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1.

The purpose of organizational structure is to provide managers with specific feedback on how well an organization
and its members are performing and building competitive advantage.
a. True

b. False

ANSWER:

False

POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

2. An important purpose of control systems is to motivate employees to work toward increasing efficiency, quality,
innovation, and responsiveness to customers.
a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

True
1

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge
3. A division is a way of grouping functions to allow an organization to better produce and dispose of its goods and
senriCes.
a. True

b. False

ANSWER:

True

POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

4. Span of control refers to the number of subordinates who report directly to one supervisor.
a. True

b. False

ANSWER:

True

POINTS:
DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

5. The reward system affects motivation, however, the type of organizational culture that develops in a company is
primarily affected by the founder's values and not the reward system.
a. True

b. False

ANSWER:

False

POINTS:
DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

6. Control through culture is ineffective because employees do not internalize values.


a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

False
1

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge

7. Organizational structure contributes to the strategy formulation by providing the framework of tasks and roles that
reduces transaction difficulties and allows employees to think and behave in ways that allow a company to achieve
superior performance.
a. True

b. False

ANSWER:
POINTS:

True
1

DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

8. Bradley is a new employee in the sales department at a local car dealership. In his first few months on the job, he
will be learning the norms and values of the organization. This refers to organizational socialization.
a. True

b. False

ANSWER:
POINTS:

True
1

DIFFICULTY:
Moderate
LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking
KEYWORDS:

Bloom's: Application

9. Effective organizational design can allow a company to obtain a competitive advantage but it has no impact on
profitability.
a. True

b. False

ANSWER:
POINTS:

False
1

DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.15.12.02- Discuss how effective organizational design enables a
company to increase product differentiation, reduce its cost structure, and build
competitive advantage
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

10. Control systems can help managers evaluate how efficiently they are producing goods and services.
a. True

b. False

ANSWER:

True

POINTS:
DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.02- Discuss how effective organizational design enables a


company to increase product differentiation, reduce its cost structure, and build
competitive advantage
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

11. Controls at each level should provide the basis on which managers at the levels below design their control systems.
a. True

b. False

ANSWER:

True

POINTS:
DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.02- Discuss how effective organizational design enables a


company to increase product differentiation, reduce its cost structure, and build
competitive advantage
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge
12. Information technology (IT) is playing an increasing role in strategy formulation. However, strategy implementation
is not affected by IT in general.
a. True

b. False

ANSWER:

False

POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.l5.12.02- Discuss how effective organizational design enables a
company to increase product differentiation, reduce its cost structure, and build
competitive advantage
NATIONAL STANDARDS: United States- BUSPROG: Technology
KEYWORDS:
Bloom's: Knowledge

13. Effective strategy implementation is very important for cost leaders, but it is of less importance to differentiators.
a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

False
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.02- Discuss how effective organizational design enables a


company to increase product differentiation, reduce its cost structure, and build
competitive advantage
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

14. For each function, a cost leader adopts output controls that allow it to monitor and evaluate functional performance
closely.
a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

True
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.02- Discuss how effective organizational design enables a


company to increase product differentiation, reduce its cost structure, and build
competitive advantage
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

15. Flat structures can lead to information distortion when data are being sent either up or down the hierarchy.
a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

False
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

16. When companies become too tall and the chain of command too long, strategic managers tend to lose control over
the hierarchy and, subsequently, their strategies.
a. True

b. False

ANSWER:

True

POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Communication
KEYWORDS:

Bloom's: Knowledge

17. Research finds that centralization of authority is never advantageous, not even in time of crisis.
a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

False
1

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

18. The need for integrating mechanisms is greater when a company's structure is more complex.
a. True

b. False

ANSWER:

True

POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Communication
KEYWORDS:

Bloom's: Knowledge

19. A product structure requires that support activities from a company's value chain be decentralized so that
independent specialists in support activities exist within each product group.
a. True

b. False

ANSWER:

