Designing Organizational Structure and Controlling

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 1) Organizational design is the organization's formal framework by which job tasks are divided, grouped, and coordinated. False Answer: True 2) Organizational structure is the degree to which tasks in an organization are divided into separate jobs. Answer: True False 3) The concept of work specialization can be traced back a couple of centuries to Adam Smith's discussion of division of labor. Answer: True False 4) Today, most managers see work specialization as a source of ever-increasing productivity. False Answer: True 5) Grouping jobs on the basis of product or customer flow is termed 'customer departmentalization'. Answer: True False 6) When decisions tend to be made at lower levels in an organization, the organization is said to be decentralized. True False Answer: 7) The concept of centralization-decentralization is absolute. False Answer: True 8) When effective implementation of company strategies depends on managers having involvement and flexibility to make decisions, the company is probably more decentralized. True False Answer: 9) A term for increased decentralization is employee empowerment, which is giving employees more authority to make decisions. Answer: True False 10) Many of today's organizations are extremely reliant on strict rules and standardization to guide and regulate employee behavior. False Answer: True 11) An organic organization tends to be characterized by high specialization, extensive departmentalization, narrow spans of control, high formalization, a limited information network, and little participation in decision making by low-level employees. False Answer: True 12) An organic organization would likely be very flexible. True False Answer: 13) Innovators need the efficiency, stability, and tight controls of the mechanistic structure. False Answer: True 14) The relationship between organizational size and structure tends to be linear. False Answer: True 15) Joan Woodward attempted to view organizational structure from a technological perspective. Answer: True False 16) Woodward's findings support that there is "one best way" to organize a manufacturing firm. False Answer: True 17) Since Woodward's initial work, numerous studies have demonstrated that organizations adapt their structures to their technology. Answer: True False 18) Large organizations, such as Aramco, tend to have more specialization and centralization compared to small organizations. Answer: True False 19) The strength of the functional structure is that it focuses on results. False Answer: True 20) A simple structure is an organizational design that groups similar or related occupational specialties together. Answer: True False 21) In divisional structures, the parent corporation typically acts as an external overseer to coordinate and control the various divisions. Answer: True False 22) Employee empowerment is a crucial aspect of team structure because there is no line of managerial authority from top to bottom. Answer: True False 28) Many organizational design concepts are not applicable to twenty-first century companies. True False Answer: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 31) ________ is the formal arrangement of jobs within an organization. A) Organizational structure B) Organizational design D) Departmentalization C) Work specialization Answer: A 32) Organizational design is based on decisions about ________. A) work specialization and mechanisms B) centralization and matrices D) chain of command and span of control C) strategy and structure Answer: D 33) In describing the degree to which tasks in an organization are divided into separate jobs, managers use the term ________. A) departmentalization B) work specialization C) span of control D) chain of command Answer: B 34) Which statement accurately defines work specialization? A) It clarifies who reports to whom. B) The degree to which tasks are grouped together. C) Individual employees specialize in doing part of an activity rather than the entire activity. D) Jobs are ranked relative only to their worth or value to the businesses. Answer: C 35) On what basis are jobs grouped in order to accomplish organizational goals? A) Centralization B) Formalization D) Coordination C) Departmentalization Answer: C 36) Functional departmentalization groups jobs by ________. A) tasks they perform B) type of customer they serve C) territories they serve D) products or services they manufacture or produce Answer: A 37) Departmentalization based on ________ groups' jobs is based on the territory or physical location. A) geographic B) functional C) matrix D) product Answer: A 38) ________ departmentalization is based on the product or customer flow through the organization. A) Product B) Organizational structure C) Functional D) Process Answer: D 39) What kind of departmentalization would be in place in a government organization where different public service responsibilities are divided into activities for employers, children, and the disabled? A) Customer B) Product C) Outcome D) Geographic Answer: A 40) ________ departmentalization is used more in recent years to better monitor the needs of customers and to respond to changes in those needs. A) Needs-based B) Functional C) Customer D) Process Answer: C 41) Work teams composed of individuals from various functional specialties are known as ________ teams. A) differentiated B) weak C) product D) cross-functional Answer: D 42) The line of authority that extends from the upper levels of management to the lowest levels of the organization is called the ________. A) chain of command B) authorized line of responsibility D) responsibility factor C) unity of command Answer: A 43) ________ 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) Unity of command B) Chain of command C) Authority D) Responsibility Answer: C 44) ________ is the obligation or expectation to perform a duty. A) Span of control B) Responsibility D) Unity of command C) Chain of command Answer: B 45) Which one of Fayol's 14 principles of management helps preserve the concept of a continuous line of authority? A) Unity of command. B) Unity