Which of the following is not a primary factor that a large firm with international operations should consider when choosing the appropriate structure for its organization?

43.

In large organizations, a strategy of diversification requires a need to reorganize around ______________ or _____________.    A.  product lines; geographic markets B.  product lines; competition C.  competitor lines; geographic markets D.  distribution lines; competitor markets A strategy of related diversification requires a need to reorganize around product lines or geographic markets. This leads to a divisional structure.

AACSB: Analytic Blooms: Understand Learning Objective: 10-01 The growth patterns of major corporations and the relationship between a firm's strategy and its structure. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

44.

Which of the following is not a primary factor that a large firm with international operations should consider when choosing the appropriate structure for its organization?    A.  the extent of international expansion B.  the type of strategy (global, multidomestic, or transnational) C.  the degree of product diversity D.  the degree of market diversity Deciding upon the most appropriate structure when a firm has international operations depends on three primary factors: the extent of international expansion, the type of strategy (global, multidomestic, or transnational), and the degree of product diversity.

AACSB: Analytic Blooms: Understand Learning Objective: 10-01 The growth patterns of major corporations and the relationship between a firm's strategy and its structure. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

45.

When an organization with a simple structure increases its sales revenue and volume of outputs, it is most likely to develop a ______________ structure.    A.  divisional B.  functional C.  product-market D.  geographic A new firm with a simple structure typically increases its sales revenue and volume of outputs over time. It may also engage in some vertical integration to secure sources of supply (backward integration) as well as channels of distribution (forward integration). The simple-structure firm then implements a functional structure to concentrate efforts on both increasing efficiency and enhancing its operations and products.

AACSB: Analytic Blooms: Understand Learning Objective: 10-01 The growth patterns of major corporations and the relationship between a firm's strategy and its structure. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

46.

When an organization with a functional structure diversifies into related product-markets, it generally _____________.    A.  maintains its functional structure B.  develops a divisional structure C.  develops a matrix structure D.  develops a worldwide product-division structure A firm with a functional structure may see its initial markets mature, so it looks beyond its present products and markets for possible expansion. A strategy of related diversification requires a need to reorganize around product lines or geographic markets. This leads to a divisional structure.

AACSB: Analytic Blooms: Understand Learning Objective: 10-01 The growth patterns of major corporations and the relationship between a firm's strategy and its structure. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

47.

A strategy of related diversification requires most firms to organize around geographical areas or product lines. This type of organizational growth leads to ______________ structure.    A.  a divisional B.  a functional C.  a matrix D.  an international A strategy of related diversification requires a need to reorganize around product lines or geographic markets. This leads to a divisional structure.

AACSB: Analytic Blooms: Understand Learning Objective: 10-01 The growth patterns of major corporations and the relationship between a firm's strategy and its structure. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

48.

Which of the following statements about simple organizational structures is not true?    A.  Small firms with a narrow product-market scope will adopt such a structure. B.  Decision making authority is highly centralized. C.  There is little specialization of tasks. D.  Creativity and individualism are rare. The simple organizational structure is the oldest, and most common, organizational form. Most organizations are very small and have a single or very narrow product line in which the owner-manager (or top executive) makes most of the decisions. Decision making is highly centralized. There is little specialization of tasks. There are few rules and regulations. There exists an informal evaluation and reward system. A simple structure may foster creativity and individualism, since there are generally few rules and regulations.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

49.

A simple structure is characterized by _____________.    A.  high specialization and low centralization B.  low specialization and high centralization C.  low formality and low creativity D.  high formality and low centralization The simple organizational structure is the oldest, and most common, organizational form. Most organizations are very small and have a single or very narrow product line in which the owner-manager makes most of the decisions. Decision making is highly centralized and there is little specialization of tasks.

AACSB: Analytic Blooms: Remember Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 1 Easy Topic: Traditional Forms of Organizational Structure

50.

Functional structures are usually found in organizations where _____________.    A.  there is high volume production B.  there are unrelated product lines or service offerings C.  there is very little vertical integration D.  there exists a strong need to decentralize decision making Functional structures are generally found in organizations in which there is a single or closely related product or service, high production volume, and some vertical integration.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

51.

Which of the following is an advantage of a functional type of organizational structure?    A.  Decentralized decision-making enhances an organization-wide perspective across functions. B.  It facilitates the development of general management talent. C.  Pooling of specialists enhances coordination and control. D.  It is easy to establish uniform performance standards. By bringing together specialists into functional departments, a firm is able to enhance its coordination and control within each of the functional areas.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

52.

