Chapter 5 – Basic Organization Designs
Chapter Five: Basic Organization Designs
True/False
1. Line authority is a person’s capacity to influence decisions.
(True; Easy; p. 163)
2. Line authority gives a manager the right to supervise the work of other employees.
(True; Easy; p. 163)
3. As an organization becomes flatter the span of control becomes smaller.
(False; Easy; p. 163)
4. The principle of specialization maintains that no person in an organization should report to or be supervised by anyone else other than one’s boss.
(False; Moderate; p. 161)
5. Departmentalization by product is defined as the grouping of activities by the functions performed in an organization.
(False; Moderate; p. 169)
6. In more centralized organizations employees at all levels of the organization are involved in the decision-making process.
(False; Moderate; p. 169)
7. Legitimate power is not based on a manager’s expertise, technical skills or functional knowledge.
(True; Moderate; p. 168; Ex. 5-5)
8. Authority is one of the five types of power described by French and Raven.
(False; Easy; p. 168; Ex. 5-5)
9. An organic organization is one that is highly structured, has many layers and levels of management and a narrow span of control.
(False; Moderate; p. 172)
10. A mechanistic organization tends to be formal, highly specialized and have centralized decision-making.
(True; Easy; p. 172)
11. A matrix organizational structure fits best with an organization that uses a focused differentiation strategy.
(False; Challenging; pp. 171-172)
12. An organizational structure made up of self-contained and self-managed operating units is called a matrix organization.
(False; Challenging; pp. 177-178)
13. A team-based, cross-functional organization combines the advantages of focusing on functional specialization with direct, clear accountability and lines of authority.
(False; Moderate; p. 178)
14. A major disadvantage of the matrix organizational structure is duplication of staff, cost and resources.
(False; Moderate; p. 177)
15. Role conflicts are likely to result from the way that reporting relationships are organized in a matrix structure.
(True; Moderate; p. 177)
16. A marketing organization that is structured by customer would break down its territory into northern, southern, eastern and western regions.
(False; Moderate; p. 170)
17. Managers in an organization with a weak organizational culture require fewer formal rules, regulations and policies.
(False; Moderate; p. 182)
18. Departmentalization is a process in which jobs and positions are grouped by specialization into departments, linking them together within the larger organizational structure.
(False; Easy; p. 169)
19. A product-based organizational structure groups together jobs, activities and functions that serve the same customers.
(False; Moderate; p. 170)
20. A customer-based organizational structure focuses all jobs, activities and functions around a single product or service produced by the company.”
(False; Easy; p. 170)
21. Because they report to more than one supervisor, employees in a matrix organization can experience role confusion and power struggles.
(True; Moderate; p. 178)
22. An organization with a narrower span of control will have fewer managers and more direct reports per manager than an organization with a wider span of control.
(False; Moderate; p. 163)
23. In centralized organizations, decision-making is delegated down and across all levels of management.
(False; Challenging; p. 163)
24. Decentralized organizations concentrate most of the authority and responsibility for making decisions at the top levels of management.
(False; Easy; p. 168)
25. Operational efficiencies can be achieved by reducing the number of layers and levels of management and increasing the span of control.
(True; Moderate; p. 168)
26. Organization design decisions are typically made by mid-level managers.
(False; Moderate; p. 160)
27. There is a point at which the diseconomies from division of labor exceed the economic advantage.
(True; Moderate; p. 1461)
28. Many organizations are increasing their span of control.
(True; Moderate; p. 163)
29. The span of control today is increasingly being determined by analyzing contingency variables.
(True; Challenging; p. 163)
30. Responsibility refers to the rights inherent in a managerial position to give orders and expect the orders to be obeyed.
(False; Moderate; p. 163)
31. Authority is related to one's position and has nothing to do with the individual.
(True; Moderate; p. 163)
32. No one should be held responsible for something over which he or she has no authority.
(True; Easy; p. 163)
33. In differentiating line managers from staff managers, staff emphasizes managers whose organizational function contributes directly to the achievement of organizational objectives.
(False; Moderate; p. 164)
34. Researchers and practitioners of management today agree with the historical perspective that you need to be a manager to have power and that power is correlated with one’s level in the firm.
(False; Moderate; p. 165-166)
35. The terms authority and power are frequently confused. Authority is a right based on the legitimacy of the person’s position in the organization. Power is the person’s capacity to influence decisions.
