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Chapter 7 Organizing the Business Enterprise MULTIPLE CHOICE QUESTIONS. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is correct with regard to the opening case entitled “Reorganizing the Irving Empire”? A) The company’s main business has historically been food, but it is now shifting into oil B) The company’s main focus of operations is the west coast C) The members of the Irving family have avoided a public fight over the direction of the company D) The company has been experiencing increasing financial difficulties in recent years and will likely have to declare bankruptcy E) All of these are correct Answer: C 2) Organizational structure refers to A) developing an organizational chart. B) determining which employees report to whom. C) the specification of the jobs to be done within a business and how those jobs relate to one another. D) determining how best to use available material resources. E) structuring the necessary resources to complete a particular task. Answer: C 3) Which term is defined as the specification of the jobs to be done and the ways in which those jobs relate to one another? A) Organizational determinants B) Organizational structure C) Span of control D) Chain of command E) Organizational strategy Answer: B 4) Roger is analyzing the jobs to be done in his company, their specific overall purpose, and how the jobs relate to each other. Roger is analyzing the company's A) job descriptions. B) organizational chart. C) organizational structure. D) departmentalization. E) chain of command. Answer: C 5) Organizational structure is A) the relationship between the chain of command in a decentralized organization. B) the specification of the way in which the organization manages the projects. C) teams of individuals temporarily working on a special project together. D) the specification of the jobs to be done within a business, and how much decentralization will be permitted. E) the specification of the jobs to be done within a business and the relationship of these jobs with each other. Answer: E 6) Which of the following elements determine an organization's structure? A) The organization's strategy B) The organization's mission C) The organization's purpose D) The organization's technology E) All of these Answer: E 7) When Ford executives announced changes intended to eliminate corporate bureaucracy, speed decision making, and improve communication and working relationships among people at different levels of the organization, these changes were examples of the ________ function of management. A) organizing B) planning C) directing D) controlling E) none of these Answer: A 8) Which of the following clarify structure and show employees where they fit into a firm's operations? A) Organization charts B) Responsibility C) Departmentalization D) Delegation E) The mission statement Answer: A 9) Which of the following is not one of the determinants of organizational structure? A) Organizational size B) Organizational profit C) Organizational mission D) Organizational strategy E) Purpose of the organization Answer: B 10) Which of the following does not account for different organizational structures? A) An institution's mission B) An institution's strategy C) Changes in environmental circumstances D) An institution's profits E) An institution's purpose Answer: D 11) What is the purpose of organization charts? A) They portray the firm's structure and the relationship of employees within the organization B) They are a valuable tool for companies experiencing a large increase in research and development expenditures on new products C) They show the grouping of jobs into logical units D) They are used to plan marketing campaigns E) They determine which jobs need to be accomplished and who will perform them Answer: A 12) Which term is defined as a physical depiction of the company's structure showing employee titles and their relationship to one another? A) Chain of command B) Organizational structure C) Organization chart D) Organizational strategy E) Organizational determinants Answer: C 13) What would an organization use to show a new employee his/her position in the firm and its relationship to other positions? A) Manual of positions and relationships B) Departmentalization plan C) Organizational strategy D) Job specialization list E) Organization chart Answer: E 14) What is the meaning of the individual boxes shown on an organization chart? A) Each box is appropriately labelled as a function or a process in the flow of materials/services B) Each box represents a job within the company C) Each box indicates a different geographical departmentalization D) Each box represents a group of people E) Each box represents a product or service provided by the organization Answer: B 15) What is the meaning of the solid lines connecting the boxes on an organization chart? A) They identify the relationship of the important staff departments B) They identify the level of specialization within the organization C) They identify the reporting relationship, or chain of command, within the organization D) They identify the relationship between the processes in the flow of materials/services E) They identify the products or services available from the organization Answer: C 16) How are corporate reporting relationships shown on an organization chart? A) Arrow B) Dotted line C) Solid line D) Arrow with the letter R E) Dashed line with the letter R Answer: C 17) The chain of command has the following characteristics except A) solid lines in an organization chart show the chain of command. B) when the chain of command is not clear, many different kinds of problems can arise. C) it shows the flow of decision-making power in a firm. D) the chain of command shows both the informal and formal organizational structure. E) it shows the reporting relationships within a business. Answer: D 18) Scott is looking at a chart showing the company's organization structure. He notices that there is a solid line connecting Judy and Charles to Kara. This means that A) all reports created by Judy and Charles must be sent to Kara. B) the product flows from Judy and Charles to Kara. C) there is a direct telephone line between Judy and Charles and Kara. D) Kara has more seniority than Judy or Charles. E) Judy and Charles both report to Kara. Answer: E 19) Businesses spend a great deal of time developing organization charts because A) charts portray the firm's structure and the relationship of employees within the organization. B) a chart determines which jobs need to be accomplished and who will perform them. C) charts are a valuable tool for companies that are involved in the research and development of new products. D) charts are useful when planning marketing campaigns. E) all of these. Answer: A 20) Organizational structure is defined as A) teams of individuals temporarily working on a special project together. B) the specification of the jobs to be done within a business, and how centralized or decentralized decision making will be. C) the specification of jobs and the relationship of these jobs to each other. D) reporting relationships within the company. E) none of these. Answer: C 21) Joanne is showing new employees the position she occupies in the organizational hierarchy. Joanne is using A) a chain of command chart. B) a manual of positions and relationships. C) an organization chart. D) a job specialization chart. E) a replacement chart. Answer: C 22) Solid lines on the company structure chart depict A) product flow. B) reporting relationships. C) informal communication channels. D) seniority. E) paper flow. Answer: B 23) Whether a business is large or small, the starting point in developing its organization structure is A) determining a strategic plan. B) appointing a board of directors. C) establishing a mission statement. D) determining who will do what. E) none of these are correct. Answer: D 24) Reporting relationships among employees are also called A) line and staff relationships. B) the chain of command. C) superior-subordinate relationships. D) boss-worker relationships. E) delegation. Answer: B 25) The chain of command illustrates ____________, while the organization chart illustrates ________. A) job specialization; the company’s structure B) reporting relationships; job specialization C) centralization; decentralization D) functional departmentalization; job specialization E) reporting relationships; the company’s structure Answer: E 26) How are reporting relationships usually shown on an organization chart? A) An arrow with the letter R B) A dotted line with the letter R C) A solid line D) A dotted line E) None of these Answer: C 27) Since Sault College is a very large organization, its organization charts would likely be A) summarized and simple. B) a series of charts, one for each division or department. C) nonexistent below the company office level. D) on very large sheets of paper. E) nonexistent because of size requirements. Answer: B 28) The process of identifying the specific jobs that need to be done and designating the people who will perform them leads to A) segmentation. B) departmentalization. C) job specialization. D) group tasks. E) mission enhancement. Answer: C 29) In a Disney animated feature, the job of one cartoonist may be to draw the face of a single character throughout the feature. This is an example of A) mission enhancement. B) segmentation. C) departmentalization. D) group tasks. E) job specialization. Answer: E 30) Determining who will do what is referred to as A) authority. B) departmentalization. C) accountability. D) responsibility. E) specialization. Answer: E 31) Which of the following is a natural part of organizational growth? A) Job specialization B) Forming a union C) Retrenchment D) Outsourcing E) Entrepreneurship Answer: A 32) The extent to which a larger job is broken down into smaller tasks is referred to as A) specialization. B) departmentalization. C) responsibility. D) authority. E) accountability. Answer: A 33) Grouping jobs into logical units is called A) departmentalization. B) process management. C) specialization. D) development of the grapevine. E) authorization. Answer: A 34) The two basic building blocks of all business organizations are A) specialization and departmentalization. B) profit