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Part III Organizing

Chapter Five: Basic Organization Designs


True/False
1.
Line authority is a persons capacity to influence decisions.
(True; Easy; p. 163)
2.
Line authority gives a manager the right to supervise the work of other employees.
(True; Easy; p. 163)
3.
As an organization becomes flatter the span of control becomes smaller.
(False; Easy; p. 163)
4.

The principle of specialization maintains that no person in an organization should


report to or be supervised by anyone else other than ones boss.
(False; Moderate; p. 161)
5.

Departmentalization by product is defined as the grouping of activities by the functions


performed in an organization.
(False; Moderate; p. 169)
6.

In more centralized organizations employees at all levels of the organization are


involved in the decision-making process.
(False; Moderate; p. 169)
7.

Legitimate power is not based on a managers expertise, technical skills or functional


knowledge.
(True; Moderate; p. 168; Ex. 5-5)
8.
Authority is one of the five types of power described by French and Raven.
(False; Easy; p. 168; Ex. 5-5)
9.

An organic organization is one that is highly structured, has many layers and levels of
management and a narrow span of control.
(False; Moderate; p. 172)
10.

A mechanistic organization tends to be formal, highly specialized and have centralized


decision-making.
(True; Easy; p. 172)
11.

A matrix organizational structure fits best with an organization that uses a focused
differentiation strategy.
(False; Challenging; pp. 171-172)
12.

An organizational structure made up of self-contained and self-managed operating


units is called a matrix organization.
(False; Challenging; pp. 177-178)
13.

A team-based, cross-functional organization combines the advantages of focusing on


functional specialization with direct, clear accountability and lines of authority.
(False; Moderate; p. 178)
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Part III Organizing

14.

A major disadvantage of the matrix organizational structure is duplication of staff, cost


and resources.
(False; Moderate; p. 177)
15.

Role conflicts are likely to result from the way that reporting relationships are
organized in a matrix structure.
(True; Moderate; p. 177)
16.

A marketing organization that is structured by customer would break down its territory
into northern, southern, eastern and western regions.
(False; Moderate; p. 170)
17.

Managers in an organization with a weak organizational culture require fewer formal


rules, regulations and policies.
(False; Moderate; p. 182)
18.

Departmentalization is a process in which jobs and positions are grouped by


specialization into departments, linking them together within the larger organizational
structure.
(False; Easy; p. 169)
19.

A product-based organizational structure groups together jobs, activities and functions


that serve the same customers.
(False; Moderate; p. 170)
20.

A customer-based organizational structure focuses all jobs, activities and functions


around a single product or service produced by the company.
(False; Easy; p. 170)
21.

Because they report to more than one supervisor, employees in a matrix organization
can experience role confusion and power struggles.
(True; Moderate; p. 178)
22.

An organization with a narrower span of control will have fewer managers and more
direct reports per manager than an organization with a wider span of control.
(False; Moderate; p. 163)
23.

In centralized organizations, decision-making is delegated down and across all levels


of management.
(False; Challenging; p. 163)
24.

Decentralized organizations concentrate most of the authority and responsibility for


making decisions at the top levels of management.
(False; Easy; p. 168)
25.

Operational efficiencies can be achieved by reducing the number of layers and levels
of management and increasing the span of control.
(True; Moderate; p. 168)
26.
Organization design decisions are typically made by mid-level managers.
(False; Moderate; p. 160)
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Chapter 5 Basic Organization Designs

27.

There is a point at which the diseconomies from division of labor exceed the economic
advantage.
(True; Moderate; p. 1461)
28.
Many organizations are increasing their span of control.
(True; Moderate; p. 163)
29.

The span of control today is increasingly being determined by analyzing contingency


variables.
(True; Challenging; p. 163)
30.

Responsibility refers to the rights inherent in a managerial position to give orders and
expect the orders to be obeyed.
(False; Moderate; p. 163)
31.
Authority is related to one's position and has nothing to do with the individual.
(True; Moderate; p. 163)
32.

No one should be held responsible for something over which he or she has no
authority.
(True; Easy; p. 163)
33.

In differentiating line managers from staff managers, staff emphasizes managers


whose organizational function contributes directly to the achievement of organizational
objectives.
(False; Moderate; p. 164)
34.

Researchers and practitioners of management today agree with the historical


perspective that you need to be a manager to have power and that power is correlated
with ones level in the firm.
(False; Moderate; p. 165-166)
35.

The terms authority and power are frequently confused. Authority is a right based on
the legitimacy of the persons position in the organization. Power is the persons
capacity to influence decisions.
(True; Moderate; p. 166)
36.

Power is defined by one's vertical position and one's distance from the organization's
center.
(True; Moderate; p. 166)
37.
Legitimate power is based on the ability to distribute something that others value.
(False; Challenging; p. 168; Ex. 55)
38.

Grouping activities by the following categories would be an example of functional


departmentalization: men's clothing, women's clothing, tools, home decorations, and
shoes.
(False; Moderate; p. 169)

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Part III Organizing

39.

The particular type of customer the organization seeks to reach can also dictate
employee grouping. The typical types of departmentalizations are customer,
geographic, and divisional.
(False; Challenging; pp. 169-170)
40.

An organic structure has many rules with rigid hierarchical relationships and a tall
structure.
(False; Moderate; p. 172; Ex. 57)
41.

Rather than having standardized jobs and regulations, the organic organization's loose
structure allows it to change rapidly as needs require.
(True; Challenging; p. 172)
42.
Organization structure should always precede organization strategy.
(False; Moderate; p. 173)
43.

