Tb11

CHAPTER 11: ORGANIZATIONAL DESIGN
Test Correlation Table Question Types/Level of Difficulty

LEARNING OBJECTIVES Easy Moderate Difficult

1. Describe the two fundamentals TF 2, 6, 10, 11, 12, 1, 4, 5, 7, 8, 9, 3, 15
of organizing. 14 13, 16

MC 1, 5, 7, 15 3, 4, 6, 8, 9, 10, 2, 11, 12, 17
13, 14, 18, 19,
20

ES 1 — —

2. Explain the five aspects of an TF 17, 19, 20, 21, 21, 28, 30, 31 18, 22, 24, 29
organization’s vertical design. 23, 25, 26, 27

MC 21, 22, 24, 25, 27, 29, 30, 31, 23, 26, 28, 37,
32, 33, 39, 42, 34, 35, 36, 38, 41, 47
44, 45 40, 43, 46, 48

ES — 2 3

3. Describe four types of horizontal TF 33, 41 34, 36, 37, 38, 32, 35, 39
design. 40, 42

MC 51, 52, 53, 54, 55, 56, 57, 58, 60, 61, 62, 64,
63, 74, 76, 81 59, 65, 66, 67, 68, 69, 73, 75, 82
70, 71, 72, 77,
78, 79, 80, 83

ES 4 6, 7 5

4. Describe two methods of TF 43, 45, 46, 47 44, 49, 50, 51, 48
integration. 52, 53, 54

MC 102 85, 86, 87, 88, 84, 96, 99
89, 90, 91, 92,
93, 94, 95, 97,
98, 100, 101,
103, 105, 106

ES 8 — 9

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True/False Questions

Learning Objective 1

1. According to the “Chapter 11 Preview," Home Depot must continue to open new stores
in order to maintain their financial performance.

ANSWER: F, Knowledge, Moderate, p. 298

2. Home Depot has been unable to find a new formula that will enable them to continue
the large-scale growth that they experienced in the 1990s.

ANSWER: T, Knowledge, Easy, p. 298

3. Organizational design is the formal system of working relations that separates and
gathers tasks.

ANSWER: F, Knowledge, Difficult, p. 298

4. An organizational unit could refer to both teams and departments.

ANSWER: T, Knowledge, Moderate, p. 299

5. Each box on an organizational chart represents an individual.


6. Organizational levels can be counted simply by the number of vertical layers in the
organizational chart.


7. An organizational chart, in general, provides ten major pieces of information about an
organization’s structure.


8. Daewoo Ford can review the organizational chart of his company to detect gaps in
authority or duplication of tasks.

ANSWER: T, Application, Moderate, p. 300

9. Sterling Lucas wants to know which individual employed at Fleet Capital Trust has the
most political influence. Lucas will be able to rely on the firm’s organizational chart to
identify that person.

ANSWER: F, Application, Moderate, p. 300

20


10. An organizational chart is a picture that does not show how things really get done in the
organization.


11. There are two fundamental concepts around which all organizations are organized:
differentiation and specialization.

ANSWER: F, Knowledge, Easy, p. 300

12. Common rules and goals are aspects of integration.


13. Specialization is dividing the work of an organization into smaller tasks.


14. Division of labor means that workers are considered to be on a different level than
management.


15. Division of labor and specialization are considered to be concepts that are closely
related.

ANSWER: T, Knowledge, Difficult, p. 300

16. Integration of organizational parts is one way to avoid the need for coordination.

ANSWER: F, Knowledge, Moderate, pp. 300–301


17. Having fewer hierarchical levels permits more people to participate in the decision-
making process.


18. Many organizations, like Wells Fargo Bank, are flattening their structures by increasing
the number of management layers between the CEO and front-line employees.


19. A hierarchy is a circular diagram showing top management at the center and the lowest
level employees around the outside.


21


20. The number of subordinates that a manager can supervise refers to span of control.

ANSWER: T, Knowledge, Easy, pp. 301–302

21. The less a manager knows about potential new operating problems in their department,
the wider their span of control should be.


22. Accountability is the glue that holds the vertical and horizontal parts of an organization
together.


23. The expectation that an employee will accept credit or blame for results achieved in
performing assigned tasks is called accountability.


24. Oftentimes, a manager makes an employee responsible to perform a task, but does not
give the person sufficient authority to get the job done.


25. Delegation is the process of giving authority to a person to make decisions and take
actions.


26. One of the barriers to delegation is when authority and responsibility have not been
defined clearly.


27. Companies are generally either totally centralized or totally decentralized.


28. Centralization is an approach that requires managers to decide what to delegate, to
select workers carefully, and to formulate adequate controls.


