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Fundamentals of Management, 10e, Global Edition (Robbins)

Chapter 6 Organizational Structure and Design

1) Organizational design requires a manager to ________.


A) decide who leads a group 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: By definition, organizational design requires that an individual develop or change
an organization's structure. Changing organizational culture or deciding who leads a group may
influence structure in only 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
LO: 6.1: Describe six key elements in organizational design.

2) All of the following are part of the process of organizational design EXCEPT ________.
A) deciding how specialized jobs should be
B) determining rules for employee behavior
C) determining the level at which decisions are made
D) determining goals for the organization
Answer: D
Explanation: Organizing jobs, formulating rules, or clarifying a decision-making process are
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
LO: 6.1: Describe six key elements in organizational design.

3) Which of the following are NOT basic elements of organizational design?


A) work specialization, span of control
B) chain of command, line authority
C) centralization, decentralization
D) departmentalization, formalization
Answer: B
Explanation: The six elements of organizational structure are given in the three incorrect
choices: work specialization, span of control, centralization, decentralization,
departmentalization and formalization. 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
LO: 6.1: Describe six key elements in organizational design.

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4) 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: 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
LO: 6.1: Describe six key elements in organizational design.

5) 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: 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
LO: 6.1: Describe six key elements in organizational design.

6) 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: 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
LO: 6.1: Describe six key elements in organizational design.

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7) Early users of work specialization in the early 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: 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
AACSB: Ethical understanding and reasoning
LO: 6.1: Describe six key elements in organizational design.

8) Today, managers favor this approach with regard to work specialization.


A) All tasks are performed by all employees to promote fairness.
B) Partners switch jobs every half hour to overcome boredom.
C) Employees specialize to maintain efficiency.
D) Monotonous tasks are shared by all employees to prevent perceived favoritism.
Answer: C
Explanation: Most managers today see work specialization as an important organizing
mechanism because it helps employees be more efficient. The other choices given here have
been tried in isolated cases, but none constitutes a prevalent approach of today's managers.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

9) 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: 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
LO: 6.1: Describe six key elements in organizational design.

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10) ________ departmentalization is based on territory or the physical location of employees or
customers.
A) Functional
B) Product
C) Geographic
D) Matrix
Answer: C
Explanation: Among the four choices, only "geographic" refers to territory, so "geographic" is
the correct choice.
Diff: 1
LO: 6.1: Describe six key elements in organizational design.

11) 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: 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
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

12) 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: Employed workers, unemployed workers, employers, and disabled workers are
categories of people who will use the agency's services–its customers. Therefore, "customer" is
correct and the other choices incorrect.
Diff: 2
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

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13) State motor vehicle offices usually use this kind of departmentalization.
A) product
B) functional
C) customer
D) process
Answer: D
Explanation: 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
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

14) 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: 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
LO: 6.1: Describe six key elements in organizational design.

15) 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: 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
LO: 6.1: Describe six key elements in organizational design.

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16) Authority gives an individual the right to do this.
A) give orders
B) reprimand employees
C) command respect
D) obey orders
Answer: A
Explanation: Authority confers the right to direct subordinates and, if necessary, issue
commands and orders, making "give 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 "obey orders" incorrect.
Diff: 1
LO: 6.1: Describe six key elements in organizational design.

17) 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: 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, "has no right to give you orders" can be eliminated because it is the
opposite of the correct answer.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

18) 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: Staff managers have authority only over the special support staff they control. Staff
managers typically do not 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
LO: 6.1: Describe six key elements in organizational design.

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19) 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: 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
LO: 6.1: Describe six key elements in organizational design.

20) ________ 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: Chain of command, line authority, and staff authority are involved in determining
how organizational orders and discipline are handled. However, only unity of command deals
explicitly with resolving conflicting orders, so it is the correct response.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

21) The importance of unity of command has diminished in today's workplace because of its
tendency to be ________.
A) inflexible and inefficient
B) ethically questionable
C) chauvinistic and dictatorial
D) too decisive
Answer: A
Explanation: 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 and inefficient" 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
LO: 6.1: Describe six key elements in organizational design.

