Basic Organizational Design
38) All other things being equal, the wider or larger the span, the more ________ an organization is. A) ambitious B) rigid C) mechanistic D) efficient
38. D
67) Worldwide economic downturn, global competition, accelerated product innovation by competitors, and increased demands from customers for high quality and faster deliveries encourage organizations to become more ________. A) organic B) mechanistic C) centralized D) formalized
67. A
2) Organizational structure is the degree to which standardized procedures are in place in an organization.
FALSE
53) Paul Abdul Oil Corporation (PAOC) began as a relatively small oil company. As PAOC has grown, the company has gained a highly trained group of managers and analysts at the corporate headquarters. This group is highly adaptive in its structure. Members of this group do not have standardized jobs, but are empowered to handle diverse job activities and problems. PAOC seems to have a(n) ________ structure. A) mechanistic B) divisional C) functional D) organic
53. D
43) Which of the following factors would require a more decentralized organizational structure? A) when the lower-level managers want a voice in decisions B) when the lower level managers are not capable of making decisions C) when the decisions to be made are not significant D) when the company is large
43. A
44) As organizations become more flexible and responsive to environmental trends, there is a distinct shift toward ________ decision making. A) centralized B) decentralized C) concentrated D) amalgamated
44. B
48) A(n) ________ organization is highly formalized and centralized. A) organic B) mechanistic C) rational D) intuitive
48. B
73) Which of the following traditional organizational designs focuses on results by holding division managers responsible for what happens to their products and services? A) simple structure B) functional structure C) divisional structure D) matrix structure
73. C
22) Organizational design is a process that involves decisions about ________. A) work specialization and cost-leadership B) chain of command and span of control C) centralization and differentiation D) departmentalization and diversification
22. B
23) The process of dividing work activities into separate job tasks is known as ________. A) work specialization B) differentiation C) chain of command D) span of control
23. A
24) Which of the following statements accurately defines work specialization? A) It is the basis of grouping jobs together. B) Individual employees specialize in doing part of an activity rather than the entire activity. C) It is the line of authority extending from upper organizational levels to the lower levels. D) It clarifies who reports to whom.
24. B
25) The process of grouping jobs together is known as ________. A) departmentalization B) centralization C) formalization D) decentralization
25. A
26) In case of functional departmentalization, jobs are grouped according to ________. A) tasks B) territories C) product lines D) customer flow
26. A
28) ________ departmentalization is based on the product or customer flow through the organization. A) Product B) Functional C) Process D) Customer
28. C
29) What kind of departmentalization would be in place in a government organization where different public service responsibilities are divided into activities for employees, children, and the disabled? A) product departmentalization B) geographic departmentalization C) process departmentalization D) customer departmentalization
29. D
30) A disadvantage of ________ departmentalization is poor communication across the different groups. A) geographic B) functional C) process D) customer
30. B
31) Work teams composed of individuals from various functional specialties are known as ________ teams. A) cross-control B) cross-training C) cross-functional D) cross-command
31. C
32) The line of authority that extends from upper organizational levels to lower levels, clarifying who reports to whom, is known as the ________. A) employee power distance B) unity of command C) span of control D) chain of command
32. D
33) ________ refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it. A) Responsibility B) Liability C) Bureaucracy D) Authority
33. D
34) ________ is the obligation or expectation to perform a duty. A) Responsibility B) Authority C) Ascendancy D) Preponderance
34. A
35) Which one of Fayol's 14 principles of management states that a person should report to only one manager? A) unity of direction B) unity of command C) division of work D) division of authority
35. B
36) According to the traditional view, managers could not and should not directly supervise more than ________ subordinates. A) nineteen or twenty B) five or six C) ten or eleven D) fifteen or sixteen
36. B
37) The ________ determines the number of levels and managers in an organization. A) delegation of authority B) unity of command C) chain of command D) span of control
37. D
39) ________ is the degree to which decision making takes place at upper levels of the organization. A) Centralization B) Decentralization C) Formalization D) Functionalization
39. A
40) If top managers make key decisions with little input from below, then the organization is ________. A) not mechanistic B) more decentralized C) not formalized D) more centralized
40. D
41) A company is planning to revise its organizational structure and one of the managers, Anderson Cooper, suggests increasing employee empowerment by giving them more decision- making authority. Which of the following, if true, would support Cooper's stand? A) The firm's employees are reluctant to disrupt the status quo and are apprehensive about any change in responsibility. B) The firm's employees are used to an authoritative structure and clearly defined job-roles. C) The company's frontline workers have first-hand knowledge of what can and cannot be done. D) The company is trying to recover from an economic downturn that caused significant losses which necessitated downsizing.
