Chapter 01 Organizations and Organization Design
Chapter 01 Organizations and Organization Design
Class: Date:
Chapter 01: Organizations and Organization Design
True / False
1. The growing global interdependence means that the environment for companies has become less complex and
competitive.
a. True
b. False
ANSWER: False
2. Organizations are social entities that are only linked to the internal environment.
a. True
b. False
ANSWER: False
3. An organization exists when people interact with one another to perform essential functions that help attain goals.
a. True
b. False
ANSWER: True
4. An organization obtains inputs from the external environment, adds value through a transformation process, and
discharges products and services back to the environment.
a. True
b. False
ANSWER: True
5. Financial resources for government and charity nonprofits typically come from the sale of products or services to
customers rather than from government appropriations, grants, and donations.
a. True
b. False
ANSWER: False
6. If specialization is low, each employee performs only a narrow range of tasks.
a. True
b. False
ANSWER: False
7. Vertical complexity is the number of departments or occupational specialties existing horizontally across an
organization.
a. True
b. False
ANSWER: False
Chapter 01: Organizations and Organization Design
8. Scientific management focuses primarily on design and functioning of an organization as a whole.
a. True
b. False
ANSWER: False
9. With decentralization, decision-making authority is pushed up to higher organizational levels.
a. True
b. False
ANSWER: False
10. Organizational behavior is concerned with people aggregated into departments and organizations and with the
differences in structure and behavior at the organization level of analysis.
a. True
b. False
ANSWER: False
Multiple Choice
11. Organization design:
a. encompasses larger elements that influence structural dimensions, including the organization’s size, technology,
environment, culture, and goals.
b. gives us the tools to evaluate and understand how and why some organizations grow and succeed while others
do not.
c. obtains inputs from the external environment, adds value through a transformation process, and discharges
products and services back to the environment.
d. provides labels to describe the internal characteristics of an organization.
ANSWER: b
12. _____ refers to economic development that generates wealth and meets the needs of the current generation while
saving the environment so future generations can meet their needs as well.
a. Centralization
b. Formalization
c. Contingency
d. Sustainability
ANSWER: d
Chapter 01: Organizations and Organization Design
13. Pendant Inc., a retail chain based in England, has implemented an energy-efficient trucking fleet. It is increasing its
use of green materials in buildings, and aims to dispose all the waste of the company by 2025. Which of the following
measures is Pendant Inc. focusing its efforts on?
a. Going green
b. Scientific management
c. Contingency
d. Centralization
ANSWER: a
14. _____ refers to technologies, skills, and processes for searching and examining massive sets of data to uncover
hidden patterns and correlations.
a. Scientific management
b. Social business
c. A social media program
d. Big data analytics
ANSWER: d
15. Which of the following is a difference between for-profit businesses and nonprofit organizations?
a. Financial resources for for-profit businesses come from government appropriations, grants, and donations, while
nonprofit organizations are funded by the sale of products or services to customers.
b. In for-profit businesses, managers focus on improving an organization’s products and services to increase sales
revenues, while in nonprofit organizations, however, services are typically provided to nonpaying clients.
c. For-profit businesses are committed to servicing clients with limited funds, while nonprofit organizations have
access to unlimited funds to service clients.
d. In for-profit businesses, services are typically provided to nonpaying clients, while in nonprofit organizations,
services are typically provided to paying clients.
ANSWER: b
16. _____ provide labels to describe the internal characteristics of an organization.
a. Functional dimensions
b. Administrative principles
c. Contingency factors
d. Structural dimensions
ANSWER: d
Chapter 01: Organizations and Organization Design
17. _____ encompass larger elements that influence structural dimensions, including an organization’s size, technology,
environment, culture, and goals.
a. Functional dimensions
b. Administrative principles
c. Contingency factors
d. Structural dimensions
ANSWER: c
18. Which of the following is true of contingency factors?
a. They describe the organizational setting that influences and shapes the structural dimensions.
b. They create a basis for measuring and comparing organizations.
c. They provide labels to describe the internal characteristics of an organization.
d. They describe who reports to whom and the span of control for each manager.
