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Indicate whether the statement is true or false.
1. An SBU structure consists of at least three levels: the top level, the corporate headquarters; the next level, the strategic
business units (SBUs); and the final level, SBU divisions.
a.
True
b.
False
2. The organizational structure for an internationally diversified firm requires trade-offs between global integration and
local market responsiveness.
a.
True
b.
False
3. Organizational controls guide the use of strategy, indicate how to compare actual results with expected results, and
suggest corrective actions to take when the difference is unacceptable.
a.
True
b.
False
4. The selection of an organizational structure for an internationally diversified firm should consider the international
corporate-level strategy the firm is using.
a.
True
b.
False
5. The cooperative form is an M-form structure in which horizontal integration is used to bring about interdivisional
cooperation.
a.
True
b.
False
6. Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate strategies for the
conditions in the external environment and the company’s competitive advantages.
a.
True
b.
False
7. As a firm grows, it typically shifts from a simple structure to a functional structure.
a.
True
b.
False
8. There are three variations of the multidivisional structure.
a.
True
b.
False
9. Failure to properly structure an organization can contribute to poor strategic decisions and eventually bankruptcy.
a.
True
b.
False
10. The worldwide product divisional structure has centralized decision-making authority in the worldwide division
headquarters to coordinate and integrate decisions and actions among business units.
a.
True
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b.
False
11. To implement a related constrained strategy, firms should use the cooperative form of the multidivisional structure.
a.
True
b.
False
12. Organizational inertia often prompts top management to initiate structural change when organizational performance
levels drop.
a.
True
b.
False
13. Research shows that structure has a more important influence on strategy than the reverse and hence the emphasis of
the chapter on the subject of structure.
a.
True
b.
False
14. To implement a related linked strategy, a firm usually needs an SBU structure.
a.
True
b.
False
15. The matrix organization has a dual structure combining functional specialization and business product or project
specialization.
a.
True
b.
False
16. The divisions within each SBU are related in terms of shared products or markets, but the divisions of one SBU have
little in common with the divisions of the other SBUs.
a.
True
b.
False
17. Internal competition for corporate resources is effective for companies with an unrelated diversification strategy, but
dysfunctional for companies with a related constrained strategy.
a.
True
b.
False
18. Companies and business units using the differentiation strategy should emphasize financial rather than strategic
controls.
a.
True
b.
False
19. According to Michael Dell, an overemphasis on financial controls to produce attractive short-term results contributed
to performance difficulties at Dell, Inc. This point emphasizes the importance of properly balancing the use of strategic
and financial controls.
a.
True
b.
False
20. The worldwide geographic area structure differs from the worldwide product divisional structure in the level of
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centralization of decision making.
a.
True
b.
False
21. A simple structure is an organizational form in which the owner-manager makes all major decisions directly and
monitors all activities, while the staff merely serves as an extension of the manager’s supervisory authority.
a.
True
b.
False
22. High levels of formalization of rules and procedures which often emanate from the centralized staff are a characteristic
of the structure used to implement the cost leadership strategy.
a.
True
b.
False
23. The simple structure is used by owner-managed firms which are characterized by informal relationships, few rules,
limited task specialization, and unsophisticated information systems.
a.
True
b.
False
24. With a related diversification corporate-level strategy, financial controls are used by corporate leaders to verify the
sharing of appropriate strategic factors such as knowledge, markets, and technologies across businesses.
a.
True
b.
False
25. For firms in a vertical complementary alliance (such as between Toyota and its suppliers), it is more difficult to
identify the strategic center firm than in a horizontal complementary alliance (for example, airline alliances).
a.
True
b.
False
26. Firms implementing the multidomestic strategy often attempt to isolate themselves from global competitive forces by
establishing protected market positions or by competing in industry segments that are most affected by differences among
local countries.
a.
True
b.
False
27. Alliances of organizations in the same position on the value chain are known as vertical alliances.
a.
True
b.
False
28. Centralized and formalized procedures allow for greater flexibility, an important factor for firms using a cost
leadership strategy.
a.
True
b.
