CHAPTER TWO

STRATEGY, ORGANIZATION DESIGN, AND

EFFECTIVENESS

MULTIPLE CHOICE

1. When looking for strengths and weaknesses, top management is:

a. Assessing the external environment.
b. Analyzing the competition.
c. Evaluating the internal situation in order to define its distinctive competence.
d. Wasting its time since it has no control over these things.
ANSWER: c

2. The primary responsibility of top management is to:

a. Perform the organization's SWOT analysis.
b. Determine goals, strategy, and design, in adaptation to environment.
c. Set a motivating culture for all employees.
d. Formalize and centralize the firm.
ANSWER: b

3. The leader of one religious denomination emphasizes converts to the denomination,

whereas the previous leader felt converts should play a backseat role while they "paid their
dues." This illustrates _________ influence on the selection of effectiveness criteria.
a. goal measurability
b. top management
c. environmental conditions
d. that almost anything can have
ANSWER: b

4. The top management role in organization effectiveness involves examination of internal

environment which includes:
a. Opportunities.
b. Weaknesses.
c. Uncertainty.
d. Resource availability.
ANSWER: b
 STRATEGY, ORGANIZATION DESIGN, AND EFFECTIVENESS

5. The top management role in organization effectiveness involves examination of external

environment which includes:
a. Threats.
b. Mission.
c. Production technology.
d. Strengths.
ANSWER: a

6. The most common occurrence in setting goals and selecting a strategy is that:
a. The environment is ignored to select the ideal mission.
b. Goals are set so high that they can rarely be attained.
c. New goals and strategies are selected on the basis of environmental needs and the
organization is redesigned accordingly.
d. Environment and current structure and goals are considered simultaneously.
ANSWER: c

7. The choices top managers make about goals, strategies, and organizational design have a
tremendous impact on organizational:
a. profitability.
b. efficiency.
c. effectiveness.
d. market share.
ANSWER: c

8. The goal of Short Stop Markets to capture 25% of the convenience market business in
Arizona is an example of a(n) _________ goal.
a. official
b. operative
c. generic
d. legitimacy
ANSWER: b

9. Mission is the same thing as:

a. Operative goals.
b. Decision guidelines.
c. Official goals.
d. Performance standards.
ANSWER: c

10. Which of the following reflects the overall performance of profit organizations?
a. Efficiency
b. Profitability
c. Innovation goals
d. Productivity
ANSWER: b
 CHAPTER TWO

11. _______ pertains to the training, promotion, safety, and growth of employees.
a. Market share
b. Innovation
c. Productivity of the industry
d. Employee development
ANSWER: d

12. Successful organizations use a carefully balanced set of _______ goals.

a. operative
b. innovation
c. visionary
d. generic
ANSWER: a

13. Models for formulating organizational strategies include:

a. Perrow's typology and Porter's model.
b. Daft's model and Pfeiffer's typology.
c. Porter's model and Miles and Snow's typology.
d. Bowerman's typology and Miles and Snow's model.
ANSWER: c

14. Official goals provide _____, while operative goals and strategies provide ______.
a. measurable objectives, legitimacy
b. legitimacy, employee direction
c. employee direction, decision guidelines
d. decision guidelines, legitimacy
ANSWER: b

15. A plan for interacting with the competitive environment to achieve organizational goals is
referred to as:
a. strategy.
b. design.
c. culture.
d. structure.
ANSWER: a

16. The differentiation strategy:

a. Was developed by Frederic Taylor.
b. Was popularized by Henri Fayol.
c. Is one of Michael Porter’s competitive strategies.
d. Is K. D. Bowerman’s “Strategy for Empowerment.”
ANSWER: c
 STRATEGY, ORGANIZATION DESIGN, AND EFFECTIVENESS

17. A _______ strategy can reduce rivalry with competitors and fight off the threat of
substitute products because customers are loyal to the company’s brand.
a. low-cost leadership
b. focused
c. defensive
d. differentiation
ANSWER: d

18. The slogan, "We’re a no-frills business! When we save, you save!" exemplifies the
strategy of:
a. Low-cost leadership.
b. Differentiation.
c. Focus.
d. Legitimacy.
ANSWER: a