29. Subordinates may make better decisions than managers because they have a better
grasp of the facts.


30. Uniform policies are a characteristic of decentralized organizations.


31. Cost may be the most important factor in determining the extent of centralization.
22




32. Harley-Davidson has chosen a geographic design to capitalize on regional differences
in its 1,300 dealers who sell 28 different models of motorcycles.


33. Grouping tasks and employees by function can be economical or efficient, but not both.


34. Kris Kringle uses a functional design for his toymaking operation. This organizational
structure may increase career development because each elf trains within their
functional area to improve his or her specialized skills.


35. Conflicts over product priorities are a potential pitfall of the functional design.


36. Organizations, such as Nestlé, Sheraton Hotels, and Celanese Chemical use product
departmentalization in part because they have worldwide operations.


37. Coordination is usually difficult across product lines because employees tend to focus
on goals for their particular product, rather than on broader company goals.


38. In the product design, all contributing functions are organized under one manager.


39. An emphasis on geographical design makes it possible to benefit from facilities and
equipment for production being located in multiple locations, which maximizes flexibility.


40. Most of an organization’s functional departments must be duplicated at each location
when using geographical design.


41. The movie industry is an example where firms use a functional design.


42. Because network designs work in real time, a delay in one part of the process has ripple
effects throughout the system.
23




43. Organizational integration is one of the basic elements of organizing.


44. An organic system is most appropriate when an organization’s environment is stable
and predictable.


45. An organic system places less emphasis on standardized rules than a mechanistic
system.

ANSWER: T, Knowledge, Easy, pp. 314–315

46. In a mechanistic system, decision making tends to be decentralized.

ANSWER: F, Knowledge, Easy, pp. 314–315

47. In the New York City Police Department (NYPD), officers perform highly specialized
tasks and decision making is highly centralized. This suggests that the NYPD has an
organic organization design.

ANSWER: F, Application, Easy, p. 314

48. An organization’s technology has a significant impact on its organization design
because different types of technologies generate various types of technological
interdependence.


49. There are three types of technological interdependence: pooled, sequential, and
reciprocal.


50. An automobile assembly line is an example of pooled interdependence.


51. At the ABC Manufacturing Co., the output from department A becomes the input for
department B, the output from department B becomes the input for department C. This
illustrates sequential interdependence.


24


52. With reciprocal interdependence, the flow of information between individuals within the
same department or between departments is serialized.


53. Hospital emergency rooms typically operate with reciprocal interdependence.


54. Designing an organization to handle reciprocal interdependence and then managing it
are relatively simple and straightforward.


Multiple Choice Questions
Preview
1. How did Home Depot originally organize itself for growth?
a. copying the business model of Sears and Wal-Mart
b. centralizing its management and purchasing
c. appealing to do-it-yourself home owners
d. commitment to international markets

ANSWER: C, Knowledge, Easy, p. 298

2. Each time Home Depot acquired a competitor or created a new store __________.
a. management lost another degree of control over the organization
b. its organizational design came under pressure to evolve
c. its profitability went up
d. its revenues per store went down

ANSWER: B, Knowledge, Difficult, p. 298


Fundamentals of Organizing
3. Organizational design is __________.
a. a diagram that illustrates the reporting lines between people in an organization
b. the skeleton of an organization
c. the decisions and actions that result in a structure
d. creative planning by owners and top management

ANSWER: C, Knowledge, Moderate, p. 298

25


4. An organizational chart provides the skeletal snapshots of an organization’s structure
and includes all of the following except __________.
a. tasks
b. levels of organization
c. lines of authority
d. political influence

ANSWER: D, Knowledge, Moderate, pp. 299–300

5. Managers frequently are able to describe the structure of their organization with
__________.
a. an organizational chart
b. the financial statements
c. a horizontal design
d. a vertical design

ANSWER: A, Knowledge, Easy, p. 299

6. Victoria Torres is the president of Secure Systems, Inc. Victoria is in the process of
making decisions that will put jobs and relationships into a structure. Victoria is creating
a(n) __________.
a. task structure
b. organizational structure
c. business plan
d. organizational design

ANSWER: D, Application, Moderate, p. 298

7. An __________ is a diagram that illustrates the reporting lines between units and
people within the organization.
a. organization structure
b. organizational chart
c. organizational design
d. organization creation