If a company chooses to compete based upon cost-leadership strategies, then the


organic structure will be the most effective.
(False; Challenging; p. 173)
44.

An organization with employees over 2,000 in number will typically have a very organic
organizational structure.
(False; Moderate; p. 173)
45.

Joan Woodward found that organizational effectiveness was related to the "fit"
between technology and structure.
(True; Moderate; p. 174)
46.
Environment is a major influence on structure.
(True; Easy; p. 174)
47.

The simple structure is most widely used in small businesses where the owner and
manager are the same person.
(True; Moderate; p. 175)
48.

The strength of the functional structure lies in the advantages that accrue from work
specialization.
(True; Moderate; p. 177)
49.
The chief advantage of the divisional structure is that it focuses on results.
(True; Moderate; p. 177)
50.
The unique characteristic of the matrix structure is that employees have only one boss.
(False; Moderate; p. 177)
51.

The boundaryless organization has an increased interdependence with its


environment.
(True; Moderate; pp. 178-179)
52.
Boundaryless organizations are merely flatter organizations.
(False; Easy; p. 179)
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Chapter 5 Basic Organization Designs

53.

Jeff Raleigh owns New World Enterprises. His organization is considered a learning
organization because the leaders and employees have developed the capacity to
continuously adapt and change; all members take an active role in identifying and
resolving work-related issues.
(True; Challenging; pp. 179181)
54.

Information, leadership, and organizational culture are all important in shaping a


learning organization.
(True; Moderate; p. 179)
55.
Values refer to a system of shared meaning within an organization.
(False; Easy; p. 181)
56.

An organization's culture can actually substitute for the rules and regulations that
formally guide employees.
(True; Moderate; p. 182)

Multiple Choice Questions


57.

________ is the formal right to give orders, make decisions, and see that tasks are
completed.
a. Centralization
b. Authority
c. Responsibility
d. Decentralization
(b; Easy; p. 163)
58.

A construction supervisor site who sees an impending thunderstorm, tells workers to


go home, and secures the site is demonstrating
a. authority.
b. delegation.
c. accountability.
d. responsibility
(a; Moderate; p. 163)
59.

The process of assigning authority and responsibility to ones subordinates to manage


a project is called
a. centralization.
b. supervision.
c. delegation.
d. specialization.
(c; Moderate; p. 163)
60.

A _____ span of control is associated with many levels of management, which gives
rise to a _____ organizational structure.
a. wide; tall
b. wide; flat
c. narrow; tall
d. narrow; flat
(c; Moderate; p. 163)

126

Part III Organizing

61.

Narrow spans of control lead to a _____ organizational structure, whereas wider spans
of control lead to a _____ organizational structure.
a. flat; tall
b. homogenous; diverse
c. short; tall
d. tall; short
(d; Challenging; p. 163)
62.

________ refers to the concentration of decision authority at the top levels of the
organizational hierarchy.
a. Departmentalization
b. Centralization
c. Formalization
d. Decentralization
(b; Moderate; p. 168)
63.

_________ involves the delegation of decision-making and authority to lower levels in


the organization.
a. Decentralization
b. Departmentalization
c. Specialization
d. Centralization
(a; Easy; p. 168)
64.

_____ facilitates effective coordination of the various organizational parts or functions


in a consistent manner, while _____ provides greater flexibility to respond to change.
a. Centralization; decentralization
b. Decentralization; centralization
c. Specialization, centralization
d. Specialization, decentralization
(a; Moderate; p. 168)
65.

Three basic approaches to departmentalization are by:


a. formalization, decentralization, and centralization
b. function, division, and matrix
c. geography, customer, and product
d. authority, accountability, and responsibility
(c; Moderate; p. 170)
66.

__________ is the form of departmentalization that groups similar jobs and activities
into departments.
a. A product structure
b. A divisional structure
c. A matrix structure
d. A functional structure
(d; Moderate; p. 176)

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Chapter 5 Basic Organization Designs

67.

A telecommunications company that organizes into a wireless division, a home-use


division, a long-lines division, and a corporate services division is using which
approach to departmentalization?
a. A divisional structure
b. A functional structure
c. A geographical structure
d. A matrix structure
(a; Easy; p. 176)
68.

When a divisional structure is superimposed over a functional structure, the type of


structure that results is called a _________organization.
a. functional
b. divisional
c. matrix
d. product
(c; Challenging; p. 177)
69.

________ is a type of departmentation that could be called a "two-boss" system,


because each worker responds to directives from two supervisors from different units
or departments.
a. Functional organization
b. Divisional organization
c. Matrix organization
d. Cross-functional organization
(c; Easy; p. 178)
70.

______ is a characteristic of the matrix organizational structure.


a. A high degree of centralization
b. A dual-reporting relationship
c. A lack of flexibility
d. A lack of functional specialization
(b; Moderate; p. 178)
71.

_________ is not an advantage of the matrix structure.


a. Efficient use of scarce resources
b. Reduced conflict about roles and responsibilities
c. Development of cross-functional skills by employees
d. Increased employee involvement
(b; Challenging; p. 178)
72.

____________ is a potential disadvantage of the matrix structure.


a. Inefficient use of scarce resources
b. Lack of flexibility
c. Conflict between product and functional managers
d. Development of cross-functional skills by employees
(c; Moderate; p. 178)

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Part III Organizing

73.

A __________ groups together people who have similar skills and who perform similar
tasks.
a. divisional structure
b. functional structure
c. matrix structure
d. integrated structure
(b; Easy; p. 176)
74.

