Question 1

A simple structure is an organizational form in which the owner-manager makes all major decisions directly and monitors all activities, while the staff serves as an extension of the manager's supervisory authority.

Accepted Answer

A) True 
 B)False

Question 2

Agatha Adams founded Insurance Specialists to process medical claims for physicians' practices.She plans to compete on the basis of cost, offering the lowest processing cost per claim in her market area.Ms.Adams' company should:

Accepted Answer

A)  be the strategic center firm in a network structure. 
B)  have a specialized multidivisional structure. 
C)  develop alliances with firms with complementary competencies. 
D)  have a highly centralized, functional structure.

Question 3

Successfully implementing a cost leadership strategy requires:

Accepted Answer

A)  freedom from constraining rules. 
B)  centralization of authority. 
C)  communication between functional silos. 
D)  sharing of competencies among divisions.

Question 4

Distributed strategic networks are the organizational structure used to manage international cooperative strategies.

Accepted Answer

A) True 
 B)False

Question 5

One reason a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so:

Accepted Answer

A)  indicates to competitors that the firm is vulnerable to a hostile takeover. 
B)  will only lead to inefficiencies. 
C)  requires that the firm undertake a multi-year restructuring period that will delay retirement. 
D)  suggests that the firm's previous choices were not the best ones.

Question 6

The management team at Krandal Industries emphasizes financial controls over strategic ones.Accounting-based measures are used to evaluate the firm's performance based on its own history and on industry averages.It is most likely that Krandal uses what type of strategy?

Accepted Answer

A)  Single business 
B)  Related constrained 
C)  Unrelated diversified 
D)  Vertical complementary

Question 7

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable.Some airlines participate in several alliances simultaneously.This tends to:

Accepted Answer

A)  make the partners' true loyalties and intentions unclear. 
B)  make the role of the strategic center firms more critical to alliance success. 
C)  distribute the alliances along several segments of the airline industry value chain. 
D)  be most effective when the alliances are with airlines headquartered in different nations.

Question 8

Alfred Chandler found that firms grow in a predictable pattern and that the firm's growth patterns determine its structural form.Which of the following forms corresponds to the FINAL stage in Chandler's theory?

Accepted Answer

A)  Functional 
B)  Simple 
C)  Vertically integrated 
D)  Multidivisional

Question 9

Companies and business units using the differentiation strategy should emphasize financial rather than strategic controls.

Accepted Answer

A) True 
 B)False

Question 10

LG Company has units operating in significantly different industries and uses financial controls to manage its portfolio.LG is MOST likely using the __________ structure.

Accepted Answer

A)  combination 
B)  cooperative form of the multidivisional 
C)  competitive form of the multidivisional 
D)  strategic business unit multidivisional

Question 11

Ortiz is a manager of BRS Corp.Ortiz's division did not meet financial targets this year.Ramirez, manager of another division, has indicated that Ortiz's division incurred significant costs which resulted in Ramirez's division setting record profits for the year.As a result, performance for BRS as a whole exceeded projections.Which of the following pairings of organizational structures for BRS and bonus for Ortiz is most plausible?

Accepted Answer

A)  Cooperative structure; no bonus due to failure to meet divisional target 
B)  Competitive structure; no bonus due to failure to meet divisional target 
C)  Cooperative structure; a bonus for increasing organizational performance 
D)  Competitive structure; a bonus for increasing organizational performance

Question 12

One disadvantage of the functional structure is that:

Accepted Answer

A)  career paths and professional development are limited. 
B)  dual reporting relationships blur lines of authority. 
C)  the CEO cannot coordinate and control the efforts of functional-level employees. 
D)  communication and coordination are difficult among organizational functions.

Question 13

Organizational controls guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable.

Accepted Answer

A) True 
 B)False

Question 14

RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and sharing of ideas among employees.In order to foster this behavior, RexMacDonald should emphasize strategic controls over financial controls.

Accepted Answer

A) True 
 B)False

Question 15

A centralized structure does not provide information from local stores that would be useful in changing its technology quickly.This example illustrates the effect of structure on strategy.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure?

Accepted Answer

A)  Increasing diversification 
B)  Coordination and control issues 
C)  Need for knowledge sharing among specialists 
D)  Greater amounts of data and information to process

Question 17

After years of negotiating short-term contracts with its suppliers, Icon Images has decided to agree to longer-term contracts.In doing this, Icon Images is hoping to:

Accepted Answer

A)  reduce transaction costs. 
B)  increase negotiating leverage with suppliers. 
C)  become less dependent on its suppliers. 
D)  move toward horizontal alliances with its suppliers.

Question 18

Leslie is a newly graduated certified public accountant with a specialty in corporate tax.She wishes to join an organization (NOT an accounting firm) that will allow her to concentrate on corporate tax and become deeply proficient in this area.Leslie should look for a position in a firm with a __________ structure.

Accepted Answer

A)  simple 
B)  functional 
C)  multidivisional 
D)  network

Question 19

The integrated cost leadership/differentiation strategy needs structural features that are partially centralized and partially decentralized, jobs that are semispecialized, and rules and procedures that call for some formal and some informal job behavior.

Accepted Answer

A) True 
 B)False

Question 20

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT:

Accepted Answer

A)  centralization of some organizational functions for the sake of coordination. 
B)  frequent, direct contact between division managers. 
C)  division managers' rewards based on division financial performance. 
D)  temporary teams or task forces formed around specific projects.

Exam 11: Organizational Structure and Controls

A simple structure is an organizational form in which the owner-manager makes all major decisions directly and monitors all activities, while the staff serves as an extension of the manager's supervisory authority.

Agatha Adams founded Insurance Specialists to process medical claims for physicians' practices.She plans to compete on the basis of cost, offering the lowest processing cost per claim in her market area.Ms.Adams' company should:

Successfully implementing a cost leadership strategy requires:

Distributed strategic networks are the organizational structure used to manage international cooperative strategies.

One reason a long-tenured top-level manager may hesitate to conclude the firm's structure is a problem is that doing so:

The management team at Krandal Industries emphasizes financial controls over strategic ones.Accounting-based measures are used to evaluate the firm's performance based on its own history and on industry averages.It is most likely that Krandal uses what type of strategy?

Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable.Some airlines participate in several alliances simultaneously.This tends to:

Alfred Chandler found that firms grow in a predictable pattern and that the firm's growth patterns determine its structural form.Which of the following forms corresponds to the FINAL stage in Chandler's theory?

Companies and business units using the differentiation strategy should emphasize financial rather than strategic controls.

LG Company has units operating in significantly different industries and uses financial controls to manage its portfolio.LG is MOST likely using the __________ structure.

One disadvantage of the functional structure is that:

Organizational controls guide the use of strategy, indicate how to compare actual results with expected results, and suggest corrective actions to take when the difference is unacceptable.

RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and sharing of ideas among employees.In order to foster this behavior, RexMacDonald should emphasize strategic controls over financial controls.

A centralized structure does not provide information from local stores that would be useful in changing its technology quickly.This example illustrates the effect of structure on strategy.

Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure?

After years of negotiating short-term contracts with its suppliers, Icon Images has decided to agree to longer-term contracts.In doing this, Icon Images is hoping to:

The integrated cost leadership/differentiation strategy needs structural features that are partially centralized and partially decentralized, jobs that are semispecialized, and rules and procedures that call for some formal and some informal job behavior.

A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT: