Strategy Chapter 11 (Exam 4)

Which of the following statements about organizational structures for implementing business-level strategies is true? A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and structured job roles. A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and an emphasis on the product R&D and marketing functions. An integrated cost leadership/differentiation strategy requires a multidivisional structure using high formalization, decentralized decision making, and vertical coordination. A focused strategy requires a functional structure featuring high levels of both specialization and formalization.

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

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 More accurate monitoring of the performance of each business Facilitating comparison between divisions Stimulating managers of poorly performing divisions to look for ways of improving performance

Aligning the corporate structure with the demands of global expansion

Goldenrod National has three divisions, GR1, GR2, and GR3. Each division operates with complete independence. What type of multidivisional structure does Goldenrod use? Cooperative Matrix Competitive SBU

Competitive

Which M-form structure is the least centralized and has the lowest bureaucratic costs? Integrated Competitive SBU Cooperative

Competitive

Which of the following statements about implementing corporate-level strategies and effective organizational structures is true? Firms pursuing a related linked strategy should implement a competitive structure with a competitive culture and centralized strategic planning activities. 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. 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. 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 Centralization Specialization Unification

Formalization

AviMin uses a differentiation strategy, delivering products that customers perceive as unique in ways that create value. AviMin likely focuses on what functions? Finance and accounting Manufacturing and process R&D Product R&D and marketing Process and product R&D

Product R&D and marketing

The best multidivisional structure to use depends primarily on what? The corporate culture The size of the company in terms of revenue The amount of control the owner wants to retain The degree of diversification

The degree of diversification

Successfully implementing a cost leadership strategy requires: freedom from constraining rules. centralization of authority. communication between functional silos. sharing of competencies among divisions.

centralization of authority.

One disadvantage of the functional structure is that: career paths and professional development are limited. dual reporting relationships blur lines of authority. the CEO cannot coordinate and control the efforts of functional-level employees. communication and coordination are difficult among organizational functions.

communication and coordination are difficult among organizational functions.

As illustrated by Textron Inc., when a firm uses the __________ structure hierarchy, the headquarters might rely on strategic controls to set rate-of-return targets and financial controls to monitor divisional performance relative to those targets and then allocate cash flow to the different divisions accordingly. functional cooperative competitive SBU

competitive

A firm pursuing an unrelated diversification strategy will most likely utilize a __________ structure. network cooperative form multidivisional competitive form multidivisional functional

competitive form multidivisional

The __________ structure is best for implementing the related constrained diversification strategy. functional competitive form of the multidivisional SBU form of the multidivisional cooperative form of the multidivisional

cooperative form of the multidivisional

The heavy use of integrative mechanisms in the __________ multidivisional organizational structure is intended to achieve __________. cooperative; economies of scope competitive; cost efficiencies functional; sensitivity to cultural diversity SBU; a quick response to local customer needs

cooperative; economies of scope

The noted business historian Alfred Chandler viewed the multidivisional structure as an innovative response to: an emerging professional management philosophy. the increasing demand by consumers for both high quality and low prices. coordination and control problems. a shift toward the global economy.

coordination and control problems.

Walmart's effective strategy/structure configuration is: cost leadership/functional. differentiation/functional. related constrained/multidivisional. related linked/multidivisional.

cost leadership/functional.

The center firm in a strategic network of vertical relationships might be expected to undertake all of the following EXCEPT: reducing its transaction costs by promoting longer-term contracts with subcontractors. enabling engineers in upstream companies to have better communication with those companies with which it has contracts for services. encouraging subcontractors to modernize their facilities and providing them with technical and financial assistance to do so. decreasing communications between network members to reduce communication costs.

decreasing communications between network members to reduce communication costs.

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. this strategic approach demands more flexibility than most firms can manage. the dual reporting relationships required for this strategy slow organizational decision making. the cost leadership strategy requires less structured job roles than does the differentiation strategy.

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: centralization of some organizational functions for the sake of coordination. frequent, direct contact between division managers. division managers' rewards based on division financial performance. temporary teams or task forces formed around specific projects.

division managers' rewards based on division financial performance.

Strategic controls allow corporate-level managers to: evaluate business-level performance on objective criteria. concentrate on day-to-day corporate operations. assess performance of employees and managers in each business unit. examine the fit between what the firm might do and what it can do.

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

Strategic controls allow corporate-level managers to: evaluate business-level performance on objective criteria. concentrate on day-to-day corporate operations. assess performance of employees and managers in each business unit. examine the fit between what the firm might do and what it can do.

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

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. managers are never able to obtain all the information necessary to make the best selection. the structure of a firm should not duplicate the structures of its competitors. the environment changes too rapidly for corporations to maintain a consistent corporate structure.

firms must be flexible while retaining a degree of stability.

Organizational structure specifies the firm's: formal reporting relationships, procedures, controls, and authority and decision-making processes. informal reporting relationships, procedures, controls, and authority and decision-making processes. formal value proposition, the markets it will serve, and how the firm will provide value in those markets. control mechanisms, grievance procedures, reporting relationships, procedures, and authority over decision-making processes.

formal reporting relationships, procedures, controls, and authority and decision-making processes.

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. horizontal complementary strategic alliance competitive multidivisional strategic business unit multidivisional hybrid combination

hybrid combination

A multidomestic strategy would be associated with: high levels of coordination. informal coordination among units. many integrative mechanisms. interdependent divisions.

informal coordination among units.

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

integration.

Toyota 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. competitive with one another. creative. complementary.

interdependent

The primary disadvantage of the multidomestic strategy and worldwide geographic area structure relates to limited: centralization. coordination across divisions. ability to meet local market needs. potential for global efficiency.

potential for global efficiency.

Functional structures work best for firms for all of the following EXCEPT: cost leadership strategy. differentiation strategy. related constrained diversification strategy. single or dominant business corporate strategy.

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 functional matrix network

simple

In most cases, the focus strategy is best managed using a __________ structure. simple functional multidivisional vertical

simple

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. network strategic business unit multidivisional functional matrix

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): worldwide product divisional structure. strategic network. SBU multidivisional structure. simple structure.

strategic network.

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

structure

IKEA is a global furniture retailer with more than 300 outlets in 39 countries and regions. IKEA focuses on lowering its costs as well as understanding customer needs, especially younger ones. IKEA's international strategy is best described as __________, and the appropriate organizational structure to implement this strategy is the __________ structure. transnational; combination global; worldwide product divisional multidomestic; worldwide geographic area competitive; strategic business unit multidivisional

transnational; combination

It is easiest to identify the company that functions as the strategic center firm in: horizontal complementary strategic alliances. vertical complementary strategic alliances. corporate-level cooperative partnerships. international cooperative partnerships.

vertical complementary strategic alliances.