62. controls are objective criteria that allow corporate managers to evaluate the returns earned by individual
business units.
a. Strategic
b. Managerial
c. Financial
d. Environmental
63. Alfred Chandler found that firms grow in a predictable pattern and that the firm‘s growth patterns determine its
structural form. Which form corresponds to the FINAL stage in Chandler’s theory?
a. functional
b. simple
c. vertically integrated
d. multidivisional
64. Andermeyer Jewelers, which specializes in high-end jewelry, has been in existence since the 1870s and has served
generations of wealthy families. Owned and managed by the Andermeyer family since its founding, it has never
had more than 20 designers and jewelers in its shop. Andermeyer Jewelers should use the structure.
a. simple
b. functional
c. matrix
d. network
65. Typically, an organization using a simple structure would be
a. large.
b. small.
c. of any size if the firm is privately held.
d. a family-owned-and-managed firm of any size.
66. In most cases, the focus strategy is best managed using a structure.
a. simple
b. functional
c. multidivisional
d. vertical
67. The benefits of a simple structure include all of the following EXCEPT
a. ease of coordination within the organization.
b. the lack of a need for sophisticated information systems.
c. active involvement by the owner-manager.
d. the ability of specialists to develop deep expertise.
68. Functional structures work best for firms for all of the following strategies EXCEPT
a. cost leadership strategy.
b. differentiation strategy.
c. related constrained diversification strategy.
d. single or dominant business corporate strategy.
69. Leslie is a newly graduated certified public accountant with a specialty in corporate tax. She wishes to join an
organization (not an accounting firm) that will allow her to concentrate on corporate tax and become deeply
proficient in this area. Leslie should look for a position in a firm with a structure.
a. simple
b. functional
c. multidivisional
d. network
70. One disadvantage of the functional structure is that
a. career paths and professional development are limited.
b. dual reporting relationships blur lines of authority.
c. the CEO cannot coordinate and control the efforts of functional-level employees.
d. communication and coordination are difficult among organizational functions.
71. Which of the following does NOT cause a firm to move from a functional structure to a multidivisional structure?
a. increasing diversification
b. coordination and control issues
c. need for knowledge-sharing among specialists
d. greater amounts of data and information to process
72. The multidivisional structure was initially designed to produce three major benefits over the functional form. Which
of the following is NOT one of the three benefits?
a. aligning the corporate structure with the demands of global expansion
b. more accurate monitoring of the performance of each business
c. facilitating comparison between divisions
d. stimulating managers of poorly performing divisions to look for ways of improving performance
73. Jumbo Industrial Supply has grown from a one-location firm with a restricted product line to a multi-state
organization with numerous product lines and a large sales staff. Sales have doubled every year for the last three
years. It currently has a simple structure with Jared Smith, the owner-manager, making all major decisions. Jumbo
is probably now experiencing or will soon experience
a. coordination and control problems.
b. bureaucratic inefficiencies.
c. excessive competition among division managers.
d. limited communication among functional specialists.
74. The noted business historian Alfred Chandler viewed the multidivisional structure as an innovative response to
a. an emerging professional management philosophy.
b. the increasing demand by consumers for both high quality and low prices.
c. coordination and control problems.
d. a shift toward the global economy.
75. Some experts consider the structure to be one of the 20th century’s most significant organizational
innovations because of its value to diversified firms.
a. network
b. cooperative
c. multidivisional
d. functional
76. The three structural characteristics that differ among organizational structures include all of the following EXCEPT
a. centralization.
b. formalization.
c. specialization.
d. intermediation.
77. Which of the following is NOT associated with an organizational structure that supports a cost leadership strategy?
a. centralization
b. specialization
c. formalization
d. integration
78. is the degree to which rules and procedures govern work.
a. Formalization
b. Centralization
c. Specialization
d. Unification
79. ____ is the degree to which decision-making authority is retained at higher managerial levels.
a. Formalization
b. Centralization
c. Specialization
d. Unification
80. Successfully implementing a cost leadership strategy requires
a. freedom from constraining rules.
b. centralization of authority.
c. communication between functional silos.
d. sharing of competencies among divisions.
81. Agatha Adams founded Insurance Specialists to process medical claims for physicians’ practices. She plans to
compete on the basis of cost, offering the lowest processing cost per claim in her market area. Ms. Adams’
company should
a. be the strategic center firm in a network structure.
b. have a specialized multidivisional structure.
c. develop alliances with firms with complementary competencies.
d. have a highly centralized, functional structure.
82. Walmart‘s effective strategy/structure configuration is
a. cost leadership/functional.
b. differentiation/functional.
c. related constrained/multidivisional.
d. related linked/multidivisional.
83. Firms seeking to compete on the basis of cost leadership particularly need support from the
functions.
a. finance; accounting
b. manufacturing; process R&D
c. product R&D; marketing
d. management information; finance
and
84. Firms seeking to differentiate particularly need support from the and functions.
a. finance; accounting
b. engineering; operations
c. product R&D; marketing
d. management information; finance
85. Typically, a successful firm pursuing a differentiation strategy will
a. have a very hierarchical structure.
b. require a structure that is very formal.
c. use cross-functional development teams.
d. develop free-standing business units.
86. Which of the following is a TRUE statement about organizational structures for implementing business-level
strategies?
a. A cost leadership strategy requires a simple structure emphasizing high specialization, centralization, and
structured job roles.
b. A differentiation strategy requires a functional structure with limited formalization, broad job descriptions, and
an emphasis on the product R&D and marketing functions.
c. An integrated cost leadership/differentiation strategy requires a multidivisional structure using high
formalization, decentralized decision making, and vertical coordination.
d. A focused strategy requires a functional structure featuring high levels of both specialization and
formalization.
87. Successful implementation of the differentiation strategy requires a structure that
a. has specialized jobs.
b. decentralizes decision making.
c. focuses on the finance function.
d. is dominated by the operations function.
88. The integrated cost leadership/differentiation strategy is difficult to implement mostly because
a. different primary and support activities are emphasized when using cost leadership and differentiation
strategies.
b. this strategic approach demands more flexibility than most firms can manage.
c. the dual reporting relationships required for this strategy slow organizational decision making.
d. the cost leadership strategy requires less structured job roles than does the differentiation strategy.
89. The structure is the most appropriate structure for implementing the integrated cost
leadership/differentiation strategy.
a. simple
b. functional
c. multidivisional
d. strategic business unit
90. The structure is best for implementing the related-constrained diversification strategy.
a. functional
b. competitive form of the multidivisional
c. SBU form of the multidivisional
d. cooperative form of the multidivisional
91. Which of the following is NOT a variation of the multidivisional structure?
a. competitive form
b. regional form
c. cooperative form
d. strategic business unit form
92. The BEST multidivisional structure to use
a. is the competitive form.
b. is the SBU form.
c. is the cooperative form.
d. depends on the degree of diversification.
93. Cisco’s corporate-level structure was useful in implementing its business-level strategy.
a. SBU form; integrated cost leadership-differentiation
b. competitive form; differentiation
c. cooperative form; cost leadership
d. cooperative form; integrated cost leadership-differentiation
94. Cisco used the structure to implement its strategy.
a. functional; cost leadership.
b. SBU form of the multidivisional; related linked
c. cooperative form of the multidivisional; related linked
d. cooperative form of the multidivisional; related constrained
95. Ortiz is a manager of BRS Corp. Ortiz’s division did not meet financial targets this year. Ramirez, manager of
another division, has indicated that Ortiz‘s division incurred significant costs which resulted in Ramirez‘s division
setting record profits for the year. As a result, performance for BRS as a whole exceeded projections. Which
pairing of organizational structures for BRS and bonus for Ortiz is most plausible?
a. cooperative structure; no bonus due to failure to meet divisional target
b. competitive structure; no bonus due to failure to meet divisional target
c. cooperative structure; a bonus for increasing organizational performance
d. competitive structure; a bonus for increasing organizational performance
96. The cooperative multidivisional firm
a. establishes profit centers based on products or markets.
b. has a flat organizational structure which broadens jobs and empowers workers.
c. has a structure organized around both functional specialization and business projects.
d. has a structure requiring heavy use of horizontal integrative devices.
97. Which organizational structure will emphasize financial controls for headquarters‘ evaluation of operating units while
the operating units will emphasize strategic controls within their units’ performance?
a. functional
b. cooperative M-Form
c. SBU form
d. competitive M-Form
98. Which of the following is a TRUE statement about implementing corporate-level strategies and effective
organizational structures?
a. Firms pursuing a related linked strategy should implement a competitive structure with a competitive culture
and centralized strategic-planning activities.
b. Firms pursuing an unrelated diversification strategy should use an SBU structure with a small corporate staff,
emphasize the R&D function, and integrate divisions to achieve synergies.
c. Firms pursuing a related linked strategy should use an SBU structure, emphasize interdependence among
divisions, and manage the strategic planning function from the central office.
d. Firms pursuing a related constrained strategy should implement a cooperative structure, use integrative
devices to link divisions, centralize the R&D function, and emphasize sharing.
99. The structure is an organizational structure that combines both functional specialization and business
product or project specialization.
a. functional
b. worldwide geographic area
c. network
d. matrix
100. The heavy use of integrative mechanisms in the
achieve
a. cooperative; economies of scope.
b. competitive; cost efficiencies.
c. functional; sensitivity to cultural diversity.
d. SBU; quick response to local customer needs.
multidivisional organizational structure is intended to
101. When a corporation pursues a related constrained diversification strategy, financial controls may not add value to
strategy implementation efforts because it is difficult to
a. use them without reducing cooperation among divisional managers.
b. transfer capital between units.
c. maintain an arms-length relationship between headquarters and the divisions.
d. identify which objective criteria to monitor.
102. A firm pursuing a related constrained diversification strategy would typically need all of the following EXCEPT
a. centralization of some organizational functions for the sake of coordination.
b. frequent, direct contact between division managers.
c. division managers‘ rewards based on division financial performance.
d. temporary teams or task forces formed around specific projects.
103. Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia
Industries. One can expect that Icarus, Athena, and Hercules
a. use integrative mechanisms to share core competencies.
b. compete with one another in Olympia‘s internal capital markets.
c. are not necessarily related to one another in terms of products or markets.
d. are network member firms while Olympia is the strategic center firm.
104. A private university is made up of various “schools,” such as the School of Journalism, the School of Business, the
School of Law, the School of Arts and Sciences, and so forth. The university is experiencing some financial
problems, so the administration has decided to have each school of the university become a profit center. This
scheme is somewhat parallel to the organizational structure.
a. network
b. strategic business unit multidivisional
c. functional
d. matrix
105. In an SBU structure,
financial controls.
is/are evaluated using strategic controls, whereas is/are evaluated using
a. each SBU; divisions within the SBUs
b. divisions within the SBUs; each SBU
c. managers of the SBUs; headquarters staff
d. headquarters staff; managers of the SBUs
106. The most centralized and most costly form of the multidivisional structure is the
a. integrated.
b. competitive.
c. SBU.
d. cooperative.
107. Which of the following multidivisional structures is CORRECTLY paired with the appropriate corporate-level
strategy?
a. competitive form with related-constrained strategy
b. cooperative form with unrelated strategy
c. SBU form with related-linked strategy
d. competitive form with related–linked strategy
108. A firm pursuing an unrelated diversification strategy will utilize a structure.
a. network
b. cooperative form multidivisional
c. competitive form multidivisional
d. functional
109. In the multidivisional structure there is complete independence among the firm’s divisions.
a. cooperative
b. matrix
c. competitive
d. SBU
110. The fewest integrative devices are used in the structure.
a. simple
b. competitive multidivisional
c. SBU
d. network
111. In the structure hierarchy, the headquarters relies on strategic controls to set rate-of-return targets and
financial controls to monitor divisional performance relative to those targets.
a. functional
b. cooperative
c. competitive
d. SBU
112. Firms such as Textron Inc. that frequently acquire and divest other firms are most likely to use the
structure.
a. matrix
b. competitive multidivisional
c. hybrid combination
d. horizontal complementary strategic alliance
113. The CEO of Transector, Inc., set a 6.5 percent rate-of–return target for all divisions for the past year. Now, at the
end of the year, three of Transector’s seven divisions have not met this rate–of–return goal. The division managers
of these three under-performing divisions have all secretly contacted executive-placement firms to investigate
openings at other firms, because they know their future at Transector is in jeopardy as financial performance is all-
important at Transector. Transector probably uses the structure.
a. competitive form of the multidivisional
b. SBU form of the multidivisional
c. worldwide geographic area
d. distributed strategic network