Chapter 10 Organizational Structure and Design TRUE/FALSE UEST!

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A #A"A$ER%S D!LE##A 1. According to the boxed feature for Chapter 10, management at Svenska Handelsbanken, Sweden s premiere bank, attributes its competitive advantage to the great degree of autonom! it grants its branch managers. "True& 'oderate& p( )**+ According to the boxed feature for Chapter 10, management at Svenska Handelsbanken, Sweden s premiere bank, has established incentives to prevent predator! competition between branches. "False& 'oderate& p( )**+

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DEF!"!"$ OR$A"!,AT!O"AL STRUCTURE $. %rgani&ational design is the organi&ation s formal framework b! which 'ob tasks are divided, grouped, and coordinated. "False& di--icult& p( )*.+ )he concept of work speciali&ation can be traced back a couple of centuries to Adam Smith s discussion of division of labor. "True& 'oderate& p( )*/+ +ivision of labor is the degree to which tasks in an organi&ation are divided into separate 'obs. 0True& 'oderate& p( )*/+ -rouping 'obs on the basis of product or customer flow is termed customer departmentali&ation. 0False& 'oderate& p( )*1+ -eographic departmentali&ation has greatl! increased in importance because of toda! s competitive business environment. 0False& 'oderate& p( )*1+ A group of individuals who are experts in various specialties and who work together is a cross0functional team. 0True& 'oderate& p( )*1+ Authorit! is the individual s capacit! to influence decisions. 0False& di--icult& p( )*1+ 2esponsibilit! is the rights inherent in a managerial position. 0False& eas2& p( )*1+ 3hen decisions tend to be made at lower levels in an organi&ation, the organi&ation is said to be decentrali&ed. 0True& 'oderate& p( )*3+ 4n the last $* !ears, there has been a trend of organi&ations moving toward increased decentrali&ation.

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0True& eas2& p( )*3+ 1$. Standardi&ation refers to the degree to which 'obs within the organi&ation are standardi&ed and the extent to which emplo!ee behavior is guided b! rules and procedures. 0False& 'oderate& p( )*3+

OR$A"!,AT!O"AL DES!$" DEC!S!O"S 1(. An organic organi&ation tends to be characteri&ed b! high speciali&ation, extensive departmentali&ation, narrow spans of control, high formali&ation, a limited information network, and little participation in decision making b! low0level emplo!ees. 0False& 'oderate& p( ).1+ An organic organi&ation would likel! be ver! flexible. 0True& 'oderate& p( ).1+ 4nnovators need the efficienc!, stabilit!, and tight controls of the mechanistic structure. 0False& eas2& p( ).1+ )he relationship between organi&ational si&e and structure tends to be linear. 0False& di--icult& p( ).)+ 5oan 3oodward attempted to view organi&ational structure from a technological perspective. 0True& 'oderate& p( ).)+ 3oodward demonstrated that organi&ations adapt their structures to their technolog!. 0True& 'oderate& p( ).1+ 3oodward s findings support that there is 6one best wa!7 to organi&e a manufacturing firm. 0False& 'oderate& p( ).)+ )he strength of the functional structure is that it focuses on results. 0False& 'oderate& p( )..+ A mechanistic organi&ation is characteri&ed b! high speciali&ation, narrow spans of control, and a limited information network. "True& eas2& p( ).1+ %rganic organi&ations do not have division of labor and 'obs and so people remain unstandardi&ed. "False& 'oderate& p( ).1+

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CO##O" OR$A"!,AT!O"AL DES!$"S

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A manufacturing organi&ation that relies on outside suppliers to provide product components which are then assembled into the final product is called a modular organi&ation. "True& eas2& p( ).4+ )raditional organi&ational designs include the simple structure, the functional structure, and the divisional structure.

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"True& 'oderate& )..+

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8mplo!ee empowerment is a crucial aspect of team structure because there is no line of managerial authorit! from top to bottom. 0True& 'oderate& p( ).5+ A simple structure is an organi&ational design with low departmentali&ation, narrow spans of control, and little formali&ation. 0False& 'oderate& p( )..+ 9ro'ect structures tend to be rigid and inflexible organi&ational designs. 0False& eas2& p( ).5+ :atrix structure is an organi&ational structure that assigns specialists from different functional departments to work on one or more pro'ects led b! pro'ect managers. 0True& 'oderate& ).5+ )he inspiration of the virtual organi&ation structural approach is the film industr!. 0True& 'oderate& p( ).1+

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#ULT!6LE7C8O!CE

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;or each of the following choose the answer that most completely answers the <uestion.

