Chapter 08 - Organization Structure

Chapter 08
Organization Structure
 

True / False Questions

 

1. The organization chart depicts the positions of the board offices in corporate headquarters. 
True    False

2. Differentiation means that differentiated units are put together so that work is coordinated
into an overall product. 
True    False

3. Division of labor and specialization are not closely related. 

True    False

4. The numerous tasks that must be carried out in a large organization make specialization a
necessity. 
True    False

5. When there are many subunits and many kinds of specialists who think differently,
differentiation is high. 
True    False

6. Coordination refers to the procedures that link the various parts of the organization to
achieve the organization's overall mission. 
True    False

7. Authority resides in people and not in positions. 

True    False

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8. Stockholders are generally directly involved in managing the organization. 

True    False

9. The board of directors determines the strategic direction in corporations. 

True    False

10. The three broad levels of the organizational pyramid are commonly called the
organizational structure. 
True    False

11. Corporate governance is the role of the corporation's executive staff and board of directors
in ensuring that the firm's activities meet the goals of the firm's stakeholders. 
True    False

12. It is generally accepted that fewer hierarchical levels creates greater operating efficiency. 
True    False

13. Tabitha, a manager at All-Bright Cleaning Services, Inc. supervises 139 front-line

employees. She reports to is the President. All-Bright Cleaning Services, Inc. would be
considered a tall organization. 
True    False

14. Mallory manages a branch retail store for Simply Sweet, a retail bakery. She supervises
ten people including the bakers and the clerks located in her branch. She reports directly to the
owner of Simply Sweet. Simply Sweet would be considered a tall rather than a flat
organization. 
True    False

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15. There is no specific ideal number of subordinates that a manager should supervise. 

True    False

16. The number of subordinates who report directly to an executive or supervisor is called the
span of control. 
True    False

17. Murray works on an automobile assembly line. His job is to assemble the door on every
vehicle that is on the line. The job is quite defined and specific as an incorrect assembly could
endanger future drivers and passengers of the car. Murray is most likely supervised using a
wide span of control. 
True    False

18. The optimal span of control is five subordinates, according to Napoleon Bonaparte. 

True    False

19. Delegation is the assignment of authority and responsibility to a subordinate at a lower

level. 
True    False

20. Delegation means that a person is assigned a task that he or she is supposed to carry out. 
True    False

21. Delegation of work responsibilities is more effective when the manager does not delegate
authority also. 
True    False

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22. If Consuelo, a manager at Nearly New, a consignment store chain, delegates responsibility
to a subordinate, she is relieved of the ultimate responsibility and accountability for her
subordinate's actions. 
True    False

23. Accountability means the subordinate's manager has the right to expect the subordinate to
perform the job, and the right to take corrective action if the subordinate fails to do so. 
True    False

24. Effective delegation usually results in the manager losing control of the work to be
accomplished. 
True    False

25. One advantage of delegation is that it helps develop effective subordinates. 

True    False

26. The first step in effective delegation is selecting the person to whom you will delegate. 
True    False

27. If you are not delegating, you are merely doing things. 
True    False

28. A basic characteristic of decentralized organizations is the delegating of authority to

people at lower hierarchical levels to make decisions and take action. 
True    False

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29. In a centralized organization the high-level executives make most decisions and pass them
down to lower levels for implementation. 
True    False

30. Sometimes organizations change their degree of centralization. 

True    False

31. Line departments are units that support staff departments. 

True    False

32. The three basic approaches to departmentalization are line, staff, and matrix. 
True    False

33. Robin Randalson works in the Human Resources Department for Kindly Kare
Corporation, a retirement community. Therefore, Robin works for a staff department, rather
than a line department. 
True    False

34. The functional structure would be most appropriate in complex and changing

environments. 
True    False

35. Functional departmentalization occurs in only large organizations. 

True    False

36. A clear advantage of the functional form of departmentalization is that technical

specialists are relatively free of administrative work. 
True    False

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37. The divisional organization has departmentalization that groups units around products,
customer, or geographic regions. 
True    False

38. Cambridge Computer Installations, Inc. (CCII) has separate company-wide marketing,

production, design and research departments. CCII is a divisional organization. 
True    False

39. A clear advantage of the product form of departmentalization is that task responsibilities
are clear. 
True    False

40. Macy's Group, has geographic divisions for its operations serving particular states or
regions of the U.S. Macy's uses a customer division. 
True    False

41. The primary advantage of both the product and customer/regional approaches to

departmentalization is the ability to focus on customer needs and provide faster, better
service. 
True    False

42. A matrix organization is a hybrid form of organization in which functional and divisional
forms overlap. 
True    False

43. The unity-of-command principle states that a person should have multiple managers who
lead together, giving subordinates the same unified message. 
True    False

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44. To a large degree, problems can be avoided if the key managers in a matrix learn the
behavioral skills demanded in the matrix structure. 
True    False

45. A network organization makes heavy use of the informal grapevine to run the firm. 
True    False

46. Another name for a virtual corporation is a dynamic network. 

True    False

47. A broker is someone who assembles and coordinates participants in a network. 

True    False

48. When organizations differentiate their structures, they also need to be concerned about
integration and coordination. 
True    False

49. Coordination methods include standardization, plans and mutual adjustment. 

True    False

50. Gerry, the operations manager of the Douglas County School District requires all schools
to use the same type of computers and operating systems. This simplifies both the purchasing
and training processes. In this instance, Gerry can best be described as coordinating the school
district using plans. 
True    False

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51. The presence of rules and regulations governing how people in the organization interact is
called formalization. 
True    False

52. Coordination by plan deals with exact rules and procedures that spell out what needs to be
done and how. 
True    False

53. Coordination by mutual adjustment involves feedback and discussions to jointly figure out
how to approach problems and devise solutions that are agreeable to everyone. 
True    False

54. Coordination by plan deals with exact rules and procedures that spell out what needs to be
done and how. 
True    False

55. The simplest and most flexible approach to coordination is by mutual adjustment. 

True    False

56. Today's complex and dynamic organizations must either reduce the need for information
or process more information to cope with high uncertainty and heavy information demands. 
True    False

 
 

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Multiple Choice Questions
 

57. Which of the following depicts the positions in the firm and how they are arranged? 
A. Span of control
B. Departmentalization
C. Division of labor
D. Organization chart
E. Value chain

58. An organization chart conveys which of the following? 

A. The work performed by each unit
B. The best number of people that can generally be supervised
C. How decisions are made
D. Where the organization is located
E. How the organization will interact with the external environment

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59. The reporting structure and division of labor in an organization is conveyed by the 

A. organization chart.
B. span of control.
C. organization hierarchy.
D. span of management.
E. managerial assets.

60. Which of the following is created through division of labor and job specialization? 
A. Integration
B. Coordination
C. Differentiation
D. Span of control
E. Managerial competence

61. The assignment of different tasks to different people or groups in the organization is the 
A. strategic plan.
B. organization structure.
C. division of labor.
D. value chain.
E. responsibility chart.

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62. The process by which different individuals and units perform specific parts of the larger
task is called 
A. accountability.
B. authority.
C. responsibility.
D. specialization.
E. differentiation.

63. __________ refers to the fact that different people often perform specific parts of the
entire task. 
A. Integration
B. Specialization
C. Departmentalization
D. Coordination
E. Hierarchy

64. Coordination refers to 

A. the division of labor within an organization.
B. the performance of specific tasks by specific people.
C. the procedures that link the various parts of the organization to achieve the organization's
overall mission.
D. the need for specific tasks in the functional fields.
E. the way the positions in the firm are organized.

65. The procedures that link the various parts of the organization for the purpose of achieving
the organization's overall mission are called 
A. job specialization.
B. diversification.
C. coordination.
D. dynamism.
E. complexity.

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66. In the study by Lawrence and Lorsch, companies in complex, dynamic environments
developed _____ levels of differentiation; and _____ levels of integration. 
A. low; low
B. intermediate; high
C. high; high
D. low; high
E. high; low

67. Authority is defined as 

A. the legitimate right to tell other people what to do.
B. the procedures that link the various parts of the organization to achieve the organization's
overall mission.
C. the assignment of new or additional responsibilities to a subordinate.
D. the expectation that staff will take corrective action when necessary.
E. a person is assigned a task that he or she is supposed to carry out.

68. The legitimate right to make decisions and to tell other people what to do is referred to as 
A. accountability.
B. delegation.
C. specialization.
D. responsibility.
E. authority.

69. The board of directors overseeing an organization is responsible for 

A. selecting the CEO.
B. determining the firm's strategic direction.
C. assuring ethical and legal conduct.
D. reviewing financial performance.
E. all of the above.

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70. Which of the following is among the major duties of a board of directors? 

