Chapter 7 3 Larger firms tend to use several different types of departmentalization

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

17. Process departmentalization is based upon the steps that are needed to actually produce a good

or service.

a. True

b. False

Difficulty: 1 Page-Reference: 221

Question ID: 07-2-149 Skill: Comprehension

Objective: 7.2

18. Larger firms tend to use several different types of departmentalization for various levels in the

organization.

a. True

b. False

Difficulty: 2 Page-Reference: 221

Question ID: 07-2-150 Skill: Comprehension

Objective: 7.2

19. After jobs are departmentalized then they should be specialized.

a. True

b. False

Difficulty: 1 Page-Reference: 218-219

Question ID: 07-2-151 Skill: Knowledge

Objective: 7.2

20. Stores like HMV typically use product departmentalization.

a. True

b. False

Difficulty: 1 Page-Reference: 219-220

Question ID: 07-2-152 Skill: Comprehension

Objective: 7.2

21. A pickle maker like Vlasic usually has several departments that transform cucumbers into fresh–

packed pickles. Vlasic is using product departmentalization.

a. True

b. False

Difficulty: 1 Page-Reference: 221

Question ID: 07-2-153 Skill: Comprehension

Objective: 7.2

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

22. Customer departmentalization generally is more effective than geographic departmentalization.

a. True

b. False

Difficulty: 1 Page-Reference: 220-221

Question ID: 07-2-154 Skill: Comprehension

Objective: 7.2

23. Responsibility is the power to make decisions for those tasks that you have been given the

authority to perform.

a. True

b. False

Difficulty: 2 Page-Reference: 222

Question ID: 07-2-155 Skill: Knowledge

Objective: 7.3

24. Delegation occurs when a manager assigns a task to a subordinate who then is accountable to

the manager for completion of the task.

a. True

b. False

Difficulty: 1 Page-Reference: 222

Question ID: 07-2-156 Skill: Knowledge

Objective: 7.3

25. Research has shown that the primary reason managers fail to delegate is their need to control

everything and everybody.

a. True

b. False

Difficulty: 1 Page-Reference: 222

Question ID: 07-2-157 Skill: Comprehension

Objective: 7.3

26. The assignment of a task, a responsibility, and/or authority by a manager to a subordinate is

known as delegation.

a. True

b. False

Difficulty: 1 Page-Reference: 222

Question ID: 07-2-158 Skill: Knowledge

Objective: 7.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

27. Delegation is practiced by line managers, but not by staff managers.

a. True

b. False

Difficulty: 1 Page-Reference: 222

Question ID: 07-2-159 Skill: Comprehension

Objective: 7.3

28. If any line department fails to complete its task, the company cannot effectively sell and deliver

finished goods.

a. True

b. False

Difficulty: 2 Page-Reference: 226

Question ID: 07-2-160 Skill: Knowledge

Objective: 7.3

29. Staff departments aid line departments in making decisions but do not have the authority to make

final decisions.

a. True

b. False

Difficulty: 2 Page-Reference: 226-227

Question ID: 07-2-161 Skill: Knowledge

Objective: 7.3

30. Assigning tasks is the first step in the process of deciding who makes which decisions.

a. True

b. False

Difficulty: 1 Page-Reference: 222

Question ID: 07-2-162 Skill: Knowledge

Objective: 7.3

31. McDonald’s uses decentralization as a way to maintain standardization.

a. True

b. False

Difficulty: 1 Page-Reference: 223

Question ID: 07-2-163 Skill: Comprehension

Objective: 7.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

32. A centralized organization structure is generally better for developing subordinates than a

decentralized structure.

a. True

b. False

Difficulty: 2 Page-Reference: 223-224

Question ID: 07-2-164 Skill: Comprehension

Objective: 7.3

33. The long history of General Motors illustrates both the advantages and disadvantages of

decentralization.

a. True

b. False

Difficulty: 1 Page-Reference: 224

Question ID: 07-2-165 Skill: Comprehension

Objective: 7.3

34. The history of General Motors illustrates the fact that decentralization is generally better than

centralization.

