Deck 6: Designing Organizational Structure: Specialization and Coordination

Question 1

Functional structure provides people with the opportunity to learn from one another and become more specialized and productive.

Answer 1

True

Question 2

In a product division structure, a centralized set of support functions services the needs of a number of different product lines.

Answer 2

True

Question 3

Use of multidivisional structure avoids duplication of organizational activities.

Answer 3

False

Question 4

In a multidivisional structure, each division is independent and self-contained.

Question 5

The more centralized an organization, the more of a problem communication will be.

Question 6

A functional structure groups functions according to the specific demands of products, markets, or customers.

Question 7

Servicing the needs of new kinds of customer groups and tailoring products to suit them are relatively simple in a functional structure.

Question 8

Most Fortune 500 companies use a functional structure because it allows them to grow and expand their operations while maintaining control over their activities.

Question 9

A multidivisional structure is characterized by a corporate headquarters staff which is composed of corporate managers who are responsible for overseeing the activities of the divisional managers heading up the different divisions.

Question 10

In a multidivisional structure, corporate headquarters can identify the divisions in which an investment of capital will yield the highest returns.

Question 11

The structure that organizations most commonly adopt to solve the control problems that result from producing many different kinds of products in many different locations for many different types of customers is the divisional structure.

Question 12

The higher the level of differentiation, the more complex the integrating mechanisms that managers need to use to control organizational activities.

Question 13

As an organization increases the kinds of goods it manufactures or the services it provides, a functional structure becomes more effective at coordinating task activities.

Question 14

A divisional structure is a design that groups people into separate functions or departments because they share common skills and expertise because they make use of the same resources.

Question 15

As an organization with a functional structure grows, the cost of each function's contribution to the development of each product becomes increasingly simple to measure.

Question 16

A functional structure has greater vertical and horizontal differentiation than a divisional structure and employs more complex integrating mechanisms.

Question 17

A product structure is a type of a functional structure.

Question 18

Multidivisional structures tend to be the tallest of all organizational structures.

Question 19

Functional structure is the foundation of horizontal differentiation.

Question 20

The goal behind the change to a divisional structure is to create smaller, more manageable subunits within an organization.

Question 21

A network structure increases the cost of production.

Question 22

One problem with the matrix structure is that employees must report to two different superiors.

Question 23

Which of the following situations causes communication problems within an organization that uses functional structure?

A) the organization uses the system of management by objectives
B) the organization operates in a stable environment
C) the organization operates in a rich environment
D) the organization develops more functions that are increasingly distant from one another

Question 24

Which of the following statements is true regarding a functional structure?

A) In a functional structure, it becomes easier for employees to supervise one another and control one another's behavior.
B) In the case of a functional structure, people are grouped together according to the specific demands of products, markets, or customers.
C) The use of the functional structure increases an organization's ability to quickly respond to the changing environment.
D) The functional structure can be used only in the decentralized organizations.

Question 25

Matrix structures are a principal form of organic structure.

Question 26

Which of the following organizational structures is the foundation of horizontal differentiation?

A) functional structure
B) product structure
C) matrix structure
D) divisional structure

Question 27

As an organization that uses a functional structure grows, ________.

A) the extent of division of labor decreases
B) the process of communication simplifies
C) the cost of each function's contribution to the development of each product becomes increasingly difficult to measure
D) the vertical differentiation within the organization decreases

Question 28

A product team structure is a divisional structure in which divisions are organized according to the requirements of the different locations in which an organization operates.

Question 29

A ________ structure is a design that groups people together on the basis of their common expertise and experience or because they use the same resources.

A) team
B) functional
C) divisional
D) product

Question 30

In general, the more complex the value-creation activities necessary to produce and market goods and services, the more problems are associated with using a network structure.

Question 31

A product division structure is more decentralized than a product team structure.

Question 32

Employee roles are clearly defined in a matrix structure.

Question 33

As the Tasty Bites restaurant grew, the owners grouped people together on the basis of their common skills and expertise. In this case, which of the following types of organizational structures is used by the restaurant?

A) matrix structure
B) product structure
C) functional structure
D) divisional structure

Question 34

The ________, the more complex the integrating mechanisms that managers need to use to control organizational activities.

A) fewer the number of levels in the hierarchy of the organization
B) higher the level of environmental richness
C) higher the level of differentiation
D) fewer the number and type of the products manufactured by the company

Question 35

Which of the following will allow managers to regain control of their organizations when they decide to adopt a more complex structure?

A) decreasing vertical differentiation
B) increasing horizontal differentiation
C) decreasing integration
D) increasing formalization

Question 36

A network structure is a cluster of different organizations whose actions are coordinated by contracts and agreements, rather than by a formal hierarchy of authority.

Question 37

In which of the following situation, servicing the needs of new kinds of customer groups and tailoring products to suit them are is most likely to be relatively difficult?

A) the organization operates in a rich environment
B) the organization uses functional structure
C) the organization has a monopoly in its respective business
D) the organization uses matrix structure

Question 38

A product team structure is more decentralized than a functional structure.

Question 39

Which of the following ways can be used by a manager to increase vertical differentiation?