of demand. D) Continuous demand. C) Demand structure. Answer: A 46) The theory that a person should report to only one manager is called ________. A) responsibility factor B) unity of command C) authorized line of responsibility D) chain of command Answer: B 47) Concepts such as chain of command and authority are considerably less relevant today because of things like ________. A) information technology B) empowerment D) span of control C) conflicting demands of multiple bosses Answer: A 49) The concept that defines the number of subordinates that report to a manager and that indirectly specifies the number of levels of management in an organization, is called ________. A) authorized line of responsibility B) span of control D) responsibility factor C) unity of command Answer: B 50) All other things being equal, as the span of control grows wider or larger, organizational design becomes more ________. A) effective B) democratic C) efficient D) bureaucratic Answer: C 51) When the span of control ________, employee performance suffers due to a lack of time, leadership, and support. A) becomes less cost efficient B) becomes moderate D) remains too small C) becomes too large Answer: C 52) Trends in the past few years have centered on a ________ span of control to reduce costs and speed decision making. A) deeper B) wider C) stable D) narrower Answer: B 53) What factor influences the amount of centralization an organization uses? A) The environment is complex. B) Decisions are significant. C) The organization is facing the risk of company failure. D) The company is geographically dispersed. Answer: C 55) In recent years, there has been a movement to make organizations more flexible and responsive through ________. A) alternative organizational structure B) decentralization C) centralization D) customer-based structure Answer: B 56) The degree to which jobs are standardized and guided by rules and procedures is called ________. A) formalization B) centralization D) decentralization C) work specialization Answer: A 57) When managers standardize employee behavior through rules and procedures, the jobs are becoming more ________. A) formalized B) horizontal C) vertical D) diversified Answer: A 58) At a company like Eldiar Furniture Manufacturing Company, workers may be assigned specific duties in order to meet the requirements of quality conscious clients. This is called ________. A) job enhancement B) labor intensification D) work specialization C) task specification Answer: D 59) An example of ________ is when a hotel, such as Renaissance Dubai Hotel, conducts meetings with employees to gather their suggestions and ideas for implementation. A) employee empowerment B) staff stimulation C) employee incentive scheme D) employee inspiration Answer: A 60) A(n) ________ organization is rigidly controlled and efficient. A) horizontal B) mechanistic C) organic Answer: B D) learning 61) Organizations that work like efficient, well-oiled machines are described as ________. A) intuitive B) organic C) rational D) mechanistic Answer: D 62) Which of the following would likely be found in mechanistic organizations? A) Decentralized responsibility. B) Standardized job specialties. D) Empowered employees. C) Wide span of control. Answer: B 63) A(n) ________ organization is able to change rapidly as needs require. A) organic B) mechanistic C) vertical Answer: A D) horizontal 64) The appropriate structure for an organization is based on four contingency variables: strategy, size, degree of environmental uncertainty, and ________. A) history B) technology D) leadership C) intensity of competition Answer: B 66) Structure is related to the size of the organization, such that larger organizations tend to have ________ than smaller organizations. A) fewer rules and regulations B) less centralization D) more specialization C) less departmentalization Answer: D 67) Structure is related to the size of the organization, such that larger organizations are more ________. A) mechanistic B) decentralized D) organic C) structurally weak Answer: A 70) In Joan Woodward's study of the relationship between technology and structure, the structure that was the most technically complex was ________. A) mass production B) technological production D) unit production C) process production Answer: C 71) According to Woodward's studies, what type of production works best with a mechanistic structure? A) Process B) Product C) Mass D) Unit Answer: C 72) The greater the environmental uncertainty, the more an organization needs to become ________. A) technologically pure B) supportive of technological change C) organic D) mechanistic Answer: C 73) Global competition, accelerated product development by competitors, and increased demands by customers for better service have encouraged organizations to become more ________. A) technologically pure B) task oriented C) mechanistic D) organic Answer: D 74) Traditional organizational designs tend to be more mechanistic, and include ________. A) simple, functional, and divisional structures B) functional, strategic, and business unit structures C) simple, functional, and business unit structures D) simple, functional, and corporate structures Answer: A 75) What is a strength of a simple structure? A) It focuses on results. B) Employees are grouped with others who have similar tasks. C) It is inexpensive to maintain. D) There are cost-saving advantages from specialization. Answer: C 76) What is a weakness of a simple structure? A) Reliance on one person is risky. B) Functional specialists become insulated and have little understanding of what other units are doing. C) Pursuit of functional goals can cause managers to lose sight of what's best for the overall organization. D) Duplication of activities and resources increases costs and reduces efficiency. Answer: A 77) The strength of a ________ structure is based on results of managers, but it has a weakness because duplication can occur easily within the organization. A) simple B) divisional C) functional D) matrix Answer: B 78) A small business with low departmentalization, wide spans of control, centralized authority, and limited formalization can be said to possess a ________ structure. A) matrix B) functional C) divisional D) simple Answer: D 79) An online Arabic sweets retailer that sells and ships sweets to customers all over the world and has a payroll of six employees, is likely to have which kind of organizational structure? A) Simple B) Divisional C) Functional D) Bureaucratic Answer: A 80) As the number of employees in an organization grows, structure tends to become more ________. A) relaxed B) informal C) centralized D) specialized Answer: D 81) What type of organizational structure is made up of autonomous, self-contained units? A) Bureaucratic B) Simple C) Divisional D) Functional Answer: C 82) Managers in contemporary organizations are finding that traditional hierarchical designs ________ for the environments they face. A) are often not appropriate B) are somewhat suitable C) are perfectly suitable D) form a foundation Answer: A 83) In what type of organizational structure is empowerment most crucial? A) Functional B) Bureaucratic C) Simple Answer: D D) Team 84) In large organizations, the team structure complements what is typically a ________ structure. A) project B) divisional C) simple D) matrix Answer: B 94) Why is keeping employees connected a major structural design challenge for managers? A) Employees are widely dispersed. B) Work is done at the employer's place of business under a manager's supervision. C) Work tasks are fairly predictable and constant. D) Most jobs are full-time and continue indefinitely. Answer: A 95) A learning organization has developed its ________. A) educational department to keep employees trained B) barriers to entry of its markets C) a sustainable competitive advantage that is easy to maintain D) capacity to adapt and change Answer: D 96) Some organizational theorists go so far as to say that an organization's ability to ________ may be the only sustainable source of competitive advantage. A) apply what they learn B) keep employees connected D) manage a global structure C) maintain its structure Answer: A 97) Organizational learning can't take place without ________. A) structure B) motivation C) goals D) sharing information Answer: D 98) Researchers have concluded that the structures and strategies of organizations worldwide are ________ and the behavior within them is ________. A) dissimilar; consistent with the individual cultures B) dissimilar; similar C) similar; also similar D) similar; consistent with the individual cultures Answer: D 99) One study showed that ________ may be more important in less economically developed countries and less important in more economically developed countries. A) formalization B) span of control D) chain of command C) departmentalization Answer: A 100) 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) centralization D) departmentalization C) chain of command Answer: A 101) Ismail majored in engineering and really enjoyed the work assigned to him. The reorganization changed some of his work assignments to include working on a team with production workers and marketing specialists, designing the newest products the company will offer. This could be described as a(n) ________. A) cross-functional team assignment B) alternative work assignment C) centralized work assignment D) career degrading assignment Answer: A 102) Ismail is offered a chance to help direct the efforts of some employees assigned to his work group. This is a chance for Ismail to experience ________. A) divisional structure B) authority C) responsibility D) functional structure Answer: B 103) Ismail sees this new assignment as an increase in ________, or an obligation or expectation for him to perform at a new level. A) responsibility B) divisional structure D) authority C) functional structure Answer: A 104) During his career, Ismail saw his job change from an engineering role to a more complex job assignment. Eventually, Ismail's department evolved to become an advanced structure in which Ismail continually worked on projects. This structure is known as a ________ structure. A) simple B) project C) divisional D) functional Answer: B 105) Maha is very concerned about the formal framework by which job tasks within her nursing unit are divided, grouped, and coordinated within her unit. This framework is known as the unit's ________. A) organizational structure B) staff C) span of control D) formal organizational chart Answer: A 106) Maha's unit specializes in cardiology cases. Dividing up work units in such a manner is most representative of ________ departmentalization. A) product B) customer C) functional D) process Answer: B 107) Maha was asked to represent her cardiac unit as part of a Total Quality Management (TQM) initiative that is aimed at improving the overall quality of care at the hospital. Other departments, such as Cardiology and ER, also have representatives on this team. The TQM team exemplifies ________. A) customer departmentalization B) process integration D) project management C) a cross-functional team Answer: C 108) Maha has noticed that everyone is very concerned about the line of authority within the organization. The line of authority within the organization is also called ________. A) organizational strategy B) the chain of command C) responsibility D) the span of control Answer: B 109) Maha is required to sign off on all decisions, suggesting the hospital has what kind of decisionmaking authority? A) strict B) autocratic C) formal D) centralized Answer: D 110) Based upon the description of Eastern Bank's situation, which aspect of the current situation is inconsistent with Eastern Bank's decision to maintain a centralized form of decision making? A) The company is large. B) The organization is facing a crisis. C) Lower-level managers want a voice in decisions. D) Lower-level managers are not as experienced at making decisions as upper-level managers. Answer: C 111) Sawsan believes that Eastern Bank should be more highly adaptive and flexible. She would like Eastern Bank to possess more of a(n) ________ structure? A) organic B) technological C) mechanistic D) formalized Answer: A 112) Many of Custom Leather's 75 employees are highly skilled and experienced artisans. Many longtime employees are stockholders