Management Exam 2
Which of the following is a divisional form of organization?
A restaurant chain with different departments running all operations in different regions of the country
A 'global-standardization' strategy is where a company sells the same product in different markets but locates specific value chain activities wherever it can best access resources. Which of the following best describes a firm that will benefit from this strategy?
A computer manufacturer that has a standard range of products for which customer preferences are similar across countries
Which of the following represents a functional organizational structure? • A car manufacturer with product groups (e.g., SUV, truck, electrical vehicles), each staffed with employees to manage that product's development, engineering, purchasing, production, and sales • A chain of restaurants with one division for each region (e.g., Northeast, Midwest, and Southeast) of the country managing all functions in that region • A consumer electronics company with a single R&D department and central finance, HR, sales and marketing departments.
A consumer electronics company with a single R&D department and central finance, HR, sales and marketing departments.
Which of the following scenarios best exemplifies a platform business? • A firm that purchases electronic parts from a variety of vendors and assembles them into inexpensive fitness trackers that our sold to consumers • A firm that operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy for their own restaurants • A consulting firm that other businesses hire to assess deficiencies in their organizational culture
A firm that operates an industrial test kitchen in which local growers bring their produce to local chefs, who use the kitchen to try new recipes and determine which produce to buy for their own restaurants
What is a reason that having people from different backgrounds be especially valuable for firms in uncertain situations?
A greater range of perspectives and ways of thinking about the environment can lead to the firms processing more information to understand the situation better
Vertical integration describes what stages of the industry value chain should the company participate. Which of the following is not an example of vertical integration?
A streaming service that has started showing live sporting events in addition to movies and series
The strategic objective of a first mover during the introduction stage of the industry life cycle is • Survive by drawing on deep pockets • Achieve market acceptance for the product • Lower entry barriers in the industry
Achieve market acceptance for the product
General Tech, a medium-sized medical technology company, has been successful in its research and development but needs to improve its ability to distribute its product in the valuable European market. Which of these actions would be most likely to lead to most longterm success for General's European sales? • Merging with a soft drinks manufacturer operating in Europe • Acquiring a company that has a successful medical technology sales force in Europe so that General can gain access to its distribution channels • Contacting its congressional representative to request higher tariffs on European technology products
Acquiring a company that has a successful medical technology sales force in Europe so that General can gain access to its distribution channels
Canon was able to redesign the copying machine so that it didn't need professional service— reliability was built directly into the machine, and the user could replace parts, such as the cartridge. What Xerox had not envisioned was the possibility that the existing components of the copying machine could be put together in an altogether different way that was more user-friendly. This example describes • Architectural innovation • Incremental innovation • Radical innovation
Architectural innovation
Which of the following is a reason why focusing heavily on personality traits and 'fit' in hiring processes can be a problem for firms? • Individuals' character and values don't matter to organizations • It is difficult to assess character and values in interviews, so organizations shouldn't bother trying • Assessing candidates on 'fit' can be biased towards existing personality types and prevents the organization appreciating good candidates with different backgrounds
Assessing candidates on 'fit' can be biased towards existing personality types and prevents the organization appreciating good candidates with different backgrounds
While looking at horizontal diversification opportunities, a manager is examining which new markets involve products using the same raw materials, why does this matter?
Because it will help determine in which new markets the firm gets economies of scale
What type of interview asks job candidates to provide an example of a time they did something to try to understand how they would act in the new organization when faced with an analogous situation? • Unstructured interviews • Behavioural structured interviews • Situational structured interviews
Behavioural structured interviews
When entering a foreign market, a new venture that has a core competency only in R&D will often form a strategic alliance or joint venture with a local partner because • Building downstream complementary assets can be expensive and time-consuming • The strategic alliance will reduce the differentiation of its product and service offerings • That protects its intellectual property better than operating a wholly owned subsidiary
Building downstream complementary assets can be expensive and time-consuming
WHY (NOT) CHOOSE DIVISIONAL STRUCTURES?
But comes with downsides... Lower economies of scale/scope than would be achieved at organization-wide level if each division duplicates activities Difficult to coordinate and exchange information among product lines Managers being judged on bottom line can lead to intense internal rivalry and competition for the organization's resources Less ability to get gains to specialization Managers become generalists not specialists Each function is smaller within the division, so each member has greater range of tasks
Standard operating procedures are used by firms to enhance inter-operability of different teams' outputs in the organization, which of the following is a disadvantage of using standard operating procedures?
Can be rigid and lack flexibility for team to respond differently according to the situation
A start-up is pioneering a new type of soft drink, why might it be at a disadvantage relative to incumbents like Coke and Pepsi in profiting from its new idea?
Coke and Pepsi have valuable existing complementary assets in the soft drinks industry -e.g. distribution channels.
What are the two fundamental problems of organizing
Division of Labor and Integration of Effort
WHY CHOOSE DIVISIONAL STRUCTURES?