A. Inspecting the overall advertising and positioning message for the firm
B. Ensuring ethical conduct
C. Reviewing all employees
D. Selecting front-line managers
E. Lobbying on behalf of the firm

71. Large corporations have boards of directors that are elected by 

A. employees.
B. managers of all levels.
C. shareholders.
D. top managers.
E. all stakeholders.

72. When top executives of Alpha Corporation sit on the Alpha Corporation board, they are
called 
A. outside directors.
B. collaborative directors.
C. cooperating directors.
D. authoritative directors.
E. inside directors.

73. The organizational pyramid is commonly called the 

A. corporation.
B. hierarchy.
C. structure
D. bureaucracy.
E. framework.

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74. The oversight of the firm by its executive staff and board of directors is called corporate 
A. control.
B. oversight.
C. power.
D. governance.
E. strategy.

75. Top management includes which of the following? 

A. Chief Financial Officer
B. First-line Manager
C. Operational Supervisors
D. Division Supervisor
E. Personnel Supervisor

76. The three broad levels of the organizational pyramid are called the 
A. chain of command.
B. organization structure.
C. organization hierarchy.
D. span of management.
E. organization control.

77. The three levels of the organizational hierarchy include 

A. top, middle and employee levels.
B. top, middle and operational levels.
C. first, middle and lower levels.
D. top, selected, delegated levels.
E. top, operational and employee levels.

78. The operational level of the organization includes 

A. the CEO, President and Vice-Presidents.
B. the plant and/or departmental managers.
C. all levels of middle management.
D. first-line managers, supervisors and employees.
E. stockholders and the board of directors.

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79. A powerful trend for United States businesses over the past few decades has been 
A. decreasing the number of hierarchical layers.
B. increasing the number of hierarchical layers.
C. decreasing the span of control.
D. increasing formalization.
E. increasing standardization.

80. The number of subordinates who report directly to an executive or supervisor is called the 
A. reporting order.
B. span of control.
C. broad report control.
D. bureaucratic span.
E. authoritative span.

81. Narrow spans of control build ____________ organizations. 

A. flat
B. wide
C. tall
D. decentralized
E. informal

82. A wide span of control builds a ______________ organization. 

A. flat
B. narrow
C. tall
D. bureaucratic
E. formal

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83. The optimal span of control should be wide when which one of the following factors is
present? 
A. The work is ambiguous.
B. Subordinates are untrained and cannot obtain much information.
C. The manager has just taken over the position.
D. Jobs are similar.
E. Subordinates prefer close supervisory control.

84. According to Napoleon Bonaparte, the optimal number of subordinates is 

A. 4.
B. 5.
C. 10.
D. 25.
E. 50.

85. The assignment of additional responsibilities to a subordinate is referred to as 

A. responsibility.
B. centralization.
C. delegation.
D. span of control.
E. accountability.

86. The assignment of a task that an employee is supposed to carry out is called 

A. responsibility.
B. authority.
C. coordination.
D. accountability.
E. span of control.

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87. The expectation that employees perform a job, managers take corrective action when
necessary and employees report upward on the status and quality of their performance is
called 
A. responsibility.
B. accountability.
C. authority.
D. coordination.
E. span of control.

88. Which of the following statements about delegation is true? 

A. Delegation is the assignment of a task that an employee is supposed to carry out.
B. It entails getting the maximum amount of work out of a subordinate.
C. Delegation helps develop effective subordinates.
D. It is easy for all managers to do comfortably because it reduces their workload.
E. As authority in organizations is spread out over various levels and spans of control the role
of delegation is less important.

89. Which of the following is an important aspect of delegation? 

A. Authority must accompany responsibility.
B. Subordinates must not be allowed to "take credit" for what was simply delegated to them.
C. Delegation should never be "upward."
D. The subordinate should be allowed to work unencumbered by frequent checkpoints.
E. The span of control should be very narrow for effective delegation.

90. Sharon had numerous duties delegated to her during an accounting internship. Many of
these required that she obtain information from other departments. She was often frustrated
because some departments repeatedly refused to share information with a "mere intern!"
Sharon was frustrated because she did not have the power to get the information she needed.
In this situation, Sharon's supervisor most likely made the mistake of 
A. delegating inappropriate tasks to an intern.
B. delegating responsibility without also delegating adequate authority to Sharon.
C. "passing the buck" for Sharon's performance.
D. taking credit for Sharon's accomplishments.
E. overestimating Sharon's capabilities.

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91. Which of the following statements about delegation is most true? 

A. Effective delegation follows several steps.
B. By delegating successfully the manager has more time to effectively build and manage the
organization.
C. Effective delegation leverages the energy and talent of his or her subordinates.
D. Delegation promotes the subordinate's sense of being important.
E. All of the above statements are true.

92. Which of the following tasks should NOT be delegated? 

A. Firing a problem employee
B. Creating a profit and loss analysis
C. Researching a lease versus buy option
D. Hiring a new employee
E. Writing the strategic plan

93. Gabriella recently accepted a job with a large insurance firm as an internal auditor.
Gabriella has found that her new job is quite different than the internship she had at an
accounting consulting firm. The insurance firm has strictly defined job responsibilities and
lines of communication. It seems that for every decision that Gabriella needs to make,
approval must be obtained from upper management! Overall, she has found the atmosphere to
be quite formal as compared to the internship. Gabriella has correctly concluded that of the
following choices, the insurance firm has 
A. a wide span of control.
B. a high degree of centralization.
C. decentralized authority.
D. a matrix design.
E. an ineffective staff.

94. Ideally, decision making should be done by 

A. the board of directors.
B. the top management of the organization.
C. the customers of the organization.
D. the supervisory level employees.
E. those people most familiar with the issue to de decided.

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95. At Sam's Soccer, Inc. Inc. top managers make all the decisions and pass them down to
lower levels for implementation. Sam's Soccer can be described as a(n) ________
organization. 
A. integrated
B. centralized
C. differentiated
D. decentralized
E. horizontal

96. An organization in which lower-level managers make important decisions is a

__________ organization. 
A. decentralized
B. horizontal
C. wide
D. severe problem
E. centralized

97. An organization in which high-level executives make most decisions and pass them down
to lower levels for implementation is a 
A. matrix organization.
B. divisional organization.
C. functional organization.
D. centralized organization.
E. decentralized organization.

98. All Gold Manufacturing Company manufactures the solid gold tableware used by the
government officials in the country of Completely Decadent. Which of these would be
considered a line department at All Gold Manufacturing Company? 
A. Research
B. Legal
C. Accounting
D. Public relations
E. Manufacturing

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99. Subdividing an organization into smaller units is 

A. called departmentalization.
B. usually most efficient.
C. more expensive.
D. not effective for decentralized organizations.
E. called decentralization.

100. A __________ type of organization would cluster jobs according to the following
departments: marketing, finance, operations, accounting and human resources. 
A. product
B. geographical
C. matrix
D. functional
E. customer

101. Which of the following is an advantage of functional departmentalization? 

A. It is most useful in a complex environment.
B. Employees are able to focus exclusively on customer satisfaction.
C. It encourages managers to become generalists.
D. Decision making and lines of communication are simple and clearly understood.
E. It is the most flexible organization form.

102. Hot Tamales, Inc. began business by making hot sauce specifically targeted to the
Hispanic market. They soon expanded into making various types of hot sauce for different
tastes. They now manufacture and distribute sauces, kitchen equipment and specialty spices
worldwide. They are departmentalized by sauces, kitchen equipment, and spices. Hot
Tamales, Inc. utilizes which form of departmentalization? 
A. Geographic
B. Functional
C. Matrix
D. Customer
E. Product

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103. An organization with departmentalization that groups units around products, customers
or geographic regions is called a 
A. divisional organization.
B. centralized organization.
C. matrix organization.
D. functional organization.
E. virtual organization.

104. Which type of divisional structure requires diligent attention to managing

decentralization and delegation? 
A. Functional
B. Product
C. Customer
D. Geographic
E. Both narrow and wide

105. Sports International (SI) began business by making shoes for athletes. They soon
expanded into making shoes for non-athletic purposes. They now manufacture and distribute
clothing, sporting equipment and protective sports gear worldwide. They are departmentalized
by products sold to serious athletes, products sold to "weekend" athletes and products sold to
sports teams. SI has utilized which form of departmentalization? 
A. Geographic
B. Functional
C. Matrix
D. Customer
E. Product

106. Which of the following statements about matrix organizations is true? 

A. A matrix organization is the same as a functional organization.
B. A matrix organization is the same as a product organization.
C. A matrix organization is a hybrid of the functional and divisional organizational forms.
D. A matrix organization is considered out-of-date compared to the organic organization.
E. A matrix organization is more easily managed than a product organization.

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107. A matrix organization is 

A. the same as a functional organization.
B. the same as a product organization.
C. a hybrid of the functional and divisional organizations.
D. considered out-of-date compared to the organic organization.
E. more easily managed than a product organization.

108. In the standard matrix organization, each employee reports to a functional and a(n)
____________ manager. 
A. mechanistic
B. organic
C. divisional
D. centralized
E. matrix

109. Which of the following statements about a matrix organization is true? 

A. Information needs are managed more easily.
B. Matrix organizations violate the unity of command principle.
C. Resources are used efficiently.
D. Decision making is decentralized.
E. All of the above statements are true.