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22) 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: 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
LO: 6.1: Describe six key elements in organizational design.

23) ________ 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: 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 also is an incorrect choice.
Diff: 1
LO: 6.1: Describe six key elements in organizational design.

24) 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 secretary who controls access to the boss wields power in his or her ability to
grant people entrance, but he or she 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 incorrect.
Diff: 3
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

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25) 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: Authority is a subset of power. Authority is the power to give orders and make
assignments. This makes "authority is a type of power" the correct choice and causes "power is a
type of authority" and "authority and power are identical" to be incorrect because neither one of
them identifies authority as a type of power. Finally, "power is 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
LO: 6.1: Describe six key elements in organizational design.

26) 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: 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 distance from the center power core of the diagram.
Diff: 3
AACSB: Analytical thinking
LO: 6.1: Describe six key elements in organizational design.

27) 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: 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. The three other listed possibilities feature a
horizontal dimension, so they are incorrect.
Diff: 3
AACSB: Analytical thinking
LO: 6.1: Describe six key elements in organizational design.

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28) 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: 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 any of his
superiors. This makes "line authority" correct and rules out the other three choices.
Diff: 2
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

29) ________ 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: 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
LO: 6.1: Describe six key elements in organizational design.

30) 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 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 are correct.
Diff: 2
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

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31) Your firm's attorney has ________ power when giving legal advice.
A) legitimate
B) status
C) expert
D) coercive
Answer: C
Explanation: 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 they refer to a type of hierarchical power, not power that comes from
expertise.
Diff: 2
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

32) ________ 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: The boss's secretary is a classic case of referent power–his or 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 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
LO: 6.1: Describe six key elements in organizational design.

33) 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: 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
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

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34) The traditional view holds that managers should directly supervise ________ subordinates.
A) no more than three
B) no more than six
C) around twelve
D) around twenty
Answer: B
Explanation: Classical studies and observations limited the number of employees under a single
manager to six, making the other options incorrect. 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
LO: 6.1: Describe six key elements in organizational design.

35) 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: A
Explanation: 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 him- or herself in accountability and responsibility. In
addition, many of his or her charges may have skills, knowledge, or insights that actually surpass
the manager's own abilities.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

36) 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: 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
LO: 6.1: Describe six key elements in organizational design.

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37) ________ reflects the degree to which decision making is distributed throughout the
hierarchy rather than concentrated at the top.
A) Centralization
B) Span of control
C) Concentration
D) Decentralization
Answer: D
Explanation: 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 decentralized, making "decentralization" the correct response. Obviously,
"centralization" is incorrect here. "Span of control" and "concentration" also are wrong because
neither span of control nor concentration refers to decision making that comes from all levels of
an organization.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

38) 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: 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
LO: 6.1: Describe six key elements in organizational design.

39) 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 make
D) nonmanagerial employees make
Answer: A
Explanation: 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
LO: 6.1: Describe six key elements in organizational design.

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40) 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: 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 routine 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.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

41) 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: 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: 3
AACSB: Analytical thinking
LO: 6.1: Describe six key elements in organizational design.

42) 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: 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
LO: 6.1: Describe six key elements in organizational design.

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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.

43) 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: Increasing the number of tasks that employees perform is an example of becoming
less specialized. It would not increase how many departments there are nor affect authority
relationships or decision making, so all of these choices would be incorrect.
Diff: 3
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

44) 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: 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
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

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45) 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: 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
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

46) Organizational design is the process in which managers change or develop an organization's
structure.
Answer: TRUE
Explanation: By definition, organizational design requires a manager to develop an
organization's structure, or change the structure in some way.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

47) There are four basic elements in organizational design.


Answer: FALSE
Explanation: There are six elements: work specialization, departmentalization, authority and
responsibility, span of control, centralization and decentralization, and formalization.
Diff: 1
LO: 6.1: Describe six key elements in organizational design.

48) 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
LO: 6.1: Describe six key elements in organizational design.

49) 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
LO: 6.1: Describe six key elements in organizational design.

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50) 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
LO: 6.1: Describe six key elements in organizational design.

51) The advantage of work specialization is that it always results 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
LO: 6.1: Describe six key elements in organizational design.