19. Which of the following is true about Porter’s competitive strategies:

a. Differentiation strategies address whether the market scope is broad or narrow.
b. Differentiation can be broken down into low cost or broad scope categories.
c. An airline using the differentiation strategy would be likely to offer travelers
refreshments at a reasonable price, rather than serve bounteous meals.
d. The statement by coffee café Starbuck’s international president “We’re not in the
business of filling bellies, we’re in the business of filling souls” is indicative of a
differentiation strategy.
ANSWER: d

20. A(n) _____ strategy is concerned primarily with stability rather than taking risks or
seeking new opportunities for innovation and growth.
a. focused
b. low-cost leadership
c. differentiation
d. intensive
ANSWER: b

21. The focus strategy:

a. Is known for its creative flair, with thinking “out of the box.”
b. Utilizes strong central authority.
c. Involves detailed control reports for targeting areas of emphasis.
d. Concentrates on a specific regional market or buyer group.
ANSWER: d
 CHAPTER TWO

22. In Miles and Snows’s Strategy Typology, the prospector:

a. Attempts to maintain a stable business environment by finding a middle ground
between stability and innovation.
b. Most closely resembles Porter’s Low-Cost Leadership strategy.
c. Responds to environmental threats in an ad hoc fashion without revealing a clear
strategy.
d. Seeks innovation or risk taking and is therefore best suited to the dynamic
environment.
ANSWER: d

23. Miles and Snow’s Strategy Typology is based on the notion that:
a. Strategy should correspond to technology.
b. Strategy should be congruent with external environment.
c. Strategy should be based on human resource capability.
d. Strategy should be a “fit” to economic resource base.
ANSWER: b

24. The _______ strategy tries to maintain a stable business while innovating on the
periphery.
a. reactor
b. prospector
c. analyzer
d. defender
ANSWER: c

25. Organization _______ needs to support the firm’s competitive approach.

a. financial standings
b. design characteristics
c. informal communication channel
d. environment for green movement
ANSWER: b

26. Which of the following from Miles and Snow’s Strategy Typology best matches with
strong capability in research, a decentralized structure, and an emphasis on flexibility:
a. Reactor.
b. Low-cost leadership.
c. Prospector.
d. Analyzer.
ANSWER: c
 STRATEGY, ORGANIZATION DESIGN, AND EFFECTIVENESS

27. The extent to which goals are obtained is a traditional definition of the degree of _____ in
the organization.
a. efficiency
b. scientific management
c. strategy
d. effectiveness
ANSWER: d

28. Contingency approaches to the measurement of effectiveness include:

a. Whether or not the organization’s internal activities and processes are efficient.
b. The system resource approach, which examines product and service outputs.
c. Stakeholders’ views on effectiveness.
d. Which competing values are applicable.
ANSWER: a

29. The _______ approach to organizational effectiveness is concerned with the output side
and whether the organization achieves its goals in terms of desired levels of output.
a. goal
b. resource-based
c. analytical
d. internal process
ANSWER: a

30. When using the goal approach to effectiveness, it is best to use _______ goals.
a. operational
b. official
c. low-level
d. non-measurable
ANSWER: a

31. Which of the following is true regarding the goal approach:

a. Full assessment of effectiveness should consider several goals simultaneously
because high achievement on one goal may mean low achievement on another.
b. Priority setting requires that only one goal at a time can be achieved.
c. There is no place for subjective assessment of goal achievement in organizations
today.
d. The most common goal stated by U.S. corporations today deals with management
development.
ANSWER: a
 CHAPTER TWO

32. Two comparably sized colleges are located in adjacent towns. The admissions counselors
of College A have been telling prospective students that College A is better than College
B because their latest freshman class has 150 more students than the freshman class at
College B. The admissions counselors of College A are using the _______ effectiveness
approach.
a. Resource-based
b. Goal
c. Internal process
d. Competing values
ANSWER: a

33. The resource-based approach emphasizes the:

a. Input into an organization.
b. Output of an organization.
c. Achievement of profitability.
d. Amount of inventory left idle by the organization.
ANSWER: a

