Deck 11: Organizational Design: Structure, Culture, and Control

Question 1

W.L.Gore & Associates is the inventor of path-breaking new products such as breathable GORE-TEX fabrics,Glide dental floss,and Elixir guitar strings.Which of the following would be most likely to hinder its intention of fostering employee satisfaction,retention,and creativity?

A) an extremely formalized organizational structure
B) a highly organic organizational structure
C) a low degree of centralization
D) a flat organization structure

Answer 1

A
Explanation: An extremely formalized organizational structure would be most likely to hinder its intention of fostering employee satisfaction, retention, and creativity. As mentioned in Strategy Highlight 11.1, Gore's freewheeling and informal culture has been linked to greater employee satisfaction and retention, higher personal initiative and creativity, and innovation at the firm level.

Question 2

Organizational design is

A) the process of creating, implementing, and modifying the structure of an organization.
B) primarily focused on replacing a firm's competitive advantage with competitive parity.
C) a process that always functions independently of strategy formulation.
D) primarily focused on formulating effective strategies, not implementing them.

Answer 2

A
Explanation: Organizational design is the process of creating, implementing, monitoring, and modifying the structure, processes, and procedures of an organization. The key components of organizational design are structure, culture, and control.

Question 3

What was one of the reasons for Jerry Yang's failure at Yahoo?

A) Jerry made many necessary changes to the company's organizational structure.
B) Jerry established a successful organizational structure and culture, but could not assert control.
C) Jerry's preference for obtaining consensus among his managers led to bickering and infighting.
D) Jerry focused most strategic changes on improving user experience and increasing advertising revenues.

Answer 3

C
Explanation: Mr. Yang was described as someone who preferred consensus among his managers to make tough strategic decisions needed to change Yahoo's structure. That preference, though, led to bickering and infighting. Jerry Yang's failure to make the necessary changes to the Internet firm's organizational structure not only led to a destruction of billions in shareholder value and thousands of layoffs, but also cost him his job.

Question 4

McDonald's uses detailed standard operating procedures throughout the world to ensure product quality.This implies that McDonald's has a high degree of

A) formalization.
B) specialization.
C) decentralization.
D) hierarchy.

Question 5

W.L.Gore & Associates is organized in such a way that it has no formal job titles,job descriptions,or chains of command.This implies that it has

A) a formalized structure.
B) a decentralized structure.
C) organizational inertia.
D) a top-down management style.

Question 6

How does W.L.Gore exemplify founder imprinting?

A) Gore consistently ranks among the top 25 of Fortune's "100 Best Companies to Work For" list.
B) W. L. Gore & Associates is organized in a formal and centralized manner.
C) The compensation of Gore associates is decided through a peer review system.
D) The four core values articulated by Bill Gore guide the company and its associates to this day.

Question 7

Which of the following real-world scenarios best exemplifies formalization?

A) Zappos' focus on allowing its customer service employees to use their own approach rather than depend on scripts
B) McDonald's use of standard operating procedures across the world
C) W. L. Gore's associates organizing themselves in project-based teams that are led by sponsors, not bosses
D) Yahoo's decision to fire its CEO after incurring huge losses

Question 8

A firm's _____ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed.

A) norm
B) culture
C) structure
D) control

Question 9

What most likely happens when a firm optimizes its organizational structure to its current situation?

A) It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur.
B) It achieves superior performance.
C) It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution.
D) It transforms strategy into actions and business models.

Question 10

Why does strategy implementation often require changes within an organization?

A) Strategy implementation is less important than strategy formulation.
B) Strategy implementation transforms strategy into actions and business models.
C) Strategy always follows structure.
D) Strategy implementation does not affect resource allocation and power distribution within an organization.

Question 11

Which of the following terms or phrases best characterizes Zappos' organizational structure?

A) centralized
B) mechanistic
C) extremely tall
D) extremely flat

Question 12

Which of the following did management at Zappos do to reduce the level of formalization in their organization?

