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Chapter 08 - Structuring Organizations for Today's Challenges
Including customers and suppliers on cross-functional teams violates the interests of
stockholders.
151. By structuring the company with cross-functional teams, there is a greater chance that
a business is more responsive to social trends affecting customer preferences.
Feedback: By going beyond company borders and including others on a cross-functional self-
managed team, a firm can learn first-hand from suppliers and customers about market trends
that affect its business.
152. A matrix team for an aerospace company may consist of a project manager, a finance
expert, a marketing specialist, a member of production, and two design engineers.
Feedback: Matrix teams consist of individual experts from various functional units of a
company joining together to solve a problem or work on a project. These are temporary teams
that disband when the assignment is completed.
153. It is strategically not sensible for a firm to consider asking suppliers and customers to
join a cross-functional self-managed team that is testing iterations of future products.
Feedback: By going beyond company borders and including others on a cross-functional self-
managed team, a firm can learn first-hand from suppliers and customers about market trends
that affect its business.
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154. One disadvantage of the matrix style of organization is that it is more difficult to keep
development projects on schedule. The model slows down the time from design, to
production, and then to market.
Feedback: Matrix style organization was purposely designed to expedite projects from
conception to market. The model eliminates the communication problems that line and line
and staff models experienced when trying to develop a product and get it to market.
155. The cross-functional team concept has resulted in lots of unhappy employees because
less than 25% of employed workers do favor working with others.
Feedback: According to a BusinessWeek report, over 80% of employees surveyed showed a
preference for working with others.
156. Due to the competitive nature of companies that compete for the same customers,
cross-functional teams never consist of individuals from more than one firm.
Feedback: Cross-functional teams often include employees who work for firms that have
teamed-up together to produce a product or service. Sometimes teams are interfirm, meaning
from two or more companies.
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157. Cross-functional teams that go beyond company boundaries share production
information but seldom market information.
Feedback: Cross-functional teams are transparent. They share as much information as
necessary to succeed in building a product that is needed by the marketplace. These teams go
outside of the boundaries of one company. Sometimes the team will share information with
government employees and/or employees from around the globe.
158.
Chapter 08 - Structuring Organizations for Today's Challenges
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Buzzoff Corporation is a medium sized organization, organized with well-defined lines of
authority and responsibility. Each employee reports to only one boss. The managers at
Buzzoff complain that they have no expert support staff available to offer legal advice.
Lately opportunities are slipping through the cracks due to inefficient long lines of
communication. These characteristics suggest that Buzzoff employs a matrix
organization.
Feedback: A line organization is characterized by well-defined lines of authority and
responsibility and provides one supervisor for each person. Line organizations also have few
experts and assistants to help line managers, and are frequently plagued by long lines of
communication.
159. Julie is an attorney that works for Worldwide Food Science, Inc. that provides legal
advice and assistance to the firm's managers. Julie's job with WFS, Inc. would be
classified as a staff position.
Feedback: Staff personnel provide advice and assistance to line managers.
160.
Chapter 08 - Structuring Organizations for Today's Challenges
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Wizard Manufacturing makes small consumer electronics like mixers and toasters. The
industry is relatively stable, having few new advances in product development. Wizard
should use a line or line-and-staff organizational structure to ensure efficient operations.
Feedback: Both line and line-and-staff organization structures work well in organizations
with a relatively unchanging environment and slow product development, such as firms
selling consumer products like toasters. In such firms, clear lines of authority and relatively
fixed organization structures are assets that ensure efficient operations.
161. Joel, an employee of the engineering department, was temporarily assigned to work
with specialists from other departments to develop a new product. Upon completion of
this project, Joel returned to his position in the engineering department. This arrangement
illustrates the use of a cross-functional team.
Feedback: In a cross-functional team, the members work together on a long-term basis. They
may work together on more than one project, and over an extended period of time. The fact
that Joel views his work on the team as temporary and plans to return to his old position when
the project is completed suggests that the firm is using a matrix organization.
162.
Chapter 08 - Structuring Organizations for Today's Challenges
Alleta Publishing Company, Inc. is considering the use of cross-functional teams. In order
to be most effective, Alleta should include customers as members of the teams.
Feedback: Cross-functional teams work best when the ideas of customers are brought into the
organization. The best way to do this is to actually include customers on the teams.
163. Barclay developed two interactive computer games. He didn't do it entirely alone. Last
year he started a small company, hired two programmers, and a marketing graduate. He
considers himself a cutting-edge kind of guy and wants to position his company the same.
Soliciting your advice as to how he should structure his organization as he moves forward,
you suggest that he hire a few potential customers to join his team of employees as
product testers. And, maybe he should solicit globally. The structure you have described
would simulate a line and staff organization.
Feedback: Including potential customers on a work team simulates a cross- functional self-
managed team.
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164. Julio is the owner of Celebration, Inc. a small party supply company. The company
provides tents, tables, chairs, and related paraphernalia for wedding, Bar Mitzvah, Bot
Mitzvah, graduation, birthday, and other celebratory events. As sales have increased, the
organization has hired more personnel and departmentalized to more efficiently handle
purchasing, sales, service, and accounting. Everyone is still responsible for achieving
company goals. Upon seeing Celebration's organization chart, you agree it uses a line
organization model.
Feedback: Many small businesses begin as line organizations. In a line organization model
everyone in the organization is responsible for achieving the company goals.
165. Networking uses communication technology to link organizations allowing them to
work together on common objectives.
166. The Internet makes "real time" availability of data possible.
167.
