Royal Dutch/Shell
Royal Dutch/Shell operates in 130 countries around the world and controls every aspect of oil
production from the ground to the gas pump. This large international company is also an insular
company, saddled with introverted control freaks, a huge and convoluted organizational structure, and
a controversial public image. Many of its managers rarely talk to the rank and file. The top brass at
headquarters constantly wrestle for power with the 100 or so influential country CEOs who run local
operations. Shell Chairman Cornelius Herkstroter wants to create a fast, flexible, environmentally
aware organization that runs more efficiently, is more innovative, and is capable of moving Shell into
profitable new businesses. The organization Herkstroter inherited has been described as bureaucratic,
inward looking, complacent, self-satisfied, and arrogant.
106. Refer to Royal Dutch/Shell. One of the major causes of Shell’s problems was the 100 or so influential
country CEOs who run local operations autonomously. This information would suggest that Shell used
__________ departmentalization.
a.
functional
b.
integrated
c.
geographic
d.
product
e.
operations
107. Refer to Royal Dutch/Shell. Shell Chairman Cornelius Herkstroter has ________ authority.
a.
stakeholder
b.
staff
c.
equity
d.
line
e.
departmentalized
108. Refer to Royal Dutch/Shell. In 1959, Shell initiated a matrix organizational structure. This means
the company:
a.
adopted a market growth strategy
b.
eliminated any span of management problems
c.
created a new corporate culture without the aid of a change agent
d.
centralized all purchasing organizations
e.
used at least two different forms of departmentalization
109. Refer to Royal Dutch/Shell. Given the autonomy of Shell’s CEOs in various countries, it is obvious
that Shell’s organization is:
a.
decentralized
b.
synergistic
c.
centralized
d.
participative
e.
entrepreneurial
110. Refer to Royal Dutch/Shell. According to the description of Shell, the company had a(n) _______
organization, which Chairman Herkstroter wanted to turn into a(n) _______ organization.
a.
centralized; decentralized
b.
matrix; functional
c.
mechanistic; organic
d.
bureaucratic; participative
e.
organic; mechanistic
111. Refer to Royal Dutch/Shell. Shell Chairman Cornelius Herkstroter wanted the company to undergo
the process of:
a.
decentralized
b.
reengineering
c.
downgrading
d.
autonomy elimination
e.
benchmarking
Specialty Blades
In its factory in Staunton, Virginia, Specialty Blades manufactures millions of blades each year,
ranging from scalpels to the serrated versions that cut gas-pump receipts. The engineers at Specialty
Blades design precision cutting devices for varied, usually custom applications. On one recent project
they worked closely with a medical-device company to develop a combination scalpel and stapler that
slices tissue very neatly close to the staples. Specialty’s clients are willing to pay premium prices for
that level of industry-specific expertise. Specialty focuses on products for which much of the value
comes from the engineering of the specific solution rather than the production cost of the component.
To allow it to have this customer focus, Specialty Blades developed a process utilizing
custom-designed, programmable machinery to generate and sharpen blanks for custom-made blades.
This process features precisely controlled, multiple-step grinding and honing sequences similar to that
used on razor blades, but it can accommodate different steels not available in strip form and unique
edge configurations not possible with continuous strip sharpening.
112. Refer to Specialty Blades. What is the advantage of the type of departmentalization used by Specialty
Blades?
a.
a focus on customer needs rather than on business functions
b.
duplication of resource usage
c.
it discourages managerial specialization
d.
a focus on organizational processes
e.
near-perfect horizontal communications capabilities
113. Refer to Specialty Blades. What is the disadvantage of the type of departmentalization used by
Specialty Blades?
a.
a focus on organizational structure rather than processes
b.
a focus on organizational processes rather than structure
c.
duplication of resources
d.
allows the company to better target regions
e.
a mixed chain of command
114. Refer to Specialty Blades. It is conceivable that the _____ principle may be violated when the
marketing manager wants a product finished quickly and the production department wants a prototype
built for another customer at the same time.
a.
delegation of command
b.
empowerment
c.
synergistic authority
d.
unity of command
e.
centralization of authority
115. Refer to Specialty Blades. If the company were to set up three separate divisions in the United States,
Korea, and France to deal with regional-specific requirements for blades, it would be an example of
_____ departmentalization.
a.
matrix
b.
product
c.
customer
d.
geographic
e.
functional
116. Refer to Specialty Blades. The salesperson who markets the company’s ability to create blades for
specific jobs to potential customers has:
a.
line authority
b.
chain of command
c.
delegation of authority
d.
degree of centralization
e.
staff authority
117. Refer to Specialty Blades. The legal advisor who makes sure that each blade designed by engineers at
Specialty Blades is patented has:
a.
line authority
b.
chain of command
c.
delegation of authority
d.
degree of centralization
e.
staff authority
118. Refer to Specialty Blades. Given that each group of engineers and production workers are given the
responsibility to create and produce a specific blade, what kind of task interdependence is used at
Specialty Blades?
a.
synergistic
b.
functional
c.
sequential
d.
hierarchical
e.
pooled
119. Refer to Specialty Blades. Employees at Specialty Blades are given the authority to meet the exact
requirements of each customer. In other words, Specialty Blades uses _____ to give its employees
intrinsic motivation.
a.
delegation of command
b.
empowerment
c.
synergistic authority
d.
unity of command
e.
centralization of authority
Alcan
With almost 70,000 employees in 55 countries, Alcan has been one of the best performers in a
slow-growth industry, aluminum. That said, aligning the organization for the best performance
possible is an ongoing process, and having so many separate companies in so many diff erent areas is a
constant challenge.