ANSWER: B, Knowledge, Easy, p. 299

8. One of the advantages of organization charts discussed in the text is that __________.
a. the chart reveals vital informational channels of communication
b. the chart shows political influence
c. power and status are reflected by a position’s proximity to the CEO
d. the chart shows employees how the pieces of the entire organization are intended to
fit together

ANSWER: D, Knowledge, Moderate, p. 300

26


9. One of the disadvantages of an organization chart discussed in the text is that the chart
__________.
a. cannot show everything about an organization’s structure
b. shows employees how the pieces of the entire organization fit together
c. is rigid and never changes
d. can help management detect gaps in authority or duplication of tasks

ANSWER: A, Knowledge, Moderate, p. 300

10. When Darrick Zelenski reviews the organization chart for his company, he can obtain all
of the following pieces of information except the __________ in the firm.
a. lines of authority
b. compensation structure
c. subdivisions of tasks
d. levels of management

ANSWER: B, Application, Moderate, p. 299

11. Luke Klein is looking at the organizational chart for Citation Industries. He can expect
that it might give him all of the following information except __________.
a. insight into how the entire organization fits together
b. cities where people are located
c. who reports to whom
d. gaps or duplication of activities

ANSWER: B, Application, Difficult, p. 300

12. At Home Depot, combining the Southeastern and Mid-Atlantic regions to form a new
region is an example of __________.
a. integration
b. differentiation
c. vertical design
d. geographic design


13. __________ means that the work of the organization is divided into smaller tasks.
a. Task division
b. Division of labor
c. Integration
d. Specialization

ANSWER: B, Knowledge, Moderate, p. 300

27


14. There are two fundamental concepts around which all organizations are organized:
__________.
a. labor and technology
b. authority and delegation
c. differentiation and integration
d. hierarchy and span of control


15. Uniqueness of tasks and specialization of workers creates a need for __________.
a. differentiation
b. integration
c. socialization
d. delegation


16. The process of identifying particular tasks and assigning them to departments, teams, or
divisions is __________.
a. coordination
b. specialization
c. standardization
d. unity of command


17. Some degree of coordination is necessary among business units in order for the
organization to be effective. This is known as __________.
a. regulation
b. uniformity
c. standardization
d. integration

ANSWER: D, Knowledge, Difficult, pp. 300–301

18. One of the elements of organizational structure that involves the separation of tasks is
__________.
a. delegation
b. assignment
c. structure
d. specialization


28


19. John Payer is a supervisor in the CAS (Customer Account Services) unit of the IRS. He
is responsible for taxpayer relationship having to do with filing, including processing
submissions and payments. Payer’s job represents the __________ element of
organizational design.
a. enrichment
b. human resources
c. assignment
d. specialization


20. Jarrod Tracy is a structural engineer for Bechtel. A job foreman asked Jarrod about the
heat and air equipment being delivered to the site but Jarrod knew nothing about it
because Bechtel is large and requires a high level of __________.
a. delegation
b. specialization
c. integration
d. hierarchy



Vertical Design
21. The __________ is a pyramid showing relationships among levels.
a. hierarchy
b. organizational chart
c. task structure
d. business plan


22. During the past few years, many U.S. companies have __________ the number of
hierarchical levels in their organizations.
a. held constant
b. eliminated
c. reduced
d. increased


23. Executives hope that fewer organizational levels will create all of the following benefits
except __________.
a. better control of subordinates
b. faster reaction times
c. hearing “bad” news more frequently
d. more cost effectiveness

ANSWER: A, Knowledge, Difficult, p. 301

29


24. __________ refers to the number of employees directly reporting to a manager.
a. Hierarchy
b. Accountability
c. Span of control
d. Delegation


25. Natalie Sanders thinks that one manager cannot effectively supervise a large number of
subordinates. Sanders has each manager in her firm supervise seven employees.
Sanders is relying on the __________ principle.
a. functional command
b. functional design
c. span of control
d. hierarchy


26. The key factors discussed in the text that determine the best span of management for
any situation include all of the following except the __________.
a. union membership of the employees
b. competence of both the manager and the employees
c. similarity or dissimilarity of tasks being supervised
d. incidence of new problems in the manager’s department


27. Sherri Delgado is a manager for Sierra Inc. Sierra produces different products in three
divisions: tires, compact discs, and pharmaceuticals. Delgado’s span of control is most
likely to be __________.
a. broad
b. narrow
c. short
d. tall


28. Employees of Connect the Dots Learning Centers face well-defined problems of
developmentally challenged students, disinterested parents, and supply shortages.
Megan Holbrook has been an employee of the center for many years and was recently
promoted to a managerial position. Holbrook’s span of control is likely to be
__________.
a. linear
b. vertical
c. broad
d. narrow

