mgmt test 2
32. Along the horizontal dimension of decision rights, a manager must decide whether decisions are made in a centralized or decentralized manner.
F
34. Transaction costs refer to the costs a firm incurs to coordinate activities between business units.
F
13. The process of understanding how work gets done and how individuals should interact is called _____. a. socialization b. internalization c. identification d. adaptation
A
15. The ultimate goal of an unrelated diversification strategy is to a. create financial economies. b. support failing businesses. c. enhance innovation. d. expand globally.
A
17. Which of the following is an advantage of a strong culture? a. A strong culture has been linked to better levels of performance. b. Strong cultures increase performance even in turbulent environments. c. Organizations with strong cultures only encourage ethical behavior. d. It is a simple and easy task to change the strong culture of an organization.
A
18. A _____ structure is an organizational structure where key decisions are made at all levels of the firm, not mandated from the top. a. decentralized b. multinational c. centralized d. bureaucratic
A
2. _____ is defined as the pattern of organizational roles, relationships, and procedures that enable coordinated action among employees. a. Organizational structure b. Value chain c. Synergy d. Organizational culture
A
22. In vertical integration, backward integration occurs when a firm a. owns or controls the inputs it uses. b. owns the distribution channels for its main products. c. controls the primary activities involved. d. controls the customers for its products.
A
22. Thomas is the top manager of a firm which is going to acquire another firm in the similar industry. Which of the following should Thomas do after acquiring the company in terms of culture? a. Thomas should preserve those elements of each culture that are essential to the company's well-being. b. Thomas should completely sacrifice his organizational culture and adopt the culture of the acquired company. c. Thomas should encourage employees to follow both cultures in an attempt to avoid any conflict situations. d. Thomas should stick to his own organization's culture regardless of whether the acquired company's culture is efficient or not.
A
24. The management of an organization is in the process of reorganizing the firm's activities with a more customer-centric focus. They are mainly focused on activities that involve helping and training employees improve their skills needed to better serve their customers. Identify the customer-centric activity used by the management. a. Capability development b. Coordination c. Cooperation d. Connection
A
5. Which of the following statements is true of the bureaucratic approach? a. Bureaucracies can withstand a diverse workforce and high turnover. b. Bureaucracies are not suitable for large, complex organizations. c. Bureaucracies are often considered the most inefficient methods of control. d. Bureaucracies are more suited to creative and innovative environments.
A
3. Which of the following statements is true of the levels of organizational culture? a. Assumptions are deeply embedded in an organization's culture. b. It is quite difficult to note the artifacts present in an organization. c. Assumptions are the meanings that members of an organization attach to artifacts. d. Values are visible organizational structures, processes, and languages.
A
31. According to one key study, performance increases as firms change from related diversification to unrelated diversification.
F
6. In _____ diversification strategy, a firm pursues businesses that share a similar set of tangible and intangible resources. a. horizontal b. single-product c. unrelated d. vertical
A
4. In a single-product diversification strategy a. a firm attempts to develop core competencies in a specific market. b. a firm owns numerous businesses that are linked in some manner. c. a firm manages several businesses with no reasonable connection. d. a firm's main focus is on establishing customer recognition and loyalty.
A
5. Which of the following levels of organizational culture refers to the visible organizational structures, processes, and languages? a. Artifacts b. Values c. Assumptions d. Beliefs
A
7. Which of the following best describes an organization's artifacts? a. Day-to-day behaviors that can be observed b. The underlying essence of why members of an organization act as they do c. Relational factors between an organization's culture and its performance d. Aspects deemed important by members of an organization
A
7. Which of the following firms is most likely to benefit from the clan approach? a. A firm with highly uncertain working conditions b. A firm with work activities that can be easily measured c. A firm which lacks diverse working styles d. A firm operating in a price-competitive industry
A
10. Z-Furn is an organization that manufactures and sells office furniture. It maintains a good name in this business and has strong capital resources. The organization decides to purchase a failing food product business in order to tap into the market of that company. Which of the following types of diversification is the firm pursuing? a. Related diversification b. Unrelated diversification c. International diversification d. Single-product diversification
B
11. Which of the following statements about the divisional structure is true? a. Coordination among functions in a divisional structure is less fluid than it is in a functional structure. b. It allows for greater accountability because each division is a separate self-contained entity. c. The general manager of a functional form has a broader purpose than the general manager in the divisional form. d. Employees tend to identify more with their function than with their division.