A) They avoided asking their customer service reps in call centers to follow a detailed script.
B) They increased their reliance on drop-shipment orders.
C) They established top-down management as their primary strategy.
D) They put an end to the practice that enabled employees to horizontally rotate to different jobs once they had mastered a particular job.

Question 13

Which of the following statements about W.L.Gore & Associates best supports the fact that it is organized in an informal and decentralized manner?

A) W. L. Gore & Associates' employees are organized by their seniors into teams that are led by sponsors, not bosses.
B) W. L. Gore & Associates prefers e-mail communication to face-to-face communication.
C) W. L. Gore & Associates is characterized by a vertical organizational form.
D) W. L. Gore & Associates refers to its employees as associates rather than employees.

Question 14

_____ refers to the degree to which decision making is concentrated at the top of the organization.

A) Specialization
B) Formalization
C) Naturalization
D) Centralization

Question 15

A high degree of formalization in an organization is most likely to

A) improve customer service.
B) slow down decision making.
C) produce inconsistent results.
D) increase creativity and innovation.

Question 16

Which of the following is true of W.L.Gore & Associates,which has a lattice organizational form?

A) It has a high degree of centralization.
B) All employees are empowered to speak to all other employees in the organization.
C) Its culture has been linked to lower employee satisfaction and retention.
D) The degree to which a task is divided into separate jobs is high.

Question 17

_____ describes the degree to which a task is divided into separate jobs.

A) Hierarchy
B) Formalization
C) Centralization
D) Specialization

Question 18

Which of the following is an unintended side effect of a high degree of specialization in an organization?

A) decreased trade-off between breadth and depth of knowledge
B) decreased opportunities for the division of labor
C) reduced employee satisfaction due to repetition of tasks
D) reduced productivity

Question 19

To maintain its core competency of providing a superior customer experience in the face of explosive growth,Zappos split the organization into 10 standalone units.Which of the following does this scenario best illustrate?

A) how an organization accommodates strategy implementation through a flexible organizational structure
B) how strategy implementation has an effect on resource allocation and power distribution
C) how an organization demonstrates organizational inertia, and therefore sets the stage for the firm's subsequent failure
D) how an organization optimizes its organizational structure to the current situation

Question 20

Which of the following statements is true of strategy in an organization?

A) Strategy implementation is considered unsuccessful if it requires changes within an organization.
B) To implement a strategy successfully, an organization's structure must be rigid.
C) Strategy implementation does not affect resource allocation and power distribution within an organization.
D) Organizational structure must follow strategy in order for firms to achieve superior performance.

Question 21

Flight Stream Inc.,a toy manufacturing company,encourages its employees to enjoy their work by taking on additional responsibilities or switching jobs with each other.It allows its employees immense flexibility in charting their own career path within the organization.Chris has worked at Flight Stream for eight years,but has never had a boss or supervised an employee.Which of the following is most likely true in this scenario?

A) Flight Stream Inc. is a mechanistic organization.
B) Flight Stream Inc. has a flat organizational structure.
C) Flight Stream Inc. has a high degree of centralization.
D) Flight Stream's organizational culture is governed by codified rules.

Question 22

Since an organic structure helps a firm build core competencies in areas such as R&D and marketing,this structure is employed by firms that

A) have a tall hierarchical structure.
B) pursue a differentiation strategy at the business level.
C) have a high degree of specialization and centralization.
D) focus on standardizing operating procedures.

Question 23

If a firm pursues only a differentiation strategy,it is most likely a(n)_____ organization.

A) organic
B) mechanistic
C) integrated
D) centralized

Question 24

_____ organizations have a low degree of specialization and formalization as well as a flat organizational structure.

A) Mechanistic
B) Centralized
C) Organic
D) Top-down

Question 25

Grey Designs Inc.,a graphic design firm,has offices in New York,Texas,California,New Mexico,and New Jersey.Each of these offices is headed by a president who reports directly to Charles Grey,the CEO.The heads of the centralized HR,Finance,and Marketing teams report to Charles Grey as well.Managers in the various offices also report to the CEO directly.Based on this information,which of the following statements is most likely to be true?