(True; Moderate; p. 166)
36. Power is defined by one's vertical position and one's distance from the organization's center.
(True; Moderate; p. 166)
37. Legitimate power is based on the ability to distribute something that others value.
(False; Challenging; p. 168; Ex. 5-5)
38. Grouping activities by the following categories would be an example of functional departmentalization: men's clothing, women's clothing, tools, home decorations, and shoes.
(False; Moderate; p. 169)
39. The particular type of customer the organization seeks to reach can also dictate employee grouping. The typical types of departmentalizations are customer, geographic, and divisional.
(False; Challenging; pp. 169-170)
40. An organic structure has many rules with rigid hierarchical relationships and a tall structure.
(False; Moderate; p. 172; Ex. 5-7)
41. Rather than having standardized jobs and regulations, the organic organization's loose structure allows it to change rapidly as needs require.
(True; Challenging; p. 172)
42. Organization structure should always precede organization strategy.
(False; Moderate; p. 173)
43. If a company chooses to compete based upon cost-leadership strategies, then the organic structure will be the most effective.
(False; Challenging; p. 173)
44. An organization with employees over 2,000 in number will typically have a very organic organizational structure.
(False; Moderate; p. 173)
45. Joan Woodward found that organizational effectiveness was related to the "fit" between technology and structure.
(True; Moderate; p. 174)
46. Environment is a major influence on structure.
(True; Easy; p. 174)
47. The simple structure is most widely used in small businesses where the owner and manager are the same person.
(True; Moderate; p. 175)
48. The strength of the functional structure lies in the advantages that accrue from work specialization.
(True; Moderate; p. 177)
49. The chief advantage of the divisional structure is that it focuses on results.
(True; Moderate; p. 177)
50. The unique characteristic of the matrix structure is that employees have only one boss.
(False; Moderate; p. 177)
51. The boundaryless organization has an increased interdependence with its environment.
(True; Moderate; pp. 178-179)
52. Boundaryless organizations are merely flatter organizations.
(False; Easy; p. 179)
53. Jeff Raleigh owns New World Enterprises. His organization is considered a learning organization because the leaders and employees have developed the capacity to continuously adapt and change; all members take an active role in identifying and resolving work-related issues.
(True; Challenging; pp. 179-181)
54. Information, leadership, and organizational culture are all important in shaping a learning organization.
(True; Moderate; p. 179)
55. Values refer to a system of shared meaning within an organization.
(False; Easy; p. 181)
56. An organization's culture can actually substitute for the rules and regulations that formally guide employees.
(True; Moderate; p. 182)
Multiple Choice Questions
57. ________ is the formal right to give orders, make decisions, and see that tasks are completed.
a. Centralization
b. Authority
c. Responsibility
d. Decentralization
(b; Easy; p. 163)
58. A construction supervisor site who sees an impending thunderstorm, tells workers to go home, and secures the site is demonstrating
a. authority.
b. delegation.
c. accountability.
d. responsibility
(a; Moderate; p. 163)
59. The process of assigning authority and responsibility to one’s subordinates to manage a project is called
a. centralization.
b. supervision.
c. delegation.
d. specialization.
(c; Moderate; p. 163)
60. A _____ span of control is associated with many levels of management, which gives rise to a _____ organizational structure.
a. wide; tall
b. wide; flat
c. narrow; tall
d. narrow; flat
(c; Moderate; p. 163)
61. Narrow spans of control lead to a _____ organizational structure, whereas wider spans of control lead to a _____ organizational structure.
a. flat; tall
b. homogenous; diverse
c. short; tall
d. tall; short
(d; Challenging; p. 163)
62. ________ refers to the concentration of decision authority at the top levels of the organizational hierarchy.
a. Departmentalization
b. Centralization
c. Formalization
d. Decentralization
(b; Moderate; p. 168)
63. _________ involves the delegation of decision-making and authority to lower levels in the organization.
a. Decentralization
b. Departmentalization
c. Specialization
d. Centralization
(a; Easy; p. 168)
64. _____ facilitates effective coordination of the various organizational parts or functions in a consistent manner, while _____ provides greater flexibility to respond to change.
a. Centralization; decentralization
b. Decentralization; centralization
c. Specialization, centralization
d. Specialization, decentralization
(a; Moderate; p. 168)
65. Three basic approaches to departmentalization are by:
a. formalization, decentralization, and centralization
b. function, division, and matrix
c. geography, customer, and product
d. authority, accountability, and responsibility
(c; Moderate; p. 170)
66. __________ is the form of departmentalization that groups similar jobs and activities into departments.