DEF!"!"$ OR$A"!,AT!O"AL STRUCTURE $1. %rgani&ational design is based on decisions about ============. a. work speciali&ation and departmentali&ation b. chain of command and span of control c. centrali&ation and decentrali&ation d. all of the above 0d& 'oderate& p( )*.+ $#. 3hich statement accuratel! defines work speciali&ation> a. the degree to which tasks are divided into separate 'obs b. individual emplo!ees speciali&e in doing part of an activit! rather than the entire activit! c. 'obs are ranked relative onl! to their worth or value to the businesses d. a and b 0d& di--icult& p( )*/+ $$. %n what basis are 'obs grouped in order to accomplish organi&ational goals> a. departmentali&ation b. centrali&ation c. formali&ation d. coordination 0a& 'oderate& p( )*/+

$(. Sales responsibilities divided into the Southwest, :idwest, southern, northern, and western regions would be an example of what t!pe of departmentali&ation> a. product b. geographic c. process d. outcome 09& eas2& p( )*5+ $*. -rouping activities on the basis of customer flow is =============. a. functional departmentali&ation b. product departmentali&ation c. geographical departmentali&ation d. process departmentali&ation 0d& 'oderate& p( )*5+ $,. 3hat kind of departmentali&ation would be in place in a government organi&ation where different public service responsibilities are divided into activities for emplo!ers, children, and the disabled> a. product b. geographic c. outcome d. customer 0d& 'oderate& p( )*5+ $.. )oda! s competitive business environment has greatl! increased the importance of what t!pe of departmentali&ation> a. geographic b. customer c. product d. process 09& di--icult& p( )*1+ $/. ;unctional departmentali&ation groups 'obs b! ==============. a. tasks the! perform b. territories the! serve c. products or services the! manufacture or produce d. t!pe of customer the! serve 0a& 'oderate& p( )*5+ $1. Assigning designers, production workers, and salespeople to a common work group to develop a new product is known as a ================ team. a. differentiated b. product c. cross0functional d. weak 0c& 'oderate& p( )*1+

(0. 4n describing the degree to which tasks in an organi&ation are divided into separate 'obs, managers use the term ===========. a. work speciali&ation

b. departmentali&ation c. chain of command d. span of control 0a& 'oderate& p( )*/+ (1. +epartmentali&ation based on =============== groups 'obs based on the territor! or ph!sical location. a. functional b. product c. geographic d. matrix 0c& eas2& p( )*5+ (#. ============== departmentali&ation is based on the product or customer flow through the organi&ation. a. 9roduct b. ;unctional c. 9rocess d. %rgani&ational structure 0c& 'oderate& p( )*1+ ($. ============== departmentali&ation is used more in recent !ears to better monitor the needs of customers and to respond to changes in those needs. a. ?eeds0based b. ;unctional c. 9rocess d. Customer 0d& 'oderate& p( )*1+ ((. )he continuous line of authorit! that extends from the upper levels of management to the lowest levels of the organi&ation is ============. a. authori&ed line of responsibilit! b. unit! of command c. responsibilit! factor d. chain of command 0d& 'oderate& p( )*1+ (*. ============== refers to the rights inherent to a position that allows a manager to tell subordinates what to do and expect them to do it. a. 2esponsibilit! b. @nit! of command c. Chain of command d. Authorit!

0d& 'oderate& p( )*1+

(,. ================ is the obligation or expectation to perform a dut!. a. 2esponsibilit! b. @nit! of command c. Chain of command

d.

Span of control

0a& 'oderate& p( )*1+

(.. )he theor! that a person should report to onl! one manager is called ============. a. authori&ed line of responsibilit! b. unit! of command c. responsibilit! factor d. chain of command 09& 'oderate& p( )*1+ (/. 3hich one of ;a!ol s 1( principles of management helps preserve the concept of a continuous line of authorit!> a. unit! of demand b. unit! of command c. demand structure d. continuous demand 09& 'oderate& p( )*1+ (1. )he concept that defines the number of subordinates that report to a manager and that indirectl! specifies the number of levels of management in an organi&ation is called =============. a. authori&ed line of responsibilit! b. unit! of command c. responsibilit! factor d. span of control 0d& di--icult& p( )*4+ *0. 4n organi&ations, the trend in recent !ears has been toward =============. a. narrower span of control b. increased chain of command c. the organi&ation s structure being based on its financial position d. wider span of control 0d& 'oderate& p( )*4+ *1. All other things being e<ual, as the span of control grows wider or larger, organi&ational design becomes more =============. a. bureaucratic b. democratic c. effective d. efficient 0d& di--icult& p( )*4+

*#. ============== is the number of subordinates that a manager manages and ultimatel! determines the number of levels of managers in an organi&ation. a. 2esponsibilit! b. @nit! of command c. Chain of command d. Span of control 0d& 'oderate& p( )*4+

