Man. of Strategy Final Test Ed. 5 Chapter 10

Altair Inc., a large firm in the electronics market, is facing stiff competition from a relatively smaller firm, Cygnus Corp. Which of the following is an advantage that Cygnus has over Altair due its size? A. Larger fixed-asset bases B. More layers of administration C. More flexible and entrepreneurial culture D. Greater bureaucratic inertia due to well-developed policies and procedures

C. More flexible and entrepreneurial culture

According to Joseph Schumpeter, small firms are likely to have better-developed complementary activities such as marketing or financial planning that enable them to be more effective innovators than larger firms. True False

False

Coalitions of small firms typically have a well-defined system of authority and control. True False

False

In a loosely coupled structure, development and production activities achieve coordination through tight integration. True False

False

Quasiformal structures foster interactions based on hierarchy rather than on interests. True False

False

With advances in information technology, loosely coupled organizational structures are losing their popularity. True False

False

Which of the following statements is true of standardization? A. It can ensure that activities within a firm run smoothly and yield predictable outcomes. B. It is defined as the degree to which a firm utilizes rules, procedures, and written documentation to structure the behavior of employees. C. It involves the use of organic structures instead of mechanistic ones. D. It encourages the creativity and experimentation that leads to innovative ideas.

A. It can ensure that activities within a firm run smoothly and yield predictable outcomes.

M&P Inc., a consumer goods manufacturing firm, has subsidiaries throughout the globe that have to respond to varying local market requirements. Therefore, the firm has planned to adopt a local-for-local approach to innovation. Which of the following statement is true in this context? A. The subsidiaries of M&P and their R&D divisions will be highly autonomous. B. The subsidiaries will achieve abundance of scale in R&D activities. C. This approach will make diffusion of valuable innovations across the company simple. D. This approach will eliminate redundancy in activities.

A. The subsidiaries of M&P and their R&D divisions will be highly autonomous.

Which of the following statements is true of skunk works? A. They are isolated from the mainstream organization to which they belong. B. They have a mechanistic structure. C. They are bound by the demands of the rest of the organization. D. They are teams that face high degrees of centralization of authority and bureaucracy.

A. They are isolated from the mainstream organization to which they belong.

Not-invented-here syndrome occurs when: A. a division of a firm is reluctant to adopt other divisions' innovations. B. a firm tends to adopt innovations developed by competitors. C. an innovation is openly accepted without testing its suitability. D. developers of a failed innovation refuse to take responsibility for its failure.

A. a division of a firm is reluctant to adopt other divisions' innovations.

A high degree of formalization and standardization in firms results in organic structures. True False

False

Which of the following statements is true of loosely coupled organizational structures? A. In loosely coupled structures, development and production activities achieve coordination through their adherence to shared objectives. B. The possibility of achieving synergies is very high in loosely coupled structures. C. They are most useful in organizations characterized by activities that require the frequent exchange of complex or tacit knowledge. D. They provide mechanisms for resolving conflict that are more effective or less expensive than those available in the market.

B. The possibility of achieving synergies is very high in loosely coupled structures.

Since larger companies tend to have more bureaucracy, fixed costs, and commitments to large numbers of employees, customers, and suppliers than smaller firms, you can expect it to _____. A. gamble more on big changes B. be less responsive to technological changes C. find it much simpler to monitor employees and reward them for their effort or success at innovation D. experience higher rates of new product success

B. be less responsive to technological changes

Urban Fashions Corp. has become very successful in the last few years and now employs a large number of people. Serena, the owner of the firm, had been very informal in running the company. However, because of the increase in the size of the firm, she now feels that the informal ways of management have become ineffective. In order to structure the behavior of employees, Serena wants to introduce written codes of conduct and regulations into the firm. This change being introduced in the company by Serena is referred to as _____. A. disintermediation B. formalization C. nationalization D. decentralization

B. formalization

Liam, an employee of Centaurs Inc., is part of a new product development team that operates in a completely different manner from its parent organization. Within the team, there is considerable decentralization of authority and limited bureaucracy. It also has its own unique culture. Liam's team can be most accurately referred to as: A. a mechanistic team. B. skunk works. C. an inorganic group. D. a mainstream circle.

B. skunk works.

Large and hierarchical firms disaggregate in order to: A. lengthen new product development cycles. B. prevent large-scale downsizing. C. become more responsive to technological changes. D. curb the entrepreneurial culture within them.

