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Chapter 5 Organizational Structure and Culture

1) Organizational design is the process in which managers change or develop an organization's


structure.
Answer: TRUE
Explanation: By definition, organization design requires a manager to develop an organization's
structure, or change the structure in some way.
Diff: 2 Page Ref: 124
Objective: 5.1

2) There are four basic elements in organizational structure.


Answer: FALSE
Explanation: There are six elements: work specialization, departmentalization, authority and
responsibility, span of control, centralization and decentralization, and formalization.
Diff: 1 Page Ref: 124
Objective: 5.1

3) The original ideas about organizational design formulated by Fayol and Weber are now
largely obsolete.
Answer: FALSE
Explanation: Surprisingly, many of the ideas of Fayol and Weber about organizational design
are still valid today.
Diff: 2 Page Ref: 124
Objective: 5.1

4) When work specialization originally began to be implemented early in the twentieth century,
employee productivity initially rose.
Answer: TRUE
Explanation: Initially, managers saw huge increases in productivity as a result of specialization.
However, when work became overly specialized employee morale and motivation dropped,
erasing many productivity gains.
Diff: 2 Page Ref: 125
Objective: 5.1

5) Today, most managers see work specialization as a source of ever-increasing productivity.


Answer: FALSE
Explanation: Today managers see a limit to the amount of productivity increase they can see
from specialization. Specialization that is not deadening to employees tends to work best.
Monotonous assembly-line work seems to have diminishing returns.
Diff: 2 Page Ref: 125
Objective: 5.1
6) The advantage of work specialization is that it tends to result in high employee motivation and
high productivity.
Answer: FALSE
Explanation: The opposite occurs—too much work specialization results in lower motivation
and productivity.
Diff: 2 Page Ref: 125
Objective: 5.1

7) Departmentalization is a how jobs are grouped.


Answer: TRUE
Explanation: The grouping of jobs along lines of function, product, and other criteria defines
departmentalization.
Diff: 1 Page Ref: 126
Objective: 5.1

8) Staff authority is the ability to direct the work of any employee who does not have a higher
rank in the organization.
Answer: FALSE
Explanation: Staff authority is authority over support staff only, not general employees. Thus a
payroll manager has authority over payroll staff but not other organization employees.
Diff: 2 Page Ref: 126
AACSB: Analytic Skills
Objective: 5.1

9) Grouping jobs on the basis of major product areas is termed customer departmentalization.
Answer: FALSE
Explanation: Grouping along the lines of product areas is termed product departmentalization,
not customer departmentalization.
Diff: 2 Page Ref: 126
Objective: 5.1

10) Line authority can be exerted only after a manager checks with his or her superior.
Answer: FALSE
Explanation: Line authority does not require checking with superiors. It can be exerted as the
manager sees fit without any kind of consultation.
Diff: 2 Page Ref: 128
Objective: 5.1

11) Unity of command prevents an employee from trying to follow two conflicting commands at
once.
Answer: TRUE
Explanation: The original management theorists stated that subordinates should not be put in the
position to try to follow two or more conflicting commands at once. Unity of command ensured
that the command from the highest organizational level be followed.
Diff: 2 Page Ref: 129
Objective: 5.1
12) Power is a right that a manager has when he or she has a higher rank in an organization.
Answer: FALSE
Explanation: Power can arise from rank, but it also can arise from a particular skill, knowledge,
or access within the organization. The boss's secretary has power to gain access to the boss
without having a high rank in the organization.
Diff: 2 Page Ref: 130
Objective: 5.1

13) When decisions tend to be made at lower levels in an organization, the organization is said to
be centralized.
Answer: FALSE
Explanation: Centralized decisions originate at higher rather than lower levels of an
organization.
Diff: 2 Page Ref: 132
Objective: 5.1

14) Traditional organizations are structured in a pyramid, with the power and authority located in
the pyramid's broad base.
Answer: FALSE
Explanation: The power and authority in a traditional organization resides at the narrow point of
the pyramid where top management is located, not the base.
Diff: 2 Page Ref: 133
Objective: 5.1

15) The two prevalent organization structure models in today's world are the organic
organization and the inorganic organization.
Answer: FALSE
Explanation: The two structures are termed organic and mechanistic.
Diff: 1 Page Ref: 134
Objective: 5.2

16) A mechanistic organization is bureaucratic and hierarchical.


Answer: TRUE
Explanation: Mechanistic organizations are formal, hierarchical, impersonal, specialized, and
heavily dependent on rules and protocols.
Diff: 2 Page Ref: 134
Objective: 5.2

17) An organic organization tends to be flexible and have few formal rules.
Answer: TRUE
Explanation: An organic organization tries to be nimble in a dynamic business climate, paring
down bureaucratic complexity and focusing on innovation, flexibility, and creativity.
Diff: 2 Page Ref: 134
Objective: 5.2
18) Innovators need the efficiency, stability, and tight controls of a mechanistic structure rather
than an organic structure.
Answer: FALSE
Explanation: Innovators usually do better in a flexible organic structure where they are given
leeway to think creatively.
Diff: 2 Page Ref: 135
AACSB: Analytic Skills
Objective: 5.2

19) The relationship between organizational size and structure tends to be linear.
Answer: FALSE
Explanation: The greater the size of the organization, the more mechanistic it tends to be.
However, the relationship is not at all linear, but rather seems to jump at certain levels in
numbers of employees. An organization with fewer than 100 employees, for example, may be
very organic, while adding just a few more employees could cause the organization to suddenly
take on more mechanistic characteristics.
Diff: 3 Page Ref: 135-136
AACSB: Analytic Skills
Objective: 5.2

20) Joan Woodward attempted to view organizational structure from a technological perspective.
Answer: TRUE
Explanation: Woodward looked at how production methods affected organization structure.
Diff: 2 Page Ref: 136
AACSB: Technology
Objective: 5.2

21) Woodward concluded that mass production worked best with an organic organization
structure.
Answer: FALSE
Explanation: Woodward found that a mechanistic structure, rather than an organic structure,
worked best with mass production technology.
Diff: 2 Page Ref: 136
AACSB: Technology
Objective: 5.2

22) The stability of a mechanistic structure seems to work best in today's dynamic and uncertain
business environment.
Answer: FALSE
Explanation: Most managers feel that today's dynamic environment calls for a more organic
approach, not a more mechanistic approach.
Diff: 2 Page Ref: 136
AACSB: Technology
Objective: 5.2
23) The strength of a simple system is that everything depends on a single person.
Answer: FALSE
Explanation: Having a single person be the repository of all organizational knowledge and
power is a liability rather than a strength in many cases, if the person suddenly becomes
unavailable or unwilling to perform his or her duties.
Diff: 2 Page Ref: 137
Objective: 5.3

24) A strength of a functional structure is that it avoids duplication.


Answer: TRUE
Explanation: Putting specialties together makes departments efficient. For example, expensive
equipment can get used in one central place, eliminating the need for the same equipment to be
located elsewhere in the organization.
Diff: 2 Page Ref: 138
Objective: 5.3

25) A weakness of the divisional structure is that duplication tends to occur.


Answer: TRUE
Explanation: A divisional structure can duplicate entire departments whose tasks could
otherwise be carried out by a single, centrally located department.
Diff: 2 Page Ref: 138
Objective: 5.3

26) In a team structure, team members are not held responsible for their decisions.
Answer: FALSE
Explanation: The opposite occurs—team members make decisions and are accountable for their
decisions.
Diff: 2 Page Ref: 139
Objective: 5.3

27) In a team structure there is a clear line of managerial authority from top to bottom.
Answer: FALSE
Explanation: A team makes decisions on its own. For the most part, a team is not subject to
decisions or orders that come from outside of the team.
Diff: 2 Page Ref: 139
Objective: 5.3

28) When an employee in a matrix structure finishes a project, she goes back to her functional
department.
Answer: TRUE
Explanation: A matrix structure maintains departments. When projects are finished, employees
return to their original department.
Diff: 2 Page Ref: 139
Objective: 5.3
29) Employees in an organization with a matrix design can have two bosses for the same job.
Answer: TRUE
Explanation: An employee in a project group can have a project manager in addition to a
manager from his or her functional department.
Diff: 2 Page Ref: 140
Objective: 5.3

30) A significant advantage of the matrix structure is the clear chain of command from top to
bottom of the organization.
Answer: FALSE
Explanation: In a matrix structure in which employees can have multiple supervisors, the chain
of command can become confused and conflicts can arise.
Diff: 2 Page Ref: 140
Objective: 5.3

31) When an employee in a project structure finishes a project, he goes back to his original
department.
Answer: FALSE
Explanation: In a project structure an employee has no original department. Instead, after the
project ends the employee enrolls in a new project.
Diff: 2 Page Ref: 140
Objective: 5.3

32) Vertical boundaries separate employees by their rank in an organization.


Answer: TRUE
Explanation: Vertical boundaries refer to the classic corporate pyramid in which rank is
measured by how high vertically you are on the pyramid.
Diff: 2 Page Ref: 141
Objective: 5.3

33) Horizontal boundaries separate employees by the amount of power they have in an
organization.
Answer: FALSE
Explanation: Horizontal boundaries separate employees by what they specialize in, not how
much power they have.
Diff: 2 Page Ref: 141
AACSB: Analytic Skills
Objective: 5.3

34) A virtual organization relies on freelancers who have no permanent status or position in the
organization.
Answer: TRUE
Explanation: Virtual organizations keep a skeleton staff and rely on the talents of free agents
who perform the work that the organization does.
Diff: 2 Page Ref: 141
AACSB: Analytic Skills
Objective: 5.3
35) Managers want to eliminate boundaries in organizations primarily to increase stability and
reduce flexibility.
Answer: FALSE
Explanation: Managers want primarily to increase flexibility in boundaryless organizations
without jeopardizing stability.
Diff: 2 Page Ref: 141
Objective: 5.3

36) Horizontal boundaries separate employees by the specialization of their job.


Answer: TRUE
Explanation: Horizontal boundaries mark the difference between, for example, an ad executive
and a member of a creative advertising team. Both may have equal ranks in the organization, but
they are separated by what they do.
Diff: 2 Page Ref: 141
AACSB: Analytic Skills
Objective: 5.3

37) A virtual organization may disintegrate after it finishes its task.


Answer: TRUE
Explanation: Virtual organizations can be ad hoc. All but a few administrators can go on to work
for different companies.
Diff: 2 Page Ref: 141
Objective: 5.3

38) All learning organizations share a distinct structure.


Answer: FALSE
Explanation: Learning organizations take on a variety of different structures. Each structure is
customized for the organization and the work that it does.
Diff: 2 Page Ref: 143
Objective: 5.3

39) A company's organizational culture refers to a system of shared political beliefs.


Answer: FALSE
Explanation: A company's culture may share values and beliefs that involve the company itself,
but political beliefs are not shared.
Diff: 2 Page Ref: 145
Objective: 5.4

40) Employees learn organizational culture by reading official organization documents and
histories.
Answer: FALSE
Explanation: Employees learn corporate culture from traditions, stories, symbols, attitudes, and
many other sources. Official documents are usually not good sources for learning about
corporate culture.
Diff: 2 Page Ref: 146
Objective: 5.4
41) An organization's founder has little influence on its culture.
Answer: FALSE
Explanation: The founders' values and attitudes typically establish all key elements of an
organization's culture.
Diff: 2 Page Ref: 146
Objective: 5.4

42) Strong organizational culture can eliminate the need for rules and bylaws.
Answer: TRUE
Explanation: A strong culture can serve as guidelines for employees, eliminating the need for
official rules and regulations.
Diff: 3 Page Ref: 147
AACSB: Ethical Understanding and Reasoning Abilities
Objective: 5.4

43) Organizational design requires a manager to ________.


A) organize groups within an organization
B) change the culture of an organization
C) change or develop the structure of an organization
D) change the logo of an organization
Answer: C
Explanation: C) By definition, organizational design requires that an individual develop or
change an organization's structure. Changing organizational culture or organizing groups may
influence structure in minor ways, so those choices are incorrect. Changing the logo of the
organization also does not constitute creating or significantly modifying the organization's
structure.
Diff: 1 Page Ref: 124
Objective: 5.1

44) All of the following are part of the process of organizational design EXCEPT ________.
A) decide how specialized jobs should be
B) determine rules for employee behavior
C) determine the level at which decisions are made
D) determine goals for the organization
Answer: D
Explanation: D) Organizing jobs, formulating rules, or clarifying a decision-making process are
all clearly examples of developing an organization's structure. Determining goals is part of
establishing an organization's mission, not creating its structure that will help carry out that
mission.
Diff: 2 Page Ref: 124
Objective: 5.1
45) Which of the following are NOT basic elements of organizational structure?
A) work specialization, span of control
B) chain of command, line authority
C) centralization, decentralization
D) departmentalization, formalization
Answer: B
Explanation: B) The six elements of organizational structure are given in all three incorrect
choices. Chain of command and line authority are not included as basic elements of
organizational structure, so "chain of command, line authority" is the correct response.
Diff: 2 Page Ref: 124
Objective: 5.1

46) Which of the following is synonymous with work specialization?


A) division of labor
B) job discrimination
C) chain of command
D) job preference
Answer: A
Explanation: A) Division of labor is the only term among the four choices that describes how
work is specialized. Job discrimination describes how employees are mistreated in the job
market. Job preference describes how employees select jobs. Chain of command describes
authority relationships in organizations.
Diff: 2 Page Ref: 124
Objective: 5.1

47) Which statement accurately defines work specialization?


A) It is the degree to which tasks are grouped together.
B) Individual employees specialize in doing part of an activity rather than the entire activity.
C) Jobs are ranked relative only to their worth or value to the businesses.
D) Work specialization clarifies who reports to whom.
Answer: B
Explanation: B) The choice regarding the degree to which tasks are grouped together describes
departmentalization, not specialization. The choices regarding ranking jobs and work
specialization both describe a power relationship in an organization, so they are incorrect. The
choice regarding individual employees accurately identifies the idea that work specialization
requires dividing a task into parts, so it is the correct response.
Diff: 3 Page Ref: 124
AACSB: Analytic Skills
Objective: 5.1
48) Early supporters of work specialization saw it as ________.
A) a reliable way to increase productivity
B) a good way to increase employee morale
C) a source of innovation
D) an immoral way to coerce workers into greater productivity
Answer: A
Explanation: A) Work specialization has never been seen as a way to increase productivity or
innovation. Work specialization was seen as an excellent but ultimately limited way to increase
productivity, so "a reliable way to increase productivity" is the correct response.
Diff: 2 Page Ref: 125
AACSB: Analytic Skills
Objective: 5.1

49) Early users of work specialization early in the twentieth century found that the practice
ultimately resulted in ________.
A) higher profits and better employee morale
B) bored workers with low morale
C) huge and permanent productivity gains
D) better communication among employees
Answer: B
Explanation: B) While managers initially saw profit and productivity gains in work
specialization, the gains were not huge, not permanent, and not accompanied by increases in
morale, so these choices are incorrect. Better communication was never observed by managers
so that choice is incorrect. After initial gains, managers did see an inevitable drop in morale of
employees as they contended with drudgery, making "bored workers with low morale" the
correct response.
Diff: 3 Page Ref: 125
AACSB: Ethical Understanding and Reasoning Abilities
Objective: 5.1

50) Today, managers favor this approach instead of work specialization.


A) All tasks are performed by all employees.
B) Partners switch jobs every half hour.
C) Employees perform a broad range of tasks.
D) Monotonous tasks are shared by all employees.
Answer: C
Explanation: C) Today's managers prefer an approach in which employees perform many tasks,
eliminating monotony. The other choices given here have been tried in isolated cases, but none
constitute a prevalent approach of today's managers.
Diff: 2 Page Ref: 125
AACSB: Analytic Skills
Objective: 5.1
51) Functional departmentalization groups jobs by ________.
A) tasks they perform
B) territories they serve
C) products or services they manufacture or produce
D) type of customer they serve
Answer: A
Explanation: A) The choice regarding territories describes geographic departmentalization,
while the choice regarding products or services describes product departmentalization, and the
choice regarding type of customer describes customer departmentalization. That makes "tasks
they perform" the correct response, as functional departmentalization groups employees by the
jobs they perform.
Diff: 2 Page Ref: 126
Objective: 5.1

52) ________ departmentalization is based on territory or the physical location of employees or


customers.
A) Functional
B) Product
C) Geographic
D) Matrix
Answer: C
Explanation: C) Among the four choices, only geographic refers to territory, so geographic
departmentalization is the correct choice.
Diff: 1 Page Ref: 126
Objective: 5.1

53) A soap company that features a bath soap department, a laundry detergent department, and a
dish soap department is using which of the following?
A) process departmentalization
B) functional departmentalization
C) product departmentalization
D) customer departmentalization
Answer: C
Explanation: C) The soap company clearly is organizing by product, not a particular process, the
job people do, or the customer that is served. That makes product departmentalization the correct
response.
Diff: 2 Page Ref: 126
AACSB: Analytic Skills
Objective: 5.1
54) What kind of departmentalization would be in place in a government agency in which there
are separate departments that provide services for employers, employed workers, unemployed
workers, and the disabled?
A) product
B) geographic
C) outcome
D) customer
Answer: D
Explanation: D) Employed workers, unemployed workers, employers, and disabled workers are
all categories of people who will use the agency's services—its customers. Therefore, "customer"
is correct and the other choices incorrect.
Diff: 2 Page Ref: 126
AACSB: Analytic Skills
Objective: 5.1

55) State motor vehicle offices usually use this kind of departmentalization.
A) product
B) functional
C) customer
D) process
Answer: D
Explanation: D) Motor vehicle offices organize, for example, by the process of getting a driver's
license. First the customer fills out forms, then takes an eye test, then takes a written test, and so
on. This makes "process" correct.
Diff: 2 Page Ref: 126
Objective: 5.1

56) The line of authority that extends from the upper levels of management to the lowest levels
of the organization is termed the ________.
A) chain of responsibility
B) unity of command
C) staff authority
D) chain of command
Answer: D
Explanation: D) Unity of command refers to a single authority prevailing when organizational
conflicts arise rather than a hierarchical authority. Staff authority refers to the authority that staff
managers have over support personnel. Only the chain of command describes the hierarchical
relationship between levels of an organization with respect to authority, so that is the correct
response. Chain of responsibility is incorrect because it is not a recognized term.
Diff: 1 Page Ref: 127
Objective: 5.1
57) The chain of command answers this question.
A) Where do I go for help?
B) How do I know when the task is complete?
C) What are the rules?
D) Who reports to whom?
Answer: D
Explanation: D) The classic description of the chain of command is that it determines who
reports to whom. The other questions given here—asking for help, knowing when work is
complete, and learning the rules do not explicitly involve authority, so they are incorrect.
Diff: 2 Page Ref: 128
Objective: 5.1

58) Authority gives an individual the right to do this.