and all participate in the profit sharing plan. While there is division of labor, the jobs most floor employees perform are not highly standardized. Management has found that employees take great pride in their craft, and thus they require minimal formal rules and little direct supervision. These traits are most typical of a(n) ________ organization. A) informal B) organic C) mechanistic D) empowered Answer: B 113) After reading Woodward's work at Lamia's suggestion, Custom Leather CEO, Masoud, asks her about other contingency factors that should be considered in optimally designing the firm's structure. Lamia responds that another contingency factor linked to structure is ________. A) process B) size C) organizational complexity D) market orientation Answer: B 114) Masoud is interested in learning more about the link between strategic decision making and organizational structure. Lamia suggested he read the research and writings of ________, which were based on studies of U.S. firms in the late 1950s and early 1960s and remain the most seminal study in this area. A) Joan Woodward B) Raymond Kramer D) Arthur Miller C) Alfred Chandler Answer: C 115) Masoud is considering doubling the size of his workforce in conjunction with expanding the number of retail outlets that carry Custom Leather products. Lamia tells him that he should expect the organization to become more ________ as a result of this change. A) mechanistic B) complex C) formalized D) organic Answer: A 119) Lamia tells Masoud that studies have found that as environmental uncertainty increases, ________ designs tend to be most effective. A) mechanistic B) centralized C) organic D) traditional Answer: C 120) The original entrepreneurial venture consisted only of Mr. Jamal and a few employees. It was an informal organization, and everyone reported to Jamal. This is best described as a ________ structure. A) functional B) divisional C) simple D) matrix Answer: C 121) A sharp rise in oil prices helped JOC expand. Jamal concluded that it was impractical and inefficient for all decisions to continue flowing through his office. He granted his key subordinates the authority and responsibility to manage others within their areas of specialty. This organizational structure is best described as a ________ structure. A) functional B) divisional D) matrix C) simple functional Answer: A 123) To deal with the workload in an effective manner,JOC's executive management group assigns specialists from the different functional departments to work on one or more work groups that are led by project managers. This popular contemporary design is called a(n) ________ structure. A) organic B) divisional C) matrix D) functional Answer: C 124) As JOC continues to grow, a highly trained group of managers and analysts has developed at corporate headquarters. This group is highly adaptive in its structure. Members of this group do not have standardized jobs, but are empowered to handle diverse job activities and problems. This group of employees is said to have a(n) ________ structure. A) divisional B) organic C) simple D) functional Answer: B ESSAY. Write your answer in the space provided or on a separate sheet of paper. 127) In a short essay, list and explain the six key elements in designing an organization's structure. Answer: 1. 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. 2. 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. 3. 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?" or "To whom am I responsible?" 4. Span of control this concept is important because, to a large degree, it determines the number of levels and managers an organization has. All things being equal, the wider or larger the span of control, the more efficient the organization. 5. 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 decentralization there is. 6. Formalization this refers to the degree to which jobs within the organization are standardized and the extent to which employee behavior is guided by rules and procedures. If a job is highly formalized, then the person doing that job 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. 128) In a short essay, list and discuss the five common forms of departmentalization. Answer: 1.Functional departmentalization jobs are grouped by the functions performed (e.g. marketing, finance, human resources). This approach can be used in all types of organizations, although the functions change to reflect the organization's objectives and work activities. 2. Product departmentalization jobs are grouped by product line. In this approach, each major product area is placed under the authority of a manager who's a specialist in, and is responsible for, everything having to do with that product line. 3. Geographical departmentalization jobs are grouped on the basis of a territory or geographic region such as southern, midwestern, or northwestern regions for an organization operating only in the United States; or for a global company, for example in U.S., European, Canadian, and Asian-Pacific regions. 4. Process departmentalization this method groups jobs on the basis of product or customer flow. In this approach, work activities follow a natural customers. processing flow of 5. Customer departmentalization jobs are grouped on the basis of common customers who have product or even common needs or problems that can best be met by having specialists for each. 131) In a short essay, list the three traditional organizational designs. Describe the characteristics that are commonly associated with each. Answer: In designing a structure to support the most efficient and effective accomplishment of organizational goals, managers often rely upon tried and true traditional organizational designs. These designs are: the simple structure, functional structure, and divisional structure. 1. 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. 2. 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, organizing around the separate functions of operations, finance, human resources, marketing, and R&D. 3. Finally, 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 still typically acts as an external overseer to coordinate and control the various divisions.