centres and divisions. C) functional and divisional departmentalization. D) managers and workers. E) centralization and decentralization. Answer: A 35) Michael is in the process of taking the department's overall “job” and breaking it down into smaller and smaller “jobs.” Michael is working on A) a matrix structure. B) job specialization. C) departmentalization. D) job classification. E) job analysis. Answer: B 36) Karen, a human resources manager, is looking at the specific jobs in her organization. She would like to see what tasks each employee is doing. She is primarily investigating A) organization chart. B) departmentalization. C) chain of command. D) organizational structure. E) job specialization. Answer: E 37) A natural development in growing organizations is A) job analysis. B) centralization of authority. C) a profit centre. D) job specialization. E) a matrix structure. Answer: D 38) Which of the following is correct with regard to job specialization? A) It is a new idea B) Its application is limited to factory work C) It is a natural part of organizational growth D) It makes it more difficult to replace people who leave the organization E) All of these are correct Answer: C 39) Departmentalization refers to A) the number of employees managed by a single supervisor. B) the level at which decisions are made. C) the duty to perform an assigned task. D) the grouping of specialized jobs into logical units. E) the establishment of a unit that is responsible for its own costs and profits. Answer: D 40) The grouping of specialized jobs into logical units is called A) work teams. B) departmentalization. C) centralization. D) organization structure. E) none of these. Answer: B 41) David has grouped some jobs together in such a way that they can be treated as if they are a separate business which is responsible for its costs, revenues, and profits. David has created a A) functional department. B) profit centre. C) departmentalized work group. D) matrix structure. E) a divisionalized department. Answer: B 42) The men's clothing department at Sears is an example of a A) functional department. B) process department. C) product department. D) profit centre. E) matrix structure. Answer: D 43) ComputerLand's structure is set up so that each location is responsible for its own costs and profits. Each location is A) a specialized unit. B) a process department. C) a profit centre. D) a product department. E) a centralized department. Answer: C 44) Businesses use profit centres because A) sales revenue in various territories is easier to determine. B) each individual reports to no more than two managers. C) a greater degree of job specialization can be attained. D) the organization may be divided according to the production process used. E) each separate unit is responsible for its own costs. Answer: E 45) Stores like Sears and The Bay are most likely to departmentalize by A) function. B) geography. C) process. D) customer. E) product. Answer: D 46) Susie's Pets and Supplies, a retail shop that sells pets and many related products needed by those pets, has recently reorganized. One area of the store is exclusively for dogs, another exclusively for cats, another exclusively for tropical fish, and so on. The shop is departmentalized by A) process. B) function. C) geography. D) customer. E) product. Answer: E 47) Home Depot and other hardware stores are typically departmentalized by A) product. B) geography. C) customer. D) function. E) process. Answer: A 48) Bigbucks Bank has separate departments for consumer loans and commercial loans. It is departmentalized by A) process. B) customer. C) product. D) geography. E) function. Answer: C 49) Stores like HMV are divided into departments like classical music, R&B, pop, and so on. This illustrates departmentalization by A) process. B) customer. C) function. D) geography. E) product. Answer: B 50) Pickle maker Vlasic has separate departments to transform cucumbers into fresh-packed pickles, pickles cured in brine, and relishes. They have chosen departmentalization by A) customer. B) function. C) process. D) geographic. E) product. Answer: C 51) As part of your annual physical, you notice that while at the hospital you'll be sent to X-ray, to the Lab for blood workups, to another department for stress testing, and so on. You realize that since each test requires different equipment and worker skills, the hospital is departmentalized by A) geography. B) function. C) process. D) product. E) customer. Answer: C 52) Electronic Universe is organized by departments such as televisions sets, VCR, radio, etc. What type of departmentalization do they use? A) Product B) Process C) Geographic D) Functional E) Electronic Answer: A 53) Which form of departmentalization is a department store most likely to use? A) Geographic B) Process C) Customer D) Functional E) Production Answer: C 54) What explanation is best for customer departmentalization? A) The firm is divided according to the functions performed in a particular grouping of specialists B) The company is departmentalized according to the process used to produce goods/services for customers C) The company is divided according to a specific customer target D) The company is divided along the lines of the specific goods/services produced for customers E) None of these Answer: C 55) Because most Sales departments and Service departments want to be close to their customers, they are usually departmentalized by A) function. B) product. C) geography. D) customer. E) process. Answer: C 56) An international company that has organized itself by areas such as North America, Europe, Pacific, and South America is departmentalized by A) function. B) product. C) customer. D) process. E) geography. Answer: E 57) In the box entitled “Product Versus Geographical Departmentation: What’s The Right Choice”?, which of the following points is made? A) Product departmentalization ensures quick, responsive reaction to the need of the company’s customers in certain geographic areas B) Organizing by product has grown in popularity as globalization has occurred C) Many firms are now switching from product to geographic departmentalization D) Geographic departmentalization can lead to duplication of production and other facilities E) All of these points are made Answer: D 58) Firms that have departments such as production, marketing, finance, human resources, etc. are using ________ departmentalization. A) geographic B) product C) customer D) process E) functional Answer: E 59) In reviewing the organizational structure of your company, you notice that Engineering is subdivided into mechanical, electrical, and software. Additionally, the Accounting Department is subdivided into Accounts Payable, Accounts Receivable, and Asset Management. What type of departmentalization has the company selected? A) Process B) Functional C) Geographic D) Product E) Customer Answer: B 60) Which form of departmentalization is most likely to be used by a public utility company? A) Geographic B) Functional C) Product D) Process E) Customer Answer: A 61) What is the form of departmentalization being used in a firm with department titles such as accounting, human resources, marketing, and production? A) Product B) Geographic C) Process D) Functional E) Customer Answer: D 62) The type of departmentalization where all the engineers are in an Engineering Department, all the customer service reps are in a Customer Service Department, and all the accountants are in an Accounting Department is called __________ departmentalization. A) customer B) process C) product D) functional E) geographic Answer: D 63) Determining how people performing certain tasks can best be grouped together is called A) departmentalization. B) controlling. C) planning. D) specialization. E) directing. Answer: A 64) David has grouped some jobs together in such a way that they can be treated like they were a small business, responsible for its costs, revenues, and profits. David has created a A) process department. B) departmentalized work group. C) profit centre. D) profit and loss centre. E) functional department. Answer: C 65) Departmentalization is the process of A) creating separate profit centres. B) creating separate revenue centres. C) developing an organization chart. D) creating chains of command. E) grouping jobs into logical units. Answer: E 66) Departmentalization can best be explained as A) the number of employees managed by a single supervisor. B) the duty to perform an assigned task. C) the grouping of specialized jobs into logical units. D) the level at which decisions are made. E) the determination of who will do what. Answer: C 67) Which of the following best describes customer departmentalization? A) The firm is divided according to the production process B) The company is divided along the lines of specific goods/services produced for consumers C) The company is divided according to a specific customer target D) The firm is divided according to the functions performed in a particular grouping of specialists E) The company is departmentalized according to the process used to produce goods/services for customers Answer: C 68) Which of the following is an advantage of customer departmentalization? A) Employees will make more money and have more job security B) Top managers can easily see how the production process is working C) Greater expertise can be developed when specialists of one function work together D) Top managers can determine when resources need to be changed because of increasing demand in a particular geographic area E) The business benefits from efficiencies and customers get better service Answer: E 69) What type of departmentalization is used by an organization whose departments are named television sets, radios, etc.? A) Functional B) Electronic C) Product D) Process E) Geographic Answer: C 70) Hewlett-Packard reorganized to increase customer responsiveness and improve decision making by creating highly autonomous teams. These teams are A) process departments. B) profit and loss centres. C) functional departments. D) departmentalized work groups. E) profit centres. Answer: E 71) As you enter your favourite store looking for a graduation gift for your cousin, you notice the signs suspended from the ceiling: Men's, Women's, Children's, Infant's. The store is departmentalized