Chapter 5: Organizing in Business Management

Which statement is NOT true regarding centralization in organizational structure? A. A high level of centralization results in participative decision-making among organizational members, which is positively linked to a high level of job satisfaction. B. Centralization in the structure of an organization determines where the business's decision making power is located. C. The level of centralization has a measurable impact on job satisfaction in an organization. D. A low level of centralization results in participative decision-making among organizational members, which is positively linked to a high level of job satisfaction.

A. A high level of centralization results in participative decision-making among organizational members, which is positively linked to a high level of job satisfaction.

The structure of an organization can impact the organization's members in which of the following ways? A. All of the answers are correct. B. It can change the level of freedom with which they perform their tasks C. It can change how they relate to the organization D. It can change their level of job-related satisfaction.

A. All of the answers are correct.

Why should you NOT generalize when linking elements of organizational structure to employee performance and satisfaction? A. The structure of an organization is unrelated to employee satisfaction and/or performance. B. Everyone is different: some people prefer high specialization and centralization, while others prefer it to be low. C. It is okay to generalize when linking elements of organizational structure and employee performance and satisfaction. D. Generalizing assumes that everyone is different.

B. Everyone is different: some people prefer high specialization and centralization, while others prefer it to be low.

Which of the following businesses would BEST benefit from work specialization? A. An auto repair shop B. A travel agency C. A custom jewelry designer D. An umbrella manufacturer

D. An umbrella manufacturer

Which of the following is NOT an advantage of a network organizational design structure? Lowered costs More flexibility Shorter time frames Increased employee retention

Increased employee retention

What does the organizational matrix structure focus on? The use of cross-functional teams. The use of a strong hierarchical structure. The use of small, highly specialized teams to maximize efficiency. The use of divisional work groups that focus on different tasks.

The use of cross-functional teams

STUDY CARD: Organizational design is the process by which managers assess the tasks, functions and goals of the business to make decisions about how to group people together to best and most efficiently achieve those objectives. Three Types of CONTEMPORARY Organizational Design Structures on other side.

Three Types of CONTEMPORARY Organizational Design Structures: 1. Matrix Organizational Structure - groups employees by both function and project. - Purpose: to maximize the use of cross-functional teams to get work done. - How it works: Project managers recruit project team members and their individual skills and expertise from various functional areas to form their project team. The employee will have two supervisors while working on a project team: the project manager and their standard manager of the functional department they work in. 2. Team Organizational Design - arranges groups of employees from various functional areas for the purpose of solving problems and exploring possibilities. Teams can be both horizontal and vertical. Purpose: to break down functional barriers among departments to strengthen working relationships and improve efficiency. 3. Network Design Structure, aka a LEAN structure - keeps the core functions of the business internal, but subcontracts or outsources non-core functions to other companies. Purpose: allows organizations to take advantage of shorter time commitments, lowered costs and greater flexibility.

Of the six elements of organizational structure, how many can be shown to be consistently tied to employee performance and behavior? 3 2 5 4

2 - Work specialization and Centralization

Which statement captures the downside to a high level of work specialization? A. A high level of work specialization requires fewer workers. B. A high degree of work specialization can lead to a low level of job satisfaction by some individual members of an organization. C. A high level of work specialization results in lower efficiency for the organization. D. A high level of work specialization does not allow low-level workers to contribute to the decision-making that takes place in an organization.

B. A high degree of work specialization can lead to a low level of job satisfaction by some individual members of an organization

Which of the following is synonymous with work specialization? A. Work division B. Division of labor C. Labor specialist D. Division of specialization

B. Division of labor

How does having a top-level executive impact divisional structures? A. It decreases the efficiency of the group because it inhibits free thinking. B. It makes them less efficient because they feel like they are constantly being monitored. C. It makes them more successful by ensuring that someone who has authority is available at all times. D. It makes them more successful because nobody has to think about what their task is.

C. It makes them more successful by ensuring that someone who has authority is available at all times.

A small business sells computers directly to customers. It does not incorporate excessive innovation and spends little on advertising. The environment at the company is very informal and could best be described as organic. Why is this NOT a common cost minimization strategy? A. A lot of money is spent on marketing and advertising in a cost minimization strategy B. There are established channels of sales in a cost minimization strategy C. There usually is a strong hierarchy in a cost minimization strategy D. There generally is a need for strong innovation in a cost minimization strategy

C. There usually is a strong hierarchy in a cost minimization strategy

Why is a divisional design structure used? A. To make sure that each work group focuses on only one narrow aspect of production. B. To make sure that there is a proper hierarchy and that there are small groups. C. To create several semi-autonomous units that focus on a narrow sector of business. D. To create a business organization where the entire workforce is one group that doesn't have a hierarchy.