34. One strength of the internal process approach is the fact that it:
a. Tells management how well the internal processes mesh with the external
environment.
b. Considers human resources and employee-oriented processes.
c. Emphasizes inputs into the organization.
d. Emphasizes outputs of the organization.
ANSWER: b

35. Contingency factors affecting the international organizational health and efficiency,
according to the text, include:
a. Organization culture.
b. Number of employees.
c. Quality control methodology.
d. Management of change.
ANSWER: a

36. If one is measuring work climate, group loyalty, and worker-management communication
as a measure of effectiveness, what approach is most likely being used:
a. Internal process.
b. Strategic human resources.
c. Quality control.
d. Stakeholder approach.
ANSWER: a
 STRATEGY, ORGANIZATION DESIGN, AND EFFECTIVENESS

37. Which approach provides management with structural control and an external focus:
a. The open systems emphasis.
b. The rational goal emphasis.
c. The internal process emphasis.
d. The human relations emphasis.
ANSWER: b

38. The competing values approach to effectiveness is based on two dimensions (i.e., the
axes), which are:
a. Open/closed system and values/beliefs of managers.
b. Internal/external focus and flexible/structured control.
c. High/low analyzability and high/low variety.
d. Environmental change and environmental complexity.
ANSWER: b

39. The Stevens Corporation has goals that reflect deeply-rooted values on growth and
resource acquisition. In the competing values approach to effectiveness evaluation, it
would be considered to be primarily in which quadrant:
a. Rational goal emphasis.
b. Internal process emphasis.
c. Open systems emphasis.
d. Human relations emphasis.
ANSWER: c

40. Which of the following is not an emphasis in the competing values model?
a. Human relations
b. Rational goal
c. Closed systems
d. Internal process
ANSWER: c

TRUE / FALSE

1. The primary responsibility of top management is to determine an organization’s goals,

strategy, and design, therein adapting the organization to a changing environment.
ANSWER: True

2. Before the mission is defined and goals are set, top management should assess its
strengths, weaknesses, opportunities, and threats.
ANSWER: True

3. Experienced managers will interpret the environment similarly and therefore end up with
similar strategic goals, thus causing a cooperative situation to occur.
ANSWER: False
 CHAPTER TWO

4. Goals and strategies are usually fixed and remain unchanged once top management agrees
upon them.
ANSWER: False

5. Organizational mission and operational goals are the same thing.

ANSWER: False

6. Operative goals refer to the formally stated definition of business scope and outcomes the
organization is trying to achieve.
ANSWER: False

7. Growth and output volume are examples of overall performance goals.

ANSWER: True

8. A productivity goal could be stated in terms of "cost for a unit of production," "units
produced per employee," or "resource cost per employee."
ANSWER: True

9. A market goal would typically be stated in terms of net income, earnings per share, or
return on investment.
ANSWER: False

10. Innovation and change goals are decreasingly important, even though they initially cause a
large increase in profits.
ANSWER: False

11. Official goals address issues pertaining to corporate legitimacy.

ANSWER: True

12. A strategy is a plan for achievement of organizational goals.

ANSWER: True

13. Organizations using the differentiation strategy try to distinguish their products or services
from others in the industry.
ANSWER: True

14. The low-cost leadership strategy is known for requiring skills based on strong marketing
ability, creative flair, strong capability in basic research, and corporate reputation for
technological leadership.
ANSWER: False

15. Differentiation is the strategy that is specifically designed to innovate, take risks, and
above all, grow in its dynamic environment.
ANSWER: False
 STRATEGY, ORGANIZATION DESIGN, AND EFFECTIVENESS

16. A defender strategy is concerned with internal efficiency and control to produce reliable,
high-quality products for steady customers.
ANSWER: True

17. The reactor strategy is a strategy because it responds to environmental threats and
opportunities in a strategic fashion.
ANSWER: False

18. A differentiation strategy calls for a learning approach, whereas a low-cost strategy should
be paired with an efficiency approach.
ANSWER: True

19. Organizational goals represent the reason for an organization’s existence and the outcomes
it seeks to achieve.
ANSWER: True