False
29. Arnold Schwartz, CEO and founder of Schwartz Engineering, has repeatedly rebuffed efforts by other firms to draw
Schwartz Engineering into strategic alliances. Schwartz Engineering has built its highly successful business around
proprietary processes invented by Mr. Schwartz in the 1980s. Mr. Schwartz is concerned that his firm will be required to
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share the sources of its competitive advantage with alliance partners. This is a reasonable fear.
a.
True
b.
False
30. Organizational structures must be both stable and flexible.
a.
True
b.
False
31. Over time, large and complex organizations must customize their structure to fit their unique strategic needs.
a.
True
b.
False
32. RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and sharing of ideas
among employees. In order to foster this behavior, RexMacDonald should emphasize strategic controls over financial
controls.
a.
True
b.
False
33. Firms using the differentiation strategy need to respond quickly to environmental opportunities and threats. The
structural features that are best for these requirements are centralization, specialization, and many rules and procedures.
a.
True
b.
False
34. A centralized structure does not provide information from local stores that would be useful in changing its technology
quickly. This example illustrates the effect of structure on strategy.
a.
True
b.
False
35. Strategy has an important influence on structure, although once in place, structures influence strategy.
a.
True
b.
False
36. Research has consistently shown that there is one best way to structure all organizations, regardless of competitive
strategy.
a.
True
b.
False
37. To properly execute strategic controls in firms using related diversification, the executives must have a deep
understanding of each unit’s business-level strategy.
a.
True
b.
False
38. In the hybrid form of the combination structure, some divisions are oriented toward products while others are oriented
toward market areas.
a.
True
b.
False
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39. The three multidivisional structures that are used to implement a diversification strategy are the competitive form, the
strategic business unit form, and the integrated form.
a.
True
b.
False
40. Firms switch from a functional structure to a multidivisional structure because greater levels of environmental
complexity and uncertainty make it necessary for the firm to develop cooperative relationships with its stakeholders.
a.
True
b.
False
41. The competitive form of the M-form structure is characterized by complete independence among the form’s divisions.
Unlike the divisions included in the cooperative structure, divisions that are part of the competitive structure do not share
common strengths.
a.
True
b.
False
42. Distributed strategic networks are the organizational structure used to manage international cooperative strategies.
a.
True
b.
False
43. If firms band together in a large number of vertical complementary strategic alliances, there is a danger that the
government will suspect them of illegal collusive activities.
a.
True
b.
False
44. The marketing and R&D functions are emphasized in the differentiation strategy’s functional structure.
a.
True
b.
False
45. Specialization refers to the extent to which authority for decision making is retained at higher managerial levels.
a.
True
b.
False
46. A strategic network can be characterized as a loose federation of partners revolving around a strategic center firm.
a.
True
b.
False
47. The integrated cost leadership/differentiation strategy needs structural features that are partially centralized and
partially decentralized, jobs that are semi-specialized, and rules and procedures that call for some formal and some
informal job behavior.
a.
True
b.
False
48. Companies and business units of large diversified firms using the cost leadership strategy should use strategic
controls.
a.
True
b.
False
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49. Strategy has an important influence on structure, once a particular structure is in place, that structure influences
strategy.
a.
True
b.
False
Indicate the answer choice that best completes the statement or answers the question.
50. 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
51. 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
52. 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.
53. 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.
54. In the competitive form of the multidivisional structure, the focus of headquarters is on all of the following EXCEPT:
a.
integration.
b.
performance appraisal.
c.
resource allocation.
d.
long-range planning.
55. Which of the following is NOT associated with an organizational structure that supports a cost leadership strategy?
a.
Centralization
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b.
Specialization
c.
Formalization
d.
Integration
56. 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.
57. ______ 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
58. 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
59. A firm pursuing an unrelated diversification strategy will utilize a ______ structure.
a.
network
b.
cooperative form multidivisional
c.
competitive form multidivisional
d.
functional
60. 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.
Dacilitating comparison between divisions
d.
