Fundamentals of Organization Structure: Exam Study Guide, Exams of Business Strategy

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Chapter 3 : Fundamentals of

Organization Structure

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Structure

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1. Which of the following is not a key component in the definition of organization structure? a. Organization structure includes the design systems to ensure effective communication, coordination, and integration of effort across departments. b. Organization structure identifies the tasks, functions, and processes for each department and position within the organization. c. Organization structure identifies the grouping together of individuals into departments and of departments into the total organization. d. Organization structure designates formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors. ANSWER: b RATIONALE: Feedback: The following three key components define organization structure: 1. Organization structure designates formal reporting relationships, including the number of levels in the hierarchy and the span of control of managers and supervisors. 2. Organization structure identifies the grouping together of individuals into departments and of departments into the total organization. 3. Organization structure includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-01 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Organization Structure KEYWORDS: Bloom’s: Remember
2. Organization structure identifies the grouping together of individuals into departments and of departments into the total organization.
3. Organization structure includes the design of systems to ensure effective communication, coordination, and integration of efforts across departments.
4. Which of the following is true of effective information sharing in an organization? a. Information should be shared vertically, but not horizontally. b. Vertical linkages are designed primarily for coordination and collaboration. c. The structure should fit the information requirements of the organization. d. It is not possible to give people a lot of information. ANSWER: c RATIONALE: Feedback: If the structure does not fit the information requirements of the organization, people either will have too little information or will spend time processing information that is not vital to their tasks, thus reducing effectiveness. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-02 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure

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RATIONALE: Feedback: Centralization and decentralization pertain to the hierarchical level at which decisions are made. Centralization means that decision authority is located near the top of the organization. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-02 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure KEYWORDS: Bloom’s: Remember

4. With , decision authority is pushed downward to lower organization levels. a. centralization b. decentralization c. full-time integration d. task forces ANSWER: b RATIONALE: Feedback: Centralization and decentralization pertain to the hierarchical level at which decisions are made. With decentralization, decision authority is pushed downward to lower organization levels. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-02 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure KEYWORDS: Bloom’s: Remember
5. are used to coordinate activities between the top and bottom of an organization and are designed primarily for control of the organization. a. Vertical linkages b. Functional groups c. Horizontal linkages d. Divisional groups ANSWER: a RATIONALE: Feedback: Vertical linkages are used to coordinate activities between the top and bottom of an organization and are designed primarily for control of the organization. Organizations may use any of a variety of structural devices to achieve vertical linkage, including hierarchical referral, rules and plans, and formal management information systems. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-02 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure

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KEYWORDS: Bloom’s: Remember

6. Which of the following strategies includes periodic reports, written information, and computer-based communications? a. Rules and plans b. Task forces c. Vertical information systems d. Hierarchical referral ANSWER: c

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LEARNING OBJECTIVES: ORGT.DAFT.16.03-03 - 03-

NATIONAL STANDARDS: United States - AACSB: Reflective Thinking TOPICS: Information-Sharing Perspective on Structure KEYWORDS: Bloom’s: Apply

9. A full-time integrator: a. improves vertical linkages in an organization. b. has a title such as brand manage or product manager. c. reports to one of the functional departments being coordinated.

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d. has the responsibility of coordinating only one department. ANSWER: b RATIONALE: Feedback: A stronger horizontal linkage device is to create a full-time position or department solely for the purpose of coordination. A full-time integrator frequently has a title, such as product manager, project manager, program manager, or brand manager. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-03 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure KEYWORDS: Bloom’s: Understand

10. Which of the following is true of full-time integrators? a. They have a lot of authority but little responsibility. b. They communicate with and are responsible for one department. c. They need excellent people skills. d. They are usually a part of the team being coordinated. ANSWER: c RATIONALE: Feedback: Integrators need excellent people skills. Integrators in most companies have a lot of responsibility but little authority. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-03 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure KEYWORDS: Bloom’s: Understand
11. Which of the following is true of teams? a. Teams tend to be the weakest horizontal linkage mechanism. b. Teams are the first device in a variety of structural devices to achieve vertical linkage. c. Teams provide a standard information source enabling employees to be coordinated without actually communicating about every task. d. Teams are often used in conjunction with a fulltime integrator. ANSWER: d RATIONALE: Feedback: Teams are permanent task forces and are often used in conjunction with a fulltime integrator. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-03 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure

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RATIONALE: Feedback: Many of today’s companies use virtual cross-functional teams. A virtual team is one that is made up of organizationally or geographically dispersed members who are linked primarily through advanced information and communications technologies. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-03 - 03- NATIONAL STANDARDS: United States - AACSB: Communication TOPICS: Information-Sharing Perspective on Structure KEYWORDS: Bloom’s: Remember

13. The highest level of horizontal coordination is: a. relational coordination. b. departmental grouping. c. hierarchical referral. d. functional grouping. ANSWER: a RATIONALE: Feedback: The highest level of horizontal coordination is relational coordination. Relational coordination refers to “frequent, timely, problem-solving communication carried out through relationships of shared goals, shared knowledge, and mutual respect.” POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-03 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure KEYWORDS: Bloom’s: Remember
14. refers to frequent, timely, problem-solving communication carried out through relationships of shared goals, shared knowledge, and mutual respect. a. Relational coordination b. Departmental grouping c. Hierarchical referral d. Functional grouping ANSWER: a RATIONALE: Feedback: The highest level of horizontal coordination is relational coordination. Relational coordination refers to “frequent, timely, problem-solving communication carried out through relationships of shared goals, shared knowledge, and mutual respect.” POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-03 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Information-Sharing Perspective on Structure

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KEYWORDS: Bloom’s: Remember

15. Which of the following is true of relational coordination? a. Relational coordination is the lowest level of horizontal coordination. b. Relational coordination is the first device in the variety of structural devices to achieve vertical linkage. c. Relational coordination provides a standard information source enabling employees to be coordinated without actually communicating about every task. d. Relational coordination is not a device or mechanism like other elements, but rather is part of the very fabric and culture of the organization.