False

POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

20. Silica Dustcloud Inc. is a decentralized organization. This means that the organization promotes flexibility and
reduces bureaucratic costs because lower-level managers are authorized to make on-the-spot decisions.
a. True

b. False

ANSWER:

True

POINTS:
DIFFICULTY:

Moderate

LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking
KEYWORDS:
Bloom's: Application
21. An organization with a centralized structure has a potential for creating higher bureaucratic costs.
a. True

b. False

ANSWER:

True

POINTS:
DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Analytic
KEYWORDS:
Bloom's: Comprehension

22. Flat organizational structures are less flexible and tend to resist change.
a. True

b. False

ANSWER:

False

POINTS:
DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

23. Silica Dustcloud Inc. plans to change its organization structure from a market structure to a functional structure and
create separate divisions. This change will better serve its different groups of customers.
a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

False
1

Moderate

LEARNING OBJECTIVES: SMIA.HILL.15.12.04- Explain the many advantages of a functional structure and why
and when it becomes necessary to utilize a more complex form of organizational
structure
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking
KEYWORDS:

Bloom's: Application

24. Building capabilities in organizational design that allow a company to develop a competitive advantage starts at the
functional level.
a. True

b. False

ANSWER:
POINTS:

True

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.04- Explain the many advantages of a functional structure and why
and when it becomes necessary to utilize a more complex form of organizational
structure
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge

25. In manufacturing, functional strategy usually centers on improving efficiency and quality.
a. True

b. False

ANSWER:
POINTS:

True

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.04- Explain the many advantages of a functional structure and why
and when it becomes necessary to utilize a more complex form of organizational
structure
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

26. Fortunately, whenever different functions work together, bureaucratic costs inevitably declines.
a. True

b. False

ANSWER:
POINTS:

False

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.04- Explain the many advantages of a functional structure and why
and when it becomes necessary to utilize a more complex form of organizational
structure
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Comprehension
27. Ambrosia Inc. is organized into Consumer, Medical, and Pharmaceutical units to serve the needs of its different
customer groups. Ambrosia is using a market structure.
a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

True
I

Moderate

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking
KEYWORDS:

Bloom's: Application

28. One of the main differences between a product team and a team in a matrix structure is that a matrix team is more
permanent than a team in a product structure.
a. True

b. False

ANSWER:
POINTS:

False

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

29. Restructuring always involves flattening the organizational hierarchy and downsizing the work force.
a. True

b. False

ANSWER:
POINTS:
DIFFICULTY:

True
1

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
30. The purpose of a(n)
company performs.
a. control system

Knowledge
is to provide managers with incentives for employees as well as feedback on how the

b. adaptive culture
c. organizational design
d. span of control
e. hierarchy of authority

ANSWER:
POINTS:
DIFFICULTY:

a
1

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge

31. Organizational structure can be defined as:


a. the means through which a company assigns employees to specific tasks and roles and specifies how these
tasks and roles are to be linked together to increase efficiency, quality, innovation, and responsiveness to
customers.
b. the blueprint that states how managers intend to use organizational resources to most efficiently achieve
organizational goals.
c. the specific collection of values, norms, beliefs, and attitudes that are shared by people and groups in an
organization and that control the way they interact with each other and with stakeholders outside the
organization..
d. the degree to which a company specifies how decisions are to be made so that employees' behavior becomes
predictable.
e. the process of redesigning business processes to achieve dramatic improvements in performance, such as
cost, quality, service, and speed.

ANSWER:
POINTS:
DIFFICULTY:

a
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

32. Organizational culture is:


a. the specific collection of values, norms, beliefs, and attitudes that are shared by people and groups in an
organization and that control the way they interact with each other and with stakeholders outside the
organization.
b. the means through which a company assigns employees to specific tasks and roles and specifies how these
tasks and roles are to be linked together to increase efficiency, quality, innovation, and responsiveness to
customers.
c. the process of deciding how a company should create, use, and combine organizational structure, control
systems, and culture to pursue a business model successfully.
d. the clear and unambiguous chain of command that defrnes each manager's relative authority from the CEO
down through top, middle, to first-line managers.
e. the principle that a company should design its hierarchy with the fewest levels of authority necessary to use
organizational resources effectively.