The company was founded in 1902 as a producer of aluminum. Today, in addition to
supplying basic metals, Alcan produces food and beauty product packaging and engineered products
for the automobile and aerospace industries. The size and complexity of the organization has grown as
the company has developed. Alcan currently has fi ve corporate-wide staff operations (corporate
development, external aff airs, fi nance, human resources, and corporate headquarters), which work
with
all areas of the organization. The company also has four operating divisions: Bauxite and
Alumina, Primary Metal, Engineered Products, and Packaging. Each of these divisions has its own
staff operations, including such functions as fi nance, human resources, procurement, and information
technology. And each division is also organized into sales groups; the Packaging division, for
example, is grouped into Food Packaging—Europe, Food Packaging—Americas, Food
Packaging—Asia, Global Pharmaceutical Packaging, Global Beauty Packaging, and Global Tobacco
Packaging.
The company has made great strides to control its costs, divesting areas that it could not run
profi tably and moving into areas where it felt they had a competitive advantage. But beyond cost
cutting, Alcan has found it diffi cult to raise net income as a percentage of sales. Organizing the
company to take advantage of growth opportunities and move it away from being a basic metals
supplier is the key to the company’s future.
120. Refer to Alcan. How could Alcan’s upper management make use of an organization chart?
a.
to schedule the most efficient use of resources
b.
to eliminate production bottlenecks
c.
to locate opportunities for benchmarking
d.
to create delegation routes
e.
to visualize the horizontal and vertical configurations of the company
121. Refer to Alcan. Which of the following would be an example of a staff position at Alcan?
a.
CEO
b.
marketing director
c.
legal advisor
d.
shipping department head
e.
salesperson
122. Refer to Alcan. It would seem that because of Alcan’s difficulties in dealing with the current business
environment, it could use:
a.
reengineering
b.
sequential motivation of its employees
c.
pooled delegation
d.
a modular planning process
e.
a virtual SWOT analysis
123. Refer to Alcan. Organizing a large change at Alcan as would be needed to modify the way it interacts
with its environments would change the organization by changing:
a.
its internal positioning strategy
b.
supplier empowerment levels
c.
its micro-adaptation processes
d.
task interdependence
e.
employees’ pooled autonomy
124. Refer to Alcan. Would it be beneficial for Alcan to create a modular organization?
a.
No, benchmarking is too costly for global organizations.
b.
Yes, it could benefit from outsourcing.
c.
No, the company relies too heavily on sequential processes.
d.
Yes, it would give it more control over organizational processes.
e.
No, a modular organization would not allow the company to closely monitor its
environment.
SHORT ANSWER
1. Describe what is meant by organizational structure and organizational process. How are these concepts
related to each other? How are they different from each other?
ANS:
2. Explain what is meant by the term “departmentalization.” List the five traditional approaches to
departmentalization.
3. There is one common disadvantage associated with geographic, product, and customer
departmentalization. What is it? Explain how the functional and matrix forms avoid this disadvantage.
4. Identify the five traditional approaches to organizational structure. Which one is the best for use by a
company? Explain your answer.
5. Define authority. List the four dimensions by which it has traditionally been characterized in
organizations.
6. Define standardization. How is this concept relevant to the degree of organizational centralization?
7. What is job specialization? Briefly explain its advantages and disadvantages.
8. What are the primary disadvantages of job specialization? How can job redesign be used to overcome
these disadvantages?
ANS:
9. The job characteristics model (JCM) is concerned with increasing internal motivation. JCM specifies
three critical psychological traits that must occur for work to be internally motivating. What are they?
10. How do the mechanistic and organic approaches to organization design differ? Under what
circumstances is each appropriate for use by a company?
11. You have been instructed to design an adaptive organizational structure. How will your focus differ if
you approach the project using reengineering, empowerment, and behavioral informality than if you
think in terms of modular and virtual organizations?
12. List and briefly describe the three approaches that companies can use to redesign internal processes.
13. What is a modular organization? Briefly identify the advantages and disadvantages associated with this
organizational form.
ESSAY
1. Identify an organization that you know of and explain how and why its approach to organizational
design tends to fit better with either the traditional (structure) or contemporary (process) approaches to
organizational design. Be sure to state whether your organizational example more closely fits the
model of mechanistic or organic organizational design.
2. List and briefly identify each of the five traditional departmental structures. Explain which one tends
to be the most difficult to manage effectively.
3. Explain what is meant by authority. How can authority be centralized? How can it be decentralized?
Describe the circumstances under which centralization versus decentralization would be more
desirable. As a manager in a large company, what particular challenge might you expect to face with
regard to the use of decentralization?
4. Identify a job that you had (or a job that you know of) that was particularly boring and that had the
characteristics of a specialized job. Analyze that job in terms of the five core job characteristics from
the job characteristics model (JCM). Make specific recommendations for redesigning it by using three
to five of the redesign techniques presented in the model.
ANS:
5. What is an intraorganizational process? Identify the techniques that are being used by companies today
to change these processes. Evaluate the probable level of risk to a company in using each of these
approaches.
ANS:
6. Describe the virtual organization. Explain how the virtual organization could theoretically prove to be
a more formidable competitor than any of the other types of organization in a highly complex,
dynamic business environment.
ANS:
