Chapter 11 - Organizational Structure and controls

Question 1

Organizational structure specifies:

Answer 1

-the firm’s formal reporting relationships, procedures, controls, and authority and decision-making processes
-the work to be done and how to do it, given then firm’s strategy or strategies

Question 2

Research evidence suggests that performance declines when…

Answer 2

The firm’s strategy is not matched with the most appropriate structure and controls

Question 3

3 basic structure types

Answer 3

-simple structure
-functional structure
-multidivisional structure (M-form)

Question 4

Simple structure

Answer 4

->Owner-manager
-makes all major decisions directly
-monitors all activities
->Staff
-Serves as an extension of the manager’s supervisor authority
->matched with focus strategies and business-level strategies
-commonly complete by offering a single product line in a single geographic market
->growth creates complexity and managerial and structural challenges

Question 5

Functional structure

Answer 5

->chief executive officer (CEO)
-limited corporate staff
->Functional line managers in dominant organizational areas (ex: production, marketing, HR)
->Supports use of business-level strategies and some corporate-level strategies
-single or dominant business with low levels of diversification

Question 6

Benefits of Functional structure

Answer 6

-economies of scale and scope
-performance standards are better maintained
-specialized training and in-depth skill development
-clear decision making and lines of communication

Question 7

Disadvantage of Functional structure

Answer 7

-hard to integrate
-lack of common vision

Question 8

Structural characteristics

Answer 8

-Specialization : concerned with the type and number of jobs required to complete work
-Centralization (the degree to which decision-making authority is retained at higher managerial levels)
-Formalization (the degree to which formal rules and procedures govern work)

Question 9

Cost leadership form of the Functional Structure

Answer 9

-Simple reporting relationships
-A few layers in the decision-making and authority structure
-A centralized corporate staff
-A strong focus on process improvements through manufacturing rather than the development of new products by emphasizing product R&D
-A low-cost culture in which employees constantly try to find ways to reduce the costs incurred to complete their work
-Centralized specialized jobs
-Highly specialized jobs
-The division of work into homogenous subgroups
-Highly formalized rules and procedures

Question 10

Differentiation form of the Functional Structure

Answer 10

-Relatively complex and flexible reporting relationships
-frequent use of cross-functional product development teams
-a strong focus on marketing and product R& D rather than manufacturing and process R&D
-Decentralized decision-making responsibility and authority
-Low specialization of jobs
-Few formal rules and procedures

Question 11

Multi-divisional structure

Answer 11

Tope corporate officer delegates responsibilities to division managers :
-for a day-to-day operations
-For business-unit strategy

Question 12

Benefits of Multidivisional structure

Answer 12

-corporate officers are able to more accurately monitor the performance of each business, which simplifies the problem of control
-Facilities comparisons between divisions, which improves the resources allocation process
-Stimulates managers of poorly performing divisions to look for ways of improving performance

Question 13

Disadvantages of Multidivisional structure

Answer 13

-difficult to coordinate across product lines
-replication of resources
-pressure to generalize, not specialize