by A) geography. B) customer. C) function. D) product. E) process. Answer: B 72) What type of departmentalization is used by Levi Strauss, which has a division for the U.S. market, one for the European market, and one for the Pacific Rim market? A) Customer B) Tri-continental C) Functional D) Product E) Geographic Answer: E 73) A machine shop has arranged all of the drill presses in one area, all the lathes in another, all the surface grinders in still another, etc. Because of the differences in equipment and operator skills, the machine shop has chosen departmentalization by A) process. B) function. C) customer. D) product. E) geography. Answer: A 74) Many international companies have organized themselves by North America, Europe, Pacific, and South America divisions. This is ________ departmentalization. A) geographic B) process C) customer D) product E) functional Answer: A 75) The Ice Cubes Coffee Company has department titles such as accounting, human resource management, marketing and production. What is the form of departmentalization being used at Ice Cubes Coffee? A) Customer B) Process C) Functional D) Product E) Geographic Answer: C 76) Which organizational structure is a company using if it has departments such as marketing, manufacturing, legal, and human resources? A) Functional B) Product C) M.M.H.L. structure D) Process E) Customer Answer: A 77) The development of the decision-making hierarchy is a three-step process, which involves A) researching information, evaluating information, and distributing information. B) centralizing resources, assigning tasks, and delegating responsibility. C) assigning tasks, performing tasks, and distributing authority. D) outsourcing work, monitoring progress, and insourcing finished products. E) none of these. Answer: C 78) Which of the following best describes responsibility? A) The liability of subordinates for accomplishing tasks assigned by managers B) The power to make the decisions necessary to complete a task C) The assignment of a task, responsibility, or authority by a manager to a subordinate D) The duty to perform an assigned task E) The number of people supervised by one manager Answer: D 79) Which of the following best describes authority? A) The assignment of a task, responsibility, or authority by a manager to a subordinate B) The power to make the decisions necessary to complete a task C) The number of people supervised by one manager D) The liability of subordinates for accomplishing tasks assigned by managers E) The duty to perform an assigned task Answer: B 80) Which of the following best describes delegation? A) The duty to perform an assigned task B) The liability of subordinates for accomplishing tasks assigned by managers C) The assignment of a task, responsibility, or authority by a manager to a subordinate D) The power to make the decisions necessary to complete a task E) The number of people supervised by one manager Answer: C 81) When delegating, managers must do all of the following except A) decide on the nature of the work. B) match the job with skills. C) make sure the person understands the objectives. D) decide on the pay of the person. E) make sure the subordinate has the time and training. Answer: D 82) ________ is the assignment of a task, responsibility, or authority by a manager to a subordinate. A) Delegation B) Decentralization C) Centralization D) Responsibility E) Authority Answer: A 83) Which of the following best describes accountability? A) The assignment of a task, responsibility, or authority by a manager to a subordinate B) The number of people supervised by one manager C) The duty to perform an assigned task D) The liability of subordinates for accomplishing tasks assigned by managers E) The power to make the decisions necessary to complete a task Answer: D 84) The duty to perform an assigned task is known as A) span of control. B) accountability. C) authority. D) responsibility. E) delegation. Answer: D 85) Authority is best described as A) the number of people under the supervision of a manager. B) the duty to perform an assigned task. C) the liability of subordinates to accomplish all the tasks assigned by managers. D) the power to make the decisions necessary to complete a task. E) the assignment of a task to a subordinate. Answer: D 86) What is responsibility? A) The assignment of a task to a subordinate B) The number of managers supervising one employee C) The power to make decisions D) The duty to perform an assigned task E) The number of people reporting to a manager Answer: D 87) What term describes a manager's action of assigning a task to a subordinate? A) Subordinate empowerment B) Authority C) Delegation D) Accountability E) Responsibility Answer: C 88) What term means the liability of subordinates for accomplishing tasks assigned by managers? A) Authority B) General liability C) Responsibility D) Delegation E) Accountability Answer: E 89) Bob has had some problems with some of the tasks that he has assigned to his subordinates not getting completed properly. The most likely problem would be that A) he has assigned authority without assigning responsibility or accountability. B) he has not assigned authority, accountability or responsibility. C) he has assigned responsibility and accountability without giving the necessary authority. D) he has assigned authority and responsibility without assigning accountability. E) none of these. Answer: C 90) John, a manager at Trenton Industries, assigns a marketing task to an employee. This is called A) authority. B) delegation. C) span of control. D) accountability. E) responsibility. Answer: B 91) Once a task has been assigned to a subordinate, this is what the subordinate owes the manager. It is A) delegation. B) span of control. C) authority. D) responsibility. E) accountability. Answer: E 92) Authority is best described as A) the assignment of a task to a subordinate. B) the right to make decisions necessary to complete the task. C) the number of people under the direct supervision of a manager. D) a duty to perform an assigned task. E) none of these. Answer: B 93) Which of the following is an advantage of delegation? A) Increases work skills of subordinates B) Permits the manager to focus on the day-to-day operations C) Makes it easier to punish workers who perform tasks poorly D) Permits the manager to exercise closer control over subordinates E) Subordinates are not held accountable for tasks assigned by delegation Answer: A 94) The requirement for a subordinate to show the results of assigned duties to a supervisor is A) delegation. B) empowerment. C) specialization. D) integration. E) accountability. Answer: E 95) You are the manager of the Marketing Department. In order to get office and art supplies you must submit a purchase requisition. Company policy states that you can only approve up to $500, but any more must have the signature of your boss. Based on this you are lacking in which of the following? A) Accountability B) Delegation C) Span of control D) Responsibility E) Authority Answer: E 96) At Roger's company, new products are developed using a team approach. The vice presidents of production, marketing, finance, and engineering meet weekly to cover topics of common interest and new products are usually on the agenda. Recently there have been numerous delays in the launching of most of the new products and along with the delays has come much finger-pointing. Which of the following items is lacking in this situation and probably a major cause for the poor performance? A) Authority B) Span of control C) Responsibility D) Delegation E) Accountability Answer: C 97) Scott's management style is one where he gets his subordinates heavily involved in department activities. After assigning specific tasks he follows up with them to be sure that they are completing the assigned activities. What is Scott's assigning of activities called? A) Authority B) Responsibility C) Accountability D) Span of control E) Delegation Answer: E 98) Scott's management style is one where he gets his subordinates heavily involved in department activities. After assigning specific tasks he follows up with them to be sure that they are completing the assigned activities. What is the name for the duty that Scott believes his subordinates owe him? A) Span of control B) Responsibility C) Authority D) Delegation E) Accountability Answer: E 99) The power to make the decisions necessary to complete a task is called A) delegation. B) empowerment. C) accountability. D) responsibility. E) authority. Answer: E 100) In order to ensure standardization, at McDonald's most lower-level decisions must be approved by upper management. Which of the following terms applies to this strategy? A) Centralized organization B) Decentralized organization C) Functional authority D) Responsibility E) Wide span of control Answer: A 101) Which of the following is correct with respect to the issue of centralization/decentralization at General Motors? A) In the 1920s, GM was highly centralized under Alfred Sloan B) GM was at one time the largest automobile manufacturer in the world because decentralization worked so well C) The autonomy given to managers under decentralization meant that product offerings in various countries were almost identical D) GM decentralized its operations as a response to the competitive threat from Japanese car makers E) All of these are correct Answer: B 102) Where a quick response time is critical, ________ is typically used. A) functional authority B) a narrow span of control C) centralized decision making D) team authority E) decentralized decision making Answer: E 103) Which of the following is likely to be evident at a small, owner-operated firm? A) Decentralization B) Functional authority C) Team authority D) A narrow span of control E) Centralization Answer: E 104) As organizations grow and prosper, which type of decision-making tends to be adopted by more successful companies? A) Functional authority B) Decentralization C) Accountability D) Narrow span of control E) Centralization Answer: B 105) Which of the following is correct with regard to centralization and decentralization at General Motors? A) Early in its history, GM was very centralized B) GM’s decentralized authority structure led to widely differing car designs that were expensive