B
12. Which of the following evolves over three stages—from compliance to identification to internalization? a. Internal integration b. Organizational commitment c. Cultural socialization d. External adaptation
B
14. Which of the following helps organizations to socialize employees? a. The intermediaries used to reach customers b. Role modeling, leader examples, and coaching c. Technologies used in manufacturing a firm's product d. Employee characteristics such as age and experience
B
14. Which of the following statements about the results of diversification is true? a. Performance increases as firms change from related diversification to unrelated diversification. b. Successful diversified organizations can balance centralized control levers with decentralized autonomy. c. There is ample evidence that unrelated diversification strategy is unsuccessful in emerging economies. d. Firms that failed with unrelated diversification have spent more time on implementation strategies and processes.
B
14. Which of the following statements is an advantage of a network structure? a. It is quite inexpensive for virtual teams to use communication technology. b. It enables a firm adapt to a change in the marketplace. c. Virtual teams often require very less coordination. d. It promotes greater accountability than divisional structure.
B
15. The elements that constitute organizational commitment are a. Artifacts, beliefs and values, and assumptions b. Compliance, identification, and internalization c. Job descriptions, strategic planning, and socialization d. Vision, mission and objectives
B
16. Which of the following is a disadvantage of a strong culture? a. A strong culture seldom influences an organization's performance. b. A strong culture tends to be difficult to change. c. In a strong culture, the goals are unclear. d. A strong culture requires more coordination and monitoring.
B
17. The test a manager uses to determine the viability of international diversification involves _____ test. a. industry attractiveness b. an ownership c. cost of entry d. a market power
B
18. Which of the following questions is addressed by an ownership test in determining the viability of international diversification? a. What markets and businesses will the firm compete in? b. Should the firm license or sell its resources to a foreign firm? c. How will the business units of the firm be aligned? d. Should the firm vertically integrate with other companies?
B
19. A firm can pass the better-off test in determining the viability of international diversification when a. it licenses its resources to a foreign firm. b. it can sell its existing product in a different country. c. it acquires extremely low-cost industries. d. it spends more time on implementation processes.
B
19. Which of the following statements about strong cultures is true? a. Strong cultures often result in greater role ambiguity. b. Strong cultures allow a company to run more smoothly and quickly. c. Strong cultures lead to decreased performance in stable environments. d. In strong cultures, there are low levels of agreement among employees.
B
2. The ultimate goal of developing a corporate-level strategy is to build _____. a. employee commitment b. a corporate advantage c. customer relationship d. a wholly-owned subsidiary
B
21. Fine Electronics is a corporation that controls all aspects of its business such as extracting raw materials, manufacturing the products, distributing them, and finally marketing to customers. It manages these activities through several business units, where one unit provides inputs to the other. This is an example of _____. a. unrelated diversification b. vertical integration c. strategic flexibility d. franchising
B
21. Which of the following terms refers to a functional unit that operates according to its own rules and guidelines and does not openly share information with other units? a. Artifact b. Silo c. Claim value d. Synergy
B
23. In vertical integration, forward integration occurs when a firm a. attempts to achieve economies of scope. b. controls the customers for its main products. c. owns or controls the inputs it uses. d. generates sustainable cost savings.
B
24. _____ costs refer to the costs a firm incurs to coordinate activities between business units. a. Franchising b. Administrative c. Outsourcing d. Transaction
B
25. Which of the following statements is true of adapting culture to a new contextual landscape? a. In times of crisis, a company's culture cannot change quickly. b. Culture tends to be a competitive differentiator. c. External adaptation addresses how work is accomplished in a firm. d. Culture cannot be a strong inhibitor to change.
B
3. Which of the following statements is true of division of labor? a. Horizontal specialization refers to how much an employee creates, executes, and administers activities in a certain area of the firm. b. The repetitive nature of specialized jobs lends itself to quick and efficient training of new resources. c. Extreme job specialization tend to increase the level of job satisfaction among workers. d. Vertical specialization refers to the breadth of activities that are performed in a certain job.