*$. )rends in the past few !ears have centered on a ============ span of control to reduce costs and speed decision making. a. narrower b. wider c. deeper d. stable 09& 'oderate& p( )*4+ *(. )he degree to which decision making is confined at a single point in an organi&ation is described as ============. a. unit! of command b. chain of command c. span of management d. centrali&ation 0d& 'oderate& p( )*3+ **. 4n recent !ears, there has been a movement to make organi&ations more flexible and responsive through =============. a. centrali&ation b. decentrali&ation c. alternative organi&ational structure d. customer0based structure 09& 'oderate& p( )*3+ *,. )he degree to which 'obs are standardi&ed and guided b! rules and procedures is called ==============. a. work speciali&ation b. centrali&ation c. decentrali&ation d. formali&ation 0d& di--icult& p( ).0+ *.. 4n an effort to make organi&ations more flexible and responsive to competitive pressures, firms have adopted more ============ decision making. a. centrali&ed b. decentrali&ed c. verticall! integrated d. stable 09& 'oderate& p( )*3+

OR$A"!,AT!O"AL DES!$" DEC!S!O"S */. A"nA ============ organi&ation is rigidl! controlled and efficient. a. organic b. hori&ontal c. learning d. mechanistic 0d& 'oderate& p( ).1+

*1. A"nA ============ organi&ation is able to change rapidl! as needs re<uire. a. organic b. hori&ontal c. vertical d. mechanistic 0a& 'oderate& p( ).1+ ,0. 3hen managers standardi&e emplo!ee behavior through rules and procedures, the 'obs are becoming more =============. a. diversified b. formali&ed c. vertical d. hori&ontal 09& di--icult& p( ).0+ ,1. 4n describing the relationship between structure and strateg!, it can be said that ============= . a. structure follows strateg! b. strateg! follows structure c. strateg! and structure are alwa!s handled e<uall! d. strateg! follows structure in smaller organi&ations 0a& 'oderate& p( ).)+ ,#. 4n linking strateg! and structure, most strategic frameworks tend to focus on ==============. a. the pursuit of meaningful and uni<ue innovation b. the pursuit of tightl! controlled costs c. minimi&ing risk and maximi&ing profit opportunities b! cop!ing market leaders d. all of the above 0d& di--icult& p( ).)+ ,$. As a t!pe of technolog!, =============, centers on large0batch production and re<uires moderate levels of complexit! and sophistication. a. unit production b. mass production c. process production d. service production 09& 'oderate& p( ).)+

,(. %rgani&ations that work like efficient, well0oiled machines are described as ==============. a. organic b. mechanistic c. rational d. intuitive 09& 'oderate& p( ).1+ ,*. %rgani&ations that are highl! flexible and adaptive are described as ==============. a. organic b. mechanistic

c. rational d. intuitive 0a& 'oderate& p( ).1+ ,,. Structure is related to the si&e of the organi&ation, such that larger organi&ations tend to have more ============. a. speciali&ation b. departmentali&ation c. centrali&ation d. all of the above 0d& 'oderate& p( ).)+ ,.. Structure is related to the si&e of the organi&ation, such that larger organi&ations are more =============. a. mechanistic b. organic c. structurall! weak d. decentrali&ed 0a& 'oderate& p( ).)+ ,/. 4n 5oan 3oodward s stud! of the relationship between technolog! and structure, the structure that was the most technicall! complex was ==============. a. unit production b. mass production c. process production d. technological production 0c& 'oderate& p( ).)+ ,1. According to 3oodward s studies, what t!pe of production works best with a mechanistic structure> a. unit b. process c. product d. mass 0d& 'oderate& p( ).*+

.0. 4n studies of the structure of an organi&ation to uncertaint! in the environment, organi&ations that face higher uncertaint! are more ============. a. organic b. mechanistic c. technologicall! pure d. supportive of technological change 0a& 'oderate& p( ).*+ .1. -lobal competition, accelerated product development b! competitors, and increased demands b! customers for better service have encouraged organi&ations to become more =============. a. organic b. mechanistic

c. technologicall! pure d. task oriented 0a& 'oderate& p( ).*+ .#. 3hich of the following would likel! be found in mechanistic organi&ations> a. wide span of control b. empowered emplo!ees c. decentrali&ed responsibilit! d. standardi&ed 'ob specialties 0d& di--icult& p( ).1+ .$. 4n the earl! !ears of Apple Computers, its desire for highl! proficient and creative emplo!ees who operated with few work rules best exemplified what t!pe of organi&ation> a. bureaucratic b. mechanistic c. volatile d. organic 0d& di--icult& p( ).1+ .(. 3hich t!pe of environment is best suited for mechanistic organi&ations> a. d!namic b. manufacturing c. service d. stable 0d& 'oderate& p( ).*+ .*. )he appropriate structure for an organi&ation is based on four contingenc! variablesB strateg!, si&e, degree of environmental uncertaint!, and =================. a( technolog! 9( histor! c( leadership d( intensit! of competition 0a& eas2& p( ).1+

.,. 5oan 3oodward stud! of the relationship between technolog! and structure is based upon her stud! of small manufacturing firms in =================. a( the northeastern @nited States 9( the south of 3ales c( ;rance d( southern 8ngland 0d& di--icult& p( ).)+ CO##O" OR$A"!,AT!O"AL DES!$"S ... )raditional organi&ational designs tend to be more mechanistic, and include ===============. a. simple, functional, and corporate structures

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b. c. d.