ANSWER: a
19. _____ pertains to the amount of written documentation in an organization.
a. Centralization
b. Specialization
c. Decentralization
d. Formalization
ANSWER: d
20. _____ is the degree to which organizational tasks are subdivided into separate jobs.
a. Centralization
b. Specialization
c. Decentralization
d. Formalization
ANSWER: b
21. _____ describes who reports to whom and the span of control for each manager.
a. Organizational technology
b. Scientific management
c. Hierarchy of authority
d. Administrative principles
ANSWER: c
Chapter 01: Organizations and Organization Design
22. _____ refers to the number of distinct departments or activities within an organization.
a. Complexity
b. Specialization
c. Decentralization
d. Formalization
ANSWER: a
23. _____ complexity is the number of levels in the hierarchy of an organization.
a. Spatial
b. Vertical
c. Lateral
d. Horizontal
ANSWER: b
24. _____ complexity is the degree to which an organization’s departments and personnel are dispersed geographically.
a. Spatial
b. Vertical
c. Lateral
d. Horizontal
ANSWER: a
25. _____ refers to the tools, techniques, and actions used to transform inputs into outputs.
a. Organization design
b. Organizational performance
c. Organizational technology
d. Organizational behavior
ANSWER: c
26. _____ refers to the amount of resources used to achieve an organization’s goals.
a. Effectiveness
b. Contingency
c. Sustainability
d. Efficiency
ANSWER: d
Chapter 01: Organizations and Organization Design
27. _____ is the degree to which an organization achieves its goals.
a. Effectiveness
b. Contingency
c. Sustainability
d. Efficiency
ANSWER: a
28. _____ primarily focus on the design and functioning of an organization as a whole.
a. Structural dimensions
b. Administrative principles
c. Contingency factors
d. Functional dimensions
ANSWER: b
29. _____ emphasize designing and managing organizations on an impersonal, rational basis through such elements as
clearly defined authority and responsibility, formal recordkeeping, and uniform application of standard rules.
a. Structural dimensions
b. Administrative principles
c. Contingency factors
d. Bureaucratic organizations
ANSWER: d
30. A(n) _____ design means that an organization is much looser, free-flowing, and adaptive.
a. organic
b. specialized
c. vertical
d. mechanistic
ANSWER: a
31. Subzero Enterprises is a publishing company based in the United States of America. The company has 70 employees.
Information flows in all directions within and across departments and hierarchical levels. The rules and regulations at
Subzero Enterprises are flexibly applied. Subzero Enterprises follows a(n) _____ design.
a. vertical
b. specialized
c. organic
d. mechanistic
ANSWER: c
Chapter 01: Organizations and Organization Design
32. Which of the following contingency factors will influence whether an organization is more effective with a primarily
mechanistic organization design?
a. Service technology
b. Large size
c. Adaptive culture
d. Innovation strategy
ANSWER: b
33. Which of the following contingency factors will influence whether an organization is more effective with a primarily
organic design?
a. Manufacturing technology
b. Stable environment
c. Adaptive culture
d. Efficiency strategy
ANSWER: c
34. At Infosoft Solutions, employees are encouraged to take care of their problems by working with one another and with
customers, using their discretion to make decisions. From this information, it can be understood that Infosoft Solutions
is a _____ organization.
a. decentralized
b. centralized
c. mechanistic
d. bureaucratic
ANSWER: a
35. A _____ is a narrowly defined piece of work assigned to a person.
a. task
b. role
c. job
d. designation
ANSWER: a
36. A _____ has discretion and responsibility, allowing a person to use his or her judgment and ability to achieve an
outcome or meet a goal.
a. task
b. role
c. structure
d. system
ANSWER: b
Chapter 01: Organizations and Organization Design
37. Which of the following types of communication is emphasized by mechanistic organizations?
a. Lateral communication
b. Spatial communication
c. Horizontal communication
d. Vertical communication
ANSWER: d
38. Which of the following types of communication is emphasized by organic organizations?
a. Lateral communication
b. Spatial communication
c. Horizontal communication
d. Vertical communication
ANSWER: c
39. _____ is the micro approach to organizations because it focuses on the individuals within organizations as the relevant
units of analysis.
a. Organizational behavior
b. Organization design
c. Organization theory
d. Organizational culture
ANSWER: a
40. Which of the following is a difference between organization design and organizational behavior?
a. Organization design focuses on individuals within organizations, while organizational behavior analyzes the
whole organization as a unit.
b. Organization design is concerned with cognitive and emotional differences among people within organizations,
while organizational behavior is concerned with the differences in structure and behavior at the organization
level of analysis.
c. Organization design is concerned with lower management, while organizational behavior is concerned with top-
and middle-management.
d. Organization design might be considered the sociology of organizations, while organizational behavior is the
psychology of organizations.
