Understanding Business Chapter 8

Question 1

Economies of Scale

Answer 1

The situation in which companies can reduce their production costs if they can purchase raw materials in bulk. the average cost of goods goes down as production levels increase.

Question 2

Hierarchy

Answer 2

A system in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers who are responsible to that person.

Question 3

Bureaucracy

Answer 3

An organization with many layers of managers who set rules and regulations and oversee all decisions.

Question 4

Chain of Command

Answer 4

The line of authority that moves from the top of a hierarchy to the lowest level.

Question 5

Span of Control

Answer 5

The optimum number of subordinates a manager supervises or should supervise.

Question 6

Centralized Authority

Answer 6

An organization structure in which decision-making authority is maintained at the top level of management at the company’s headquarters.

Question 7

Decentralized Authority

Answer 7

An organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be.

Question 8

Tall Organization Structure

Answer 8

An organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management.

Question 9

Flat Organization Structure

Answer 9

An organization structure that has few layers of management and a broad span of control.

Question 10

Departmentalization

Answer 10

The dividing of organizational functions into separate units.

Question 11

Line Organization

Answer 11

An organization that has direct two-way lines of responsibility. authority. and communication running from the top to the bottom of the organization. with all people reporting to only one supervisor.

Question 12

Staff Personnel

Answer 12

Employees who advise and assist line personnel in meeting their goals.

Question 13

Line Personnel

Answer 13

Employees who are part of the chain of command that is responsible for achieving organizational goals.

Question 14

Matrix Organization

Answer 14

An organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line-and-staff structure.

Question 15

Cross-Functional Self-Managed Teams

Answer 15

Groups of employees from different departments who work together on a long-term basis.

Question 16

Virtual Corporation

Answer 16

A temporary networked organization made up of replaceable firms that join and leave as needed.

Question 17

Networking

Answer 17

Using communications technology and other means to link organizations and allow them to work together on common objectives.

Question 18

Real Time

Answer 18

The present moment or the actual time in which something takes place.

Question 19

Benchmarking

Answer 19

Comparing an organization’s practices. processes. and products against the world’s best.

Question 20

Core Competencies

Answer 20

Those functions that the organization can do as well as or better than any other organization in the world.

Question 21

Digital Natives

Answer 21

Young people who have grown up using the Internet and social networking.

Question 22

Restructuring

Answer 22

Redesigning an organization so that it can more effectively and efficiently serve its customers.

Question 23

Inverted Organization

Answer 23

An organization that has contact people at the top and the chief executive officer at the bottom of the organization chart.

Question 24

Organizational (or corporate) Culture

Answer 24

. Widely shared values within an organization that provide unity and cooperation to achieve common goals.

Question 25

Formal Organization

Answer 25

The structure that details lines of responsibility. authority. and position. that is. the structure shown on organization charts.

Question 26

Informal Organization

Answer 26

The system that develops spontaneously as employees meet and form cliques. relationships. and lines of authority outside the formal organization. that is. the human side of the organization that does not appear on any organization chart.