41. C
42) Which of the following factors calls for a more centralized organizational structure? A) when the decisions to be taken are significant B) when the company is geographically dispersed C) when the organization is facing a crisis D) when the environment is complex
42. C
45) ________ refers to how standardized an organization's jobs are and the extent to which employee behavior is guided by rules and procedures. A) Specialization B) Centralization C) Decentralization D) Formalization
45. D
51) GlaxoSmithKline would become more ________ if it starts allowing its lab scientists to set the priorities and allocate the resources. A) bureaucratic B) mechanistic C) diversified D) organic
51. D
52) Which of the following is a characteristic of an organic organization? A) high specialization B) cross-functional teams C) rigid departmentalization D) narrow span of controls
52. B
54) What are the four contingency variables that an organization's structure depends on? A) strategy, size, technology, and equity B) management, technology, equity, and degree of environmental uncertainty C) management, funding, technology, and degree of environmental uncertainty D) strategy, size, technology, and environmental uncertainty
54. D
55) Large organizations tend to have more ________ than smaller organizations. A) specialization B) departmentalization C) centralization D) rules and regulations
55. A
56) Large organizations are more ________. A) mechanistic B) organic C) disorganized D) decentralized
56. A
57) Joan Woodward divided firms into three distinct technologies that had increasing levels of complexity and sophistication: unit production, mass production, and ________. A) continuous production B) repetitive flow production C) series production D) process production
57. D
58) ________ is a type of technology that centers on small-batch production. A) Unit production B) Mass production C) Process production D) Flow production
58. A
59) ________ is a type of technology that centers on large-batch production and requires moderate levels of complexity and sophistication. A) Unit production B) Mass production C) Process production D) Service production
59. B
60) In Joan Woodward's study of the relationship between technology and structure, the structure that was the most technically complex was ________. A) unit production B) mass production C) process production D) technological production
60. C
61) Low vertical differentiation, low horizontal differentiation, and low formalization are characteristics of an organization that carries out ________. A) unit production B) mass production C) process production D) flow production
61. A
62) Moderate vertical differentiation, high horizontal differentiation, and high formalization are characteristics of an organization that indulges in ________. A) small-batch production B) mass production C) unit production D) process production
62. B
63) High vertical differentiation, low horizontal differentiation, and low formalization are characteristics of an organization that indulges in ________. A) mass production B) serial production C) process production D) unit production
63. C
64) According to Woodward's studies, what type of production technology is best suited for a mechanistic structure? A) unit B) process C) product D) mass
64. D
66) The greater the environmental uncertainty, the more an organization needs to become ________. A) organic B) mechanistic C) specialized D) departmentalized
66. A
68) What are the different structures that traditional organizations can have? A) simple, functional, and corporate structures B) simple, functional, and business unit structures C) functional, strategic, and business unit structures D) simple, functional, and divisional structures
68. D
69) A company with low departmentalization, wide spans of control, centralized authority, and little formalization possesses a ________ structure. A) simple B) functional C) divisional D) matrix
69. A
70) As the number of employees in an organization grows, structure tends to become more ________. A) specialized B) informal C) centralized D) relaxed
70. A
71) Which of the following is a strength of simple structures? A) Employees are grouped with others who have similar tasks. B) It focuses on results. C) It is inexpensive to maintain. D) It remains appropriate even as the organization changes as it grows.