to produce C) GM’s troubles in the last few years caused the company to decentralize further in order to better meet consumer demands in various geographical markets D) GM’s troubles in the last few years caused the company to recentralize finance and decentralize car design E) All of these are correct Answer: B 106) Centralization is the concentration of authority for most decisions with A) the board. B) the middle managers. C) the top managers. D) the shareholders. E) the supervisors. Answer: C 107) What type of decision-making structure is used when upper management must approve lower level decisions? A) Authority structure B) Supervisory check/re-check system C) Centralized D) Delegation E) Decentralized Answer: C 108) Which organization delegates certain decision-making authority to lower level managers in order to be more responsive to customers' needs? A) Centralized B) Quasi-centralized C) Span of control D) Chain of command E) Decentralized Answer: E 109) What are the circumstances under which decision-making authority is likely to be decentralized? A) A company where managers practice little delegation B) A company where the top managers control everything C) A small owner-operated company D) A large organization where top managers cannot personally supervise every detail E) When high dollar value decisions are made Answer: D 110) What group has decision-making authority in a centralized organization? A) First-line managers B) Everyone except the top managers C) Teams D) Middle managers E) Top managers Answer: E 111) Distribution of authority deals with the concepts of ________ and ________ of decisions. A) authority; decentralization B) authority; accountability C) accountability; centralization D) responsibility; authority E) decentralization; centralization Answer: E 112) An organization which begins to eliminate management levels in a "downsizing" restructuring is moving toward A) a tall, centralized structure. B) a line organization. C) an informal organization. D) a flat, decentralized structure. E) it is not possible to tell with this information. Answer: D 113) Span of control refers to A) the responsibility for tasks. B) the number of people managed by one manager. C) the authority for tasks. D) accountability to complete tasks. E) decentralization of decision-making. Answer: B 114) The term "span of control" refers to A) the accountability to complete tasks. B) the organizational level which makes most of the decisions. C) the number of people that one supervisor can manage. D) the number of management levels within the organization. E) the number of specialists in the organization, such as engineers and accountants. Answer: C 115) What do the solid lines shown on an organizational chart mean? A) Accountability B) Team authority C) Line authority D) Informal organization communications channel E) Staff authority Answer: C 116) The greater the __________, the wider the span of control is likely to be, while the greater the ________, the narrower the span of control is likely to be. A) complexity of the task; employees’ abilities B) the supervisor’s managerial skills; interrelationship of the tasks C) uniqueness of the task; routineness of the task D) interrelationship of the tasks; the supervisor’s managerial skills E) complexity of the task; the supervisor’s managerial skills Answer: B 117) Which of the following items would tend to support narrower spans of control? A) Subordinates work independently of each other B) Subordinates perform complex tasks C) Subordinates perform diverse tasks D) When tasks are not routine E) All of these Answer: E 118) The number of people managed by one manager is called A) line authority. B) span of control. C) quality circle. D) team authority. E) chain of command. Answer: B 119) Which of the following items would tend to support wider spans of control as the best choice? A) Subordinates perform complex tasks B) Subordinates work independently of each other C) Subordinates perform non routine tasks D) Subordinates perform diverse tasks E) One subordinate's tasks depend on another subordinate's tasks Answer: E 120) What type of authority flows up and down the chain of command? A) Team authority B) Reverse vertical authority C) Specialists' authority D) Line authority E) Staff authority Answer: D 121) Which departments are directly linked to the production and sales of specific products? A) Line B) Product specific delegation C) Advisory D) Staff E) Team Answer: A 122) Kara is an accounts receivables clerk in the accounting department. Her boss is Tina who oversees the work of several clerks. The type of authority which Tina has is A) command authority. B) staff authority. C) line authority. D) committee and team authority. E) direct authority. Answer: C 123) Hillary has just graduated from law school and has taken a position with a legal firm. At first she will assist the partners but eventually she will handle cases on her own. Hillary is A) a staff member of the firm. B) a line member of the firm. C) a member of the management team. D) a committee member of the firm. E) a work team member of the firm. Answer: B 124) Line authority covers those people who ________, while staff authority covers those people who ________. A) are indirectly involved in producing goods or services; are directly involved in producing goods or services B) advise line managers; advise staff managers C) advise staff managers; do things D) are directly involved in producing goods or services; provide professional advice to line managers E) are in human resource departments; are involved in manufacturing or sales Answer: D 125) Which of the following would be a staff member in a manufacturing firm? A) Painting department chief B) Machine shop foreman C) Corporate attorney D) Assembly line worker E) Packing and shipping department head Answer: C 126) A corporate attorney is reviewing the marketing department's contract with a new advertising agency. The term for the type of authority the attorney has is A) staff authority. B) committee authority. C) command authority. D) line authority. E) direct authority. Answer: A 127) Which of the following would be a staff member in a manufacturing firm? A) Assembly line worker B) Marketing manager C) Human resources manager D) Machine shop foreman E) Purchasing department manager Answer: C 128) In reviewing the firm's organization chart, Martin, who is an attorney, notices that there is a dotted line between him and the V.P. of Sales. This means that A) the V.P. is Martin's boss. B) Martin has a line responsibility to the V.P. C) Martin and the V.P. serve on the same committee or work team. D) Martin has the final decision regarding any legal matters in Sales. E) Martin will assist the V.P. but the V.P. will make the final decision. Answer: E 129) Ted, the Human Resources manager, is reviewing a batch of resumes that are in response to a job advertisement in a local paper. After selecting six candidates the resumes are sent to the Sales Manager for selection of the candidates to be interviewed. Ted has what kind of authority? A) Line authority B) Expert authority C) Staff authority D) Direct authority E) Command authority Answer: C 130) A group of top managers has been selected to guide the restructuring of the company's business. Because of the critical nature of its activities the group has been granted A) line authority. B) committee and team authority. C) staff authority. D) executive authority. E) temporary authority. Answer: B 131) Departments which are directly linked to the production or sales of revenue-generating products are A) staff departments. B) function critical departments. C) line departments. D) matrix departments. E) none of these. Answer: C 132) Clark Equipment Company manufactures small earth movers. In this company, all of the following would be line departments except A) purchasing. B) accounting. C) sales. D) distribution. E) assembly. Answer: B 133) Employees with specific areas of expertise like accounting, law, and human resources, are usually given _________ authority, while managers of areas like production, finance, and marketing are usually given ________ authority. A) line; staff B) staff; line C) functional; staff D) team; staff E) none of these Answer: B 134) Geoff is a legal expert for Guelph Inc. His special expertise involves counseling and advising other managers. This illustrates A) functional authority. B) counseling authority. C) line authority. D) human resource authority. E) staff authority. Answer: E 135) Groups of operating employees empowered to plan and organize their own work and to do that with a minimum of supervision are called A) operating teams. B) employee committees. C) work teams. D) autonomous employee teams. E) none of these. Answer: C 136) What is the difference between line managers and staff managers? A) Staff managers have no authority over their subordinates, while line managers do B) Line managers usually have more formal education than staff managers C) Line managers are more important D) In a manufacturing firm, line managers are involved in areas like marketing and production, while staff managers work in areas like marketing research, personnel, and legal E) Staff managers have more authority than line managers Answer: D 137) In a firm which does marketing research for other firms, which of the following would be a line position? A) Market researchers B) Accountants C) Legal experts D) Human resource people E) It is not possible to tell Answer: A 138) In a law firm, which of the following would be a line position? A) Market researchers B) Lawyers C) Accountants D) Human resource people E) None of these; they would all be staff positions Answer: B 139) All of the following are either advantages or disadvantages of the functional structure except A) no single function is responsible for overall organizational performance. B) employees have clearly defined career paths. C) increases accountability. D) focuses attention on the key activities that must be performed. E) conflicts may arise among the functional areas. Answer: C 140) Which of the following is not an advantage of the functional structure? A) It focuses attention on the key activities that must be performed B) There is little duplication of activities C) Employees have clearly defined career paths