ANSWER:
POINTS:
DIFFICULTY:

a
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge

33. Standardization is a form of:


a. output control.
b. fmancial control.
c. organizational inertia.
d. organizational culture.
e. behavior control.

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

e
I

Easy
SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic


KEYWORDS:

Bloom's: Knowledge

34. Control through organizational culture is so powerful because:


a. it eliminates the need for managers in large companies.
b. it makes employees follow organizational values, after they've internalized them, without thinking about them.
c. it results in maximum decentralization and the elimination of bureaucracy.
d. it achieves increased performance through the alignment of organizational goals with external societal
expectations.
e. it achieves external control through motivated coworkers.

ANSWER:

b POINTS:
I

DIFFICULTY:
Challenging
LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Evaluation

35. Control through organizational culture:


a. is less expensive than output control.
b. reduces mutual adjustment.
c. involves employees internalizing the norms and values of the organization.
d. includes setting individual goals.
e. includes obtaining specific feedback to help managers evaluate performance.

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

c
I

Easy
SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic


KEYWORDS:

Bloom's: Knowledge

36. Which form of control would you most likely frnd in a voluntary or charity organization?
a. Bureaucratic control through rules and procedures
b. Control through norms and values
c. Financial control through accurate frnancial statements
d. Output control, since it is the cheapest
e. Incentive systems to motivate employees

ANSWER:

b POINTS:
I

DIFFICULTY:
Challenging
LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Evaluation

37. Companies that are innovative and able to deal with environmental change with new strategies and structures
probably have:
a. weak cultures.
b. strong functional cultures.
c. adaptive cultures.
d. prescriptive cultures.
e. cost-conscious culture.

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

c
I

Easy
SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic


KEYWORDS:

Bloom's: Knowledge

38. The process of deciding how a company should create, use, and combine organizational structure, control systems,
and culture to pursue a business model successfully is referred to as:
a. organizational behavior.
b. organizational norm.
c. organizational design.
d. organizational ecology.
e. organizational density.

ANSWER:
POINTS:
DIFFICULTY:

c
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

39. To a large degree, any organization's tasks are a function of its:


a. market area.
b. labor supply.
c. supervisors.

d. strategies.
e. compensation plan.

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

d
I

Easy
SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic


KEYWORDS:
Bloom's: Knowledge
40. The degree to which a company specifies how decisions are to be made so that employees' behavior becomes
predictable is referred to as:
a. uniformity of output.
b. conformity.
c. standardization.
d. maximization of effort.
e. behavioral control.

ANSWER:
POINTS:
DIFFICULTY:

c
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

41. In a successful company, the purpose of a control system is to:


a. provide managers with a set of incentives to motivate employees to work toward company goals.
b. allow the managers to use punishments as a tool to ensure that the employees meet the company targets.
c. collect values, norms, beliefs, and attitudes and share them with people and groups in an organization.
d. decide how a company should create, use, and combine organizational structure and culture.
e. assign employees to specific value creation tasks and roles and specify how these tasks and roles are to work
together.

ANSWER:
POINTS:
DIFFICULTY:

a
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge

42. In any organization, for-profit or not-for-profit, span of control refers to the:


a. number of managers at the highest levels in the organization.
b. CEO and his or her management team.
c. number of subordinates who report directly to one manager.
d. number of supervisors in a specific segment of a manufacturing activity.
e. number of members elected or appointed to be the board of directors.

ANSWER:

POINTS:
1
DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

43. The specific collection of values, norms, beliefs, and attitudes shared by people and groups in a company is
commonly referred to as:
a. organizational fit.
b. organizational culture.
c. organizational development.
d. organizational positioning.
e. organizational design.

ANSWER:

POINTS:
DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge
44. The term used to describe how people learn an organization's culture and way of behaving in the organization is:
a. organizational structure.
b. organizational development.
c. organizational design.
d. organizational behavior.
e. organizational socialization.