ANSWER: d
Chapter 01: Organizations and Organization Design
41. Under Jeff Immelt’s leadership at General Electric, managers were encouraged to find ways to reduce emissions,
invest in clean energy, and develop products that had a lower impact on the environment. Which of the following
global challenges was GE responding to?
a. Speed and responsiveness
b. Going green
c. Intense competition
d. Big data analytics
ANSWER: b
42. Kodak, once considered the leading film and camera producer, was one of the first to invest in developing digital
cameras, yet the organization’s managers decided against launching the product because they feared it would detract
from sales of its existing photographic products. Kodak ultimately declared bankruptcy and no longer produces
photographic equipment. Which of the following global challenges did Kodak fail to address?
a. Speed and responsiveness
b. Going green
c. Big data analytics
d. Globalization
ANSWER: a
43. You’ve just been named the CEO of a struggling snack manufacturer. Sales of some of the company’s bestselling
products have dropped off considerably in recent years, and you know you need to make some changes to the
organization’s product lines soon or the firm will go under. Which of the following most likely provides the best
opportunities for making immediate changes that will increase demand for your firm’s products?
a. Engaging in “green” manufacturing
b. Entering new markets around the globe
c. Using data analytics to determine current consumer preferences
d. Acquiring a competing organization
ANSWER: c
44. You are the production manager for a men’s clothing manufacturer. Several years ago, under intense pressure to cut
costs, you made the decision to outsource production of your organization’s t-shirts to a low-cost facility in Cambodia.
The move significantly reduced expenses and increased profits, enabling your firm to better compete against similar
apparel manufacturers. Recently, however, the media has brought attention to the poor working conditions in some
Cambodian factories, and there has been a public outcry against companies that take advantage of workers by
manufacturing goods under unfair working conditions. You’re now concerned that consumers will stop buying your
firm’s Cambodian-made products. Which of the following best describes the challenge you’re facing?
a. Intense competition
b. Globalization
c. Sustainability and ethics issues
d. Big data analytics
ANSWER: c
Chapter 01: Organizations and Organization Design
45. ABC Construction is a regional organization divided into separate groups working under one name. One group
focuses on installing heating and air conditioning systems in new homes, another group installs roofing, and yet another
group is dedicated to installing plumbing systems. To which of the following elements of an organization is this
information related?
a. Being a social entity
b. Goals
c. A deliberately structured and coordinated system
d. Links to the external environment
ANSWER: c
46. Poppy, a small boutique, specializes in clothing for the mature woman who wants to look fashionable without looking
too young or trendy. The organization’s ideal customer comes from a higher income bracket, is 40+ years old, and
seeks unique fashions. To which of the following elements of an organization is this information related?
a. Being a social entity
b. Goals
c. A deliberately structured and coordinated system
d. Links to the external environment
ANSWER: d
47. In Bangladesh, Nobel Peace Prize-winning economist Muhammad Yunus designed an organization that
would manufacture a low-cost, fortified yogurt for toddlers to help lower the high mortality rate among two- and
three-year-old children in that country. The organization would also provide jobs to those who worked in the plant, as
well as to women who would sell the product door-to-door, keeping a small percentage of each sale as their
commission. Which of the following best describes this organization?
a. For-profit organization
b. Nonprofit organization
c. Social organization
d. Hybrid organization
ANSWER: d
48. As the Operations Manager of a manufacturing plant, you have recently become aware of a conflict. The purchasing
department wants to switch to a foreign supplier of a particular component part in order to save money, but the
manufacturing floor manager says the new supplier’s parts are lower in quality, break more easily, and thus, fewer
pieces pass the final inspection, lowering overall production. Which of the following challenges are you facing?
a. Solving an ethical dilemma
b. Motivating employees to work together to achieve organizational goals
c. Creating a more diverse workforce
d. Adapting to conducting business in a global environment
ANSWER: b
Chapter 01: Organizations and Organization Design
49. At a certain automotive manufacturing plant, each line worker is required to perform three specific actions or steps on
an automobile before it moves on to the next person on the line. At a different computer manufacturer, each line
worker performs fifteen to eighteen actions on each laptop and tests his or her work before sending the units on to the
next station. These two manufacturers are very different in terms of:
a. formalization.
b. specialization.
c. complexity.
d. centralization.