simple, functional, and business unit structures functional, strategic, and business unit structures simple, functional, and divisional structures. 0d& 'oderate& p( )..+

./. A small business with low departmentali&ation, wide spans of control, centrali&ed authorit!, and limited formali&ation can be said to possess a ================ structure. a. simple b. functional c. divisional d. matrix 0a& eas2& p( )..+ .1. As the number of emplo!ees in an organi&ation grows, structure tends to become more ==============. a. speciali&ed b. informal c. centrali&ed d. a and b 0a& eas2& p( )..+ /0. 3hen an organi&ation assigns specialists to groups according to the pro'ects the! are working on, this is called ================. a. divisional structure b. functional structure c. product structure d. matrix structure 0d& di--icult& p( )..+ /1. A simple organi&ational structure is characteri&ed b! ==============. a. high departmentali&ation b. wide spans of control c. decentrali&ed authorit! d. high levels of formali&ation 09& 'oderate& p( )..+

/#. +ivisional structure allows grouping of different groups of 'obs that are related b! ===============. a. the product produced b. the service offered c. the cost advantage within a niche market d. a and b 0d& di--icult& p( )..+ /$. :atrix structure mixes characteristics of functional departmentali&ation and ===============. a. product departmentali&ation b. process departmentali&ation c. a dual chain of command d. a narrow span of control

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0a& di--icult& pp( )./7).5+ /(. :atrix structure violates a ke! element of organi&ational design called ===================. a. unit! of command b. chain of command c. span of management d. decentrali&ation

0a& 'oderate& pp( )./7).5+

/*. A ================== organi&ation is a small core organi&ation that outsources ma'or business functions such as manufacturing, allowing the firm to concentrate on its core competencies. a. network b. virtual c. modular d. learning 0a& 'oderate& p( ).4+ /,. A ============== organi&ation consists of a small core of full0time emplo!ees and temporaril! hires outside specialists to work on emergent opportunities. a. network b. virtual c. modular d. learning 09& 'oderate& p( ).1+ /.. A learning organi&ation has developed its ===============. a. educational department to keep emplo!ees trained b. capacit! to adapt and change c. barriers to entr! of its markets d. a sustainable competitive advantage that is eas! to maintain 09& di--icult& p( ).4+

//. A ================ organi&ation uses outside suppliers to provide product components which are then assembled into final products. a. network b. virtual c. modular d. learning 0c& 'oderate& p( ).4+ /1. A ============= design is not limited to hori&ontal, vertical, or external boundar! imposed b! a conventional structure. a. learning organi&ation s b. threatened organi&ation s c. functional

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d. boundar!less organi&ation s 0d& di--icult& p( ).1+ 10. 3hat t!pe of organi&ation assigns specialists from different functional departments to work on one or more pro'ects led b! a pro'ect manager> a. classical b. contemporar! c. matrix d. evolutionar! 0c& eas2& p( ).5+ 11. An online wine retailer that sells and ships hundreds of wines to customers all over the world with a pa!roll of six emplo!ees, most likel! has what kind of organi&ational structure> a. bureaucratic b. simple c. functional d. divisional 09& di--icult& p( )..+ 1#. 3hat t!pe of organi&ational structure is made up of autonomous, self0contained units> a. bureaucratic b. simple c. functional d. divisional 0d& 'oderate& p( )..+ 1$. 4n what t!pe of organi&ational structure is empowerment most crucial> a. bureaucratic b. simple c. functional d. team0based 0d& eas2& p( )./+

1(. )he matrix approach violates what classical principle> a. unit! of command b. decentrali&ation c. customer focus d. linear lines of responsibilit! 0a& 'oderate& p( ).5+ 1*. )he strength of a ============= structure is based on results of managers, but it has a weakness because duplication can occur easil! within the organi&ation a. simple b. functional c. divisional d. matrix

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0c& di--icult& p( )..+ 1,. ============ structure is an advanced version of the matrix organi&ation, where emplo!ees continuousl! work on assignments that are oriented to completion of a task. a. 3eighted b. ;unctional c. Conservative d. 9ro'ect 0d& di--icult& p( ).1+ 1.. Some organi&ational theorists go so far as to sa! that an organi&ation s abilit! to ========== ma! be the onl! sustainable source of competitive advantage. a( learn 9( appl! what the! learn c( change d( a and b 0d& 'oderate& p( ).4+ 1/. According to the textbook, organi&ational learning can t take place without ============. a. motivation b. goals c. information d. structure 0c& 'oderate& p( ).3+

SCE"AR!O

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;or each of the following choose the answer that most completely answers the <uestion. DEF!"!"$ OR$A"!,AT!O"AL STRUCTURE 8ric the 2edd "ScenarioA 8ric 2edd graduated from college and was hired b! a corporation that manufactured parts for the automotive industr!. )he emplo!ees on the assembl! line seemed bored, and their motivation was low. 8ric s emplo!er decided to tr! to reorgani&e to increase productivit!. +uring his career, 8ric will see his 'ob change from an engineer to a more complex 'ob assignment. 11. )he 'obs of assembl!0line emplo!ees are to be changed to allow more tasks to be done b! individual workers. )his is a reduction in ==============. a. work speciali&ation b. departmentali&ation c. chain of command d. centrali&ation 0a& di--icult& p( )*/+ 100. 8ric ma'ored in engineering and reall! en'o!ed the work assignment. )he reorgani&ation changed some of his work assignments to include working on a team with production workers and marketing specialists designing the newest products the compan! will offer. )his could be described as a"nA ================.

