Deck 9: Organization Size,Life Cycle,and Decline

Question 1

Small companies become a victim of their own success:

A)as they grow large and shift to a complex structure.
B)when they cannot manage their profits and make incorrect decisions.
C)when they overestimate the demand and block funds in inventory storage.
D)as they spawn entrepreneurs rather than "organization men."

Answer 1

A
Explanation:Small companies can become victims of their own success as they grow,shifting to a mechanistic design emphasizing vertical hierarchy and spawning "organization men" rather than entrepreneurs.

Question 2

Steve,an entrepreneur,started a breakfast-on-the-go business that focused on providing customized breakfast packages to students and executives in his neighborhood.He had fifty people working for him who had the liberty to make decisions and propose improvement plans.Which of the following would most likely be a characteristic of Steve's business?

A)Mechanistic management
B)A complex structure
C)Niche finding
D)A stable market

Answer 2

C
Explanation:Steve's start-up venture is a small business.Niche finding is a characteristic of small businesses.

Question 3

Alphacone Inc.is a multinational plasticware manufacturing company.It operates in nine countries,and employs around 7000 people.The large firm is difficult to manage,and the director is looking for a way to capture the mindset and advantages of small businesses to turn the management process around.Which of the following approaches should the director of Alphacone Inc.use?

A)He should hire managers from small organizations to implement their strategies.
B)He should reorganize his organization into groups of small companies.
C)He should cut down his business and limit it to one country.
D)He should lay off employees and maintain a manageable number.

Answer 3

B
Explanation:The CEO of Alphacone Inc.should reorganize his organization into groups of small companies.By reorganizing into groups of small companies,huge corporations such as Johnson & Johnson capture the mindset and advantages of smallness.

Question 4

Carter is a middle-level manager in his organization.He was satisfied with his job for the first three years,but he has decided to quit as he feels stifled by the bureaucracy and lack of innovation.Carter's organization is most likely in the _____ of the organizational life cycle.

A)elaboration stage
B)entrepreneurial stage
C)formalization stage
D)collectivity stage

Question 5

Which of the following reasons has spurred budding entrepreneurs to take a chance on starting their own company?

A)The high rate of success of small businesses
B)Economic woes and layoffs at many large firms
C)Easy availability of financial resources
D)Lucrative outsourcing prospects

Question 6

Which of the following is a characteristic of large organizations?

A)Vertical hierarchy
B)Flat structure
C)Responsiveness
D)Flexibility

Question 7

Which of the following statements is true of the entrepreneurial stage of an organizational life cycle?

A)There is limited control on the employees, and they make their own decisions.
B)The organization is formal and bureaucratic.
C)The growth comes from a creative new product or service.
D)The founders devote all their time to strategic planning.

Question 8

Huge resources and economies of scale and scope are needed for many organizations to _____.

A)carve out a niche
B)compete globally
C)have an organic structure
D)reduce bureaucracy

Question 9

The competing argument says small is beautiful because the crucial requirements for success in a global economy are:

A)longevity and stability in an unstable environment.
B)huge resources and economies of scale.
C)responsiveness and flexibility in fast-changing markets.
D)labor force and productivity.

Question 10

What is the major goal of an organization during the entrepreneurial stage of the organizational life cycle?

A)Profit maximization
B)Reputation
C)Growth
D)Survival

Question 11

Nicholas started a computer assembling business with fifteen employees.All employees were responsible for the complete assembling of a unit.As his start-up grew overtime,he created departments and appointed a supervisor for each department.This signifies that Nicholas's business is in the _____ stage.

A)collectivity
B)formalization
C)elaboration
D)entrepreneurial

Question 12

Which of the following is true of small businesses?

A)They represent a large percentage of exporters.
B)They represent 40 percent of all businesses in the United States.
C)They often experience lesser employee commitment.
D)They are generally slow to adapt to changing customer needs.

Question 13

Which of the following crises is faced by organizations in the entrepreneurial stage?

A)The need to deal with too much red tape
B)The need for delegation
C)The need for revitalization
D)The need for leadership

Question 14

_____ is accused of many sins,including inefficiency,rigidity,and demeaning routinized work that alienates both employees and the customers an organization tries to serve.

A)An organic structure
B)Bureaucracy
C)An entrepreneurial start-up
D)Delegation

Question 15

_____ are the lifeblood of the U.S.economy.

A)Multi-nationals
B)Established organizations
C)Entrepreneurial start-ups
D)Joint ventures

Question 16

The formalization stage of an organizational life cycle involves:

A)the installation and use of rules, procedures, and control systems.
B)the establishment of a hierarchy of authority, job assignments, and division of labor.
C)the birth of the organization, and creation of a new product or service.
D)the simplification of the formal system as it gets replaced by manager teams and task forces.

Question 17

Which of the following is true of managers in the collectivity stage of an organization?

A)Top managers may get replaced during this period as the organization reaches maturity.
B)Middle management may resent the intrusion of staff.
C)Strong managers are hired at this level to deal with issues.
D)Lower-level managers begin to acquire more confidence and want more discretion.

Question 18

A(n)_____ implies incorporating structures and processes that are appropriate for both small-company creativeness and large-company systems for exploiting innovations.

A)joint venture
B)dual structure
C)ambidextrous approach
D)paradoxical practice

Question 19

During the _____ stage,an organization begins to develop clear goals and direction.