ANSWER:
POINTS:

e
1

DIFFICULTY:
Easy
LEARNING OBJECTIVES: SMIA.HILL.15.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

45. Organizations strive to control employees' behavior by linking


a. disciplinary

systems to their control systems.

b. disincentive
c. reporting
d. administrative
e. reward

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

e
I

Easy
SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic


KEYWORDS:
Bloom's: Knowledge
46. At LittleHippo, an online retail company, the work environment is playful. Employees often get their pictures taken
wearing silly wigs and masks. This atmosphere is part of the company's:
a. organizational density.
b. organizational structure.
c. organizational culture.
d. strategic control systems.
e. competitive envirornnent.

ANSWER:
POINTS:
DIFFICULTY:

c
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to


select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking
KEYWORDS:
Bloom's: Comprehension
47. Natalie and Shay are both employees at Silica Dustcloud Inc. Natalie, the marketing manager, often meets with
Shay, the production manager, in order to solve specific mutual problems. Which of the following is this an example
of?
a. Organizational culture
b. Liaison roles
c. Direct contact
d. Diverging mechanisms
e. Strategic control

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

c
I

Moderate
SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking


KEYWORDS:

Bloom's: Application

48. At Silica Dustcloud Inc., rules are published at the cubicle of all employees stating what is expected of them
regarding time to arrive, time for lunch, when to take breaks, and when to socialize. Which of the following is this an
example of?
a. Output control
b. Personal control
c. Behavior control
d. Conversion activities
e. Strategic competencies

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

c
I

Moderate
SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking


KEYWORDS:

Bloom's: Application

49. An effective organizational design:


a. always follows a centralized structure.
b. keeps the number of employees to a minimum.
c. increases the cost structure.
d. economizes on bureaucratic costs.

e. maintains a tall hierarchical structure.

ANSWER:
POINTS:
DIFFICULTY:

d
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.02- Discuss how effective organizational design enables a


company to increase product differentiation, reduce its cost structure, and build
competitive advantage
NATIONAL STANDARDS: United States- BUSPROG: Technology
KEYWORDS:
Bloom's: Comprehension

50. To reduce costs, cost leaders prefer to use


a. output controls

to closely monitor and evaluate functional performance.

b. personal controls
c. behavioral controls
d. cultural controls
e. input controls

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

a
I

Easy
SMIA.HILL.l5.12.02- Discuss how effective organizational design enables a
company to increase product differentiation, reduce its cost structure, and build
competitive advantage

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic


KEYWORDS:

Bloom's: Knowledge

51. Which of the following strategic control systems do managers use to shape and influence the behavior of employees
in face-to-face interactions?
a. Personal control
b. Output control
c. Behavior control
d. Input control
e. Process control

ANSWER:
POINTS:
DIFFICULTY:

a
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.02- Discuss how effective organizational design enables a


company to increase product differentiation, reduce its cost structure, and build
competitive advantage
NATIONAL STANDARDS: United States- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge

52. Flat organizational structures are characterized by:


a. many levels of management compared to the size of the company.
b. slower repose to changes in the competitive environment.
c. a relatively wide span of control.
d. reduced flexibility in decision-making strategies.
e. an increase in bureaucratic costs.

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

c
I

Easy
SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority

NATIONAL STANDARDS: United States- BUSPROG: Analytic


KEYWORDS:
Bloom's: Knowledge
53. When decision-making responsibilities are decentralized, benefits include all of the following except:
a. increased motivation and accountability.
b. lower bureaucratic costs from flattened hierarchy.
c. reduced information overload.
d. easier coordination of functions.
e. flexibility in decision-making.

