Chapter 08 – Structuring Organizations for Today’s Challenges
The key people in a company’s grapevine typically have considerable influence in the
organization.
Feedback: The grapevine is the informal organization’s nerve center. Unofficial information
flows through this system.
215. Successful managers will find the balance between promoting the informal
organization and maintaining a formalized structure, as well.
Feedback: As appealing as the informal organization may be due to its ability to create
camaraderie and a spirit of cooperation, informality also can be very powerful in resisting
managerial directives. These resistance movements can result in Union strikes and other
disruptive occurrences. Management must find the right balance between the formal and
informal organization.
216. Samad accepted a managerial position at City Bank. In order to be more effective in
his new position, he should try to learn who the important people are in City’s informal
organization.
Feedback: Important people within a firm’s informal organization can be very helpful at
teaching new employees the “ins and outs” of how to operate effectively within the
organization.
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217. Molly, a production line employee at Holiday Industries learned from a friend at her
coffee break that one of the managers in accounting is about to be fired. She is eager to
learn if other friends at Holiday know any more about the situation. This flow of
information is an example of Holiday’s grapevine.
Feedback: The grapevine is the flow of unofficial (and sometimes inaccurate) information
between and among managers and employees within an organization.
218. Rapid Response Security Firm, a company that provides on-site security services for
malls and other retail environments needs to review current procedures used by its
professional officers to make certain they are in compliance with new laws. On crucial
issues such as this, it is more important to gather information through the informal
organization, as opposed to the formal organization.
Feedback: The informal organization is not well suited to making critical decisions of long
term significance. It is too unstructured and emotional to allow for careful, reasoned decision
making on such important topics.
219.
Chapter 08 – Structuring Organizations for Today’s Challenges
Jack just learned that several persons in Arizona became ill from the peanut butter they ate
that was produced and bottled in his plant. As he walks the back stairs at the plant, he
ponders, “It’s time to get the informal organization in on this. We’ve got to stop this in its
tracks!” Jack is taking the right approach to solving this serious problem.
Feedback: The informal organization is often too unstructured and emotional to deal with
serious emergency type situations. Critical matters need reasoned and rational decision-
making that needs to happen in a more formalized approach.
220. Jessica found a job at a bank, after losing her insurance company job when the firm
went bankrupt. Although she has only been with this firm for a couple of weeks, she
senses a rather austere climate where not too many people take the time to get to know
one another. Several of her coworkers seem to get very nervous when managers walk by
and breathe sighs of relief when the VP is away for the day. When she asked her
supervisor why people seemed afraid of the VP, the supervisor quoted an old Tennyson
poem, “Ours is not to reason why, ours is but to do and die.” Jessica realizes the bank
does not operate as an open organization. It lacks a thriving informal organization. It is
unlikely that Jessica will feel an allegiance to this company.
Feedback: Organizations do not operate effectively without both the formal and informal
organizations.
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221. Organizing a business begins with:
A. acquiring the necessary resources.
B. choosing the best qualified employees.
C. developing an efficient plan of action.
D. determining the work to be done.
222. Dividing the required work among a group of employees is called:
A. departmentalization.
B. delegation of responsibility.
C. division of labor.
D. separation of control.
223. Dividing tasks into smaller jobs is called:
A. job enrichment.
B. job specialization.
C. departmentalization.
D. division of authority.
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243. A(n) __________ consists of one person at the top of the organization and many levels
of managers who are responsible to that person.
A. hierarchy
B. oligarchy
C. inverted organization
D. informal organization
244. In a bureaucratic organization:
A. departments communicate with each other on a regular basis.
B. employees follow strict rules and regulations.
C. customer satisfaction is the number one priority.
D. first-line workers are empowered to respond to the needs of customers.
Feedback: Max Weber believed that as organizations grew, it was necessary to define strict
rules and guidelines for workers. These rules were created for the purpose of making
management’s job easier. The organization would realize more efficiency.
245.
Chapter 08 – Structuring Organizations for Today’s Challenges
One advantage of a bureaucratic organization is that:
A. it is very responsive to the wants and needs of customers.
B. there are very few layers of management.
C. it encourages cooperation among different departments within the organization.
D. employees know they are expected to follow the rules and regulations.
Feedback: Max Weber believed that as organizations grew, it was necessary to define strict
rules and guidelines for workers. These rules were created for the purpose of making
management’s job easier. The organization would realize more efficiency.
246. ______________ organizations are characteristic of many layers of management and
function with well-defined rules and procedures.
A. Matrix
B. Inverted
C. Ordered
D. Bureaucratic
Feedback: Weber believed that organizations needed bureaucracy in order to operate
efficiently and effectively. Bureaucrats were middle managers who created written rules and
regulations in order to carryout the decisions of top management.
247. Economies of scale:
A. are available to small firms but not to large firms due to management inefficiencies.
B. are achieved when a firm reduces its average cost of production as it produces more.
C. can be avoided by purchasing supplies and raw materials in large quantities.
D. help explain the success of small businesses.
Feedback: Mass production can allow a firm to increase its efficiency. As production volume
increases, the per-unit cost of production decreases. This is explained, in part, by the purchase
of supplies and raw materials in large quantities and labor efficiencies.
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248. Max Weber favored which of the following?
A. Inverted organizations
B. Worker participation in decision making
C. Staffing and promotions based on qualifications
D. Flat organizations
Feedback: Weber emphasized job descriptions, written rules, decision guidelines, detailed
records, consistent procedures, regulations and policies, and staffing and promotion based on
qualifications.
249. Fayol believed that decision-making authority should remain in the hands of top
management:
A. in small organizations, but should be delegated to middle and first-line managers in
large organizations.
B. in large organizations, but could be delegated to middle and first-line managers in
small organizations.
C. in all types and sizes of organizations.
D. only in organizations subjected to significant government regulation.
Feedback: One of Fayol’s principles of organization states that the amount of decision-making
power vested in top management should vary according to circumstances. Fayol believed that
top management could assume all decision making power in small organizations, but that
decision making power could be delegated to lower levels of management in large
organizations.