Stimulating managers of poorly performing divisions to look for ways of improving performance
61. One of the primary disadvantages of the global strategy and worldwide product divisional structure is that:
a.
it is difficult to achieve economies of scale.
b.
the firm must develop centers to offer after-sales service to customers.
c.
it is difficult to respond effectively to local market needs and preferences.
d.
achieving economies of scale with this strategy/structure combination is nearly impossible.
62. The heavy use of integrative mechanisms in the ______ multidivisional organizational structure is intended to achieve
_______.
a.
cooperative; economies of scope
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b.
competitive; cost efficiencies
c.
functional; sensitivity to cultural diversity
d.
SBU; quick response to local customer needs
63. 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
64. Strategic controls allow corporate-level managers to:
a.
evaluate business-level performance on objective criteria.
b.
concentrate on day-to-day corporate operations.
c.
assess performance of employees and managers in each business unit.
d.
examine the fit between what the firm might do and what it can do.
65. Galatea Foods was founded in Greece by Galatea Chronos in 1978, and the company spread rapidly through Western
Europe. Ms. Chronos retains the office of CEO. The Spanish division is headed by her oldest son. The North European
division is headed by her only daughter, and the French-Italian division is headed by Ms. Chronos’ brother. This company
probably uses the ______ strategy.
a.
network
b.
multi-domestic
c.
global
d.
transnational
66. Which of the following is TRUE?
a.
Organizations tend to change structure too frequently, which erodes their competitive advantage.
b.
Large organizations can retain a simple structure as long as they have a focus strategy.
c.
Flexibility in structure is more important than stability.
d.
Strategy has a more important influence on structure than structure has on strategy.
67. Toyota heavily uses a strategic network of vertical relationships. Toyota enables engineers in supplier firms to
communicate easily with companies with which Toyota has contracts for services. This results in the suppliers and Toyota
(the strategic center firm) being more:
a.
interdependent.
b.
competitive with one another.
c.
creative.
d.
complementary.
68. ______ is the degree to which rules and procedures govern work.
a.
Formalization
b.
Centralization
c.
Specialization
d.
Unification
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69. The primary disadvantage of the multi-domestic strategy and worldwide geographic area structure relates to limited:
a.
centralization.
b.
coordination across divisions.
c.
ability to meet local market needs.
d.
potential for global efficiency.
70. In an SBU structure, ______ is/are evaluated using strategic controls, whereas ______ is/are evaluated using financial
controls.
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
71. 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
72. 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.
73. 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
74. Implementing the multi-domestic strategy requires decentralization to:
a.
facilitate the tailoring of products to the demand in local markets.
b.
develop economies of scale.
c.
achieve economies of scope.
d.
reduce bureaucracy and speed up decision making.
75. Firms seeking to compete on the basis of cost leadership particularly need support from the ______ and ______
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functions.
a.
finance; accounting
b.
manufacturing; process R&D
c.
product R&D; marketing
d.
management information; finance
76. The need for the organization to combine local responsiveness and efficiency is most critical in a ______ strategy.
a.
multi-domestic
b.
transnational
c.
global
d.
focus
77. 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
78. 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.
79. 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
80. 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.
81. A worldwide geographic area structure is an organizational form in which:
a.
multiple alliances across the globe link complementary businesses.
b.
standardized products are offered across country markets.
c.
national interests dominate and management adapts to local or cultural differences.
d.
responsiveness to local demand is combined with economies of scale.
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82. A firm’s ______ specifies the work to be done and how to do it given the firm’s strategy or strategies.
a.
structure
b.
controls
c.
culture
d.
strategy
83. 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.
84. 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
85. 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
86. Which of the following is NOT a preliminary task of the strategic center firm in a strategic network?
a.
Strategic outsourcing
b.
Encouraging friendly rivalry among network members
c.
Allocating internal capital
d.
Supporting development of new core competencies
87. IKEA is a global furniture retailer with more than 300 outlets in 39 countries and regions. IKEA focuses on lowering
its costs as well as understanding customer needs, especially younger ones. IKEA‘s international strategy is best described
as ______, and the appropriate organizational structure to implement this strategy is the ______ structure.
a.
transnational; combination
b.
global; worldwide product divisional
c.
multi-domestic; worldwide geographic area
d.
competitive; strategic business unit multidivisional
88. 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
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d.
cooperative form of the multidivisional
89. In most cases, the focus strategy is best managed using a ______ structure.
a.
simple
b.
functional
c.
multidivisional
d.
vertical
90. 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.