ANSWER:
POINTS:
DIFFICULTY:

d
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Comprehension

54. Companies choose the number of hierarchical levels they need on the basis of their strategies and the functional
tasks necessary to:
a. achieve diseconomies of scale.
b. create distinctive competencies.
c. enhance employee productivity.
d. enhance cross-departmental coordination.
e. attract skilled employees

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

b
I

Easy
SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic


KEYWORDS:

Bloom's: Knowledge

55. Essentially, centralization or decentralization are concepts that refer to the:


a. levels where decisions are made in the hierarchy of an organization.
b. number of hierarchical levels existing in an organization.
c. tools that allow an organization to monitor and evaluate if its strategies and structure are working as intended.
d. business models oriented at expanding nationally and managing a wide range of products.
e. strategies implemented by an organization to create, market and distribute its products.

ANSWER:
POINTS:
DIFFICULTY:

a
I

Moderate

LEARNING OBJECTIVES: SMIA.HILL.l5.12.03 -Explain why it is so important that managers keep the
organizational hierarchy as flat as possible and what factors determine the way they
decide to centralize or decentralize authority
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

56. A drawback of the functional structure is:


a. that each worker must report to more than one superior.
b. the difficulty in communicating and coordinating across functions.
c. too much decentralization of decision-making authority.
d. its lack of flexibility in decision-making.
e. the need to downsize before implementing this structure.

ANSWER:
POINTS:

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.04- Explain the many advantages of a functional structure and why
and when it becomes necessary to utilize a more complex form of organizational
structure
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

57. If a firm fmds that its functional structure is becoming too complex as the firm grows in size, the firm can tum to:
a. a simple structure.
b. downsizing.
c. reengmeerrng.
d. restructuring.
e. outsourcing.

ANSWER:
POINTS:

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.04- Explain the many advantages of a functional structure and why
and when it becomes necessary to utilize a more complex form of organizational
structure
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

58. Which of the following advantages does a functional organizational structure offer a company?
a. Diversification of activities leading to greater productivity
b. Lesser communication problems
c. Reduction in manufacturing costs and increase in operational flexibility
d. Ease in gauging the contribution of products to overall profitability
e. Faster servicing of customers

ANSWER:
POINTS:
DIFFICULTY:

c
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.04- Explain the many advantages of a functional structure and why
and when it becomes necessary to utilize a more complex form of organizational
structure
NATIONAL STANDARDS: United States- BUSPROG: Analytic
KEYWORDS:
Bloom's: Knowledge

59. Eva Studio, an audio company, manufactures a wide range of sound systems such as noise-canceling headsets,
loudspeakers, and amplifiers. Employees in EvaStudio are grouped such that each group works only on one type of
sound system. Which of the following structures is EvaStudio is most likely to have employed?

a. Matrix
b. Multidivisional
c. Geographic
d. Functional
e. Product

ANSWER:
POINTS:

DIFFICULTY:

Challenging

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking


KEYWORDS:

Bloom's: Evaluation

60. Which of the following structures requires centralization of value chain support activities?
a. The product structure
b. The product team structure
c. The matrix structure
d. The functional structure
e. The innovative structure

ANSWER:
POINTS:

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies

NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic


KEYWORDS:

Bloom's: Comprehension

61. Which of the following is not one of the advantages of a geographic structure?
a. Promotion of innovation and product development due to intensive cross-functional integration
b. Responsiveness to the needs of regional customers
c. Lower transportation costs
d. More coordination and control than a functional structure
e. Centralization of key activities and functions that allow leveraging skills across regions

ANSWER:
POINTS:

DIFFICULTY:

Moderate

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

62. All employees part of a project team within a


a. functional

structure are known as two-boss employees.

b. geographic
c. market
d. matrix
e. product

ANSWER:
POINTS:

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

63. Matrix structures:


a. have many hierarchical levels.
b. are appropriate for companies with many low-skilled workers.
c. group activities vertically by function and horizontally by product or project.
d. are appropriate for a firm pursuing a low-cost strategy.
e. have several product group hierarchies and two forms of horizontal differentiation.