A) give orders
B) reprimand employees
C) command respect
D) obey orders
Answer: A
Explanation: A) Authority confers the right to direct subordinates and, if necessary, issue
commands and orders, making "giving orders" the correct response. Reprimanding may be done
by superiors to subordinates, but it is not an explicit part of authority. Commanding respect is
completely independent of authority—although practically speaking authority is hard to establish
without it. Finally, all employees have the "right" to obey orders, not just a person with authority,
making "obeying orders" incorrect.
Diff: 1 Page Ref: 128
Objective: 5.1

59) In the chain of command, each person above you ________.


A) has special privileges
B) receives higher pay
C) has line authority
D) has no right to give you orders
Answer: C
Explanation: C) Line authority is the explicit right to issue orders to a subordinate. People of
higher rank may or may not receive special privileges or more pay than people below, so those
choices are incorrect. Finally having no right to give you orders can be eliminated because it is
the opposite of the correct answer.
Diff: 2 Page Ref: 128
Objective: 5.1
60) Staff managers have authority over ________.
A) special support employees only
B) line managers
C) middle managers
D) the person above them in the chain of command
Answer: A
Explanation: A) Staff managers have authority only over the special support staff they control.
Staff managers do not typically exercise authority over other employees, even if they outrank
them. This makes "special support employees only" the correct response and the other three
choices incorrect because they all identify people other than support staff.
Diff: 2 Page Ref: 128
Objective: 5.1

61) Line authority gives a manager the ability to direct the work of ________.
A) any employee in the firm
B) any subordinate
C) any subordinate, after consulting with the next higher level
D) only subordinates one level down
Answer: B
Explanation: B) Line authority is the explicit right to issue orders or direct the activities of any
subordinate. Line authority confers this right to a manager without any prior consultation with
higher-ups. This makes "any subordinate" the correct response. "Any subordinate after
consulting with the next higher level" is incorrect because line authority extends only downward,
not up to higher-ranking individuals.
Diff: 2 Page Ref: 128
AACSB: Analytic Skills
Objective: 5.1

62) ________ prevents a single employee from getting conflicting orders from two different
superiors.
A) Line authority
B) Unity of command
C) Staff authority
D) Chain of command
Answer: B
Explanation: B) The chain of command, line authority, and staff authority all are involved in
determining how organizational orders and discipline are handled. However, only the unity of
command deals explicitly with resolving conflicting orders, so it is the correct response.
Diff: 2 Page Ref: 128
AACSB: Analytic Skills
Objective: 5.1
63) The importance of unity of command has diminished in today's workplace because of its
tendency to be ________.
A) inflexible
B) ethically questionable
C) chauvinistic and dictatorial
D) too decisive
Answer: A
Explanation: A) Unity of command is a principle that establishes absolute authority of the
superior in an organization. In today's workplace, flexibility is valued over authority so unity of
command has been downgraded. This makes "inflexible" the correct response. Unity of
command is not ethically questionable, so that choice can be eliminated. Similarly, though there
may be an element of veracity in the remaining two choices, they can both be ruled out since
being dictatorial or overly decisive are not causes of the diminution of unity of command.
Diff: 2 Page Ref: 129
AACSB: Communication
Objective: 5.1

64) Which of the following statements is true?


A) Power is a right.
B) Authority is one's ability to influence decisions.
C) Authority is a right.
D) Both power and authority are rights.
Answer: C
Explanation: C) The choices indicating that power is a right and authority is one's ability to
influence decisions have the facts reversed. Power, not authority, is the ability to influence
decisions, and authority is a right. That makes the choice indicating that authority is a right the
correct response and also rules out the remaining choice since authority alone is a right.
Diff: 2 Page Ref: 130
AACSB: Analytic Skills
Objective: 5.1

65) ________ is the obligation or expectation to perform a duty.


A) Responsibility
B) Unity of command
C) Chain of command
D) Span of control
Answer: A
Explanation: A) By definition, responsibility is the obligation to perform duties that have been
assigned, so that is the correct choice. An employee's responsibility is to complete the task that
he or she has been assigned. Two of the other choices here, unity of command and chain of
command, refer to giving and following orders, so they can be eliminated. Span of control refers
to the number of employees who report to a manager, so it is also an incorrect choice.
Diff: 1 Page Ref: 130
Objective: 5.1
66) The personal secretary of a top manager may have ________.
A) power but not authority
B) authority but not power
C) power and authority
D) line authority but not staff authority
Answer: A
Explanation: A) A secretary who controls access to the boss wields power in his ability to grant
people entrance, but he does not have authority to issue orders or assignments. Therefore the
secretary has power without authority. This makes "power but not authority" the correct choice
and renders the other three choices all incorrect.
Diff: 3 Page Ref: 131
AACSB: Analytic Skills
Objective: 5.1

67) Which of the following statements is true?


A) Power is a type of authority.
B) Authority and power are identical.
C) Authority is a type of power.
D) Power is determined by horizontal position in an organization.
Answer: C
Explanation: C) Authority is a subset of power. Authority is the power to give orders and make
assignments. This makes authority as a type of power the correct choice and causes power as a
type of authority and authority and power being identical to be incorrect because neither one of
them identifies authority as a type of power. Finally, power being determined by horizontal
position in an organization is incorrect because power is determined by both the horizontal and
vertical position of a person in an organization.
Diff: 3 Page Ref: 130
AACSB: Analytic Skills
Objective: 5.1

68) As represented in a power cone, power is based on ________.


A) vertical position only
B) horizontal position only
C) distance from the center only
D) vertical position and distance from the center
Answer: D
Explanation: D) Vertical position by itself determines authority, not power, so vertical position
only is incorrect. Horizontal position on its own determines neither power nor authority, so
horizontal position only is incorrect. Distance from the center only partly defines power, so that
choice is incorrect. The remaining choice gives the correct relationship: power is determined by
both vertical position and the horizontal distance from the center power core of the diagram.
Diff: 3 Page Ref: 130-131
AACSB: Analytic Skills
Objective: 5.1
69) As represented in a hierarchical organization diagram, authority is based on ________.
A) vertical position only
B) horizontal position only
C) distance from the center only
D) horizontal and vertical position
Answer: A
Explanation: A) In a hierarchical organization diagram, vertical position is a measure of
authority. The person at the top therefore has the most authority and the person on the bottom the
least, making vertical position only the correct choice. All three other possibilities listed feature a
horizontal dimension so all three are incorrect.
Diff: 3 Page Ref: 130-131
AACSB: Analytic Skills
Objective: 5.1

70) A construction site supervisor who sees an impending thunderstorm and tells workers to go
home is demonstrating ________.
A) line authority
B) staff delegation
C) provisional accountability
D) responsibility
Answer: A
Explanation: A) This is a perfect example of line authority: The supervisor is exercising the
authority to make a decision and give an order to subordinates without consulting with any of his
superiors. This makes line authority correct and rules out all of the other three choices.
Diff: 2 Page Ref: 131
Objective: 5.1

71) ________ is the power that rests on the leader's ability to punish or control.
A) Reward power
B) Coercive power
C) Expert power
D) Referent power
Answer: B
Explanation: B) Coercive power is the power that comes from fear. So the ability to punish or
control is a coercive power. This makes coercive power correct. The leader is not using
expertise, access, or some kind of premium or bonus to influence others, so these choices are
incorrect.
Diff: 2 Page Ref: 131
Objective: 5.1
72) A bank manager who passes out bonuses at the end of the year is exercising this.
A) reward power
B) coercive power
C) expert power
D) referent power
Answer: A
Explanation: A) A bonus is a type of reward, so the manager is exercising reward power. The
power is not based on fear (coercive power), expertise, or knowing someone (referent power), so
none of these choices is correct.
Diff: 2 Page Ref: 131
AACSB: Analytic Skills
Objective: 5.1

73) Your firm's attorney has ________ power when giving legal advice.
A) legitimate
B) status
C) expert
D) coercive
Answer: C
Explanation: C) Legal advice is a type of expertise so expert is the correct response. The
attorney's power is not based on fear, so coercive is incorrect. Legitimate and status are both
incorrect because both refer to a type of hierarchical power, not power that comes from
expertise.
Diff: 2 Page Ref: 131
AACSB: Analytic Skills
Objective: 5.1

74) ________ is the power that arises when a person is close to another person who has great
power and authority.
A) Expert power
B) Referent power
C) Reward power
D) Legitimate power
Answer: B
Explanation: B) The boss's secretary is a classic case of referent power—her power is based on
the ability to give access to an important person, the boss. This makes referent power the correct
response. The other three choices are all incorrect because none of the three describes the power
that comes from proximity and access to a person who has power or resources.
Diff: 2 Page Ref: 131
Objective: 5.1
75) When a top manager decides to hire an individual over the objections of her staff she is
exercising which kind of power?
A) referent
B) expert
C) coercive
D) legitimate
Answer: D
Explanation: D) When the manager does what she wants over the objection of subordinates she
is exploiting her position of authority in the vertical organizational hierarchy—in other words,
she is using legitimate power. None of the other choices refers to the vertical power that comes
from one's position in the corporate pyramid.
Diff: 3 Page Ref: 131
AACSB: Analytic Skills
Objective: 5.1

76) The traditional view holds that managers should not directly supervise more than ________
subordinates.
A) three or four
B) five or six
C) seven or eight
D) nine or ten
Answer: B
Explanation: B) Classical studies and observations limited the number of employees under a
single manager to six, making five or six correct. This view has recently evolved. As
organizations become more sophisticated and workers become better trained and more
accountable, the span of control has increased in size.
Diff: 1 Page Ref: 132
Objective: 5.1

