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63. A(n) ____ organization is one that is characterized by broadly defined jobs and responsibilities;
loosely defined, frequently changing roles; and decentralized authority and horizontal communication
based on task knowledge.
a.
centralized
b.
mechanistic
c.
departmentalized
d.
organic
e.
modular
64. According to an electronics CEO, the first requirement of management is that it should make the
fullest use of the capacities of its members. Thus any individual’s job should be as little defined as
possible so that it would ‘shape itself’ to the person’s special abilities and initiative. This electronics
company more than likely had a(n) ____ organization.
a.
centralized
b.
mechanistic
c.
departmentalized
d.
organic
e.
modular
65. In a(n) ____ organization, the normal procedure for dealing with any matter lying outside the
boundaries of one individual’s functional responsibility is to refer it to the point in the system where
such responsibility is known to reside, or, failing that, to lay it before one’s superior.
a.
centralized
b.
mechanistic
c.
departmentalized
d.
organic
e.
modular
66. When higher management in a(n) ____ organization admits there is a need for better communication,
the response is to tether subordinates to their jobs and to appoint newly hired employees who
specialize in establishing liaison relationships.
a.
centralized
b.
mechanistic
c.
departmentalized
d.
organic
e.
modular
67. Which of the following statements about the organic form of organization design is true?
a.
The organic form of organization design is characterized by broadly defined jobs and
responsibility; loosely defined, frequently changing roles; and decentralized authority and
horizontal communication based on task knowledge.
b.
The organic form of organization design works best in stable business environments.
c.
The organic form of organization design is better suited to using organizational design
techniques based upon functional departmentalization and centralized authority.
d.
The organic form of organization design is typically less appropriate than the mechanistic
approach for the environments in which today's businesses compete.
e.
All of these statements about the organic form of organization design are true.
68. A(n) ____ organization is an organization that is characterized by specialized jobs and responsibilities;
precisely defined, unchanging roles; and a rigid chain of command based on centralized authority and
vertical communication.
a.
modular
b.
departmentalized
c.
standardized
d.
organic
e.
mechanistic
69. Which of the following statements about mechanistic organizations is true?
a.
Mechanistic organizations rely on decentralized authority.
b.
Mechanistic organizations work best in stable, unchanging business environments.
c.
Mechanistic organizations are characterized by horizontal communication based on task
knowledge.
d.
Mechanistic organizations have broadly defined jobs.
e.
None of these statements about mechanistic organizations is true.
70. ____ is a fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in critical measures of performance such as cost, quality, service, and speed.
a.
Pooling interdependence
b.
Reciprocating interdependence
c.
Reengineering
d.
Repositioning
e.
Manufacturing conversion
71. In recent years, the Air Force Weather Agency (AFWA) has undergone a radical change in how it
determines and shares local weather conditions with pilots. Before the local base weather station was
responsible for warnings. The quality of this information varied. Now AFWA provides the same high
standard of weather information to all pilots. This is an example of ____?
a.
customization
b.
micro-adaptation
c.
sequential independence
d.
reengineering
e.
customer empowerment
72. LexisNexis realized that its ability to serve new Web-based customers was severely straining its
customer service department after thousands of small and midsize law firms representing a huge
business opportunity had to wait 48 hours to have their Web accounts activated after signing up.
Clearly, LexisNexis needed to revamp its customer sign-up and order-fulfillment processes, which
were designed for large law firms and the ordering of hardcover legal tomes. LexisNexis would most
likely use ____ to radically change its business practices.
a.
standardization
b.
micro-adaptation
c.
sequential independence
d.
reengineering
e.
customer empowerment
73. ____ is a feeling of intrinsic motivation, in which workers perceive their work to have meaning and
perceive themselves to be competent, having an impact, and capable of self-determination.
a.
Reciprocity
b.
Motivational assertion
c.
Eutonomy
d.
Empowerment
e.