52) Departmentalization is how jobs are grouped.


Answer: TRUE
Explanation: The grouping of jobs along lines of function, product, and other criteria defines
departmentalization.
Diff: 1
LO: 6.1: Describe six key elements in organizational design.

53) 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 organizational employees.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

54) 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
LO: 6.1: Describe six key elements in organizational design.

55) 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
LO: 6.1: Describe six key elements in organizational design.

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56) 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 ensures
that the command from the highest organizational level is followed.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

57) 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. For example, the boss's secretary has power to gain access to
the boss without having a high rank in the organization.
Diff: 2
LO: 6.1: Describe six key elements in organizational design.

58) 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
LO: 6.1: Describe six key elements in organizational design.

59) 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
LO: 6.1: Describe six key elements in organizational design.

18
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60) In a short essay, list and explain three key elements in designing an organization's structure.
Answer: (any three of the following)

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?" and "To whom am I responsible?"

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
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

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Copyright © 2017 Pearson Education, Ltd.
61) In a short essay, list and discuss three common forms of departmentalization.
Answer: (any three of the following)

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.

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
AACSB: Application of knowledge
LO: 6.1: Describe six key elements in organizational design.

62) A(n) ________ organization has a high degree of specialization, formalization, and
centralization.
A) organic
B) horizontal
C) learning
D) mechanistic
Answer: D
Explanation: By definition, a mechanistic organization is hierarchical and highly specialized
with rigid, formal rules and decision making controlled at the top of the corporate pyramid. Both
organic and learning organizations are 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

20
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63) 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: 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

64) A(n) ________ organization is able to change rapidly as needs require.


A) organic
B) hierarchical
C) vertical
D) mechanistic
Answer: A
Explanation: 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

65) Which term best describes an organic organization?


A) hierarchical
B) pyramid-shaped
C) flexible
D) fixed
Answer: C
Explanation: 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

21
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66) Which word best characterizes a mechanistic organization?
A) bureaucracy
B) collaborative
C) adaptable
D) informal
Answer: A
Explanation: 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 often called a bureaucracy.
Diff: 2
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

67) 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: 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.
Diff: 1
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

68) 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: 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

22
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69) 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: 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 identify
nonorganic approaches that work better for cost-cutting and efficiency than they do for
innovation.
Diff: 2
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

70) 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: 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
incorrect because in larger organizations you would expect more, not less, departmentalization
and centralization and more, not fewer, rules to follow.
Diff: 2
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

71) 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: Like an army, the realities of organizing large groups of people require 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

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72) 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: 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
AACSB: Information technology
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

73) Recent studies on Woodward's initial research found that if the technology was nonroutine,
this structure worked best.
A) mechanistic
B) traditional
C) inorganic
D) organic
Answer: D
Explanation: 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
AACSB: Information technology
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

74) Woodward concluded that the least complex of the technologies was ________.
A) unit production
B) mass production
C) process production
D) quality production
Answer: A
Explanation: Woodward found that unit production was the least complex while mass and
process production required more sophistication. Quality production is not a correct term.
Diff: 2
AACSB: Information technology
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

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75) In Woodward's study, this type of production was the most complex and the most
sophisticated.
A) unit production
B) mass production
C) process production
D) technological production
Answer: C
Explanation: 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 incorrect.
Diff: 2
AACSB: Information technology
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

76) The greater the environmental uncertainty, the more an organization needs to become
________.
A) organic
B) mechanistic
C) stable
D) high-tech
Answer: A
Explanation: 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

77) The two prevalent organizational 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

78) 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

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79) 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

80) 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

81) As organizations become larger, they tend to become more organic.


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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

82) 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
AACSB: Information technology
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

83) Woodward and more recent studies have concluded that mass production worked best with
an organic organizational structure.
Answer: FALSE
Explanation: Woodward found that a mechanistic structure, rather than an organic structure,
worked best with mass production technology.
Diff: 2
AACSB: Information technology
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

26
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84) 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
LO: 6.2: Identify the contingency factors that favor either the mechanistic model or the organic
model of organizational design.