ANSWER:
POINTS:
DIFFICULTY:

c
I

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

64. A matrix structure would be the most appropriate for which of the following fmus?
a. A company in which each employee is required to have only one boss
b. A company operating in the maturity stage of the industry life cycle
c. A company which is dependent on rapid mobilization of resources for competitive success
d. A company with a high level of vertical differentiation
e. A company in which the speed of product development is not crucial

ANSWER:
POINTS:

DIFFICULTY:

Challenging

LEARNING OBJECTIVES: SMIA.HILL.15.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking
KEYWORDS:
Bloom's: Synthesis
65. Which of the following does restructuring involve?
a. Eliminating business units
b. Rethinking business processes
c. Creating more business units
d. Flattening the organizational hierarchy
e. Broadening the span of control

ANSWER:
POINTS:

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:
Bloom's: Comprehension
66. Which of the following actions would you expect to see in a company that is undergoing a reengineering?
a. Hiring more managers
b. Hiring more workers
c. Examining activities from a customer's point of view
d. Investing more in product research and development (R&D)
e. Centralizing decision-making authority

ANSWER:
POINTS:
DIFFICULTY:

c
1

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Comprehension

67. Restructuring is:


a. a rethinking and radical redesign of a firm's business processes.
b. a radical readjustment of the organization's staffrng and hierarchy.
c. a philosophy that states that mistakes, defects, and poor-quality materials are not acceptable and should be
eliminated.
d. the shift that firms make from a functional to a more complex structure as the finn grows in complexity and
SIZe.

e. employed when a finn needs help in improving its functional strategies.

ANSWER:
POINTS:

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

68. A hospital examines its processes closely and then changes them radically to become more patient-centered. Among
the changes are new ways of doing tasks and new groupings of workers. This is an example of:
a. restructuring.
b. reengineering.
c. total quality management.
d. benchmarking.
e. downsizing.

ANSWER:
POINTS:
DIFFICULTY:

b
I

Moderate

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thinking
KEYWORDS:
Bloom's: Application

69. The organization structure that organizations most commonly adopt to solve control problems that result from
producing many different kinds of products for many different market segments is the:
a. functional structure.
b. process structure.
c. matrix structure.
d. product structure.
e. differentiated structure.

ANSWER:
POINTS:

DIFFICULTY:

Easy

LEARNING OBJECTIVES: SMIA.HILL.15.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Knowledge

70. A typical matrix organizational structure:


a. groups employees in two ways simultaneously to maximize the rate at which different kinds of products can
be developed.
b. breaks up a company's growing product line into a number of smaller, more manageable subunits.
c. groups people on the basis of their common expertise and experience or because they use the same
resources.
d. is a way of grouping employees into separate customer groups so that each group can focus on satisfying the
needs of a particular customer group.
e. is a way of grouping employees to best satisfy the needs of customers within different regions.

ANSWER:
POINTS:

DIFFICULTY:

Moderate

LEARNING OBJECTIVES: SMIA.HILL.15.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Analytic
KEYWORDS:
Bloom's: Comprehension

71. When a company engages in restructuring, it may be necessary to:


a. increase its basic business operations.
b. increase the number of organizational levels.
c. lay off employees.
d. add to the operating costs.
e. retain the functional processes.

ANSWER:
POINTS:
DIFFICULTY:
LEARNING OBJECTIVES:

c
I

Easy
SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of
organizational structures managers adopt to implement specific kinds of business-level
strategies

NATIONAL STANDARDS: United States- BUSPROG: Analytic


KEYWORDS:

Bloom's: Knowledge

72. Identify and discuss the three building blocks of organizational structure.

ANSWER:

Organizational structure assigns employees to specific value creation tasks and roles
and specifies how these tasks and roles are to be linked together in a way that
increases efficiency, quality, innovation, and responsiveness to customers D distinctive
competencies that build competitive advantage.
The first building block of structure is grouping tasks, functions, and divisions. As
companies grow, they may need to revisit structure so that these groupings are done to
help create distinctive competencies.
The second building block is allocating authority and responsibility. As companies
address authority and responsibility, the day-to-day structure takes shape. Decisions
must address the hierarchy of authority, span of control, tall or flat structure, chain of
command, and degree of centralization or decentralization.
The fmal building block of structure is integration and integrating mechanisms. The
greater the complexity of an organization's structure, the greater is the need for
coordination among the people, functions, and divisions to make the organizational
structure work efficiently. Tools of integration include direct contact, liaison roles, and
teams.

