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Chapter 15 Foundations of Organization Structure Page 543
Questions for Review
15-1. What are seven key elements to define an organization’s structure?
15-2. What are the characteristics of the functional, divisional, and matrix structures?
Answer: The functional structure groups employees by their similar specialties,
responsibility for all activities related to a product, but with duplication of
functions and costs. The matrix structure combines two forms of
—their functional department managers and their product managers. Therefore,
the matrix has a dual chain of command. The strength of the matrix lies in its
ensuring their efficient deployment. The major disadvantages of the matrix lie in
the confusion it creates, its propensity to foster power struggles, and the stress it
places on individuals.
structures
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
15-3. What are the characteristics of the virtual structure, the team structure, and the
circular structure?
Chapter 15 Foundations of Organization Structure Page 544
with little or no departmentalization. Virtual organizations create networks of
concentrates on what it does best. The major advantage to the virtual organization
is its flexibility. The primary drawback is that it reduces management’s control
vertical boundaries, management flattens the hierarchy and minimizes status and
rank. An organization in which executives are at the center, spreading their vision
social responsibility.
Learning Objective: Identify the characteristics of a virtual structure, the team structure, and the
circular structure
AACSB: Reflective thinking
15-4. How might downsizing affect organizational structures and employees?
Answer: Downsizing is a systematic effort to make an organization leaner by
and companies downsizing to improve strategic focus often see positive effects on
stock prices after the announcement. On the other hand, among companies that
concentration on the job, and lower creativity. Downsizing can also lead to more
voluntary turnover, so vital human capital is lost. The result is a company that is
more anemic than lean.
AACSB: Reflective thinking
15-5. How are mechanistic structures and organic structural models similar and
different?
decisions, has multiple decision makers, and favors flexible practices.
Learning Objective: Contrast the reasons for mechanistic and organic structural models
Chapter 15 Foundations of Organization Structure Page 545
AACSB: Reflective thinking
15-6. What are the behavioral implications of different organizational designs?
Learning Objective: Analyze the behavioral implications of different organizational designs
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
Experiential Exercise
The Sandwich Shop
This exercise contributes to:
Learning Objective: Demonstrate how organizational structures differ, and contrast simple structure,
bureaucracies, and virtual structures
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Reflective thinking
Divide the class into groups of at least four individuals.
As background: The managers of a new chain of sandwich shops will need to determine
what types of sandwiches consumers want and find recipes and ingredients. Ingredient
sources, prices, and other logistical requirements (like refrigeration) will need to be
determined, purchasing decisions will be ongoing, and supplier relationships will need to
be managed. Financing must also be arranged at this early phase. With this groundwork,
the company will move to the next stage of marketing, including pricing and the
development of advertising materials. Finally, selecting and training workers will occur.
Each group creates the following:
A Simple Structure
Chapter 15 Foundations of Organization Structure Page 546
operations? About how many people would be acting in an administrative role, and what
sort of spans of control would they have? What challenges will the organization face as it
grows?
A Bureaucracy
future growth with a bureaucratic system.
A Virtual Structure
Determine what a virtual structure would look like for this organization if many of the
aspects of the business are outsourced. Consider which tasks can be adequately
performed by individuals who do not work within the restaurant chain, and which should
be kept in house.
Debriefing
business.
Ethical Dilemma
Post-Millennium Tensions in the Flexible Organization
This exercise contributes to:
Learning Objective: Analyze the behavioral implications of different organizational designs
well-defined jobs have been decreasing in number.
The shift has often been described in positive terms. Managers work to create
organizations that have laudable characteristics like adaptability, flexibility, and
creativity. Author Micha Kaufman notes that doing well in contemporary business
Chapter 15 Foundations of Organization Structure Page 547
levels of psychological strain and worry. Insecure workers also get sick more frequently.
Contrary to the positive image of the freelance worker with boundless energy and
creativity, evidence shows that for many individuals, a lack of job security can result in
functions are no longer needed. As a result, even within the highly volatile health care
industry, it has been able to avoid layoffs. However, systems that provide job security do
not come cheaply, nor are they feasible for all companies.
Sources: M. Kaufman, “The Wisdom of Job Insecurity,” Forbes, October 3, 2014, http://www.forbes.com/sites/michakaufman
and Employee Outcomes,” Journal of Occupational Health Psychology 19, (2014): 243–58.
Questions
15-7. Do you think that stability is good or bad for employees?
personal situations.
15-8. Do employers have an ethical responsibility to provide security for employees or
ethical perspectives.
15-9. If long-term employment security isn’t feasible, what alternatives might
employers provide to help employees make smoother transitions?
Case Incident 1
Creative Deviance: Bucking the Hierarchy?
This exercise contributes to:
Chapter 15 Foundations of Organization Structure Page 548
AACSB: Reflective thinking
One of the major functions of an organizational hierarchy is to increase standardization
and control for top managers. Using the chain of command, managers can direct the
activities of subordinates toward a common purpose. If the right person with a creative
vision oversees a hierarchy, the results can be phenomenal. Until Steve Job’s regrettable
slitter that was one of the most important process innovations in 3M’s history, and
Nichia’s development of multi-billion-dollar LED bright lighting technology were all
officially rejected by the management hierarchy. In all these cases, an approach like
Apple’s would have shut down some of the most successful products these companies
development.