C. To create several semi-autonomous units that focus on a narrow sector of business.

_____ refers to an organization's practice of assigning individual tasks into separate jobs. A. Organizational specialization B. Work structure C. Work specialization D. Organizational structure

C. Work specialization

Span of Control is: A. the number of managers an employee can deal with B. the number of top managers making decisions C. the number of employees a manager can feasibly oversee D. the number of decisions top managers delegate to lower-level managers

C. the number of employees a manager can feasibly oversee

A state university has a system where most of the decisions are made by the top level of management and the subordinates are not supposed to question them. There are no complex decision-making processes that involve multiple parties and most of the communication goes from the bottom toward the top. Why is this NOT a common mechanistic structure? A. Because most of the decisions are made by the top level of management B. Because there are no complex decision-making processes that involve multiple parties C. Because the subordinates are not supposed to question the decision-making process D. Because most of the communication goes from the bottom toward the top

D. Because most of the communication goes from the bottom toward the top

Why is the mechanistic structure often referred to as a bureaucratic structure? A. Because of the complex relationship between the employees B. Because the organization quickly adapts to change C. Because there is a lot of paperwork involved D. Because the organization has a formal network

D. Because the organization has a formal network

Which of the following is not an advantage of a divisional structure? A. It offers flexibility B. It can provide for accountability C. It permits specialization D. It's always cheap

D. It's always cheap

Sales and marketing, finance and accounting, customer service, and human resources are a few examples of groupings within which organizational design type? Functional Team Divisional Simple

Functional

Which one of the following companies was one of the first to use of a divisional structure? Google General Motors Facebook Starbucks

General Motors

What's another name for a divisional organizational structure? Bureaucracy Matrix form U-form M-form

M-form = multidivisional structure

Which type of organizational design structure keeps the core functions of the business internal while outsourcing non-core functions to third parties? Simple Matrix Team Network

Network

STUDY CARD: Organizational Strategy = plan a company uses to achieve their objectives. 1. Cost minimization strategy = tightly controlled costs, no unnecessary innovation/marketing expenses, & strong price cutting - selling a basic product through established channels: - highly formalized mechanistic structure. 2. Innovation strategy = a company that strives to bring new and innovative products to market. - an organic structure, which allows input from all members of the organization. 3. Imitation strategy = a company that copies and mass-produces innovative products that have already been proven successful by companies that follow an innovation strategy. - uses both the organic and mechanistic structures. Organic structure flexibility required to investigate new product ideas. Mechanistic structure tight controls required to mass-produce the products.

Organizational Structure = dividing, grouping, and coordinating tasks is composed of different elements. 1. Mechanistic: - a high degree of formalization and extensive departmentalization - provides little opportunity for decision making by low-level members of the organization. 2. Organic - a low degree of formalization and departmentalization - provide ample opportunity for decision making by all members of the organization

Which is a feature of Mechanistic Structures? A. They are tall with a formal chain of command. B. They are horizontal C. Employees do everything D. They are flat with few layers of management

A. They are tall with a formal chain of command.

Why are functional structures used by an organization? A. To have specialized work units that maximize functionality. B. To focus on brainstorming and creating new ideas. C. To have mixed work groups that focus on innovative concepts. D. To have an incoherent structure where everyone does what they do best.

A. To have specialized work units that maximize functionality.

In a centralized organization, policies and procedures are usually _____. A. uniform B. diverse C. effective D. strict

A. uniform

Which of the following best describes a divisional organizational structure? A. An organization that is divided into semi-autonomous units B. An organization that uses no centralized authority and is divided into autonomous units C. An organization that is subject to a complete centralized hierarchy of authority D. An organization is divided into units by function such as accounting, operations and sales

A. An organization that is divided into semi-autonomous units

How does organizational strategy affect organizational structure? A. An organizational strategy is crucial to developing and implementing a viable organizational structure B. Organizational structure must be established before an effective organizational strategy can be implemented C. Organizational structure and strategy must be determined at the same time D. There is no relationship between organizational structure and organizational strategy

A. An organizational strategy is crucial to developing and implementing a viable organizational structure

How are orders transmitted in a centralized organization? A. From top management down B. Through a span of control C. At different levels in the hierarchy D. Through a delegation process

A. From top management down

All of the following are traits of the simple organizational design structure, EXCEPT: A. High departmentalization B. Minimal work specialization. C. Wide spans of control. D. Centralized authority.

