MGT491 - Chapter 11 Practice Quiz

A change in company culture is most commonly accompanied by a change in leadership. True False

True

Firms with a flat structure and a low degree of specialization tend to foster innovation better than firms with a tall structure and high degree of specialization. True False

True

Organizational design involves establishing a firm's structure, culture, and control mechanisms. True False

True

A high degree of formalization in an organization is most likely to a. improve customer service. b. slow down decision making. c. produce inconsistent results. d. increase creativity and innovation.

b. slow down decision making.

Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy? a. It allows the firm to create incentives to foster process innovation in order to drive down cost. b. It allows the firm to nurture and constantly upgrade necessary core competencies in manufacturing and logistics. c. It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing. d. It allows the firm to reduce its cost below that of competitors while offering acceptable value.

c. It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.

________ refers to a firm's resistance to change the status quo that can set the stage for the firm's subsequent failure. a. Formalization b. Centralization c. Organizational inertia d. PESTEL factors

c. Organizational inertia

(scroll down) Tony's Tacos is a nationwide fast-food chain. Decision power resides at the top of the organization. Each job is documented in minute detail. The firm has many levels of supervision, including vice presidents and regional managers. Tony's headquarters provides detailed instructions to each of its franchisees so that they provide comparable quality and service across the board. Based on this scenario, which of the following is an accurate statement about Tony's? a. Tony's has a low degree of specialization and formalization, a high degree of centralization, and relies on a flat hierarchy. b. Tony's has a high degree of specialization and formalization, a low degree of centralization, and relies on a tall hierarchy. c. Tony's has a low degree of specialization, formalization, and centralization and relies on a flat hierarchy. d. Tony's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.

d. Tony's has a high degree of specialization, formalization, and centralization and relies on a tall hierarchy.

Output controls can sometimes discourage collaboration among different strategic business units. However, more and more work requires creativity and innovation, especially in highly-developed economies. One way firms are grappling with this issue is by a. introducing results-only-work-environments to tap intrinsic motivations. b. updating standard operating procedures to allow more process flexibility. c. using output controls only when the goal is to ensure a predictable outcome. d. refining the budgeting process to encourage more department collaboration.

a. introducing results-only-work-environments to tap intrinsic motivations.

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy? a. It enables a cost-leader to build products that are different from its competitors' offerings. b. It allows a cost-leader to upgrade core competencies in manufacturing and logistics. c. It enables a cost-leader to increase costs above that of its competitors. d. It allows a cost-leader to operate in a decentralized organizational structure.

b. It allows a cost-leader to upgrade core competencies in manufacturing and logistics.

Why does a functional structure rely on a flat organizational structure? a. It allows for the implementation of a differentiation strategy. b. It allows for efficient bottom-up and top-down communication. c. It allows for a higher degree of specialization and domain expertise. d. The work in the organization is centrally coordinated by the CEO.

b. It allows for efficient bottom-up and top-down communication.

In which of the following ways does Zappos achieve organizational control? a. It encourages employees to be creative and innovate and to go the extra mile to deliver a wonderful customer experience. b. It enforces that each group member's compensation depends in part on the group's overall productivity. c. It refrains from monitoring its employees' calls. d. It continually changes the organizational values that guide its employees.

b. It enforces that each group member's compensation depends in part on the group's overall productivity.

A functional structure is recommended when a firm a. has a low degree of specialization. b. has a low level of diversification. c. diversifies into different product lines and geographies. d. has a broad focus in terms of its product/service offerings.

b. has a low level of diversification.

Which of the following types of groups is most susceptible to groupthink? a. a heterogeneous group b. a decentralized group c. a cohesive group d. a diverse group

c. a cohesive group

Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization? a. It allows a high level of integration. b. It leads to competition between SBUs. c. It helps evaluate each SBU as a stand-alone profit-and-loss center. d. It helps contain the core competencies within a strategic business unit (SBU).

a. It allows a high level of integration.

________ describes the collectively shared values and norms of an organization's members. a. Organizational culture b. Organizational structure c. Core competency d. Competitive advantage

a. Organizational culture

Avalanche operates as a strategic business unit (SBU) under Snowfall Inc., a home-furnishings manufacturer. From this information, it may be reasonable to infer that a. Avalanche is dependent on the other SBUs in Snowfall Inc. b. Avalanche is led by its own CEO (or equivalent general manager). c. Avalanche has a matrix organizational structure. d. Avalanche does not have its own profit and loss responsibility.

b. Avalanche is led by its own CEO (or equivalent general manager).