71. C
72) Which of the following is a weakness of the simple structure? A) Duplication of activities and resources increases costs and reduces efficiency. B) Specialists become insulated and have little understanding of what other units are doing. C) Pursuit of functional goals causes managers to lose sight of what is best for the overall organization. D) It relies too much on one person which is very risky.
72. D
74) In which of the following traditional organizational designs, duplication of activities and resources leads to increase in costs and reduced efficiency? A) divisional structure B) team structure C) matrix structure D) project structure
74. A
76) The ________ is an organizational structure made up of separate business units with each unit having limited autonomy. A) bureaucratic structure B) simple structure C) functional structure D) divisional structure
76. D
77) In a ________ structure the parent corporation typically acts as an external overseer to coordinate and control the various divisions and provide financial, legal, or other such support services. A) divisional B) simple C) functional D) matrix
77. A
6) The chain of command is a principle that states that a person should report to only one boss.
False
7) All other things unchanged, the narrower the span of control, the more efficient the organization is.
False
27) Departmentalization based on ________ groups jobs on the basis of territory or physical location. A) customer B) product C) geography D) process
27. C
46) In highly ________ organizations, there are explicit job descriptions, numerous organizational rules, and clearly defined procedures covering work processes. A) formalized B) decentralized C) leveraged D) capitalized
46. A
49) Which of the following is a characteristic of a mechanistic organization? A) cross functional teams B) free flow of information C) wide spans of control D) clear chain of command
49. D
50) A(n) ________ organization is highly adaptive, loose, and flexible. A) organic B) centralized C) vertical D) mechanistic
50. A
75) A ________ is an organizational design that groups similar or related occupational specialties together. A) matrix structure B) functional structure C) divisional structure D) simple structure
75. B
94) In a short essay, explain the concept of chain of command.
Answer: The chain of command is the line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom. Managers need to consider it when organizing work because it helps employees with questions such as "Who do I report to?" or "Who do I go to if I have a problem?" Three other concepts that help in a better understanding of the concept of chain of command are authority, responsibility, and unity of command. Authority - Authority was a major concept discussed by the early management writers; they viewed it as the glue that held an organization together. Authority refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it. Managers in the chain of command had authority to do their job of coordinating and overseeing the work of others. Authority could be delegated downward to lower-level managers, giving them certain rights while also prescribing certain limits within which to operate. These writers emphasized that authority was related to one's position within an organization and had nothing to do with the personal characteristics of an individual manager. Chester Barnard, an early management writer proposed the acceptance theory of authority. According to this theory, authority comes from the willingness of subordinates to accept it. If an employee did not accept a manager's order, there was no authority. The early management writers also distinguished between two forms of authority: line authority and staff authority. Line authority entitles a manager to direct the work of an employee. It is the employer--employee authority relationship that extends from the top of the organization to the lowest echelon, according to the chain of command. As a link in the chain of command, a manager with line authority has the right to direct the work of employees and to make certain decisions without consulting anyone. In the chain of command, every manager is also subject to the authority or direction of his or her superior. As organizations get larger and more complex, line managers find that they do not have the time, expertise, or resources to get their jobs done effectively. In response, they create staff authority functions to support, assist, advise, and generally reduce some of their informational burdens. Responsibility - When managers use their authority to assign work to employees, those employees take on an obligation to perform those assigned duties. This obligation or expectation to perform is known as responsibility. Assigning work authority without responsibility and accountability can create opportunities for abuse. Likewise, no one should be held responsible or accountable for work tasks over which he or she has no authority to complete those tasks. Unity of command - The unity of command principle which is one of Fayol's 14 management principles states that a person should report to only one manager. Without unity of command, conflicting demands from multiple bosses may create problems.
98) Explain the concepts of mechanistic and organic structures.