A) Charles Grey has a wide span of control.
B) Grey Designs Inc. has a tall hierarchical structure.
C) Charles Grey is underworked.
D) Grey Designs Inc. is a mechanistic organization.

Question 26

Black Mouse Inc.,a web development firm,is headed by Rob Dennis,the CEO.Each functional department of the company-marketing,finance,and HR-has a president who reports to the CEO directly.Each department has various managers who manage teams.The managers report to the presidents,and the team leads report to the managers.Finally,the employees at the lowest level report to their team leads.It is rare for a lower-level employee to interact with the CEO of the company.In this scenario,Black Mouse Inc.can be said to have a(n)

A) organic organizational structure.
B) decentralized organizational structure.
C) tall hierarchical structure.
D) flat hierarchical structure.

Question 27

A typical college of business (or school of management)has several areas such as management,marketing,finance,accounting,MIS,and so on.This is an example of a(n)_____ structure.

A) simple
B) M-form
C) matrix
D) functional

Question 28

Why did W.L.Gore reorganize itself into a functional structure from a simple structure?

A) A simple structure was too formalized, specialized, and centralized to really facilitate any kind of productivity.
B) A functional structure is more decentralized.
C) A simple structure could not provide the effective division, coordination, and integration of work required to accommodate future growth.
D) A functional structure has a tall hierarchical structure that relies on bottom-up communication.

Question 29

Fast Call Inc.is a pharmaceutical company that has many breakthroughs in medicine to its credit.Unlike many other pharmaceutical companies,Fast Call has a relaxed work environment where employees are free to discuss projects with each other.Employees are encouraged to choose the projects that interest them; communication between team members and their supervisors is open and easy.Because of the company's work culture,its employees feel motivated to work harder and display more entrepreneurial behaviors.In this scenario,Fast Call Inc.is most likely an organization that is

A) formalized.
B) mechanistic.
C) centralized.
D) organic.

Question 30

Nick just graduated from law school and wants to start his own law firm.It is best for Nick to use a _____ organizational structure.

A) functional
B) simple
C) mechanistic
D) matrix

Question 31

While working a night job at a call center,Carlos creates an app called DineSmart,which can be used to place orders at restaurants,rate the restaurants,and make reservations.Because he receives good responses for his app,he quits his current job to focus his efforts on DineSmart.He creates a start-up called TYOP and hires three people to help him improve DineSmart and maintain the servers that run it.In this scenario,TYOP most likely has a _____ structure.

A) simple
B) matrix
C) mechanistic
D) functional

Question 32

Walmart is an example of a(n)_____ organization.

A) organic
B) mechanistic
C) decentralized
D) informal

Question 33

_____ organizations are characterized by a high degree of specialization and formalization,and tall hierarchies that rely on centralized decision making.

A) Organic
B) Virtual
C) Mechanistic
D) Flat

Question 34

An organization is characterized as having a flexible division of labor,distributed decision making,and generalized knowledge of how to accomplish strategic goals valued.This organization is most likely _____ in nature.

A) specialized
B) organic
C) mechanistic
D) formalized

Question 35

Which of the following is an advantage offered by a functional structure?

A) It allows for an efficient top-down communication chain and thus relies on a relatively tall structure.
B) It facilitates a lower division of labor, which is linked to higher productivity.
C) It allows for a higher degree of specialization and deeper domain expertise.
D) It facilitates a lower level of specialization.

Question 36

Opal,a recent fashion design school graduate,has received praise for her clothing designs from her peers and friends on social networking sites; this has inspired her to set up a store where she can design and sell apparel.After experiencing some success with sales,she recruits two employees to handle customers at the store.However,she handles other day-to-day affairs herself,while continuing to design clothes.Which of the following is likely to be a pitfall of this organizational structure established by Opal?

A) Once the firm starts growing and attracting more customers she is likely to feel overloaded.
B) Hiring more employees will result in loss of intellectual property.
C) People are highly unlikely to buy clothes from a store run by a fashion design student.
D) The online admiration of her designs will not translate into sales.