77) Modern managers find that they can ________ if their employees are experienced, well-
trained, and motivated.
A) increase their span of control
B) decrease their span of control
C) eliminate their span of control
D) fluctuate their span of control
Answer: B
Explanation: B) Having eager, well-trained, experienced employees seems to be the key to
increasing span of control. In a sense the manager oversees a group of "self-managed"
individuals who are almost equal to himself in accountability and responsibility. In addition,
many of his charges may have skills, knowledge, or insights that actually surpass the manager's
own abilities. All of these factors make decreasing their span of control the correct response and
rule out the other iterations.
Diff: 2 Page Ref: 133
Objective: 5.1
78) A traditional "top down" organization is ________ organization.
A) a largely centralized
B) a largely decentralized
C) an absolutely decentralized
D) an absolutely centralized
Answer: A
Explanation: A) By definition, a centralized organization is one in which decisions are issued
from the top. This makes largely centralized the correct choice and largely decentralized and
absolutely decentralized incorrect because they refer to decentralized rather than centralized
structure. Finally, absolutely centralized is not correct because no organization is completely
centralized or decentralized. All organizations are somewhere in the middle of the two extremes.
Diff: 2 Page Ref: 133
AACSB: Analytic Skills
Objective: 5.1

79) ________ reflects the degree to which decision making is distributed through out the
hierarchy rather than concentrated at the top.
A) Centralization
B) Span of Control
C) Concentration
D) Decentralization
Answer: D
Explanation: D) By definition, decentralization refers to the opposite of top-down decision
making: the more decentralized decisions in an organization are, the less often they are made by
top managers and filter down from above. When decision making is distributed throughout the
hierarchy it is therefore decentralized making decentralization the correct response. Obviously
centralization is incorrect here. Span of control and concentration are also wrong because neither
span of control nor concentration refer to decision making that comes from all levels of an
organization.
Diff: 2 Page Ref: 133
Objective: 5.1

80) In recent years, organizations have become more ________ to be responsive to a dynamic
business environment.
A) centralized
B) decentralized
C) structured
D) mechanistic
Answer: B
Explanation: B) The fast-changing business environment of today has made managers seek to be
more flexible. A decentralized structure that can effect change from any position in the hierarchy
without waiting for a centralized top-down decree is therefore favored by managers seeking
flexibility. This makes decentralized the correct response and rules out the other three choices,
all of which identify inflexible rather than flexible decision making.
Diff: 2 Page Ref: 133
Objective: 5.1
81) In today's decentralized business world, ________ the most important strategic decisions.
A) top managers still primarily make
B) middle managers make
C) lower-level managers
D) nonmanagerial employees
Answer: A
Explanation: A) Though decentralization has increased greatly in the recent past, the truly
important decisions in most organizations are still made by top managers. The decisions that
middle managers, lower managers, and nonmanagers make are usually of a tactical nature and do
not affect the direction in which the organization is headed.
Diff: 2 Page Ref: 133
Objective: 5.1

82) All of the following are characteristics of a highly formalized organization EXCEPT
________.
A) explicit job descriptions
B) little discretion for employees
C) minimum number of rules
D) a standardized way of doing things
Answer: C
Explanation: C) A formalized organization is very precise and bureaucratic. Jobs are precisely
defined; employees are given little leeway in how they carry out tasks, rules are given great
emphasis, and most activities are routinized and standardized. Since rules are important in this
kind of an organization, you would not expect a minimum of rules, making it the correct
response for this question.
Diff: 2 Page Ref: 134
Objective: 5.1

83) Today's managers are moving away from formalization and trying to be this.
A) more rigorous
B) more flexible
C) more strict
D) less permissive
Answer: B
Explanation: B) Today's managers, if anything, are getting less strict and more permissive,
making "more strict" and "less permissive" incorrect. "More rigorous" is wrong simply because
rigor has not been identified as a current trend among managers. The correct choice identifies
flexibility as the key to dealing with a fast-changing economic environment.
Diff: 2 Page Ref: 134
Objective: 5.1
84) Today's managers expect employees to ________.
A) ignore rules for the most part
B) use discretion when it comes to following rules
C) faithfully follow rules even when it may harm the organization
D) make their own rules
Answer: B
Explanation: B) Rules have been de-emphasized in today's business environment, but not
forgotten. This rules out ignoring rules and faithfully following rules as the correct answer.
Managers don't want to go so far as having employees make their own rules, which eliminates
that choice. The correct response is using discretion, which reflects a decentralized view of
management in which employees participate in decision making—including the decision to
interpret rules.
Diff: 2 Page Ref: 134
AACSB: Ethical Understanding and Reasoning Abilities
Objective: 5.1

85) A(n) ________ organization has a high degree of specialization, formalization, and
centralization.
A) organic
B) horizontal
C) learning
D) mechanistic
Answer: D
Explanation: D) By definition, a mechanistic organization is hierarchical, highly specialized
with rigid, formal rules and decision making controlled at the top of the corporate pyramid. An
organic or learning organization are both very nearly opposite to a mechanistic structure,
featuring highly empowered employees, few rules, and flexible, decentralized decision making.
Horizontal is incorrect because it does not describe a recognized organizational model.
Diff: 1 Page Ref: 134
Objective: 5.2

86) Which of the following would likely be found in mechanistic organizations?


A) wide span of control
B) empowered employees
C) decentralized responsibility
D) standardized jobs
Answer: D
Explanation: D) A mechanistic organization would feature a narrow span of control, employees
who were not highly empowered, and centralized responsibility, making the choices indicating
the opposite incorrect. A mechanistic organization would feature precisely defined, highly
standardized jobs, which makes standardized jobs the correct response.
Diff: 2 Page Ref: 134
Objective: 5.2
87) A(n) ________ organization is able to change rapidly as needs require.
A) organic
B) hierarchical
C) vertical
D) mechanistic
Answer: A
Explanation: A) The hallmark of an organic organization is its ability to be flexible and change
in response to a dynamic business environment. Hierarchical, vertical, and mechanistic
organizations are entities that do not adapt well to new situations, so these choices are incorrect.
Diff: 1 Page Ref: 134
Objective: 5.2

88) Which term best describes an organic organization?


A) hierarchical
B) pyramid-shaped
C) flexible
D) fixed
Answer: C
Explanation: C) Flexibility is the key to an organic organization, making that choice correct.
The terms hierarchical, pyramid-shaped, and fixed all correlate with a mechanistic organization,
so each of these choices is incorrect.
Diff: 2 Page Ref: 134
AACSB: Analytic Skills
Objective: 5.2

89) Which word best characterizes a mechanistic organization?


A) hierarchical
B) collaborative
C) adaptable
D) informal
Answer: A
Explanation: A) A mechanistic organization is not collaborative, adaptable, or informal. Those
terms describe more organic models, such as a team or matrix structure. A mechanistic
organization is hierarchical, depending on vertical relationships for the way business is
conducted, so hierarchical is correct.
Diff: 2 Page Ref: 134
AACSB: Analytic Skills
Objective: 5.2
90) Strategy, size, technology, and the degree of uncertainty in the environment together make
up what are called ________.
A) contingency variables
B) control factors
C) structure variables
D) probable factors
Answer: A
Explanation: A) The inputs that determine an organization's structure are called contingency
variables—strategy, size, technology, and degree of uncertainty. Each of these variables can
change how a company is organized and structured. For example, as the size of an organization
changes, its structure also gets modified to accommodate its new stature. Since contingency
variables is the only choice that correctly identifies these variables, it is the right response for
this question.
Diff: 1 Page Ref: 135
Objective: 5.2

91) Together, contingency variables determine the ________.


A) success of an organization
B) culture of an organization
C) structure of an organization
D) size of an organization
Answer: C
Explanation: C) Contingency variables are the inputs that determine an organization's structure.
For example, in a highly uncertain business environment, the structure of an organization
typically changes to become more nimble and adaptable so it can change quickly. Since degree
of uncertainty is a contingency variable, this makes structure of an organization the correct
response and renders the other terms incorrect.
Diff: 2 Page Ref: 135
Objective: 5.2

92) A company that is pursuing a cost leadership strategy would be most likely to have this kind
of structure.
A) mechanistic
B) virtual
C) team
D) matrix-project
Answer: A
Explanation: A) In a cost-leadership strategy, holding down costs and maximizing efficiency
and productivity are paramount. A mechanistic approach has been found to work best for holding
down costs, so that is the correct response here. Virtual, team, and matrix-project models
typically work better for innovation and creativity rather than the cost-cutting measures needed
for a cost-leadership strategy.
Diff: 2 Page Ref: 135
AACSB: Analytic Skills
Objective: 5.2
93) A company that is trying to be a leader in innovation within its industry would be most likely
to have this kind of structure.
A) mechanistic
B) organic
C) simple
D) functional
Answer: B
Explanation: B) An organic model has been found to work best for innovation and creativity
within an organization, making organic the correct response. The other three choices all identify
non-organic approaches that work better for cost-cutting and efficiency than they do for
innovation.
Diff: 2 Page Ref: 135
Objective: 5.2

94) Larger organizations tend to have ________ than smaller organizations.