W. L. Gore & Associates is organized in such a way that it has no formal job titles, job descriptions, or chains of command. This implies that it has a. a top-down management style. b. a decentralized structure. c. a formalized structure. d. organizational inertia.

b. a decentralized structure.

Successful ________ requires managers to design and shape structure, culture, and control mechanisms. a. strategy diversification b. strategy innovation c. strategy implementation d. strategy formulation

c. strategy implementation

Fine Lines Inc. is a notebook manufacturing company based in Ohio. Fine Lines' main market is Ohio. It aims at providing its products at better prices than its competitors. Which of the following structures is Fine Lines Inc. likely to use if it has functional setup? a. simple b. matrix c. organic d. mechanistic

d. mechanistic

When a firm diversifies into different product lines and geographies, a ________ structure is preferred. a. network b. simple c. functional d. multidivisional

d. multidivisional

Turquoise Games relies on its employees to provide innovative ideas for new educational products. To foster intrinsic motivation in its workforce, Turquoise should a. distribute a list of standard operating procedures for employees to follow. b. give employees a "free day" every two weeks to pursue ideas for new educational toys. c. offer bonuses to employees whose ideas go into production. d. threaten to fire employees who do not come up with at least one new idea per week.

b. give employees a "free day" every two weeks to pursue ideas for new educational toys.

Which of the following is a disadvantage of a functional strategy? a. It does not facilitate rich communication between members of the same department. b. It frequently lacks the tools required to pursue a cost-leadership strategy. c. It cannot effectively address a higher level of diversification. d. It does not allow organizations to be flexible or innovative.

c. It cannot effectively address a higher level of diversification.

Why is the optimal organizational structure a multidivisional structure? a. Its focus is on establishing a flat hierarchy operated in a decentralized fashion. b. Its focus is on retaining activities within a single geographic area. c. Its focus is on driving down costs. d. Its focus is on producing differentiated products.

c. Its focus is on driving down costs.

Why does strategy implementation often require changes within an organization? a. Strategy implementation does not affect resource allocation and power distribution within an organization. b. Strategy always follows structure. c. Strategy implementation transforms strategy into actions and business models. d. Strategy implementation is less important than strategy formulation.

c. Strategy implementation transforms strategy into actions and business models.

Which of the following is true of the process of organizing for competitive advantage? a. Formulating an effective strategy is a necessary and sufficient condition for gaining and sustaining competitive advantage. b. Strategy formulation and strategy implementation are independent activities. c. To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes. d. Organizing for competitive advantage is a static and not a dynamic process.

c. To maintain competitive advantage, companies need to restructure as they grow and the competitive environment changes.

*Which of the following statements best describes groupthink? a. It is a situation in which organizations compete with one another for resources, but they also need to cooperate to share competencies. b. It is a process whereby employees internalize an organization's values and norms through immersion in its day-to-day operations. c. It is a process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure. d. It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions

d. It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions

ValueHealth is a successful drug manufacturer. Because the pharmaceutical industry features a high rate of change and the threat of disruption is high, ValueHealth should a. attempt to implement an unstructured organization. b. stick with the structure that brought it success no matter what happens. c. switch to whichever structure is most common in the industry. d. be prepared to restructure as the landscape changes.

d. be prepared to restructure as the landscape changes.

*An open innovation model reduces a firm's absorptive capacity. True False

False

A primary advantage of the matrix organizational structure is that it simplifies decision making and communication in geographically diverse organizations. True False

False

*A firm that successfully balances exploitation of current opportunities and exploration of future possibilities is considered ambidextrous. True False

True

*Firms that pursue a closed approach to innovation typically enjoy first-mover advantages. True False

True

McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world. This indicates that McDonalds's a. has a decentralized structure. b. is mechanistic in nature. c. has an informal structure. d. is organic in nature.

b. is mechanistic in nature.

Uptown Office Systems recently underwent a reorganization. Based on customer feedback, the company eliminated many of its middle management positions and implemented a flatter structure. Which of the following is a possible drawback of this decision? a. Internal communications and decision-making processes will be slower. b. Employees will be forced to take on more specialized roles and may become bored by repetitive tasks. c. Employees will have less power and autonomy, resulting in a loss of morale. d. The increased span of control for remaining managers may lead to higher levels of stress and possible burnout.

d. The increased span of control for remaining managers may lead to higher levels of stress and possible burnout.