Answer: The mechanistic organization (or bureaucracy) was the natural result of combining the six elements of structure: work specialization, departmentalization, chain of command, span of control, centralization and decentralization, and formalization. Adhering to the chain-of- command principle ensured the existence of a formal hierarchy of authority, with each person controlled and supervised by one superior. Keeping the span of control small at increasingly higher levels in the organization created tall, impersonal structures. As the distance between the top and the bottom of the organization expanded, top management would increasingly impose rules and regulations. Because top managers could not control lower-level activities through direct observation and ensure the use of standard practices, they substituted rules and regulations. The early management writers' belief in a high degree of work specialization created jobs that were simple, routine, and standardized. Further specialization through the use of departmentalization increased impersonality and the need for multiple layers of management to coordinate the specialized departments. Thus, a mechanistic organization has the following characteristics: a. high specialization b. rigid departmentalization c. clear chain of command d. narrow spans of control e. centralization f. high formalization The organic organization is a highly adaptive form that is as loose and flexible as the mechanistic organization is rigid and stable. Rather than having standardized jobs and regulations, the organic organization's loose structure allows it to change rapidly as required. It has division of labor, but the jobs people do are not standardized. Employees tend to be professionals who are technically proficient and trained to handle diverse problems. They need few formal rules and little direct supervision because their training has instilled in them standards of professional conduct. Thus, an organic organization has the following characteristics: a. cross-functional teams b. cross-hierarchical teams c. free flow of information d. wide spans of control e. decentralization f. low formalization
17) Once an organization grows past a certain size, the impact of size on organization structure strengthens.
False
47) A(n) ________ organization is highly specialized and rigidly departmentalized. A) organic B) fundamental C) learning D) mechanistic
47. D
10) At one end of the spectrum, organizations can be absolutely centralized, while at the other end, they can be completely decentralized.
False
1) Organizational structure is defined as the formal arrangement of jobs within an organization.
True
11) Employee empowerment gives employees more authority to make decisions.
True
15) An organic organization is low in centralization.
True
20) In divisional structures, the parent corporation typically acts as an external overseer to coordinate and control the various divisions of the organization.
True
3) Work specialization is also known as division of labor.
True
4) Managers today continue to see work specialization as important because it helps employees be more efficient.
True
5) Customer departmentalization works well because it emphasizes monitoring and responding to changes in customers' need.
True
8) Given other things unchanged, managers with well-trained and experienced employees can function well with a wider span of control than those with a less talented workforce.
True
16) Innovators need the efficiency, stability, and tight controls of the mechanistic structure.
False
19) A simple structure is characterized by low spans of controls and high formalization.
False
18) The strength of the functional structure is that it focuses on results because managers are responsible for what happens to their products and services.
False
21) ________ is the formal arrangement of jobs within an organization. A) Departmentalization B) Organizational design C) Organizational structure D) Work specialization
21. C
12) In highly formalized organizations, employees have more discretion in how they do their work.