D) The structure is simple and easy to understand E) No single function is responsible for overall organizational performance Answer: E 141) Scott has reviewed the organizational structure of his company and found that there is a lot of specialization within each area, employees seem to have clearly defined career paths, and that there is little duplication of activities. He is most likely working in a company with a(n) ________ structure. A) international B) divisional C) functional D) conglomerate E) matrix Answer: C 142) What is an advantage of the functional organization? A) The members of the organization speak a foreign language B) The organization is staffed with people who have expert knowledge about the product C) Coordinating highly specialized functions is easy D) Members of the organization report to two or more managers E) The functions are performed by experts in their field Answer: E 143) United Technologies departments include Pratt & Whitney, Carrier Air Conditioning, Otis Elevator, and Flight Systems. UTC has a(n) ________ organizational structure. A) functional B) international C) divisional D) matrix E) multinational Answer: C 144) Which organizational structure relies on product departmentalization? A) Functional B) Matrix C) Divisional D) Project E) International Answer: C 145) What term describes a department that looks like a separate business in that it produces and markets its own products? A) Team B) Diversified enterprise C) Division D) Profit centre E) Decentralized Answer: C 146) What kind of organization is typically organized around several divisions? A) Functional B) Matrix C) Product D) International E) Divisional Answer: E 147) All of the following are either advantages or disadvantages of the divisional structure except A) a lack of communication among divisions may occur. B) accommodates change and expansion. C) activities may be duplicated across divisions. D) company politics may affect the allocation of resources. E) focuses attention on the key activities that must be performed. Answer: E 148) Which of the following is not an advantage of the divisional structure? A) Activities may be duplicated across divisions B) Training for top management is encouraged C) Accountability is increased D) Develops expertise in the various divisions E) Change and expansion are facilitated Answer: A 149) Michael is analyzing the structure of his new employer. It is highly flexible and can readily adapt to changing circumstances. It also is heavily dependent upon committee and team authority. The firm is probably using the ________ structure. A) matrix B) functional C) conglomerate D) divisional E) international Answer: A 150) At Thermos, interdisciplinary teams have become focused on their target market rather than on the product. This is one of the major advantages of the ________ organization. A) divisional B) functional C) international D) conglomerate E) matrix Answer: E 151) In which structure will an individual report to two or more managers? A) Divisional B) Conglomerate C) Duopoly D) Matrix E) Functional Answer: D 152) Which of the following is the best explanation of a matrix structure? A) Teams are formed in which employees report to two or more managers B) A matrix structure is based upon the geographical area of the world C) A matrix occurs when one firm purchases another and combines the staff activities D) A matrix occurs when the organization is restructuring from a tall to a flat organization E) A matrix divides the organization into divisions, each of which operates as a semi-autonomous unit Answer: A 153) An organization that customarily uses teams of individuals from several departments to work on special projects is using a(n) ________ organizational structure. A) decentralized B) matrix C) international D) line and staff E) conglomerate Answer: B 154) Which organizational structure is used in the following situation: The firm is making a sales proposal which must include suggested computer hardware, software, an overall systems design, and estimated costs, and a project manager is assigned who assembles a group of company specialists from various departments to prepare the proposal to the customer. A) Strategic business unit structure B) Product departmentalization C) Geographic departmentalization D) Matrix structure E) Centralized structure Answer: D 155) With regard to the box entitled “Green Structures,” which is correct? A) The physical structures of businesses do not present much opportunity to be eco-friendly B) When a hybrid heating system was introduced at Delta Whistler Village Suites, it was hoped that greenhouse gases would be significantly reduced, but the technology didn’t work C) The “heel-strike” technology used to save electricity is already in operation in England D) The University of Toronto is already “off the grid” E) None of these are correct Answer: E 156) Which of the following is not one of the basic forms of organizational structure? A) Project B) Functional C) International D) Divisional E) Customer Answer: E 157) Gerry owns a medium-sized firm that employs 78 people. It would most likely have a ________ structure. A) functional B) international C) matrix D) conglomerate E) divisional Answer: A 158) As companies get larger and more complex, they are likely to move a way from the __________ structure. A) matrix B) international C) functional D) divisional E) conglomerate Answer: C 159) Departments that resemble separate businesses in that they produce and market their own products is typical in the ________ organization. A) functional B) matrix C) multinational D) divisional E) international Answer: D 160) Which organizational structure is used most frequently by small- and medium-sized firms? A) Functional B) Quasi-divisional C) Divisional D) International E) Matrix Answer: A 161) Which organizational structure emphasizes product departmentalization? A) Functional B) Matrix C) International D) Divisional E) Geographic Answer: D 162) Which of the following is an advantage of a functional structure? A) Functional areas get approval from top management for a variety of decisions B) Expertise develops within each function C) No single function is responsible for overall company performance D) Conflicts between functional areas may arise E) None of these Answer: B 163) Which of the following is correct with regard to divisional structures? A) Unhealthy competition may arise between the divisions B) the different divisions all pursue the same corporate identity C) Different divisions do not share certain corporate-level resources like market research data D) If a lot of control is delegated to divisional managers, corporate managers have a better understanding of daily operations in the divisions E) There is little duplication of effort because the various divisions must work together to achieve overall corporate objectives Answer: A 164) All of the following are advantages of the functional structure except A) employees have clearly defined career paths. B) the structure is simple and easy to understand. C) the structure eliminates duplication of activities. D) the structure accommodates change and expansion. E) the structure focuses attention on the key activities that must be performed. Answer: D 165) All of the following are advantages of the divisional structure except A) the structure facilitates the development of expertise in various areas of the company. B) the structure encourages training for top management. C) the structure increases accountability. D) the structure accommodates change and expansion. E) the structure focuses attention on the key activities that must be performed. Answer: E 166) In the ________ structure, teams are formed in which individuals report to two or more managers, usually including a line manager and a staff manager. A) conglomerate B) matrix C) divisional D) international E) functional Answer: B 167) Which structure uses teams/committees along with functional departments on a long-term basis? A) Matrix B) Functional C) Conglomerate D) Team-based duopoly E) Divisional Answer: A 168) Elizabeth reports to three managers. Elizabeth's company uses the ________ corporate structure. A) matrix B) triple C) functional D) divisional E) conglomerate Answer: A 169) The ________ structure has been developed in response to the need to manufacture, purchase, and sell in global markets. A) conglomerate B) international C) functional D) divisional E) matrix Answer: B 170) Wal-Mart has adopted a(n) ___________ structure. A) conglomerate B) international C) functional D) divisional E) matrix Answer: B 171) Organizations in which traditional boundaries and structures are minimized or eliminated are called __________ organizations. A) learning B) virtual C) Smith's D) boundaryless E) international Answer: D 172) In ________ organizations, people “float” from project to project as dictated by their skills and the demands of the project. A) learning B) virtual C) team D) boundaryless E) international Answer: C 173) ________ and _________ organizations are closely related because in both of them people are constantly moving around to different jobs as dictated by the work that is being done. A) virtual; functional B) functional; project C) matrix; team D) team; virtual E) divisional; functional Answer: D 174) When clients of Global Research Consortium request various services, the staff of three permanent employees contracts out the work to people with appropriate skills. GRC is therefore a(n) __________ organization. A) virtual B) team C) international D) boundaryless E) learning Answer: A 175) As the world grows increasingly complex and fast paced, organizations continue to seek new forms of organization that permit them to compete effectively. The following are all examples of the new forms except A) boundaryless organization. B) virtual organization. C) global organization. D) team organization. E) learning organization. Answer: C 176) A ________ organization relies almost entirely on project type teams, with little or no underlying functional hierarchy. A) team B) learning C) virtual D) flexible E) boundaryless Answer: A 177) A ________ organization has little or no formal structure, with only a handful of permanent employees. A) learning B) flexible C) boundaryless D) team E) virtual Answer: E 178) A ________ organization seeks to integrate continuous improvement with continuous employee development. A) virtual B) flexible C) learning D) boundaryless E) team Answer: C 179) A ________ organization focuses on employee development and continually transforming itself to respond to changing demands and needs. A) team B) learning C) boundaryless D) project E) virtual Answer: B 180) Which of the following organizational systems is the part that can be seen and represented in chart form? A) Formal organization B) Grapevine C) Informal organization D) Normal organization E) Product organization Answer: A 181) The type of organization within which people do their jobs in different ways and interact with other people in ways that do not follow formal lines of communication is called the A) divisional organization. B) international organization. C) rational organization. D) informal organization. E) matrix organization. Answer: D 182) Everyday social interactions among employees that transcend formal jobs and job interrelationships are called the A) informal organization. B) formal organization. C) process organization. D) gossip structure. E) production organization. Answer: A 183) ________ are groups of people who decide to interact among themselves. A) Staff members B) Grapevines C) Line departments D) Informal groups E) Matrix structures Answer: D 184) The ________ is an informal communication network that runs through an organization. A) grapevine B) intrapreneur C) intranet D) span of control E) message center Answer: A 185) Which of the following is correct with regard to the grapevine? A) Managers can eliminate the grapevine, but it takes a lot of time and effort to do so B) All things considered, it is best for the manager to ignore the grapevine because the accuracy of the information it carries is inconsistent and unpredictable C) The grapevine is an early warning system, so managers should pay attention to it D) Managers cannot have an influence on the information carried by the grapevine because it is controlled by the informal organization E) All of these are correct Answer: C 186) Which of the following is a disadvantage of informal communications? A) Managers can easily interrupt the flow of information which the employees may believe to be important B) Good news may spread very rapidly through the informal channel C) It flows through the chain of command D) Rumours and distorted or inaccurate information may be flowing through the grapevine at a fast rate E) Studies have shown that the rumours and gossip on the grapevine are almost always accurate Answer: D 187) Gerry, president of Erin Enterprises, knew he had to lay off 5% of his employees in order to stay profitable. Gerry wanted to ease the aggravation of telling his employees, so he used the ________ prior to his formal announcement. A) matrix strategy B) virtual method C) grapevine D) virtual organization E) ”keep-‘em-in-the-dark” strategy Answer: C 188) When musicians and singers at the New York Metropolitan Opera play poker during intermissions, this is an example of A) poor control by management. B) informal groups. C) the grapevine. D) rumours. E) unethical employee behaviour. Answer: B 189) Which of the following is correct with regard to the informal organization? A) It matches up pretty closely the formal organization B) The term refers to the breaking down of barriers between formal departments C) Managers should try to suppress the informal organization because it often provides employees with inaccurate information D) Managers should tune in to the grapevine because it is an early warning system E) All of these are correct Answer: D 190) The grapevine is an informal _________ network. A) task B) communication C) budget D) gossip E) structural Answer: B TRUE/FALSE QUESTIONS. Write 'T' if the statement is true and 'F' if the statement is false. 191) Each firm has the same basic organizational elements and thus the same basic structure. Answer: False 192) Organizational structure involves the relationships of jobs within an organization. Answer: True 193) Organizational structure is defined as "the specification of the jobs to be done within a business and how those jobs relate to one another." Answer: True 194) Organizational structure is influenced by the firm's mission and size, but not by the technology used in the firm. Answer: False 195) Because the purpose of a marketing department or accounting department is essentially the same in every organization, organizational structure is fairly standardized in Canadian business firms. Answer: False 196) Most organizations change their structures on a continuing basis. Answer: True 197) Since it was first incorporated, Ford Motor Co. has essentially maintained its original organizational structure. Answer: False 198) The chain of command shown on an organization chart reflects manager and subordinate relationships. Answer: True 199) Organization charts show the formal and informal organization structure of an organization. Answer: False 200) The chain of command refers to the unduly heavy responsibilities borne by managers. Answer: False 201) Job specialization means that an individual job is broken into specific tasks which are then assigned to different individuals. Answer: True 202) Job specialization is the process of identifying the specific jobs that need to be done and designating the people who will perform them. Answer: True 203) Job specialization is a natural part of organizational growth. Answer: True 204) The two basic building blocks of all business organizations are specialization and departmentalization. Answer: True 205) In small organizations, jobs tend to be unspecialized. Answer: True 206) Creating profit centres is a special case of departmentalization. Answer: True 207) The process of grouping together jobs into logical units is known as departmentalization. Answer: True 208) Attempts to separate the work force into departments that are based on anything other than customers have been largely unsuccessful. Answer: False 209) Customer departmentalization tends to make a retail store more efficient and sales people tend to gain expertise in their specific department. Answer: True 210) Process departmentalization is based upon the steps that are needed to produce a good or service. Answer: True 211) Larger firms tend to use several different types of departmentalization for various levels in the organization. Answer: True 212) After jobs are departmentalized then they should be specialized. Answer: False 213) Stores like HMV typically use product departmentalization. Answer: False 214) A pickle maker like Vlasic usually has several departments that transform cucumbers into fresh-packed pickles. Vlasic is using product departmentalization. Answer: False 215) Customer departmentalization generally is more effective than geographic departmentalization. Answer: False 216) All things considered, functional departmentalization is the optimum organizational structure for most organizations. Answer: False 217) A bank that handles consumer loans in one department and commercial loans in another department is using product departmentalization. Answer: True 218) Assigning tasks is the first step in the process of deciding who makes which decisions. Answer: True 219) The first step in establishing the decision making hierarchy is to assign tasks. Answer: True 220) Responsibility is the power to make decisions for those tasks that you have been given the authority to perform. Answer: False 221) Delegation occurs when a manager assigns a task to a subordinate who then is accountable to the manager for completion of the task. Answer: True 222) The assignment of a task, a responsibility, and/or authority by a manager to a subordinate is known as delegation. Answer: True 223) Many managers have trouble delegating tasks to others. Answer: True 224) McDonald’s uses decentralization as a way to maintain standardization. Answer: False 225) At FedEx, the commitment to decentralization promotes innovation. Answer: True 226) The long history of General Motors illustrates both the advantages and disadvantages of decentralization. Answer: True 227) A centralized organization is one way for a large firm with many branches to maintain control and ensure that the branches are operated in a standard fashion. Answer: True 228) The case of General Motors illustrates the fact that decentralization is generally better than centralization. Answer: False 229) Centralized organizations usually have wide spans of control with a lot of delegation taking place. Answer: False 230) In a centralized organization, most of the decision-making authority is held by upper-level managers. Answer: True 231) Centralized organizations usually have wide spans of control with a lot of delegation taking place. Answer: False 232) Span of control refers to the type and number of different tasks for which one is responsible. Answer: False 233) When many employees perform the same simple task, a wide span of control is feasible. Answer: True 234) Downsizing typically reduces the span of control. Answer: False 235) Staff departments aid line departments in making decisions but do not have the authority to make final decisions. Answer: True 236) In a large manufacturing business, staff departments like law, accounting, and human resources are found. Answer: True 237) Responsibility is relevant for line managers, but not for staff employees. Answer: False 238) Delegation is allowed by line managers, but not by staff managers. Answer: False 239) If any line department fails to complete its task, the company cannot sell and deliver finished goods. Answer: True 240) Whether a manager is classified as line or staff depends on the type of company the manager works in. Answer: True 241) Staff managers generally have less education than line managers. Answer: False 242) Team authority is generally given to top management teams, but not to operating teams. Answer: False 243) A team organization relies almost exclusively on project type teams with little or no underlying functional hierarchy. Answer: True 244) In some organizations the matrix structure is temporary and the team is broken up while in other firms the structure is permanent. Answer: True 245) Functional organization structures are used primarily by