POINTS:

DIFFICULTY:
Challenging
LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational design requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Analysis

73. Describe the roles that organizational structure, strategic control systems, and organizational culture play in strategy
implementation.

ANSWER:

Structure helps organizations implement their strategies because structure determines


the processes by which information is communicated within the organization and by
which decisions are made. Structure also has important implications for organizational
flexibility and learning, and an important effect on the organization's ability to achieve
low costs or differentiation. Finally, structure is the primary mechanism for integration,
which is crucial for strategy implementation, particularly in larger organizations.
Strategic control systems enable organizations to monitor achievement of strategic
goals, to evaluate performance, and to take corrective actions if needed. In addition,
strategic control systems can focus on the future, working to ensure that the firm is
well positioned to achieve its future strategic goals as well as today's goals.
Organizational culture is another very strong determinant of the behavior of employees
and thus helps to determine the organization's performance. Culture provides guidelines
for behaviors that are internalized and thus can be very powerful motivators.

POINTS:

DIFFICULTY:
Challenging
LEARNING OBJECTIVES: SMIA.HILL.l5.12.01- Understand how organizational desigu requires managers to
select the right combination of organizational structure, control, and culture
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Synthesis

74. Consider the case of a family-run business that operates one small local retail shop and its subsequent expansion into
more locations and more stores. Describe the changes that are likely to take place in that business's organizational
structure as it grows in size, geographic dispersion, and complexity. Tell why the changes are beneficial for the
business.

ANSWER:

The store probably followed this common pattern. It began with a simple structure
because the owner-manager could do all the work or with the help of just a few
employees. Each employee could be supervised directly by the owner, and the store's
performance could be monitored directly by the owner. However, as the business grew
and a second store was added, it was no longer possible for the owner to do it all.
More employees were hired, including another supervisor. Supervision and monitoring
became more difficult, too. As the number of stores continued to grow, they also
became more geographically widespread. Both the size and the dispersion of stores
created a need for many new employees and supervisors. Also, the increased size and
complexity necessitated specialization to be most efficient. Therefore, some employees
began to specialize in tasks such as payroll, training, store desigu, purchasing,
marketing, and so on. A functional structure was adopted to help the firm better cope
with these changes.

POINTS:
DIFFICULTY:

Challenging

LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of


organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Evaluation

75. Describe what is meant by the terms restructuring and reengineering, and discuss when and why they would be
used.

ANSWER:

While both can lead to improved performance, there are important differences between
these two approaches.
Restructuring refers to the process of downsizing and is usually performed in two
steps: (I) streamlining the management hierarchy by reducing the number of levels, and
(2) downsizing the work force. Restructuring is often painful but it may be necessary
for any number of reasons, including a change in the business envirornnent, conditions
that result in excess capacity, inefficient cost structures that must be addressed, or a
failure to monitor and control operations over time so that a drastic move (as opposed
to incremental adjustments) must be made. Restructuring is often viewed as a broad
stroke to wipe the slate clean and start anew.
Reengineering is an attempt to address poor performance by fundamentally rethinking
how a company does things. Rather than focus on functions, companies that engage in
reengineering do so by focusing on different processes and fmding ways to perform
these processes more efficiently. In many cases, when companies focus on processes
and make them better, the output improves as well. Reengineering often results in
companies reorganizing their value delivery systems. The concept is closely aligned
with total quality management (TQM).

POINTS:

DIFFICULTY:
Challenging
LEARNING OBJECTIVES: SMIA.HILL.l5.12.05 -Differentiate between the more complex forms of
organizational structures managers adopt to implement specific kinds of business-level
strategies
NATIONAL STANDARDS: United States- BUSPROG: Reflective Thin- BUSPROG: Analytic
KEYWORDS:

Bloom's: Synthesis