A) increase the number of levels in the hierarchy
B) increase the richness of the environment
C) diversify the business
D) manufacture products at several different locations

Question 40

When ________, the cost of each function's contribution to the development of each product becomes increasingly difficult to measure.

A) an organization with a divisional structure uses the system of management by objectives
B) an organization with a functional structure grows and the number and complexity of their functions and products increases
C) an organization with a matrix structure operates in a stable environment
D) an organization with a divisional structure operates in a rich but complex environment

Question 41

Which of the following statements is true regarding a product division structure?

A) In a product division structure, each division is independent and self-contained.
B) Use of product division structure leads to duplication of organizational activities.
C) Typically, a product division structure is used by an organization which produces a wide variety of complex products.
D) In a product division structure, support functions are centralized at the top of the organization.

Question 42

Most Fortune 500 companies use a ________ structure because it allows them to grow and expand their operations while maintaining control over their activities.

A) functional
B) product divisional
C) multidivisional
D) market

Question 43

Which of the following statements is true regarding a multidivisional structure?

A) A multidivisional structure is the least suitable for an organization which produces a wide range of complex products.
B) A multidivisional structure decreases division of labor which ultimately decreases organizational effectiveness.
C) As an organization moves from functional to multidivisional structure, the level of vertical differentiation increases.
D) A multidivisional structure avoids duplication of organizational activities.

Question 44

A ________ structure is a structure in which support functions are placed in self-contained divisions.

A) market
B) product division
C) multidivisional
D) functional

Question 45

Which of the following is a difference between the product division structure and the multidivisional structure?

A) Horizontal differentiation is increased in the multidivisional structure, but not in the product division structure.
B) Vertical differentiation is increased in the product division structure, but not in the multidivisional structure.
C) Support functions are centralized at the top of the organization in a multidivisional structure, but decentralized to the divisions in a product division structure.
D) Divisions are independent in a multidivisional structure, but not in a product division structure.

Question 46

Which of the following structures is most likely to be selected by an organization whose products are very complex technologically or whose characteristics change rapidly to suit changing customer needs?

A) multidivisional structure
B) functional structure
C) product team structure
D) geographic divisional structure

Question 47

A food manufacturer is experiencing coordination problems between its frozen food division and its canned food division. The main control problem is that each product requires an entirely separate system for ordering supplies, packaging the product, and storing the product upon completion. Which structure would help solve these coordination problems?

A) product division structure
B) market structure
C) multidivisional structure
D) geographic divisional structure

Question 48

As compared to other organizational structures, an advantage of a multidivisional structure is that ________.

A) it is the least expensive to operate
B) the division of labor increases organizational effectiveness
C) the duplication of organizational activities is avoided
D) the communication problems are least likely to occur in a multidivisional structure

Question 49

A(n) ________ structure has functions grouped together according to the specific demands of products, markets, or customers.

A) divisional
B) concurrent
C) functional
D) differentiated

Question 50

A corporate headquarters staff is created in a ________ structure.

A) product division
B) multidivisional
C) product team
D) matrix

Question 51

Under which of the following situations are managers most likely to use functional structure?

A) The organization produces a large number of different products.
B) The organization can easily measure the cost of each function's contribution to the development of each product.
C) The organization produces products in several different geographic locations.
D) The organization sells its products to only one major type of customer.

Question 52

Which of the following is a disadvantage of a multidivisional structure?

A) A multidivisional structure decreases division of labor which ultimately decreases organizational effectiveness.
B) It becomes difficult for corporate headquarters to identify the divisions in which an investment of capital will yield the highest returns.
C) A multidivisional structure is not suitable for an organization which produces a wide range of complex products.
D) Multidivisional structures are very expensive to operate.

Question 53

Which of the following is a divisional structure in which a centralized set of support functions services the needs of a number of different product lines?

A) product team structure
B) multidivisional structure
C) product division structure
D) market structure

Question 54

________ structures tend to be the tallest of all organizational structures.

A) Functional
B) Product division
C) Market
D) Multidivisional

Question 55

Which of the following types of organizational structures is most likely to use transfer pricing?

A) functional structure
B) product team structure
C) product division structure
D) multidivisional structure

Question 56

Because controlling the production of many different foods within the same manufacturing unit proved to be difficult and resulted in increasing costs, a packaged food manufacturer created separate product divisions that make frozen vegetables, frozen entrees, canned soups, and baked goods. This design decision will ________ within the organization.

A) decrease horizontal differentiation
B) increase vertical differentiation
C) increase horizontal differentiation
D) decrease vertical differentiation

Question 57

A regional company markets ice cream, milk, and frozen yogurt. A ________ structure is the most appropriate structure for this firm.

A) product division
B) multidivisional
C) product team
D) market

Question 58

A ________ structure is commonly used by food processors, furniture makers, and companies that make personal care products, paper products, or other products that are broadly similar and use the same set of support functions.

A) product division
B) market
C) multidivisional
D) product team

Question 59

Which of the following types of organizational structures is the most suitable for an organization whose products are very different and which operates in several different markets or industries?

