Fundamentals of Management - Organizational Structure and Design Part 2

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. 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. 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. 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. 35) Modern managers find that they can ________ if their employees are experienced, welltrained, 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 52) Departmentalization is how jobs are grouped. Answer: TRUE Explanation: The grouping of jobs along lines of function, product, and other criteria defines departmentalization. 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. 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. 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. 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. 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. 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. 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. 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 bettertrained 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. 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. 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.