large, corporate businesses. Answer: False 246) Global Research Consortium offers research and consulting services to firms doing business in Asia and is an example of a learning organization. Answer: False 247) All things considered, the divisional structure is probably the best one. Answer: False 248) In both the divisional and international structures the departments are quite autonomous and are free to run as they best see fit. Answer: True 249) The matrix structure must be temporary. Answer: False 250) A matrix structure is a variation of the project structure. Answer: True 251) The project organization is not used much by Canadian firms because their megaprojects are too large for the structure to work. Answer: False 252) The matrix structure is especially desirable for firms that want to establish long-term relationships among members of the special project teams, and which were assembled for specific purposes. Answer: False 253) A matrix structure cannot be permanent. Answer: False 254) Boundaryless and virtual organizations both function without traditional boundaries. Answer: True 255) A boundaryless structure is one that operates freely across international boundaries. Answer: False 256) Wal-Mart’s relationship with some of its suppliers is an example of a boundaryless organization. Answer: True 257) A virtual organization typically has only a small number of employees. Answer: True 258) Generally speaking, a team organization is more effective than a virtual organization. Answer: False 259) A learning organization is one where management pledges to put aside a certain percentage of profits and allocate that money to training for employees. Answer: False 260) A properly structured formal organization eliminates the need for the informal structure. Answer: False 261) The informal organization is sometimes just as powerful, if not more powerful, than the formal structure. Answer: True 262) Studies of the grapevine network within organizations have shown that the rumours and gossip on the grapevine are almost always accurate, and that a prudent manager is wise to act on that information. Answer: False 263) Because the grapevine carries so much inaccurate information, managers should ignore it. Answer: False 264) Attempts to eliminate the grapevine are fruitless. Answer: True SHORT ANSWER QUESTIONS. Write the word or phrase that best completes each statement or answers the question. 265) What is an organization chart? Answer: An organization chart is a diagram depicting a company's structure, showing employees where they fit into its operations. 266) Why do most businesses use organization charts? Answer: Organization charts clarify structure and show employees where they fit into a firm's operations. The solid lines define the chain of command or reporting relationship within the company. 267) What elements work together to determine an organization's structure? Answer: The chief factors working together to determine an organization's structure are its purpose, mission, and strategy. 268) Explain the meaning of the term "organizational structure." Answer: ∙a tool which shows the specification of the jobs to be done within a business and how those jobs relate to one another 269) Identify the two building blocks of organizational structure. Answer: Specialization and departmentalization. 270) What is specialization? Answer: Specialization is determining who will do what. 271) What are the advantages and disadvantages of specialization? Answer: Advantages: Specialized jobs are learned more easily and can be performed more efficiently than nonspecialized jobs. When jobs are specialized, it is also easier to replace people who leave the organization. Disadvantages: When jobs are too specialized, employees may become bored and careless, derive less satisfaction from their jobs, and lose sight of how their contribution fits into the overall organization. 272) Identify five forms of departmentalization. Answer: Customer, product, process, geographic, and functional. 273) What is the difference between specialization and departmentalization? Answer: Specialization refers to breaking down one overall job into several smaller jobs, while departmentalization refers to the process of grouping jobs together into logical units. 274) Ace Products, a manufacturer of copiers, printers, and fax machines, has vice-presidents for the federal government, airlines, and banks. How is Ace Products departmentalized? Answer: Ace Products is departmentalized by customer. 275) Johnson Products has vice-presidents for copiers, printers, and fax machines. How is Johnson Products departmentalized? Answer: Ace Products is departmentalized by product. 276) Bright Products has vice-presidents for Europe, North America, and Asia. How is Ace Products departmentalized? Answer: Ace Products is departmentalized by geography. 277) What is one of the advantages of departmentalization by customer? Answer: It makes shopping easier for customers. 278) What are the advantages and disadvantages of departmentalization by geography? Answer: It ensures quick, responsive reaction to the needs of customers, but it may also lead to duplicate production and other facilities, as well as compartmentalization of knowledge. 279) What is responsibility? Answer: Responsibility is the duty to perform an assigned task. 280) What is authority? Answer: Authority is the power to make the decisions necessary to complete a task. 281) What is delegation? Answer: Delegation is the assignment of a task, responsibility, or authority by a manager to a subordinate. 282) What is accountability? Answer: Accountability is the liability of subordinates for accomplishing tasks assigned by managers. 283) What is a centralized organization? Answer: In a centralized organization, upper-level managers hold most decision-making authority. 284) What is a decentralized organization? Answer: In a decentralized organization, much of the decision-making authority is delegated to lower levels of management. 285) What is the span of control? Answer: The span of control is the number of people supervised by one manager. 286) List the factors that may affect a manager's span of control. Answer: Factors that may affect a manager's span of control include employees' abilities, the supervisor's management skills, the similarity and simplicity of tasks, and the extent to which tasks are interrelated. 287) Identify the three forms of authority. Answer: Line authority, staff authority, and committee and team authority. 288) What type of authority flows up and down the chain of command? Answer: Line authority. 289) What type of authority is held by specialists in areas such as law, accounting, and human resource management? Answer: Staff authority. 290) What is a divisional structure? Answer: This type of structure divides the organization into several divisions, each of which operates as a semi-autonomous unit and profit centre. 291) Identify the four basic forms of organizational structure. Answer: Functional, divisional, project, and international. 292) What is a project organization? Answer: In this type of structure, teams of specialists are formed from different functional areas of the organization to work on a specific project. 293) Why do some companies adopt a truly global structure? Answer: Some companies adopt a truly global structure in which they acquire resources (including capital) , produce goods and services, engage in research and development, and sell products in whatever local market is appropriate, without consideration of national boundaries. This allows the company to function as one integrated global organization. 294) What is a team organization? Answer: A team organization relies almost exclusively on project-type teams, with little or no underlying functional hierarchy. 295) What is a boundaryless organization? Answer: One in which traditional boundaries and structures are minimized or eliminated altogether. 296) Describe the structure typically found within a virtual organization. Answer: A virtual organization has little or no formal structure; typically, it has only a handful of employees and a modest administrative facility. 297) Describe a learning organization. Answer: A learning organization works to facilitate the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs. 298) What is the informal organization? Answer: The informal organization is the network of everyday social interactions among company employees that is unrelated to the firm's formal authority structure. 299) Is the informal organization positive or negative? Answer: The informal organization can be both positive and negative. It can help employees feel that they belong, it allows them to “let off steam” in a safe environment, and it provides information. On the negative side, it can reinforce organizational politics and provide distorted information. 300) What is the grapevine? Answer: The grapevine is the informal communication network that runs through an organization. ESSAY QUESTIONS. Write your answer in the space provided or on a separate sheet of paper. 301) What is the purpose of developing an organization chart? How are these charts used? Answer: • to illustrate to employees how their job fits into the organization • they are used to show the chain of command (authority) and flow of formal communication 302) Describe how organizations create and communicate their organizational structures. Answer: Each organization must develop an appropriate organizational structure: the specification of the jobs to be done and the ways in which those jobs relate to one another. Most organizations change structures almost continuously. Firms prepare organization charts to clarify structure and to show employees where they fit into a firm's operations. Each box represents a job, and solid lines define the chain of command, or reporting relationships. The charts of large firms are complex and include individuals at many levels. Because size prevents them from charting every manager, they may create single organization charts for overall corporate structure and separated charts for divisions. 