Which of the following statements accurately describes the functional organizational


structure?
a. Members of functional departments share common technical expertise, interests,
and responsibilities.
b. Members of each function work within their areas of specialization or expertise.
c. When each function does its jobs properly, the business operates effectively.
d. All of the above.
(d; Moderate; p. 176)
75.

A(n) _________ groups together people who work on the same product or processes,
serve similar customers, and/or work in the same area or geographic region.
a. divisional structure.
b. informal structure.
c. matrix structure.
d. functional structure.
(d; Moderate; p. 169)
76.

A(n) __________ structure involves creating work units based on product, process,
customer, or geographic territory.
a. functional
b. divisional
c. organic
d. mechanistic
(d; Moderate; p. 169)
77.

__________ structures group together jobs and activities that are performed in the
same region or location.
a. Product
b. Market
c. Geographic
d. Customer
(c; Easy; p. 170)
78.

________ contribute directly to the strategic goals of the organization.


a. Line managers
b. Operational managers
c. Staff managers
d. Frontline supervisors
(a; Easy; p. 164)

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Chapter 5 Basic Organization Designs

79.

In a consulting firm, the consultants have _____ authority since their work directly
contributes to the bottom line, whereas consultants in a manufacturing firm have
_____ authority because they are used in an advisory capacity.
a. planning; line
b. organizing; staff
c. line; staff
d. controlling; line
(c; Moderate; p. 164)
80.

__________ is the type of authority held by an information systems manager who


primarily renders technical advise to the corporation.
a. Line authority
b. Staff authority
c. Corporate responsibility
d. Management accountability
(b; Easy; p. 164)
81.

_________ would NOT be considered a source of position or legitimate power for a


manager.
a. The ability to give special monetary rewards to deserving subordinates
b. Possession of a charismatic personality
c. The ability to recommend disciplinary action for subordinates
d. Being a high-ranking executive in the company
(b; Moderate; p. 168; Ex. 5-5)
82.

__________ is the ability to influence the behavior of other people because of one's
capacity to offer rewards, or other desirable outcomes.
a. Legitimate power
b. Expert power
c. Coercive power
d. Reward power
(d; Easy p. 168; Ex. 5-5)
83.

What type of power does a manager exercise when he or she offers pay raises,
bonuses, special assignments, or incentives to subordinates?
a. Legitimate power
b. Reward power
c. Coercive power
d. Expert power
(b; Easy; p. 168; Ex. 5-5)
84.

Which of the following is NOT likely to result from increasing the number of levels and
layers of management in an organization?
a. Overhead costs increase.
b. Decision making can be slowed greatly.
c. Direct contact with the client or customer may be lost.
d. The organization gains additional competitive advantage.
(d; Moderate; p. 163)

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Part III Organizing

85.

The number of persons reporting directly to a single manager is an organizational


issue relating to __________.
a. functional authority
b. centralization
c. line and staff relationships
d. span of control
(d; Moderate; p. 163)
86.

The wider the span of control, the more the organization will tend to __________.
a. have many levels of management
b. be more costly than organizations with narrower spans of control
c. have flat structures
d. have tall structures
(c; Moderate; p. 163)
87.

Organizations with narrower spans of control tend to __________.


a. have many levels of management
b. be more costly than organizations with narrower spans of control
c. have tall structures
d. have flat structures
(b; Moderate; p. 163)
88.

In organizations, __________ personnel provide expert advice and guidance to


__________ personnel.
a. manufacturing ; marketing
b. operating ; sales
c. staff ; line
d. line ; staff
(c; Moderate; p. 164)
89.

Organization design decisions are typically made by


a. senior management.
b. mid-level management.
c. lower-level management.
d. operatives.
(a; Moderate; p. 160)
90.

The process of _____ involves making decisions about how specialized jobs should be
allocated, the rules to guide employees behaviors, and at what level decisions are to
be made.
a. planning
b. organizing
c. controlling
d. organization design
(d; Moderate; p. 160)

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Chapter 5 Basic Organization Designs

91.

Which of the following is not one of the six elements of structure?


a. work specialization
b. chain of command
c. span of control
d. technology
(d; Moderate; p. 160)
92.

A component of organization structure that involves having each discrete step of a job
done by a different individual rather than having one individual do the whole job is
known as
a. work specialization.
b. chain of command.
c. span of control.
d. departmentalization.
(a; Easy; p. 161)
93.

Which of the elements of structure includes making efficient use of workers' diverse
skills?
a. work specialization
b. authority
c. chain of command
d. departmentalization
(a; Moderate; p. 161)
94.

When five differing workers each do one specific job preparing a Big Mac at
McDonald's, they are engaging in
a. work specialization.
b. chain of command.
c. span of control.
d. departmentalization.
(a; Moderate; p. 161)
95.

Which of the following is not a result of work that has become too specialized?
a. fatigue
b. low productivity
c. poor quality
d. lower turnover
(d; Moderate; p. 161)
96.

Terri must constantly report to the department chair as well as her immediate
supervisor. Which of the following is being violated?
a. work specialization
b. chain of command
c. span of control
d. departmentalization
(b; Easy; p. 162)

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Part III Organizing

97.

The number of employees a manager can direct efficiently and effectively is known as
which of the following?
a. work specialization
b. chain of command
c. span of control
d. departmentalization
(c; Easy; p. 163)
98.

Early writers favored a span of control that was no more than


a. two.
b. four.
c. six.
d. eight.
(c; Challenging; p. 163)
99.