Autonomy
74. The three types of task interdependence are
a.
pooled, delegated, and systematic
b.
delegated, integrated, and combined
c.
sequential, delegated, and pooled
d.
reciprocal, pooled, and sequential
e.
integrated, reciprocal, and synergistic
75. Zara clothing stores has developed a system that can order new fashions and deliver them to the store
in only three weeks. It uses ____ to pass information to the next person in the line of development.
a.
standardization
b.
sequential interdependence
c.
pooled interdependence
d.
manager empowerment
e.
transactional intradependence
76. A military expert describes how the military forces were organized for Operation Desert Storm as
pooled interdependence. This means that each branch of the military that took part in the operation
____.
a.
independently contributed to the success of the campaign
b.
worked with each other in a give-and-take manner
c.
performed identical tasks
d.
accepted the fact that one's group's output was another group's input
e.
had little, or no, autonomy
77. Leaders during any disaster need to give their employees a sense that everyone is participating in the
relief effort. The Gap gave its employees the authority to transfer their paid time off to some 1,300
employees affected by Hurricane Katrina. The Gap used ____ to allow its employees to gain a feeling
of intrinsic motivation.
a.
standardization
b.
sequential interdependence
c.
pooled interdependence
d.
empowerment
e.
transactional intradependence
78. Roughly 70 percent of all reengineering projects fail because ____.
a.
of how the process affects people in the workplace
b.
the reengineering process requires the organization's vision to be changed
c.
staff personnel must be given line authority to effectively implement reengineering
d.
satisfactory benchmarks cannot be located
e.
newly hired employees cannot internalize the organizational culture
79. Novo Nordisk is a European manufacturer of pharmaceuticals. An employee , Rikke
NedergaardBischoff, who is a clinical-development scientist, contends that Novo upholds the
standards expected of public institutions without the stifling bureaucracy. She says, "There's a great
deal of empowerment at Novo Nordisk." Novo Nordisk provides NedergaardBischoff with ____.
a.
a rigid chain of command
b.
a mechanistic work environment
c.
feelings of intrinsic motivation
d.
reengineering opportunities
e.
a high degree of job significance as defined by the JCM
80. In essence, reengineering changes organizations by ____.
a.
increasing reciprocal interdependence
b.
decreasing the use of autonomy
c.
increasing pooled interdependence
d.
decreasing delegation
e.
increasing sequential interdependence
81. Which of the following is an approach to managing interorganizational processes?
a.
matrix organizations
b.
modular organizations
c.
flat organizations
d.
hierarchical organizations
e.
tall organizations
82. Except for the core business activities that they can perform better, faster, and cheaper than others,
____ outsource all remaining business activities to outside companies, suppliers, specialists, or
consultants.
a.
modular organizations
b.
hierarchical organizations
c.
boundaryless organizations
d.
organizational networks
e.
virtual organizations
83. Modular organizations ____.
a.
allow a high level of control over business processes and output
b.
cost significantly more to run than traditional organizations
c.
outsource all but the core business activities that they can perform best
d.
succeed because they operate independently from vendors and suppliers
e.
are accurately described by all of these
84. A(n) ____ organization is part of a network in which many companies share skills, costs, capabilities,
markets, and customers with each other.
a.
modular
b.
virtual
c.
matrix
d.
electronic
e.
boundaryless
85. A park, recreation, and open space (PROS) cooperative is a recognized association of park, recreation,
open space, and related entities united voluntarily. PROS cooperatives conserve the diversity of
valued resources and recreation opportunities for the benefit these afford individuals, communities, the
economy, and the environment. A PROS cooperative is an example of a ____ organization.
a.
modular
b.
boundaryless
c.
decentralized
d.
virtual
e.
mechanistic
86. In the automobile industry, three car manufacturers and a variety of suppliers and distributors have
formed a network to create economies in production through outsourcing. It is intended for this ____
to cut as much as $3,000 from the costs of producing one car.
a.
matrix organization
b.
functional organization
c.
modular organization
d.
hierarchical organization
e.
virtual organization
87. The composition of a ____ organization is always changing.
a.
modular
b.
boundaryless
c.
decentralized
d.
virtual
e.
mechanistic
Yahoo!