False
Eric Redd (Scenario) Eric Redd graduated from college and was hired by a company that manufactured parts for the automotive industry. Eventually, the top management noticed that the employees on the assembly line seemed bored, and their motivation was low. Eric's employer decided to try to reorganize in order to increase productivity. Eric's responsibilities are about to change from that of an engineer to a more complex one. 78) In an attempt to reorganize, the assembly-line activity was divided into separate job tasks. Individual employees were trained to become specialists in specific tasks rather than the entire activity. The company seems to have adopted ________. A) work specialization B) departmentalization C) cross-functional teams D) centralization 79) Eric majored in engineering and really enjoyed his work. After the reorganization, Eric was required to work with a team that included production workers as well as marketing specialists to design the latest products the company was planning to offer. This implies ________. A) the company is becoming more centralized B) that Eric's job responsibilities have been reduced C) the company is becoming more mechanistic D) that Eric is a part of a cross-functional team 80) Eric is offered a chance to help direct the efforts of some employees assigned to his work group. This is a chance for Eric to experience ________. A) self actualization B) groupthink C) referent power D) authority 81) When Eric is offered a chance to help direct the efforts of some employees assigned to his work group, he sees this new assignment as a(n) ________. A) decrease in authority B) increase in departmentalization C) increase in his responsibility D) decrease in work specialization
78. A 79. D 80. D 81. C
Michelle is a registered nurse in charge of a new unit at her hospital. She would like to have a more laidback approach in dealing with her new staff, but the hospital demands that there be strict hierarchical levels and that all decisions must be signed off by Michelle. Sometimes the constant filling out of forms, and so forth really annoys Michelle. She also feels that the numerous levels of hierarchy are unnecessary and place barriers between herself and her staff. She isn't sure why things have to be so "organized" and is thinking about speaking with her boss about having more flexibility and fewer rules. 82) Michelle is very concerned about the formal framework by which job tasks are divided, grouped, and coordinated within her unit. This implies that she is concerned about ________. A) group norms B) the organizational structure C) job rotation D) the span of control 83) Michelle was asked to represent the cardiac unit as part of a Total Quality Management (TQM) initiative that is aimed at improving the overall quality of care at the hospital. Other departments, such as orthopedics, neurology, oncology, and pediatrics also have representatives on this team. This TQM team is an example of ________. A) a multi-cultural team B) a cross-functional team C) process integration D) customer departmentalization 84) Michelle has noticed that everyone is very concerned about the line of authority within the hospital. This implies that the employees at the hospital are worried about the ________. A) decentralization of control B) chain of command C) span of control D) departmentalization 85) The fact that Michelle's signature is required on all documents and her word is the last word on all decisions relating to her unit, suggests that ________. A) the hospital has a centralized structure B) the hospital has a decentralized structure C) the hospital has a simple structure D) the hospital has an organic structure
82. B 83. B 84. B 85. A
Changes in banking regulations, a series of loan defaults by dotcom customers and a decline in the California real estate market have forced Western Bank, a large regional West Coast bank, to downsize in an effort to improve profitability and bolster its declining stock prices. Susan, a regional branch supervisor for the Sacramento district, has been tasked with preparing a management report concerning how these cuts are affecting bank operations and customer service. Susan believes that the most important problem that has emerged concerns span of control and decision-making authority within the bank. In the past, bank policy indicated that no manager should supervise more than six subordinates and only managers could make decisions for their individual units. However, with many of the middle managers being laid-off, upper management has increased its span of control while still insisting on retaining control on decision making at the unit level. The result is that upper managers spend all of their time putting out fires and subordinates feel they are getting answers too slowly. Lower level employees are requesting greater authority to make decisions on their own. However, they are not as experienced at making decisions as upper-level managers. Susan believes that structural changes must be made to help Western Bank deal with the new situation effectively. 86) Based upon the preceding description of Western Bank's situation, which aspect of the current situation is inconsistent with Western Bank's decision to maintain a centralized form of decision making? A) Lower-level managers want a voice in decisions. B) Lower-level managers are not as experienced at making decisions as upper-level managers. C) The company is large. D) The organization is facing a crisis. 87) Susan believes that Western Bank should be more adaptive and flexible. Which of the following organizational structures is she likely to prefer? A) formalized B) mechanistic C) organic D) centralized
86. A 87. C