110. Which of the following is a disadvantage of the matrix design? 

A. Decision making is decentralized.
B. Resource utilization is inefficient.
C. Upper management loses touch with operational levels.
D. Managers sharing subordinates may jockey for power over these subordinates.
E. Dual career ladders exist.

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111. The matrix organization today 

A. must be looked at as a process.
B. is almost non-existent.
C. has not proven effective at consolidating costs.
D. has fallen out of favor with profit-oriented organizations.
E. is almost always used with centralized organizations.

112. A very flexible version of the network organization is the 

A. virtual corporation.
B. matrix organization.
C. flexible corporation.
D. non-standardized divisional form.
E. localized division.

113. Establishing common routines and standard operating procedures that apply uniformly to
everyone is called 
A. formalization.
B. accountability.
C. responsibility.
D. authority.
E. standardization.

114. The presence of rules and regulations governing how people in the organization interact
is called 
A. formalization.
B. accountability.
C. responsibility.
D. authority.
E. standardization.

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115. __________ occurs when interdependent units are required to meet deadlines and
objectives that contribute to a common goal. 
A. Coordination by plan
B. Cooperation by mutual adjustment
C. Standardization
D. Formalization
E. Collaboration

116. An approach that involves feedback and discussions to jointly figure out how to
approach problems and devise solutions that are agreeable to everyone is known as 
A. coordination by mutual adjustment.
B. management by objectives.
C. coordination by plan.
D. collaborative standardization.
E. hierarchical decision making.

117. Creating slack resources basically means that 

A. a manager limits the availability of resources to some units.
B. each unit is provided with the minimal resources it needs.
C. more resources are made available to each unit in case they need them "in a pinch".
D. each unit is differentiated by functional specialty.
E. time, money and other resources are tightly budgeted.

118. A specific technique used to reduce the need for information is to 
A. create self-contained tasks.
B. reduce the amount of inventory on hand.
C. invest in information systems.
D. create horizontal relationships.
E. create strategic alliances.

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119. Caroline Dayco's job with a local utility is to coordinate between the electric utility, and
the community. This coordination involves communicating with local organizations who
know of people in need of help with their electric bills and the utility for the purpose of
assuring that no one is without heat during the winter. According to this scenario Caroline is
best described as performing a __________ role, helping the utility to process more
information. 
A. mutual adjustment officer
B. social worker
C. liaison
D. program manager
E. direct contact

120. Investing in information systems and creating horizontal relationships most likely results
in which of the following? 
A. A reduced need for information
B. An increased availability of resources
C. A reduction of need to share information across units
D. The ability of an organization to process more information
E. The creation of slack resources

121. Which of the following statements about the organization is true? 

A. The organization is more like a motion picture than a snapshot.
B. Today's organizations are far removed from the traditional forms they once had.
C. Organizations are hotbeds of social relationships.
D. Organizations contain coalitions.
E. All of the above statements about organizations are true.

 
 

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Essay Questions
 

122. Compare and contrast differentiation and integration. How are differentiation and
integration related in an effective organization? 

 
 

123. Define "authority" and explain the three components of top management that have
formal position authority. 

 
 

124. Describe the optimal span of control and the conditions under which it should be
narrow. 

 
 

125. Discuss the concepts of responsibility, authority and accountability. What should a

manager do when he/she has more responsibility than authority? 

 
 

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126. Explain the advantages of delegation and how managers should delegate. 

 
 

127. Compare and contrast centralized and decentralized organizations. 

 
 

128. Discuss the functional organization structure. What are its advantages and
disadvantages? What is its future? 

 
 

129. Compare and contrast the matrix organization with the network organization. 

 
 

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130. There are three coordination methods used for organizational integration. Describe and
give examples of each. 

 
 

131. Explain both the general strategies and specific techniques to manage high information-
processing demands. 

 
 

132. In the context of the organization of the future, explain this quote taken from your text:
"The formal organization structure does not describe everything about how the company
really works." 

 
 
 

Multiple Choice Questions

 

 Scenario A. Mike is a new management trainee at Simply Swift, Inc., a firm that
manufactures equipment used in wind technology, a complex and ever-changing industry. He
has just graduated with his bachelor's degree in management and is anxious to use his
education. He has nearly completed the first management rotation for Simply Swift and has
some questions about how the organization is managed and how the principles of organization
structure are used in the company. He believes there is too little specialization and that the
span of control in the company is not optimal.

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133. Mike is looking for a long-term career with this company. Given the information in
Scenario A what is the best way he could discover possible career paths with Simply Swift? 
A. He should research minimum job qualifications for entry-level jobs.
B. He should review the organization chart.
C. He should ask the director of finance.
D. He should review company financial statements.
E. He should check with an online job placement firm.

134. Mike believes that there is too little specialization in the company. Therefore, he appears
to favor 
A. low differentiation.
B. high differentiation.
C. less coordination.
D. a new job.
E. more levels in the hierarchy.

135. Given Mike's belief about the level of specialization in the company, if he begins to be
unhappy working under these conditions, he might best look for a new company that operates
in a more _________ environment. 
A. simple, complex
B. simple, stable
C. complex, dynamic
D. simple, dynamic
E. stable, complex

 Scenario B. Imagine you are promoted to a managerial position in a Cookie Capers, a

privately-owned bakery that you have been working for about five years. You are pleased
with your new job but are concerned about problems you have recently been having. You are
required, as part of your job, to determine the employees' leave schedules. However, when
you tell an employee that he/she can't take leave on a certain day, James, the owner of the
company, allows them to go anyway. Consequently, the employees you manage are beginning
to bypass you and do not seem to view you as a manager. Worse than that, after James has
allowed the employee to take leave, if their work doesn't get completed in their absence, he is
upset with you!

8-29
Chapter 08 - Organization Structure

136. In this organization, the ultimate authority rests with 

A. the employees.
B. you.
C. James.
D. the customer.
E. In this organization authority is shared.

137. In the situation at Cookie Capers, the basic problem is that James has not supported your
___________ to carry out the ___________ you have been given. 
A. responsibility, authority
B. authority, responsibility
C. accountability, authority
D. authority, accountability
E. knowledge, tasks

138. In the situation at Cookie Capers, to complete your scheduling assignment you will have
to rely more on 
A. accountability.
B. responsibility.
C. authority.
D. informal influence tactics.
E. span of control.

 Scenario C. You are representing your company at the independent booksellers' convention.
You always enjoy this convention, not only because you see the newest releases but also
because you are able to exchange ideas with other people who work in your industry. There
are sessions for every type of job within the industry so you are able to meet lots of different
types of managers. Along with their name everyone's name badge has his or her title,
company name, and headquarters city. Originally you thought all of the other firms would be
set up using the same type of organizational structure as your own firm, but after glancing at a
few of the nametags it becomes apparent that different companies are using different
organizational structures. For example, Phil's title is Vice President for Production. Jerry is
the Coordinator for Book Sales and interestingly he reports to both a marketing supervisor
and a book department supervisor. Finally Sherry's nametag listed her title as Vice President
for Eastern United States.

8-30
Chapter 08 - Organization Structure

139. Phil's company is set up as a _____________ structure. 

A. functional
B. divisional
C. geographic divisional
D. customer divisional
E. matrix

140. Sherry's company is set up as a _____________ structure. 

A. functional
B. divisional
C. geographic divisional
D. customer divisional
E. matrix

141. Jerry's company is set up as a _____________ structure. 

A. functional
B. divisional
C. geographic divisional
D. customer divisional
E. matrix

 Scenario D. "This company needs better integration!" Alyssa was thinking about that quote
as she was working on a project for the president of her company, who was also her boss. He
had asked her to put together a plan to transition their firm to a more tightly integrated one.
Alyssa recalled from her college management classes that the particular structure an
organization adopts may use a variety of approaches to help them make certain that
interdependent units and individuals will work together to achieve a common purpose.
Somehow she had to address this in her report.

8-31
Chapter 08 - Organization Structure

142. One thing that Alyssa was considering was to be sure the firm focused on regulating
what the employees do to better integrate the firm. Which of the following actions should
Alyssa recommend to her boss to best accomplish this goal? 
A. Coordinate by standardization
B. Formalize all processes with the approval of the Board
C. Change the organization to a matrix structure
D. Accumulate the right resources and eliminate resources that don't provide value
E. Centralize decision making

143. Alyssa was also considering the fact that the organization was an innovative one and the
units may need more latitude in establishing their goals and schedules in order to remain
innovative. If ultimately Alyssa considered this to the most important, she should recommend
that her boss 
A. simply allow the employees to talk to each other whenever they felt like it and about
whatever they wanted.
B. consider coordinating by plan.
C. use standardization.
D. use centralized decision making.
E. consider coordinating by mutual adjustment.