Welcome to Yahoo! where you’ll find a $100 million loss, plummeting advertising sales, a stock price
that has fallen from an all-time high of $237 to less than $10 per share, and layoffs that cost 800
people—including the previous CEO—their jobs. At this once-phenomenally-successful company, so
many basic things have gone wrong that the question is: Where do you start to fix it?
One key problem is the organizational structure: with just 3,200 employees, Yahoo! has forty-four
different business units! Even General Electric, with 300,000 employees, has only 13. You think to
yourself, “This is unmanageable. Too many people and no focus.” Amazingly, despite having 44
business units, Yahoo! doesn’t have a direct sales unit. No one, it turns out, is responsible for
cultivating customers. Why not? Well, during the “go-go” days, customers were literally throwing
themselves and their advertising dollars at the company. As one Yahoo! manager said, “The fish were
jumping into the boat.” Consequently, most orders took place via email. Yahoo! didn’t have to
establish relationships with customers because customers came to it. Unfortunately, this led to
arrogance. Jeff Bell, a vice president at one of Yahoo!’s potential customers, said the message was,
“Buy our stuff [meaning Yahoo!’s advertising], and shut up.” Jeff Mallett, Yahoo!’s former president,
said, “We ran Yahoo! to optimize market share. I make no apologies for that. If there was a company
that didn’t get it [Internet advertising], we moved on very quickly.”
Another problem was the overly creative, freewheeling, spontaneous company culture in which
everyone, including the CEO, worked in cubicles. The problem wasn’t so much the cubicles, but what
they came to represent: an overly informal culture with no controls. At Yahoo!, employees played
soccer in a large open space outside the company boardroom, even while the board was meeting.
Furthermore, no one had an overall perspective of what was best for the entire company.
Consequently, said one Yahoo! vice president, “[Unit] managers would beg, borrow, and steal from
the network [meaning the overall company] to help their own properties.” Plus, if you had an idea, you
pursued it without having to get anyone’s feedback or approval. Yahoo!’s chief operating officer said,
“Yahoo!’s original mission was to grow as fast as you can and put things out there and see what
works.” The more serious problem, he said, was that “nobody knew what would work.”
The most amazing aspect of this culture was that, as one manager explained, “There was a fair
amount of resistance toward the strategy of monetizing our businesses.” In other words, the culture at
Yahoo! was so informal, so unfocused, and so freewheeling that no one really worried about whether
the company could charge for the services it provided and make a profit. “There was a fear,” said this
manager, “that if all of our efforts were put into profit making, we’d starve research and development
and lose our innovation.”
88. Refer to Yahoo!. One of the causes of the precipitous drop in the value of Yahoo's stock was the
company's inability to subdivide work and workers into separate organizational units responsible for
completing particular tasks. For example, Yahoo has no sales unit to cultivate and call on advertising
customers. Yahoo caused itself trouble when it decided to not engage in ____.
a.
decentralization
b.
cultural rigidity
c.
the appropriate change of command
d.
departmentalization
e.
employee empowerment
89. Refer to Yahoo!. After restructuring, Yahoo's four new departments were consumer services,
marketing services, business and enterprise services, and premium services. What type of
organizational structure did Yahoo adopt during its restructuring?
a.
product
b.
matrix
c.
networked
d.
functional
e.
customer
90. Refer to Yahoo!. What is one of the advantages of Yahoo's new organizational structure?
a.
elimination of the constraints associated with the chain of command
b.
a flatter structure better able to respond to a static environment
c.
elimination of resource duplication
d.
the ease with which cross-departmental cooperation can be achieved
e.
the ease with which top managers can assess work-unit performance
91. Refer to Yahoo!. One of the causes of the precipitous drop in the value of Yahoo's stock was that too
many unrelated decisions were being made by unrelated people in the company without any regard for
what was best for the entire company. One way to solve this problem would be to use more ____.
a.
behavioral informality
b.
centralization of authority
c.
delegation
d.
employee empowerment
e.
autonomy
92. Refer to Yahoo!. Before restructuring, Yahoo! was described as having an overly creative,
freewheeling culture, a highly decentralized decision-making structure in which managers did only
what was best for their units rather than what was best for the entire company and exhibited resistance
to actually making a profit by placing too much value on innovation to the exclusion of profit. What
kind of an organization did the company have?
a.
mechanistic
b.
transformational
c.
organic
d.
synergistic
e.
transactional
WWYD Eli Lilly
Eli Lilly’s 20-year patent on Zyprexa, a drug that generates $5 billion a year runs out in October 2011.