Lacey has been hired as a consultant for Jefferson Consulting. Her first assignment is to work with one of Jefferson's newest clients, Custom Leather, Inc., a manufacturer of high-end leather furniture. Custom Leather was founded over a decade ago with the idea that great looking, comfortable leather furniture could be custom made and delivered to customers in 30 days. Traditionally, retailers stock leather sofas to satisfy the desire to receive new furniture fast limiting the choice of colors and style for the consumer. In stark contrast, Custom Leather offers 13 different styles in over 70 different colors from rich, deep browns to sleek, silver grays, to bright, ruby red through a select group of retail outlets. Each piece is built to the customer's individual requirements and is shipped within 2-3 weeks. However, the emergence of a new manufacturing technology has enabled a few, traditionally mass-production competitors to offer greater customization, adversely affecting Custom Leather's competitive advantage. As a result, Custom Leather is considering sweeping changes to current work processes and organizational structure. 88) Many of Custom Leather's 75 employees are highly skilled and experienced artisans. Many long-time employees are stockholders and all participate in its profit sharing plan. While there is division of labor, the jobs most floor employees perform are not highly standardized. Management has found that employees take great pride in their craft, and they require minimal formal rules and little direct supervision. These traits are most typical of a(n) ________ organization. A) matrix B) mechanistic C) organic D) centralized 89) Custom Leather CEO, Standish, is considering doubling the size of his workforce in conjunction with expanding the number of retail outlets that carry Custom Leather products. Lacey tells him that he should expect the organization to become ________ as a result of this change. A) more mechanistic B) more decentralized C) more organic D) less formalized 90) Lacey believes that Joan Woodward's work will be particularly pertinent in considering Custom Leather's organizational structure, since Woodward believed that the effectiveness of the organization was related to the fit between the firm's structure and ________. A) culture B) technology C) accounting D) operations
88. C 89. A 90. B
97) List a few factors that influence the amount of centralization or decentralization in an organization.
Answer: An organization requires more centralization if the: a. environment is stable. b. lower-level managers are not as capable or experienced at making decisions as upper-level managers. c. lower-level managers do not want to have a say in decisions. d. decisions to be taken are relatively minor. e. organization is facing a crisis or the risk of company failure. f. company is large. g. effective implementation of company strategies depends on managers' retaining a say over what happens. An organization requires more decentralization if the: a. environment is complex and uncertain. b. lower-level managers are capable and experienced at making decisions. c. lower-level managers want a voice in decisions. d. decisions to be made are relatively significant. e. corporate culture is open to allowing managers to have a say in what happens. f. company is geographically dispersed. g. effective implementation of company strategies depends on managers' having involvement and flexibility to make decisions.
13) Today's organizations mostly rely on strict rules and standardization to guide and regulate employee behavior.
False
96) Explain centralization, decentralization, and employee empowerment.
Answer: Centralization is the degree to which decision making takes place at upper levels of the organization. If top managers make key decisions with little input from below, then the organization is more centralized. On the other hand, the more that lower-level employees provide input or actually make decisions, the more decentralization there is. Centralization- decentralization is not an either-or concept. The decision is relative, not absolute——that is, an organization is never completely centralized or decentralized. Early management writers proposed that the degree of centralization in an organization depended on the situation. Their goal was the optimum and efficient use of employees. Traditional organizations were structured in a pyramid, with power and authority concentrated near the top of the organization. Given this structure, historically centralized decisions were the most prominent, but organizations today have become more complex and responsive to dynamic changes in their environments. As such, many managers believe that decisions need to be made by those individuals closest to the problems, regardless of their organizational level. In fact, the trend over the past several decades—at least in U.S. and Canadian organizations—has been a movement toward more decentralization in organizations. Today, managers often choose the amount of centralization or decentralization that will allow them to best implement their decisions and achieve organizational goals. What works in one organization, however, won't necessarily work in another, so managers must determine the appropriate amount of decentralization for each organization and work units within it. As organizations have become more flexible and responsive to environmental trends, there has been a distinct shift toward decentralized decision making. This trend, also known as employee empowerment, gives employees more authority (power) to make decisions. In large companies especially, lower-level managers are "closer to the action" and typically have more detailed knowledge about problems and how best to solve them than do top managers.
95) Explain the concept of span of control.