144. Alyssa turned her attention to managing the high information-processing demands that
had been steadily increasing for the firm. Which of the following best reflects a technique that
her boss could successfully use in this situation? 
A. Creating slack resources
B. Practicing continuous improvement
C. Using ISO 9001
D. Increasing his authority
E. Becoming a learning organization

8-32
Chapter 08 - Organization Structure

Chapter 08 Organization Structure Answer Key

 

True / False Questions

 

1. (p. 276) The organization chart depicts the positions of the board offices in corporate
headquarters. 
FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

2. (p. 277) Differentiation means that differentiated units are put together so that work is
coordinated into an overall product. 
FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

3. (p. 277) Division of labor and specialization are not closely related. 

FALSE

Division of labor and specialization are closely related. They are necessary because of the
many tasks that must be carried out in an organization. The overall work of the organization
would be too complex for any individual.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Medium
Topic: Fundamentals of Organizing
 

8-33
Chapter 08 - Organization Structure

4. (p. 277) The numerous tasks that must be carried out in a large organization make
specialization a necessity. 
TRUE

Division of labor and specialization are closely related. They are necessary because of the
many tasks that must be carried out in an organization. The overall work of the organization
would be too complex for any individual.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Medium
Topic: Fundamentals of Organizing
 

5. (p. 277) When there are many subunits and many kinds of specialists who think differently,
differentiation is high. 
TRUE

Differentiation is high when an organization has many subunits and many specialists who
think differently. Harvard professors found that organizations in a complex, dynamic
environment developed a high degree of differentiation to cope with the challenges.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Medium
Topic: Fundamentals of Organizing
 

6. (p. 278) Coordination refers to the procedures that link the various parts of the organization to
achieve the organization's overall mission. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

8-34
Chapter 08 - Organization Structure

7. (p. 278) Authority resides in people and not in positions. 

FALSE

Authority is the legitimate right to make decisions and to tell other people what to do. It
resides in positions rather than in people.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-02 Summarize how authority operates.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

8. (p. 279) Stockholders are generally directly involved in managing the organization. 

FALSE

In corporations, the owners are the stockholders. But because there are numerous stockholders
and these individuals generally lack timely information, few are directly involved in
managing the organization.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

9. (p. 279) The board of directors determines the strategic direction in corporations. 

TRUE

The board, led by the chairperson, makes major decisions affecting the organization. They
assess, reward, and perhaps replace the CEO; determine the firm's strategic direction and
review financial performance; and assure ethical, socially responsible, and legal conduct.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

8-35
Chapter 08 - Organization Structure

10. (p. 280) The three broad levels of the organizational pyramid are commonly called the
organizational structure. 
FALSE

The three broad levels of the organizational pyramid, commonly called the hierarchy include
top, middle, and front-line management.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

11. (p. 280) Corporate governance is the role of the corporation's executive staff and board of
directors in ensuring that the firm's activities meet the goals of the firm's stakeholders. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

12. (p. 282) It is generally accepted that fewer hierarchical levels creates greater operating
efficiency. 
TRUE

Most executives today believe that fewer layers create a more efficient, fast-acting, and cost-
effective organization.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

8-36
Chapter 08 - Organization Structure

13. (p. 282) Tabitha, a manager at All-Bright Cleaning Services, Inc. supervises 139 front-line

employees. She reports to is the President. All-Bright Cleaning Services, Inc. would be
considered a tall organization. 
FALSE

The implications of differences in the span of control for the shape of an organization are
straightforward. Holding size constant, narrow spans build a tall organization that has many
reporting levels. Wide spans create a flat organization with fewer reporting levels. Tabitha is
in a flat organization since she reports directly to the President and supervises front-line
employees.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

14. (p. 282) Mallory manages a branch retail store for Simply Sweet, a retail bakery. She
supervises ten people including the bakers and the clerks located in her branch. She reports
directly to the owner of Simply Sweet. Simply Sweet would be considered a tall rather than a
flat organization. 
FALSE

Simply Sweet would be considered a flat organization as there are only two layers of
supervision in the organization.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

8-37
Chapter 08 - Organization Structure

15. (p. 282-283) There is no specific ideal number of subordinates that a manager should

supervise. 
TRUE

The optimal span of control maximizes effectiveness by balancing two considerations: (1) It
must be narrow enough to permit managers to maintain control over subordinates; and (2) It
must not be so narrow that it leads to overcontrol and excessive number of managers
overseeing a few subordinates.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

16. (p. 282) The number of subordinates who report directly to an executive or supervisor is

called the span of control. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

17. (p. 283) Murray works on an automobile assembly line. His job is to assemble the door on
every vehicle that is on the line. The job is quite defined and specific as an incorrect assembly
could endanger future drivers and passengers of the car. Murray is most likely supervised
using a wide span of control. 
TRUE

A wide span of control is best used under particular circumstances including when the work is
clearly defined and unambiguous, as is the case with Murray's job.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

8-38
Chapter 08 - Organization Structure

18. (p. 283) The optimal span of control is five subordinates, according to Napoleon Bonaparte. 

TRUE

The optimal number of subordinates is five, according to Napoleon Bonaparte. Some

managers today still consider five a good number.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

19. (p. 283) Delegation is the assignment of authority and responsibility to a subordinate at a

lower level. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

20. (p. 283) Delegation means that a person is assigned a task that he or she is supposed to carry
out. 
FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

8-39
Chapter 08 - Organization Structure

21. (p. 283) Delegation of work responsibilities is more effective when the manager does not
delegate authority also. 
FALSE

When delegating responsibilities, the manager also should delegate to the subordinate enough
authority to get the job done.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

22. (p. 284) If Consuelo, a manager at Nearly New, a consignment store chain, delegates

responsibility to a subordinate, she is relieved of the ultimate responsibility and accountability
for her subordinate's actions. 
FALSE

As a manager delegates responsibilities, subordinates are held accountable for achieving

results. However, managers remain responsible and accountable not only for their own actions
but also for the actions of their subordinates.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

23. (p. 284) Accountability means the subordinate's manager has the right to expect the
subordinate to perform the job, and the right to take corrective action if the subordinate fails
to do so. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

8-40
Chapter 08 - Organization Structure

24. (p. 284) Effective delegation usually results in the manager losing control of the work to be
accomplished. 
FALSE

Effective delegation leverages the manager's energy and talent and those of his or her
subordinates. It allows managers to accomplish much more than they would be able to do on
their own.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

25. (p. 284) One advantage of delegation is that it helps develop effective subordinates. 

TRUE

Delegation essentially gives the subordinate a more important job. The subordinate acquires
an opportunity to develop new skills and to demonstrate potential for additional
responsibilities and perhaps promotion.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

26. (p. 285; Figure 8.2) The first step in effective delegation is selecting the person to whom you
will delegate. 
FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

8-41
Chapter 08 - Organization Structure

27. (p. 285) If you are not delegating, you are merely doing things. 
TRUE

If you are not delegating, you are merely doing things; but the more you delegate, the more
you are truly building and managing an organization.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

28. (p. 285) A basic characteristic of decentralized organizations is the delegating of authority to

people at lower hierarchical levels to make decisions and take action. 
TRUE

Ideally, decision making occurs at the level of the people who are most directly affected and
have the most intimate knowledge about the problem. In decentralized organizations, more
decisions are made at lower levels.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

29. (p. 285) In a centralized organization the high-level executives make most decisions and
pass them down to lower levels for implementation. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

8-42
Chapter 08 - Organization Structure

30. (p. 285) Sometimes organizations change their degree of centralization. 

TRUE

This depends on the particular challenges they face. Tougher times often cause senior
managements to take charge, whereas in times of rapid growth, decisions are pushed farther
down the chain of command.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

31. (p. 287) Line departments are units that support staff departments. 

FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

32. (p. 287) The three basic approaches to departmentalization are line, staff, and matrix. 
FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

8-43
Chapter 08 - Organization Structure

33. (p. 287) Robin Randalson works in the Human Resources Department for Kindly Kare
Corporation, a retirement community. Therefore, Robin works for a staff department, rather
than a line department. 
TRUE

Staff departments are those that provide specialized or professional skills, including human
resources departments, that support line departments.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Hard
Topic: The Horizontal Structure
 

34. (p. 288) The functional structure would be most appropriate in complex and changing

environments. 
FALSE

Functional structures may be most appropriate in rather simple, stable environments rather
than those that are complex and changing.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

35. (p. 287) Functional departmentalization occurs in only large organizations. 

