Fundamentals of Management - Organizational Structure and Design Part 4

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. 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. 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. 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. 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. 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. 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. 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. 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. 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." 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.