chapter 10

Question 1

Generally speaking, discussions of the relationship between strategy and structure strongly imply that
A. strategy follows structure.
B. structure follows strategy.
C. strategy can effectively be formulated without considering structural elements.
D. structure typically has a very small influence on a firm’s strategy.

Answer 1

B. structure follows strategy.

Question 2

When an organization with a simple structure increases its sales revenue and volume of outputs, it is most likely to develop a 
A. divisional structure.
B. functional structure.
C. product-market structure.
D. geographic structure.

Answer 2

B. functional structure.

Question 3

When an organization with a functional structure diversifies into related product-markets, it generally
A. maintains its functional structure.
B. develops a divisional structure.
C. develops a matrix structure.
D. develops a worldwide product-division structure.

Answer 3

B. develops a divisional structure.

Question 4

A strategy of related diversification requires most firms to organize around geographical areas or product lines. This type of organizational growth leads to a(n) 
A. divisional structure.
B. functional structure.
C. matrix structure.
D. international structure.

Answer 4

A. divisional structure.

Question 5

All of the following statements about simple organizational structures are true EXCEPT which?
A. Small firms with a narrow product-market scope will adopt such a structure.
B. Decision making authority is highly centralized.
C. There is little specialization of tasks.
D. Creativity and individualism are rare.

Answer 5

D. Creativity and individualism are rare

Question 6

A simple structure is characterized by
A. high specialization and low centralization.
B. low specialization and high centralization.
C. low formality and low creativity.
D. high formality and low centralization.

Answer 6

B. low specialization and high centralization.

Question 7

Functional structures are usually found in organizations where there is
A. high volume production.
B. unrelated product lines or service offerings.
C. very little vertical integration.
D. a strong need to decentralize decision making.

Answer 7

A. high volume production.

Question 8

At ABC Corporation, work is divided into units that specialize in production, marketing, research and development, and other management tasks. This is an example of a 
A. simple structure.
B. functional structure.
C. divisional structure.
D. matrix structure.

Answer 8

B. functional structure.

Question 9

Which of the following is an advantage of a functional type of organizational structure?
A. Decentralized decision-making enhances an organization-wide perspective across functions.
B. It facilitates the development of general management talent.
C. Pooling of specialists enhances coordination and control.
D. It is easy to establish uniform performance standards.

Answer 9

C. Pooling of specialists enhances coordination and control.

Question 10

Which of the following is a disadvantage of a functional type of organizational structure?
A. Differences in functional orientation may impede communication and coordination.
B. Use of managerial and technical talent is inefficient due to pooling of expertise in functional areas.
C. Decision making is centralized at the top of the organization.
D. Managers tend to be overly concerned with long-term strategies that minimize the importance of functional area strengths.

Answer 10

A. Differences in functional orientation may impede communication and coordination.

Question 11

Which of the following is a disadvantage of a functional type of organizational structure?
A. Differences in functional orientation may impede communication and coordination.
B. Use of managerial and technical talent is inefficient due to pooling of expertise in functional areas.
C. Decision making is centralized at the top of the organization.
D. Managers tend to be overly concerned with long-term strategies that minimize the importance of functional area strengths.

Answer 11

A. Differences in functional orientation may impede communication and coordination.

Question 12

A divisional structure
A. is organized around functional area departments.
B. typically improves the performance of firms pursuing a strategy of vertical integration.
C. facilitates the development of general managers.
D. enhances centralized decision making.

Answer 12

C. facilitates the development of general managers.

Question 13

Which of the following is an advantage of a divisional type of organizational structure?
A. Efficient use of managerial and technical talent.
B. An enhanced ability to respond quickly to changes in the external environment.
C. High degree of emphasis on long-term performance.
D. Uniformity in image and quality across divisions.

Answer 13

B. An enhanced ability to respond quickly to changes in the external environment.

Question 14

All of the following are disadvantages of a divisional type of organizational structure EXCEPT
A. it can be very expensive compared to a functional organizational structure.
B. there is a strong tendency for divisions to focus on short-term performance.
C. there can be dysfunctional competition among divisions.
D. there is separation of strategic and operating control.

Answer 14

D. there is separation of strategic and operating control.

Question 15

An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure? 
A. Functional structure
B. Matrix structure
C. Strategic business unit structure
D. Holding company structure

Answer 15

C. Strategic business unit structure

Question 16

All of the following are advantages of a strategic business unit (SBU) type of organizational structure EXCEPT
A. divisions with similar products, markets, or technologies are formed into homogeneous groups that can achieve synergies.
B. divisional executives can respond quickly to market changes and opportunities.
C. planning and control by the corporate office is more manageable.
D. the corporate office is more removed from the individual divisions.