ANSWER: D, Application, Difficult, p. 302

30


29. At the local post office, extensive rules govern the tasks and behavior of employees.
Postmasters rely on the rules and standard operating procedures to do much of the
controlling of employees. The span of control for a postmaster can be __________
than that of a manager for a restaurant with few rules and procedures.
a. greater
b. less important
c. narrower
d. broader


30. When a news assistant reports to a senior reporter, who reports to the editor, who
reports to the publisher, a flow of __________ has been established.
a. accountability
b. responsibility
c. delegation
d. designation

ANSWER: A, Application, Moderate, p. 302

31. In creating employee accountability, when __________ is lacking, managers cannot
judge the subordinates' accomplishments fairly.
a. responsibility
b. delegation
c. authority
d. both a and c

ANSWER: D, Knowledge, Difficult, p. 302

32. Managers assign the right to act and make decisions in certain areas to subordinates
through __________.
a. centralization
b. delegation
c. span of control
d. locus of control


33. __________ is the right to make decisions.
a. Authority
b. Decision making
c. Power
d. Position


31


34. Darnell Henley is the captain of the Wichita Wildcats football team and determines all of
the game plays. Darnell is able to make these decisions because he has __________.
a. authority
b. power
c. charismatic authority
d. accountability


35. A company president assigns to an executive assistant the task of preparing a formal
statement for presentation to a congressional committee. This is an example of
__________.
a. organizational design
b. locus of control
c. misallocation of resources
d. delegation of authority


36. __________ is not one of the basic components of the delegation process.
a. Establishing goals and standards
b. Providing training
c. Determining political power and alliances
d. Involvement


37. Antwan Payne is a manager of the marketing department of Paradise Time Share
Condominiums. Payne’s subordinate, Chadwick Wolff, is having trouble locating
information on the demographics of timeshare buyers. Payne asks Wolff to do the
report for him because he doesn’t know how to do it. Payne tells Wolff to check some
trade magazines. Wolff is following the __________ principle for improving delegation
of authority.
a. establish adequate controls
b. expecting completed work
c. involve subordinates
d. timely feedback

ANSWER: B, Application, Difficult, p. 303

38. Ron Anderson often writes his own test questions because he thinks that a mistake
made by a student writer would be costly. Anderson is reluctant to ___________.
a. delegate authority
b. give up power
c. reduce his span of control
d. share credit for good test questions


32


39. Which of the following is not one of the six principles useful for improving delegation of
authority?
a. ensure clarity
b. involve subordinates
c. provide training
d. All of the above are principles for improving delegation.

ANSWER: D, Knowledge, Easy, p. 303

40. __________ is not one of the excuses managers often make for not delegating.
a. It takes too much time to explain
b. An employee’s mistake could damage the manager’s reputation
c. Managers think they can do the job better themselves
d. Employees are too busy themselves


41. The six practices for achieving effective delegation provide a strong foundation for
__________.
a. reducing barriers to delegation
b. training workers to receive authority
c. achieving higher productivity from managers
d. all of the above


42. American Standard designed its Bulgarian organization to respond to the primary risk
factor, which was __________.
a. market size
b. cultural
c. political
d. foreign exchange


43. American Standard was one of the few companies to locate their factory in a rural area
rather than the city. All of the following were advantages to the company except
__________.
a. labor costs would have been higher in the city
b. local governmental agencies were appreciative
c. labor relations were excellent
d. the company was recognized as a major development force


33


44. When authority is concentrated at the top of an organization or department, decision
making is __________.
a. strategic
b. decentralized
c. focused
d. centralized


45. When decisions are made by employees throughout an organization or department,
decision making is __________.
a. accountable
b. decentralized
a. unfocused
b. centralized


46. One of the advantages of decentralization is that __________.
a. top managers develop organizational plans and strategies
b. top managers handle routine, day-to-day decisions
c. subordinates check everything with the boss to save time
d. the organization’s atmosphere fosters competition among employees


47. Management’s decision to centralize or decentralize decision making responsibilities
can be affected by all of the following factors except __________.
a. cost of decisions
b. competency levels
c. difficulty of decisions
d. control mechanisms

ANSWER: C, Knowledge, Difficult, p. 305

48. When Home Depot advertises a nationwide sale on paint, all stores charge the same
price because decision making has been __________.
a. focused
b. decentralized
c. advertised
d. centralized