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a. alternative work assignment b. career degrading assignment c. centrali&ed work assignment d. cross0functional team assignment 0d& 'oderate& p( )*1+ 101. 8ric is offered a chance to help direct the efforts of some emplo!ees assigned to his work group. )his is a chance of 8ric to experience ===============. a. functional structure b. divisional structure c. responsibilit! d. authorit! 0d& 'oderate& p( )*1+ 10#. 8ric sees this new assignment as an obligation or expectation for him to perform at a new level of ===============. a. functional structure b. divisional structure c. responsibilit! d. authorit! 0d& 'oderate& p( )*1+ 10$. 8ric s 'ob continues to change over the !ears, and eventuall!, his department evolves to the point that he is in advanced structure where he continuall! works on pro'ects. )his structure is known as =========== structure. a. simple b. functional c. divisional d. pro'ect 0d& eas2& p( ).1+ -eneral Hospital "ScenarioA :ichelle is a registered nurse in charge of a new unit at her hospital. She would like to have a more laid0back approach in dealing with her new staff, but the hospital demands that there be strict hierarchical levels and that all decisions must be signed off b! :ichelle. Sometimes this drives :ichelle nutsCthe constant filling out of forms, and so forth. She also feels that the numerous levels of hierarch! are unnecessar! and place barriers between herself and her staff. She isn t sure wh! things have to be so 6organi&ed7 and is thinking about speaking with her boss to attempt changing her unit to have more flexibilit! and fewer rules. 10(. :ichelle is ver! concerned about the formal framework b! which 'ob tasks within her nursing unit are divided, grouped, and coordinated within her unit. )his framework is known as the unit s ==============. a. formal organi&ational chart b. organi&ational structure c. staff d. span of control 09& 'oderate& p( )*.+ 10*. :ichelle s unit speciali&es in cardiolog! cases. +ividing work units up in such a manner is most representative of ============= departmentali&ation. a. functional

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b. c. d.

product process customer 0d& 'oderate& p( )*1+

10,. :ichelle is re<uired to sign off on all decisions, suggesting the hospital has what kind of decision0making authorit!> a. centrali&ed b. formal c. autocratic d. strict 0a& 'oderate& p( )*3+ 10.. :ichelle has noticed that ever!one is ver! concerned about the line of authorit! within the organi&ation. )he line of authorit! within the organi&ation is also called a"nA ==============. a. responsibilit! b. chain of command c. span of control d. organi&ational strateg! 09& eas2& p( )*1+ 10/. :ichelle was asked to represent her cardiac unit as part of a )otal Dualit! :anagement ")D:A initiative that is aimed at improving the overall <ualit! of care at the hospital. %ther departments, such as Cardiolog! and 82, also have representatives on this team. )he )D: team exemplifies ================. a. pro'ect management b. a cross functional team c. process integration d. customer departmentali&ation 09& eas2& p( )*1+ Eou Can )ake )hat to the Fank "ScenarioA Changes in banking regulations, a series of loan defaults b! dotcom customers and a decline in the California real estate market have forced 3estern Fank, a large regional 3est Coast bank, to downsi&e in an effort to improve profitabilit! and bolster its sagging stock price. Susan D., a regional branch supervisor for the Sacramento district, has been tasked with preparing a management report concerning how these cuts are affecting bank operations and customer service. Susan believes that the most important problem that has emerged concerns span of control and decision0making authorit! within the bank. 4n the past, bank polic! was that no manager should supervise more than six subordinates and onl! managers could make decisions for their individual units. However, with man! of the cuts coming in middle management, upper management has increased its span of control while still insisting on managerial0onl! decision making at the unit level. )he result is that upper managers spend all of their time putting out fires and subordinates feel the! are getting answers too slowl!. As a result, lower level emplo!ees are re<uesting greater authorit! to make decisions on their own. Susan D believes that structural changes must be made that reflect 3estern Fank s new situation. 101. Fased upon the preceding description of 3estern Fank s situation, which aspect"sA of the current situation are inconsistent with 3estern Fank s decision to maintain a centrali&ed form of decision making> a. the environment is uncertain b. wider span of managerial control c. the compan! is large d. a and b