Answer 16

D. the corporate office is more removed from the individual divisions.

Question 17

Important advantages of a holding company structure include
A. savings in personnel and overhead expenses associated with a small corporate office.
B. a high level of awareness at the corporate office of issues facing individual divisions.
C. a high level of control of division executives by executives at the corporate level.
D. gaining synergistic benefits across businesses.

Answer 17

A. savings in personnel and overhead expenses associated with a small corporate office.

Question 18

Strategic business unit (SBU) and holding company structures result from extensive 
A. diversification.
B. vertical integration.
C. international expansion.
D. organizational flattening.

Answer 18

A. diversification.

Question 19

Complete the following sentence: “Strategic business unit (SBU) structures are best suited for corporations pursuing __________, whereas holding company structures are best suited for companies with __________ strategies.”
A. product-market diversification; international
B. international diversification; product-market
C. related diversification; unrelated diversification
D. unrelated diversification; related diversification

Answer 19

C. related diversification; unrelated diversification

Question 20

A matrix organizational structure is characterized by
A. dual reporting relationships.
B. a combination of functional and divisional organization structures.
C. efficient use of resources and expertise.
D. all of these.

Answer 20

D. all of these.

Question 21

Complicated working relationships, intense power struggles, and excessive reliance on group processes are disadvantages of what type of organizational structure? 
A. divisional
B. matrix
C. holding company
D. functional

Answer 21

B. matrix

Question 22

Which of the following is considered to be an advantage of a matrix structure?
A. the layering of matrices
B. increased clarity in reporting relationships
C. increased responsiveness to the market
D. fewer power struggles and reduced conflict

Answer 22

C. increased responsiveness to the market

Question 23

If an international firm has a multidomestic strategy and a relatively high level of product diversity, the best choice for its organizational structure is 
A. worldwide functional.
B. worldwide product division.
C. worldwide matrix.
D. international division.

Answer 23

C. worldwide matrix

Question 24

If an international firm has a global strategy and a relatively low level of product diversity, the best choice for its organizational structure is 
A. worldwide functional.
B. worldwide product division.
C. worldwide matrix.
D. international division.

Answer 24

B. worldwide product division.

Question 25

The relationship between strategy and structure can be best described as
A. strategy determines structure but structure does not determine strategy.
B. structure determines strategy but strategy does not determine structure.
C. strategy and structure influence each other.
D. a third force determines both strategy and structure.

Answer 25

C. strategy and structure influence each other.

Question 26

In firms with overall low cost strategies, the culture should foster \_\_\_\_\_\_\_\_\_\_ levels of interdependence and rewards should be based primarily on \_\_\_\_\_\_\_\_\_\_ measures of output. 
A. low; financial
B. low; behavioral
C. high; financial
D. high; behavioral

Answer 26

A. low; financial

Question 27

In firms with differentiation strategies, the culture should foster \_\_\_\_\_\_\_\_\_\_ levels of interdependence and rewards should be based primarily on \_\_\_\_\_\_\_\_\_\_ measures of output. 
A. low; financial
B. low; behavioral
C. high; financial
D. high; behavioral

Answer 27

D. high; behavioral

Question 28

In firms with related diversification strategies, the culture should foster \_\_\_\_\_\_\_\_\_\_ levels of interdependence and rewards should be based primarily on \_\_\_\_\_\_\_\_\_\_ measures of output. 
A. low; financial
B. low; behavioral
C. high; financial
D. high; behavioral

Answer 28

D. high; behavioral

Question 29

In firms with unrelated diversification strategies, the culture should foster \_\_\_\_\_\_\_\_\_\_ levels of interdependence and rewards should be based primarily on \_\_\_\_\_\_\_\_\_\_ measures of output. 
A. low; financial
B. low; behavioral
C. high; financial
D. high; behavioral

Answer 29

A. low; financial

Question 30

Which of the following is not a boundaryless organizational design? 
A. virtual
B. modular
C. matrix
D. barrier-free

Answer 30

C. matrix

Question 31

Which of the following is NOT an advantage of teams?
A. Because teams interact so closely, coordination and integration becomes unnecessary.
B. Teams substitute peer-based control for hierarchical control of work.
C. Because of sharing, teams often develop more creative solutions.
D. Teams permit the absorption of administrative tasks previously performed by specialists.

Answer 31

A. Because teams interact so closely, coordination and integration becomes unnecessary.

Question 32

According to the text, there are elements of team building that influence a team’s success. These include all of the following EXCEPT
A. work. Work should be relevant and meaningful to group members.
B. people bonding during the “heat of the battle.” Team members become more unified during a crisis.
C. titles. Titles are important to a team’s success.
D. teams taking care of their own. Team members look after each other’s best interest.

Answer 32

C. titles. Titles are important to a team’s success.

Question 33

Organizations are increasingly using teams for many reasons. The difference between a good team and an outstanding team has been found to be
A. the combined technical skills of the members.
B. similarities in the way team members solve problems.
C. the way team members treat each other.
D. similarities in the age and experience of team members.