FALSE

Functional departmentalization is common in both large and small organizations.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

8-44
Chapter 08 - Organization Structure

36. (p. 288) A clear advantage of the functional form of departmentalization is that technical

specialists are relatively free of administrative work. 
TRUE

The traditional functional approach to departmentalization has a number of potential

advantages for an organization including that technical specialists are relatively free of
administrative work.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

37. (p. 289) The divisional organization has departmentalization that groups units around

products, customer, or geographic regions. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

38. (p. 289) Cambridge Computer Installations, Inc. (CCII) has separate company-wide

marketing, production, design and research departments. CCII is a divisional organization. 
FALSE

A divisional organization groups all functions into a single division and duplicates functions
across all the divisions of the firm. This is opposite of the way CCII is set up.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Hard
Topic: The Horizontal Structure
 

8-45
Chapter 08 - Organization Structure

39. (p. 291) A clear advantage of the product form of departmentalization is that task

responsibilities are clear. 
TRUE

In the product approach to departmentalization task responsibilities are clear, and managers
are more independent and accountable.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

40. (p. 291) Macy's Group, has geographic divisions for its operations serving particular states or
regions of the U.S. Macy's uses a customer division. 
FALSE

Macy's uses geographical divisions, indicated by the regions mentions in the question.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

41. (p. 291) The primary advantage of both the product and customer/regional approaches to

departmentalization is the ability to focus on customer needs and provide faster, better
service. 
TRUE

This is true, but the duplication of activities across many customer groups and geographic
areas is expensive.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

8-46
Chapter 08 - Organization Structure

42. (p. 292) A matrix organization is a hybrid form of organization in which functional and

divisional forms overlap. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

43. (p. 293) The unity-of-command principle states that a person should have multiple managers
who lead together, giving subordinates the same unified message. 
FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

44. (p. 294) To a large degree, problems can be avoided if the key managers in a matrix learn the
behavioral skills demanded in the matrix structure. 
TRUE

The skills needed vary depending on the manager's job. The top executive, for example, must
learn to balance power and emphasis between the product and functional orientations.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

8-47
Chapter 08 - Organization Structure

45. (p. 295) A network organization makes heavy use of the informal grapevine to run the firm. 
FALSE

A network organization is a collection of independent, mostly single-function firms that

collaborate to produce a good or service. It describes not one organization but a web of
relationships among many firms.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

46. (p. 295) Another name for a virtual corporation is a dynamic network. 

TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

47. (p. 296) A broker is someone who assembles and coordinates participants in a network. 

TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

8-48
Chapter 08 - Organization Structure

48. (p. 296) When organizations differentiate their structures, they also need to be concerned

about integration and coordination. 
TRUE

Besides structuring their organization around differentiation—the way the organization is

composed of different jobs and tasks, and they way they fit on an organization chart—
managers also need to consider integration and coordination—the way all parts of the
organization work together.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Medium
Topic: Organizational Integration
 

49. (p. 296) Coordination methods include standardization, plans and mutual adjustment. 

TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

50. (p. 297) Gerry, the operations manager of the Douglas County School District requires all
schools to use the same type of computers and operating systems. This simplifies both the
purchasing and training processes. In this instance, Gerry can best be described as
coordinating the school district using plans. 
FALSE

Gerry is using standardization with the standard operating procedure of purchasing a specific
computer and operating system.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Hard
Topic: Organizational Integration
 

8-49
Chapter 08 - Organization Structure

51. (p. 297) The presence of rules and regulations governing how people in the organization
interact is called formalization. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

52. (p. 297) Coordination by plan deals with exact rules and procedures that spell out what needs
to be done and how. 
FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

53. (p. 297) Coordination by mutual adjustment involves feedback and discussions to jointly

figure out how to approach problems and devise solutions that are agreeable to everyone. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

54. (p. 297) Coordination by plan deals with exact rules and procedures that spell out what needs
to be done and how. 
FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

8-50
Chapter 08 - Organization Structure

55. (p. 297) The simplest and most flexible approach to coordination is by mutual adjustment. 

FALSE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

56. (p. 299; Figure 8.8) Today's complex and dynamic organizations must either reduce the need for
information or process more information to cope with high uncertainty and heavy information
demands. 
TRUE

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 
 

Multiple Choice Questions

 

57. (p. 276) Which of the following depicts the positions in the firm and how they are arranged? 
A. Span of control
B. Departmentalization
C. Division of labor
D. Organization chart
E. Value chain

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

8-51
Chapter 08 - Organization Structure

58. (p. 276) An organization chart conveys which of the following? 

A. The work performed by each unit
B. The best number of people that can generally be supervised
C. How decisions are made
D. Where the organization is located
E. How the organization will interact with the external environment

The organization chart depicts the positions in the firm and the way they are arranged. The
chart provides a picture of the reporting structure (who reports to whom) and the various
activities that are carried out by different units.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Medium
Topic: Fundamentals of Organizing
 

59. (p. 276) The reporting structure and division of labor in an organization is conveyed by the 

A. organization chart.
B. span of control.
C. organization hierarchy.
D. span of management.
E. managerial assets.

The organization chart depicts the positions in the firm and the way they are arranged. The
chart provides a picture of the reporting structure (who reports to whom) and the various
activities that are carried out by different units. Division of labor means the work of the
organization is subdivided into smaller tasks.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Medium
Topic: Fundamentals of Organizing
 

8-52
Chapter 08 - Organization Structure

60. (p. 277) Which of the following is created through division of labor and job specialization? 
A. Integration
B. Coordination
C. Differentiation
D. Span of control
E. Managerial competence

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

61. (p. 277) The assignment of different tasks to different people or groups in the organization is

the 
A. strategic plan.
B. organization structure.
C. division of labor.
D. value chain.
E. responsibility chart.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

62. (p. 277) The process by which different individuals and units perform specific parts of the
larger task is called 
A. accountability.
B. authority.
C. responsibility.
D. specialization.
E. differentiation.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

8-53
Chapter 08 - Organization Structure

63. (p. 277) __________ refers to the fact that different people often perform specific parts of
the entire task. 
A. Integration
B. Specialization
C. Departmentalization
D. Coordination
E. Hierarchy

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

64. (p. 278) Coordination refers to 

A. the division of labor within an organization.
B. the performance of specific tasks by specific people.
C. the procedures that link the various parts of the organization to achieve the organization's
overall mission.
D. the need for specific tasks in the functional fields.
E. the way the positions in the firm are organized.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

65. (p. 278) The procedures that link the various parts of the organization for the purpose of
achieving the organization's overall mission are called 
A. job specialization.
B. diversification.
C. coordination.
D. dynamism.
E. complexity.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Easy
Topic: Fundamentals of Organizing
 

8-54
Chapter 08 - Organization Structure

66. (p. 278) In the study by Lawrence and Lorsch, companies in complex, dynamic

environments developed _____ levels of differentiation; and _____ levels of integration. 
A. low; low
B. intermediate; high
C. high; high
D. low; high
E. high; low

Lawrence and Lorsch found that highly differentiated firms were successful if they also had
high levels of integration and were more likely to fail if they existed in complex environments
but failed to integrate their activities adequately.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Medium
Topic: Fundamentals of Organizing
 

67. (p. 278) Authority is defined as 

A. the legitimate right to tell other people what to do.
B. the procedures that link the various parts of the organization to achieve the organization's
overall mission.
C. the assignment of new or additional responsibilities to a subordinate.
D. the expectation that staff will take corrective action when necessary.
E. a person is assigned a task that he or she is supposed to carry out.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-02 Summarize how authority operates.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

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Chapter 08 - Organization Structure

68. (p. 278) The legitimate right to make decisions and to tell other people what to do is referred
to as 
A. accountability.
B. delegation.
C. specialization.
D. responsibility.
E. authority.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-02 Summarize how authority operates.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

69. (p. 279) The board of directors overseeing an organization is responsible for 

A. selecting the CEO.
B. determining the firm's strategic direction.
C. assuring ethical and legal conduct.
D. reviewing financial performance.
E. all of the above.

The board, led by the chairperson, makes major decisions affecting the organization, subject
to corporate charter and bylaw provisions. Boards select, assess, reward, and perhaps replace
the CEO; determine the firm's strategic direction and review financial performance; and
assure ethical, socially responsible, and legal conduct.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

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Chapter 08 - Organization Structure

70. (p. 279) Which of the following is among the major duties of a board of directors? 

A. Inspecting the overall advertising and positioning message for the firm
B. Ensuring ethical conduct
C. Reviewing all employees
D. Selecting front-line managers
E. Lobbying on behalf of the firm

The board, led by the chairperson, makes major decisions affecting the organization, subject
to corporate charter and bylaw provisions. Boards select, assess, reward, and perhaps replace
the CEO; determine the firm's strategic direction and review financial performance; and
assure ethical, socially responsible, and legal conduct.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

71. (p. 279) Large corporations have boards of directors that are elected by 

A. employees.
B. managers of all levels.
C. shareholders.
D. top managers.
E. all stakeholders.

Stockholders elect a board of directors to oversee the organization on their behalf.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

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Chapter 08 - Organization Structure

72. (p. 279) When top executives of Alpha Corporation sit on the Alpha Corporation board, they
are called 
A. outside directors.
B. collaborative directors.
C. cooperating directors.
D. authoritative directors.
E. inside directors.

The board's membership usually includes some top executives—called inside directors.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

73. (p. 280) The organizational pyramid is commonly called the 

A. corporation.
B. hierarchy.
C. structure
D. bureaucracy.
E. framework.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

74. (p. 280) The oversight of the firm by its executive staff and board of directors is called
corporate 
A. control.
B. oversight.
C. power.
D. governance.
E. strategy.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

8-58
Chapter 08 - Organization Structure

75. (p. 280) Top management includes which of the following? 