A)entrepreneurial
B)elaboration
C)collectivity
D)formalization

Question 20

Which of the following is true of large firms?

A)They are badly affected by disasters and take time to recover.
B)They are generally more customized.
C)They have lower productivity compared to small firms.
D)They are able to weather economic woes more efficiently.

Question 21

In the formalization stage of an organizational life cycle,management may attack the bureaucracy and streamline it.

Question 22

During times of high uncertainty,the most effective structure is one that loosens the lines of command.

Question 23

As organizations increase in size,the _____ declines and the ratios for other support groups increase.

A)administrative ratio
B)personnel ratio
C)profitability ratio
D)clerical ratio

Question 24

The service sector encourages an increase in organization size.

Question 25

_____ occurs when price competition is used to evaluate the output and productivity of an organization or its major departments and divisions.

A)Clan control
B)Market control
C)Bureaucratic control
D)Economic control

Question 26

As organizations become larger,greater centralization is necessary.

Question 27

Which of the following statements best describes the elaboration stage of organizational life cycle?

A)It is a mature stage of the life cycle in which a red tape crisis is resolved through the development of a new sense of teamwork and collaboration.
B)It is the life cycle stage in which an organization is born and its emphasis is on creating a product and surviving in the marketplace.
C)It is the life cycle stage that involves the installation and use of rules, procedures, and control systems.
D)It is the life cycle stage in which employees identify with the mission of the organization and spend long hours helping the organization succeed.

Question 28

Organizational atrophy occurs when:

A)an organization loses to its competitors in the market.
B)organizations are over-staffed, which gives rise to internal conflict.
C)organizations grow older and become inefficient and overly bureaucratized.
D)an organization chooses the wrong target market, and is unable to deliver to it.

Question 29

Small companies are standardized,often mechanistically run,and complex.

Question 30

Increased training substitutes for bureaucratic rules and procedures that can constrain the creativity of employees.

Question 31

_____ refers to rules,procedures,and written documentation,such as policy manuals and job descriptions,that prescribe the rights and duties of employees.

A)Monopolization
B)Centralization
C)Formalization
D)Liberalization

Question 32

In the collectivity stage of an organizational life cycle,communication and control are mostly informal,although a few formal systems begin to appear.

Question 33

Which of the following statements is true of a professional partnership?

A)It is a joint venture between two highly specialized organizations.
B)It strongly believes in the effectiveness of bureaucratic principles.
C)It works on consensus orientation rather than top-down direction.
D)It comprises a mixed group of employees with varying skills and qualifications.

Question 34

Every time a layer of bureaucracy is added,information gets diluted.

Question 35

Large firms can provide greater social support to the communities they serve.

Question 36

The reward and control system during the entrepreneurial stage of an organization is _____.

A)impersonal
B)paternalistic
C)extensive
D)customized

Question 37

Bureaucracy provides for:

A)easy access to top level managers for grievance redressal.
B)effective ways to increase profit margins for an organization
C)systematic and rational ways to organize and manage tasks.
D)secure provisions to protect whistle-blowing employees.

Question 38

An autonomy crisis occurs in the formalization stage of an organizational life cycle.

Question 39

The systematic study of bureaucracy was launched by _____.

A)Max Weber
B)Georg Simmel
C)Abraham Maslow
D)Jean Baudrillard

Question 40

The goal of a company in the elaboration stage is _____.

A)survival
B)growth
C)reputation
D)expansion

Question 41

Overcommunication,during turbulent times,does more harm than good.

Question 42

In the crisis stage of an organizational life cycle,leaders should reduce employee uncertainty by clarifying values and providing information.

Question 43

Environmental decline refers to reduced energy and resources available to support an organization.

Question 44

The most difficult decision in downsizing is selling off a company's assets.

Question 45

In the faulty action stage of an organizational life cycle,indicators of poor performance cannot be ignored.

Question 46

Explain the concepts of formalization and centralization.

Question 47

During the first stage of decline of an organizational life cycle,leaders may try to persuade employees and other stakeholders that all is well.

Question 48

Rational-legal authority is the basis for both creation and control of most government organizations and is the most common base of control in organizations worldwide.

Question 49

During the inaction stage of an organizational life cycle,managers do not take any action as there are no apparent signs of decline.

Question 50

Vulnerable organizations typically need to redefine their environmental domain to enter new industries or markets.

Question 51

Organizational decline is used to define a condition in which a substantial,absolute decrease in an organization's resource base occurs over time.

Question 52

Explain the size-related paradox that companies face.

Question 53

Describe the entrepreneurial stage of an organizational life cycle.

Question 54

Actions like retrenchment and downsizing personnel are considered in the final stage of decline of an organizational life cycle.

Question 55

The dissolution stage is not irreversible,major organizational restructuring can still turn things around.

Question 56

Explain the role of personnel ratios in an organization's structure.

Question 57

What are the benefits and drawbacks of a large organization?

Question 58

Clan control cannot function alone; it needs to be linked with bureaucratic control.

Question 59

The faulty action stage of an organizational life cycle precedes the crisis stage.

Question 60

Open communication about a pending layoff is always harmful.

Question 61

What is clan control?

Question 62

What steps are organizations taking in reducing bureaucracy? Define professionalism.

Question 63

Describe the crisis stage in an organization's decline.

Question 64

How are temporary systems useful in eradicating the problems of bureaucracy?

Question 65

Describe the role of atrophy in an organization's decline.