Divisional managers focus on a particular product line, customer, or geography -can build up knowledge of what matters to customers here Significant autonomy and control -can act faster to make decisions and mobilize resources Can take whole viewand develop long-term strategies for product/customer/region Managers develop broad set of skills to understand complexity Easier to assess divisional performance based on bottom-line
divisional structure
Each division manages full range of necessary tasks May be based on product, customer, geography
functional structure
Each type of task is assigned to and carried out by functional specialist sub-organizations
Alpha Group is a mobile platform that matches independent fashion designers with consumers who want a personalized wardrobe. Which of the following initiatives would best allow Alpha to fine-tune its offerings to better meet the needs of its consumers? • Encouraging users to provide feedback to producers on the style and fit of clothing • Conducting anonymous phone surveys about consumers' fashion preferences • Studying the financial records of various fashion design companies to try to determine trends
Encouraging users to provide feedback to producers on the style and fit of clothing
Which of the following is not an advantage when it comes to "first-mover advantages" introducing a new type of product? • First movers may be able to lock-in key suppliers • First movers may benefit from network effects • First movers must educate potential customers about the product
First movers must educate potential customers about the product
Gamma Electronics relied on a large chain of consumer electronics stores to sell its tablet computers, cell phones, and televisions and also to provide customer service and technical support. However, that retailer outsourced its service departments, and customers began to complain that they could not get reliable tech support for Gamma products. In response, Gamma Electronics decided to set up its own tech support department, and it also began to investigate opening its own brand-based retail stores. What does this scenario best illustrate? • Becoming a platform business • New product development • Forward vertical integration
Forward vertical integration
What is a potential advantage of functional organizational structures?
Greater economies of scale from managing resources at organization-rather than division-level
Intel introduced the Celeron chip, a stripped-down, budget version of its Pentium chip, in 1998. More recently, Intel followed up with the Atom chip, a new processor that is inexpensive and consumes little battery power, to power low-cost mobile devices. Intel's Celeron chip and Atom chip are initiatives to • Introduce a new product in a new market to extend its leadership to other industries • Guard the company against disruptive innovation by protecting the low end of the market • Target that section of the market that is not particularly price sensitive
Guard the company against disruptive innovation by protecting the low end of the market
Matrix Organizational Structures
Hybrid structure distinguished by two chains of authority Product and divisional structures overlaid Brings functional experts into project teams Can be reconfigured
In which part of the industry lifecycle is it the primary focus of firms to demonstrate 'proof of concept' that the type of product is potentially valuable to customers?
Introduction stage
Which of the following lists the stages of the industry life cycle in the correct order? • Introduction, growth, shakeout, maturity, and decline • Introduction, shakeout, growth, maturity, and decline • Introduction, growth, maturity, shakeout, and decline
Introduction, growth, shakeout, maturity, and decline
An organization in a dynamic environment needs to speed up information processing across departments in the organization, which of the following is the best option?
Invest in formal information management systems that can be rolled out across the organization or improve horizontal relationships across teams to foster information flows
Why might a cellphone manufacturer be vertically integrated into providing its own stores for sales?
It is a high-end manufacturer and wants to ensure a buying experience for customers that is congruent with its brand image
What makes a training module more effective for an employee in the organization? • It is tailored to the specific needs of the employee and focuses on realistic situations that employees' face in their daily roles • It is at a large, attractive venue where lots of people can sit and listen to a speaker it at the same time. • It focuses on presenting abstract concepts to employees rather than getting into details about practical applications in their jobs
It is tailored to the specific needs of the employee and focuses on realistic situations that employees' face in their daily roles
Apple has a functional organizational structure with flexible teams being set up across the organization. Which of the following is not a reason for Apple to choose this structure? • Core products rest on similar technological expertise across categories so there are gains to economies of scope/scale • Specialized technical knowledge is very important to successful innovation and it can be difficult for general managers to develop technical skills to manage across complex tasks in changing environment • It isn't important for Apple's managers to have deep understanding of the company's products
It isn't important for Apple's managers to have deep understanding of the company's products
Which of the following was Disney's most important resource in gaining an advantage when it entered the theme parks industry? • Its artistic resources for creating cartoons • Its intellectual property rights over its characters • Its purchase of 160 acres of land in Anaheim in 1953
Its intellectual property rights over its characters
WHY (NOT) CHOOSE FUNCTIONAL STRUCTURES?
Key challenge is to ensure effective integration of work across functions Ensure focus on own functional outputs doesn't lead to less focus on the organizations' core outputs -i.e. product quality and customer satisfaction Need strong top management to coordinate effectively Functional leaders must buy-in to overall strategy, not focus excessively on own domain Prevent tasks falling in gap between functional responsibilities Need to encourage communication channels across functions
Matrix organizations seek to marry the benefits of employee specialization in functional organizations with the strong product/consumer focus promoted by divisional organizations. Which of the following is an advantage of matrix organizations? • Links expertise across organization, fosters communication and information transfer, builds internal (informal) networks • Authority and accountability can be difficult to define with dual lines of control • Stress for employees managing competing demands across managers
Links expertise across organization, fosters communication and information transfer, builds internal (informal) networks
A firm that produces medical devices is looking to expand to a new market where production is lower cost, but intellectual property protections are weaker. Which of the following would be the biggest risk of a joint venture with a local firm?