a. True

b. False

Difficulty: 1 Page-Reference: 224

Question ID: 07-2-166 Skill: Comprehension

Objective: 7.3

35. 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.

a. True

b. False

Difficulty: 2 Page-Reference: 223

Question ID: 07-2-167 Skill: Knowledge

Objective: 7.3

36. Centralized organizations usually have wide spans of control because a lot of delegation is taking

place.

a. True

b. False

Difficulty: 2 Page-Reference: 223

Question ID: 07-2-168 Skill: Comprehension

Objective: 7.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

37. When many employees are performing the same simple task, a wide span of control is feasible.

a. True

b. False

Difficulty: 1 Page-Reference: 225-227

Question ID: 07-2-169 Skill: Application

Objective: 7.3

38. In a large manufacturing business, staff departments like law, accounting, and human resources

are typically evident.

a. True

b. False

Difficulty: 2 Page-Reference: 226-227

Question ID: 07-2-170 Skill: Comprehension

Objective: 7.3

39. Managers of staff departments do not have line authority over their subordinates.

a. True

b. False

Difficulty: 2 Page-Reference: 226-227

Question ID: 07-2-171 Skill: Comprehension

Objective: 7.3

40. The goals of the organization determine whether a given function is classified as “line” or “staff.”

a. True

b. False

Difficulty: 2 Page-Reference: 227

Question ID: 07-2-172 Skill: Comprehension

Objective: 7.3

41. Barrett Services Ltd. is an executive search company, that is, it facilitates the hiring of managers

at other companies that are its clients. Therefore, at Barrett human resources is a line (not a staff) activity.

a. True

b. False

Difficulty: 2 Page-Reference: 226-227

Question ID: 07-2-173 Skill: Comprehension

Objective: 7.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

42. A team organization relies almost exclusively on project type teams with little or no underlying

functional hierarchy.

a. True

b. False

Difficulty: 3 Page-Reference: 227

Question ID: 07-2-174 Skill: Comprehension

Objective: 7.3

43. Because customer innovation centres have expertise on product development, brand

management, and sales, they are used to overcome one of the disadvantages of the functional structure:

poor interdepartmental communication.

a. True

b. False

Difficulty: 3 Page-Reference: 228

Question ID: 07-2-175 Skill: Comprehension

Objective: 7.4

44. Moving products that were formerly in independent divisions into the same division overcomes the

problem of lack of coordination.

a. True

b. False

Difficulty: 3 Page-Reference: 228

Question ID: 07-2-176 Skill: Comprehension

Objective: 7.4

45. One of the problems with the divisionalized structure is that different divisions can unknowingly

duplicate their activities.

a. True

b. False

Difficulty: 3 Page-Reference: 228-229

Question ID: 07-2-177 Skill: Knowledge

Objective: 7.4

46. In some organizations the matrix structure is temporary, while in others the structure is

permanent.

a. True

b. False

Difficulty: 2 Page-Reference: 229-230

Question ID: 07-2-178 Skill: Knowledge

Objective: 7.4

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

47. If Global Research Consortium offers research and consulting services to firms doing business in

Asia, this is an example of a learning organization.

a. True

b. False

Difficulty: 2 Page-Reference: 234

Question ID: 07-2-179 Skill: Comprehension

Objective: 7.4

48. Functional organization structures are used primarily by large, corporate businesses.

a. True

b. False

Difficulty: 2 Page-Reference: 228

Question ID: 07-2-180 Skill: Comprehension

Objective: 7.4

49. All things considered, the functional structure is probably the best one.

a. True

b. False

Difficulty: 2 Page-Reference: 227-232

Question ID: 07-2-181 Skill: Comprehension

Objective: 7.4

50. In both the divisional and international structures, departments are quite autonomous and are free

to run as they best see fit.

a. True

b. False

Difficulty: 2 Page-Reference: 228-232

Question ID: 07-2-182 Skill: Comprehension

Objective: 7.4

51. The project organization is not much used by Canadian firms because their megaprojects are too

large for the matrix structure to work.