85) 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: 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

86) 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 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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87) 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: 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

88) 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: 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 is risky" the correct response.
Diff: 2
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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


A) adaptability
B) departmentalization
C) flexibility
D) little specialization
Answer: B
Explanation: 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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90) 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: 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

91) Avoiding redundancy is a strength of which structure?


A) simple
B) divisional
C) functional
D) corporate
Answer: C
Explanation: 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

92) In a ________ structure each business unit has complete autonomy to reach its goals.
A) simple
B) functional
C) divisional
D) matrix
Answer: C
Explanation: 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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93) 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: 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
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

94) 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: 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
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

95) 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: 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
AACSB: Analytical thinking
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

30
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96) 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: Simple, divisional, and functional structures are 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

97) 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: 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 precedence
over the request of a manager of higher rank who is outside 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
AACSB: Interpersonal relations and teamwork
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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98) 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: 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
AACSB: Interpersonal relations and teamwork
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

99) 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: 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
typically does not need management experience, making the choice regarding team members
with years of management experience the correct response.
Diff: 2
AACSB: Interpersonal relations and teamwork
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

100) 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: 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 those choices are incorrect. A divisional
structure does not typically engage in project work, so that choice also is incorrect.
Diff: 3
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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101) 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: 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

102) When a group member in a matrix structure finishes a project, he or she ________.
A) returns to his or 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 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

103) 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: 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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104) 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: 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
AACSB: Interpersonal relations and teamwork
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

105) 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: A project structure has employees who have no "home" department and move from
one project to the next in the organization. This identifies "move 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

106) Which of the following areas has opened up new possibilities for how and where employees
work?
A) information technology
B) human resources
C) organizational design
D) global competition
Answer: A
Explanation: It's fair to say that the world of work will never be like it was 10 years ago. IT has
opened up new possibilities for employees to do their work in locations as remote as Patagonia
or in the middle of downtown Seattle. Although organizations have always had employees who
traveled to distant corporate locations to take care of business, these employees no longer have to
find the nearest pay phone or wait to get back to "the office" to see what problems have cropped
up.
Diff: 3
AACSB: Information technology
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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107) Which of the following is the biggest concern when doing work at anytime and anywhere?
A) employee payroll
B) security
C) employee accountability
D) customer satisfaction
Answer: B
Explanation: The biggest issue in doing work anywhere, anytime is security. Companies must
protect their important and sensitive information. However, software and other disabling devices
have minimized security issues considerably.
Diff: 3
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

108) 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: 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
AACSB: Analytical thinking
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

109) 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: 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 typically are
unaffiliated with any permanent organization or company.
Diff: 2
AACSB: Information technology
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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110) 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: 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 providing benefits and compensation when there is no work for them to
perform. This makes "keeping only 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 typically do not hire fewer workers than are
necessary.
Diff: 2
AACSB: Information technology
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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


A) virtual organization
B) boundary organization
C) matrix structure
D) network organization
Answer: D
Explanation: 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 that 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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112) 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: 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 "farms 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
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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.

113) 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: 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 matches a recognized work structure, so they are incorrect.
Diff: 2
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

114) One of the strengths of a simple structure is that it is flexible.


Answer: TRUE
Explanation: The simple structure is most widely used in smaller businesses and its strengths
should be obvious. It's fast, flexible, and inexpensive to maintain, and accountability is clear.
Diff: 2
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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115) A strength of a functional structure is that it avoids duplication of activities.
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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

116) A weakness of the divisional structure is that duplication of activities 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

117) 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

118) 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 the team.
Diff: 2
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

119) 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

120) 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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121) When employees in a matrix structure finish a project, they go back to their functional
department.
Answer: TRUE
Explanation: A matrix structure maintains departments. When projects are finished, employees
return to their original department.
Diff: 2
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

122) When employees in a project structure finish a project, they go back to their 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

123) 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 an employee is on the pyramid.
Diff: 2
AACSB: Analytical thinking
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

124) Internal boundaries separate the organization from its customers, suppliers and
stakeholders.
Answer: FALSE
Explanation: External boundaries separate the organization from its customers, suppliers and
stakeholders.
Diff: 2
AACSB: Analytical thinking
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