This means other manufacturers can sell low-priced generic versions of the drug. Lilly has seven other
major drugs that will fall off the “patent cliff” and stands to lose 75% of its annual revenue if it doesn’t
generate new “blockbuster” drugs. And Lilly isn’t the only pharmaceutical company in this situation.
The entire industry will see half of its revenues fall off due to expiring patents. When Lilly’s patent
expired on Prozac, a drug for depression taken daily by 40 million people, then-CEO Sidney Taurel
took steps to energize drug development by increasing R&D budget and instructing Lilly’s 7,000
researchers to focus on drugs that could produce one-half billion dollars a year in sales. This time,
however, expanding headcount and increasing R&D budgets aren’t options. The long-term challenge
is to grow Lilly’s drug pipeline with faster, less expensive innovation. Some think that large budgets,
centralized approval for allocating research dollars, and “siloed" research (where few know and
understand what others in the company are working on) stifle innovation and slow decision making.
Thus, after laying off workers and reducing annual expenses by $1 billion, CEO John Lechleiter had to
jumpstart Lilly’s drug development process and restructure his company to address this challenge.
John Lechleiter restructured Lilly to significantly improve communication in product
development teams and speed up the entire drug development process. One of his first actions was to
put everyone involved in the drug development process under one building, which Lilly named the
Development Center of Excellence. In addition to improving chances for spontaneous communication,
the company focused on ways to achieve dramatic improvements in cost, quality, service, and speed.
Lilly began using Critical Chain project management developed by physicist Eli Goldratt, which
eliminates delays that occur in a process when a task is completed by one person and then handed off
to the next to begin the next step or task in the process.
Lilly also created a group within the company called Chorus, which outsources 80% of Lilly’s
research to contract research organizations (CROs). To ensure results, CROs earn bonuses for
successfully meeting deadlines—and, if the products make it to market, they earn drug sale royalties
too.
The cost of using CROs is roughly a third less than it would have cost for Lilly to do the
testing in-house. Of course, modular organizations have disadvantages, too, such as the loss of
control that occurs when key business activities are outsourced to other companies. Also, suppliers to
whom work is outsourced can sometimes become competitors. So, is Lilly risking its future by
outsourcing the core function of researching and testing new drugs? While CROs may help
pharmaceutical companies do a faster job of determining which drugs don’t deserve more expensive
late-phase testing, some critics doubt whether they can help firms like Lilly uncover the blockbuster
drugs they need to replace the drugs that are coming out of patent protection.
93. Refer to WWYD Eli Lilly. The shift to “siloed” research would likely be proposed by those in the
company who advocate______departmentalization.
a.
functional
b.
product
c.
geographic
d.
customer
e.
matrix
94. Refer to WWYD Eli Lilly. Although product departmentalization—each unit devoted to particular
drug—would work well in developing new drugs for Lilly, which of the following would be the most
problematic issue for this kind of project management?
a.
Having teams in each unit do the same thing one division could do for all units.
b.
Not all units have the same highly qualified specialists.
c.
There is no evidence that this kind of project management guarantees blockbusters.
d.
Duplication could result in higher costs.
e.
All of these would be problematic aspects to product departmentalization at Eli Lilly.
95. Refer to WWYD Eli Lilly. The adoption of the Critical Chain project management methodology is one
way Lilly __________ internal processes to increase the speed of getting new drugs on the market.
a.
reengineered
b.
informalized
c.
increased the number of CROs who perform
d.
outsourced
e.
mobilized
96. Refer to WWYD Eli Lilly. Lilly’s move to outsource its research to contract research organizations to
cut costs for R&D, rigorous testing, and manufacturing, is indicative of the company’s
new______structure.
a.
matrix
b.
geographic
c.
virtual
d.
modular
e.
process