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TOPICS: Organization Design Alternatives KEYWORDS: Bloom’s:

18. means people are organized according to what the organization produces. a. Functional grouping b. Divisional grouping c. Multifocused grouping d. Horizontal grouping ANSWER: b

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RATIONALE: Feedback: Divisional grouping means people are organized according to what the organization produces. For example, all the people required to produce toothpaste—including personnel in marketing, manufacturing, and sales—are grouped together under one executive. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-04 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Organization Design Alternatives KEYWORDS: Bloom’s: Remember

19. means an organization embraces two or more structural grouping alternatives simultaneously. a. Functional grouping b. Divisional grouping c. Multifocused grouping d. Horizontal grouping ANSWER: c RATIONALE: Feedback: Multifocused grouping means an organization embraces two or more structural grouping alternatives simultaneously. These structural forms are often called matrix or hybrid. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-04 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Organization Design Alternatives KEYWORDS: Bloom’s: Remember
20. means employees are organized around core work processes, the end-to-end work, information, and material flows that provide value directly to customers. a. Functional grouping b. Divisional grouping c. Multifocused grouping d. Horizontal grouping ANSWER: d RATIONALE: Feedback: Horizontal grouping means employees are organized around core work processes, the end-to-end work, information, and material flows that provide value directly to customers. All the people who work on a core process are brought together in a group rather than being separated into functional departments. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-04 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Organization Design Alternatives

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ANSWER: a RATIONALE: Feedback: With virtual network grouping, the organization is a loosely connected cluster of separate components. In essence, departments are separate organizations that are electronically connected for the sharing of information and completion of tasks. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-04 - 03- NATIONAL STANDARDS: United States - AACSB: TOPICS: Organization Design Alternatives KEYWORDS: Bloom’s:

22. In a , activities are grouped together by common function from the bottom to the top of the organization. a. functional structure b. divisional structure c. geographic structure d. hybrid structure ANSWER: a RATIONALE: Feedback: Functional grouping and divisional grouping are the two most common approaches to structural design. In a functional structure, also called a U-form (unitary), activities are grouped together by common function from the bottom to the top of the organization. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-04 - 03- NATIONAL STANDARDS: United States - AACSB: TOPICS: Functional, Divisional, and Geographic Designs KEYWORDS: Bloom’s:
23. Which of the following is a strength of a functional structure? a. It has fast response time to environmental changes. b. It leads to excellent horizontal coordination among departments. c. It results in more innovation. d. It allows economies of scale within functional departments. ANSWER: d RATIONALE: Feedback: One of the strengths of a functional structure is that it allows economies of scale within functional departments. Also, it enables organization to accomplish functional goals. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-05 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Functional, Divisional, and Geographic Designs

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KEYWORDS: Bloom’s: Understand

24. Which of the following is a weakness of a functional structure? a. It has slow response time to environmental changes. b. It restricts economies of scale within functional departments. c. It restricts in-depth knowledge and skill development. d. It restricts organizations from accomplishing functional goals. ANSWER: a RATIONALE: Feedback: One of the weaknesses of a functional structure is that it has slow response time

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27. Which of the following is true of a divisional structure? a. It is also known as chain of command. b. It is also called a U-form (unitary) structure. c. It is a centralized structural form. d. It is used to promote flexibility and change. ANSWER: d RATIONALE: Feedback: The divisional structure promotes flexibility and change because each unit is

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smaller than in the functional structure and can adapt to the needs of its environment. Moreover, the divisional structure decentralizes decision making because the lines of authority converge at a lower level in the hierarchy. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-04 - 03- NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Functional, Divisional, and Geographic Designs KEYWORDS: Bloom’s: Understand

28. The matrix structure is the correct structure when three conditions are met. Which of the following is one of these three conditions? a. Pressure exists to share scarce resources across product lines. b. Technical quality is not very important. c. The environmental domain of the organization is simple. d. The environmental domain of the organization is certain and stable. ANSWER: a RATIONALE: Feedback: A dual hierarchy may seem an unusual way to design an organization, but the matrix is the correct structure when the following conditions are present: ∙ Condition 1. Pressure exists to share scarce resources across product lines. ∙ Condition 2. Environmental pressure exists for two or more critical outputs, such as for in-depth technical knowledge (functional structure) and frequent new products (divisional structure). ∙ Condition 3. The environmental domain of the organization is both complex and uncertain. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03.04 - 03. NATIONAL STANDARDS: United States - AACSB: Analytic TOPICS: Matrix Structure KEYWORDS: Bloom’s: Remember
29. The term means the redesign of a vertical organization along its horizontal workflows and processes. a. vertical linkage b. vertical network grouping c. innovating d. reengineering ANSWER: d RATIONALE: Feedback: Organizations typically shift toward a horizontal structure during a procedure called reengineering. Reengineering, or business process reengineering, basically means the redesign of a vertical organization along its horizontal workflows and processes. POINTS: 1 LEARNING OBJECTIVES: ORGT.DAFT.16.03-06 - 03-