91. 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
92. ____ is the degree to which decision-making authority is retained at higher managerial levels.
a.
Formalization
b.
Centralization
c.
Specialization
d.
Unification
93. Toyota and its suppliers have a relationship in which Toyota encourages suppliers to modernize their facilities and
provides them with technical and financial assistance to do so. It also promotes longer-term contracts with suppliers and
enables engineers in the supplier companies to have better communication with Toyota. This is an example of a(n):
a.
worldwide product divisional structure.
b.
functional structure.
c.
SBU multidivisional structure.
d.
strategic network.
94. The Amos Ball Printing Company was established in 1866. Currently, Amos Ball V is the CEO and chairman of the
board. The company has traditionally used a functional structure. Five years ago, the company branched into online
publishing and small-batch printing in addition to its regular large-batch operations. Both new businesses are significantly
different in technology and marketing from each other and from Ball’s traditional business. Despite the hiring of
experienced professionals in these new endeavors, performance continues to be poor and is affecting Ball’s overall
performance. Which of the following statements is TRUE?
a.
Amos should consider adopting the multidivisional structure.
b.
Mr. Ball has insufficient power to change the structure of the organization.
c.
Restructuring must only be done from a position of strength, so it is necessary to wait until the company’s
overall performance improves before making radical changes.
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d.
These businesses are too disparate to coordinate within one corporate structure.
95. 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
96. The three structural characteristics that differ among organizational structures include all of the following EXCEPT:
a.
centralization.
b.
formalization.
c.
specialization.
d.
intermediation.
97. Airlines have forged a number of complementary strategic alliances, in part because many airlines are not profitable.
Some airlines participate in several alliances simultaneously. This tends to:
a.
make the partners’ true loyalties and intentions unclear.
b.
make the role of the strategic center firms more critical to alliance success.
c.
distribute the alliances along several segments of the airline industry value chain.
d.
be most effective when the alliances are with airlines headquartered in different nations.
98. The most centralized and most costly form of the multidivisional structure is the:
a.
integrated.
b.
competitive.
c.
SBU.
d.
cooperative.
99. 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
100. 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
101. Icarus Aviation, Athena Instrumentation, and Hercules Miniaturization are strategic business units of Olympia
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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.
102. 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.
103. 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
104. Organizational structure:
a.
specifies the firm’s formal reporting relationships, procedures, controls, and authority and decision-making
processes.
b.
specifies the firm’s informal reporting relationships, procedures, controls, and authority and decision-making
processes.
c.
specifies the firm’s formal value proposition, the markets it will serve, and how the firm will provide value in
those markets.
d.
specifies the firm’s control mechanisms, grievance procedures, reporting relationships, procedures, and
authority over decision-making processes.
105. In the ______ multidivisional structure there is complete independence among the firm’s divisions.
a.
cooperative
b.
matrix
c.
competitive
d.
SBU
106. Walmart’s effective strategy/structure configuration is:
a.
cost leadership/functional.
b.
differentiation/functional.
c.
related constrained/multidivisional.
d.
related linked/multidivisional.
107. Financial controls are most important in the ______ strategy.
a.
single business
b.
related constrained
c.
unrelated diversified
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d.
vertical complementary
108. 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.
109. 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.
110. TheLG Company has units operating in significantly different industries and uses financial controls to manage its
portfolio. LG is most likely using the ______ structure.
a.
combination-matrix
b.
cooperative form of the multidivisional
c.
competitive form of the multidivisional
d.
strategic business unit multidivisional
111. Ichabod Industries has a Latin American Division, a European Division, an Industrial Lubricants Division, and a
Food Service Division. Ichabod Industries probably uses the ______ organizational structure.
a.
horizontal complementary strategic alliance
b.
competitive multidivisional
c.
strategic business unit multidivisional
d.
hybrid combination
112. Selecting the organizational structure and controls that effectively implement the chosen strategy is a challenge for
managers because:
a.
firms must be flexible while retaining a degree of stability.
b.
managers are never able to obtain all the information necessary to make the best selection.
c.
the structure of a firm should not duplicate the structures of its competitors.
d.
the environment changes too rapidly for corporations to maintain a consistent corporate structure.