Which of the following is a disadvantage of a functional type of organizational structure?    A.  Differences in functional orientation may impede communication and coordination. B.  Use of managerial and technical talent is inefficient due to pooling of expertise in functional areas. C.  Decision making is centralized at the top of the organization. D.  Managers tend to be overly concerned with long-term strategies that minimize the importance of functional area strengths. The differences in values and orientations among functional areas may impede communication and coordination. Departments may come to view themselves as isolated, self-contained units with little need for interaction and coordination with other departments.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

53.

Which of the following is an advantage of a divisional type of organizational structure?    A.  efficient use of managerial and technical talent B.  an enhanced ability to respond quickly to changes in the external environment C.  high degree of emphasis on long-term performance D.  uniformity in image and quality across divisions The focus on products and markets by the divisional executives provides the corporation with an enhanced ability to respond quickly to important changes. Since there are functional departments within each division of the corporation, the problems associated with sharing resources across functional departments are minimized.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

54.

Which of the following is not a disadvantage of a divisional type of organizational structure?    A.  It can be very expensive compared to a functional organizational structure. B.  There is a strong tendency for divisions to focus on short-term performance. C.  There can be dysfunctional competition among divisions. D.  There is separation of strategic and operating control. A divisional structure can be very expensive; there can be increased costs due to the duplication of personnel, operations, and investment since each division must staff multiple functional departments. There also can be dysfunctional competition among divisions since each division tends to become concerned solely about its own operations. Since each division is evaluated in terms of financial measures such as return on investment and revenue growth, there is often an urge to focus on short-term performance.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

55.

An organization such as ConAgra that has dozens of different divisions with similar products will probably have the greatest success with which form of organization structure?    A.  functional structure B.  matrix structure C.  strategic business unit structure D.  holding company structure Highly diversified corporations such as ConAgra, a 13 billion dollar food producer, may consist of dozens of different divisions. If ConAgra were to use a purely divisional structure, it would be nearly impossible for the corporate office to plan and coordinate activities, because the span of control would be too large. To attain synergies, ConAgra has put its diverse businesses into three primary SBUs: food service (restaurants), retail (grocery stores), and agricultural products.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

56.

Which of the following is not an advantage of a strategic business unit (SBU) type of organizational structure?    A.  Divisions with similar products, markets, or technologies are formed into homogeneous groups that can achieve synergies. B.  Divisional executives can respond quickly to market changes and opportunities. C.  Planning and control by the corporate office is more manageable. D.  The corporate office is more removed from the individual divisions. With an SBU structure, divisions with similar products, markets, and/or technologies are grouped into homogeneous units to achieve synergies. It makes planning and control by the corporate office more manageable. With greater decentralization of authority, individual businesses can react more quickly to important changes in the environment than if all divisions had to report directly to the corporate office.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

57.

Important advantages of a holding company structure include _____________.    A.  savings in personnel and overhead expenses associated with a small corporate office B.  a high level of awareness at the corporate office of issues facing individual divisions C.  a high level of control of division executives by executives at the corporate level D.  gaining synergistic benefits across businesses The holding company structure has the cost savings associated with fewer personnel and the lower overhead resulting from a small corporate office and fewer hierarchical levels.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

58.

Strategic business unit (SBU) and holding company structures result from extensive _____________.    A.  diversification B.  vertical integration C.  international expansion D.  organizational flattening Both result from diversification; an SBU structure is most likely when there is related diversification while holding company structures are most appropriate for firms with a strategy of unrelated diversification.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

59.

Strategic business unit (SBU) structures are best suited for corporations pursuing _____________, whereas holding company structures are best suited for companies with ______________ strategies.    A.  product-market diversification; international B.  international diversification; product-market C.  related diversification; unrelated diversification D.  unrelated diversification; related diversification A SBU structure is most likely when there is related diversification while holding company structures are most appropriate for firms with a strategy of unrelated diversification.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure

60.

A matrix organizational structure is characterized by a combination of the ______________ and _____________.    A.  functional structure; divisional structure B.  simple structure; functional structure C.  simple structure; divisional structure D.  holding company structure; divisional structure The matrix organizational structure is a combination of the functional and divisional structures. The individuals who work in a matrix organization become responsible to two managers: the project manager and the manager of their functional area. The matrix structure facilitates the shared use of specialized personnel, equipment, and facilities.

AACSB: Analytic Blooms: Understand Learning Objective: 10-02 Each of the traditional types of organizational structure: simple; functional; divisional; and matrix. Level of Difficulty: 2 Medium Topic: Traditional Forms of Organizational Structure