Lecture 7 - Internal Organization 2

Question 1

Hierarchy as an organizational structure that can bring about both efficiency and flexibility

TRUE/FALSE

Answer 1

TRUE

Question 2

_____ seems to enable economization of coordination costs; decreasing the required interactions between nodes within an organization

Fill out the blank word
A) hierarchy
B) self-organizing teams

Answer 2

(A) HIERARCHY seems to enable economization of coordination costs; decreasing the required interactions between nodes within an organization

Question 3

Hierarchy, whilst allowing for lower coordination costs due to lower number of required interactions between nodes, also often loads to higher quality of the coordination achieved

TRUE/FALSE

Answer 3

FALSE:
self-organizing teams are sometimes chosen as configuration because it increases the quality of coordination achieved, even though it often entails higher coordination costs than a hierarchy

Question 4

In a ______, if nodes must coordinate, it typically means that any disruption taking place in any module will induce necessary changes in the connected nodes. I.e., this means of coordination requires system-wide adaptation

Fill out the blank word
A) hierarchy
B) self-organizing team

Answer 4

In a SELF-ORGANIZING TEAM, if nodes must coordinate, it typically means that any disruption taking place in any module will induce necessary changes in the connected nodes. I.e., this means of coordination requires system-wide adaptation. This is because the nodes are tightly coupled in an integrated system

Question 5

A _____ as an organizational configuration can enable a loosely-coupled modular structure, where if any disruption happens in one of the nodes, it will not necessarily affect other modules. Changes can be made self-contained under such a structure.

Fill out the blank word
A) hierarchy
B) self-organizing team

Answer 5

A HIERARCHY as an organizational configuration can enable a loosely-coupled modular structure, where if any disruption happens in one of the nodes, it will not necessarily affect other modules. Changes can be made self-contained under such a structure.

Question 6

Which of the following is (are) not advantages of hierarchy as an organizational configuration?
A) eases adaptation in the face of change
B) economizes coordination costs
C) often leads to higher-quality coordination
D) allows for greater flexibility

Answer 6

WRONG: C) SELF-ORGANIZING TEAMS often leads to higher-quality coordination

Question 7

In many ways, hierarchy and bureaucracy are similar in their characteristics and implications for the organization

TRUE/FALSE

Answer 7

FALSE: hierarchy and bureaucracy are not the same thing, and the former can allow for higher adaptivity and flexibility whilst the latter fails to do so to the same degree

Question 8

Departmentalization is a way for an organization to define units within a hierarchy. Essentially, it refers to grouping jobs and individuals together so that similar or associated/ complementary tasks can be easier coordinated.

TRUE/FALSE

Answer 8

TRUE

Question 9

Several types of departmentalization can be carried out. Which are the main types?

A) Task-based departmentalization
B) product-based
C) process-based
D) distance-based
E) geography-based

Answer 9

A) Task-based departmentalization
B) product-based
C) process-based
E) geography-based

Question 10

Of the four types of departmentalization, which one denotes when the department/group is formed based on the primary functions performed?

A) Task-based departmentalization
B) product-based
C) process-based
E) geography-based

Answer 10

A) Task-based departmentalization

Question 11

Of the four types of departmentalization, which one denotes when the department/group is formed based on goods/services produced or sold

A) Task-based departmentalization
B) product-based
C) process-based
E) geography-based

Answer 11

B) product-based

Question 12

Of the four types of departmentalization, which one denotes when the department/group is formed based on production process used?

A) Task-based departmentalization
B) product-based
C) process-based
E) geography-based

Answer 12

C) process-based

Question 13

What does it mean when departmentalization is geography based?

Answer 13

Departmentalization is based on the geographic segment of organizational units

Question 14

In Vestas’ hierarchy, departments incl. legal, personnel, manufacturing, engineering, marketing and finance.

Which type of departmentalization is this?
A) Task-based
B) product-based
C) process-based
E) geography-based

Answer 14

A) Task-based

Question 15

In Rigshospitalet’s hierarchy, departments incl. heart , neuro-science, center of diagnosis, and orthopedics.