Which of the following is not a contingency variable that determines the appropriate
span of control for managers?
a. employee training
b. task complexity
c. management style preferences
d. expenses
(d; Moderate; p. 163)
100.

The rights inherent in a managerial position to give orders and expect them to be
obeyed is known as
a. responsibility.
b. span of control.
c. authority.
d. accountability.
(c; Moderate; p. 163)
101.

Jack has just been promoted to line manager for the assembling plant. Since Jack is
now a manager, which of the following automatically also goes with the title of
manager?
a. respect
b. span of control
c. authority
d. acceptance by the employees
(c; Moderate; p. 163)
102.

Stanley Milgram, a Yale University social psychologist, performed an experiment in


which subjects were instructed to administer a shock to learners when they made a
mistake. What can be concluded from his experiments?
a. Most subjects refused to shock the learner on the basis of ethical considerations.
b. Authority is a potent source for getting things done.
c. A subject's stage of moral development can be used to explain his or her response
to being directed to shock the learners.
d. The base of the experimenter's power determines the subject's response to
instructions.
(b; Challenging; p. 164)

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Chapter 5 Basic Organization Designs

103.

When managers delegate authority, they must allocate commensurate


a. responsibility.
b. power.
c. money.
d. influence.
(a; Moderate; p. 163)
104.

_____ entitles a manager to direct the work of an employee.


a. Span of control
b. Line authority
c. Staff authority
d. Responsibility
(b; Easy; p. 164)
105.

Those managers whose organizational function contributes directly to the achievement


of organizational objectives have
a. span of control.
b. line authority.
c. staff authority.
d. responsibility.
(b; Moderate; p. 164)
106.

A purchasing department may be created because the hospital administrator cannot


effectively handle all purchasing. What type of position authority has been created?
a. accountability
b. line authority
c. staff authority
d. responsibility
(c; Moderate; p. 164)
107.

_____ is an individual's capacity to influence decisions.


a. Span of control
b. Line authority
c. Staff authority
d. Power
(d; Challenging; p. 166)
108.

Power can be viewed as a three-dimensional concept. It includes functional and


hierarchical dimensions as well as a third dimension called
a. influence.
b. legitimacy.
c. departmentalization.
d. centrality.
(d; Challenging; p. 166)

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Part III Organizing

109.

French and Raven identified five sources, or bases, of power. Which of the following is
not included?
a. influence
b. coercive
c. referent
d. expert
(a; Moderate; p. 168; Ex. 5-5)
110.

It is possible to be low in the power hierarchy, but close to the _____.


a. power base
b. power affiliates
c. power core
d. power influence
(c; Challenging; p. 166)
111.

Power based upon one's expertise, special skills, or knowledge is


a. coercive power.
b. legitimate power.
c. expert power.
d. referent power.
(c; Moderate; p. 168; Ex. 55)
112.

Power based upon identification with a person who has desirable resources or
personal traits is known as
a. coercive power.
b. legitimate power.
c. expert power.
d. referent power.
(d; Moderate; p. 168; Ex. 55)
113.

Jim has the ability to "dock" paychecks of employees who arrive at work past 9:05 AM.
What kind of power does Jim possess?
a. coercive power
b. legitimate power
c. expert power
d. referent power
(a; Moderate; p. 168; Ex. 55)
114.

Harry is the only person who fully understands the new computer network in the office
area. Whenever someone has questions, he goes to Harry. Harry has _____ power.
a. coercive
b. reward
c. expert
d. referent
(c; Moderate; p. 168; Ex. 55)

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Chapter 5 Basic Organization Designs

115.

_____ is a function of how much decision-making authority is pushed down to lower


levels in the organization.
a. Departmentalization
b. Centralization
c. Span of control
d. Power
(b; Moderate; p. 168)
116.

An organization where decisions are made by those employees closest to the


problems is using which type of decision-making authority?
a. centralization
b. decentralization
c. span of control
d. acceptance theory
(b; Moderate; p. 168)
117.

A manager who organizes his or her plant by separating engineering, accounting,


human resources, and purchasing is using _____ departmentalization.
a. functional
b. product
c. customer
d. geographic
(a; Moderate; p. 169)
118.

An organization that groups activities according to women's footwear, men's footwear,


apparel, accessories, and leggings would use _____ departmentalization.
a. functional
b. product
c. customer
d. geographic
(b; Moderate; p. 170)
119.

An office supply firm that has three departments based upon retail, wholesale, and
governmental customers is using which of the following types of departmentalization?
a. functional
b. product
c. customer
d. geographic
(c; Moderate; p. 170)
120.

An organization that has four sales regions, North, Midwest, South, and Southwest is
using _____ departmentalization.
a. functional
b. product
c. customer
d. geographic
(d; Moderate; p. 170)

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Part III Organizing

121.

The grouping of activities by work or customer flow is which of the following?


a. functional departmentalization
b. process departmentalization
c. customer departmentalization
d. geographic departmentalization
(b; Easy; p. 170)
122.

Todays competitive environment has refocused the attention of management on its


_____ and _____ departmentalization.
a. customers; divisional
b. bottom line; customer
c. global environment; customer
d. customer; customer
(d; Challenging; p. 170)
123.

Which of the following is not a contingency variable that affects the appropriate
structure for an organization?
a. strategy
b. size
c. technology
d. sales
(d; Moderate; p. 171)
124.