ANSWER: b
50. Maxi’s Magical Mystery Tour is a nonprofit organization operated by a group of six actors, singers, and dancers. They
intend to bring the arts to school-aged children by performing at a minimum of nine grade schools in the tri-state
region each school year. To which of the following elements is this information related?
a. Being a social entity
b. Goals
c. A deliberately structured and coordinated system
d. Links to the external environment
ANSWER: b
51. As the newly hired production manager at a small but growing solar panel manufacturing firm, you were shocked to
discover that there is virtually no written documentation detailing the production of various types of panels. The owner
explained it by saying that he “trusts his people to know what they’re doing.” You see potential problems with this
approach, so which of the following structural dimensions do you think you should focus on addressing first?
a. Formalization
b. Specialization
c. Centralization
d. Documentation
ANSWER: a
52. During the first week of his new job as a sales representative for a national auto parts distributor, Tyler attended a
regional sales conference. He couldn’t help but notice that of the 400 or so sales reps there, nearly all of them were
good-looking men under 35, like himself. He began to wonder if he got the job because of his skill in sales or because
he fit a certain profile. Which aspect of organizational design is Tyler concerned about?
a. The hierarchy of authority
b. Specialization
c. Organizational culture
d. Organizational environment
ANSWER: c
Chapter 01: Organizations and Organization Design
53. The CEO of a chemical manufacturing plant is reviewing the organization’s effectiveness over the past year. Among
other things, she is looking at the plant’s profitability, the volume of chemicals produced, the number of accidents
within the plant, the rate of employee turnover, and the degree to which the firm is complying with federal regulations
regarding the plant’s impact on the environment. This CEO is taking a(n) _______ approach to measuring
effectiveness.
a. Stakeholder
b. Goal-oriented
c. Comprehensive
d. Efficient
ANSWER: a
54. In some organizations, in which everyone has access to the information they need and the training to make good
decisions, it no longer makes sense to have layers of managers. This is particularly true of ________ organizations.
a. knowledge-based
b. global
c. highly centralized
d. diversified
ANSWER: a
55. Phoenix Software employs fewer than 20 employees. They do not have job titles, and they typically organize
themselves into collaborative work teams as new projects arise. Which of the following best describes Phoenix
Software?
a. Mechanistic
b. Centralized
c. Informal
d. Bossless
ANSWER: d
Essay
56. In today’s rapidly changing global business environment, managers face many challenges. Briefly summarize the five
major challenges discussed in the text.
ANSWER: Due to globalization, managers are expected to help their organizations adapt to a business environment
in which markets, technologies, and organizations are increasingly interconnected. This growing global
interdependence creates new opportunities for organizations, but it has also led to intense competition in
an increasingly complex environment. Stakeholders around the globe are demanding that organizations
commit to balancing profit with public interest, thus managers must place a new focus on sustainability,
the green movement, and ethics. A fourth significant challenge for managers is to respond quickly and
decisively to environmental changes, organizational crises, and shifting customer expectations. And finally,
due to the digital revolution, managers must learn to use big data analytics to uncover hidden patterns
and correlations that can enhance their organizations’ performance.
Chapter 01: Organizations and Organization Design
57. Differentiate between for-profit businesses and nonprofit firms.
ANSWER: The primary difference between for-profit businesses and nonprofit firms is that managers in businesses
direct their activities toward earning money for the company and its owners, whereas managers in
nonprofits direct much of their effort toward generating some kind of social impact. Financial resources
for government and charity nonprofits typically come from government appropriations, grants, and
donations rather than from the sale of products or services to customers. In businesses, managers focus
on improving the organization’s products and services to increase sales revenues. In nonprofits, however,
services are typically provided to nonpaying clients, and a major problem for many organizations is
securing a steady stream of funds to continue operating. Nonprofit managers, committed to serving clients
with limited funds, must focus on keeping organizational costs as low as possible and demonstrating a
highly efficient use of resources. Moreover, for-profit firms often compete with nonprofits for limited
donations through their own philanthropic fundraising efforts.