34


49. Marriott Hotels collects certain key data, including number of beds occupied, employee
turnover, number of meals served, and the average amount that guests spend on food
and beverages. The decision making Marriott uses is __________.
a. decentralized
b. centralized
c. based on economics
d. an example of heuristics


50. Organizations such as Centex and Weyerhaeuser work hard to ensure an adequate
supply of competent managers and employees. These companies are willing to permit
employees to make mistakes involving small costs so as to learn from them. The
decision making tends to be __________.
a. mechanistic
b. centralized
c. organic
d. decentralized



Horizontal Design
51. Functional design is particularly suited for which type of organization?
a. high production volume
b. narrow range of products
c. small organization size
d. all of the above


52. __________ involves dividing organizations into smaller units as a result of growth and
increased complexity.
a. Job rotation
b. Specialization
c. Horizontal design
d. Vertical design


53. Kris Cassidy is an employee at a Taco Bell restaurant. As a result of functional design,
Cassidy is most likely to work __________.
a. in Tacoma, Washington
b. at food preparation
c. afternoons only
d. as a store manager

ANSWER: B, Application, Easy, p. 306

35


54. Management can use any of the basic types of horizontal design, including
__________.
a. by function
b. by product
c. geographically
d. all of the above


55. Functional design groups employees __________.
a. by accounting and finance only
b. according to their areas of expertise and the resources they draw on to perform their
jobs
c. by production departments only
d. according to their past employment and salary level


56. Harley-Davidson primarily uses __________.
a. functional design
b. network design
c. product design
d. traditional design


57. Lynette Ivey and Everett Frank are employees of Catalina Classics, a publishing firm.
Both have experience in editing romance fiction. Both require editorial assistance and
computer typesetting. If the two are grouped together based on these facts, the
company is using __________.
a. network design
b. product design
c. virtual design
d. functional design


58. All of the following are potential benefits to functional design except __________.
a. increased coordination within the function
b. better career development within the function
c. promotes high-quality technical decision making
d. interdepartmental coordination is enhanced


59. All of the following are potential disadvantages to functional design except
__________.
a. conflicts over product priorities
b. skills become excessively specialized
c. overall organization goals are deemphasized
d. managers become experts in a narrow field

36


60. All of the following are advantages of functional design except __________.
a. it results in a simple structure
b. it focuses on interdepartmental goals
c. creation of one department for each primary task
d. it keeps administrative expenses low


61. All of the following are disadvantages of functional design except _______.
a. making quick decisions becomes difficult
b. managers must spend time resolving problems among departments
c. it promotes skills specialization
d. pinpointing the accountability of employees becomes difficult


62. Ahmed Delgado has analyzed the use of functional design in his company, Bolsha
Resources. He concludes that the organization has reduced duplication of resources,
increased coordination within the functional areas, and focused on departmental issues
and goals. Ahmed concludes that functional design has had __________.
a. completely positive results
b. completely negative effects
c. no effect
d. both positive and negative consequences

ANSWER: D, Application, Difficult, pp. 306–307

63. Product design refers to __________.
a. the organization of the company around the locations where products are sold
b. organizing all functions that contribute to a product under one manager
c. the organization of the company around the locations where raw materials are found
d. the division of the organization into departments like accounting, finance, and
production


64. __________ is the most commonly used design for companies in the Fortune 500.
a. Network design
b. Functional design
c. Product design
d. Geographical design


65. All of the following are advantages of product design except __________.
a. is most appropriate for slow changes in a product
b. allows greater product visibility
c. clearly defines responsibilities
d. develops managers who can think across functional lines


66. All of the following are disadvantages of product design except __________.
37


a. may not use skills and resources effectively
b. fosters politics in resource allocation
c. is not suited to fast changes in a product
d. limits career mobility for personnel outside their product line


67. Management wants to ensure a focus on the needs of customers. This firm will likely
use __________ design.
a. functional
b. network
c. product
d. geographical


68. Proctor & Gamble has a product design. The firm most likely chose this organization
structure because __________.
a. all of their competitors do so
b. the customers would require the firm to do so
c. the company is organized by geographic location
d. it helps in measuring financial performance of each division

ANSWER: D, Application, Difficult, p. 307

69. Komatsu uses __________ design to organize its operations.
a. product
b. supplier
c. geographic
d. stakeholder


70. Sun Tzu is the president of The Art of War, a consulting company. The firm has
branches that are diverse in terms of customers, geographic location, and available
services. Tzu is most likely to choose to use __________ design for his firm.
a. functional
b. network
c. product
d. geographical