303) What are the major factors which determine how a firm should be best organized? Answer: firm's purpose, mission statement, strategies, size of the firm, technology changes, competition, government regulations, any changes to its internal or external environments 304) What elements work together to determine an organization's structure? What types of circumstances affect this structure? Answer: ∙elements working together include an organization's purpose, mission and strategy ∙size, technology and changes in the environmental circumstance affect an organization's structure 305) Discuss the relationship between chain of command and an organization chart, including what the boxes, dotted lines, and solid lines represent. Answer: diagram showing reporting relationships; solid lines = direct reports; dotted lines = staff authority; one box = one job; helps employees know where they fit in 306) What are the two basic building blocks of organizational structure? Answer: ∙specialization: determining who will do what ∙departmentalization: determining how people performing certain tasks can best be grouped together 307) Describe the five most common methods of departmentalization within an organization. Identify the advantages of each method. Answer: • customer: departmentalization according to types of customers likely to buy a given product • product: departmentalization according to the products being created • process: departmentalization according to the production process used to create a good or service • geographic: departmentalization according to the area of the country or world supplied ∙functional: departmentalization according to functions or activities 308) What are specialization and departmentalization, and how do they relate one to another? Answer: breaking down the elements of an overall job into smaller jobs; then grouping those smaller jobs into logical units. 309) Discuss the three-step process used to establish the decision-making hierarchy. Answer: • Assigning tasks: determining who can make decisions and specifying how they should be made • Performing tasks: implementing decisions that have been made • Distributing authority: determining whether the organization is to be centralized or decentralized 310) Describe centralization/decentralization, delegation, and authority as the key ingredients in establishing the decision-making hierarchy. Answer: After jobs have been specialized and departmentalized, firms establish decision-making hierarchies. One major issue addressed through the creation of the decision-making hierarchy involves whether the firm will be relatively centralized or relatively decentralized. Centralized authority systems typically require multiple layers of management and thus tall organizational structures. Decentralized firms tend to have relatively fewer layers of management, resulting in a flat organizational structure. Delegation is the process through which a manager allocates work to subordinates. In general, the delegation process involves three steps: (1) assigning responsibility; (2) granting authority; and (3) creating accountability. As individuals are delegated responsibility and authority in a firm, a complex web of interactions develops. These interactions may take one of three forms of authority: line, staff, or committee and teams. 311) Why should a manager maintain equilibrium between authority and responsibility? Answer: • with authority comes responsibility • you cannot hold an employee responsible for a task without giving her/him the authority to use the firm's resources to carry out the tasks 312) Explain what is meant by "span of control." What factors need to be considered when establishing the span of control for a manager? Answer: • span is the number of people managed by one supervisor/manager • factors which determine this are: • employees' abilities • the supervisor's managerial skills • similarity and simplicity of tasks • extent to which tasks are interrelated 313) Compare and contrast the three forms of authority: line, staff, and committee and team authority. Answer: • line authority is based on chain of command and operates vertically? a telling function • staff authority is based on expertise and flows horizontally? an advising function • committee authority is based on granting power for a specified period to perform a specialized task 314) Compare and contrast the three forms of authority: line, staff, and committee and team authority. Answer: • line authority is based on chain of command and operates vertically - a telling function • staff authority is based on expertise and flows horizontally - an advising function • committee authority is based on granting power for a specified period to perform a specialized task 315) Describe what responsibility and authority are and how they are related. Answer: responsibility is the duty to perform a task; authority is the power to make decisions related to that responsibility; each responsibility should have a commensurate degree of authority 316) Describe what delegation and accountability are and how they are related. Answer: delegation occurs when a manager assigns a task to a subordinate; accountability is the subordinate's duty to perform the assigned task 317) What is centralization and decentralization, and how are they related to span of control and delegation? Answer: with centralization the decision-making is concentrated in top management; with decentralization the opposite is true; span of control is the number of people reporting to a manager and it is wider when a firm is decentralized; likewise delegation is more likely in a decentralized structure 318) Describe a line-and-staff organization, being sure to discuss what line authority and staff authority are and the way they interrelate. Answer: line managers are responsible for all activities that get a good to a customer; staff managers are to counsel and advise line managers and generally assist them in getting their jobs done; final decisions are made by line managers with input and help from staff managers 319) Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design. Answer: Most firms rely on one of four basic forms of organizational structure: (1) functional, (2) divisional, (3) matrix, or (4) international. Functional structure is a form of business organization in which authority is determined by the relationships between group functions and activities. A divisional structure relies on product departmentalization. A so-called matrix structure is organized along two dimensions, instead of just one, by combining, for example, a functional and a divisional structure. International organizational structures are developed in response to the need to manufacture, purchase, and sell in global markets. As global competition becomes more complex, companies may experiment with ways to respond. Some adopt truly global structures, acquiring resources and producing and selling products in local markets without consideration of national boundaries. Organizations also continue to seek new forms of organization that permit them to compete effectively. The most popular new forms include (1) team organization; (2) virtual organization; and (3) learning organization. 320) Discuss the advantages and disadvantages of a functional structure. Answer: ∙see table 7.1 on page 239 Advantages: Specialization improves efficiency and expertise; clear lines of authority enhance communication within departments. Disadvantages: Silos can lead to poor communication between departments; can create rigidity, limiting responsiveness to change. 321) Describe the divisional structure and the advantages and disadvantages for companies. Also give an example of a real company who uses this type of structure. Answer: • a divisional structure allows a firm to be divided into segments each of which then operates and makes decisions on their own • e.g., General Motors, Chevrolet, Pontiac • see Table 7.2 on page 240 A divisional structure organizes departments based on products, services, or geographic regions. Advantages: Increases flexibility and focus on specific markets. Disadvantages: Can lead to duplication of resources and efforts. Example: General Electric (GE). 322) Why is the divisional organizational structure used by many large corporations? Answer: divisions operate as independent business; many large corporations have several businesses which are not related and well suited to be run independently 323) Why should a firm consider the matrix organizational structure for developing new products? Answer: flexible; focused on customer not functions, use resources on other products 324) Explain the functional structure, and note its advantages and disadvantages. Answer: • in the functional structure, the various units of the organization are formed based on the functions that must be carried out to reach organizational goals. • for advantages and disadvantages, see table 7.1 325) As the world grows increasingly complex and fast paced, organizations continue to seek new forms of organization that permit them to compete effectively. Identify and describe some of these new forms. Answer: • ∙boundaryless organization: one in which traditional boundaries and structures are minimized or eliminated altogether • team organization: relies almost exclusively on project-type teams, with little or no underlying functional hierarchy • virtual organization: has little or no formal structure • learning organization: works to integrate continuous improvement with continuous employee learning and development 326) Describe the purposes of a learning organization. Answer: • main purpose is to integrate continuous improvement with employee learning and development; other purposes include: • facilitating life long learning • improving quality • continuous improvement • performance measurements 327) What should be the reaction of a manager who discovers the existence of a grapevine in the organization? Answer: • probably do nothing! • a good manager, with good people skills, can use it to his/her advantage in their informational and interpersonal role. 328) What factors exist to cause the grapevine to work effectively? Answer: • a relaxed management style • a decentralized organization • a warm working environment • a motivated employee group • shared decision making Test Bank for Business Essentials Ronald J. Ebert, Ricky W. Griffin, Frederick A. Starke, George Dracopoulos 9780132479769, 9780134384733

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