Which type of departmentalization is this?
A) Task-based
B) product-based
C) process-based
E) geography-based

Answer 15

B) product/service-based

Question 16

In ECCO’s hierarchy, departments incl. leather cutting, leather tanning, shoe manufacturing, shipping, and customer service.
Which type of departmentalization is this?
A) Task-based
B) product-based
C) process-based
E) geography-based

Answer 16

C) process-based

Question 17

Principles (types) of departmentalizing may be mixed

TRUE/FALSE

Answer 17

TRUE: Danske bank mixed tasks and product-based departmentalization

Question 18

Mintzberg introduced the concept of “span of control”, which refers to the number of FTEs in each hierarchical layer that is supervised by a manager. Typically, a wider span of control implies fewer hierarchical layers all else equal

TRUE/FALSE

Answer 18

TRUE: with the same amount of FTEs in an organization, a wider span of control entails that more people are in each layer of the hierarchy

Question 19

A wider span of control is typically more efficient than a narrow span of control, because fewer organizational layers make coordination easier
TRUE/FALSE

Answer 19

FALSE: whether one chooses a wide or narrow span of control is contingent on the specific attributes of the firm and the given context - there are advantages and disadvantages of each, making a trade-off necessary

Question 20

Which of the following is NOT an advantage of narrow span of control (e.g., 4 vs. 8 in each department)?

A) permits higher degree of control at lower agency cost
B) managers is likely more familiar with individuals
C) allows for quicker decision-making
D) close supervision of employees can enables immediate feedback by manager

Answer 20

C) allows for quicker decision-making

With narrow span of control, there will all-else-equal be a higher number of hierarchical layers; slowing down decision-making

Question 21

Which of the following is NOT a disadvantage of a narrow span of control (e.g., 4 vs. 8 in each department)?
A) more management needed (one at each level) - increasing costs
B) decision-making is slowed down due to increased number of hierarchical layers
C) TMT may be more isolated from operations at the bottom of the hierarchy
D) lack of familiarity with the department head
E) employee autonomy is discouraged, harming motivation and productivity

Answer 21

D) lack of familiarity with the department head

This is an implication of wide span of control, since more FTEs in each layer are “competing” for managers’ attention

Question 22

Which of the following is NOT an advantage of wide span of control (e.g., 8 vs. 4 in each department)?

A) allows managers at each layer to more closely supervise sub-ordinates
B) quicker decision-making
C) greater flexibility
D) increased efficiency and reduced costs - e.g., bc. of a need for fewer managers due to fewer layers

Answer 22

WRONG: A) allows managers at each layer to more closely supervise sub-ordinates

With wide span of control, managers at each layer must supervise a larger number of FTEs, decreasing their ability to supervise closely and provide individual feedback

Question 23

Which of the following is NOT a disadvantage of a wide span of control (e.g., 8 vs. 4 in each department)?
A) less control of each FTE
B) higher risk of managers lacking familiarity with FTEs at each layer
C) inducing risk of managers being spread thin
D) reduces ease of coordination

Answer 23

All options are correct

Question 24

Increasing/ widening span of control implies delayering

TRUE/FALSE

Answer 24

TRUE - all else equal

Question 25

According to Mintzberg’s basic configuration claim ______…:

A) the choice of organizational design for each firm is highly individual and contingent on its characteristics and environment
B) the elements of organizational design tend to cluster in specific, discrete, predictable ways, resulting in a list of familiar hierarchical forms
C) organizational design tend to be continuous rather than discrete

Answer 25

According to Mintzberg’s basic configuration claim: (B) the elements of organizational design tend to cluster in specific, discrete, predictable ways – “configurations”. This gives us the familiar hierarchical forms

Question 26

According to Mintzberg, departmentalization, span of control, and delegation […] combine in discrete hierarchical forms

TRUE/FALSE

Answer 26

TRUE

Question 27

The “design of an organization” entails making two sets of choices - which?
A) employee recruitment and retention choices
B) structure choices with respect to division of labor
C) incentive choices
D) organizational control choices

Answer 27

B) structure choices with respect to division of labor

D) organizational control choices

Question 28

When designing an organization, one must make two sets of choices; structure and organizational control choices. Which of the following statement is NOT true regarding structure choices?