20. If an organization has well-developed goals for profitability, that is all they need for
determination of their effectiveness.
ANSWER: False

21. One would expect the effectiveness criteria of a football team to be affected by goal
measurability.
ANSWER: True

22. The competing values approach to effectiveness demonstrates that only one managerial
value (or effectiveness criteria) can be used, and managers must decide which of the four
competing values they will follow.
ANSWER: False

23. The internal process approach to effectiveness utilizes both cultural and economic
measures.
ANSWER: True

24. The rational goal emphasis incorporates the values of an internal focus and a flexible
structure, whereas the internal process emphasis reflects the values of internal focus and
structural control.
ANSWER: False

ESSAY

1. Contrast these types of organizational goals and give an example of each: official goals
and operative goals.

2. What is the difference between a goal and a strategy? Give an illustration of each.
 CHAPTER TWO

3. Name a company that you can imagine creating. List five operative goals that would be
reasonable for your company to pursue.

4. Apply Porter's model for formulating strategies to the following situation: Quebecor
Printing is a Canadian-based commercial printing company that is expanding, acquiring
ailing printing companies, and moving into international markets. They have completed
more than 100 mergers and buyouts since 1972, and have focused on customized service
by using "selective binding" to print, for example, two dozen versions of Reader's Digest
for urban and regional markets. [Hint: Use the example given to explain the aspect of
Porter's model that you choose to illustrate.]

5. List and describe Porter’s Competitive Strategies. Draw these strategies in the strategy
matrix.

6. What is the difference between a differentiation and a focus strategy?

7. Compare and contrast Miles and Snow’s theoretical approach against Porter’s theoretical
approach.

8. What is the specific overlap between effectiveness and efficiency?

9. You are talking at a social event with a top manager of another company, other than where
you work, about their effectiveness. She says flippantly, “Effectiveness is not an issue for
me, because effectiveness is however I define it.” Evaluate her claim.

10. When would you recommend that the resource-based approach be used to gauge
organizational effectiveness?

11. Describe the internal process effectiveness measure of economic efficiency.

12. Define and describe each of the contingency effectiveness approaches.

13. Draw the matrix of the competing values model. Include the approach, their primary
goals, and their subgoals.

14. What does a competing values approach have to do with organizational effectiveness?

15. You have just been hired by a large organization to serve as a first line supervisor, but
because you are in an influential department, you have the opportunity to meet the top
managers at a company party and to dialogue with the CEO on his responsibilities.
Knowing the responsibilities and types of decisions made by top management as we
studied them in organization theory, what would you discuss about the organization with
the CEO?
 STRATEGY, ORGANIZATION DESIGN, AND EFFECTIVENESS

16. Based on the following description, place the strategy of Granite Rock Company into a
theoretical context and explain its approach in "textbook terms." We know that Granite
Rock tracks its actual operations in at least 40 measurable ways, each plotted and posted
on graphs and charts at every plant. They survey customers to rate themselves and
competitors, and aim to outperform the group average by 33%. When they don't achieve
their goal, they chart the actual daily operations, and are assured that their employees will
see a negative and want to do something about it.

17. The new general manager of a (Broadway style) theater in San Francisco wants to assess
the theater's effectiveness as an organization. Although the theater has grown because of
its stylish productions, management from a business perspective has been relatively
absent. Based on our study in organization theory, how should this assessment of
effectiveness be approached?

18. Assume that a non-profit organization is very successful at obtaining grants to support its
activities. On the other hand, it is felt among employees that a hostile work environment
(one type of sexual harassment) exists. You have heard that recipients of the
organization’s services run the range of satisfaction with services provided. If you came
in as an outside evaluator to this situation, describe and defend the method would you use
for assessing effectiveness.

19. Assume that in an area university, some people feel that athletics is overly emphasized,
and other feel that it is under emphasized. How would you go about measuring the
effectiveness of that university relative to its athletics program? Explain.

20. In an introductory management course, the professor was quoted as saying that
“organizational effectiveness is simply the degree to which the organization achieves its
pre-set goals.” Is she correct?

21. Some organizations do not formally set goals. How should their effectiveness be
measured?