Strategic Management Concepts 3rd Edition By Frank Rothaermel – Test Bank

Overview

Chapter 11
Organizational Design: Structure, Culture, and Control Answer Key

Multiple Choice Questions

1. Which of the following terms or phrases best characterizes Zappos’ organizational structure?

A. centralized

B. mechanistic

C. extremely tall

D. extremely flat
As mentioned in Chapter Case 11, Zappos’ organizational structure is extremely flat. Once an employee has mastered a job, he or she is rotated to a different job, often horizontally.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-03 Define organizational structure and describe its four elements.
Topic: Organizational Design and Competitive Advantage

2. Organizational design is

A. the process of creating, implementing, and modifying the structure of an organization.

B. primarily focused on replacing a firm’s competitive advantage with competitive parity.

C. a process that always functions independently of strategy formulation.

D. primarily focused on formulating effective strategies, not implementing them.
Organizational design is the process of creating, implementing, monitoring, and modifying the structure, processes, and procedures of an organization. The key components of organizational design are structure, culture, and control.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Define organizational design and list its three components.
Topic: Organizational Design and Competitive Advantage

3. What was one of the reasons for Jerry Yang’s failure at Yahoo?

A. Jerry made many necessary changes to the company’s organizational structure.

B. Jerry established a successful organizational structure and culture, but could not assert control.

C. Jerry’s preference for obtaining consensus among his managers led to bickering and infighting.

D. Jerry focused most strategic changes on improving user experience and increasing advertising revenues.
Mr. Yang was described as someone who preferred consensus among his managers to make tough strategic decisions needed to change Yahoo’s structure. That preference, though, led to bickering and infighting. Jerry Yang’s failure to make the necessary changes to the Internet firm’s organizational structure not only led to a destruction of billions in shareholder value and thousands of layoffs, but also cost him his job.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Define organizational design and list its three components.
Topic: Organizational Design and Competitive Advantage

4. Why does strategy implementation often require changes within an organization?

A. Strategy implementation is less important than strategy formulation.

B. Strategy implementation transforms strategy into actions and business models.

C. Strategy always follows structure.

D. Strategy implementation does not affect resource allocation and power distribution within an organization.
Because strategy implementation transforms strategy into actions and business models, it often requires changes within the organization. However, strategy implementation often fails because managers are unable to make the necessary changes due to its effects on resource allocation and power distribution within an organization.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Define organizational design and list its three components.
Topic: Organizational Design and Competitive Advantage

5. Which of the following statements is true of strategy in an organization?

A. Strategy implementation is considered unsuccessful if it requires changes within an organization.

B. To implement a strategy successfully, an organization’s structure must be rigid.

C. Strategy implementation does not affect resource allocation and power distribution within an organization.

D. Organizational structure must follow strategy in order for firms to achieve superior performance.
Organizational structure must follow strategy in order for firms to achieve superior performance. This tenet implies that to implement a strategy successfully, organizational design must be flexible enough to accommodate the formulated strategy and future growth and expansion.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-01 Define organizational design and list its three components.
Topic: Organizational Design and Competitive Advantage

6. To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 standalone units. Which of the following does this scenario best illustrate?

A. how an organization accommodates strategy implementation through a flexible organizational structure

B. how strategy implementation has an effect on resource allocation and power distribution

C. how an organization demonstrates organizational inertia, and therefore sets the stage for the firm’s subsequent failure

D. how an organization optimizes its organizational structure to the current situation
Zappos provides an example of a company with flexible organizational structure. To maintain its core competency of providing a superior customer experience in the face of explosive growth, Zappos split the organization into 10 stand-alone units.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 11-01 Define organizational design and list its three components.
Topic: Organizational Design and Competitive Advantage

7. What most likely happens when a firm optimizes its organizational structure to its current situation?

A. It plants the seed of subsequent failure: the tightly coupled system can break apart when internal or external pressures occur.

B. It achieves superior performance.

C. It makes it difficult for managers to make the necessary changes due to its effects on resource allocation and power distribution.

D. It transforms strategy into actions and business models.
Inertia, a firm’s resistance to changing the status quo, can set the stage for the firm’s subsequent failure. Successful firms often plant the seed of subsequent failure: They optimize their organizational structure to the current situation. That tightly coupled system can break apart when internal or external pressures occur.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 11-02 Explain how organizational inertia can lead established firms to failure.
Topic: Organizational Design and Competitive Advantage

8. A firm’s _____ determines how the work efforts of individuals and teams are orchestrated and how resources are distributed.

A. norm

B. culture

C. structure

D. control
Some of the key decisions managers must make when designing effective organizations pertain to the firm’s organizational structure. That structure determines how the work efforts of individuals and teams are orchestrated and how resources are distributed.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 11-03 Define organizational structure and describe its four elements.
Topic: Organizational Design and Competitive Advantage

9. Which of the following real-world scenarios best exemplifies formalization?

A. Zappos’ focus on allowing its customer service employees to use their own approach rather than depend on scripts

B. McDonald’s use of standard operating procedures across the world

C. W. L. Gore’s associates organizing themselves in project-based teams that are led by sponsors, not bosses

D. Yahoo’s decision to fire its CEO after incurring huge losses
McDonald’s use of standard operating procedures across the world best exemplifies formalization. Formalization captures the extent to which employee behavior is controlled by explicit and codified rules and procedures.

AACSB: Knowledge Application
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 11-03 Define organizational structure and describe its four elements.
Topic: Organizational Design and Competitive Advantage

10. Which of the following is an unintended side effect of a high degree of specialization in an organization?

A. decreased trade-off between breadth and depth of knowledge

B. decreased opportunities for the division of labor

C. reduced employee satisfaction due to repetition of tasks

D. reduced productivity
Specialization describes the degree to which a task is divided into separate jobs—that is, the division of labor. While a high degree of the division of labor increases productivity, it can also have unintended side effects such as reduced employee job satisfaction due to repetition of tasks.