Answer: How many employees can a manager efficiently and effectively manage? That is what span of control is all about. The traditional view was that managers could not—and should not— directly supervise more than five or six subordinates. Determining the span of control is important because to a large degree, it determines the number of levels and managers in an organization—an important consideration in how efficient an organization will be. All other things being equal, the wider or larger the span, the more efficient an organization is. The contemporary view of span of control recognizes that there is no magic number. Many factors influence the number of employees that a manager can efficiently and effectively manage. These factors include the skills and abilities of the manager and the employees, and the characteristics of the work being done. For instance, managers with well-trained and experienced employees can function well with a wider span. Other contingency variables that determine the appropriate span include similarity and complexity of employee tasks, the physical proximity of subordinates, the degree to which standardized procedures are in place, the sophistication of the organization's information system, the strength of the organization's culture, and the preferred style of the manager. The trend in recent years has been toward larger spans of control, which is consistent with managers' efforts to speed up decision making, increase flexibility, get closer to customers, empower employees, and reduce costs. Managers are beginning to recognize that they can handle a wider span when employees know their jobs well and when those employees understand organizational processes.
91) Define organizing and list its purpose.
Answer: Organizing is defined as arranging and structuring work to accomplish organizational goals. It is an important process during which managers design an organization's structure. Some of the purposes of organizing are the following. a. It helps in dividing the work to be done into specific jobs and departments. b. It helps in assigning tasks and responsibilities associated with individual jobs. c. It helps in coordinating diverse organizational tasks. d. It helps in clustering jobs into units. e. It helps in establishing relationships among individuals, groups, and departments. f. It helps in establishing formal lines of authority. g. It helps in allocating and deploying organizational resources.
93) What do you mean by departmentalization? In a short essay, list and discuss the five common forms of departmentalization, their advantages and disadvantages.
Answer: The basis by which jobs are grouped together is known as departmentalization. The five common forms of departmentalization are: a. Functional departmentalization - Here jobs are grouped by the functions (i.e., marketing, finance, human resources) performed. This leads to an increased efficiency in the organization because people with similar specialties, common skills, knowledge, and orientations are put together. It also leads to an increased coordination within functional areas. On the flip side, it gives a limited view of the organizational goals. b. Product departmentalization - Here jobs are grouped by product line. This allows the managers to specialize in particular products and services. It also helps the managers to become experts in their industry. On the other hand, this leads to duplication of functions. It also gives a limited view of organizational goals. c. Geographical departmentalization - Here jobs are grouped on the basis of a geographic region. This helps in more effective and efficient handling of specific regional issues that arise. It also helps in serving the needs of unique geographic markets. On the flip side, it leads to duplication of functions. d. Process departmentalization - This method groups jobs on the basis of product or customer flow. This approach efficiently manages the flow of work activities. But, the major disadvantage of this approach is that it can only be used with certain types of products. e. Customer departmentalization - Here jobs are grouped on the basis of specific and unique customers who have common needs. It allows specialists to handle customers' needs and problems. But, this also leads to duplication of functions. It causes departments to have a limited view of organizational goals. Most large organizations continue to use combinations of most or all of these types of departmentalization. Now-a-days, a popular departmentalization trend is the increasing use of customer departmentalization. Because getting and keeping customers is essential for success, this approach works well because it emphasizes monitoring and responding to changes in customers' needs. Another popular trend is the use of teams, especially as work tasks have become more complex and diverse skills are needed to accomplish those tasks. One specific type of team that more organizations are using is a cross-functional team, which is a work team composed of individuals from various functional specialties.
99) At an international business meet, the CEO of a multinational company said that "The modern organization should go the organic way because it is essential to encourage internal collaboration." How would you effectively counter this argument?
Answer: The organic organization is low in centralization allowing professionals to respond quickly to problems as top-level managers cannot always be expected to possess the expertise to make necessary decisions. However, mechanistic structures also have their own plus points. As organizations grow, which all aim to do, the need for a certain level of centralized control intensifies. No firm can ensure that all employees will always put the company's interests before their own. The bureaucracy associated with centralized structures is not necessarily a bad thing. One must remember that no organization can be purely mechanized or purely organic. All organizations will have elements of both. The extent to which a firm is organic or otherwise depends largely on the environment it functions in and its market conditions. Student answers may vary.
14) An organic organization strictly adheres to the chain-of-command principle and has a small span of control.