125) A virtual organization relies on free agents 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
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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126) Managers want to eliminate boundaries in organizations primarily to increase stability and
reduce flexibility.
Answer: FALSE
Explanation: Managers primarily want to increase flexibility in boundaryless organizations
without jeopardizing stability.
Diff: 2
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

127) 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
AACSB: Analytical thinking
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

128) A network organization uses its own employees and outside suppliers to provide manpower
for projects.
Answer: TRUE
Explanation: A network organization uses its own employees to do some work activities and
networks of outside suppliers to provide other needed product components or work processes.
This organizational form is sometimes called a modular organization by manufacturing firms.
Diff: 2
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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129) In a short essay, list and discuss two contingency variables that should be considered in
determining an appropriate structure in organizational design.
Answer: (any two of the following)

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.

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
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

130) 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
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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131) 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
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

132) 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 typically still 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 operating at the same
time.
Diff: 2
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

133) 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
AACSB: Application of knowledge
LO: 6.3: Compare and contrast traditional and contemporary organizational designs.

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134) 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: 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 "build
up enormous cash reserves" is incorrect.
Diff: 2
AACSB: Diverse and multicultural work environments
LO: 6.4: Discuss the design challenges faced by today's organizations.

135) 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: 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 learn, adapt, and change" the correct response.
Diff: 2
LO: 6.4: Discuss the design challenges faced by today's organizations.

136) 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: Collaboration is critical to a learning organization, making "share information and
collaborate with one another" the correct response. Note that collaboration is limited to the
inside of the organization, making both "collaborate with competitors" and "make all ideas
public" incorrect. "Encode information" is wrong because it focuses on employees failing to
share information, something that a learning organization would not do.
Diff: 2
LO: 6.4: Discuss the design challenges faced by today's organizations.

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137) 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: 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
LO: 6.4: Discuss the design challenges faced by today's organizations.

138) 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: Learning organizations are often boundaryless organizations in which such things
as chain of command, a rigid hierarchy, and 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
LO: 6.4: Discuss the design challenges faced by today's organizations.

139) In a learning organization, it is important that all employees ________.


A) collaborate
B) study each night
C) have a strong sense of leadership
D) share the same vision for the organization
Answer: D
Explanation: Employees in a learning organization may or may not collaborate with one another,
depending on the situation. They may or may not be good leaders, and in most cases do not need
to study to succeed. What employees do require in a learning organization is a shared vision for
the organization. That shared vision allows them to work together and further organizational
goals.
Diff: 2
LO: 6.4: Discuss the design challenges faced by today's organizations.

140) 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
LO: 6.4: Discuss the design challenges faced by today's organizations.

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141) The biggest issue in workers working at home or off-site involves fairness.
Answer: FALSE
Explanation: The biggest off-site work issue is security.
Diff: 2
LO: 6.4: Discuss the design challenges faced by today's organizations.

142) A learning organization puts an enormous amount of effort on making sure that all of its
employees are enrolled in some kind of university level class.
Answer: FALSE
Explanation: Learning organizations focus on learning, adapting, and changing within the
business environment, not taking classes.
Diff: 2
LO: 6.4: Discuss the design challenges faced by today's organizations.

143) Organizations that implement flextime programs allow employees to work at home for
some of the work day.
Answer: FALSE
Explanation: Working from home is called telecommuting and gives employees flexibility with
regard to time and location of work. Flextime gives flexibility in time.
Diff: 2
AACSB: Information technology
LO: 6.4: Discuss the design challenges faced by today's organizations.

144) Contingent workers may make up to 40 percent of the workforce by the end of the decade.
Answer: TRUE
Explanation: The use of contingent workers who do jobs by the piece is increasing every year.
Diff: 3
AACSB: Ethical understanding and reasoning
LO: 6.4: Discuss the design challenges faced by today's organizations.

145) 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
AACSB: Application of knowledge
LO: 6.4: Discuss the design challenges faced by today's organizations.

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146) 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 to resolve 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
AACSB: Application of knowledge
LO: 6.4: Discuss the design challenges faced by today's organizations.

46
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