B
5. The distinguishing factor between unrelated and related diversification strategy is that a firm using unrelated diversification strategy a. has numerous businesses that are linked in some manner. b. manages several businesses with no reasonable connection. c. focuses on one specific product, typically in one market. d. develops core competencies using its resources and capabilities.
B
6. Which of the following is a key advantage of the clan approach? a. Clearly defined roles and responsibilities b. Self-regulating characteristics of employees c. Close personal surveillance of superiors over subordinates d. Extreme job specialization
B
6. _____ refer to the meanings that members of an organization attach to visible aspects of a firm. a. Artifacts b. Values and beliefs c. Assumptions d. Objectives
B
9. In a functional structure a. a firm groups diverse functions into separate divisions. b. a firm is organized in terms of the main activities that need to be performed. c. a firm gives equal authority to both divisional and functional managers. d. a firm categorizes its employees based on their performance and commitment.
B
9. Which of the following statements is an advantage of related diversification strategy? a. Related diversification strategy allows a firm to maintain several businesses that are not connected in any way. b. The sharing of resources is a key component of developing economies of scope and often increases a firm's competitive advantage. c. Related diversification strategies often achieve financial economies through the restructuring of business units. d. It can allow a sick or dying company to use capital generated in a profitable division to prop it up for a short period of time.
B
13. Which of the following questions should be addressed by a manager to identify conditions that can create shareholder value? a. How will the activities of the firm be coordinated? b. How will the business units of the firm be aligned? c. How attractive is the industry? d. How to organize resources?
C
1. An organization's _____ defines how people think, feel, and act and it moves at an almost subconscious level. a. structure b. design c. culture d. strategy
C
1. The scope of a corporate-level strategy focuses on a. the manner in which activities of the firm will be coordinated. b. the relationship between business units. c. the markets and businesses the firm will compete in. d. the internal environment affecting a firm's business.
C
1. Which of the following statements is true of organizational strategy in terms of structure and design? a. An organization's execution is not as significant as it's strategy to enable long-term success. b. Competitors often easily imitate another firm's unique organizational configuration that drives excellent implementation and performance. c. Companies implement their strategies by analyzing the organizational culture, human capital, and measurement. d. It is not possible for competitors to steal or adopt another company's strategic perspective.
C
10. Which of the following aspects of a leader's role in relation to culture is deemed critically important to an organization's success? a. Acquire more companies and adopt all elements of the acquired company's weak culture b. Reward employees and managers with pay based on commitment and continue raising the bar c. Empower employees to make independent decisions and to find ways to improve operations d. Inspire managers and employees to work as they wish in an attempt to reduce their job related stress
C
10. Which of the following terms refers to a structure where both divisional and functional managers have equal authority in the organization? a. Functional structure b. Divisional structure c. Matrix structure d. Network structure
C
30. According to one key study, a firm's performance decreases as it shifts from single-business strategies to related diversification.
F
19. The process by which firms impact the nature of their overarching industrial environment and alter their organization in response to evolving contextual factors is called _____. a. business process reengineering b. vertical specialization c. mutual adaptation d. horizontal specialization
C
2. Which of the following is a characteristic of an organization's culture? a. Culture is unchangeable b. It is unrelated to performance c. Culture is dynamic d. It can be easily copied by competitors
C
20. Which of the following is the best example of an organization with a strong culture? a. TechPark is a company characterized by low levels of agreement among employees about what is valued in the organization. b. The employees of Z-Gadgets, a manufacturing company, experience role ambiguity and therefore they require more coordination and monitoring. c. The performance of ElectronicZone tends to fluctuate, wherein, it's good under stable environments and very poor under turbulent environments. d. Z-Furn's organizational culture is very flexible and can be easily changed in response to changing environments.
C
20. Which of the following statements is true of the organizational design and the life-cycle of a firm? a. Once a firm reaches maturity, the emphasis on coordination generally increases. b. The nature of leadership should remain stable as the firm keeps evolving. c. As a firm matures, it tends to emphasize division of labor. d. Start-up firms are characterized by more job specialization.