False
101) Discuss the three traditional organizational designs and highlight their strengths and weaknesses.
Answer: The three traditional organizational designs are: the simple structure, functional structure, and divisional structure. These structures tend to be more mechanistic in nature. a. Simple structure - It is an organizational design with low departmentalization, wide spans of control, authority centralized in a single person, and little formalization. As employees are added, however, most do not remain as simple structures. The structure tends to become more specialized and formalized. Rules and regulations are introduced, work becomes specialized, departments are created, levels of management are added, and the organization becomes increasingly bureaucratic. At this point, managers might choose a functional structure or a divisional structure. These structures are fast, flexible, and inexpensive to maintain. On the negative side, these structures are not appropriate when the organization starts growing. Moreover, the reliance on one person is also very risky. b. Functional structure - A functional structure is an organizational design that groups similar or related occupational specialties together. This structure enjoys cost-saving advantages from specialization (economies of scale, minimal duplication of people and equipment). It also groups employees who have similar tasks with each other. On the negative side, the constant pursuit of functional goals can cause managers to lose sight of what is best for the overall organization. Moreover, the functional specialists become insulated and have little understanding of what other units are doing. c. Divisional structure - It is an organizational structure made up of separate business units or divisions. In this structure, each division has limited autonomy, with a division manager who has authority over his or her unit and is responsible for performance. In divisional structures, however, the parent corporation typically acts as an external overseer to coordinate and control the various divisions, and often provides support services such as financial and legal. The major strength of this structure is that it focuses on results by holding division managers responsible for what happens to their products and services. But, the duplication of activities and resources encountered in such structures increases the cost and reduces the efficiency of the organization.
92) Write a short essay on work specialization.
Answer: Work specialization is the process of dividing work activities into separate job tasks. Individual employees "specialize" in doing part of an activity rather than the entire activity in order to increase work output. It is also known as division of labor. It makes efficient use of the diversity of skills that workers have. Early proponents of work specialization believed that it could lead to great increases in productivity. At the beginning of the twentieth century, that generalization was reasonable. Because specialization was not widely practiced, its introduction almost always generated higher productivity. But, at some point, the human diseconomies from division of labor—boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high turnover—exceed the economic advantages. Today, most managers continue to see work specialization as important because it helps employees be more efficient. However, managers should remember that, at some point, work specialization no longer leads to productivity. Thus, they should plan and organize accordingly.
100) List and discuss the four contingency variables that should be considered while designing an appropriate organizational structure.
Answer: a. Strategy and structure - An organization's structure should facilitate the achievement of goals. Since goals are influenced by the organization's strategies, it is logical that strategy and structure should be closely linked. The flexibility and free-flowing information of the organic structure works well when an organization is pursuing meaningful and unique innovations. The mechanistic organization with its efficiency, stability, and tight controls works best for companies wanting to tightly control costs. b. Size and structure - There is considerable evidence that an organization's size significantly affects its structure. Large organizations typically considered to be those with 2,000 employees tend to have more specialization, departmentalization, centralization, and rules and regulations than do small organizations. However, once an organization grows past a certain size, size has less influence on structure. c. Technology and structure - Every organization uses some form of technology to convert its inputs into outputs. The processes or methods that transform an organization's inputs into outputs differ by their degree of routineness. In general, organizations adapt their structures to their technology depending on how routine their technology is for transforming inputs into outputs. In general, the more routine the technology, the more mechanistic the structure can be, and organizations with more nonroutine technology are more likely to have organic structures. d. Environmental uncertainty and structure - Some organizations face stable and simple environments with little uncertainty; others face dynamic and complex environments with a lot of uncertainty. Managers try to minimize environmental uncertainty by adjusting the organization's structure. In stable and simple environments, mechanistic designs can be more effective. On the other hand, the greater the uncertainty, the more an organization needs the flexibility of an organic design.
9) The more the decision-making power of lower-level employees, the more decentralized the organization is.
True