A. High departmentalization

Which of the following is a characteristic of a mechanistic structure? A. Job specialization B. Lateral communication C. Highly integrated and dependent functional areas D. Decentralized decision making to allow for complex decision-making processes

A. Job specialization

What is one potential outcome for an organization utilizing work specialization? A. Low morale due to limited interaction and collaboration B. Enhanced employee experience and wider skill sets C. Slower production due to specialization D. Increased creativity and the ability to multi-task

A. Low morale due to limited interaction and collaboration

How does a mechanistic structure differ from an organic structure? A. The organic structure is usually far less formal and departmentalized B. The mechanistic structure is better for laid-back workers, while the organic appeals to employees who want a more formal approach C. The mechanistic structure allows far more input from lower levels of management D. The mechanic structure does not have a lot of needless bureaucracy, while the organic is very bureaucratic

A. The organic structure is usually far less formal and departmentalized

How can centralized authority be a disadvantage? A. Work varies from day to day. B. Decision-making can be very slow. C. Employees are less efficient in the lower levels of the chain of command. D. Employees are usually located far from a central location.

B. Decision-making can be very slow.

Which one of the following is not a disadvantage of a divisional structure? A. Divisions may compete instead of cooperate B. Divisions are semi-autonomous C. Duplication of management and functional areas across divisions D. Difficulty in maintaining an appropriate balance of power between the central authority and the divisions

B. Divisions are semi-autonomous

Why does an organic structure work best for an innovation strategy? A. This combination is not ideal; a cross-function strategy would be far more efficient B. This combination encourages input and decision-making by all members of the organization C. This combination is not ideal; a formal structure would be a lot better for an innovation strategy D. This combination allows the employees to work freely with the knowledge that there is a strong person in charge

B. This combination encourages input and decision-making by all members of the organization

Robert works in a large informational technology company that uses a matrix structure. Joanna is his manager in the programming department. Tristan leads the project that Robert is currently working on. Robert reports to which of these individuals? Only Tristan. Both Joanna and Tristan. Nobody; a matrix organization means there is no hierarchy. Only Joanna.

Both Joanna and Tristan.

STUDY CARD: Mechanistic structures have clear strengths: They are stable Employees specialize at what they do best There is clear accountability for the work getting done

But they have some weaknesses: They stifle creativity and imagination There is excessive paperwork, reporting and meetings to keep managers up to date. They are cumbersome and slow to react to change.

Fred has chosen to implement work specialization at his expanding recycling company. What could he do to prevent a negative outcome? A. Encourage employees to be more efficient and productive since the process will be slower B. Prepare employees for the fact that they will likely have a decrease in job security C. Develop methods to facilitate clear communication and build a sense of teamwork to prevent isolation D. Keep a close eye on quality control costs to make sure they do not increase

C. Develop methods to facilitate clear communication and build a sense of teamwork to prevent isolation

Which of these is a strength of Organic Structures? A. They depend on top down communication. B. They spend an excessive amount of time on meetings C. They react well to change D. They are tall and cumbersome

C. They react well to change

An IT company focuses on copying and mass-producing computer hardware that is similar to successful devices developed by companies that follow an innovation strategy. Which of the following structures would best suit the IT company's strategy? A. The imitation structure B. The mechanistic structure C. Both the mechanistic and imitation structure D. Both the mechanistic and organic structure

D. Both the mechanistic and organic structure

Why is structure so important to an organization? A. Organizational structure helps to define positions people hold. B. Organizational structure helps to keep goals aligned. C. Organizational structure is important for tax purposes. D. Organizational structure helps to define roles and expectations for employees.

D. Organizational structure helps to define roles and expectations for employees.

Why is the team organizational structure utilized? A. To maximize efficiency by completing simple tasks. B. To maximize the level of authority management has by creating one central department to which every group reports. C. To create a more innovative approach by granting each department complete autonomy. D. To break down functional barriers among departments to strengthen working relationships and improve efficiency.

D. To break down functional barriers among departments to strengthen working relationships and improve efficiency.

Marcy gets orders to work on clients from her supervisor. When her supervisor is away and an important decision needs to be made, Marcy is authorized to make it. Marcy works _____. A. under a fixed chain of command B. under a hierarchical authority C. under centralized authority D. under decentralized authority

D. under decentralized authority

STUDY CARD: Organizational design is the process by which managers assess the tasks, functions and goals of the business, allowing them to make decisions about how to group people together to best and most efficiently achieve their objectives. Three Types of BASIC Organizational Design Structures on other side.

Three Types of BASIC Organizational Design Structures: 1. Simple structure - low departmentalization, little work specialization, wide spans of control, centralized authority (typically the owner has most of the power) and little formalization or rules that govern operation. eg small businesses 2. Functional structure - focuses on practical specialization, whereby similar or related occupational specialties are grouped together (also referred to as departmentalization). eg. Research and development, marketing, manufacturing, human resources and finance 3. Divisional structure - gives a larger company the capacity to separate large sections of the business into semi-autonomous units or divisions. - These groups are self-managed and focused on a narrow aspect of the business with their own goals to accomplish. eg US or Canadian division