Answer 33

C. the way team members treat each other.

Question 34

Which of the following is NOT a disadvantage of the barrier-free form of organization?
A. Lack of strong leadership can lead to coordination problems.
B. Democratic process can be time-consuming and difficult to manage.
C. Additional integration issues result is a slower response to market changes.
D. If trust among employees is not sufficiently high, organizational performance may suffer.

Answer 34

C. Additional integration issues result is a slower response to market changes.

Question 35

What type of organization is defined as "a central hub surrounded by networks of outside suppliers and specialists"? 
A. matrix
B. virtual
C. modular
D. barrier-free

Answer 35

C. modular

Question 36

What is the name of the practice that many modular organizations use to grow? 
A. operational effectiveness
B. outsourcing
C. strategic leveraging
D. strategic enabling

Answer 36

B. outsourcing

Question 37

What advantages does outsourcing provide an organization?
A. accessing best in class goods and services
B. enabling rapid expansion with relatively low capital investment
C. focusing scarce resources on core competencies
D. all of these

Answer 37

D. all of these

Question 38

Which of the following is NOT a strategic risk of outsourcing? 
A. loss of critical skills
B. loss of cross-functional skills
C. loss of control over a supplier
D. loss of non-vital functions

Answer 38

D. loss of non-vital functions

Question 39

Nike is a company that makes use of the concept of “product expatriates.” Product expatriates are
A. managers from the home country sent abroad to oversee the marketing of a company’s products.
B. managers from suppliers who come to work at a company’s headquarters.
C. managers of the company sent abroad to work at the plants of its suppliers.
D. local nationals hired by the company in the countries from which it sources products.

Answer 39

C. managers of the company sent abroad to work at the plants of its suppliers.

Question 40

The phrase that best defines a virtual organization is
A. a dot.com company.
B. a type of modular structure.
C. an organization that uses information technology to integrate different functions.
D. a continually evolving network of independent companies.

Answer 40

D. a continually evolving network of independent companies.

Question 41

Lockheed Martin uses a coalition of three entities, its own company, academia, and government, to achieve its goals. This is an example of a 
A. matrix organization.
B. modular organization.
C. virtual organization.
D. divisional structure.

Answer 41

C. virtual organization.

Question 42

Complete the following sentence: “Virtual organizations __________ whereas modular organizations __________.”
A. are usually permanent; are usually temporary
B. accept interdependent destinies; pursue collective strategies
C. pursue collective strategies; forfeit strategic control
D. give up part of their strategic control; retain full strategic control

Answer 42

D. give up part of their strategic control; retain full strategic control

Question 43

Which of the following is not a disadvantage of virtual structures?
A. difficulty in individual and organizational knowledge sharing
B. potential loss of operational control among partners
C. loss of strategic control over emerging technology
D. difficulty in determining where one company ends and another begins due to close interdependencies

Answer 43

A. difficulty in individual and organizational knowledge sharing

Question 44

Technical Computer Graphics uses small project teams and forms alliances with its teams, customers, and suppliers to accomplish projects. This is an example of
A. combining forms of boundaryless organizations.
B. outsourcing.
C. horizontal systems and processes.
D. democratic management control.

Answer 44

A. combining forms of boundaryless organizations.

Question 45

Organizations generally tend to become internally focused when faced with 
A. resource scarcity.
B. declining performance.
C. external pressures.
D. all of these.

Answer 45

D. all of these.

Question 46

Tools and techniques used to achieve effective coordination and integration of key activities in an organization include all of the following EXCEPT
A. horizontal organization structures.
B. horizontal systems and processes.
C. horizontal diversification.
D. communications and information technologies.

Answer 46

C. horizontal diversification

Question 47

Effective ambidextrous organizations have alignment, which means that
A. employees are rewarded according to both profit and sales growth.
B. managers are focused on growth opportunities.
C. there is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated.
D. divisional-level goals are consistent with overall corporate goals.

Answer 47

C. there is a clear sense of how value is being created in the short-term and how activities are properly integrated and coordinated.

Question 48

According to the study by O’Reilly and Tushman, effective ambidextrous structures had all of the following attributes EXCEPT
A. a clear and compelling vision.
B. managerial efforts were highly focused on revenue enhancement.
C. cross-fertilization among business units.
D. established units were shielded from the distractions of launching new businesses.
The study found many factors explained why ambidextrous organizations were more effective. A clear and compelling vision, consistently communicated by senior management was critical. The structure enabled cross-fertilization while avoiding cross-contamination. The established units were shielded from the distractions of launching new businesses, and they continued to focus all of their attention and energy on refining their operations, enhancing their products, and serving their customers.

Answer 48

B. managerial efforts were highly focused on revenue enhancement.