Loss of technological knowledge to partner who can use it to become a rival
What is a reason that formal career development programs can lower risk of bias in promotion decisions?
Makes skill acquisition and performance more transparent and lowers importance of subjective judgment in evaluating promotion potential
Which of the following is not a way diversity can enhance an organization's performance? • Getting a range of ideas and outputs from different ways of thinking can improve innovation processes • A culture that is more open to difference can help people see things from new perspectives and identify new opportunities • Managers can use statistics on workforce demographics to avoid having to think about how to create an organizational culture that values difference and different perspectives
Managers can use statistics on workforce demographics to avoid having to think about how to create an organizational culture that values difference and different perspectives
What is a risk of evaluating employees' outputs based only on clear identifiable measurable criteria that many firms try to mitigate using 360-degree feedback?
Many jobs have important components that are difficult to measure by objective output-based criteria, but employers want to encourage staff to work hard on these too
Why might Disney outsource production of cuddly toys and t-shirts, but manage hotels internally?
Merchandise is easier to have produced to a given specification by a wide-range low-cost producers, whereas in hotels control over customer experience and responsiveness matters more
What is a potential downside to adopting a matrix organizational structure?
Need middle managers to spend more time communicating with each others over employees
What is a challenge that managers must actively consider when determining the criteria for evaluating employees' work? • Subjective assessments are less at-risk of bias and misperception than objective criteria • Objective criteria can be biased towards outputs/tasks that are more measurable and hence shift employees' efforts towards these away from other important, but unmeasured, tasks • It is bad for employees to be aware of the performance expectations managers have of them
Objective criteria can be biased towards outputs/tasks that are more measurable and hence shift employees' efforts towards these away from other important, but unmeasured, tasks
In addition to the ethical considerations, why is it important for a clothing firm that sells its products all over the world to do due diligence on potential new low-cost suppliers
Reputational loss if that supplier fails to meet customers' expectations of basic standards of labor etcand this becomes widely known
Mixed Functional - divisional
Some tasks assigned to product divisions, some to functional groups depending on nature of tasks E.g. economies of scale and scope in secondary activities vs. need to be focused on product and customer
As organizations have flattened hierarchies to eliminate bureaucracy, they have increased the responsibilities of middle-level managers. This includes give them more direct reporting employee (increasing their 'span of control'). Which of the following makes it more difficult to expand a manager's span of control without affecting their ability to manage effectively? • Subordinates' work is routine and well-defined. • Subordinates carry out similar tasks. • Subordinates need to be frequently reassigned across many different types of work.
Subordinates need to be frequently reassigned across many different types of work.
A firm is thinking about how to flatten its hierarchy, which would entail middle managers taking on more responsibilities. What would be a reason to limit how many subordinates middle managers have
Subordinates work is complex and hard to evaluate; subordinates need support carrying out array of complex tasks; difficult to group subordinates that have similar jobs and performance criteria
What is one reason that Google entered cellphone production when it was primarily a software business that had produced limited hardware?
Synergies in advertising products from harvesting new source of consumer to go with search and other data
An 'international' strategy is when a company sells the same products/services in both domestic & foreign markets. What is a fundamental trade-off in this model?
The firm has more product control, but less ability to customize product to local conditions
Which of the following isn't a reason employees might be more productive working from home? • Staff want this type of flexibility and so it improves employee satisfaction and morale • There are fewer opportunities to meet people and build effective relationships across the organization • Staff feel under less pressure to exert effort presenting an image that fits more neatly into the dominant culture in the organization
There are fewer opportunities to meet people and build effective relationships across the organization
What is a reason to focus training narrowly on specific skills relevant to people's jobs?
There is a limit to how much people can learn in one go and focusing repeatedly on learning a particular skill is more effective than briefly covering a range of skills
. Which of the following is a reason against delegating more control to lower-level managers in an organization? • It is difficult for top managers to process all the relevant information across wide range of decision areas across the firm in complex environments • To facilitate faster responses to changes in environment without going up hierarchy • To prevent senior managers from learning about organizational failings
To prevent senior managers from learning about organizational failings
Which of the following is a bad reason for managers to expand their firms' operations into new markets? • To lower costs from economies of scale or scope in production • To use core competencies and resources that the firm already has in new markets where they can create value • To provide managers with a larger organization over which to exert control
To provide managers with a larger organization over which to exert control
Beta Computers sources the components for its laptops from various suppliers on the market. The firm pays $100 for processors, $35 for disk drives, $50 for screens, $10 for memory, and $40 for graphics and wireless internet cards per output unit. Beta has determined that it would cost $200 per unit to produce all of the necessary components using its in-house manufacturing facility. In this scenario, Beta should • Continue to outsource production • Vertically integrate • Exit the laptop industry
Vertically integrate
A platform business is trying to determine which side of the market to increases prices for to increase its own profit margins, which is the most important consideration?
Which sided of the market has the lowest switching costs
What is a risk of a functional organization if not well-managed?
focus on own functional outputs leads each department to focus less on the organizations' core outputs because there is less clear department ownership of product lines