Question 37

Which of the following is a feature of an organic organization?

A) high degree of specialization
B) rigid division of labor
C) clear lines of authority
D) high span of control

Question 38

Which of the following characteristics of McDonald's best supports the fact that it is a mechanistic organization?

A) It frequently ranks among the top 500 companies to work for.
B) Its communication lines are bottom-up and well-defined.
C) Its decision power is spread across the organization.
D) Its job descriptions are very descriptive.

Question 39

The relationship between strategy and structure that directly impacts a firm's performance is

A) dynamic.
B) independent.
C) static.
D) unpredictable.

Question 40

McDonald's operates Hamburger University that trains students to ensure consistent food quality across its outlets throughout the world.This indicates that McDonalds's

A) is organic in nature.
B) is mechanistic in nature.
C) has an informal structure.
D) has a decentralized structure.

Question 41

Why must managers use a mechanistic structure to implement a cost-leadership strategy?

A) A mechanistic structure offers a centralized structure with well-defined lines of authority.
B) A mechanistic structure allows for a lower degree of specialization.
C) A mechanistic structure offers continuous innovation and flexibility as well as creativity.
D) A mechanistic structure allows for the CEO to delegate tasks.

Question 42

Which of the following statements is true about the use of functional structures with various business strategies?

A) The goal of a differentiation strategy is to create competitive parity.
B) The goal of a cost-leadership strategy is to create competitive parity.
C) The goal of a differentiation strategy is to create a competitive advantage by controlling costs.
D) A cost-leadership strategy can be effectively implemented with the help of an organic structure.

Question 43

Frappe operates as a strategic business unit (SBU)under More or Less Inc.,a home-furnishings manufacturer.From this information,it may be reasonable to infer that

A) Frappe does not have its own profit and loss responsibility.
B) Frappe is dependent on the other SBUs in More or Less Inc.
C) Frappe has a matrix organizational structure.
D) Frappe is led by its own CEO (or equivalent general manager).

Question 44

When a firm diversifies into different product lines and geographies,a _____ structure is preferred.

A) simple
B) functional
C) multidivisional
D) network

Question 45

Why does a firm use an organic organization combined with a functional structure when implementing a differentiation strategy?

A) It allows the firm to create incentives to foster process innovation in order to drive down cost.
B) It allows the firm to reduce its cost below that of competitors while offering acceptable value.
C) It allows the firm to constantly upgrade core competencies in R&D, innovation, and marketing.
D) It allows the firm to nurture and constantly upgrade necessary core competencies in manufacturing and logistics.

Question 46

Kolt Inc.,a large and successful retail chain on the West Coast,decides to expand its operations across the U.S.Which of the following organizational structures should Kolt Inc.use?

A) basic
B) simple
C) multidivisional
D) functional

Question 47

Why does a functional structure rely on a flat organizational structure?

A) The work in the organization is centrally coordinated by the CEO.
B) It allows for a higher degree of specialization and domain expertise.
C) It allows for efficient bottom-up and top-down communication.
D) It allows for the implementation of a differentiation strategy.

Question 48

Curve Inc.is a software development firm based in California.It strives to provide highly differentiated software at cheaper prices when compared to its competitors.Which of the following organizational designs should Curve Inc.implement to ensure the maximum success of its business strategies?

A) organic
B) simple
C) ambidextrous
D) mechanistic

Question 49

W.L.Gore has four product divisions: electronic products,industrial products,medical products,and fabrics division.It also has manufacturing facilities in the U.S.,China,Germany,Japan,and Scotland,and business activities in 30 countries across the globe.Based on this information,which of the following statements is most accurate?

A) W. L. Gore is pursuing a cost-leadership strategy.
B) W. L. Gore is using a multidivisional structure.
C) W. L. Gore is using a simple structure.
D) W. L. Gore is pursuing an integration strategy.

Question 50

Which of the following features helps match a cost-leadership strategy to a functional structure?

A) decentralization
B) process and product innovations
C) flexibility and mutual adjustment
D) focus on economies of scale

Question 51

Which of the following is true of a functional structure?

A) It offers a lower degree of specialization than a simple structure.
B) It relies on a relatively flat organizational structure.
C) It offers decentralized management.
D) It relies on bottom-up communication rather than top-down communication.

Question 52

Which of the following types of organizations best helps match a differentiation strategy to a functional structure?

A) ambidextrous organization
B) mechanistic organization
C) organic organization
D) rigid organization

Question 53

Remote Inc.is a notebook manufacturing company based in Ohio.Remote's main market is Ohio.It aims at providing its products at better prices than its competitors.Which of the following structures is Remote Inc.likely to use if it has functional setup?

A) organic
B) simple
C) matrix
D) mechanistic

Question 54

Broadview Company integrated certain important functions of Widget.com with Widget,while keeping other functions independent.To support this integration,the president of Widget shifted compensation incentives for both senior teams to accomplish joint goals rather than to focus solely on each business unit's performance.This scenario best exemplifies a(n)

A) multidivisional structure.
B) organic organization.
C) simple structure.
D) ambidextrous organization.

Question 55

Which of the following is an advantage of using a functional structure when pursuing a cost-leadership strategy?

A) It allows a cost-leader to upgrade core competencies in manufacturing and logistics.
B) It enables a cost-leader to build products that are different from its competitors' offerings.
C) It enables a cost-leader to increase costs above that of its competitors.
D) It allows a cost-leader to operate in a decentralized organizational structure.

Question 56

Which of the following is a disadvantage of a functional strategy?

A) It frequently lacks the tools required to pursue a cost-leadership strategy.
B) It does not facilitate rich communication between members of the same department.
C) It cannot effectively address a higher level of diversification.
D) It does not allow organizations to be flexible or innovative.

Question 57

To effectively implement a differentiation strategy,managers rely on a functional structure that resembles an organization that is highly

A) formalized.
B) specialized.
C) organic.
D) mechanistic.

Question 58

StickOn Inc.is an adhesive manufacturer.After a slight dip in production numbers,it forms a team to find a quick solution to this problem,at least for the shorter term.This scenario best exemplifies

A) exploration.
B) exploitation.
C) co-opetition.
D) competition.

Question 59

A functional structure is recommended when a firm

A) has a broad focus in terms of its product/service offerings.
B) has a low level of diversification.
C) has a low degree of specialization.
D) diversifies into different product lines and geographies.

Question 60

Plow Inc.is a greeting card manufacturing company.Plow's market dominance exists primarily because of the innovative designs of its greeting cards when compared to those of its competitors.In this scenario,Plow Inc.'s managers must ideally rely on a functional structure that resembles a(n)_____ organization.

A) simple
B) organic
C) mechanistic
D) integrated

Question 61

What is most likely to happen if a firm relies too long on a competency without honing,refining,and upgrading as the firm and the environment change?

A) The firm's original core competency can turn from a liability into an asset.
B) The firm's organizational inertia can turn into its core rigidity.
C) The firm's competitive parity can turn into its competitive advantage.
D) The firm's culture can turn from a core competency into a core rigidity.

Question 62

The most important yet least visible element of organizational culture is

A) values.
B) norms.
C) laws.
D) artifacts.

Question 63

Employees learn about an organization's culture through the process of

A) socialization.
B) exploitation.
C) co-opetition.
D) acculturation.

Question 64

Which of the following global strategies best matches with a multidivisional structure?

A) international
B) multidomestic
C) global-standardization
D) transnational

Question 65

Which of the following statements best describes groupthink?

A) It is a process by which the founder defines and shapes an organization's culture, which can persist for decades after his or her departure.
B) It is a situation in which organizations compete with one another for resources, but they also need to cooperate to share competencies.
C) It is a process whereby employees internalize an organization's values and norms through immersion in its day-to-day operations.
D) It is a situation in which opinions coalesce around a leader without individuals critically challenging and evaluating that leader's opinions and assumptions.

