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Exam 8: Structuring Organizations for Todays Challenges

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Question 41

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Fayol believed that decision-making authority should remain in the hands of top management:

A) in small organizations, but should be delegated to middle and first-line managers in large organizations.
B) in large organizations, but could be delegated to middle and first-line managers in small organizations.
C) in all types and sizes of organizations.
D) only in organizations subjected to significant government regulation.

E) None of the above
F) B) and D)

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Question 42

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Mini-Case Angelica Canizales is the CEO of Mucho Dinero Enterprises. Sales have declined for four consecutive years and the firm's accountants have reported net losses in each of the last two years. Employees appear demoralized and frustrated. Recently, Angelica met with managers from marketing, production, and finance to listen to their views regarding the company's problems. The managers unanimously agreed that the main problem was a lack of communication between the several functional areas of the business. Each manager felt that the firm could increase quality and customer satisfaction with better interdepartmental communication. Angelica also met with marketing and production employees to get their respective opinions on the problems of the firm. One employee from the production department observed that, "We have so many layers of management that it takes forever to make decisions." An employee from marketing complained that, "This place is so bogged down with rules and regulations that there is no opportunity to be creative." Several employees shared their opinions regarding their bosses. Specifically, one employee expressed "My boss never pays attention to my ideas. He just issues orders and expects me to obey them." Angelica decided, after listening to many comments from employees, suppliers, and customers, that the only way to end Mucho Dinero's slide was to completely rethink the firm's structure and to make radical changes in its organization. She presented her ideas to the board of directors, promising to voluntarily resign if her efforts to reorganize did not return the firm to profitability. -Angelica's decision to completely redesign Mucho Dinero's organization indicates that she believes the best approach to her firm's problems is:

A) competitive benchmarking.
B) flexible departmentalization.
C) restructuring.
D) organizational therapy.

E) C) and D)
F) All of the above

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Question 43

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Chang is a project manager at Paradox Industries. He is able to borrow specialists from the organization on a regular basis to assist in major projects. After the project ends, the specialists return to their functional units to await new assignments. Paradox Industries utilizes a:

Due to the competitive nature of companies that compete for the same customers, cross-functional teams never consist of individuals from more than one firm.

The traditional way to departmentalize an organization is by geographical area served.

Cardinal Foods is a wholesaler serving grocery stores. High tech communications allows Cardinal to work closely with its suppliers and customers in real time. Networking allows these organizations to operate more efficiently.

In today's competitive environment, cost containment is extremely important to survival. Which of the following increases efficiency in the production and distribution of goods?

Departmentalization is the dividing of organizational functions into separate units.

Empowering employees to better serve customers requires front-line employees.

The organizational structure of the U.S. Army's 1st Infantry Division provides for direct two-way lines of responsibility, authority, and communication running from the top to the bottom. Additionally, each person in the division reports to only one superior. The 1st Infantry Division is clearly an example of a(n) :

A firm's formal organization would be better suited than its informal organization to:

Antonio works in the accounting department of a large firm. This is an example of Fayol's division of labor concept.

John recently accepted a job in the marketing department with the Burbank Bagel Boys. After just a few days on the job, John learned that the company has many layers of management, and seems to have a rule to cover almost every situation. These conditions suggest that Burbank Bagel Boys is a(n) :

Joel, an employee of the engineering department, was temporarily assigned to work with specialists from other departments to develop a new product. Upon completion of this project, Joel returned to his position in the engineering department. This arrangement illustrates the use of a cross-functional team.

At Green Acres Fencing Company, eight employees each perform various aspects of the company's work. One person does sales, four perform installation; one purchases materials; one does billing; one performs after-sales inspections. This type of organization reflects Fayol's principle of:

Rise 'n Shine Bakeries is a nationwide bakery that has plants located throughout the United States. Top management at Rise 'n Shine believes that customers in different regions have different tastes. It also recognizes that its bakeries face more intense competition in some regions than in others. Therefore, Rise 'n Shine's top management gives local managers the freedom to offer different types of breads and desserts, and to decide on a reasonable pricing strategy for its products. Rise 'n Shine typifies a decentralized organization.

The informal organization of a business can help generate creative solutions and inspires teamwork and camaraderie.

Mini-Case Angelica Canizales is the CEO of Mucho Dinero Enterprises. Sales have declined for four consecutive years and the firm's accountants have reported net losses in each of the last two years. Employees appear demoralized and frustrated. Recently, Angelica met with managers from marketing, production, and finance to listen to their views regarding the company's problems. The managers unanimously agreed that the main problem was a lack of communication between the several functional areas of the business. Each manager felt that the firm could increase quality and customer satisfaction with better interdepartmental communication. Angelica also met with marketing and production employees to get their respective opinions on the problems of the firm. One employee from the production department observed that, "We have so many layers of management that it takes forever to make decisions." An employee from marketing complained that, "This place is so bogged down with rules and regulations that there is no opportunity to be creative." Several employees shared their opinions regarding their bosses. Specifically, one employee expressed "My boss never pays attention to my ideas. He just issues orders and expects me to obey them." Angelica decided, after listening to many comments from employees, suppliers, and customers, that the only way to end Mucho Dinero's slide was to completely rethink the firm's structure and to make radical changes in its organization. She presented her ideas to the board of directors, promising to voluntarily resign if her efforts to reorganize did not return the firm to profitability. -In order to encourage more interdepartmental communication and cooperation, Angelica is thinking about setting up groups of workers from different departments to work together on a long-term basis. She is even thinking about asking people from some of Mucho Dinero's suppliers, customers and distributors to join these groups. The type of group that Angelica is considering is known as a(n) :

Line-and-staff organizations may suffer from inflexibility.

While most organizations have a formal organization structure, only poorly managed firms also have an informal organization.