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TESTBANK: CHAPTER 6
Organization Structure and Management Systems:
The Fundamentals of Strategy Implementation
True/False Questions
1. Jamie Dimon’s comment, “I’d rather have first-rate execution and second-rate strategy anytime than
brilliant ideas and mediocre management” reflects the view that strategy implementation is more
important than strategy formulation.
[See p.139]
2. The comment, “Brilliant strategy; lousy implementation” confirms the essential fact that strategy
formulation and strategy implementation are distinct, separable activities.
[See p.141]
3. For strategy to be effectively implemented, all enterprises need a strategic planning system.
[See p.141]
4. Linking medium-term strategic planning to annual operating plans and an operating budget is
undesirable since it encourages short-term thinking.
[See p.143]
5. Conventionally, strategy is viewed as preceding organizational structure. Management writer Tom
Peters states the opposite: “strategy follows structure.” The relationship between strategy and structure
is best described as:
[See p.144]
6. Operating plans and capital expenditure budgets are the key mechanisms through which strategy
drives resource allocation.
[See p.143]
7. Firm and markets represent the two primary modes of economic organization in the capitalist
economy.
[See pp.146-147]
8. A major organizational innovation of the first two decades of the 20th century was the
multidivisional corporation.
[See p.146]
9. Corporations are not the dominant organizational form in all industries—in agriculture and many
service industries other forms of business enterprise predominate.
[See p.147]
10. Holding companies are organizational forms that exist primarily to facilitate control over
large family-owned businesses.
[See p.146]
11. Firms exist in order to achieve the efficiency benefits of specialization and division of labor.
[See p.145]
12. The rigidities of hierarchical control have resulted in most business enterprises no longer being
organized as hierarchies.
[See p.151]
13. During recent decades, the hierarchical structures of business enterprises have become more
oriented towards control than coordination.
[See p.151]
14. The fundamental organizational problem is that specialisation creates the need for cooperation and
coordination.
[See p.145]
15. The shared values embodied in an organization’s culture cannot substitute for direct management
control.
[See p.148]
16. Hierarchy is a feature of all complex organizational forms whether human, biological, or physical.
[See p.151]
17. In determining how to group the employees into organizational units, the intensity with which they
need to collaborate with one another is less important than the need for social harmony.
[See p.150]
18. Organic structures are superior to mechanistic structures.
[See p.153]
19. Contingency theory advocates that the best organizational design is one that can respond to
multiple contingencies.
[See p.153]
20. When markets become unstable, bureaucratic approaches to management become more effective
because they are a source of stability.
[See p.153]
21. According to James Thompson, “pooled interdependence” is the most intensive form of interaction
between organizational members.
[See p.155]
22. As companies and their industries mature, the need for efficiency and more centralized control,
often results in companies replacing their functional structures with multidivisional structures.
[See p.156]
23. In recent decades many large corporations have reorganized their matrix structures such that
financial and strategic control is exercised through a single dimension.
[See p.159]
24. Adhocracy is a structure where values, motivation, participation, and mutual respect, allow a high
level of coordination without the need for formal control
[See p.160]
25. The distinctive feature of project–based organizations is that the operating units—the project
teams—are temporary.
[See p.160]
Multiple Choice Questions
26. Jay Galbraith and Ed Lawler’s comment that: “Ultimately, there may be no long-term sustainable
advantage that the ability to organize and manage” may be justified by:
[See p. 139]
27. The epithet “Great strategy; lousy implementation” is typically wrong because:
[See p.141]
28. In most large companies strategic planning is:
[See p.142]
29. The main reason that most entrepreneurial start-up companies adopt a formalized process of
strategic planning processes at some stage of their development is:
[See p.141]
30. In most large companies the strategic planning cycle begins with:
[See p.142]
31. The primary mechanisms through which companies translate strategic plans into action are:
[See p.143]
32. During the 19th century the principle source of ideas about how to organize large business
enterprises derived from:
[See p.146]
33. The Tata Group, the Virgin Group, and Alphabet Inc. are examples of:
[See p.146]
34. The creation of business enterprises where a head office managed geographically-separate
operational units was facilitated by:
[See p.148
35. The success of the multidivisional structure as an organizational form was because:
[See p.148
36. The pioneers of the multidivisional structure were:
[See p.146]
37. According to Henry Mintzberg, organizational structure can be defined as:
[See p.144]
38. A fundamental task of organization is to manage:
[See p.144]
39. The tendency for societies to revert to subsistence economies when the fabric of civilization breaks
down is because:
[See p.145]
40. The “agency problem” refers to:
[See p.145]
41. An important role of shared values within an organization is to:
[See p.148]
42. The major determinant of the organizational culture of most companies is:
[See p.152
43. It is important for in incoming CEO to be intimately familiar with the culture of the organization
he/she is joining because:
[See p.149]
44. Roles and directives, mutual adjustment, and routines are:
[See p.150]
45. In doubles tennis, the main mechanism through which the players coordinate their actions is:
[See p.150]
46. Hierarchy is a feature of:
[See p.151]
47. For hierarchical organizations to be adaptable requires:
[See p.155
48. Organic organizational forms are preferable to mechanistic organizational forms:
[See pp.152-153
49. Firms organized around functional structures tend to experience management problems when:
[See p.156]
50. Large corporations with matrix structures where control is shared among different organizational
dimensions have experienced:
[See pp.158-159]
