Deck 10: Organizing for Innovation

Question 1

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

Answer 1

True

Question 2

In globally linked strategies to innovation,R&D divisions are centralized.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

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.

Question 5

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

Question 6

Formalization increases the need for direct managerial oversight.

Question 7

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

Question 8

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

Question 9

Loose coupling helps organizations reap significant synergies by being tightly integrated.

Question 10

Managers choose a local-for-local approach to innovation when they have a strong desire to control the evolution of a technology.

Question 11

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

Question 12

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

Question 13

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

Question 14

The transnational approach to R&D leverages resources and capabilities that exist anywhere within the firm and deploys them when and where an opportunity to do so exists.

Question 15

A loosely coupled structure is better suited for activities that involve exchange of tacit knowledge.

Question 16

According to Bartlett and Ghoshal,for the transnational approach to R&D to work,reciprocal interdependence among the divisions of a firm must be discouraged.

Question 17

High degrees of formalization and standardization in firms results in organic structures.

Question 18

Modular products become more valuable when customers have heterogeneous demands.

Question 19

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

Question 20

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

Question 21

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

Question 22

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 the lack of formal rules and procedures.

Question 23

Urban Fashions has become very profitable and now employs in large numbers.Serena,the owner of the firm,had been very informal in running the company.However,with the increase in the size of the firm,she 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.The method used by Serena is referred to as _____.

A) disintermediation
B) formalization
C) nationalization
D) decentralization

Question 24

According to Schoonhoven and Jelinek,quasiformal structures are:

A) slow to respond to the need for changes.
B) useful in fostering interactions based on hierarchy.
C) less problem-focused than rest of the company.
D) not a part of the formal reporting structure.

Question 25

ErgoWorld manufactures office furniture.The company is considering adopting a modular production system.A modular system offers greater value to ErgoWorld when:

A) most customers are likely to agree on a single product configuration.
B) customers prefer to upgrade their products by replacing their entire system.
C) customers are willing to pay a premium price for extreme customization and personalization.
D) customers have heterogeneous demands which are expected to be met in a cost-effective way.

Question 26

Divine Laboratories,a 70 year old large pharmaceutical firm,has consistently invested heavily in R&D.Divine Laboratories would typically have:

A) better capabilities to take on larger innovation projects than smaller firms.
B) fewer rules and regulations than smaller firms.
C) a more effective governance system than smaller firms.
D) lesser bureaucratic inertia than smaller firms.

Question 27

Which of the following 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.

Question 28

In the 1980s and 1990s,Neon Co.was the most successful firm in the television market.The firm believed that 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 that Japanese competitors had begun to infiltrate the market with.Eventually,Neon lost its market leadership to its competitors.This is a typical example for the _____.

A) Giffen effect
B) Hawthorne effect
C) Idiosyncrasy credit
D) Icarus Paradox

Question 29

As a firm grows bigger it becomes:

A) easier to effectively monitor and motivate 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.

Question 30

Altair Inc.,the largest firm in the electronics market,is facing stiff competition from a relatively smaller firm,the Cygnus Group.Which of the following is an advantage that Cygnus has over Altair due its size?

A) Large fixed-asset bases
B) Multiple layers of administration
C) Flexibility and an entrepreneurial culture
D) Greater bureaucratic inertia due to well-developed policies and procedures

Question 31

Liam,an employee at Centaurs Inc.,is a 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,limited bureaucracy,and it also has its own unique culture.Liam's team can be referred to as:

A) a mechanistic team.
B) skunk works.
C) an inorganic group.
D) a quality circle.

Question 32

Which of the following is true of ambidextrous organizations?

A) They have uniform incentive plans for all employees within the organization.
B) They help 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.

Question 33

Modern Woods Furniture Company uses a limited number of components to make several different types of tables by configuring them in many possible ways.Customers can mix and match a number of components to meet their specific needs.Modern Woods is said to be applying:

A) product modularity.
B) mass standardization.
C) architectural innovation.
D) component parallelism.

Question 34

Since a large company tends 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

Question 35

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.

Question 36

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.

Question 37

Which of the following statements is true of standardization?

A) It can ensure that activities within the firm run smoothly and yield predictable outcomes.
B) It is defined as the degree to which the 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.

Question 38

Pipeline Designs Inc.is a firm that outsources designs for apparels and accessories to reputed fashion houses across Europe.Of late,it has been losing out on orders from important clients.A study conducted on the firm reflected that though the designers were highly capable,low levels of employee empowerment,motivation,and experimentation stifled their creativity.To tackle this problem the firm should:

A) adopt a mechanistic structure.
B) adopt high degrees of formalization and standardization.
C) adopt an organic structure.
D) avoid keeping its R&D activities decentralized.

Question 39

Which of the following helps organizations collectively achieve both efficiency and flexibility?

A) Mechanistic structure
B) Organic structure
C) Modular system
D) Formalization

Question 40

Which of the following is true of loosely coupled organizational structures?

A) In loosely coupled structures, development and production activities have different objectives and standards.
B) The possibility of achieving synergies is low in loosely coupled structures.
C) They are 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.

Question 41

Not-invented-here syndrome occurs when:

A) a division of a firm is reluctant to adopt other divisions' innovations.
B) a firm tends to always 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.

Question 42

Oxygenic 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 an example of a _____ strategy.

A) center-for-global
B) local-for-local
C) locally leveraged
D) globally linked

Question 43

Oxygenic is a company that uses photodynamic therapy to treat cancer and has major divisions in Germany,Russia,and the United States.The scientists in Russia develop the cancer treatment methods,treatment clinics are organized in Germany,and the U.S.division gathers the finance and markets the treatment methods.What type of strategy is being employed by Oxygenic and what are the advantages and disadvantages of this type of strategy?

Question 44

Explain why a mechanistic organizational structure stifles creativity.

Question 45

Phoenix Motor Company is considering using loosely-coupled organizational structure.They have asked for your evaluation of such a structure and if you would recommend it for an automobile manufacturer.Provide your answer.

Question 46

Biotrue produces tissues and diagnostics substances for three market segments: hospitals,universities,and pharmaceutical companies.The firm is trying to decide whether to decentralize its R&D activities by division or not.You have been called in as a consultant to explain the advantages and disadvantages of such a move.What will your opinion be?

Question 47

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 is true in this context?

A) The subsidiaries of M&P Inc. and their R&D divisions will be highly autonomous.
B) The subsidiaries will achieve economies of scale in R&D activities.
C) This approach will make diffusion of valuable innovations across the company simple.
D) This approach will reduce redundancy in activities.

Question 48

The Sapphire Crystal Company wants to tightly control R&D activities and achieve specialization and economies of scale.At the same time,it wants to protect its core competencies and avoid significant redundancy in R&D activities.The _____ strategy is best suited to achieve this goal.

A) center-for-global
B) local-for-local
C) organic structure
D) disaggregation

Question 49

What are some of the advantages and disadvantages of large firms in terms of R&D?

Question 50

In a locally leveraged strategy to innovation,the R&D divisions _____.

A) are completely centralized
B) each play a different role 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