Strategic Management Chapter 11

________ is the degree to which rules and procedures govern work.

a. Formalization

The multidivisional structure was initially designed to produce three major benefits over the functional form. Which of the following is NOT one of the three benefits?

a. aligning the corporate structure with the demands of global expansion

The CEO of Transector, Inc., set a 6.5 percent rate-of-return target for all divisions for the past year. Now, at the end of the year, three of Transector's seven divisions have not met this rate-of-return goal. The division managers of these three under-performing divisions have all secretly contacted executive-placement firms to investigate openings at other firms, because they know their future at Transector is in jeopardy as financial performance is all- important at Transector. Transector probably uses the ________ structure

a. competitive form of the multidivisional

The heavy use of integrative mechanisms in the ________ multidivisional organizational structure is intended to achieve

a. cooperative; economies of scope

Jumbo Industrial Supply has grown from a one-location firm with a restricted product line to a multi-state organization with numerous product lines and a large sales staff. Sales have doubled every year for the last three years. It currently has a simple structure with Jared Smith, the owner-manager, making all major decisions. Jumbo is probably now experiencing or will soon experience

a. coordination and control problems.

Walmart's effective strategy/structure configuration is

a. cost leadership/functional.

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to

a. make the partners' true loyalties and intentions unclear.

Organizational structure

a. specifies the firm's formal reporting relationships, procedures, controls, and authority and decision-making processes.

Which of the following is a TRUE statement about organizational structures for implementing business-level strategies?

b. A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions.

Some experts consider the _______ structure to be one of the 20th century's most significant organizational innovations because of its value to diversified firms.

c. multidivisional

The Amos Ball Printing Company was established in 1866. Currently, Amos Ball V is the CEO and chairman of the board. The company has traditionally used a functional structure. Five years ago, the company branched into online publishing and small-batch printing in addition to its regular large-batch operations. Both new businesses are significantly different in technology and marketing from each other and from Ball's traditional business. Despite the hiring of experienced professionals in these new endeavors, performance continues to be poor and is affecting Ball's overall performance. Which of the following statements is TRUE?

a. Amos should consider adopting the multidivisional structure

The integrated cost leadership/differentiation strategy is difficult to implement mostly because

a. different primary and support activities are emphasized when using cost leadership and differentiation strategies.

Implementing the multidomestic strategy requires decentralization to

a. facilitate the tailoring of products to the demand in local markets.

Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for managers because

a. firms must be flexible while retaining a degree of stability.

In the competitive form of the multidivisional structure, the focus of headquarters is on all of the following EXCEPT

a. integration.

Toyota heavily uses a strategic network of vertical relationships. Toyota enables engineers in supplier firms to communicate easily with companies with which Toyota has contracts for services. This results in the suppliers and Toyota (the strategic center firm) being more

a. interdependent

After years of negotiating short-term contracts with its suppliers, Icon Images has decided to agree to longer-term contracts. In doing this, Icon Images is hoping to

a. reduce transaction costs

Andermeyer Jewelers, which specializes in high-end jewelry, has been in existence since the 1870s and has served generations of wealthy families. Owned and managed by the Andermeyer family since its founding, it has never had more than 20 designers and jewelers in its shop. Andermeyer Jewelers should use the __________ structure.

a. simple

In most cases, the focus strategy is best managed using a ___________ structure.

a. simple

A firm's ___________ specifies the work to be done and how to do it given the firm's strategy or strategies.

a. structure

IKEA is a global furniture retailer with more than 300 outlets in 39 countries and regions. IKEA focuses on lowering its costs as well as understanding customer needs, especially younger ones. IKEA's international strategy is best described as _______, and the appropriate organizational structure to implement this strategy is the _______ structure

a. transnational; combination

When a corporation pursues a related constrained diversification strategy, financial controls may not add value to strategy implementation efforts because it is difficult to

a. use them without reducing cooperation among divisional managers.

________ is the degree to which decision-making authority is retained at higher managerial levels.

b. Centralization

Megaline, Inc., with five divisions, follows the competitive form of the multidivisional structure. One division has not met the rate-of-return goals for the past year. Another division has exceeded the rate-of-return goals. The other three divisions met the rate-of-return goals. The headquarters office must decide where to allocate capital in the next year. Which scenario is the MOST likely?

b. The highest-performing division will get the highest capital allocation because it has the best prospects for creating more wealth for the shareholders next year.

Successfully implementing a cost leadership strategy requires

b. centralization of authority.

Firms such as Textron Inc. that frequently acquire and divest other firms are most likely to use the _______ structure

b. competitive multidivisional

The fewest integrative devices are used in the ________ structure

b. competitive multidivisional

Successful implementation of the differentiation strategy requires a structure that

b. decentralizes decision making

In an SBU structure _______ is/are evaluated using strategic controls, whereas ________ is/are evaluated using financial controls

b. divisions within the SBUs; each SBU

Leslie is a newly graduated certified public accountant with a specialty in corporate tax. She wishes to join an organization (not an accounting firm) that will allow her to concentrate on corporate tax and become deeply proficient in this area. Leslie should look for a position in a firm with a ____________ structure.

b. functional

The ________ structure is the most appropriate structure for implementing the integrated cost leadership/differentiation strategy.

b. functional

A multidomestic strategy would be associated with

b. informal coordination among units

Firms seeking to compete on the basis of cost leadership particularly need support from the ________ and ________ functions

b. manufacturing; process R&D

Galatea Foods was founded in Greece by Galatea Chronos in 1978, and the company spread rapidly through Western Europe. Ms. Chronos retains the office of CEO. The Spanish division is headed by her oldest son. The North European division is headed by her only daughter, and the French-Italian division is headed by Ms. Chronos' brother. This company probably uses the ________ strategy.

b. multidomestic

Which of the following is NOT a variation of the multidivisional structure?

b. regional form

Typically, an organization using a simple structure would be

b. small.