It’s not immediately apparent why top-down decision making works so well for one
highly creative company like Apple, while hierarchy nearly ruined innovations at several
other organizations. It may be that Apple’s structure is quite simple, with relatively few
layers and a great deal of responsibility placed on everyone for his or her own outcomes.
Questions
15-10. Do you think it’s possible for an organization to deliberately create an
Management. Student responses will vary.
15-11. Why do you think a company like Apple is able to be creative with a strongly
hierarchical structure, whereas other companies find hierarchy limiting?
Chapter 15 Foundations of Organization Structure Page 549
15-12. Do you think Apple’s success was entirely dependent upon Steve Jobs’ role as
head of the hierarchy? What are the potential liabilities of a company’s being so
strongly connected to the decision making of a single individual?
Case Incident 2
Turbulence on United Airlines
This exercise contributes to:
Learning Objective: Analyze the behavioral implications of different organizational designs
Learning Outcome: Discuss the factors that influence decisions about organizational structure
AACSB: Diverse and multicultural work environments; Reflective thinking
The beginning of 2017 was not good for United Airlines. Several incidents involving
United Airlines personnel enforcing a variety of rules, regulations, and protocols in
employees’ interactions with customers ensued, causing international outcry. The first
Comedian Seth Rogan tweeted, “We here at United are just trying to police the attire of
the daughters of our employees! That’s all! Cool, right?”
A second, more severe incident occurred when David Dao, a doctor who needed to see
his patients the following morning, was aboard a Louisville bound flight from Chicago in
defensive. Dao later filed a lawsuit against United for their actions.
A third incident, in Houston involved a to-be-married couple, Michael and Amber,
headed to Costa Rica for their wedding. When they entered the plane, they noticed a man
sleeping in the row where their seats were assigned. Instead of disturbing him, they
Chapter 15 Foundations of Organization Structure Page 550
attendant to return to their seats and they complied. A U.S. Marshall approached them
soon after and ejected them from the plane. According to United statements, the couple
kept “repeatedly” trying to sit in upgraded seats and would not follow the instructions of
passengers.
These incidents suggest that, starting with the structure as laid forth by the CEO, United
employees’ do not have much latitude or flexibility to deal with day-to-day policy
breaches. Cost-minimization and efficiency-boosting strategies, when taken overboard,
also may have had an effect given that the focus drifted from the customer and toward
Twitter Trouble Over Leggings Rule,” CNN Money, March 27, 2017,
money.cnn.com/2017/03/26/news/united-airlines-twitter-dress-code/; A. Hartung, “Why United Airlines Abuses Customers: The Risks
of Operational Excellence,” Forbes, April 10, 2017,
https://www.forbes.com/sites/adamhartung/2017/04/10/why-united-airlines-abuses-customers-the-risks-of-operational-excellence/#78
Questions
15-13. How do you think United Airlines should have handled the recent string of
Management. Student responses will vary.
15-14. What are the pros and cons of having a bureaucratic organizational structure for
Management. Student responses will vary.
15-15. What do you think United Airlines should do, moving forward from these
incidents? Do you have any suggestions for enhancements or improvements to
the United Airlines organizational structure? Would you consider restructuring?
Why or why not?
MyLab Management
Chapter 15 Foundations of Organization Structure Page 551
as the following Assisted-graded writing questions:
15-16. Considering Case Incident 2, do you think it is possible for organizations to merge
structure at the same time? How so?
15-17. Based on what you’ve discovered about your personality traits on the Big Five
organizational structures might you work best?
15-18. MyLab Management Only—comprehensive writing assignment for this chapter.
Instructor’s Choice
Applying the Concepts
This exercise contributes to:
chart would look like a roller coaster. Plans were for former BMW boss Bernd
Pischetsrieder to fix ailing VW when he came aboard in 2002. However, the best laid
more value for the dollar if loyalty is to be retained. Second, sales in China’s booming
market (VW was one of the first car makers on the scene in this giant economy) have
company’s 100 managers are not used to making their own decisions. This spells even
more trouble for the company in the year ahead.
characterize the company’s existing structure.
3. Based on what you have observed in Steps 1 and 2 above, suggest a new
organizational structure for the company. Cite any assumptions that you made when
you developed your structure.
Chapter 15 Foundations of Organization Structure Page 552
Instructor Discussion
However, they should be aware that the current CEO is not having much success with
modern structures as the company seems to be very tradition-bound at present. Students
Exploring OB Topics on the Web
This exercise contributes to:
Learning Objective: Analyze the behavioral implications of different organizational designs
AACSB: Reflective thinking
1. The chapter discusses span of control and the various advantages and disadvantages
of wide versus narrow. Let us see how that looks in actual numbers. First, determine
in (e.g., Red Cross, MDS, American Cancer Society, etc.). Obtain their hierarchical
structure either by searching the Internet (most annual reports have information on
2. What factors influence virtual teams? For a short analysis, go to Seanet, “Fifth
Generation Work – Virtual Organization”:
why not?