A. Chief Financial Officer
B. First-line Manager
C. Operational Supervisors
D. Division Supervisor
E. Personnel Supervisor

Top management teams typically consist of the CEO, president, chief operating officer, chief
financial officer, and other key executives.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

76. (p. 281) The three broad levels of the organizational pyramid are called the 
A. chain of command.
B. organization structure.
C. organization hierarchy.
D. span of management.
E. organization control.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

77. (p. 280-281) The three levels of the organizational hierarchy include 

A. top, middle and employee levels.
B. top, middle and operational levels.
C. first, middle and lower levels.
D. top, selected, delegated levels.
E. top, operational and employee levels.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

8-59
Chapter 08 - Organization Structure

78. (p. 281) The operational level of the organization includes 

A. the CEO, President and Vice-Presidents.
B. the plant and/or departmental managers.
C. all levels of middle management.
D. first-line managers, supervisors and employees.
E. stockholders and the board of directors.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

79. (p. 282) A powerful trend for United States businesses over the past few decades has been 
A. decreasing the number of hierarchical layers.
B. increasing the number of hierarchical layers.
C. decreasing the span of control.
D. increasing formalization.
E. increasing standardization.

A powerful trend for U.S. businesses over the past few decades has been to reduce the number
of hierarchical layers. GE used to have 29 levels; today it has only a handful of layers.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

80. (p. 282) The number of subordinates who report directly to an executive or supervisor is

called the 
A. reporting order.
B. span of control.
C. broad report control.
D. bureaucratic span.
E. authoritative span.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

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Chapter 08 - Organization Structure

81. (p. 282) Narrow spans of control build ____________ organizations. 

A. flat
B. wide
C. tall
D. decentralized
E. informal

Holding size constant, narrow spans build a tall organization with many reporting levels.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

82. (p. 282) A wide span of control builds a ______________ organization. 

A. flat
B. narrow
C. tall
D. bureaucratic
E. formal

Holding size constant, wide spans build a flat organization with fewer reporting levels.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

8-61
Chapter 08 - Organization Structure

83. (p. 283) The optimal span of control should be wide when which one of the following factors
is present? 
A. The work is ambiguous.
B. Subordinates are untrained and cannot obtain much information.
C. The manager has just taken over the position.
D. Jobs are similar.
E. Subordinates prefer close supervisory control.

The span of control should wide when jobs are similar, and performance measures are
comparable.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

84. (p. 283) According to Napoleon Bonaparte, the optimal number of subordinates is 

A. 4.
B. 5.
C. 10.
D. 25.
E. 50.

The optimal number of subordinates, according to Napoleon Bonaparte, is five. Some

managers today still consider five a good number.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

8-62
Chapter 08 - Organization Structure

85. (p. 283) The assignment of additional responsibilities to a subordinate is referred to as 

A. responsibility.
B. centralization.
C. delegation.
D. span of control.
E. accountability.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

86. (p. 283) The assignment of a task that an employee is supposed to carry out is called 

A. responsibility.
B. authority.
C. coordination.
D. accountability.
E. span of control.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

87. (p. 284) The expectation that employees perform a job, managers take corrective action
when necessary and employees report upward on the status and quality of their performance is
called 
A. responsibility.
B. accountability.
C. authority.
D. coordination.
E. span of control.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

8-63
Chapter 08 - Organization Structure

88. (p. 284) Which of the following statements about delegation is true? 

A. Delegation is the assignment of a task that an employee is supposed to carry out.
B. It entails getting the maximum amount of work out of a subordinate.
C. Delegation helps develop effective subordinates.
D. It is easy for all managers to do comfortably because it reduces their workload.
E. As authority in organizations is spread out over various levels and spans of control the role
of delegation is less important.

Delegation helps develop effective subordinates; the approach is likely to empower

subordinates and help them develop. Delegation gives the subordinate a more important job.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

89. (p. 285) Which of the following is an important aspect of delegation? 

A. Authority must accompany responsibility.
B. Subordinates must not be allowed to "take credit" for what was simply delegated to them.
C. Delegation should never be "upward."
D. The subordinate should be allowed to work unencumbered by frequent checkpoints.
E. The span of control should be very narrow for effective delegation.

The person who gets the assignment should be given the authority, time, and resources to
carry out the task successfully.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

8-64
Chapter 08 - Organization Structure

90. (p. 285) Sharon had numerous duties delegated to her during an accounting internship. Many
of these required that she obtain information from other departments. She was often frustrated
because some departments repeatedly refused to share information with a "mere intern!"
Sharon was frustrated because she did not have the power to get the information she needed.
In this situation, Sharon's supervisor most likely made the mistake of 
A. delegating inappropriate tasks to an intern.
B. delegating responsibility without also delegating adequate authority to Sharon.
C. "passing the buck" for Sharon's performance.
D. taking credit for Sharon's accomplishments.
E. overestimating Sharon's capabilities.

The person who gets the assignment should be given the authority, time, and resources to
carry out the task successfully. Clearly Sharon did not have this.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

91. (p. 284-285) Which of the following statements about delegation is most true? 

A. Effective delegation follows several steps.
B. By delegating successfully the manager has more time to effectively build and manage the
organization.
C. Effective delegation leverages the energy and talent of his or her subordinates.
D. Delegation promotes the subordinate's sense of being important.
E. All of the above statements are true.

Effective delegation promotes all of the choices listed in the question.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

8-65
Chapter 08 - Organization Structure

92. (p. 285) Which of the following tasks should NOT be delegated? 

A. Firing a problem employee
B. Creating a profit and loss analysis
C. Researching a lease versus buy option
D. Hiring a new employee
E. Writing the strategic plan

Some tasks, such as disciplining subordinates and conducting performance reviews, should
not be delegated.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

93. (p. 285) Gabriella recently accepted a job with a large insurance firm as an internal auditor.
Gabriella has found that her new job is quite different than the internship she had at an
accounting consulting firm. The insurance firm has strictly defined job responsibilities and
lines of communication. It seems that for every decision that Gabriella needs to make,
approval must be obtained from upper management! Overall, she has found the atmosphere to
be quite formal as compared to the internship. Gabriella has correctly concluded that of the
following choices, the insurance firm has 
A. a wide span of control.
B. a high degree of centralization.
C. decentralized authority.
D. a matrix design.
E. an ineffective staff.

In a centralized organization, important decisions usually are made at the top. This is the
situation facing Gabriella in her job.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

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Chapter 08 - Organization Structure

94. (p. 285) Ideally, decision making should be done by 

A. the board of directors.
B. the top management of the organization.
C. the customers of the organization.
D. the supervisory level employees.
E. those people most familiar with the issue to de decided.

Ideally decision making occurs at the level of the people who are most directly affected and
have the most intimate knowledge about the problem.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

95. (p. 285) At Sam's Soccer, Inc. Inc. top managers make all the decisions and pass them down
to lower levels for implementation. Sam's Soccer can be described as a(n) ________
organization. 
A. integrated
B. centralized
C. differentiated
D. decentralized
E. horizontal

In a centralized organization, important decisions usually are made at the top. This is the
situation at Sam's Soccer, Inc.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

8-67
Chapter 08 - Organization Structure

96. (p. 285) An organization in which lower-level managers make important decisions is a

__________ organization. 
A. decentralized
B. horizontal
C. wide
D. severe problem
E. centralized

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

97. (p. 285) An organization in which high-level executives make most decisions and pass them
down to lower levels for implementation is a 
A. matrix organization.
B. divisional organization.
C. functional organization.
D. centralized organization.
E. decentralized organization.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Easy
Topic: The Vertical Structure
 

8-68
Chapter 08 - Organization Structure

98. (p. 287) All Gold Manufacturing Company manufactures the solid gold tableware used by
the government officials in the country of Completely Decadent. Which of these would be
considered a line department at All Gold Manufacturing Company? 
A. Research
B. Legal
C. Accounting
D. Public relations
E. Manufacturing

Line departments are those that have responsibility for the principal activities of the firm. Line
units deal directly with the organization's primary goods or services; in this case they deal
with manufacturing gold tableware.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Hard
Topic: The Horizontal Structure
 

99. (p. 287) Subdividing an organization into smaller units is 

A. called departmentalization.
B. usually most efficient.
C. more expensive.
D. not effective for decentralized organizations.
E. called decentralization.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

8-69
Chapter 08 - Organization Structure

100. (p. 287) A __________ type of organization would cluster jobs according to the following
departments: marketing, finance, operations, accounting and human resources. 
A. product
B. geographical
C. matrix
D. functional
E. customer

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

101. (p. 288) Which of the following is an advantage of functional departmentalization? 

A. It is most useful in a complex environment.
B. Employees are able to focus exclusively on customer satisfaction.
C. It encourages managers to become generalists.
D. Decision making and lines of communication are simple and clearly understood.
E. It is the most flexible organization form.