71. All of the following are advantages of geographical design except __________.
a. the equipment used for products is all in one place
b. managers know customers’ problems
c. managers develop expertise in solving problems unique to one location
d. extensive rules and regulations may be required


72. All of the following are disadvantages of geographical design except __________.
a. achieving uniformity of quality may require extensive regulations
b. there may be a conflict between each location’s goals and corporate goals
38


c. managers may develop expertise unique to one location
d. all functions are duplicated at each location


73. Michele Morrison is the president of Outrageous Outback Adventures, an adventure tour
and travel company. One guide is assigned to each particular adventure, but Morrison
has set extensive rules that apply to all tours and all guides. Morrison is addressing
__________ of geographical design.
a. a disadvantage
b. the key issue
c. an advantage
d. the functional aspects

ANSWER: A, Application, Difficult, p. 310

74. An example of geographical design is __________.
a. determining political power from the organization chart
b. organizing a company by sharing of resources
c. locating a plant next to raw materials
d. creating a standardized advertising campaign for all subsidiaries

ANSWER: C, Application, Easy, p. 309

75. Starbucks’ organizational design __________.
a. is horizontally integrated
b. has the executive level organized by location
c. applies rules extensively to all locations
d. all of the above


76. The Starbucks organization would be characterized by a __________ design.
a. functional
b. product
c. geographical
d. network


77. A network design __________.
a. groups employees into interconnected functional networks
b. subcontracts some of its operations to other firms
c. groups tasks and operations by location
d. depends upon regional coordination through technology


39


78. The network design is described by all of the following terms except __________.
a. virtual organization
b. outsourcing
c. divisional structures
d. real time


79. Cisco Systems primarily uses a __________ design.
a. functional
b. product
c. geographical
d. network


80. The movie industry is regarded as a network design because it __________.
a. outsources its projects to various people
b. uses multiple managers
c. operates in multiple locations
d. is horizontally integrated


81. Why does the network design sometimes fail to live up to deadlines?
a. inadequate resources
b. lack of worker commitment
c. unclear lines of authority
d. all of the above


82. DreamWorks takes part in all of the following except __________.
a. computer-generated film technology
b. video game development
c. using HP for animation technology
d. outsourcing of artists and actors

ANSWER: B, Knowledge, Difficult, pp. 313–314

83. DreamWorks is using __________ to create even more realistic animation for its next
generation of films.
a. video game technology
b. interactive display technology
c. Activision
d. Hewlett-Packard


40



Organizational Integration
84. Which statement about organizational integration is false?
a. Management must furnish coordination tools for organizational goals to be achieved.
b. Many managers believe that good people can make any organizational design work.
c. The text presented two integration methods: behavior and technology.
d. There are a variety of methods managers can use for integration of activities.


85. A(n) __________ system encourages managers and subordinates to work together in
teams and to communicate openly with each other.
a. organic
b. mechanistic
c. network
d. virtual


86. A(n) __________ system is one in which management breaks activities into separate,
highly specialized tasks, relies extensively on standardized rules, and centralizes
decision making at the top.
a. organic
b. mechanistic
c. functional
d. networked


87. Deirdre Drummond is an environmental specialist with the City of Newark sanitation
department. The garbage collectors in her department each perform specialized tasks
and rely on the department head for decision making. Deirdre works in a(n)
__________ organization.
a. organic
b. mechanistic
c. stable
d. standardized


41


88. Trinidad Wolff is a computer programmer with a large data processing company. Wolff
spends much of his day working as a team with Meghan Kincaid, who is a computer
engineer who specializes in computer hardware design. Wolff and Kincaid have
authority to make system-wide design decisions and their work as a team facilitates
problem solving. Wolff and Kincaid work in a(n) ___________ organization.
a. organic
b. mechanistic
c. network
d. virtual


89. A(n) __________ system is well suited to a changing environment.
a. organic
b. mechanistic
c. dynamic
d. post modern


90. A(n) __________ organization may be most appropriate when an organization’s
environment is stable and predictable.
a. organic
b. mechanistic
c. network
d. geographical


91. Which of the following statements is true of a mechanistic organization?
a. Authority, responsibility, and accountability are not defined or restricted by level.
b. Specific roles are prescribed for each employee.
c. Tasks tend to be interdependent.
d. Tasks are continually adjusted and refined through employee participation in setting
new goals.