C. become more responsive to technological changes.

Pioneer Systems Inc. has a high degree of formalization. Employees in Pioneer Systems are more likely to: A. exhibit high levels creativity and experimentation. B. feel empowered to implement new solutions. C. face morale and motivation problems. D. face ambiguity as a result of a lack of formal rules and procedures.

C. face morale and motivation problems.

As a firm grows bigger, it becomes: A. more effective in monitoring and motivating employees. B. less vulnerable to bureaucratic inertia. C. less efficient in R&D due to loss of managerial control. D. increasingly easy for individual scientists to appropriate the returns of their efforts.

C. less efficient in R&D due to loss of managerial control.

In a locally leveraged strategy to innovation, the R&D divisions _____. A. are completely centralized B. play different roles in the company's overall R&D strategy C. work on the full scope of development activities relevant to their business unit D. do not share creative resources and innovative developments

C. work on the full scope of development activities relevant to their business unit

A loosely coupled structure is best suited for activities that involve exchange of tacit knowledge. True False

False

In the 1980s and 1990s, Neon Corp. was the most successful firm in the television market. The firm believed that its competitors would never be able to produce televisions comparable to its quality and cost. As a result, it was unable to respond to the new generations of television with which its Japanese competitors had begun to infiltrate the market. Eventually, Neon lost its market leadership to its competitors. This scenario most clearly exemplifies the _____. A. Giffen effect B. Hawthorne effect C. Idiosyncrasy Credit D. Icarus Paradox

D. Icarus Paradox

Which of the following statements is true of ambidextrous organizations? A. They have uniform incentive plans for all employees within the organization. B. They achieve long-term innovation, but not short-term efficiency. C. They fail to tolerate varying cultures and different sets of behavior from employees. D. They have a complex organizational form that is composed of multiple internally inconsistent architectures.

D. They have a complex organizational form that is composed of multiple internally inconsistent architectures.

Oxygenic Inc. is a company with major decentralized divisions in Germany, Russia, and the United States. The scientists in Russia develop cancer treatment methods. Treatment clinics are organized in Germany. The U.S. division gathers finance and markets the treatment methods. The activities of the different divisions are coordinated by the central office of the firm to meet companywide objectives. This is most clearly an example of a _____ strategy. A. center-for-global B. local-for-local C. locally leveraged D. globally linked

D. globally linked

ErgoWorld Inc. manufactures office furniture. The company is considering adopting a modular production system. A modular system would offer greater value to ErgoWorld if: A. most customers are likely to agree on a single product configuration. B. its customers prefer to upgrade their products by replacing their entire system. C. its customers are willing to pay a premium price for extreme customization and personalization. D. its customers have heterogeneous demands that need to be met in a cost-effective way.

D. its customers have heterogeneous demands that need to be met in a cost-effective way.

A firm choosing to decentralize its R&D by divisions rather than centralizing it will have a greater possibility of: A. maximizing economies of scale in R&D. B. preventing redundant R&D activities from being performed in multiple divisions. C. benefiting from the learning-curve effects. D. matching new products to the requirements of the customers served.

D. matching new products to the requirements of the customers served.

According to Schoonhoven and Jelinek, quasiformal structures are: A. slow to respond to the need for changes. B. most useful in fostering interactions based on hierarchy. C. less problem-focused than other structures of companies. D. not part of the formal reporting structure.

D. not part of the formal reporting structure.

Since much innovation arises from experimentation and improvisation, the _____ organization structure is typically considered better suited to creativity and innovation. A. mechanistic B. formalized C. standardized D. organic

D. organic

A firm's prior success in the market increases its ability to respond to new technological generations. This is known as an Icarus Paradox. True False

False

As a firm grows, it becomes more difficult to exercise direct managerial oversight. True False

True

If a firm codifies all of its activities with detailed procedures, it may stifle employee creativity. True False

True

In the context of innovation productivity, a firm's overall size is not an easy-to-manipulate attribute of the firm. True False

True

It is possible for organizations to have a highly decentralized mechanistic structure. True False

True

Modular products become more valuable when customers have heterogeneous demands and there are diverse options for meeting them. True False

True

The customization of products and processes to a local market makes them particularly difficult to transfer to divisions serving different markets. True False

True

The transnational approach to R&D leverages resources and capabilities that exist anywhere within a firm and deploys them when and where any opportunity arises. True False

True