Deck 13: Organizational Structure and Controls Emea Edition

Question 1

Decisions about strategy and structure are interrelated.

Answer 1

True

Question 2

The integrated cost-leadership/differentiation strategy needs structural features that are partially centralized and partially decentralized, jobs that are semispecialized, and rules and procedures that call for some formal and some informal job behavior.

Answer 2

True

Question 3

High levels of formalization of rules and procedures which often emanate from the centralized staff are a characteristic of the structure used to implement the cost leadership strategy.

Answer 3

True

Question 4

Firms using the differentiation strategy need to respond quickly to environmental opportunities and threats. The structural features that are best for these requirements are centralization, specialization, and many rules and procedures.

Question 5

Specialization refers to the extent to which authority for decision-making is retained at higher managerial levels.

Question 6

The matrix organization has a dual structure combining functional specialization and business product or project specialization.

Question 7

To implement a related-linked strategy, a firm usually needs an SBU structure.

Question 8

Research shows that structure has a more important influence on strategy than the reverse and hence the emphasis of the chapter on the subject of structure.

Question 9

The marketing and R&D functions are emphasized in the differentiation strategy's functional structure.

Question 10

There are three variations of the multidivisional structure.

Question 11

Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the conditions in the external environment and the company's competitive advantages.

Question 12

To implement a related constrained strategy, firms should use the cooperative form of the multidivisional structure.

Question 13

Organizational structures must be both stable and flexible.

Question 14

The three multidivisional structures that are used to implement a diversification strategy are the competitive form, the strategic business unit form, and the integrated form.

Question 15

As a firm grows, it typically shifts from a simple structure to a functional structure.

Question 16

The competitive form of the M-form structure is characterized by complete independence among the form's divisions. Unlike the divisions included in the cooperative structure, divisions that are part of the competitive structure do not share common strengths.

Question 17

Companies and business units of large diversified firms using the cost leadership strategy should use strategic controls.

Question 18

Organizational inertia often prompts top management to initiate structural change when organizational performance levels drop.

Question 19

A simple structure is an organizational form in which the owner-manager makes all major decisions directly and monitors all activities, while the staff merely serves as an extension of the manager's supervisory authority.

Question 20

An SBU structure consists of at least three levels: the top level, the corporate headquarters; the next level, the strategic business units (SBUs); and the final level, SBU divisions.

Question 21

The noted business historian Alfred Chandler viewed the multidivisional structure as an innovative response to

A) an emerging professional management philosophy.
B) the increasing demand by consumers for both quality and low-price.
C) coordination and control problems.
D) a shift toward the global economy.

Question 22

One disadvantage of the functional structure is that

A) career paths and professional development are limited.
B) dual reporting relationships blur lines of authority.
C) the CEO cannot coordinate and control the efforts of functional level employees.
D) communication is difficult among organizational functions.

Question 23

Organizational structure

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

Question 24

Alliances of organizations in the same position on the value chain are known as vertical alliances.

Question 25

Firms implementing the multidomestic strategy often attempt to isolate themselves from global competitive forces by establishing protected market positions or by competing in industry segments that are most affected by differences among local countries.

Question 26

Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for managers because

A) firms must be flexible while retaining a degree of stability.
B) managers are never able to obtain all the information necessary to make the best selection.
C) the structure of a firm should not duplicate the structures of its competitors.
D) the environment changes too rapidly for corporations to maintain a consistent corporate structure.

Question 27

Distributed strategic networks are the organizational structure used to manage international cooperative strategies.

Question 28

Strategic controls allow corporate-level managers to

A) evaluate business-level performance on objective criteria.
B) concentrate on day-to-day corporate operations.
C) assess performance of employees and managers in each business unit.
D) examine the fit between what the firm might do and what it can do.

Question 29

In the hybrid form of the combination structure, some divisions are oriented toward products while others are oriented toward market areas.

Question 30

The benefits of a simple structure include all of the following EXCEPT

A) ease of coordination within the organization.
B) no need for sophisticated information systems.
C) active involvement by the owner-manager.
D) specialists can develop deep expertise.

Question 31

Structural stability affects the organization's ability to:

A) resist organizational inertia.
B) cope with uncertainty about cause-and-effect relationships in the global economy.
C) develop new competitive advantages.
D) predictably manage its daily work routines.

Question 32

Alfred Chandler found that firms grow in a predictable pattern, and that the firm's growth patterns determine its structural form. Which form corresponds to the FINAL stage in Chandler's theory?

A) functional
B) simple
C) vertically integrated
D) multidivisional

Question 33

A strategic network can be characterized as a loose federation of partners revolving around a strategic center firm.

Question 34

For firms in a vertical complementary alliance (such as between Toyota and its suppliers), it is more difficult to identify the strategic center firm than in a horizontal complementary alliance (e.g., airline alliances).

Question 35

Typically, an organization using a simple structure would be

A) large.
B) small.
C) of any size if the firm is privately held.
D) a family-owned-and-managed firm of any size.

Question 36

The divisions within each SBU are related in terms of shared products or markets, but the divisions of one SBU have little in common with the divisions of the other SBUs.

Question 37

The worldwide product divisional structure has centralized decision-making authority in the worldwide division headquarters to coordinate and integrate decisions and actions among business units.