A structure that is high in specialization, formalization, and centralization is a(n)


a. strategic organization.
b. mechanistic organization.
c. organic organization.
d. matrix organization.
(b; Moderate; p. 172; Ex. 57)
125.

Julie's organization has a very formal structure with strict lines of communication
where there are many rules and duties are fixed. This is an example of which of the
following?
a. strategic organization
b. mechanistic organization
c. organic organization
d. advocacy
(b; Moderate; p.172; Ex. 57)
126.

Frederic works in an organization where a large amount of collaboration occurs and


decision-making authority is decentralized. There are few rules, and duties are
adaptable. This is an example of which of the following?
a. strategic organization
b. mechanistic organization
c. organic organization
d. bureaucracy
(c; Moderate; 172; Ex. 57)

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Chapter 5 Basic Organization Designs

127.

Which of the following structures is loose and flexible allowing it to change rapidly as
the need arises?
a. strategic organization
b. mechanistic organization
c. organic organization
d. bureaucracy
(c; Moderate; p. 172)
128.

Organizational structure should always _____ organizational strategy.


a. precede
b. occur at the same time as
c. follow
d. be independent of
(c; Challenging; p. 172)
129.

Jody Bartholomew is attempting to lead his company in a growth strategy by entering


into global markets. He will need a structure that is flexible, fluid, and readily _____ to
the environment.
a. responsive
b. adaptable
c. stable
d. None of the above.
(b; Moderate; p. 172)
130.

If the strategy of a company is to compete based on cost-leadership that requires


stability and efficiency, which of the following structures will be most effective?
a. strategic organization
b. mechanistic organization
c. organic organization
d. matrix organization
(b; Challenging; pp. 171-172)
131.

If a company is pursuing a differentiation strategy that requires flexibility and


adaptability, which of the following structures will be most effective?
a. strategic organization
b. mechanistic organization
c. organic organization
d. bureaucracy
(c; Challenging; p. 172)
132.

Joan Woodward found that the effectiveness of organizations was related to "fit"
between _____ and structure.
a. personality
b. technology
c. corporate culture
d. product life cycle
(b; Moderate; p. 174)

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Part III Organizing

133.

An organization that uses technology which is nonroutine, will probably find which
structure to be most effective?
a. strategic organization
b. mechanistic organization
c. organic organization
d. bureaucracy
(c; Moderate; p. 174)
134.

Global competition that requires accelerated product innovation, and increased


demands by consumers for higher quality and faster deliveries is requiring
organizations to adapt to which type of structure in order to be able to compete
effectively?
a. strategic organization
b. mechanistic organization
c. organic organization
d. bureaucracy
(c; Moderate; p. 174)
135.

_____ organizations tend to be ill equipped to respond to rapid environmental change.


a. Organic
b. Global
c. Mechanistic
d. MNC
(c; Easy; p. 174)
136.

The simple structure form of organization is fast, flexible, and inexpensive to maintain,
and accountability is clear. It is effective in _____ organizations.
a. mechanistic
b. organic
c. small corporation
d. small
(d; Moderate; p. 175)
137.

Two of the most popular bureaucratic design options grew out of the function and
product departmentalizations. They are called _____ structures.
a. functional and geographic
b. divisional and geographic
c. product and functional
d. functional and divisional
(d; Challenging; pp. 175-176)
138.

The strength of the functional structure is which of the following?


a. It focuses on results.
b. It gains advantages due to work specialization.
c. Employees have more than one boss.
d. It is based solely on teams.
(b; Moderate; p. 176)

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139.

Which of the following is not an advantage of the functional structure?


a. economies of scale
b. minimization of duplication
c. employee satisfaction
d. primary pursuit of functional goals
(d; Challenging; p. 176)
140.

The _____ structure is an organization design made up of self-contained units.


a. functional
b. simple
c. divisional
d. matrix
(c; Challenging; p. 176)
141.

The strength of the divisional structure is which of the following?


a. It focuses on results.
b. It gains advantages due to work specialization.
c. Employees have more than one boss.
d. It is based solely on teams.
(a; Challenging; p. 177)
142.

The major disadvantage of the divisional structure is


a. diseconomies of scale.
b. minimization of duplication.
c. employee satisfaction.
d. duplication of activities and resources.
(d; Challenging; p. 177)
143.

Which of the following structures combines the advantages of the functional


specialization with the focus and accountability of product departmentalization?
a. team-based structure
b. boundaryless organization
c. matrix structure
d. networking structure
(c; Moderate; p. 177)
144.

Which of the following is the primary strength of the matrix structure?


a. Economies of scale and the ability to coordinate interdependent projects.
b. Propensity to foster power struggles.
c. Employee satisfaction.
d. Duplication of activities and resources.
(a; Moderate; p. 178)
145.

The major disadvantage of the matrix structure is


a. duplication of resources.
b. lack of employee satisfaction.
c. lack of economies of scale.
d. its propensity to foster power struggles.
(d; Moderate; p. 178)

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Part III Organizing

146.

In a team-based structure, _____ make(s) the decisions that affect the team.
a. top management
b. middle management
c. first-line management
d. team members
(d; Moderate; p. 178)
147.

Which of the following has not contributed to the boundaryless organization?


a. changes in technology
b. complex and dynamic environments
c. static environments
d. increases in telecommunication
(c; Moderate; p. 179)
148.

Leadership in a learning organization must have a shared vision and a _____


environment.
a. future-oriented
b. global
c. collaborative
d. culturally favorable
(c; Moderate; p. 180)
149.

