant advantage from the use of resources and the sale of outputs in multiple countries?

Global start-up

Companies that wish to start up on a global basis should be aware of which of the following costs? (Check all that apply.)

Higher communication costs Higher coordination costs Higher transportation costs

Which of the following developments in the business of a firm often lead to a change in the firm's organizational structure? (Check all that apply.)

Increases in the size of the business Diversification into new product markets Expansion in the geographic scope of the business

Which of the following are advantages of the strategic business unit organizational structure? (Check all that apply.)

Individual business units can react more quickly to the firm's external environment. Planning and controlling by the corporate office is often more manageable. Each individual strategic business unit has greater authority, which provides more flexibility.

Which of the following are challenges or risks that virtual organizations face? (Check all that apply.)

Information systems must be designed to interface with partners. Alliances often fail to meet one or both parties' expectations. Managers may have difficulty building win-win relationships with competitors.

Which of the following statements regarding the advantages of the holding company structure are true? (Check all that apply.)

It allows quick response to market opportunities and threats. It can save money through lower overhead and fewer personnel. Division executives benefit from greater autonomy in running daily business operations.

Which of the following are advantages of a virtual organizational design? (Check all that apply.)

It brings the best core competencies to the partnership. It enhances global market access. It enables sharing costs and skills.

Which of the following are considered disadvantages of a divisional organization structure? (Check all that apply.)

It can lead to dysfunctional competition between divisions. It can be very expensive because of duplication of personnel, operations, and investment. It can result in differences in image and quality across divisions.

Which of the following are disadvantages of a virtual organizational design? (Check all that apply.)

It can require managerial skills that are difficult to acquire. It can make knowing where one company ends and another begins difficult because of their interdependencies. It may lead to loss of operational control.

Which of the following statements about a functional organizational structure are true? (Check all that apply.)

It has functional groupings, such as accounting, finance, production, and marketing. The coordination of the functional areas is an important task for the CEO. It is commonly used by organizations that have a single product or service, high production volume, and some vertical integration.

Which of the following statements concerning organizational structure are correct? (Check all that apply.)

It identifies hierarchical relationships. It influences the flow of information and the nature of human interactions. It helps ensure that resources are used effectively.

Which of the following statements about a holding company organizational structure are true? (Check all that apply.)

It includes units with a great deal of autonomy. It is the most appropriate structure for firms that use an unrelated diversification corporate strategy. It is often referred to as a conglomerate.

Which of the following statements about a matrix organizational structure are correct? (Check all that apply.)

It is a combination of the functional and divisional structures. Some large multinationals rely on the structure to combine product groups and geographical units. Some individuals report to two managers: the project manager and the functional area manager.

Which of the following statements are true about a virtual organization? (Check all that apply.)

It is a network of suppliers, customers, and even competitors that share costs and access to one another's markets. Through the sharing of knowledge and expertise, it enables member businesses to do more than they could individually. It allows units from different companies to exploit complementary skills.

Which of the following are advantages of a simple organizational structure? (Check all that apply.)

It is highly informal and coordination is accomplished by direct supervision. There is little specialization of tasks, few rules and regulations, and an informal evaluation and reward system. Decision making is quick, as it is highly centralized.

What are potential downsides to using a barrier-free organizational structure? (Check all that apply.)

It lacks strong leadership and common vision. It may not be able to overcome political boundaries outside the organization. It involves time-consuming democratic processes.

Which of the following are costs associated with developing organizational relationships? (Choose all that apply.)

Leadership may rely on social capital rather than initiave. A lack of formal rules may impede decision-making. Businesses may feel "locked in" to relationships.

Which of the following are strategic concerns of outsourcing? (Check all that apply.)

Loss of critical skills or developing the wrong skills Loss of cross-functional skills Loss of control over a supplier

Which of the following statements regarding the disadvantages of a holding company structure are true? (Check all that apply.)

Major problems can arise if key executives leave the business. It hinders turning around individual business in the company that may run into trouble. The corporate office has less control over divisional executives.

Which of the following statements about a modular organizational design are correct? (Check all that apply.)

Manufacturing and service units may be modular. The company becomes a central hub surrounded by networks of outside suppliers and specialists. Managers outsource nonvital functions.

Which of the following are benefits of developing lasting business relationships? (Choose all that apply.)

Monitoring costs are reduced. Supplier and customer costs are reduced.

Which of the following are reasons why a company may want to start up globally? (Check all that apply.)

Potential customers for many specialized industries are located worldwide. Human resources are globally dispersed. Foreign financing may be easier to obtain for young companies.

Which of the following statements about the advantages of a matrix organizational structure are true? (Check all that apply.)

Professionals have a broader range of responsibility, which helps them develop their skills and competencies. Resources are shared, so there is no duplication of resources. It facilitates the use of specialized personnel, equipment, and facilities.

Which of the following are actions recommended for building successful teams? (Choose all that apply.)

Provide economic support for teams through funding. Promote managerial engagement.

Place the organizational structures below in the order typically followed by corporations as they grow, with the initial structure at the top.

Simple structure Functional structure Divisional structure International structures

What two new, interrelated phenomena are occurring concerning international expansion? (Check all that apply.)

Some firms are "born global." Many firms are expanding internationally relatively early in their history.

Which of the following statements regarding the value of teams for barrier-free organizations are correct? (Check all that apply.)

Teams often develop more creative solutions to problems because members share tacit knowledge. Teams can help remove layers of hierarchy. The amount of time managers spend on controlling employees is reduced.

Which of the following conditions are necessary for a modular organizational structure to be successful? (Check all that apply.)

The company needs to select reliable, loyal vendors and work closely with them. The company must decide and select the appropriate competencies to keep in-house.

Which of the following statements about the advantages of a divisional organizational structure are correct? (Check all that apply.)

The development of general management talent is enhanced due to multiple levels of general managers. Corporate officers are able to devote their time to overall strategic issues for the entire firm. Divisional managers can focus their efforts on improving operations in their individual product markets.

Which of the following statements about creating permeable internal boundaries are correct? (Check all that apply.)

The level of organization-wide trust must be high. Teams are an important aspect of barrier-free structures. The focus must be on leveraging all employees' talents.

A firm's strategy dictates which of the following aspects? (Check all that apply.)

The need for integration of activities The division of tasks Authority relationships within the organization

Which of the following statements are true about conditions for a modular organization? (Check all that apply.)

The organization should be able to use a small management team for major objectives. The organization needs to work closely with its suppliers. The organization must be able to trust vendors with trade secrets.

Which of the following are the three major contingencies that influence the structure of an international company? (Check all that apply.)

The type of strategy driving a company's foreign operations The company's product diversity The extent to which a firm is dependent on foreign sales

Which of the following are challenges to using a barrier-free organizational structure? (Check all that apply.)

There may be a lack of strong leadership and common vision. Some managers may find it difficult to transition to a more democratic structure. High levels of trust are needed.

Which of the following statements about the worldwide functional and worldwide product division structures are true? (Check all that apply.)

They devote little attention to local market factors. They are consistent with the efficiency perspective.

Ambidextrous organizational designs are more effective for which of the following reasons? (Choose all that apply.)

They help to improve the performance of the existing business. They are efficient in launching breakthrough products or services.

Which of the following are the two contradictory challenges faced by today's managers? (Check all that apply.)

They must exploit the value of their existing assets and competencies. They must explore new opportunities and adjust to volatile markets in order to avoid complacency.

Which of the following are true statements about global start-up businesses? (Check all that apply.)

They sell products and services in multiple countries right from the beginning. Geographic boundaries of nation-states are irrelevant. They use inputs from around the world right from the beginning.

A(n) ______ organizational design attempts to simultaneously pursue modest, incremental innovations as well as more dramatic breakthrough innovations.

ambidextrous

A(n) ______ organizational structure groups similar or related business units under common management control and facilitates sharing resources and infrastructures to exploit synergies among operating units to help create a sense of common purpose.

horizontal

Multidomestic strategies are driven by political and cultural imperatives that require each country manager to respond to the ______ conditions.

local

In an international division structure, ______.

local managers are provided with a high level of autonomy to manage their operations.

The ______ organizational structure is an organizational form in which there are multiple lines of authority and some individuals report to at least two managers.

matrix

A ______ organization is an organizational form in which nonvital functions are outsourced, which uses the knowledge and expertise of outside suppliers while retaining strategic control.

modular

Outsourcing non-core functions in order to focus scarce resources for competitive advantage, tap into supply-chain expertise, and decrease overall costs are specific advantages of a ______ organization.

modular

One important characteristic of boundaryless organizational designs is that internal and external boundaries are ______.

more open and permeable

In facilitating the change to a boundaryless organizational structure, managers need to consider which of the following? (Check all that apply.)

recognizing common shared values utilizing information technology applying human resources practices

A ______ structure is an organizational form in which the owner-manager makes most of the decisions and controls activities, and the staff serves as an extension of the top executive.

simple

A ______ organizational structure is an organizational form in which products, projects, or product market divisions are grouped into homogeneous units.

strategic business unit

The ______ that a firm selects influences the ______ that the company uses.

strategy; structure

Managers working for global companies must align their strategies with the organization's ______.

structure