a. True

b. False

Difficulty: 2 Page-Reference: 229

Question ID: 07-2-183 Skill: Comprehension

Objective: 7.4

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

52. The matrix structure is especially desirable for firms that want to establish long–term relationships

among members of the special project teams.

a. True

b. False

Difficulty: 2 Page-Reference: 229-230

Question ID: 07-2-184 Skill: Comprehension

Objective: 7.4

53. Boundaryless and virtual organizations both function without traditional boundaries.

a. True

b. False

Difficulty: 2 Page-Reference: 233

Question ID: 07-2-185 Skill: Comprehension

Objective: 7.4

54. Walmart’s relationship with some of its suppliers is an example of a boundaryless organization.

a. True

b. False

Difficulty: 2 Page-Reference: 233

Question ID: 07-2-186 Skill: Comprehension

Objective: 7.4

55. A virtual organization has very little formal organizational structure.

a. True

b. False

Difficulty: 2 Page-Reference: 233

Question ID: 07-2-187 Skill: Knowledge

Objective: 7.4

56. Learning organizations are most commonly found in universities and community colleges.

a. True

b. False

Difficulty: 2 Page-Reference: 234

Question ID: 07-2-188 Skill: Comprehension

Objective: 7.4

57. A properly structured formal organization is necessary to eliminate the negative effects of the

informal structure.

a. True

b. False

Difficulty: 2 Page-Reference: 234

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

Question ID: 07-2-189 Skill: Comprehension

Objective: 7.5

58. The informal organization is sometimes just as powerful, if not more powerful, than the formal

structure.

a. True

b. False

Difficulty: 1 Page-Reference: 234

Question ID: 07-2-190 Skill: Comprehension

Objective: 7.5

59. 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.

a. True

b. False

Difficulty: 2 Page-Reference: 235

Question ID: 07-2-191 Skill: Knowledge

Objective: 7.5

60. Because the grapevine is a mechanism for informal communication, it is most commonly found in

organizations that are having problems.

a. True

b. False

Difficulty: 2 Page-Reference: 235

Question ID: 07-2-192 Skill: Comprehension

Objective: 7.5

61. Attempts to eliminate the grapevine are fruitless, so managers should not waste their time trying

to do so.

a. True

b. False

Difficulty: 2 Page-Reference: 235

Question ID: 07-2-193 Skill: Comprehension

Objective: 7.5

1. What is an organization chart?

Difficulty: 2 Page-Reference: 216-218

Question ID: 07-3-194 Skill: Knowledge

Objective: 7.1

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

2. Explain the meaning of the term organizational structure.

Difficulty: 2 Page-Reference: 216

Question ID: 07-3-195 Skill: Knowledge

Objective: 7.1

3. Identify the two building blocks of organizational structure.

Difficulty: 2 Page-Reference: 218

Question ID: 07-3-196 Skill: Knowledge

Objective: 7.2

4. What is specialization?

Difficulty: 2 Page-Reference: 218

Question ID: 07-3-197 Skill: Knowledge

Objective: 7.2

5. Identify five forms of departmentalization.

Difficulty: 2 Page-Reference: 219

Question ID: 07-3-198 Skill: Knowledge

Objective: 7.2

6. 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?

Difficulty: 2 Page-Reference: 219

Question ID: 07-3-199 Skill: Comprehension

Objective: 7.2

7. Johnson Products has vice-presidents for copiers, printers, and fax machines. How is Johnson

Products departmentalized?

Difficulty: 2 Page-Reference: 220

Question ID: 07-3-200 Skill: Comprehension

Objective: 7.2

8. Bright Products has vice-presidents for Europe, North America, and Asia. How is Ace Products

departmentalized?