Question 66

GM's insistence on sticking to a bureaucratic culture combined with its M-form structure and its subsequent failure to adapt to changing customer preferences for more fuel-efficient cars,produce higher quality,and create innovative designs best exemplifies

A) decentralization.
B) founder imprinting.
C) groupthink.
D) core rigidity.

Question 67

Which of the following organizational structures matches best with an international strategy?

A) simple
B) matrix
C) multidivisional
D) functional

Question 68

_____ describes the collectively shared values and norms of an organization's members.

A) Competitive advantage
B) Organizational structure
C) Organizational culture
D) Core competency

Question 69

Why does Zappos offer its new recruits $2,000 to quit at the end of the first week of their job?

A) It is confident that employees will be impressed with the company's creativity and will stay on for a longer term.
B) It does not believe that a firm's culture can flow from its values when they are linked to the company's reward system.
C) It believes that individuals who choose to stay on will fit in with the Zappos culture.
D) It is certain that a firm's culture flows only from founder imprinting.

Question 70

A firm that uses a structure that is organized along different business functions such as HR,R&D,Sales,and Marketing and also along different geographical areas such as different countries of the world is most likely using a _____ structure.

A) global matrix
B) multidivisional
C) functional
D) simple

Question 71

FTZ Inc.is an electronic appliances manufacturer that has many strategic business units (SBUs),among which,television and computers share a close relationship.These SBUs have to fight each other for R&D funding because there is a combined amount set aside for these two units.However,they share technological findings with each other and work together to ensure that their combined output is better that of the other SBUs.Such a relationship between SBUs in a business is referred to as

A) competition.
B) co-opetition.
C) exploitation.
D) exploration.

Question 72

Why is the optimal organizational structure a multidivisional structure?

A) Its focus is on driving down costs.
B) Its focus is on producing differentiated products.
C) Its focus is on retaining activities within a single geographic area.
D) Its focus is on establishing a flat hierarchy operated in a decentralized fashion.

Question 73

_____ define appropriate employee attitudes and behaviors.

A) Values
B) Artifacts
C) Appraisals
D) Norms

Question 74

Zappos' 10 core values that define what it means for employees to be working at Zappos also define the _____ of Zappos.

A) organizational structure
B) organizational culture
C) organizational strategy
D) organizational controls

Question 75

Why should managers using the M-form organizational structure to support a related-diversification strategy ideally concentrate decision making at the top of the organization?

A) It allows a high level of integration.
B) It helps contain the core competencies within a strategic business unit (SBU).
C) It leads to competition between SBUs.
D) It helps evaluate each SBU as a stand-alone profit-and-loss center.

Question 76

Zappos established its unique organizational culture

A) through explicitly stated values that are connected to its reward system.
B) through input control systems that mandated adherence to organizational values.
C) by closely monitoring employees calls with customers.
D) by giving employees gift cards to shop at Zappos and Amazon.

Question 77

Organizational culture can be the basis of a firm's competitive advantage if

A) it is valuable, rare, and difficult to imitate.
B) it is trademarked and copyright protected.
C) it converts the organization's core competency into its core rigidity.
D) it changes the organization's inertia into its core rigidity.

Question 78

An organization that is organized according to strategic business units (SBUs)and also along organizational structures is most likely using a _____ structure.

A) functional
B) multidivisional
C) matrix
D) simple

Question 79

Which of the following types of groups is most susceptible to groupthink?

A) a diverse group
B) a cohesive group
C) a heterogeneous group
D) a decentralized group

Question 80

Which of the following real-world scenarios best exemplifies the use of organizational culture to build competitive advantage?

A) W. L. Gore & Associates organizes its employees into project-based teams.
B) Apple develops high-tech products that are preferred by consumers across the world.
C) Southwest Airlines pilots sometimes help load baggage, which results in quick turnaround time.
D) GM offers compensation if its products do not meet a consumer's expectations.