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Organizing the Business

Organization charts are graphical representations of employee salary information.
False
Job specialization is the process of eliminating unnecessary or undesirable jobs.
False
Departmentalization refers to the process of grouping jobs into logical units.
True
Geographic departmentalization divides firms according to the areas of the country or the world that they serve.
True
In a centralized structure, most decision-making authority is delegated to levels of management at various points below the top.
False
Accountability refers to the liability of subordinates for accomplishing tasks assigned by managers.
True
Divisional structure is the relationships between group functions and activities that determine authority.
False
International organizational structures are an approach to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets.
True
The chain of command is depicted by solid lines on an organization chart.
True
Organizational structure is a function of the organization’s mission and strategy.
True
The building blocks of all organizations are specialization and centralization.
False
As organizations grow and become larger, jobs tend to become less specialized.
False
Acme Oil Company has three divisions: Exploration, Extraction, and Refining. This is an example of process departmentalization.
True
Firms with production, marketing, human resource, and finance departments have a process form of organization.
False
Firms typically use the same form of departmentalization at upper and lower levels.
False
Flat organizational structures are usually associated with centralized decision making.
False
Employees’ abilities and the supervisor’s managerial skills help determine whether span of control is wide or narrow.
True
When several employees perform the same simple task, a narrow span of control is most appropriate.
False
For the delegation process to work smoothly, responsibility and authority must be equivalent.
True
Line departments are linked directly to the production and sales of a specific product.
True
The functional organizational structure is the approach to organizational structure used by most small to medium-sized firms.
True
The matrix form of organizational structure was pioneered by NASA.
True
An international organization is one in which traditional boundaries and structures are minimized or eliminated altogether.
False
A virtual organization has little or no formal structure.
True
Frequently, the informal organization effectively alters a company’s formal structure.
True
The informal organization is not as powerful as the formal structure.
False
Intrapreneuring attempts to create and maintain the innovation and flexibility found in large, bureaucratic structures.
False
After an organizational structure has been created, it is permanent and cannot be changed.
False
Job specialization is a natural part of organizational growth.
True
To avoid bureaucracy within the organization, most large organizations tend to adopt the same types of departmentalization for all levels.
False
Coordination across functional departments becomes more complicated in smaller firms than in larger firms.
False
Decentralization works best in a complex, rapidly changing environment.
True
For the delegation process to work smoothly, responsibility must slightly exceed one’s level of authority.
False
Line, staff, committee and team forms of authority are not likely to all be found within the same organization.
False
A divisional structure relies on functional departmentalization.
False
A team organization typically does not utilize functional hierarchy.
True
Which term refers to the specification of jobs to be done within an organization and the ways in which those jobs relate to one another?
organizational structure
Which of the following clarifies structure and shows employees where they fit into a firm’s operations?
organization charts
What do the solid lines on an organization chart show in reporting relationships within a company?
B chain of command
What is the process of designing specific jobs that need to be done and identifying the people who will perform them called?
B) job specialization
Which term covers grouping jobs into logical units?
D) departmentalization
What kind of departmentalization happens when an organization is divided into operations related to different products?
process departmentalization
What is the main organizational characteristic of decentralized firms?
flat
Which feature characterizes the organization of centralized firms?
tall
What is an employee’s duty to perform an assigned task?
responsibility
What is the power to make the decisions necessary to complete a task called?
authority
What is authority that flows up and down the chain of command called?
line authority
What type of departments are linked to the production and sales of specific products?
line departments
What is authority given to a special group of employees that play central roles in the firm’s daily operations called?
committee and team
What are everyday social interactions among employees that transcend formal jobs and job interrelationships called?
informal organization
Which term describes creating and maintaining the innovation and flexibility of a small business environment within the confines of a large, bureaucratic structure?
intrapreneuring
Which factor plays a key role in determining an organization’s structure?
mission and strategy
What do managers do when the “job” of a firm is broken down into smaller jobs?
specialize the job
At Chaparral Steel, some employees transport scrap steel while others operate shredding equipment. What does this example demonstrate?
specialization
Which of the following is a natural part of organizational growth?
job specialization
Determining how people performing certain tasks can best be grouped together is called what?
departmentalization
What type of departmentalization does Kraft Foods use by having separate divisions for different types of foods?