Chapter 08 - Structuring Organizations for Today's Challenges
Transparency describes the relationship between a firm and its stockholders.
168. Transparency allows two companies to work more efficiently together.
169. Most companies are no longer self-sufficient or self-contained.
170. Networking requires transparency to work most effectively.
171. A virtual corporation refers to a permanent network of firms linked by high-tech
communication systems.
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172. A virtual corporation is a networked organization made up of replaceable firms that
join the network and leave it as needed.
173. Benchmarking requires organizations to compare each organizational function against
the best in the world.
174. Competitive benchmarking rates an organization's products and operations against the
industry average.
175. Competitive benchmarking compares a company's practices, processes, and products
against others in its industry, with the goal of doing it better than the competition.
176.
Chapter 08 - Structuring Organizations for Today's Challenges
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The functions that a company can perform as well as or better than anyone else in the
world are known as that firm's optimized capabilities.
177. An organization's core competencies are those functions that the firm performs as well
as or better than anyone else in the world.
178. If a particular function is one of a firm's core competencies, it typically performs this
function itself rather than outsourcing it to another organization.
179. Assigning various functions that a firm might do for itself to outside organizations is
known as competitive allocation.
180.
Chapter 08 - Structuring Organizations for Today's Challenges
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Outsourcing involves assigning various functions to outside organizations.
181. Restructuring involves the redesign of an organization to be more responsive to
customers.
182. To better serve customers, many firms are restructuring to empower front-line
employees.
183. New technology such as the Internet has opened up opportunities for firms to sell to
new markets.
184.
Chapter 08 - Structuring Organizations for Today's Challenges
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Digital natives, those who grew-up with the Internet are an important customer group that
most businesses want to reach.
185. Introducing change into an organization is an easy task for a manager.
186. Inverted organizations define the role of front-line employees as those workers who
follow the orders of top and middle management.
187. Inverted organizations empower employees by adding multiple layers of management
and long lines of communication.
188.
Chapter 08 - Structuring Organizations for Today's Challenges
In an inverted organization, the purpose of management is to assist and support the
decisions of employees who work directly with customers.
189. Companies have learned that working transparently through real time networks has
provided competitive advantages in the marketplace.
Feedback: The Internet has allowed companies to send to each other real time data, which
expedites the process of getting products and services to customers, many of which are digital
natives, having grown-up with the Internet who expect fast and exceptional service.
190. Outsourcing has become commonplace, particularly when organizations want to focus
on core competencies.
Feedback: Outsourcing is assigning one or more functions to another organization. Often
companies will look outside the firm for accounting services, transportation services, and
legal services, to name a few. They prefer to utilize their resources on core competencies,
those functions that they do better than most.
191. Once a company has restructured a firm to be more competitive in today's market, it
alleviates the need to scan the external environment.
Feedback: Adapting to change is difficult but necessary in today's business world. Companies
must be careful to avoid complacency.
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192. The virtual corporation does all its business online with partners considered a
permanent part of the network.
Feedback: Although it is possible for firms that are connected virtually to interact online, the
term refers to the fact that the functional units of this type of corporation do not have
permanent ties to any one corporation. The core firms hire other companies to partner with it
on an as needed basis.
193. The Social Media in Business box titled, “When Twitter and Facebook Are Old
School,” discusses the lifecycle of social media and predicts that this media will lose its
appeal when businesses realize it is not adding to the bottom line.
Feedback: The organizing function will continue to evolve due to faster, interactive
communication through a number of media, including cloud computing technology. We will
see more employees telecommuting and more seamless relationships with vendors and
suppliers. Keeping up with technology will continue to be important.
194. Cardinal Foods is a wholesaler serving grocery stores. High tech communications
allows Cardinal to work closely with its suppliers and customers in real time. Networking
allows these organizations to operate more efficiently.
Feedback: Networking is using communications technology to link organizations and allow
them to work together on common objectives.
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195. In order to improve services to customers, Northwest Electric, a regional monopoly
recently rated their company's processes and products against the results achieved by the
world's best at similar processes and products. Northwest Electric has adopted a policy of
international standardization.
Feedback: Rating an organization's practices, processes, and products against the world's best
is known as competitive benchmarking.
196. The Nutmeg Soccer Club outsourced its accounting work. This suggests that
management at Nutmeg does not believe that accounting is one of the firm's core
competencies.
Feedback: Core competencies are those functions a firm can perform as well as, or better
than, anyone else. A firm should continue carrying out its core competencies, and should
outsource only functions that others can perform more efficiently.
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202. Organizational culture can produce either a positive or negative impact on an
organization.
203. The very best organizations have cultures that emphasize service to others, especially
customers.
204. Organizational culture refers to the widely shared values within a corporation that
foster unity and cooperation.
205. The informal organization is created by the decisions of top management.
206.
Chapter 08 - Structuring Organizations for Today's Challenges
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While most organizations have a formal organization structure, only poorly managed
firms also have an informal organization.
207. A firm's informal organization refers to the structure that identifies the authority,
responsibility, and position of people within the organization.
208. The informal organization of a business can help generate creative solutions and
inspires teamwork and camaraderie.
209. The formal organization of a firm provides the lines of authority to follow in routine
situations.
210.
Chapter 08 - Structuring Organizations for Today's Challenges
The grapevine refers to the formal channel used for confidential communications between
members of top management.
211. An informal organization can be a valuable asset to managers attempting to create an
environment of harmony among workers and establish the corporate culture.
212. The informal organization appears as dashed lines on a firm's organizational chart.
213. The informal organization is best suited for decision making on big issues.
214.