C
20. _____ occurs when one corporation owns business units that make inputs for other business units in the same corporation. a. Globalization b. Franchising c. Vertical integration d. International diversification
C
22. Of the four activities that make a firm customer-centric, connection involves a. helping employees at the firm develop the right skills needed to better serve customers. b. creating structural mechanisms at the firm that allow workers to organize their activities to focus more exclusively on creating value for customers. c. developing relationships with parties outside the firm to increase the value of the firm's offerings. d. using informal methods such as culture and incentives to encourage people in the organization to come together in the spirit of serving customers.
C
24. External adaptation refers to a. how work is accomplished in a firm. b. how ceremonies help to socialize organizational members. c. how environmental changes impact a firm's strategy. d. how an organization's founder influences its culture.
C
25. The management of an automobile manufacturing company signed a contract with a consultancy that provides recruitment services. Though the organization was performing this function on its own previously, the management felt that the consultancy would offer a better service. Which of the following alternatives to vertical integration has the management opted? a. Franchising b. Exporting c. Outsourcing d. Licensing
C
4. Which of the following refers to an organization's assumptions? a. Aspects deemed important by members of an organization b. Relational factors between an organization's culture and its performance c. The underlying essence of why members of an organization act as they do d. Day-to-day behaviors that can be observed
C
7. Which of the following is a reason why managers pursue diversification strategies? a. Increasing customer loyalty b. The potential for gaining knowledge c. The potential for personal gain d. Improving employee commitment
C
8. _____ is created when a firm generates sustainable cost savings by combining duplicate activities or deploying underutilized assets across multiple businesses. a. Value b. Strategy c. Synergy d. Market power
C
11. _____ directly impact culture in the manner in which they encounter big problems, solve those problems, and see the effects of their solutions. a. Suppliers b. Competitors c. Customers d. Teams
D
11. _____ is a strategy is which a firm engages in several different businesses that may or may not be related in an attempt to create more value than if the businesses existed as stand-alone entities. a. Franchising b. Globalization c. Outsourcing d. Diversification
D
12. The factor that distinguishes functional organizational structure from divisional is that a. a functional structure is organized around the outputs a firm produces. b. a functional structure is best suited to deal with environmental change. c. a functional structure groups diverse functions into separate divisions. d. a functional structure is organized in terms of main activities performed.
D
12. Which of the following statements is a downside of unrelated diversification strategy? a. It does not allow a dying company to use capital generated in a profitable division to prop it up for a short period of time. b. A firm cannot manage multiple businesses without any reasonable connections. c. It is not possible to achieve financial economies. d. It can open a firm to higher levels of risk and uncertainty.
D
13. Which of the following is a weakness of the matrix structure? a. In matrix structure, the divisional managers have more authority than the functional managers, which causes an imbalance of power. b. A manager cannot use a matrix structure when resources need to be shared and optimized across divisions and within functions. c. When a firm's internal interrelationships are complex, it is not possible for managers to adopt a matrix structure. d. It often creates confusing and inefficient scenarios for managers working in a functional group as well as across divisions.
D
15. In a _____ structure, "knowledge workers" are organized to work as individual contributors or to be a part of a work cluster that provides a certain expertise for the organization. a. functional b. divisional c. matrix d. network
D
16. Which of the following is a disadvantage of a divisional structure? a. It is not suited to competitive situations where coordinated action is needed for innovation. b. This structure does not allow for much accountability. c. It is not suited to business environments marked by high degrees of uncertainty. d. Core functions are duplicated, preventing the development of economies of scale.
D
16. Which of the following is the main motive for international diversification? a. Support failing businesses b. Understand social values c. Create strategic flexibility d. Achieve economies of scale
D
17. Fine Gadgets, a gadgets manufacturing company, has an organizational structure where the employees have to strictly follow rules and regulations stated by the management. Moreover, only the top management is allowed to make key decisions regarding organizational activities. Fine Gadgets is an example of a _____ organization. a. decentralized b. global c. diversified d. centralized
D
18. Which of the following characterizes a weak culture? a. Employees require less coordination and monitoring b. High role clarity c. Allows a company to run more smoothly and quickly d. No agreement on the firm's values
D
21. Which of the following questions should a manager address while acquiring a company in terms of culture? a. Which culture is the best? b. How socialized are the employees? c. Is culture linked to performance? d. Where are the similarities and differences?