A) functional structure
B) multidivisional structure
C) market structure
D) product divisional structure

Question 60

Which of the following statements is true regarding a divisional structure?

A) The goal behind the change to a divisional structure from a functional structure is to create larger subunits within an organization.
B) As compared to functional structure, divisional structure has lower levels of vertical differentiation.
C) A divisional structure employs more complex integrating mechanisms than a functional structure.
D) As compared to functional structure, divisional structure has lower levels of horizontal differentiation.

Question 61

A ________ structure has specialists from support functions combined into product development groups that specialize in the needs of a particular kind of product.

A) product team
B) task force
C) transactional
D) functional

Question 62

Which of the following is an advantage of a matrix structure?

A) increased organizational flexibility
B) clearly defined hierarchy of authority
C) lack of role ambiguity and role conflict
D) lack of movement of employees from team to team

Question 63

Which of the following statements is true regarding a market structure?

A) A market structure is a type of a functional structure.
B) A market structure aligns functional skills and competences with the product needs of different customer groups.
C) Organizations using the market structure have the tallest hierarchies.
D) The market structure is the most suitable for a company that operates in a continuously changing environment and manufactures complex products.

Question 64

A ________ structure organizes divisions according to the requirements of the different locations in which an organization appears.

A) geographic divisional
B) product divisional
C) functional
D) multidivisional

Question 65

Which of the following statements is true regarding a product team structure?

A) Use of product team structure increases the product development time.
B) In a product team structure divisions are organized according to the requirements of the different locations in which an organization operates.
C) A product team structure is more decentralized than a functional structure.
D) Typically, a product team structure is used by an organization that operates in a stable environment where the requirements of the customers do not change quickly.

Question 66

Which of the following organizational structures is the most decentralized?

A) product division structure
B) functional structure
C) product team structure
D) transactional structure

Question 67

A matrix structure involves ________ vertical control from the formal hierarchy and ________ horizontal control from the use of integrating mechanisms.

A) minimal; minimal
B) minimal; maximal
C) maximal; maximal
D) maximal; minimal

Question 68

A market structure organizes people according to ________.

A) the skills of the people
B) the types of customers they serve
C) the regional markets they serve
D) the functions they perform

Question 69

A ________ structure is a cross between the product division structure and the multidivisional structure.

A) functional
B) transactional
C) product team
D) geographic divisional

Question 70

Artists and writers in Hallmark are organized around categories of greeting cards such as Mother's Day cards and Christmas cards. Which of the following types of organizational structures is being used by Hallmark?

A) geographic structure
B) functional structure
C) product team structure
D) transactional structure

Question 71

Which of the following is a difference between the product team and the matrix structures?

A) Employees have two bosses in a product team structure and only one boss in a matrix structure.
B) A product team structure uses teams to coordinate activities but a matrix structure does not use teams.
C) Employees move between teams in a matrix structure but not in a product team structure.
D) A matrix structure has a taller hierarchy than a product team structure.

Question 72

Which of the following statements is most likely to be true regarding a geographic divisional structure?

A) A geographic structure allows some functions to be centralized at one headquarters location and others to be decentralized to a regional level.
B) A geographic divisional structure is a divisional structure in which specialists from the support functions are combined into product development teams that specialize in the needs of a particular kind of product.
C) An organization using a geographic divisional structure employs a transfer pricing mechanism to transfer its products from one geographic division to the other geographic division.
D) Organizations that use geographic divisional structure operate in rich and dynamic environment.

Question 73

Which of the following statements is true regarding a matrix structure?

A) A matrix structure has a clearly defined hierarchy of authority.
B) An organization using a matrix structure can quickly respond to changing needs of customers.
C) A matrix structure is characterized by clearly defined roles.
D) Organizations with matrix structures tend to have the tallest hierarchies.

Question 74

In which of the following organizational structures do employees move between teams?

A) product team structure
B) matrix structure
C) functional structure
D) bureaucratic structure

Question 75

A geographic structure is most likely to be appropriate for which of the following companies?

A) a large manufacturer that wants to produce automobiles in Mexico and computers in Southeast Asia
B) an oil producer that sells gas, a commodity, in five different regions
C) a telecommunications company that makes technologically complex equipment
D) a retailer who specializes in clothing and operates in five different regions of the United States

Question 76

Which of the following structures is most likely to be the flattest?

A) mechanistic structure
B) matrix structure
C) bureaucratic structure
D) transactional structure

Question 77

In a ________ structure, role and authority relationships are deliberately left vague because the underlying assumption of this structure is that when team members are given more responsibility than they have formal authority, they are forced to cooperate to get the job done.

A) functional
B) bureaucratic
C) matrix
D) product divisional

Question 78

Which of the following organizational structures has a disadvantage of extensive duplication of activities within the organization?

A) functional structure
B) product division structure
C) multidivisional structure
D) market structure

Question 79

Which of the following is an organizational design that groups people and resources in two ways simultaneously: by function and by product?

A) product team structure
B) market structure
C) geographic structure
D) matrix structure

Question 80

The price at which one division in an organization sells a product or information about innovations to another division in the same organization is called ________ price.

A) developmental
B) historic
C) aggregated
D) transfer