A) it concerns choices that pertain the tasks and assignments to be allocated to individuals and subunits
B) entails appointment of resources to units
C) entails identification of customers and markets that each unit is the be responsible for
D) essentially relates to decisions regarding division of labor
E) such decisions will affect productivity, but also degree of coordination and cooperation

Answer 28

All options are correct

Question 29

When designing an organization, one must make two sets of choices; structure and organizational control choices. Which of the following statement is NOT true regarding organizational control choices?
A) it entails establishing mechanisms that help deal with issues from division of labor
B) entails establishing mechanisms for dealing with coordination problems
C) entails establishing mechanisms for dealing with cooperation problems problems
D) is independent from structure choices

Answer 29

WRONG: D)
The two steps are interdependent: making specific structure choices has ramifications for specific choices of organizational control

Question 30

Which of the following organizational control mechanisms are helpful for coordination problems?
A) communication-enhancing IT
B) standard routines and procedures
C) culture/ beliefs
D) incentives

Answer 30

A) communication-enhancing IT
B) standard routines and procedures
C) culture/ beliefs

Question 31

Which of the following organizational control mechanisms are helpful for cooperation problems?
A) incentives
B) close ties with management
C) monitoring
D) disciplinary measures (e.g., firing)

Answer 31

All options are correct

Question 32

What are the four components of organizational design?
A) grouping/ departmentalization
B) chain of command/reporting structure
C) communication mechanisms
D) spans of control
E) formalization

Answer 32

A) grouping/ departmentalization
B) chain of command/reporting structure
C) communication mechanisms
E) formalization

Question 33

One of the components of organizational design concerns how orders are formulated at the top and passed down (authority) and how reporting lines are established

What is this component called?

Answer 33

Chain of command/ reporting structure

Question 34

One of the components of organizational design concerns ensuring common interpretation of information and proper data processing and transmission

What is this component called?

Answer 34

Communication mechanisms

Question 35

One of the components of organizational design concerns ensuring write-down of decisions and activities, enabling standardized workflows and operating procedures as well as specification of decision criteria

What is this component called?

Answer 35

Formalization

Question 36

What are the main determinants of organizational design?
A) firm size
B) strategy
C) technology
D) uncertainty
E) geography

Answer 36

A) firm size
B) strategy
C) technology
D) uncertainty

Question 37

As a firm grows, this has ramifications of the selected organizational design. For instance, there is a greater need for formalization and delegation/ division of labour

TRUE/ FALSE

Answer 37

TRUE

Question 38

The strategy of a firm affects its organizational design. For instance, if the firm follows cost-leadership, a more cost-efficient design may be optimal

TRUE/FALSE

Answer 38

TRUE

Question 39

Technology has implications on the organizational design of firms. For instance, it can affect the type of interdependence between units, which impacts the right choice of design

TRUE/FALSE

Answer 39

TRUE

Question 40

Uncertainty affects the organizational design of firms. For instance, high uncertainty can make it difficult to plan in advance - which shall be taken into account in the organizational design

TRUE/FALSE

Answer 40

TRUE

Question 41

The intensity of coordination need affects the optimal choice of departmentalization - specifically, FTEs with high interdependence activities and high need for interaction should be grouped into the same unit

TRUE/FALSE

Answer 41

TRUE

Question 42

Four main types of interdependence exist. Which?

A) reciprocal interdependence
B) activity interdependence
C) sequential interdependence
D) team interdependence
E) pooled interdependence

Answer 42

A) reciprocal interdependence
C) sequential interdependence
D) team interdependence
E) pooled interdependence

Question 43

Pooled interdependence is one of the four main types of interdependence. Which statement is NOT true about it?

A) demands low need for communication in decision-making across units
B) standardized coordination
C) employees follow standard rules and procedures
D) type of technology required is “mediating”
E) the need for locating units in close proximity is low

Answer 43

All options are correct

Question 44

Sequential interdependence is one of the four main types of interdependence. Which statement is NOT true about it?

A) FTE1 must do his job before FTE2 can start his job
B) medium degree of communications is required for decision-making across units
C) type of coordination measures incl. planning, scheduling and feedback
D) the priority for locating units in close proximity is high
E) the type of technology required is “long-linked”

Answer 44

D) the priority for locating units in close proximity is MEDIUM

Question 45

Reciprocal interdependence is one of the four main types of interdependence. Which statement is NOT true about it?