A) more specialization
B) less departmentalization
C) less centralization
D) fewer rules and regulations
Answer: A
Explanation: A) It is inevitable that as an organization grows to a large size, a high degree of
specialization results. With so many employees to keep track of, it is only natural that groups
form that consist of individuals who share tasks or priorities. The other three choices are all
incorrect because in larger organizations you would expect more, not less, departmentalization
and centralization, and more, not fewer rules to follow.
Diff: 2 Page Ref: 135-136
Objective: 5.2

95) As an organization grows to a size of over 2,000 employees, it finds it hard to avoid
becoming more ________.
A) mechanistic
B) organic
C) informal
D) adaptable
Answer: A
Explanation: A) Like an army, the realities of organizing large groups of people requires a fairly
rigid, rule-bound structure. This causes large organizations to become more mechanistic as they
increase in size. If anything, as organizations grow they become less organic, informal, and
adaptable, making all of these choices incorrect.
Diff: 2 Page Ref: 136
Objective: 5.2
96) Joan Woodward conducted pioneering studies on how this affected the structure of
companies.
A) ethics
B) technology
C) values
D) corporate culture
Answer: B
Explanation: B) Woodward studied factories that used different technologies to produce goods,
discovering trends in the way technology affected organizational structure. Woodward did not
observe firms with respect to ethical, value-based, or cultural concerns, making all of these
choices incorrect for this question.
Diff: 1 Page Ref: 136
AACSB: Technology
Objective: 5.2

97) Woodward found that if horizontal differentiation in an organization was low, this structure
worked best.
A) mechanistic
B) traditional
C) inorganic
D) organic
Answer: D
Explanation: D) Woodward's findings showed that no matter how vertical differentiation
differed, low horizontal differentiation correlated with an organic model. A mechanistic or
traditional structure correlated with high horizontal differentiation, eliminating those two
choices. Inorganic is ruled out because "inorganic" is not a recognized model.
Diff: 2 Page Ref: 136
AACSB: Technology
Objective: 5.2

98) Woodward concluded that a mechanistic structure worked best for a firm that used
________.
A) unit production
B) mass production
C) process production
D) quality production
Answer: B
Explanation: B) Woodward found that mass production technology correlated with a
mechanistic structure, making that the correct choice and eliminating the other choices.
Diff: 2 Page Ref: 136
AACSB: Technology
Objective: 5.2
99) In Woodward's study, this type of production combined high vertical differentiation and low
horizontal differentiation.
A) unit production
B) mass production
C) process production
D) technological production
Answer: C
Explanation: C) Woodward found that process production was very hierarchical, that is,
vertically differentiated into levels of organizational authority, but low in horizontal
differentiation, meaning there was little specialization. The other technologies did not match this
profile, so the other three choices are all incorrect.
Diff: 2 Page Ref: 136
AACSB: Technology
Objective: 5.2

100) The greater the environmental uncertainty, the more an organization needs to become
________.
A) organic
B) mechanistic
C) stable
D) high-tech
Answer: A
Explanation: A) Increased uncertainty in a business environment requires an organization to be
more flexible and adaptable—in other words, more organic. High uncertainty would militate
against being more mechanistic and it would have little influence on the stability of an
organization or the degree to which it was "high-tech."
Diff: 2 Page Ref: 136
Objective: 5.2

101) Global competition forces firms to ________.


A) become lean, fast, and flexible
B) build up enormous cash reserves
C) think locally
D) become more hierarchical
Answer: A
Explanation: A) Competing in a global market adds unpredictability to a business, typically
forcing it to become more adaptable and quick to respond to change, making lean, fast, and
flexible the correct response. Global competition requires the opposite of thinking locally or
becoming more hierarchical (less flexible). Going global does not necessarily affect cash
requirements, so building up enormous cash reserves is incorrect.
Diff: 2 Page Ref: 136
AACSB: Globalizations
Objective: 5.2
102) Traditional organizational designs tend to be more mechanistic and include ________.
A) simple, complex, and divisional structures
B) simple, functional, and dysfunctional structures
C) functional, divisional, and vertical structures
D) simple, functional, and divisional structures
Answer: D
Explanation: D) The original organizational theorists divided organizations into three categories:
simple, functional, and divisional. Several other categories and subcategories have subsequently
been added, but these traditional characterizations still stand up well today. For example, the
newly identified matrix model is a modification of the original functional design, with teams
forming from individuals within a functional system.
Diff: 1 Page Ref: 137
Objective: 5.3

103) A simple structure is ________ like a mechanistic organization, but ________ like an
organic organization.
A) centralized; informal
B) informal; decentralized
C) decentralized; formal
D) centralized; formal
Answer: A
Explanation: A) A simple structure is largely a one-person show, with a single person being the
originator and driving force behind the organization he or she formed. A single person makes
virtually all important decisions in a simple structure, making the system highly centralized.
However, since the simple structure is largely used in very small companies, it is also typically
very informal. The combination of being centralized and informal matches the choice with the
same description.
Diff: 3 Page Ref: 137
AACSB: Analytic Skills
Objective: 5.3

104) What is a strength of a simple structure?


A) Employees are grouped with others who have similar tasks.
B) Power and authority are widely distributed.
C) Accountability is clear.
D) There are cost-saving advantages from specialization.
Answer: C
Explanation: C) Simple structures have a number of strengths, but they do not include
specialization, departmentalization, or decentralization. A simple structure is typically too small
for any of those attributes to emerge. What almost all simple structures do feature is a strong
sense of accountability. With a single person largely making all important decisions, simple
structures do not suffer from murkiness when it comes to determining who was responsible for
an action or decision. This makes the choice on accountability the correct response.
Diff: 2 Page Ref: 137
Objective: 5.3
105) What is a weakness of a simple structure?
A) Duplication of activities and resources increases costs and reduces efficiency.
B) Functional specialists become insulated and have little understanding of what other units are
doing.
C) Pursuit of functional goals can cause managers to lose sight of what is best for the overall
organization.
D) Reliance on a single person is risky.
Answer: D
Explanation: D) Simple structures are usually too small to suffer from duplication, too much
specialization, or losing sight of larger goals, so none of these choices is correct. The weakness
that simple structures do suffer from is putting "too many eggs in a single basket"—relying on a
single person to make all key decisions and perform all important functions. This makes reliance
on a single person being risky the correct response.
Diff: 2 Page Ref: 137
AACSB: Analytic Skills
Objective: 5.3

106) This is a key characteristic in an organization with a functional structure.


A) adaptability
B) departmentalization
C) flexibility
D) little specialization
Answer: B
Explanation: B) The hallmark of a functional structure is departmentalization. An organization
that has functional structure is essentially a sum of individual parts, each one being a separate
department. Adaptability and flexibility are traits one would be likely to see in an organic
organization of some type, so those choices are incorrect. Similarly, one would expect to see a
great deal of specialization in a functional structure, making little specialization incorrect.
Diff: 2 Page Ref: 137-138
AACSB: Analytic Skills
Objective: 5.3

107) This is a weakness of a functional structure.


A) favoring functional goals over organizational goals
B) favoring organizational goals over functional goals
C) failing to attain functional goals
D) overemphasizing organizational goals
Answer: A
Explanation: A) The risk that any functional structure with strong departments runs is that
departmental goals will begin to eclipse overall organizational goals. A department will become
so focused on its task that it might take actions that are less than beneficial or even harmful to the
organization itself. Given this tendency, it is easy to see that the choices regarding favoring and
overemphasizing organizational goals are not correct, as organizational goals are not likely to be
favored. The risk of not meeting functional goals is always possible, but certainly would not be
considered a weakness of the functional structure.
Diff: 3 Page Ref: 138
AACSB: Analytic Skills
Objective: 5.3
108) Avoiding redundancy is a strength of which structure?
A) simple
B) divisional
C) functional
D) corporate
Answer: C
Explanation: C) In a functional structure, workers are grouped together according to specialty,
meaning that the chance of duplicating resources and equipment gets minimized. For example, if
an art department needs a super-expensive printer, it is likely that the organization will purchase
only one printer rather than have artists scattered in other segments of the organization requiring
their own printers. These facts all indicate that functional is the correct response.
Diff: 2 Page Ref: 138
Objective: 5.3

109) In a ________ structure each business unit has complete autonomy to reach its goals.
A) simple
B) functional
C) divisional
D) matrix
Answer: C
Explanation: C) A divisional structure combines a number of separate business units under the
umbrella of the main organization. These units are almost completely autonomous, but benefit
from the resources and brand of the combined organization. The divisional structure allows more
autonomy for its subunits than any other structure, making divisional the correct response.
Diff: 2 Page Ref: 138
Objective: 5.3
110) A media company that has separate, autonomous companies for movies, TV, Internet, and
print journalism is most likely a ________ structure.
A) divisional
B) functional
C) simple
D) matrix
Answer: A
Explanation: A) An organization that features autonomous branches that function like
independent companies is likely to be a divisional structure. This media company fits the
description of a divisional structure, making that the correct response, and ruling out a
functional, simple, or matrix structure.
Diff: 3 Page Ref: 138
AACSB: Analytic Skills
Objective: 5.3
111) Having separate payroll departments in each division of a divisional structure is an example
of which of the following?
A) efficiency, because payroll departments compete
B) duplication, because a single payroll department could do the job
C) effectiveness, because separate payroll departments create jobs
D) efficiency, because separate payroll departments can share methods of operation
Answer: B
Explanation: B) Separate departments that perform the same task is an example of redundancy,
not efficiency or effectiveness. The organization is wasting resources by having different units
perform tasks that could be done by a single unit. This makes the choice regarding duplication
the correct response.
Diff: 3 Page Ref: 138
AACSB: Analytic Skills
Objective: 5.3

112) As the number of employees in an organization grows, structure tends to become more
________.
A) bureaucratic
B) informal
C) decentralized
D) relaxed
Answer: A
Explanation: A) Size increases complexity, so an organization inevitably becomes more
bureaucratic and centralized as it increases in size—simply to manage the increase in complexity
it faces. This makes bureaucratic the correct response. The other three choices identify traits that
a larger organization tends to move away from as it grows: informality and less top-down in
decision making.
Diff: 1 Page Ref: 124
Objective: 5.3

113) Looking for ways to make their organization more flexible and innovative, today's
managers may choose this kind of structure.
A) simple
B) divisional
C) functional
D) team
Answer: D
Explanation: D) Simple, divisional, and functional structures are all traditional organization
types that have many strengths but do not typically specialize in being flexible or innovative.
That makes the team structure the best candidate here, as it is typically employed in firms that
seek to be creative and adaptable.
Diff: 2 Page Ref: 138
Objective: 5.3
114) In a team structure, ________.
A) there is a clear line of managerial authority
B) there is no clear line of managerial authority
C) authority comes from top managers only
D) no one has the authority to make decisions
Answer: B
Explanation: B) An organization that has a team structure is made entirely of work groups or
teams. Each team is fairly independent of others causing traditional lines of managerial authority
to be cast aside or blurred. For example, within a team a project leader's request might take
precedent over the request of a manager of higher rank who is outside of the team. This makes
the choices regarding authority from top managers and a clear line of managerial authority
incorrect as they describe traditional authority relationships. The choice regarding no one having
authority is incorrect because it assumes no authority for decisions and though teams make
decisions differently than traditional structures, they still ultimately assert authority and arrive at
decisions.
Diff: 2 Page Ref: 138
AACSB: Analytic Skills
Objective: 5.3

115) In a team structure, team members ________.