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0d& 'oderate& p( )*3+ 110. Susan believes that 3estern Fank should be more highl! adaptive and flexible. She would like 3estern Fank to possess more of a"nA =========== structure> a. organic b. mechanistic c. formali&ed d. technological 0a& eas2& p( ).1+ 111. 4n her report, Susan cites a case stud! of the Fank of :ontreal, and points to this bank as a model for future restructuring efforts. Ge! component"sA to the Fank of :ontreal s success include =============. a. emplo!ee empowerment b. geographic departmentali&ation c. increased work speciali&ation d. a and b 0d& 'oderate& pp( )*1 and ).0+

OR$A"!,AT!O"AL DES!$" DEC!S!O"S Heather and Hace! "ScenarioA Hace! has been hired as a consultant for IEJ Consulting. Her first assignment is to work with one of IEJ s newest clients, Custom Heather, 4nc., a manufacturer of high0end leather furniture. Custom Heather was founded over a decade ago with the idea that great looking, comfortable leather furniture could be custom made and delivered to customers in $0 da!s. )raditionall!, retailers stock leather sofas to satisf! the desire to receive new furniture fastClimiting the choice of colors and st!le for the consumer. 4n stark contrast, Custom Heather, offers 1$ different st!les in over .0 different colorsC from rich, deep browns to bright, sunflowerK sleek, silver gra!s and bright, rub! redCthrough a select group of retail outlets. 8ach piece is built to the customerLs individual re<uirements and is shipped with in #M$ weeks. However, the emergence of a new manufacturing technolog! has enabled a few, traditionall! mass0production competitors to offer greater customi&ation, minimi&ing some of Custom Heather s competitive advantage. As a result, Custom Heather is considering sweeping changes to current work processes and organi&ational structure. 11#. At their first meeting, Hace! provides copies of a collection of 5oan 3oodward s essa!s for Custom Heather s management to read. Hace! believes that 3oodward s work ma! be particularl! pertinent in considering Custom Heather s organi&ational structure, since 3oodward believed that the effectiveness of the organi&ation was related to the fit between the firms s ===============. a. emplo!ees and products b. technolog! and structure c. si&e and structure d. processes and emplo!ees 09& 'oderate& p( ).)+ 11$. After reading 3oodward s work at Hace! s suggestion, Custom Heather C8% :iles Standish asks her about other contingenc! factors that should be considered in optimall! designing the firm s organi&ational structure. Hace! responds that other contingenc! factors linked to structure include ===============.

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a. b. c. d.

market orientation process organi&ational complexit! none of the above 0d& 'oderate& pp( ).)7).*+

11(. Hace! believes that as Custom Heather devises a competitive response to its more intense competitive environment, it is important to ensure that emergent strategies are coaligned with Custom Heather s structure. She explains to Standish that strateg! frameworks tend to focus on three dimensionsB innovation, cost minimi&ation, and ==============. a. market orientation b. customi&ation c. imitation d. none of the above 0c& 'oderate& p( ).)+ 11*. Standish is interested in learning more about the link between strategic decision making and organi&ational structure. Hace! suggested that the research and writings of =========, which were based on studies of @.S. firms in the late 11*0s and earl! 11,0s and remain the most seminal stud! in this area. a. Arthur :iller b. 5oan 3oodward c. Alfred Chandler d. 2a!mond Gramer 0c& di--icult& p( ).)+ 11,. Standish is considering doubling the si&e of his workforce in con'unction with expanding the number of retail outlets that carr! Custom Heather products. Hace! tells him that he should expect the organi&ation to become more ============ as a result of this change. a. mechanistic b. formali&ed c. organic d. complex 0a& eas2& p( ).)+

11.. :an! of Custom Heather s .* emplo!ees are highl! skilled and experienced artisans. :an! long time emplo!ees are stock holders and all participate in the profit sharing plan. 3hile there is division of labor, the 'obs most floor emplo!ees perform are not highl! standardi&ed. :anagement has found that emplo!ees take great pride in their craft, thus re<uiring minimal formal rules and little direct supervision. )hese traits are most t!pical of a"nA ================= organi&ation. a. informal b. mechanistic c. organic d. empowered 0c& 'oderate& p( ).1+

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11/. Since Custom Heather produces individuall! customi&ed couches, this could best be referred to as what kind of production> a. mass b. process c. unit d. environmental 0c& 'oderate& p( ).)+ 111. Custom Heather s competitors t!picall! produce its couches in large batches. )his could best be referred to as what kind of production> a. mass b. process c. unit d. environmental 0a& 'oderate& p( ).)+ 1#0. Hace! tells Standish that studies have found that as environmental uncertaint! increases, ================ designs tend to be most effective. a. organic b. mechanistic c. traditional d. centrali&ed 0a& eas2& p( ).*+ CO##O" OR$A"!,AT!O"AL DES!$"S Flack -old, )exas )ea "ScenarioA 9aul Abdul %il Corporation "9A%CA began as a relativel! small, oil compan!. However, through the !ears it has grown to become an international corporation. 1#1. )he original entrepreneurial venture consisted onl! of :r. Abdul and a few emplo!ees. 4t was an informal organi&ation, and ever!one reported to :r. Abdul. )his is best described as a ======== structure. a. simple b. functional c. divisional d. matrix 0a& eas2& p( )..+ 1##. A sharp rise in oil prices helped 9A%C s business expand. Abdul concluded that it was impractical and inefficient for all decisions to continue flowing through his office. He granted his ke! subordinates the authorit! and responsibilit! to manage others within their areas of specialt!. )his organi&ational structure is best described as a ============ organi&ational structure. a. simple b. functional c. divisional d. matrix 09& 'oderate& p( )..+