The system or patterns or values, symbols, rituals, myths, and practices that have
evolved over time are an organization's
a. control factors.
b. culture.
c. history.
d. characteristics.
(b; Easy; p. 181)
150.

The culture of an organization is largely determined by


a. top management.
b. employees.
c. stockholders.
d. the company founders.
(d; Moderate; p. 182)
151.

Managers need fewer formal rules and regulations in an organization with which of the
following?
a. weak culture
b. strong culture
c. tall structure
d. culture never impacts structure
(b; Challenging; p. 182)

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Scenario-Based Questions
Application of Bases of Power
Jerri is confused. She thought that once she had the title of manager, everyone would
listen to her and accept her authority and power. However, she has noticed other
employees that seem to have power. Whenever someone has a question about the
computer system, they always go to Helen who actually established the current system
they are using. Usually Helen can get things up and running quicker than going to the
support staff for help. Then there is Joe who has a remarkable amount of charm and
charisma. He seems to have a power based simply upon him. Then there is Jill, her
secretary, who has a power entirely of her own. Jill turns in the timecards weekly, and
Jerri has seen her more than once override the time clock and clock somebody in
earlier than they actually arrived or clock out for them when the employee left work
early. When Jerri questioned her about it, Jill just laughed and said that they had been
doing it for years and the time all averaged out. The company allowed no overtime so
any extra time spent after work was not compensated. Jerri sometimes wonders if she
has any power at all.
152.

In Jerris organization most decision-making authority is concentrated at the top levels


of the organization, and most managers rely on their position as a source of power. In
this organization power is ________ and is referred to as _______.
A) centralized ; legitimate power
B) decentralized ; legitimate power
C) centralized ; formal power
D) decentralized ; referent power
(c; Moderate; p. 168)
153.

Helen has the ability to influence her coworkers to work harder because she has very
strong problem-solving skills. Helen possesses ___________.
A) legitimate power
B) expert power
C) coercive power
D) referent power
(b; Moderate; p. 146; Ex. 5-5)
154.

Jerris boss, Ralph, is the vice president of information systems for the company. He
has the ability to influence the behavior of other people because they identify with him;
he demonstrates a sense of fairness and a strong commitment to the companys
mission. He has
A) legitimate power.
B) expert power.
C) coercive power.
D) referent power.
(d; Moderate; p. 1468; Ex. 55)

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155.

Jerri could enhance her or build her power by capitalizing on __________.


A) centrality
B) criticality
C) visibility
D) All of the above.
(d; Moderate; p. 168; Ex. 55)
156.

Jerris success as a manager depends on acquiring and appropriately utilizing


A) legitimate and referent power.
B) reward power and coercive power.
C) expert power.
D) all sources of power.
(d; Moderate; p. 168; Ex. 55)
157.

What type of authority does Jerri possess?


a. span of control
b. line authority
c. staff authority
d. responsibility
(b; Moderate; p. 163)
158.

What type of power does Jerri actually possess?


a. legitimate power
b. reward power
c. expert power
d. referent power
(a; Moderate; p. 168; Ex. 55)
159.

What type of power does Helen possess?


a. coercive power
b. reward power
c. expert power
d. referent power
(c; Moderate; p. 168; Ex. 55)
160.

What type of power does Joe possess?


a. coercive power
b. reward power
c. expert power
d. referent power
(d; Moderate; p. 168; Ex. 55)
161.

What type of power does Jill possess?


a. coercive power
b. reward power
c. expert power
d. referent power
(b; Moderate; p. 168; Ex. 55)

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162.

Which type of power is not displayed in Jerris organization?


a. coercive
b. reward
c. expert
d. referent
(a; Easy; p. 168; Ex. 55)

Application of Departmentalization
John is aware that the structure of his organization must change in order to compete
more effectively in today's global market. However, he is not sure which structure
would work best for his company. His company is currently organized around an
accounting, human resource, sales, purchasing, and manufacturing departments.
However, there are other choices available. He has considered reorganizing around
their primary products, which are frames, silk flowers, dried flowers, art supplies, craft
supplies, and material. However, equally important are the differing clientele they
serve, who are homemakers that do arts/crafts, interior decorators, large institutions,
and professional consultants. Since the business is growing, they now have stores
across the United States primarily in the Northwest, Midwest, South, and Southwest
areas. Plus, his customers seldom shop for just one type of item. Frequently they
purchase not only the flowers, but also the vases and other supplies that are needed in
order to complete the arrangement, which means oftentimes shopping in most of the
areas in the store.
163.

What is one of the most popular ways to group activities/departmentalize that John
could model after?
a. functional
b. product
c. customer
d. geographic
(a; Easy; p. 176)
164.

The current structure that is being used is which of the following?


a. functional departmentalization
b. product departmentalization
c. customer departmentalization
d. geographic departmentalization
(a; Moderate; pp. 169-170)
165.

Which of the following structures would be used if the grouping were done by frames,
silk flowers, dried flowers, art supplies, craft supplies, and material?
a. functional departmentalization
b. product departmentalization
c. customer departmentalization
d. geographic departmentalization
(b; Moderate; p. 170)

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Part III Organizing

166.

Which of the following structures would be used if the grouping of activities were
centered on homemakers, interior decorators, institutions, and consultants?
a. functional departmentalization
b. product departmentalization
c. customer departmentalization
d. geographic departmentalization
(c; Moderate; p. 170)
167.

Which of the following departmental structures would be used if the grouping were
based on the areas served in the United States?
a. functional departmentalization
b. product departmentalization
c. customer departmentalization
d. geographic departmentalization
(d; Moderate; p. 1570)
168.