One potential advantage of the traditional functional approach to departmentalization is that

decision making and lines of communication are simple and clearly understood.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

8-70
Chapter 08 - Organization Structure

102. (p. 289) Hot Tamales, Inc. began business by making hot sauce specifically targeted to the
Hispanic market. They soon expanded into making various types of hot sauce for different
tastes. They now manufacture and distribute sauces, kitchen equipment and specialty spices
worldwide. They are departmentalized by sauces, kitchen equipment, and spices. Hot
Tamales, Inc. utilizes which form of departmentalization? 
A. Geographic
B. Functional
C. Matrix
D. Customer
E. Product

Organizations can create a divisional structure in several ways including product divisions.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Hard
Topic: The Horizontal Structure
 

103. (p. 289) An organization with departmentalization that groups units around products,

customers or geographic regions is called a 
A. divisional organization.
B. centralized organization.
C. matrix organization.
D. functional organization.
E. virtual organization.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

8-71
Chapter 08 - Organization Structure

104. (p. 291) Which type of divisional structure requires diligent attention to managing

decentralization and delegation? 
A. Functional
B. Product
C. Customer
D. Geographic
E. Both narrow and wide

Coordination across product lines and divisions is difficult. Because decision making is
decentralized, top management can lose control over decisions made in the divisions. Proper
management of all the issues surrounding decentralization and delegation is essential for this
structure to be effective.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

105. (p. 291) Sports International (SI) began business by making shoes for athletes. They soon
expanded into making shoes for non-athletic purposes. They now manufacture and distribute
clothing, sporting equipment and protective sports gear worldwide. They are departmentalized
by products sold to serious athletes, products sold to "weekend" athletes and products sold to
sports teams. SI has utilized which form of departmentalization? 
A. Geographic
B. Functional
C. Matrix
D. Customer
E. Product

Customer divisions are those built around groups of customers such as serious athletes,
"weekend" athletes, and sports teams.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Hard
Topic: The Horizontal Structure
 

8-72
Chapter 08 - Organization Structure

106. (p. 292) Which of the following statements about matrix organizations is true? 

A. A matrix organization is the same as a functional organization.
B. A matrix organization is the same as a product organization.
C. A matrix organization is a hybrid of the functional and divisional organizational forms.
D. A matrix organization is considered out-of-date compared to the organic organization.
E. A matrix organization is more easily managed than a product organization.

A matrix organization is a hybrid form of organization in which functional and divisional

forms overlap.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

107. (p. 292) A matrix organization is 

A. the same as a functional organization.
B. the same as a product organization.
C. a hybrid of the functional and divisional organizations.
D. considered out-of-date compared to the organic organization.
E. more easily managed than a product organization.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

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Chapter 08 - Organization Structure

108. (p. 292) In the standard matrix organization, each employee reports to a functional and a(n)
____________ manager. 
A. mechanistic
B. organic
C. divisional
D. centralized
E. matrix

Managers and staff personnel report to two bosses—a functional manager and a divisional
manager.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

109. (p. 293) Which of the following statements about a matrix organization is true? 

A. Information needs are managed more easily.
B. Matrix organizations violate the unity of command principle.
C. Resources are used efficiently.
D. Decision making is decentralized.
E. All of the above statements are true.

The matrix organization has a number of advantages including all of the choices listed in the
question.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

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Chapter 08 - Organization Structure

110. (p. 293) Which of the following is a disadvantage of the matrix design? 

A. Decision making is decentralized.
B. Resource utilization is inefficient.
C. Upper management loses touch with operational levels.
D. Managers sharing subordinates may jockey for power over these subordinates.
E. Dual career ladders exist.

Table 8.3 lists the disadvantages of the matrix design including that the design encourages
managers who share subordinates to jockey for power.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

111. (p. 294) The matrix organization today 

A. must be looked at as a process.
B. is almost non-existent.
C. has not proven effective at consolidating costs.
D. has fallen out of favor with profit-oriented organizations.
E. is almost always used with centralized organizations.

The key to managing today's matrix is not the formal structure itself but the realization that
the matrix is a process.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

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Chapter 08 - Organization Structure

112. (p. 295) A very flexible version of the network organization is the 

A. virtual corporation.
B. matrix organization.
C. flexible corporation.
D. non-standardized divisional form.
E. localized division.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Easy
Topic: The Horizontal Structure
 

113. (p. 297) Establishing common routines and standard operating procedures that apply

uniformly to everyone is called 
A. formalization.
B. accountability.
C. responsibility.
D. authority.
E. standardization.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

114. (p. 297) The presence of rules and regulations governing how people in the organization
interact is called 
A. formalization.
B. accountability.
C. responsibility.
D. authority.
E. standardization.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

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Chapter 08 - Organization Structure

115. (p. 297) __________ occurs when interdependent units are required to meet deadlines and
objectives that contribute to a common goal. 
A. Coordination by plan
B. Cooperation by mutual adjustment
C. Standardization
D. Formalization
E. Collaboration

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

116. (p. 297) An approach that involves feedback and discussions to jointly figure out how to
approach problems and devise solutions that are agreeable to everyone is known as 
A. coordination by mutual adjustment.
B. management by objectives.
C. coordination by plan.
D. collaborative standardization.
E. hierarchical decision making.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

117. (p. 299) Creating slack resources basically means that 

A. a manager limits the availability of resources to some units.
B. each unit is provided with the minimal resources it needs.
C. more resources are made available to each unit in case they need them "in a pinch".
D. each unit is differentiated by functional specialty.
E. time, money and other resources are tightly budgeted.

AACSB: Analytic
Bloom's: Knowledge
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Easy
Topic: Organizational Integration
 

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Chapter 08 - Organization Structure

118. (p. 299; Figure 8.8) A specific technique used to reduce the need for information is to 
A. create self-contained tasks.
B. reduce the amount of inventory on hand.
C. invest in information systems.
D. create horizontal relationships.
E. create strategic alliances.

Figure 8.8 shows that one specific technique for reducing the need for information is to create
self-contained tasks.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Medium
Topic: Organizational Integration
 

119. (p. 300) Caroline Dayco's job with a local utility is to coordinate between the electric
utility, and the community. This coordination involves communicating with local
organizations who know of people in need of help with their electric bills and the utility for
the purpose of assuring that no one is without heat during the winter. According to this
scenario Caroline is best described as performing a __________ role, helping the utility to
process more information. 
A. mutual adjustment officer
B. social worker
C. liaison
D. program manager
E. direct contact

Caroline is performing a liaison role, or a specialized job to handle communications between

two departments or organizations (such as the community in this case).

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Hard
Topic: Organizational Integration
 

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Chapter 08 - Organization Structure

120. (p. 300) Investing in information systems and creating horizontal relationships most likely

results in which of the following? 
A. A reduced need for information
B. An increased availability of resources
C. A reduction of need to share information across units
D. The ability of an organization to process more information
E. The creation of slack resources

An organization may take the approach of increasing its information-processing capability. It

can invest in information systems, which usually means employing or expanding computer
systems. It can also use knowledge management by creating horizontal relationships between
units to foster coordination.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Medium
Topic: Organizational Integration
 

121. (p. 301) Which of the following statements about the organization is true? 

A. The organization is more like a motion picture than a snapshot.
B. Today's organizations are far removed from the traditional forms they once had.
C. Organizations are hotbeds of social relationships.
D. Organizations contain coalitions.
E. All of the above statements about organizations are true.

All of the statements in the question are accurate and contained in the "Looking Ahead"
portion of the chapter.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Medium
Topic: Looking Ahead
 
 

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Chapter 08 - Organization Structure
Essay Questions
 

122. (p. 277-278) Compare and contrast differentiation and integration. How are differentiation

and integration related in an effective organization? 

Answers will vary.

AACSB: Analytic
Bloom's: Analysis
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Hard
Topic: Fundamentals of Organizing
 

123. (p. 278-280) Define "authority" and explain the three components of top management that
have formal position authority. 

Answers will vary.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-02 Summarize how authority operates.
Learning Objective: 08-03 Define the roles of the board of directors and the chief executive officer.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

124. (p. 282-283) Describe the optimal span of control and the conditions under which it should
be narrow. 

Answers will vary.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

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Chapter 08 - Organization Structure

125. (p. 283-284) Discuss the concepts of responsibility, authority and accountability. What

should a manager do when he/she has more responsibility than authority? 

Answers will vary.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

126. (p. 284-285) Explain the advantages of delegation and how managers should delegate. 

Answers will vary.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-05 Explain how to delegate effectively.
Level of Difficulty: Medium
Topic: The Vertical Structure
 

127. (p. 285-286) Compare and contrast centralized and decentralized organizations. 

Answers will vary.

AACSB: Analytic
Bloom's: Analysis
Learning Objective: 08-06 Distinguish between centralized and decentralized organizations.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

128. (p. 287-289) Discuss the functional organization structure. What are its advantages and
disadvantages? What is its future? 