92. Marshall Dillon manages a McDonald’s. Marshall should adopt a __________ design.
a. product
b. network
c. mechanistic
d. organic

ANSWER: C, Application, Moderate, pp. 314–315

42


93. Which of the following statements adequately describes an organic structure? Organic
structures __________.
a. place emphasis on employees giving and taking orders
b. are well-suited to an unchanging environment
c. place little emphasis on teamwork
d. encourage employees to communicate with anyone who might help solve a problem


94. Jewel Martinez owns and operates a business in which products, governmental
regulations, and customer demands are constantly changing. To be an effective
manager, she should consider __________.
a. a mechanistic organization design
b. an organic organization design
c. hiring individuals with little or no communication or group skills
d. a network structure


95. The medical services industry is constantly offering new technologies and equipment to
assist with the diagnosis and treatment of patients. In addition, recent debates
regarding public policy changes suggest that the governmental regulation of medicine is
likely to be reformed to some significant degree. Furthermore, providing medical care
might be described as a nonroutine service. Considering all of this, medical care
providers should use a(n) __________ type of organization design.
a. mechanistic
b. network
c. geographic design
d. organic


96. Which of the following is true of Flextronics’ procedure for making large capital
investments?
a. The CEO references the 80-page Corporate Policy Manual.
b. Only top managers are authorized to make decisions.
c. A long list of standard questions must be answered in the decision process.
d. All of the above statements are true.

ANSWER: A, Knowledge, Difficult, pp. 315–316

97. An organic system is the most appropriate for Flextronics due to all of the following
except:
a. the CEO does not like rigid structures, charts, and job duties.
b. the CEO believes in allowing people to risk making mistakes.
c. the CEO believes that global manufacturing is all about creativity.
d. the CEO believes the biggest mistake is to miss important opportunities.

ANSWER: C, Knowledge, Moderate, pp. 315–316

43


98. Louis Escobar owns and manages a store that markets, repairs, sells, and produces
televisions and computers. Little coordination of information flow and resource
exchange occurs between departments. This is best described as ___________
interdependence.
a. pooled
b. sequential
c. reciprocal
d. virtual


99. At many commercial banking establishments, the savings, loan, and real estate
departments operate according to __________ interdependence organization design.
a. pooled
b. technological
c. reciprocal
d. sequential

ANSWER: A, Application, Difficult, p. 317

100 __________ interdependence involves the orderly step-by-step flow of information,
. tasks, and resources from on individual or team to another within the same department
or from one department to another.
a. Product
b. Pooled
c. Output
d. Sequential


101 Vern Hinson owns an egg farm. At the farm, one person collects the eggs, then another
. washes and inspects the eggs, then another person is responsible for placing the
different-sized eggs into the correct cartons. This organizational design can best
described as __________ interdependence.
a. reciprocal
b. pooled
c. output
d. sequential


102 If unit A’s output is unit B’s input, and unit B’s output is unit C’s input, then this
. arrangement might best be described as relying upon __________ interdependence.
a. sequential
b. pooled
c. reciprocal
d. product

ANSWER: A, Application, Easy, p. 317

44


103 Which of the following type of business is most characterized by sequential
. interdependence?
a. automobile manufacturing
b. convenience stores
c. hospitals
d. airlines


104 __________ interdependence involves the need for every individual and department to
. work with every other individual and department; information and resources flow back
and forth freely until the goal is achieved.
a. Task
b. Reciprocal
c. Sequential
d. Pooled


105 Jenna Kendrick runs an advertising firm in Phoenix, Arizona. Information and resources
. flow back and forth until the service for each client is complete. This is best described
as a __________ interdependence organization design.
a. task
b. perpetual
c. reciprocal
d. sequential

ANSWER: C, Application, Moderate, p. 317

106 Which one of the following types of organizations is most characterized by reciprocal
. interdependence?
a. automobile manufacturing
b. hotels and Motels
c. hospital emergency rooms
d. fast-food restaurants

ANSWER: C, Application, Moderate, p. 317

45


Essay Questions


1. What are the two fundamentals of organizing? Describe them.

There are two fundamental concepts around which all organizations are organized:
differentiation and integration. Differentiation is the specialization and division of labor
that enable different competencies to be deployed for various tasks performed by
employees with unique abilities. Each work unit is given the opportunity to organize its
work differently to meet its objectives. Integration puts the units together so that work
can be coordinated. Rules and procedures are instituted, as well as the use of systems
and technology.