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1#$. 9aul Abdul decided to purchase an oil drilling suppl! compan!, located in a new countr!. )he purchase of this compan! was classified as a related diversification, but distance and the new product line suggested that this newl! purchased organi&ation continue to be operated as a separate compan!. 4n beginning a new phase in the histor! of 9aul Abdul %il Corporation, a ========= structure should be implemented to allow the compan! to continue to grow. a. simple b. functional c. divisional d. matrix 0c& di--icult& p( )..+ 1#(. As 9A%C continues to grow, a highl! trained group of managers and anal!sts has developed at corporate head<uarters. )his group is highl! adaptive in its structure. :embers of this group do not have standardi&ed 'obs, but are empowered to handle diverse 'ob activities and problems. )his group of emplo!ees is said to have a"nA =========== structure. a. simple b. divisional c. functional d. organic 0d& di--icult& p( ).*+ 1#*. )o deal with the workload in an effective manner, 9A%C s executive management group assigns specialists from the different functional departments to work on one or more work groups that are led b! pro'ect managers. )his popular contemporar! design is called a =========== structure. a. matrix b. divisional c. functional d. organic 0a& 'oderate& 6( ).5+ 1#,. :r. Abdul reali&es that his compan! is taking on a life of its own and he wants to allow people from all levels to work together in teams. )his view grows to include emplo!ees working activel! with external agencies. )his organi&ational design does not have a predefined structure and is referred to as a "nA =========. a. learning organi&ation b. threatened organi&ation c. functional structure d. boundar!less organi&ation 0d& di--icult& 6( ).1+ 1#.. )went! !ears after founding 9A%C, Abdul decides he is approaching retirement. He wants 9A%C to develop the capacit! to adapt itself and change because each member will take an active role in identif!ing and resolving work0 related issues. Abdul wants the firm to become a ==============. a. learning organi&ation b. threatened organi&ation c. functional structure d. boundar!less organi&ation 0a& 'oderate& pp( ).47).3+ 1#/. Several !ears after the retirement of :r. Abdul, management at 9A%C decided to sell off its oil exploration and drilling suppl! holdings, and instead focus on the more profitable distribution end of the business. 4n con'unction

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with this decision, management decided to outsource most of its noncore functions, such as accounting, pa!roll, and human resources. )hese moves are consistent with what t!pe of contemporar! organi&ational design> a( a virtual organi&ation 9( a network organi&ation c( a modular organi&ation d( a matrix organi&ation 09& di--icult& p( ).4+

ESSA: UEST!O"S
DEF!"!"$ OR$A"!,AT!O"AL STRUCTURE 1#1. 4n a short essa!, list and explain the six ke! elements in designing an organi&ation s structure. Ans;er a. 3ork speciali&ationC)his concept describes the degree to which tasks in an organi&ation are divided into separate 'obs. )he essence of work speciali&ation is that an entire 'ob is not done b! one individual, but instead is broken down into steps, with each step completed b! a different person. b. +epartmentali&ationC)he basis b! which 'obs are grouped together is called departmentali&ation. )he five common forms of departmentali&ation include functional, product, geographical, process, and customer departmentali&ation. c. Chain of commandC)his is the continuous line of authorit! that extends from upper organi&ational levels to the lowest levels and clarifies who reports to whom. 4t helps emplo!ees answer <uestions such as 63ho do 4 go to if 4 have a problem>7 or 6)o whom am 4 responsible>7 d. Span of controlC)his concept is important because, to a large degree, it determines the number of levels and managers an organi&ation has. All things being e<ual, the wider or larger the span of control, the more efficient the organi&ation. e. Centrali&ation and decentrali&ationCCentrali&ation describes the degree to which decision making is concentrated at a single point in the organi&ation. 4f top managers make the organi&ation s ke! decisions with little or no input from below, then the organi&ation is centrali&ed. 4n contrast, the more that lower0level emplo!ees provide input or actuall! make decisions, the more decentrali&ation there is. f. ;ormali&ationC)his refers to the degree to which 'obs within the organi&ation are standardi&ed and the extent to which emplo!ee behavior is guided b! rules and procedures. 4f a 'ob is highl! formali&ed, then the person doing that 'ob has a minimum amount of discretion over what is to be done, when it s to be done, and how he or she could do it. 0di--icult& pp( )*.7).0+ 1$0. 4n a short essa!, list and discuss the five common forms of departmentali&ation. Ans;er a. ;unctional departmentali&ationC5obs are grouped b! the functions "i.e., marketing, finance, human resourcesA performed. )his approach can be used in all t!pes of organi&ations, although the functions change to reflect the organi&ation s ob'ectives and work activities. b. 9roduct departmentali&ationC5obs are grouped b! product line. 4n this approach, each ma'or product area is placed under the authorit! of a manager who s a specialist in, and is responsible for, ever!thing having to do with that product line. c. -eographical departmentali&ationC5obs are grouped on the basis of a territor! or geograph! such as southern, midwestern, or northwestern regions for an organi&ation operating onl! in the @nited StatesK or for a global compan!, ma!be @.S., 8uropean, Canadian, and Asian09acific regions. d. 9rocess departmentali&ationC)his method groups 'obs on the basis of product or customer flow. 4n this approach, work activities follow a natural processing flow of product or even customers.

