MGMT Ch 11 MC

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

competitive form multidivisional

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

financial

A multidomestic strategy would be associated with

informal coordination among units.

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

potential for global efficiency

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

simple

Typically, an organization using a simple structure would be

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.

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)

strategic network.

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)

strategic network.

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

structure

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

the ability of specialists to develop deep expertise

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

transnational

Financial controls are most important in the strategy.

unrelated diversified

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

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

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

Amos should consider adopting the multidivisional structure.

Which of the following is a TRUE statement about implementing corporate-level strategies and effective organizational structures? a. Firms pursuing a related linked strategy should implement a competitive structure with a competitive culture and centralized strategic-planning activities. b. Firms pursuing an unrelated diversification strategy should use an SBU structure with a small corporate staff, emphasize the R&D function, and integrate divisions to achieve synergies. c. Firms pursuing a related linked strategy should use an SBU structure, emphasize interdependence among divisions, and manage the strategic planning function from the central office. 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.

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.

_________is the degree to which rules and procedures govern work.

Formalization

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?

SBU form

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy? a. competitive form with related-constrained strategy b. cooperative form with unrelated strategy c. SBU form with related-linked strategy d. competitive form with related-linked strategy

SBU form with related-linked strategy

Which of the following is TRUE? a. Organizations tend to change structure too frequently, which erodes their competitive advantage. b. Large organizations can retain a simple structure as long as they have a focus strategy. c. Flexibility in structure is more important than stability. d. Strategy has a more important influence on structure than structure has on strategy.

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

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?

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.

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?

aligning the corporate structure with the demands of global expansion

Which of the following is NOT a preliminary task of the strategic center firm in a strategic network? a. strategic outsourcing b. encouraging friendly rivalry among network members c. allocating internal capital b. encouraging friendly rivalry among network members c. allocating internal capital

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

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

Which of the following is a TRUE statement about organizational structures for implementing business-level strategies? a. A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles. 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. c. An integrated cost leadership/differentiation strategy requires a multidivisional structure using high formalization, decentralized decision making, and vertical coordination. d. A focused strategy requires a functional structure featuring high levels of both specialization and formalization.

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.

A worldwide geographic area structure is an organizational form in which

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

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

centralization

Successfully implementing a cost leadership strategy requires

centralization of authority.

One disadvantage of the functional structure is that

communication and coordination are difficult among organizational functions.

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.

competitive

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

competitive

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.

competitive form of the multidivisional

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

competitive form of the multidivisional

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

competitive multidivisional

The fewest integrative devices are used in the __structure.

competitive multidivisional

Structural stability affects the organization's ability to

consistently and predictably manage its daily work routines.

The most centralized and most costly form of the multidivisional structure is the a. integrated.

cooperative

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

cooperative form of the multidivisional

Cisco used the structure to implement its strategy. a. functional; cost leadership.

cooperative form of the multidivisional; related constrained

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

cooperative form; integrated cost leadership-differentiation

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?

cooperative structure; a bonus for increasing organizational performance

100. The heavy use of integrative mechanisms in the _____ multidivisional organizational structure is intended to achieve _____.

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

coordination and control problems.

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

coordination and control problems.

Walmart's effective strategy/structure configuration is

cost leadership/functional.

Strategic controls allow corporate-level managers to

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

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

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.

Successful implementation of the differentiation strategy requires a structure that

decentralizes decision making.

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

decreasing communications between network members to reduce communication costs.

The BEST multidivisional structure to use

depends on the degree of diversification.

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

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

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

division managers' rewards based on division financial performance.

In an SBU structure, _______ is/are evaluated using strategic controls, whereas___________is/are evaluated using financial controls.

divisions within the SBUs; each SBU

Implementing the multidomestic strategy requires decentralization to

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

firms must be flexible while retaining a degree of stability.

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.

functional

the ______ structure is the most appropriate structure for implementing the integrated cost leadership/differentiation strategy

functional

The cooperative multidivisional firm

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

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.

hybrid combination

Which of the following is NOT associated with an organizational structure that supports a cost leadership strategy? a. centralization b. specialization c. formalization d. integration

integration

In the competitive form of the multidivisional structure, the focus of headquarters is on all of the following EXCEPT a. integration. b. performance appraisal. c. resource allocation. d. long-range planning.

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

interdependent.

The three structural characteristics that differ among organizational structures include all of the following EXCEPT a. centralization. b. formalization. c. specialization. d. intermediation.

intermediation.

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that a. it is difficult to achieve economies of scale.

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

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

make the partners' true loyalties and intentions unclear.

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

manufacturing; process R&D

the ______ structure is an organizational structure that combines both functional specialization and business product or project specialization

matrix

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

multidivisional

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.

multidomestic

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure? a. increasing diversification b. coordination and control issues c. need for knowledge-sharing among specialists d. greater amounts of data and information to process

need for knowledge-sharing among specialists

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

product R&D; marketing

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

reduce transaction costs.

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

regional form

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

related constrained diversification strategy.

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.

simple

organizational structure

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

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 strategyis best described as _____ and the appropriate organizational structure to implement this strategy is the ______structure.

transnational; combination

Typically, a successful firm pursuing a differentiation strategy will

use cross-functional development teams.

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

use them without reducing cooperation among divisional managers.

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

vertical complementary strategic alliances.