Which of the following departmental structures would be used if the grouping were
based on work or customer flow?
a. functional departmentalization
b. process departmentalization
c. customer departmentalization
d. geographic departmentalization
(b; Moderate; p. 170)

Application of Organizational Structure


Jim Johnson is the CEO of a major manufacturer of farming equipment. His company
has been in business for the last 100 years and has been very profitable. The
company is very formal and tall with formalized communication channels and rigid
hierarchical relationships. Mr. Johnson makes all major decisions. This has worked
very well until lately. It has begun to have some major global competition. Companies
overseas are bringing new products into the United States at a lower price.
Furthermore, just yesterday, the new vice-president had mentioned that he felt that
there was a major market overseas for the company's products. As its strategy was
beginning to change, Mr. Johnson also realized its structure too would need to change,
but to what? The company was large and, prior to these changes, the technology
utilized, while extensive, had been very routine. What is he to do?
169.

What qualifies the company to be a mechanistic structure?


a. The company is very formal.
b. The company is tall with formalized communication channels.
c. The company has rigid hierarchical relationships.
d. All of the above.
(b; Moderate; p. 172; Ex. 5-7)

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Chapter 5 Basic Organization Designs

170.

Which type of decision-making authority is currently being used in the company?


a. centralization
b. decentralization
c. span of control
d. acceptance theory
(a; Moderate; p. 168)
171.

Mr. Johnson's company probably needs to change from a(n) _________ structure to a
_____________ structure.
a. mechanistic; organic
b. organic; mechanistic
c. organic; matrix
d. mechanistic; bureaucracy
(a; Challenging; pp. 171172)
172.

The large size of the company and the use of routine technology are indicators that
which type of structure would be most effective?
a. strategic organization
b. mechanistic organization
c. organic organization
d. matrix
(b; Challenging; pp. 171-172)
173.

Which of the following contingency variables had the biggest impact on the need for
changes in Mr. Johnson's organization?
a. size
b. technology
c. environment
d. management
(c; Challenging; p. 172)

Short Discussion Questions


174.

Name and briefly describe the difference between centralization and decentralization

Centralization is a function of how much decision-making authority is pushed down to lower


levels in the organization. Centralization-decentralization is a degree phenomenon. By that,
we mean that no organization is completely centralized or completely decentralized. Early
management writers felt that centralization in an organization depended on the situation.
Traditional organizations were structured in a pyramid, with power and authority concentrated
near the top of the organization. Given this structure, historically, centralized decisions were
the most common.
(Moderate; pp. 168-169)

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Part III Organizing

175.

Describe the two types of basic organization design (mechanistic and organic forms).

The mechanistic organization (or bureaucracy) was the natural result of combining the six
elements of structure. The chain-of-command principle ensured the existence of a formal
hierarchy of authority. By keeping the span of control small, this created tall, impersonal
structures. There is a high degree of work specialization creating simple, routine, and
standardized jobs.
The organic form is a highly adaptive form that is a direct contrast to the mechanistic one. The
organic organizations loose structure allows it to change rapidly as needs require. In this type
of organization, employees tend to be professionals who are technically proficient and trained
to handle diverse problems. They need very few formal rules and little direct supervision. The
organic organization tends to be decentralized. A mechanistic or bureaucratic design
emphasizes vertical control with rigid hierarchical relationships, top down control and
communication, centralized authority, highly formalized work rules and policies, and
specialized, narrowly defined jobs. An organic organization design focuses on change and
flexibility by emphasizing horizontal relationships involving teams, departments or divisions,
and provisions to coordinate those lateral units.
(Moderate; pp. 171-172)
176.

What is a matrix organization?

The matrix structure combines the advantages of functional specialization with the focus and
accountability that product departmentalization provides. See Exhibit 5-10, which illustrates
the matrix structure of an aerospace firm.
1. The unique characteristic of the matrix is that employees in this structure have at
least two bosses: their functional departmental manager and their product or
project managers. Project managers have authority over the functional members
who are part of that managers team.
2. Authority is shared between the two managers. Typically, the project manager is
given authority over project employees relative to the projects goals. Decisions
such as promotions, salary recommendations, and annual reviews remain the
functional managers responsibility.
3. To work effectively, project and functional managers must communicate and
coordinate.
4. The primary strength of the matrix is that it can facilitate coordination of a multiple
set of complex and interdependent projects while still retaining the economies that
result from keeping functional specialists grouped together.
5. The major disadvantages of the matrix are in the confusion it creates and its
propensity to foster power struggles.
(Moderate; pp. 177-178)

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Chapter 5 Basic Organization Designs

177.

What is the trend today in span of control?

The span of control is increasingly being determined by looking at contingency variables,


including management and employee training, similarity of tasks, task complexity, physical
proximity of employees, standardization and sophistication of systems, strength of the value
system, and the preferred managing style of the manager. The trend is a wider span.
(Moderate; p. 163)
178.

What is the difference between line authority and staff authority?

Line authority entitles a manager to direct the work of an employee. Staff authority functions to
support, assist, advise, and generally reduce some of the informational burdens of those with
line authority.
(Moderate; pp. 163-165)
179.

Compare and contrast authority and power.

Authority comes from the position, not the person. Power is the ability of an individual to
influence decisions, which may not be reflected in their level of authority. French and Raven
suggested five bases of power: reward, coercive, legitimate, referent, and expert.
(Moderate; pp. 163-166)
180.

List five types of departmentalization that are available.