Question 38

The selection of an organizational structure for an internationally diversified firm should consider the international corporate level strategy the firm is using.

Question 39

One reason why a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so

A) indicates to competitors that the firm is vulnerable to a hostile takeover.
B) will only lead to inefficiencies.
C) requires the firm undertake multi-year restructuring period that will delay retirement.
D) suggests that their previous choices were not the best ones.

Question 40

The organizational structure for an internationally diversified firm requires trade-offs between global integration and local market responsiveness.

Question 41

The three structural characteristics which differ between organizational structures include all of the following EXCEPT

A) centralization.
B) formalization.
C) specialization.
D) intermediation.

Question 42

One of the primary disadvantages of the global strategy and worldwide product divisional structure is that

A) it is difficult to achieve economies of scale.
B) the firm must develop centers to offer after-sales service to customers.
C) it is difficult to respond effectively to local market needs and preferences.
D) achieving economies of scale with this strategy/structure combination is nearly impossible.

Question 43

A firm that frequently acquires and divests other firms is most likely to use the ____ structure.

A) matrix
B) competitive multidivisional
C) hybrid combination
D) horizontal complementary strategic alliance

Question 44

Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level strategy?

A) competitive form with related constrained strategy
B) cooperative form with unrelated strategy
C) SBU form with related linked strategy
D) competitive form with related linked strategy

Question 45

Increasingly diversified firms that have decided to shift to a related-constrained strategy should change their organizational structure to the ____ structure.

A) functional
B) competitive form of the multidivisional
C) SBU form of the multidivisional
D) cooperative form of the multidivisional

Question 46

To successfully implement a cost leadership strategy, there is a need for

A) freedom from constraining rules.
B) centralization of authority.
C) communication between functional silos.
D) sharing of competencies among divisions.

Question 47

The most centralized and most costly form of the multidivisional structure is the

A) integrated.
B) competitive.
C) SBU.
D) cooperative.

Question 48

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable. Some airlines participate in several alliances simultaneously. This tends to

A) make the partners' true loyalties and intentions unclear.
B) make the role of the strategic center firms more critical to alliance success.
C) distribute the alliances along several segments of the airline industry value chain.
D) be most effective when the alliances are with airlines headquartered in different nations.

Question 49

A firm pursuing a related-constrained diversification strategy would typically need all of the following EXCEPT

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

Question 50

The ____ structure is an organizational structure that combines both functional specialization and business product or project specialization.

A) functional
B) worldwide geographic area
C) network
D) matrix

Question 51

In the ____ multidivisional structure there is complete independence among the firm's divisions.

A) cooperative
B) matrix
C) competitive
D) SBU

Question 52

Implementing the multidomestic strategy requires decentralization

A) to facilitate the tailoring of products to the demand in local markets.
B) to develop economies of scale.
C) in order to achieve economies of scope.
D) to reduce bureaucracy and speed up decision-making.

Question 53

Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and provides them with technical and financial assistance to do so. It also promotes longer term contracts with suppliers, and enables engineers in the supplier company to have better communication with Toyota. This is an example of a(an):

A) worldwide product divisional structure.
B) functional structure.
C) SBU multidivisional structure.
D) strategic network.

Question 54

In an SBU structure, ____ is/are evaluated using strategic controls, whereas ____ is/are evaluated using financial controls.

A) each SBU, divisions within the SBUs
B) divisions within the SBUs, each SBU
C) managers of the SBUs, headquarters staff
D) headquarters staff, managers of the SBUs

Question 55

The integrated cost leadership/differentiation strategy is difficult to implement mostly because

A) different primary and support activities are emphasized when using cost leadership and differentiation strategies.
B) this strategic approach demands more flexibility than most firms can manage.
C) the dual reporting relationships required for this strategy slow organizational decision-making.
D) the cost leadership strategy requires less structured job roles than does the differentiation strategy.

Question 56

Which organizational structure will emphasize financial controls for headquarters' evaluation of operating units while the operating units will emphasize strategic controls within their units' performance?

A) Functional structure
B) Cooperative M-Form
C) SBU Form
D) Competitive M-Form

Question 57

In the ____ structure hierarchy, the headquarters relies on strategic controls to set rate-of-return targets and financial controls to monitor divisional performance relative to those targets.

A) functional
B) cooperative
C) competitive
D) SBU

Question 58

In the competitive form of the multidivisional structure, the focus of headquarters is on all the following EXCEPT

A) integration.
B) performance appraisal.
C) resource allocation.
D) long range planning.

Question 59

Typically, a successful firm pursuing a differentiation strategy will

A) have a very hierarchical structure.
B) require a structure which is very formal.
C) use cross-functional development teams.
D) develop free-standing business units.

Question 60

A worldwide geographic area structure is an organizational form in which

A) multiple alliances across the globe link complementary businesses.
B) standardized products are offered across country markets.
C) national interests dominate and management adapts to local or cultural differences.
D) responsiveness to local demand is combined with economies of scale.

Question 61

Describe the three major types of organizational structure and their appropriate use.

Question 62

Describe the organizational structures used to implement the three international strategies.

Question 63

Discuss the organizational structures used to implement the different business-level strategies.

Question 64

Discuss the organizational structures used to implement corporate-level strategies.

Question 65

Discuss the difference between strategic and financial controls.