A) are subject to decisions made by their supervisors
B) can influence decisions made by top managers
C) make decisions and are accountable for their decisions
D) make decisions only after first checking with management
Answer: C
Explanation: C) Within a team structure, team members are empowered to make and influence
decisions. This privilege does have its price—team members are held accountable for their
decisions and cannot make excuses that they were "only following orders." The choice regarding
accountability therefore is the correct response, making the choices regarding supervisors and
top managers, both traditional arrangements, incorrect. The choice regarding checking with
management is also incorrect because team members do not typically need to consult
management before making decisions that affect their team's functioning.
Diff: 3 Page Ref: 139
AACSB: Analytic Skills
Objective: 5.3

116) All of the following are necessary for successful team structure EXCEPT ________.
A) well-trained team members
B) team members with cross-functional skills
C) team members with years of management experience
D) a fair and well-run team-based pay plan
Answer: C
Explanation: C) An effective team needs skilled, highly trained, versatile team members. It also
requires a specialized pay plan to avoid conflicts and misunderstandings. An effective team does
not typically need management experience, making the choice regarding team members with
years of management experience the correct response.
Diff: 2 Page Ref: 139
AACSB: Analytic Skills
Objective: 5.3
117) In a ________, employees are recruited from functional departments to work on a specific
project for a limited time period.
A) team structure
B) divisional structure
C) product structure
D) matrix structure
Answer: D
Explanation: D) Of the contemporary organizational designs, only the matrix structure preserves
functional departments within its format. Team and product structures do not recruit group
members from existing functional departments so these choices are incorrect. A divisional
structure does not typically engage in project work so that choice is also incorrect.
Diff: 3 Page Ref: 139
AACSB: Analytic Skills
Objective: 5.3

118) In a matrix structure, a group member will typically report to ________.


A) a project manager only
B) both a project manager and functional department head
C) a functional department head only
D) Group members are fully autonomous in a matrix structure, so they don't report to anyone.
Answer: B
Explanation: B) Since group members in a matrix structure are recruited from functional
departments, they report to their project manager and their department head. This makes the
choice regarding both a project manager and functional department head the correct response and
eliminates the choices regarding a project manager only and a functional department head only.
The choice regarding group members being fully autonomous is incorrect because matrix group
members do need to report to managers.
Diff: 2 Page Ref: 139
AACSB: Analytic Skills
Objective: 5.3

119) When a group member in a matrix structure finishes a project, she ________.
A) returns to her functional department
B) stays with the group to take on a new project
C) enters a pool of available employees from the entire organization
D) starts looking for a new job
Answer: A
Explanation: A) A key difference between a matrix structure and a project structure is that group
members return to their departments after finishing a project in a matrix system. In a project
system, group members have no "home" department, and go on to new projects when they
complete their current project. The choice regarding staying with the group describes the
arrangement in a team structure while the remaining two choices match the situation in a project
structure.
Diff: 2 Page Ref: 139
AACSB: Analytic Skills
Objective: 5.3
120) By giving employees two direct superiors, a matrix structure violates this key element of
organizational design.
A) unity of command
B) chain of command
C) span of management
D) decentralization
Answer: A
Explanation: A) Unity of command requires that a single voice be dominant in the event that
there are conflicting orders in an organization. Since a matrix system can give a single employee
two bosses, it violates the unity of command tradition.
Diff: 2 Page Ref: 139
AACSB: Reflective Thinking
Objective: 5.3

121) A key difference between a team structure and a matrix structure is that a team structure
________ while a matrix structure does not.
A) empowers group members
B) works on projects
C) has fairly permanent groups or teams
D) holds group members accountable
Answer: C
Explanation: C) Both matrix and team structures feature small groups working together on
projects with empowered employees who are held accountable for their decisions. A key
difference between the two structures is that teams can be fairly permanent, while matrix groups
return to their functional departments when their project is complete.
Diff: 2 Page Ref: 139
AACSB: Analytic Skills
Objective: 5.3

122) In a project structure, when employees finish a project they ________.


A) return to their department
B) return to a different division
C) move on to another project
D) return to their regular work
Answer: C
Explanation: C) A project structure has employees who have no "home" department and move
from one project to the next in the organization. This identifies moving on to another project as
the correct response and eliminates the other three choices as correct responses, since the
employee would not return to a department, division, or "regular work."
Diff: 2 Page Ref: 140
AACSB: Analytic Skills
Objective: 5.3
123) In an orchestra, a horizontal boundary exists between which of the following?
A) the string section and the horn section
B) the string section and the conductor
C) the conductor and the audience
D) the string section and the audience
Answer: A
Explanation: A) A horizontal boundary in an organization refers to specialization, rather than
rank, that separates individuals. Thus, string and horn sections would be roughly equal in rank in
an orchestra, meaning that they would be separated horizontally by their specialization, not
vertically by their rank. The other choices compare groups or individuals who are not equal in
rank. For example, the string section and conductor would be separated vertically since the
conductor would outrank a string player, making the choice regarding the string section and the
conductor incorrect. Similarly, the two choices regarding the audience can also be eliminated as
they compare groups that do not have the same rank in the orchestra.
Diff: 2 Page Ref: 140
AACSB: Analytic Skills
Objective: 5.3

124) In an orchestra, a vertical boundary exists between which of the following?


A) the string section and the horn section
B) the string section and the conductor
C) the horn section and the percussion section
D) the percussion section and the string section
Answer: B
Explanation: B) A vertical boundary denotes differences in rank between individuals. Since
string and horn sections, horn and percussion sections, and percussion and string sections are all
roughly equal in rank, no vertical boundary exists between them. A vertical boundary does exist
between the conductor and the string section, since the conductor presumably outranks the string
players, making that the correct response.
Diff: 2 Page Ref: 140
AACSB: Analytic Skills
Objective: 5.3

125) Boundaryless organizations try to eliminate ________ within their organization.


A) horizontal specialization and vertical hierarchy
B) horizontal specialization only
C) vertical hierarchy only
D) vertical specialization only
Answer: A
Explanation: A) Boundaryless organizations try to eliminate both kinds of boundaries—vertical
boundaries that separate by rank and horizontal boundaries that separate by specialization. This
makes horizontal specialization and vertical hierarchy the correct response and renders the other
choices incorrect.
Diff: 2 Page Ref: 141
AACSB: Analytic Skills
Objective: 5.3
126) A virtual organization is essentially ________ who come together for a particular project.
A) a group of employees from a single company
B) a group of free agents
C) a team of employees from different departments of a company
D) a group of top managers and CEOs
Answer: B
Explanation: B) A virtual organization maintains a small administrative staff, but relies on
freelancers to perform tasks, complete projects, and do the work of the organization. The
freelancers do not come from a single organization, nor are they high ranked corporate managers.
Instead, the freelancers come from a variety of different places and are typically unaffiliated with
any permanent organization or company.
Diff: 2 Page Ref: 141
AACSB: Analytic Skills
Objective: 5.3

127) How does a virtual organization save on costs?


A) by hiring people who specialize in what they do
B) by hiring fewer people than they need and making them work much longer hours
C) by eliminating all administrative duties
D) by keeping only a small permanent staff for administrative purposes only
Answer: D
Explanation: D) A virtual organization can temporarily grow to a large size by hiring large
numbers of freelancers. However, it keeps costs to a minimum by paying these individuals only
for actual work they do and not having to provide benefits and compensation when there is no
work for the employees to perform. This makes keeping a small permanent staff the correct
response. Eliminating all administrative duties is incorrect because a virtual organization does
keep a small administrative staff. Hiring people who specialize in what they do is incorrect
because hiring people with specialties does not necessarily keep costs down. Hiring fewer people
than they need is incorrect because virtual organizations do not typically hire fewer workers than
are necessary.
Diff: 2 Page Ref: 141
AACSB: Analytic Skills
Objective: 5.3

128) A ________ subcontracts part of a project out to outside suppliers.


A) virtual organization
B) boundary organization
C) matrix structure
D) network organization
Answer: D
Explanation: D) A network organization takes on projects knowing that it has resources to
complete only some phases of the work. The network organization then relies on subcontracting
to outside firms or groups who specialize in the services needed by the project. None of the other
choices—virtual, boundary, or matrix structures have these qualities, so all of these choices are
incorrect for this situation.
Diff: 2 Page Ref: 141
Objective: 5.3
129) A building contractor follows the network organization model when he does which of the
following?
A) does the framing and tiling by himself
B) hires three workers to help with framing
C) gives orders to workers
D) farms out the plumbing to a plumbing firm
Answer: D
Explanation: D) A building contractor functions as a network organization when he farms out
work to others. The contractor, for example, may do one part of the job himself and subcontract
phases of the job that he is not qualified to do. This makes farming out the plumbing the correct
response. Doing the framing and tiling on his own, hiring workers, or issuing orders does not
qualify the contractor as a networker; that occurs only when he actually subcontracts a part of the
job to another organization or individual.
Diff: 3 Page Ref: 141
Objective: 5.3

130) A learning organization develops the capability to ________.