A) FTE1 finishes his job, passes it to FTE2, who then pass it back to FTE1. Eventually, it is passed on to FTE3 before it is sent back to FTE2 and then exits the unit
B) high degree of interdependence
C) high amount of communication required with respect to decision-making across units
D) types of required coordination measures incl. mutual adjustments, unscheduled and planned meetings
E) it is important that units are located in close proximity
F) type of technology required is “intensive”

Answer 45

All options are correct

Question 46

Team interdependence is one of the four main types of interdependence. This is essentially a more complex version of reciprocal interdependence, but many requirements for this type of interdependence resemble those of reciprocal

TRUE/FALSE

Answer 46

TRUE

Question 47

Firms in high-uncertainty environments require more standard operating procedures, rules and programs

TRUE/FALSE

Answer 47

FALSE:
Given high predictability in the environment, there is not much managers need to do, since the standardized procedures should take care of most operational questions

Question 48

Hierarchy is very relevant in environments of low uncertainty

TRUE/ FALSE

Answer 48

FALSE: the relevance of hierarchy emerges in the presence of uncertainty of at least some degree

Question 49

When uncertainty emerges, and things become less predictable than the no-uncertainty case, there is a need for decision-making at different levels

TRUE/FALSE

Answer 49

TRUE

Question 50

When uncertainty is high, how does this impact organizational design?

A) hierarchies may be challenged due to the need of delegation/labor division
B) it induces benefits of letting “the man on the spot make the decisions” rather than having it be approved by numerous layers
C) the firm may find it sensible to adopt targets/goals and allowing FTEs to find the appropriate responses themselves to external and internal disturbances having the overall goal in mind

Answer 50

All options are correct

Question 51

Two “extremes” of organizational design exist: mechanistic organizations and organic organizations. Which of the following characteristics do not characterize a mechanistic organization?
A) high degree of specialization
B) rigid division of labor
C) high degree of formalization of rules, policies, and processes
D) decision power centralized at top and mainly vertical (top-down) communication
E) low span of control
F) clear lines of authority - lot of command and control
G) highly suitable for high-uncertainty environments

Answer 51

WRONG: G) highly suitable for high-uncertainty environments

A mechanistic organization is a perfect fit for very predictable environments with no uncertainty

Question 52

Two “extremes” of organizational design exist: mechanistic organizations and organic organizations. Which of the following characteristics do not characterize an organic organization?
A) low degree of specialization
B) flexible division of labor with employees also focusing on the bigger picture along with managers
C) generalized knowledge of how to accomplish strategic goals is valued
D) vertical (top-down and bottom-up) and no horizontal communication take place
E) flat structures
F) high span of control
G) mutual adjustment is required
H) suitable organizational design as uncertainty increases

Answer 52

D) vertical (top-down and bottom-up) AND horizontal communication take place - both types of communication take place

Question 53

A start-up can be seen as a company were mechanistic organizational design is well-fitting

TRUE/FALSE

Answer 53

FALSE: high uncertainty environment makes the mechanistic organizational design less fitting

Question 54

Galbraith’s study (1974) assess the so-called contingency theory. Which of the following statements hold true for his findings:

A) there is no universally best way or organizing, and therefore no universally best form of hierarchy
B) optimal organizational decision is based on contingencies such as TECHNOLOGY used in the organization
C) optimal organizational decision is based on contingencies such as DYNAMISM and other characteristics of the environment
D) optimal organizational decision is based on contingencies such as STRATEGY ADOPTED by the firm

Answer 54

All options are correct

Question 55

For the configurational theory asserted by Mintzberg, following statements hold true:

A) mechanisms that ensure coordination and cooperation within organizations tend to cluster in discrete configurations
B) Mintzberg introduced five basic configurations: simple, machine bureaucracy, professional bureaucracy, divisionalized, and adhocracy
C) Mintzberg introduced four basic configurations: simple, machine bureaucracy, professional bureaucracy, and adhocracy
D) Mintzberg introduced six basic configurations: simple, machine bureaucracy, professional bureaucracy, divisionalized, matrix structure, and adhocracy

Answer 55

A) mechanisms that ensure coordination and cooperation within organizations tend to cluster in discrete configurations

B) Mintzberg introduced five basic configurations: simple, machine bureaucracy, professional bureaucracy, divisionalized, and adhocracy

Question 56

Which of the following statements are NOT true about Simple Structure (Mintzberg)

A) often adopted by small entrepreneurial companies
B) little standardization and formalization of behaviour
C) minimal planning, training and liaison devices
D) few middle-managers; much coordination is achieved by direct supervision of top managers
E) support staff is minimized in order to be lean and flexible
F) would rather make than buy
G) highly centralized decision-rights

Answer 56

WRONG: F) would rather make than buy

Firms with a simple structure configuration prefers to buy than make

Question 57

Simple structure is often adopted by which type of firms?