Answers will vary.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

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Chapter 08 - Organization Structure

129. (p. 292-296) Compare and contrast the matrix organization with the network organization. 

Answers will vary.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Medium
Topic: The Horizontal Structure
 

130. (p. 297-299) There are three coordination methods used for organizational integration.

Describe and give examples of each. 

Answers will vary.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Hard
Topic: Organizational Integration
 

131. (p. 299-300) Explain both the general strategies and specific techniques to manage high
information-processing demands. 

Answers will vary.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Medium
Topic: Organizational Integration
 

8-82
Chapter 08 - Organization Structure

132. (p. 301) In the context of the organization of the future, explain this quote taken from your
text: "The formal organization structure does not describe everything about how the company
really works." 

Answers will vary.

AACSB: Analytic
Bloom's: Comprehension
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Medium
Topic: Looking Ahead
 
 

Multiple Choice Questions

 

 Scenario A. Mike is a new management trainee at Simply Swift, Inc., a firm that
manufactures equipment used in wind technology, a complex and ever-changing industry. He
has just graduated with his bachelor's degree in management and is anxious to use his
education. He has nearly completed the first management rotation for Simply Swift and has
some questions about how the organization is managed and how the principles of organization
structure are used in the company. He believes there is too little specialization and that the
span of control in the company is not optimal.

133. (p. 276) Mike is looking for a long-term career with this company. Given the information in
Scenario A what is the best way he could discover possible career paths with Simply Swift? 
A. He should research minimum job qualifications for entry-level jobs.
B. He should review the organization chart.
C. He should ask the director of finance.
D. He should review company financial statements.
E. He should check with an online job placement firm.

The organization chart depicts the positions in the firm and the way they are arranged. The
chart provides a picture of the reporting structure (who reports to whom) and the various
activities that are carried out by different units.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Hard
Topic: Fundamentals of Organizing
 

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Chapter 08 - Organization Structure

134. (p. 277) Mike believes that there is too little specialization in the company. Therefore, he
appears to favor 
A. low differentiation.
B. high differentiation.
C. less coordination.
D. a new job.
E. more levels in the hierarchy.

Within an organization's structure, differentiation is created through division of labor and job
specialization. Since Mike believes there is too little specialization in Simply Swift he would
appear to favor high rather than low levels of differentiation.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Hard
Topic: Fundamentals of Organizing
 

135. (p. 277) Given Mike's belief about the level of specialization in the company, if he begins
to be unhappy working under these conditions, he might best look for a new company that
operates in a more _________ environment. 
A. simple, complex
B. simple, stable
C. complex, dynamic
D. simple, dynamic
E. stable, complex

Lawrence and Lorsch found that organizations in a complex, dynamic environment (such as
wind energy in this example) developed a high degree of differentiation to cope with the
challenges. While it is unlikely that Mike would become unhappy at Simply Swift due to the
level of specialization, the place for him to go in that event would be an even more complex
and dynamic environment.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-01 Explain how differentiation and integration influence an organization's structure.
Level of Difficulty: Hard
Topic: Fundamentals of Organizing
 

8-84
Chapter 08 - Organization Structure

 Scenario B. Imagine you are promoted to a managerial position in a Cookie Capers, a

privately-owned bakery that you have been working for about five years. You are pleased
with your new job but are concerned about problems you have recently been having. You are
required, as part of your job, to determine the employees' leave schedules. However, when
you tell an employee that he/she can't take leave on a certain day, James, the owner of the
company, allows them to go anyway. Consequently, the employees you manage are beginning
to bypass you and do not seem to view you as a manager. Worse than that, after James has
allowed the employee to take leave, if their work doesn't get completed in their absence, he is
upset with you!

136. (p. 278) In this organization, the ultimate authority rests with 

A. the employees.
B. you.
C. James.
D. the customer.
E. In this organization authority is shared.

In private business enterprises, the owners have ultimate authority.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-02 Summarize how authority operates.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

137. (p. 283-284) In the situation at Cookie Capers, the basic problem is that James has not
supported your ___________ to carry out the ___________ you have been given. 
A. responsibility, authority
B. authority, responsibility
C. accountability, authority
D. authority, accountability
E. knowledge, tasks

When delegating responsibilities, the manager also should delegate to the subordinate enough
authority to get the job done.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

8-85
Chapter 08 - Organization Structure

138. (p. 283-284) In the situation at Cookie Capers, to complete your scheduling assignment you
will have to rely more on 
A. accountability.
B. responsibility.
C. authority.
D. informal influence tactics.
E. span of control.

Ironically, people often have more responsibility than authority; they must perform as well as
they can through informal influence tactics instead of relying purely on authority.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-04 Discuss how span of control affects structure and managerial effectiveness.
Level of Difficulty: Hard
Topic: The Vertical Structure
 

 Scenario C. You are representing your company at the independent booksellers' convention.
You always enjoy this convention, not only because you see the newest releases but also
because you are able to exchange ideas with other people who work in your industry. There
are sessions for every type of job within the industry so you are able to meet lots of different
types of managers. Along with their name everyone's name badge has his or her title,
company name, and headquarters city. Originally you thought all of the other firms would be
set up using the same type of organizational structure as your own firm, but after glancing at a
few of the nametags it becomes apparent that different companies are using different
organizational structures. For example, Phil's title is Vice President for Production. Jerry is
the Coordinator for Book Sales and interestingly he reports to both a marketing supervisor
and a book department supervisor. Finally Sherry's nametag listed her title as Vice President
for Eastern United States.

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Chapter 08 - Organization Structure

139. (p. 287) Phil's company is set up as a _____________ structure. 

A. functional
B. divisional
C. geographic divisional
D. customer divisional
E. matrix

In a functional organization, jobs and departments are specialized and grouped according to
business functions and the skills they require, for example Phil is the VP for Production.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Hard
Topic: The Horizontal Structure
 

140. (p. 291) Sherry's company is set up as a _____________ structure. 

A. functional
B. divisional
C. geographic divisional
D. customer divisional
E. matrix

Geographic divisions are structured around geographic regions such as the Eastern United
States.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-07 Summarize ways organizations can be structured.
Level of Difficulty: Hard
Topic: The Horizontal Structure
 

8-87
Chapter 08 - Organization Structure

141. (p. 292) Jerry's company is set up as a _____________ structure. 

A. functional
B. divisional
C. geographic divisional
D. customer divisional
E. matrix

A matrix organization is a hybrid form of organization in which functional and divisional

forms overlap. Jerry reports to two bosses, a functional and divisional one.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-08 Identify the unique challenges of the matrix organization.
Level of Difficulty: Hard
Topic: The Horizontal Structure
 

 Scenario D. "This company needs better integration!" Alyssa was thinking about that quote
as she was working on a project for the president of her company, who was also her boss. He
had asked her to put together a plan to transition their firm to a more tightly integrated one.
Alyssa recalled from her college management classes that the particular structure an
organization adopts may use a variety of approaches to help them make certain that
interdependent units and individuals will work together to achieve a common purpose.
Somehow she had to address this in her report.

142. (p. 297) One thing that Alyssa was considering was to be sure the firm focused on
regulating what the employees do to better integrate the firm. Which of the following actions
should Alyssa recommend to her boss to best accomplish this goal? 
A. Coordinate by standardization
B. Formalize all processes with the approval of the Board
C. Change the organization to a matrix structure
D. Accumulate the right resources and eliminate resources that don't provide value
E. Centralize decision making

Standardization constrains actions and integrates various units by regulating what people do.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Hard
Topic: Organizational Integration
 

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Chapter 08 - Organization Structure

143. (p. 297) Alyssa was also considering the fact that the organization was an innovative one
and the units may need more latitude in establishing their goals and schedules in order to
remain innovative. If ultimately Alyssa considered this to the most important, she should
recommend that her boss 
A. simply allow the employees to talk to each other whenever they felt like it and about
whatever they wanted.
B. consider coordinating by plan.
C. use standardization.
D. use centralized decision making.
E. consider coordinating by mutual adjustment.

Coordination by plan does not require the same high degree of stability and routinization
required for coordination by standardization. Here, interdependent units are required to meet
deadlines and objectives that contribute to a common goal.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Hard
Topic: Organizational Integration
 

144. (p. 299) Alyssa turned her attention to managing the high information-processing demands

that had been steadily increasing for the firm. Which of the following best reflects a technique
that her boss could successfully use in this situation? 
A. Creating slack resources
B. Practicing continuous improvement
C. Using ISO 9001
D. Increasing his authority
E. Becoming a learning organization

Slack resources are extra resources on which organizations can rely in a pinch so that if they
get caught off guard, they can still adjust. This is one way to reduce the need for information
and thus help manage the high information-processing demands the organization has.

AACSB: Analytic
Bloom's: Application
Learning Objective: 08-09 Describe important integrative mechanisms.
Level of Difficulty: Hard
Topic: Organizational Integration
 

8-89