Difficulty: 2 Page-Reference: 220

Question ID: 07-3-201 Skill: Comprehension

Objective: 7.2

9. What is one of the advantages of departmentalization by customer?

Difficulty: 2 Page-Reference: 219

Question ID: 07-3-202 Skill: Comprehension

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

Objective: 7.2

10. What are the advantages and disadvantages of departmentalization by geography?

Difficulty: 2 Page-Reference: 220-221

Question ID: 07-3-203 Skill: Comprehension

Objective: 7.2

11. What is responsibility?

Difficulty: 2 Page-Reference: 222

Question ID: 07-3-204 Skill: Knowledge

Objective: 7.3

12. What is authority?

Difficulty: 2 Page-Reference: 222

Question ID: 07-3-205 Skill: Knowledge

Objective: 7.3

13. What is delegation?

Difficulty: 2 Page-Reference: 222

Question ID: 07-3-206 Skill: Knowledge

Objective: 7.3

14. What is accountability?

Difficulty: 2 Page-Reference: 222

Question ID: 07-3-207 Skill: Knowledge

Objective: 7.3

15. What is a centralized organization?

Difficulty: 2 Page-Reference: 223

Question ID: 07-3-208 Skill: Knowledge

Objective: 7.3

16. What is a decentralized organization?

Difficulty: 2 Page-Reference: 223

Question ID: 07-3-209 Skill: Knowledge

Objective: 7.3

17. Identify two characteristics of flat organizations.

Difficulty: 2 Page-Reference: 224

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

Question ID: 07-3-210 Skill: Knowledge

Objective: 7.3

18. Identify two characteristics of tall organizations.

Difficulty: 2 Page-Reference: 224-225

Question ID: 07-3-211 Skill: Knowledge

Objective: 7.3

19. What is span of control?

Difficulty: 2 Page-Reference: 225-226

Question ID: 07-3-212 Skill: Knowledge

Objective: 7.3

20. Identify the three forms of authority.

Difficulty: 2 Page-Reference: 226

Question ID: 07-3-213 Skill: Knowledge

Objective: 7.3

21. What type of authority flows up and down the chain of command?

Difficulty: 2 Page-Reference: 226

Question ID: 07-3-214 Skill: Knowledge

Objective: 7.3

22. What type of authority is held by specialists in law, accounting, and human resource

management?

Difficulty: 2 Page-Reference: 226

Question ID: 07-3-215 Skill: Knowledge

Objective: 7.3

23. Identify the four basic forms of organizational structure.

Difficulty: 2 Page-Reference: 227

Question ID: 07-3-216 Skill: Knowledge

Objective: 7.4

24. What is a team organization?

Difficulty: 2 Page-Reference: 233

Question ID: 07-3-217 Skill: Knowledge

Objective: 7.4

25. What is a divisional structure?

Difficulty: 2 Page-Reference: 228

Question ID: 07-3-218 Skill: Knowledge

Objective: 7.4

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

26. What is a project organization?

Difficulty: 2 Page-Reference: 229

Question ID: 07-3-219 Skill: Knowledge

Objective: 7.4

27. What is a boundaryless organization?

Difficulty: 2 Page-Reference: 233

Question ID: 07-3-220 Skill: Knowledge

Objective: 7.4

28. What is the informal organization?

Difficulty: 2 Page-Reference: 234

Question ID: 07-3-221 Skill: Knowledge

Objective: 7.5

29. Is the informal organization positive or negative?

Difficulty: 2 Page-Reference: 234

Question ID: 07-3-222 Skill: Comprehension

Objective: 7.5

30. What is the grapevine?

Difficulty: 2 Page-Reference: 235

Question ID: 07-3-223 Skill: Knowledge

Objective: 7.5

1. What is the purpose of developing an organization chart? How are these charts used?

Difficulty: 2 Page-Reference: 216-218

Question ID: 07-4-224 Skill: Comprehension

Objective: 7.1

2. What are the major factors that determine how a firm should be best organized?

Difficulty: 2 Page-Reference: 216

Question ID: 07-4-225 Skill: Comprehension

Objective: 7.1

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

3. What elements work together to determine an organization’s structure? What types of

circumstances affect this structure?

Difficulty: 2 Page-Reference: 216

Question ID: 07-4-226 Skill: Comprehension

Objective: 7.1

4. Discuss the relationship between chain of command and an organization chart, including what the

boxes, dotted lines, and solid lines represent.

