Ch. 14 - Organizational Structure

Question 1

Organizational Structure

Answer 1

Formally dictates how jobs and tasks are divided and coordinated between individuals and groups within the company

Question 2

True or False: Organizational structure has a significant impact on financial performance and an organization’s ability to manage employees and products.

Answer 2

True

Question 3

What are the elements of organizational structure?

Answer 3

Work Specialization
Span of Control
Centralization
Formalization
Chain of Command

Question 4

Work Specialization

Answer 4

The degree to which tasks in an organization are divided into separate jobs

Question 5

What are the consequences of high work specialization?

Answer 5

Increased productivity
Reduced flexibility in employees since employees cannot practice other skills
Lower motivation/job satisfaction due to lack of variety in tasks

Question 6

Chain of command

Answer 6

Specifies who reports to whom and formal authority relationships. Helps organizations to attain order, control, and predictable performance

Question 7

True or False: In a typical organizational structure, employees may not have someone to whom they report.

Answer 7

False
In a typical organizational structure, each employee has one person to whom they report

Question 8

Span of Control

Answer 8

Represents how many employees each manager in the organization has responsibility for

Question 9

True or False: Research suggests that a wide span of control yields the highest productivity

Answer 9

False
A moderate span of control is best for an organization’s production

Question 10

What are the negative consequences of a tall span of control?

Answer 10

Need to hire more managers
Communication becomes more complex
Organization’s ability to make decisions becomes slower (decisions need to be approved at every level)

Question 11

Centralization

Answer 11

Aspect of structure that dictates where decisions are formally made in organizations. Decisions in highly centralized structures are made exclusively by top managers

Question 12

Formalization

Answer 12

The degree to which rules and procedures are used to standardize behaviours and decisions in an organization

Question 13

Mechanistic Organizations

Answer 13

Efficient, rigid, predictable, and standardized organizations that thrive in stable environments (high formalization, high centralization, low flexibility)

Question 14

Organic Organizations

Answer 14

Flexible, adaptive, outward-focused organizations that thrive in dynamic environments (low work specialization, decentralized, high flexibility)

Question 15

Organizational Design

Answer 15

The process of creating, selecting, or changing the structure of an organization

Question 16

Common Organizational Forms

Answer 16

Simple Structure
Bureaucratic Structure (includes functional, multi-divisional, and matrix structures)

Question 17

What factors impact the organizational design process?

Answer 17

Business Environment
Company Strength
Technology
Company Size

Question 18

Business Environment (Organizational Design)

Answer 18

Factors external to the firm such as customers, suppliers, and competitors which affect organizational design

Question 19

Company Strategy (Organizational Design)

Answer 19

An organization’s objectives and goals and how it tries to capitalize on its assets to make money

Question 20

Low-Cost Producer Strategy

Answer 20

Prioritize efficiency to sell products at the lowest price possible

Question 21

Differentiation Strategy

Answer 21

Prioritize quality of products (offer features lower price products do not have) to charge higher prices

Question 22

Technology (Organizational Design)

Answer 22

The method by which an organization transforms inputs to outputs

Question 23

Company Size (Organizational Design)

Answer 23

The number of employees in a company. Larger companies rely on some combination of specialization, centralization, and formalization to control their activities

Question 24

Simple Structure

Answer 24

An organizational form that features one person as the central decision-making figure. The most common form of organizational design (more small organizations than large ones)

Question 25

What are the characteristics of a simple structure?

Answer 25

Usually a small organization
Manager/President/Owner are the same person
Low degree of formalization
Only basic differences in work specialization

Question 26

Bureaucratic Structure

Answer 26

An organizational form that exhibits many facets of a mechanistic organization. Designed for efficiency and rely on high levels of work specialization, formalization, centralization, rigid chains of command, and narrow spans of control

Question 27

Functional Structure

Answer 27

An organizational form in which employees are grouped by the functions they perform for the organization.

Question 28

What are the benefits of using a functional structure?

Answer 28

Extremely efficient when the organization as a whole has a relatively narrow focus, fewer product lines or services, and a stable environment.

Question 29

What is the biggest weakness of a functional structure?

Answer 29

Employees do not communicate as well across functions as they do within functions

Question 30

Multi-divisional Structure

Answer 30

An organizational form in which employees are grouped by product, geography, or client

Question 31

How do multi-divisional structures usually develop?

Answer 31

Multi-divisional structures generally develop from companies with functional structures whose interests and goals become too diverse for a functional structure to handle

Question 32

Product Structure

Answer 32

An organizational form in which employees are grouped around different products that the company produces. Best used when firms diversify to the point that the products they sell are so different that managing them becomes overwhelming

Question 33

Geographic Structure

Answer 33

An organizational form in which employees are grouped around the different locations where the company does business

Question 34

Why might a company choose a geographic structure?

Answer 34

Customers in different regions have different tastes
The size of the locations that need to be covered by different salespeople
Manufacturing and distribution of a product are better served by a geographic breakdown

Question 35

Client Structure

Answer 35

An organizational form in which employees are organized around serving customers

Question 36

Matrix Structure

Answer 36

A complex form of organizational structure that combines a functional and multi-divisional grouping. Employees are distributed into teams/projects based on both their functional expertise and the product they are working on

Question 37

What is the main drawback of a matrix structure

Answer 37

Higher stress levels for employees if demands from one supervisor conflict with demands from the other supervisor (result of two chains of command)

Question 38

What is the main benefit of a matrix structure

Answer 38

Greater flexibility (enables the organization to adjust more quickly to the environment than a traditional bureaucratic structure)

Question 39

What is the relationship between restructuring and job performance?

Answer 39

Weak negative relationship

Question 40

What is the relationship between restructuring and organizational commitment?

Answer 40

Moderate negative relationship

Question 41

Restructuring

Answer 41

The process of changing an organization’s structure

Question 42

What is the most common kind of restructuring in recent years

Answer 42

“Flattening” of an organization

Question 43

How can managers assist a restructuring effort?

Answer 43

Managers can help manage layoff survivors who have a great deal of guilt & remorse. Managers can give layoff survivors a stronger sense of control