113. After years of negotiating short-term contracts with its suppliers, Icon Images has decided to agree to longer-term
contracts. In doing this, Icon Images is hoping to:
a.
reduce transaction costs.
b.
increase negotiating leverage with suppliers.
c.
become less dependent on its suppliers.
d.
move toward horizontal alliances with its suppliers.
114. In Japan, the center firm in a strategic network of vertical relationships might be expected to undertake all of the
following EXCEPT:
a.
reducing its transaction costs by promoting longer-term contracts with subcontractors.
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b.
enabling engineers in upstream companies to have better communication with those companies with which it
has contracts for services.
c.
encouraging subcontractors to modernize their facilities and providing them with technical and financial
assistance to do so.
d.
decreasing communications between network members to reduce communication costs.
115. A multidomestic strategy would be associated with:
a.
high levels of coordination.
b.
informal coordination among units.
c.
many integrative mechanisms.
d.
interdependent divisions.
116. 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.
117. 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.
118. McDonald’s operates through a franchising system wherein the head office uses strategic and financial controls to
ensure that the franchises are creating the greatest possible value. This is an example of a(n):
a.
worldwide product divisional structure.
b.
strategic network.
c.
SBU multidivisional structure.
d.
simple structure.
119. It is easiest to identify the company that functions as the strategic center firm in:
a.
horizontal complementary strategic alliances.
b.
vertical complementary strategic alliances.
c.
corporate-level cooperative partnerships.
d.
international cooperative partnerships.
120. 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.
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d.
limited communication among functional specialists.
121. Megaline, Inc., with five divisions, follows the competitive form of the multidivisional structure. One division has
not met the rate-of-return goals for the past year. Another division has exceeded the rate-of-return goals. The other three
divisions met the rate-of-return goals. The headquarters office must decide where to allocate capital in the next year.
Which scenario is the MOST likely?
a.
The poorest-performing division will get the highest capital allocation so that it can fix its problems and
achieve the rate-of-return goal next year.
b.
The highest-performing division will get the highest capital allocation because it has the best prospects for
creating more wealth for the shareholders next year.
c.
The average-performing divisions which met the rate-of-return goals will receive the highest allocation
because their performance exactly matched corporate requirements.
d.
All divisions will receive the same capital allocation for the next year because this organizational structure
rewards divisional managers based on achievement of strategic goals.
122. The fewest integrative devices are used in the ______ structure.
a.
simple
b.
competitive multidivisional
c.
SBU
d.
network
123. 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.
124. 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.
125. Structural stability affects the organization’s ability to:
a.
resist organizational inertia.
b.
cope with uncertainty about cause-and-effect relationships in the global economy.
c.
develop new competitive advantages.
d.
consistently and predictably manage its daily work routines.
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126. 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.
127. One reason why a long-tenured top-level manager may hesitate to conclude the firm’s structure is a problem is that
doing so:
a.
indicates to competitors that the firm is vulnerable to a hostile takeover.
b.
will only lead to inefficiencies.
c.
requires that the firm undertake a multi-year restructuring period that will delay retirement.
d.
suggests that the firm’s previous choices were not the best ones.
128. 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
129. Describe the organizational structure associated with a firm that pursues an unrelated diversification strategy.
130. Discuss the organizational structures used to implement corporate-level strategies.
131. Describe the organizational structures used to implement cooperative strategies, giving attention to the role of the
strategic center firm.
132. Define the three major dimensions of organizational structure: specialization, centralization, and formalization. How
do these dimensions vary in organizations implementing the cost leadership, differentiation, and cost
leadership/differentiation strategies?
133. Describe the three major types of organizational structure and their appropriate use.
134. Discuss the organizational structures used to implement the different business-level strategies.
135. Describe the organizational structures used to implement the three international strategies.
136. Discuss the difference between strategic controls and financial controls.
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