a. A product structure
b. A divisional structure
c. A matrix structure
d. A functional structure
(d; Moderate; p. 176)
67. A telecommunications company that organizes into a wireless division, a home-use division, a long-lines division, and a corporate services division is using which approach to departmentalization?
a. A divisional structure
b. A functional structure
c. A geographical structure
d. A matrix structure
(a; Easy; p. 176)
68. When a divisional structure is superimposed over a functional structure, the type of structure that results is called a _________organization.
a. functional
b. divisional
c. matrix
d. product
(c; Challenging; p. 177)
69. ________ is a type of departmentation that could be called a "two-boss" system, because each worker responds to directives from two supervisors from different units or departments.
a. Functional organization
b. Divisional organization
c. Matrix organization
d. Cross-functional organization
(c; Easy; p. 178)
70. ______ is a characteristic of the matrix organizational structure.
a. A high degree of centralization
b. A dual-reporting relationship
c. A lack of flexibility
d. A lack of functional specialization
(b; Moderate; p. 178)
71. _________ is not an advantage of the matrix structure.
a. Efficient use of scarce resources
b. Reduced conflict about roles and responsibilities
c. Development of cross-functional skills by employees
d. Increased employee involvement
(b; Challenging; p. 178)
72. ____________ is a potential disadvantage of the matrix structure.
a. Inefficient use of scarce resources
b. Lack of flexibility
c. Conflict between product and functional managers
d. Development of cross-functional skills by employees
(c; Moderate; p. 178)
73. A __________ groups together people who have similar skills and who perform similar tasks.
a. divisional structure
b. functional structure
c. matrix structure
d. integrated structure
(b; Easy; p. 176)
74. Which of the following statements accurately describes the functional organizational structure?
a. Members of functional departments share common technical expertise, interests, and responsibilities.
b. Members of each function work within their areas of specialization or expertise.
c. When each function does its jobs properly, the business operates effectively.
d. All of the above.
(d; Moderate; p. 176)
75. A(n) _________ groups together people who work on the same product or processes, serve similar customers, and/or work in the same area or geographic region.
a. divisional structure.
b. informal structure.
c. matrix structure.
d. functional structure.
(d; Moderate; p. 169)
76. A(n) __________ structure involves creating work units based on product, process, customer, or geographic territory.
a. functional
b. divisional
c. organic
d. mechanistic
(d; Moderate; p. 169)
77. __________ structures group together jobs and activities that are performed in the same region or location.
a. Product
b. Market
c. Geographic
d. Customer
(c; Easy; p. 170)
78. ________ contribute directly to the strategic goals of the organization.
a. Line managers
b. Operational managers
c. Staff managers
d. Frontline supervisors
(a; Easy; p. 164)
79. In a consulting firm, the consultants have _____ authority since their work directly contributes to the bottom line, whereas consultants in a manufacturing firm have _____ authority because they are used in an advisory capacity.
a. planning; line
b. organizing; staff
c. line; staff
d. controlling; line
(c; Moderate; p. 164)
80. __________ is the type of authority held by an information systems manager who primarily renders technical advise to the corporation.
a. Line authority
b. Staff authority
c. Corporate responsibility
d. Management accountability
(b; Easy; p. 164)
81. _________ would NOT be considered a source of position or legitimate power for a manager.
a. The ability to give special monetary rewards to deserving subordinates
b. Possession of a charismatic personality
c. The ability to recommend disciplinary action for subordinates
d. Being a high-ranking executive in the company
(b; Moderate; p. 168; Ex. 5-5)
82. __________ is the ability to influence the behavior of other people because of one's capacity to offer rewards, or other desirable outcomes.
a. Legitimate power
b. Expert power
c. Coercive power
d. Reward power
(d; Easy p. 168; Ex. 5-5)
83. What type of power does a manager exercise when he or she offers pay raises, bonuses, special assignments, or incentives to subordinates?
a. Legitimate power
b. Reward power
c. Coercive power
d. Expert power
(b; Easy; p. 168; Ex. 5-5)
84. Which of the following is NOT likely to result from increasing the number of levels and layers of management in an organization?
a. Overhead costs increase.
b. Decision making can be slowed greatly.
c. Direct contact with the client or customer may be lost.
d. The organization gains additional competitive advantage.
(d; Moderate; p. 163)
85. The number of persons reporting directly to a single manager is an organizational issue relating to __________.