58. Briefly discuss the contingency factors of an organization.
ANSWER: Contingency factors include size, organizational technology, the external environment, goals and strategy,
and organizational culture.
a. Size can be measured for the organization as a whole or for specific components, such as a plant or
division.
b. Organizational technology refers to the tools, techniques, and actions used to transform inputs into
outputs.
c. The environment includes all elements outside the boundary of the organization.
d. The organization’s goals and strategy define the purpose and competitive techniques that set it apart
from other organizations.
e. An organization’s culture is the underlying set of key values, beliefs, understandings, and norms shared
by employees.
59. Discuss in detail the stakeholder approach.
ANSWER: Achieving effectiveness is not always a simple matter because different people want different things from
an organization. For customers, the primary concern is high-quality products and services provided in a
timely manner at a reasonable price, whereas employees are mostly concerned with adequate pay, good
working conditions, and job satisfaction. Managers carefully balance the needs and interests of various
stakeholders in setting goals and striving for effectiveness. This is referred to as the stakeholder approach,
which integrates diverse organizational activities by looking at various organizational stakeholders and
what they want from the organization. A stakeholder is any group within or outside of the organization that
has a stake in the organization’s performance. The satisfaction level of each group can be assessed as an
indication of the organization’s performance and effectiveness.
Chapter 01: Organizations and Organization Design
60. What is scientific management? How is it used?
ANSWER: Pioneered by Frederick Winslow Taylor, scientific management emphasizes scientifically determined jobs
and management practices as the way to improve efficiency and labor productivity. Taylor proposed that
workers “could be retooled like machines, their physical and mental gears recalibrated for better
productivity.” He insisted that management itself would have to change and emphasized that decisions
based on rules of thumb and tradition should be replaced with precise procedures developed after careful
study of individual situations. To use this approach, managers develop precise, standard procedures for
doing each job, select workers with appropriate abilities, train workers in the standard procedures,
carefully plan work, and provide wage incentives to increase output.
61. What is a mechanistic design?
ANSWER: A mechanistic design means that an organization is characterized by machine-like standard rules,
procedures, and a clear hierarchy of authority. Organizations are highly formalized and are also
centralized, with most decisions made at the top.
62. Differentiate between specialized tasks and empowered roles.
ANSWER: A task is a narrowly defined piece of work assigned to a person. With a mechanistic design, tasks are
broken down into specialized, separate parts, as in a machine, with each employee performing activities
according to a specific job description. A role, in contrast, is a part in a dynamic social system. A role has
discretion and responsibility, allowing a person to use his or her judgment and ability to achieve an
outcome or meet a goal.
63. Discuss how communication takes place in mechanistic and organic organizations.
ANSWER: Mechanistic organizations emphasize vertical communication up and down the hierarchy. Top managers
pass information downward to employees about goals and strategies, job instructions, procedures, and so
forth, and in turn ask that employees provide information up the hierarchy concerning problems,
performance reports, financial information, suggestions and ideas, and so forth. In an organic organization,
there is greater emphasis on horizontal communication, with information flowing in all directions within and
across departments and hierarchical levels. The widespread sharing of information enables all employees
to have complete information about the company so they can act quickly. In addition, organic organizations
maintain open lines of communication with customers, suppliers, and even competitors to enhance learning
capability.
64. Describe the levels of analysis of an organization.
ANSWER: Each organization is a system that is composed of various subsystems. Organization systems are nested
within systems, and one level of analysis has to be chosen as the primary focus. Four levels of analysis
normally characterize organizations. The individual human being is the basic building block of
organizations. The human being is to the organization what a cell is to a biological system. The next higher
system level is the group or department. These are collections of individuals who work together to
perform group tasks. The next level of analysis is the organization itself. An organization is a collection of
groups or departments that combine into the total organization. Organizations themselves can be grouped
together into the next higher level of analysis, which is the interorganizational set and community. The
interorganizational set is the group of organizations with which a single organization interacts. Other
organizations in the community make up an important part of an organization’s environment.
Chapter 01: Organizations and Organization Design
65. What is organization theory and design?
ANSWER: Organization theory and design is a macro examination of organizations because it analyzes a whole
organization as a unit. Organization design is concerned with people aggregated into departments and
organizations and with the differences in structure and behavior at the organization level of analysis.
Organization design might be considered the sociology of organizations, while organizational behavior is
the psychology of organizations.