D
23. Internal integration refers to a. how environmental changes impact a firm's strategy. b. how rituals reinforce an organization's culture. c. how stories and myths convey an organization's values. d. how work is accomplished in a firm.
D
23. Of the four activities that make a firm customer-centric, coordination involves a. using informal methods such as culture and incentives to encourage people in the organization to come together in the spirit of serving customers. b. developing relationship with parties outside a firm to increase the value of the firm's offerings. c. helping employees at a firm develop the right skills needed to better serve customers. d. creating structural mechanisms at a firm that allow workers to organize their activities to focus more exclusively on creating value for customers.
D
25. Of the four activities that make a firm customer-centric, cooperation involves a. helping employees at a firm develop the right skills needed to better serve customers. b. creating structural mechanisms at the firm that allow workers to organize their activities to focus more exclusively on creating value for customers. c. developing relationship with parties outside the firm to increase the value of the firm's offerings. d. using informal methods such as incentives to encourage people in the organization to come together in the spirit of serving customers.
D
3. Which of the following questions is addressed by the organizational design of a firm's corporate-level strategy? a. What markets and businesses will the firm compete in? b. How will the business units of the firm be aligned? c. What are the businesses to be acquired? d. How will the resources of the firm be coordinated?
D
4. Thomas, the head of the marketing department in an organization, has structured his department in such a way that the roles and responsibilities of his workers are loosely defined. Moreover, he does not exert too much control over his workers and encourages two-way communication. His workers tend to be highly satisfied with their jobs when compared to those in the finance department, headed by John who exerts more control. From this scenario it can be inferred that Thomas has adopted a _____ mechanism for coordinating. a. bureaucratic b. authoritative c. centralized d. behavioristic
D
8. Which of the following firms is most likely to benefit from a bureaucratic approach? a. A firm with constantly changing, dynamic markets b. A start-up firm with less complexity c. A firm involving creativity and innovation d. A firm with high turnover and a diverse workforce
D
8. Which of the following is a source from which a firm's culture develops? a. The employees' skill set b. The suppliers and customers c. The organization's competitors d. The founder of the organization
D
30. Vertical specialization refers to the breadth of activities that are performed in a certain job.
F
9. Which of the following statements is true of the role of founders in influencing culture? a. The founders take the least risk and therefore do not feel as much anxiety as their employees. b. In allowing values to trump economics, founders tend to have a weak influence on the company's culture. c. A founder cannot make any risky decisions as he is required to account to everyone in the organization. d. Founders are uniquely situated to be innovative and to exemplify innovation to their employees.
D
26. Competitors can easily imitate a firm's unique organizational configuration that drives excellent implementation and performance.
F
27. As firms expand and grow in complexity, they reorganize into a functional structure.
F
27. Firms that have excess capacity or potential in their physical assets or their intangible assets tend to pursue unrelated diversification.
F
28. Assumptions are the meanings that members of an organization attach to artifacts.
F
28. Firms pursuing related diversification to increase market power attempt to decrease the price at which they sell their products to levels below the normal prices found in the market.
F
29. Once a behavior has become an assumption, it is even more visible.
F
29. The key advantage of the matrix structure is that it creates clear and efficient scenarios for managers working in a functional group as well as across divisions.
F
26. Corporate advantage occurs when a firm maximizes its resources to build a competitive advantage across its various business units.
T
27. An appreciation of the company's values helps in deciphering the roots of a company's culture.
T
28. One of the most important benefits of the functional structure is the efficiency it creates.
T
29. The ultimate goal of an unrelated diversification strategy is to create some type of financial economies.
T
30. In formal organizations, the backbone of culture generally begins with a founder.
T
31. Behaviorists are those who support a more open organizational structure where roles and responsibilities are loosely defined.
T
32. Firms diversify internationally to achieve economies of scale.
T
33. A key component of a new manager's job is to understand the informal structure of the organization.
T
33. Forward integration occurs when a firm owns or controls the customers or distribution channels for its main products.
T
34. Changes in work practices or informal structures tend to result in greater efficiency.
T
35. Connection involves developing relationships with parties outside a firm to increase the value of the firm's offerings.
T
35. Short-term contracts involve a firm's commitment to buy a commodity product at a specific price.
T
TRUE/FALSE 26. It is the culture of the organizational structure that drives performance.
T