Easy, p. 300


2. Explain the five aspects of an organization’s vertical design.

There are five major parts to the vertical organizational design.
1) Hierarchy refers to the relationships among organizational levels. These can be
observed in the organizational chart.
2) Span of control is the number of employees directly reporting to a manager. Wider
spans create a flatter organization with fewer hierarchical levels.
3) Authority, responsibility, and accountability are the glue that holds the vertical and
horizontal parts of the organization together. They indicate who has the right to
make decisions, who will be held responsible for performance, and who is
accountable for results.
4) Delegation is the process of giving authority to a person (or group) to make
decisions. Delegation is directly related to responsibility and accountability.
5) Centralization and decentralization refer to the overall management philosophy
regarding the way that decisions are made and implemented. Authority can be
retained at the top of the organization or can be spread out to appropriate work
units.

Moderate, pp. 301–305

46


3. Describe some of the factors that affect management’s decisions to either centralize or
decentralize the authority for decision making.

a. Cost of decisions is the most important criteria. High costs relate to the retention of
authority at the top of the organization.
b. Uniformity of policy is the concern management has toward fairness and equality.
Uniform policies aid in administration and comparison of relative efficiencies.
c. Competency levels relate to the skills and performance of managers and employees.
These must be reasonably high in order to consider decentralization.
d. Control mechanisms may be required, particularly in large organizations, in order to
ensure that expectations are being met.
e. Environmental influences pertains to regulatory restrictions that may affect the
degree of autonomy that is appropriate for separate business units.

Difficult, p. 305


4. Describe the four types of horizontal design.

1) Functional design: grouping workers according to their areas of expertise and the
resources used in their work.
2) Product design: organizing around the functions that contribute to a product that
competes against competitors in its own market.
3) Geographical design: activities are organized around a physical location based on
customers, competitors, or resources of production.
4) Network design: relates to outsourcing organizational activities that are
subcontracted to other firms

Easy, pp. 306–313

5. What are the advantages and disadvantages of functional design?

a. Advantages

1) Supports skill specialization.
2) Reduces duplication of resources and increases coordination within the
functional area.
3) Enhances the career development and training within the department.
4) Allows superiors and subordinates to share common expertise.
5) Promotes high-quality technical problem solving.

b. Disadvantages

1) Inadequate communication between departments.
2) May create conflict over product priorities.
3) May make interunit coordination difficult.
4) Focuses on departmental rather than organizational issues and goals.
5) Develops managers who are experts in narrow fields.

Difficult, pp. 306–307

47


6. Describe how Starbucks uses its strategic action competency to develop its
organizational design.

With 6,000 locations worldwide and $3 billion in sales, Starbucks has successfully
established itself on three continents. Starbucks combines a functional design with a
geographical design. At the top is the functional group of executive vice presidents over
finance, supply chain, etc. but below the senior vice president for coffee is a geographic
structure. This consists of four regional presidents who are accountable for procedures
and profits for their geographic area. Below these regional presidents are district
managers who handle store operations.

Moderate, pp. 309–310

7. Discuss the benefits and dangers of a network design.

The network design makes it possible to link up with the skills of other organizations to
rapidly achieve ambitious goals. Skills that do not exist in the organizations can be
acquired for the purpose of a project, and then rapidly disassembled. This creates the
opportunity for speed, flexibility, creativity, and cost effectiveness.

The dangers relate to a lack of control and commitment that can occur through limited
coordination and overall management difficulty. Delays can result when goals are not
met. Lack of knowledge can be a disadvantage when relying on the specialized skills of
others. Urgency levels may not be as high at the outsourced organization. Also, lines
of accountability are not always clear.

Moderate, p. 312


8. Describe the two systems of integration.

The mechanistic system (also known as the bureaucratic system) breaks activities into
separate tasks and relies on standardized rules, with decision making centralized at the
top. This is appropriate for a relatively stable organizational environment. An organic
system encourages managers and subordinates to work together in teams and
communicate openly with each other. This type of decision making tends to be
decentralized and is well suited to a changing environment.

Easy, pp. 314–315

48


9. Explain two of the three types of technical interdependence. Give an organizational
example of each.

a. Pooled interdependence involves little sharing of information or resources among
individuals within a department or among departments. Each department in the
organization works on its own specialized tasks. Various departments within a bank
are a good example of pooled interdependence.
b. Sequential interdependence involves the orderly step-by-step flow of information,
tasks, and resources from one individual or team to another within the same unit or
from one unit to another. The output of one department becomes the inputs for
another department. A car assembly line is typical of sequential interdependence.
c. Reciprocal interdependence takes place when every individual in a work unit needs
to work with every other individual and unit. Information and resources flow back
and forth freely until the goal is achieved. A hospital would be a typical example of
reciprocal interdependence.

Difficult, pp. 316–317

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