A) add new training programs to keep employees up to date
B) accept the conventional wisdom of the industry
C) continuously learn, adapt, and change
D) attract new employees who have special knowledge
Answer: C
Explanation: C) A learning organization does not just train employees, gain insights, or hire
knowledgeable people. Instead, a learning organization specializes in adapting to new conditions
and developing new methods and ideas as an organization. For example, a learning organization
might collectively discover innovative new ways to improve a process or a product. This makes
continuously learning, adapting, and changing the correct response.
Diff: 2 Page Ref: 143
Objective: 5.3

131) A learning organization requires employees to ________.


A) encode information to prevent competitors from stealing ideas
B) collaborate with competitors
C) make all ideas public
D) share information and collaborate with one another
Answer: D
Explanation: D) Collaboration is critical to a learning organization, making sharing information
and collaborating with one another the correct response. Note that collaboration is limited to the
inside of the organization, making collaborating with competitors and making ideas public
incorrect. Encoding information is wrong because it focuses on employees failing to share
information, something that a learning organization would not do.
Diff: 2 Page Ref: 143
AACSB: Analytic Skills
Objective: 5.3
132) All of the following are characteristic of learning organizations EXCEPT ________.
A) a strong sense of community
B) a collaborative environment
C) managers who serve as facilitators
D) fear of making mistakes
Answer: D
Explanation: D) To function well, learning organizations need a strong sense of community and
skilled managers who facilitate collaboration. This leaves fear of making mistakes as the correct
response—learning organizations want their employees to be creative and recognize that part of
the creative process is to make mistakes.
Diff: 2 Page Ref: 143
Objective: 5.3

133) Organizational learning can't take place without ________.


A) complete privacy for employees
B) a clear chain of command
C) a shared vision of the future
D) a stable structure or hierarchy
Answer: C
Explanation: C) Learning organizations are often boundaryless organizations in which such
things as chain of command, a rigid hierarchy, or excessive privacy are out of place. One thing
that learning organizations do require is a vision of the future to guide employees toward
common goals.
Diff: 2 Page Ref: 144
Objective: 5.4

134) The culture of an organization is analogous to the ________ of an individual.


A) skills
B) personality
C) motivation
D) ability
Answer: B
Explanation: B) Organizational cultures are like people—individual, contradictory in places, full
of quirks and unexpected traits. In other words, organizational cultures resemble individual
personalities, making personality the correct response and eliminating the other choices.
Diff: 1 Page Ref: 145
AACSB: Communication
Objective: 5.4
135) Which of the following phrases best characterizes the culture of an organization?
A) our official code of conduct
B) how things are done around here
C) the most efficient way to do things
D) guidelines for where this organization is going
Answer: B
Explanation: B) The most apt phrase for an organizational culture is "how things are done
around here." An organizational culture is not thought to be official in any way, efficient, or to
comprise a set of guidelines to light the way to the future. Instead, the organizational culture is a
set of values and attitudes, making how things are done around here a perfect description.
Diff: 3 Page Ref: 145
AACSB: Reflective Thinking
Objective: 5.4

136) Which of the following is NOT a common way in which corporate cultures are transmitted
to employees?
A) stories
B) informal rituals
C) formal culture meetings
D) symbols
Answer: C
Explanation: C) Corporate culture gets handed down through stories, rituals, and material
symbols, but not formal culture meetings. The dissemination of cultural values is almost always
an indirect process in which meaning is inferred from a story, action, or even something as small
as a facial expression.
Diff: 2 Page Ref: 145
Objective: 5.4

137) Sony Corporation's focus on product innovation is an example of which of the following
dimensions of organizational culture?
A) member identity
B) people focus
C) risk tolerance
D) conflict tolerance
Answer: C
Explanation: C) Innovation is a creative process and being creative almost always involves
making mistakes and taking risks. This makes risk tolerance the correct choice and eliminates the
other items that do not deal with innovation or creativity.
Diff: 2 Page Ref: 145
Objective: 5.4
138) Which of the following is NOT considered to be a characteristic of organizational culture?
A) attitudes about taking risks
B) aggressiveness and competitiveness
C) purchasing policies
D) attention to detail
Answer: C
Explanation: C) Organizational culture involves attitudes, how competitive employees are, and
how perspicacious and tidy employees are. Organizational culture does not involve purchasing,
making "purchasing policies" the correct response for this question.
Diff: 2 Page Ref: 145
Objective: 5.4

139) The original source of an organization's culture usually reflects the vision and attitudes of
________.
A) the current president or CEO of the organization
B) the organization's original employees
C) contemporaries who are admired by the organization
D) the organization's founders
Answer: D
Explanation: D) Corporate culture is typically a tradition so it would be impossible for it to be
provided by current members of the organization or contemporaries held in high esteem. Original
employees of an organization might help contribute to corporate culture, but the culture's
primary sources are invariably the organization's founders. In general, corporate cultures reflect
the values and attitudes of their founders, making the organization's founders the correct
response.
Diff: 2 Page Ref: 146
Objective: 5.4

140) What does the story of 3M employee Art Fry inventing the Post-It Note to make church
hymns communicate to 3M employees?
A) that church is important
B) that creativity is important
C) that workers need to take a day off
D) that workers never stop working
Answer: B
Explanation: B) Fry's discovery is celebrated because it is a brilliant example of creativity. One
can infer from the story that being creative does not end when an employee leaves the office.
Rather, a truly creative person can derive inspiration from the most unlikely of circumstances.
Diff: 3 Page Ref: 146
AACSB: Reflective Thinking
Objective: 5.4
141) All of the following show why corporate rituals can be valuable in a corporate culture
EXCEPT ________.
A) rituals help initiate new employees into the culture
B) rituals reinforce corporate values
C) rituals symbolize key ideas that are important in the culture
D) rituals intimidate and silence critics of the corporate culture.
Answer: D
Explanation: D) Rituals have been shown to be valuable for initiations, reinforcing attitudes and
values, and conveying important ideas and ideals. One would hope that rituals would not be used
to intimidate or stifle the instincts of an employee in any way, making the choice regarding that
issue the correct response.
Diff: 2 Page Ref: 147
AACSB: Analytic Skills
Objective: 5.4

142) Which of the following most accurately reflects the difference between strong cultures and
weak cultures?
A) Strong cultures tend to encourage employee innovation, while weak cultures do not.
B) Weak cultures are found in most successful organizations, whereas strong cultures are
relatively rare.
C) Strong cultures have less of an influence on employee behavior than do weak cultures.
D) Company values are more deeply held and widely shared in strong cultures than in weak
cultures.
Answer: D
Explanation: D) Strong cultures are common in successful organizations, making the choice
regarding weak cultures being found in most successful organizations incorrect. The choice
regarding strong cultures having less influence is incorrect because strong cultures have more
impact on individuals than weak cultures. Strong cultures encouraging employee innovation is
incorrect because a strong culture may or may not encourage innovation. This leaves the choice
regarding company values being more deeply held and widely shared as the correct response, as
it accurately states that strong cultures imprint themselves more deeply into individuals than
weak cultures.
Diff: 2 Page Ref: 147
AACSB: Analytic Skills
Objective: 5.4
Eric the Redd (Scenario)

Eric Redd graduated from college and was hired by a corporation that manufactured parts for the
automotive industry. The employees on the assembly line seemed bored, and their motivation
was low. Eric's employer decided to try to reorganize to increase productivity. During his career,
Eric will see his job change from an engineer to a more complex job assignment.

143) The jobs of assembly-line employees are to be changed to allow more tasks to be done by
individual workers. This is a reduction in ________.
A) work specialization
B) departmentalization
C) chain of command
D) centralization
Answer: A
Explanation: A) Increasing the number of tasks that employees perform is an example of
becoming less specialized. It would not increase how many departments there are, affect
authority relationships, or decision making, so all of these choices would be incorrect for this
question.
Diff: 3 Page Ref: 124
AACSB: Analytic Skills
Objective: 5.1

144) Eric, who is trained as an engineer, is now in a group with production workers and
marketing specialists from different departments designing a new product that the company plans
to offer. This situation could be described as a(n) ________.
A) alternative assignment
B) collective assignment
C) advanced assignment
D) project assignment
Answer: D
Explanation: D) Since Eric is working with employees from different departments, it appears
that he is working on a project team within a matrix structure. He will go on to design the new
product, then move back to his original position in the organization. None of the other terms
given here match a recognized work structure, so they are incorrect.
Diff: 2 Page Ref: 140
AACSB: Analytic Skills
Objective: 5.3
145) Eric is offered a chance to help direct the efforts of some employees assigned to his work
group. This is a chance for Eric to experience ________.
A) functional structure
B) divisional structure
C) responsibility
D) authority
Answer: D
Explanation: D) By definition, authority gives an employee the right to direct the work of others
and give orders if necessary. This means that Eric is assuming authority. Assuming responsibility
would be just meeting organizational obligations. The other two choices are incorrect because
they refer to organizational design structures, not abilities that Eric might assume.
Diff: 2 Page Ref: 128-129
AACSB: Analytic Skills
Objective: 5.1

146) Eric sees this new assignment as an increase in ________, or an obligation or expectation
for him to perform at a new level.
A) functional structure
B) divisional structure
C) responsibility
D) authority
Answer: C
Explanation: C) Assuming authority is about giving orders and directing the work of others
while assuming responsibility is about fulfilling one's obligations with respect to the
organization. Since Eric is meeting expectations, responsibility is the correct response.
Diff: 2 Page Ref: 128
AACSB: Analytic Skills
Objective: 5.1

147) In a short essay, list and explain the three key elements in designing an organization's
structure.
Answer: Work specialization
This concept describes the degree to which tasks in an organization are divided into separate
jobs. The essence of work specialization is that an entire job is not done by one individual, but
instead is broken down into steps, with each step completed by a different person.