A) firms in dynamic environments requiring flexibility
B) firms with complex production systems and products
C) young and small firms
D) firms facing extreme and hostile pressures, regardless of size

Answer 57

A) firms in dynamic environments requiring flexibility
C) young and small firms
D) firms facing extreme and hostile pressures, regardless of size

WRONG: B) firms with complex production systems and products

Firms adoption simple structure have simple production systems and products - when innovation is complex, simple structure falters due to centralization

Question 58

Which of the following statements are NOT true about Simple Machine Bureaucracy (Mintzberg)

A) emphasizes work formalization and standardization of coordination
B) large hierarchy emerges in the middle line to oversee specialized work of the operating core
C) rigid departmentalization and alienation follow its routine and circumscribed tasks
D) very centralized: formal power concentrated on top
E) prefers vertical integration rather the buying

Answer 58

All options are correct

Question 59

Machine bureaucracy is often adopted by which type of firms?

A) firms in stable environments with not much change
B) very large and typically mature firms
C) firms with fairly simple production systems due to centralized control
D) firms engaged in mass production - automotive companies; McD
E) firms unable to automate its routine jobs

Answer 59

All options are correct

Question 60

Which of the following statements are NOT true about Professional Bureaucracy (Mintzberg)

A) standardization of skills rather than process and output
B) replies on trained professionals - skilled people
C) professionals are given considerable control over own work (operating tasks) –> highly decentralized
D) parallel hierarchies are formed: one democratic (for professionals) and one autocratic (for support staff)
E) enables skill perfection (through standardization) and efficiency but lacks adaptability

Answer 60

All options are correct

Question 61

Professional bureaucracy is often adopted by which type of firms?

A) firms with complex tasks but which are standardized
B) firms with size of the operating unit being very large with only few managers needed
C) firms in stable but complex environments with decentralized decision-making for trained professionals
D) innovative firms
E) hospitals, universities, accounting firms, law firms

Answer 61

All options are correct, except D:
Professional bureaucracy is not a structure suitable for firms that rely on innovation, but more for firms focusing on perfecting what is already known

Question 62

Which of the following statements are NOT true about divisionalized form (Mintzberg)

A) not very integrated: independent entities joined by a loose administrative overlay
B) each division treated as a single entity with own goals
C) each division is structured towards machine bureaucracy
D) each division is granted considerable autonomy to run own business
E) centralized decision-making: manager of each division retains the lion’s share of power bc. he/she is responsible for divisional performance
F) HQ visit divisions periodically and authorize important decisions whilst evaluating division performance
G) the structure is well-suited for highly innovative companies

Answer 62

WRONG: G) the structure is well-suited for highly innovative companies

The control systems of the structure discourages risk-taking and innovation – since division head must be able to justify his/her performance every period, this limits experimental spirit

Question 63

Divisionalized form is often adopted by which type of firms?

A) firms with diversified product lines
B) the largest and most mature organizations
C) very large hospitals, unions, governments
D) firms heavily reliant on being highly innovative

Answer 63

A) firms with diversified product lines
B) the largest and most mature organizations
C) very large hospitals, unions, governments

Question 64

Which of the following statements are NOT true about adhocracy (Mintzberg)?

A) the firm is organized into a project structure with interacting project teams
B) the structure is very complex and non-standardized - very fluid
C) power based on expertise rather than authority - constantly shifting power
D) coordination and control are by mutual adjustment through informal communication and interaction between experts
E) high reliance on trained and specialized experts working together to create new ideas
F) wide span of control and large project teams
G) TMT participate in projects but otherwise focuses on linking teams together

Answer 64

WRONG: F) NARROW span of control and SMALL project teams

Question 65

Adhocracy is often adopted by which type of firms?
A) high-complexity and innovative firms
B) firms operating in dynamic environments in need for flexibility and decentralization
C) firms in industries such as aerospace and petrochemicals
D) young organizations with no standard products or services

Answer 65

All options are correct

Question 66

Following Mintzberg, the adhocracy structure leads to high efficiency due to lower overhead and lower need for managerial supervision

TRUE/FALSE

Answer 66

FALSE: the problem with adhocracy is inefficiency: there are costly liaison devices for communication and high requirement for lots of communication between employees and projects

Adhocracy can do no ordinary thing well, but is extraordinary in innovation