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e.

Customer departmentali&ationC5obs are grouped on the basis of common customers who have common needs or problems that can best be met b! having specialists for each. 0'oderate& pp( )*/7)*1+ 1$1. 4n a short essa!, list six factors that influence the amount of centrali&ation "or decentrali&ationA in an organi&ation. Ans;er :ore Centrali&ation a. )he environment is stable. b. Hower0level managers are not as capable or experienced at making decisions as upper0level managers. c. Hower0level managers do not want to have a sa! in decisions. d. +ecisions are significant. e. )he organi&ation is facing a crisis or the risk of compan! failure. f. )he compan! is large. g. 8ffective implementation of compan! strategies depends on managers retaining a sa! over what happens. :ore +ecentrali&ation a. )he environment is complex, uncertain. b. Hower0level managers are capable and experienced at making decisions. c. Hower0level managers want a voice in decisions. d. +ecisions are relativel! minor. e. )he corporate culture is open to allowing managers to have a sa! in what happens. f. )he compan! is geographicall! dispersed. g. 8ffective implementation of compan! strategies depends on managers having involvement and flexibilit! to make decisions. 0'oderate& pp( )*37).0+

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1$#. 4n a short essa!, list and discuss the four contingenc! variables that should be considered in determining an appropriate structure in organi&ational design. Ans;er a. Strateg! and structureCAn organi&ation s structure should facilitate the achievement of goals. Since goals are influenced b! the organi&ation s strategies, it s onl! logical that strateg! and structure should be closel! linked. :ore specificall!, structure should follow strateg!. 4f managers significantl! change the organi&ation s strateg!, the! will need to modif! structure to accommodate and support the change. b. Si&e and structureC)here s considerable evidence that an organi&ation s si&e significantl! affects its structure. ;or instance, large organi&ationsCthose with #,000 or more emplo!eesCtend to have more speciali&ation, departmentali&ation, centrali&ation, and rules and regulations than do small organi&ations. However, the relationship isn t linear. 2ather, si&e affects structure at a decreasing rateK that is, si&e becomes less important as an organi&ation grows. c. )echnolog! and structureC8ver! organi&ation has at least one form of technolog! to convert its inputs into outputs. )he processes or methods that transform an organi&ation s inputs into outputs differ b! their degree of routineness. 4n general, the more routine the technolog!, the more standardi&ed and mechanistic the structure can be. %rgani&ations with more nonroutine technolog! are more likel! to have organic structures. d. 8nvironmental uncertaint! and structureCSince uncertaint! threatens an organi&ation s effectiveness, managers will tr! to minimi&e it. %ne wa! to reduce environmental uncertaint! is through ad'ustments in the organi&ation s structure. )he greater the uncertaint!, the greater the need for the flexibilit! offered b! an organic design. %n the other hand, in stable, simple environments, mechanistic designs tend to be most effective. 0di--icult& pp( ).17).*+ 1$$. 4n a short essa!, list the three traditional organi&ational designs. +escribe the characteristics that are commonl! associated with each. Ans;er 4n designing a structure to support the most efficient and effective accomplishment of organi&ational goals, managers often rel! upon tried and true traditional organi&ational designs. )hese designs areB the simple structure, functional structure and divisional structure. N )he simple structure is most often associated with small entrepreneurial ventures and is common among organi&ations where the owner and manager are one and the same. Simple structures possess low departmentali&ation, wide spans of control, authorit! centrali&ed in a single person, and little formali&ation. As firms grow, structure tends to become more speciali&ed and formali&ed, departments and new levels of management are created, and the firm takes on a more bureaucratic nature. N A functional structure is an organi&ational design that groups similar or related occupational specialties together. 4t is a functional approach to departmentali&ation applied to the entire organi&ation. ;or example, organi&ing around the separate functions of operations, finance, human resources, marketing, and 2O+. ;inall!, the di<isional structure is an organi&ational structure made up of separate business units or divisions. 4n this design, each unit maintains limited autonom! with a division manager responsible for performance and determining who has strategic and operational authorit! within the divisional unit. However, the parent corporation still t!picall! acts as an external overseer to coordinate and control the various divisions. 0'oderate& p( )..+

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