Difficulty: 2 Page-Reference: 216-218

Question ID: 07-4-227 Skill: Analysis

Objective: 7.1

5. What are the two basic building blocks of organizational structure?

Difficulty: 1 Page-Reference: 218

Question ID: 07-4-228 Skill: Knowledge

Objective: 7.2

6. Describe the five most common methods of departmentalization within an organization. Identify the

advantages of each method.

Difficulty: 2 Page-Reference: 219-221

Question ID: 07-4-229 Skill: Knowledge

Objective: 7.2

7. What are specialization and departmentalization, and how do they relate one to another?

Difficulty: 2 Page-Reference: 218-221

Question ID: 07-4-230 Skill: Comprehension

Objective: 7.2

8. Discuss the three-step process used to establish the decision-making hierarchy.

Difficulty: 2 Page-Reference: 222

Question ID: 07-4-231 Skill: Knowledge

Objective: 7.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

9. Why should a manager maintain equilibrium between authority and responsibility?

Difficulty: 2 Page-Reference: 222

Question ID: 07-4-232 Skill: Comprehension

Objective: 7.3

10. Explain what is meant by “span of control.” What factors need to be considered when establishing

the span of control for a manager?

Difficulty: 2 Page-Reference: 225-226

Question ID: 07-4-233 Skill: Comprehension

Objective: 7.3

11. Compare and contrast the three forms of authority: line, staff, and committee and team authority.

Difficulty: 1 Page-Reference: 226-227

Question ID: 07-4-234 Skill: Comprehension

Objective: 7.3

12. Describe what responsibility and authority are and how they are related.

Difficulty: 2 Page-Reference: 222

Question ID: 07-4-235 Skill: Comprehension

Objective: 7.3

13. Describe what delegation and accountability are and how they are related.

Difficulty: 2 Page-Reference: 222

Question ID: 07-4-236 Skill: Comprehension

Objective: 7.3

14. What are centralization and decentralization, and how are they related to span of control and

delegation?

Difficulty: 2 Page-Reference: 222-223, 225-226

Question ID: 07-4-237 Skill: Comprehension

Objective: 7.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

15. Describe a line-and-staff organization, being sure to discuss what line authority and staff authority

are and the way they interrelate.

Difficulty: 2 Page-Reference: 226-227

Question ID: 07-4-238 Skill: Comprehension

Objective: 7.3

16. Describe the purposes of a learning organization.

Difficulty: 2 Page-Reference: 234

Question ID: 07-4-239 Skill: Knowledge

Objective: 7.4

17. Discuss the advantages and disadvantages of a functional structure.

Difficulty: 2 Page-Reference: 228

Question ID: 07-4-240 Skill: Comprehension

Objective: 7.4

18. 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.

Difficulty: 2 Page-Reference: 228-229

Question ID: 07-4-241 Skill: Comprehension

Objective: 7.4

19. 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.

Difficulty: 2 Page-Reference: 233-234

Question ID: 07-4-242 Skill: Knowledge

Objective: 7.4

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise

20. Why is the divisional organizational structure used by many large corporations?

Difficulty: 1 Page-Reference: 228

Question ID: 07-4-243 Skill: Comprehension

Objective: 7.4

21. Why should a firm consider the matrix organizational structure for developing new products?

Difficulty: 2 Page-Reference: 229

Question ID: 07-4-244 Skill: Comprehension

Objective: 7.4

22. Explain the functional structure, and note its advantages and disadvantages.

Difficulty: 2 Page-Reference: 228

Question ID: 07-4-245 Skill: Comprehension

Objective: 7.4

23. Explain the divisional structure, and describe its advantages and disadvantages.

Difficulty: 2 Page-Reference: 228-229

Question ID: 07-4-246 Skill: Comprehension

Objective: 7.4

24. What should be the reaction of a manager who discovers the existence of a grapevine in the

organization?

Difficulty: 2 Page-Reference: 235

Question ID: 07-4-247 Skill: Comprehension

Objective: 7.5

25. What factors exist to cause the grapevine to work effectively?

Difficulty: 2 Page-Reference: 235

Question ID: 07-4-248 Skill: Comprehension

Objective: 7.5

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 7—Organizing the Business Enterprise