Departmentalization
The basis by which jobs are grouped together is called departmentalization. The five common
forms of departmentalization include functional, product, geographical, process, and customer
departmentalization.

Chain of command
This is the continuous line of authority that extends from upper organizational levels to the
lowest levels and clarifies who reports to whom. It helps employees answer questions such as
"Who do I go to if I have a problem?" or "To whom am I responsible?"
Diff: 2 Page Ref: 124-134
AACSB: Analytic Skills
Objective: 5.1
148) In a short essay, list and explain the three additional key elements in designing an
organization's structure.
Answer: Span of control
The question of how many employees a manager can efficiently and effectively supervise is
important because, to a large degree, it determines the number of levels and managers an
organization has. Trends in today's organizations show wider spans of control that reflect better-
trained employees who are more independent and accountable.

Centralization and decentralization


Centralization describes the degree to which decision making is concentrated at a single point in
the organization. If top managers make the organization's key decisions with little or no input
from below, then the organization is centralized. In contrast, the more that lower-level employees
provide input or actually make decisions, the more decentralized the organization is.

Authority, responsibility, and power


Authority is the right to give directions and expect them to be obeyed within an organization; the
amount of authority for a given position is inherent in that position, not related to the individual
who fills that position. Responsibility is the obligation to perform assigned tasks. While authority
is a right given by position, power is an ability to change things that is independent of position.
For example, a low-level employee with a particular skill has considerable power in an
organization if that skill is valuable to the organization.
Diff: 2 Page Ref: 124-134
AACSB: Analytic Skills
Objective: 5.1

149) In a short essay, list and discuss the three common forms of departmentalization.
Answer: Functional departmentalization
Jobs are grouped by the functions (i.e., marketing, finance, human resources) performed. This
approach can be used in all types of organizations, although the functions change to reflect the
organization's objectives and work activities.

Product departmentalization
Jobs are grouped by product line. In this approach, each major product area is placed under the
authority of a manager who is a specialist in, and is responsible for, everything having to do with
that product line. Examples might include men's shoes, women's shoes, men's clothing, women's
clothing, and so on.

Geographical departmentalization
Jobs are grouped on the basis of a territory or geography that is served. Territory might reflect
the location of employees, customers, plants, and so on.
Diff: 2 Page Ref: 126-127
AACSB: Analytic Skills
Objective: 5.1
150) In a short essay, list and discuss the two additional common forms of departmentalization.
Answer: Process departmentalization
This method groups jobs on the basis of product or customer flow. In this approach, work
activities follow a natural processing flow of product or even customers. An example of process
departmentalization is a motor vehicles office that is organized around a process that customers
use to obtain permits, licenses, and other services.

Customer departmentalization
Jobs are grouped on the basis of common customers who have common needs or problems that
can best be met by having specialists for each. An example of customer departmentalization
includes separate retail, wholesale, and government customers at a large firm.
Diff: 2 Page Ref: 126-127
AACSB: Analytic Skills
Objective: 5.1

151) In a short essay, list and discuss two contingency variables that should be considered in
determining an appropriate structure in organizational design.
Answer: Strategy and structure
An organization's structure should facilitate the achievement of goals. Since goals are influenced
by the organization's strategies, it's only logical that strategy and structure should be closely
linked. More specifically, structure should follow strategy. If managers significantly change the
organization's strategy, they will need to modify structure to accommodate and support the
change.

Size and structure


There is considerable evidence that an organization's size significantly affects its structure. For
instance, large organizations—those with 2,000 or more employees—tend to have more
specialization, departmentalization, centralization, and rules and regulations than do small
organizations. However, the relationship isn't linear. Rather, size affects structure at a decreasing
rate; that is, size becomes less important as an organization grows.
Diff: 2 Page Ref: 134-136
AACSB: Analytic Skills
Objective: 5.3
152) In a short essay, list and discuss two contingency variables that should be considered in
determining an appropriate structure in organizational design.
Answer: Technology and structure
Every organization has at least one form of technology to convert its inputs into outputs. The
processes or methods that transform an organization's inputs into outputs differ by their degree of
routineness. In general, 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.

Environment and structure


The greater the uncertainty in the environment, the greater the need for the flexibility offered by
an organic design. On the other hand, in stable, simple environments, mechanistic designs tend to
be most effective.
Diff: 2 Page Ref: 134-136
AACSB: Analytic Skills
Objective: 5.3

153) In a short essay, describe the characteristics of a simple structure.


Answer: The simple structure is most often associated with small entrepreneurial ventures and is
common among organizations where the owner and manager are one and the same. Simple
structures possess low departmentalization, wide spans of control, authority centralized in a
single person, and little formalization. As firms grow, structure tends to become more specialized
and formalized, departments and new levels of management are created, and the firm takes on a
more bureaucratic nature. The great weakness in a simple structure is that it relies too much on a
single individual. If that person is unavailable for some reason, the organization grinds to a halt.
Diff: 2 Page Ref: 137
AACSB: Analytic Skills
Objective: 5.3

154) In a short essay, describe the characteristics of a functional structure.


Answer: A functional structure is an organizational design that groups similar or related
occupational specialties together. It is a functional approach to departmentalization applied to the
entire organization. For example, an organization could be structured by the separate functions of
operations, finance, human resources, marketing, and R&D. Strengths of a functional structure
include advantages from specialization—economies of scale and little redundancy. Weaknesses
of a functional structure involve employees putting the functional goals ahead of the goals of the
entire organization.
Diff: 2 Page Ref: 138
AACSB: Analytic Skills
Objective: 5.3
155) In a short essay, describe the characteristics of a divisional structure.
Answer: The divisional structure is an organizational structure made up of separate business
units or divisions. In this design, each unit maintains limited autonomy with a division manager
responsible for performance and determining who has strategic and operational authority within
the divisional unit. However, the parent corporation still typically acts as an external overseer to
coordinate and control the various divisions. Strengths of the divisional structure include a focus
on results as divisions are highly motivated to achieve their goals. Weaknesses of this approach
include the redundancy that might arise from having autonomous divisions all operating at the
same time.
Diff: 2 Page Ref: 138
AACSB: Analytic Skills
Objective: 5.3

156) In a short essay, describe the matrix structure. What are its advantages and disadvantages?
Answer: The matrix structure is an organizational structure that assigns specialists from
different functional departments to work on one or more projects being led by project managers.
Each product is managed by an individual who staffs his or her product team with people from
each of the functional departments. The addition of this vertical dimension to the traditional
horizontal functional departments, in effect, "weaves together" elements of functional and
product departmentalization, creating a matrix arrangement. One unique aspect of this design is
that it creates a dual chain of command, which violates the classical organizing principle of unity
of command. Employees in a matrix organization have two managers who share authority: their
functional area manager and their product or project manager. The project managers have
authority over the functional members who are part of their project team in areas related to the
project's goals. However, decisions such as promotions, salary recommendations, and annual
reviews typically remain the functional manager's responsibility. To work effectively, project
and functional managers have to communicate regularly, coordinate work demands on
employees, and resolve conflicts together.
Diff: 3 Page Ref: 139-140
AACSB: Analytic Skills
Objective: 5.3

157) In a short essay, describe the boundaryless organization.


Answer: Another approach to contemporary organizational design is the concept of a
boundaryless organization, an organization whose design is not defined by, or limited to, the
horizontal, vertical, or external boundaries imposed by a predefined structure. To minimize or
eliminate these boundaries, managers might use virtual or network structural designs. Advances
in technology have facilitated the movement toward more boundaryless organizations.
Diff: 2 Page Ref: 141
AACSB: Analytic Skills
Objective: 5.3
158) In a short essay, describe a learning organization. What structural aspects does a learning
organization need?
Answer: A learning organization is an organization that has developed the capacity to
continuously learn, adapt, and change. In a learning organization, employees continually acquire
and share new knowledge and are willing to apply that knowledge in making decisions or
performing their work.

What structural aspects does a learning organization need? First, it is critical for members in a
learning organization to share information and collaborate on work activities throughout the
entire organization—across different functional specialties and even at different organizational
levels. To do this requires minimal structural and physical barriers. In such a boundaryless
environment, employees can work together and collaborate in doing the organization's work the
best way they can and learn from each other.

Finally, because of this need to collaborate, teams also tend to be an important feature of a
learning organization's structural design. Employees work in teams that are empowered to make
decisions about doing whatever work needs to be done or resolving issues. With empowered
employees and teams, there is little need for "bosses" to direct and control. Instead, managers
serve as facilitators, supporters, and advocates.
Diff: 3 Page Ref: 142-143
AACSB: Analytic Skills
Objective: 5.3

159) In a short essay, define organizational culture.


Answer: Organizational culture is the shared values, principles, traditions, and ways of doing
things that influence the way organizational members act. In most organizations, these important
shared values and practices have evolved over time and determine, to large degree, what
employees perceive about their organizational experiences and how they behave in the
organization. When doing their work, the organizational culture—the "way we do things around
here"—influences what employees can do and how they view, define, analyze, and resolve
problems and issues.
Diff: 2 Page Ref: 145
Objective: 5.4