A private university is made up of various "schools," such as the School of Journalism, the School of Business, the School of Law, the School of Arts and Sciences, and so forth. The university is experiencing some financial problems, so the administration has decided to have each school of the university become a profit center. This scheme is somewhat parallel to the _______ organizational structure

b. strategic business unit multidivisional

McDonald's operates through a franchising system wherein the head office uses strategic and financial controls to ensure that the franchises are creating the greatest possible value. This is an example of a(n)

b. strategic network

The need for the organization to combine local responsiveness and efficiency is most critical in a ________ strategy

b. transnational

It is easiest to identify the company that functions as the strategic center firm in

b. vertical complementary strategic alliances

__________ controls are objective criteria that allow corporate managers to evaluate the returns earned by individual business units.

c. Financial

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance?

c. SBU form

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy?

c. SBU form with related-linked strategy

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network?

c. allocating internal capital

Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia Industries. One can expect that Icarus, Athena, and Hercules

c. are not necessarily related to one another in terms of products or markets

In the ________ multidivisional structure there is complete independence among the firm's divisions

c. competitive

In the ________ structure hierarchy, the headquarters relies on strategic controls to set rate-of-return targets and financial controls to monitor divisional performance relative to those targets.

c. competitive

A firm pursuing an unrelated diversification strategy will utilize a _________ structure

c. competitive form multidivisional

TheLG Company has units operating in significantly different industries and uses financial controls to manage its portfolio. LG is most likely using the ________ structure

c. competitive form of the multidivisional

Ortiz is a manager of BRS Corp. Ortiz's division did not meet financial targets this year. Ramirez, manager of another division, has indicated that Ortiz's division incurred significant costs which resulted in Ramirez's division setting record profits for the year. As a result, performance for BRS as a whole exceeded projections. Which pairing of organizational structures for BRS and bonus for Ortiz is most plausible?

c. cooperative structure; a bonus for increasing organizational performance

The noted business historian Alfred Chandler viewed the multidivisional structure as an innovative response to

c. coordination and control problems.

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT

c. division managers' rewards based on division financial performance

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that

c. it is difficult to respond effectively to local market needs and preferences

A worldwide geographic area structure is an organizational form in which

c. national interests dominate and management adapts to local or cultural differences

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure?

c. need for knowledge-sharing among specialists

Firms seeking to differentiate particularly need support from the _________ and ___________ functions.

c. product R&D; marketing

Functional structures work best for firms for all of the following strategies EXCEPT

c. related constrained diversification strategy.

Financial controls are most important in the __________ strategy.

c. unrelated diversified

Typically, a successful firm pursuing a differentiation strategy will

c. use cross-functional development teams.

An important lesson from the Chapter 11 Opening Case about Borders is that

c. while a firm's structure usually follows the strategy, once in place, structure can have a significant effect on strategy.

Which of the following is a TRUE statement about implementing corporate-level strategies and effective organizational structures?

d. Firms pursuing a related constrained strategy should implement a cooperative structure, use integrative devices to link divisions, centralize the R&D function, and emphasize sharing

Which of the following is TRUE?

d. Strategy has a more important influence on structure than structure has on strategy.

One disadvantage of the functional structure is that

d. communication and coordination are difficult among organizational functions.

Structural stability affects the organization's ability to

d. consistently and predictably manage its daily work routines.

The most centralized and most costly form of the multidivisional structure is the

d. cooperative

The _________ structure is best for implementing the related-constrained diversification strategy

d. cooperative form of the multidivisional

Cisco used the _________ structure to implement its _________ strategy.

d. cooperative form of the multidivisional; related constrained

Cisco's _________ corporate-level structure was useful in implementing its _________ business-level strategy.

d. cooperative form; integrated cost leadership-differentiation

In Japan, the center firm in a strategic network of vertical relationships might be expected to undertake all of the following EXCEPT

d. decreasing communications between network members to reduce communication costs

The BEST multidivisional structure to use

d. depends on the degree of diversification.

Strategic controls allow corporate-level managers to

d. examine the fit between what the firm might do and what it can do.

The cooperative multidivisional firm

d. has a structure requiring heavy use of horizontal integrative devices

Agatha Adams founded Insurance Specialists to process medical claims for physicians' practices. She plans to compete on the basis of cost, offering the lowest processing cost per claim in her market area. Ms. Adams' company should

d. have a highly centralized, functional structure.

Ichabod Industries has a Latin American Division, a European Division, an Industrial Lubricants Division, and a Food Service Division. Ichabod Industries probably uses the _________ organizational structure.

d. hybrid combination

Which of the following is NOT associated with an organizational structure that supports a cost leadership strategy?

d. integration

The three structural characteristics that differ among organizational structures include all of the following EXCEPT

d. intermediation.

The __________ structure is an organizational structure that combines both functional specialization and business product or project specialization.

d. matrix

Alfred Chandler found that firms grow in a predictable pattern and that the firm's growth patterns determine its structural form. Which form corresponds to the FINAL stage in Chandler's theory?

d. multidivisional

The primary disadvantage of the multidomestic strategy and worldwide geographic area structure relates to limited

d. potential for global efficiency

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so. It also promotes longer-term contracts with suppliers and enables engineers in the supplier companies to have better communication with Toyota. This is an example of a(n)

d. strategic network.

One reason why a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so

d. suggests that the firm's previous choices were not the best ones.

The benefits of a simple structure include all of the following EXCEPT

d. the ability of specialists to develop deep expertise