product
Vlasic has separate departments to transform cucumbers into fresh-packed pickles, pickles cured in brine, and relishes. What is this an example of?
process departmentalization
What is dividing a store into a men’s department, a women’s department, and a luggage department an example of?
customer departmentalization
A snack food firm has one division for the United States, one for Europe, and another for Asia. How is this firm departmentalized?
by geography
In what type of organization do most lower-level decisions need to be approved by upper management before they can be implemented?
centralized
At McDonald’s, most advertising is handled at the corporate level, and any local advertising must be approved by a regional manager. What kind of organization is McDonald’s demonstrating?
centralized
In what type of organization is decision-making authority delegated to levels of management at various points below the top?
decentralized
What kind of organization becomes more responsive to its environment by breaking the company into more manageable units?
decentralized
With relatively few layers of managers, what do decentralized organizations tend to reflect?
flat organizational structure
Companies with centralized authority systems typically require multiple layers of management. What type of organizational structures are these companies utilizing?
tall
With its many organizational layers, what type of organizational structure does the U.S. Army demonstrate?
tall
In tall organizations, which feature describes the span of control?
narrow
What is the preferred span of control when jobs are more diversified or prone to change?
narrow
Which of the following begins when a manager assigns responsibility to a subordinate?
delegation
After responsibility for a task is assigned, which of the following comes next?
the granting of authority
Which of the following BEST describes responsibility?
the duty to perform an assigned task
Which of the following BEST describes authority?
the power to make the decisions necessary to complete a task
Which of the following BEST describes accountability?
the obligation employees have to their manager for the successful completion of an assigned task
What authority is based on special expertise and usually involves counseling and advising?
staff authority
What are an organization’s specialists in law, accounting, and human resource management commonly called?
staff members
Which term describes groups of operating employees who are empowered to plan and organize their tasks and to perform those tasks with a minimum of supervision?
work teams
Which form of organization is used by most small to medium-sized firms?
functional
Firms with what structure are structured around departments for each basic business action?
functional structure
Which of the following structures relies on product departmentalization?
divisional
What are departments called that resemble separate businesses in that they produce and market their own products?
divisions
The organization of the health care producer Johnson & Johnson includes consumer health care products, medical devices and diagnostics, and pharmaceuticals. What kind of organizational structure does this company use?
divisions
What style of organization relies almost entirely on employees working on a common project, with little or no underlying functional hierarchy?
team
What structure does an organization with little or no formal structure and with only a handful of permanent employees use?
virtual structure
What type of organization seeks to integrate continuous improvements with continuous employee development?
learning
Which of the following organizational systems is the part that can be seen and represented in chart form?
formal organization
What has Rubbermaid used to create and maintain the innovation and flexibility of a small business environment within the large, bureaucratic structure?
intrapreneuring
Which of the following is an advantage of job specialization?
Workers can develop expertise in their jobs.
Procter & Gamble has Baby Care, Beauty Care, Health Care, and Home and Fabric Care divisions in its U.S. operations. What is this an example of?
product departmentalization
American Wood Products has three divisions. The Lumberjack division is involved in harvesting trees and transporting them to lumber mills. The Milling division transforms cut timber into dimensional lumber for building. The Paper Products division makes paper and cardboard from the remnants of the milling process. What type of departmentalization is this an example of?
process departmentalization
Silver Designs is a high-end clothing manufacturer. They have three divisions producing clothes for men, women, and teens. What is this an example of?
customer departmentalization
Which statement about organizational structure is TRUE?
As a company gets larger, it tends to adopt a decentralized structure.
Jack Welch, former CEO of General Electric, stated, “If you don’t let managers make their own decisions, you’re never going to be anything more than a one-person business.” What style of management is Welch proposing?
decentralized management
What is the sequence of events in the delegation process?
granting authority follows assigning responsibility
Which statement about line departments is TRUE?
They include those directly linked to the sales of products.
Which of the following are the “doers” and producers in a company?
line employees
Which statement about staff responsibility is TRUE?
It is clearly different from line authority.
Which feature will a committee have?
some decision-making responsibility
At Ace Products, three vice presidents report to the CEO, including the VP for Finance, the VP for Marketing, and the VP for Operations. What type of structure does Ace Products have?
functional
What does functional structure foster?
centralization

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