Functional
Product
Customer
Geographic
Process
(Easy; p. 169; Ex. 56)
181.

What is a boundaryless organization?

An organization that is not defined or limited by boundaries or categories imposed by


traditional structures; it is an attempt to eliminate vertical, horizontal, and interorganizational
barriers.
(Easy; pp. 178-179)
182.

What is organizational culture?

Culture is basically the personality of the organization and includes all values, symbols, rituals,
myths, and practices that have evolved over time. Strong culture can preclude the necessity of
many rules and regulations.
(Moderate; p. 181)

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Part III Organizing

Medium-Length Discussion Questions


183.

How does strategy affect structure?

An organizations structure is a means to help management achieve its objectives.

Strategy and structure should be closely linked.


Accordingly, organizational structure should follow strategy. If management makes a
significant change in strategy, it needs to modify its structure as well. Most
organizations usually begin with a single product or line. The simplicity of the strategy
requires only a simple form of structure to execute it. Decisions can be centralized and
complexity and formalization will be low.
As organizations grow, their strategies become more ambitious and elaborate.
Organizations pursuing a differentiation strategy must innovate to survive. An organic
organization matches best with this strategy because it is flexible and maximizes
adaptability.
A cost-leadership strategy seeks stability and efficiency. Stability and efficiency help to
produce low-cost goods and services and can best be achieved with a mechanistic
organization.
(Moderate; pp. 172-173)
184.

Briefly describe the advantages and disadvantages of the functional, divisional and
matrix types of organizational structures. When would you use one over the other?
(Moderate; pp. 176178)
The functional structure offers the advantages that accrue from specialization. The divisional
structure has a greater focus on results but suffers from duplication of activities and
resources. The matrix structure combines the advantages of functional specialization with the
focus and accountability that product departmentalization provides.
185.

Describe the advantages and disadvantages of work specialization.

Advantageseconomies of scale; skills developed through repetition; pay workers for level of
skill; and training is easier and less expensive.
Disadvantagescan result in human diseconomies, which lead to fatigue, stress, boredom,
low productivity, higher turnover, and increased absences.
(Moderate; pp. 161-162)
186.

List and explain French and Raven's five bases of power.


Coercive powerbased on fear.
Reward powerbased on the ability to distribute something that others value.
Legitimate powerbased on one's position in the formal hierarchy.
Expert powerbased on one's expertise, special skill, or knowledge.
Referent powerbased on identification with a person who has desirable resources or
personal traits.
(Challenging; p. 168; Ex. 55)

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Chapter 5 Basic Organization Designs

187.

Briefly explain the three distinct technologies found in Joan Woodwards studies. What
conclusions did she reach?

Unit production describes the production of items in units or small batches. Mass production
describes large batch manufacturing. Process production is the most technically complex
group and included continuous-process production. She concluded that the process or
methods that transform an organizations inputs into outputs differ by their degree of
routineness. The more routine the technology, the more standardized and mechanistic the
structure can be. Organizations with more nonroutine technology are more likely to have
organic structures.
(Challenging; p. 174)
188.

What is a matrix structure? What is its primary strength? What are its major
disadvantages?

Matrix structurean organization in which specialists from functional departments are


assigned to work on one or more projects led by a project manager.
Primary strengthcan facilitate coordination of a multiple set of complex and interdependent
projects, while still retaining the economies that result from keeping functional specialists
grouped together.
Major disadvantagescreates confusion and has a propensity to sponsor power struggles.
(Challenging; pp. 177-178)

Comprehensive Essays
189.

As the CEO of a company that develops educational computer software applications


should your firm be structured mechanistically, organically? or centralized or
decentralized? Explain your answer.

A mechanistic structure would have rigid hierarchical relationships, fixed duties, many rules,
formalized communication channels, centralized decision authority, and taller structures.
While an organically structured firm would be less hierarchical, more collaborative (both
vertical and horizontal), adaptable duties, few rules, information communication, decentralized
decision authority, and a fewer layers and levels of management. The mechanistic structure
would be least effective except perhaps in the production department where the actual
products are packaged. The organic and decentralized forms would be more effective
because these structures facilitate greater collaboration, low formalization, informal
communication, decentralization, flexible jobs, and teamwork.
(Moderate; p. 172; Ex. 57)
190.

List the characteristics of mechanistic and organic organizations.

Mechanisticrigid hierarchical relationships, fixed duties, many rules, formalized


communication channels, centralized decision authority, and taller structures.
Organiccollaboration (both vertical and horizontal), adaptable duties, few rules, information
communication, decentralized decision authority, and flatter structures.
(Moderate; p. 172; Ex. 57)

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Part III Organizing

191.

Describe the impact that strategy, size, technology, and environment have on
structure.

Strategy should precede structure. Structure must agree with the strategy chosen. The larger
the size of the organization, the more formal the structure. Nonroutine technology needs a
more organic structure in order to be most effective. Global, dynamic, ever-changing
environment requires a more organic structure in order for organizations to retain their
competitive advantage. Culture comes from the company founders and is relatively stable.
(Challenging; pp. 172-174)
192.

What factors have contributed to the rise of boundaryless designs in todays


organizations?

Globalization of markets and competitors has played a major role. Changes in technology
have also contributed to this movement, such as advances in computer power, intelligent
software, and telecommunications. Each of these supports e-commerce and the information
network that makes the virtual workplace possible. Boundaryless organizations attempt to
support the trend of eliminating vertical, horizontal, and inter-organizational barriers.
(Moderate; p. 179)

151