Business Essentials, 12e, Global Edition (Ebert/Griffin)

Chapter 6 Organizing the Business

1) 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?
A) Delegation
B) A mission statement
C) Cross training
D) Role responsibility
E) Organizational structure

2) Which of the following clarifies structure and shows employees where they fit into a firm's
operations?
A) Delegation
B) Departmentalization
C) Organization charts
D) Mission statement
E) Job descriptions

3) What do the solid lines on an organization chart show in reporting relationships within a
company?
A) Mission statement
B) Chain of command
C) Job specialization
D) Grapevine activity
E) Market share

4) Which factor plays a key role in determining an organization's structure?

A) Competition and technology
B) Location and life-cycle stage
C) Profitability and leverage
D) Research and development
E) Mission and strategy

5) What is the advantage of an organization that is unstructured and informal?

A) Decisions can be made by consensus.
B) There is less effect on the organization in a rapidly changing market.
C) Managers do not become overwhelmed with decision making.
D) It can become a more complex structure quickly and efficiently.
E) The structure is more adaptable to the environment.

6) Reporting relationships within a company are indicated on an organization chart and represent
A) organizational structure.
B) mission and strategy responsibility.
C) areas of specialization.
D) chain of command.
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E) decision-making responsibility.

7) Organization charts are graphical representations of employee salary information.

TRUE/FALSE

8) The chain of command is depicted by solid lines on an organization chart. TRUE/FALSE

9) Organizational structure is a function of the organization's mission and strategy. TRUE/FALSE

10) The reporting relationships within an organization follow a chain from the highest level to the
lowest level in the organization, and is known as chain of command. TRUE/FALSE

11) Describe how organizations create and communicate their organizational structure.

12) What do managers do when the "job" of a firm is broken down into smaller jobs, allowing
others to perform them?
A) Fragment the task
B) Specialize the job
C) Respond to the job
D) Assign the task
E) Control the job

13) Which of the following is an advantage of job specialization?

A) Workers can develop expertise in their jobs.
B) Workers will not need to be trained.
C) Jobs become more interesting.
D) Workers derive more satisfaction from their jobs.
E) Jobs do not need to be redefined.

14) When a large organization has departments based on areas of production, what type of
departmentalization is being utilized?
A) Customer departmentalization
B) Process departmentalization
C) Geographic departmentalization
D) Functional departmentalization
E) Product departmentalization

15) What is the advantage of using product departmentalization?

A) Managers can focus on specific product lines.
B) Products are organized based on the production process.
C) Products are better targets to specific customer groups.
D) Customer groups are easily identifiable.
E) Products are closer to where consumers are served.

16) If a manufacturer divides the organization according to the way goods are created, what type
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of departmentalization is being utilized?
A) Functional departmentalization
B) Process departmentalization
C) Customer departmentalization
D) Geographic departmentalization
E) Brand departmentalization

17) Which of the following is a natural part of organizational growth?

A) Retrenchment
B) Entrepreneurship
C) Job specialization
D) Outsourcing
E) Team consolidation

18) Determining how people performing certain tasks can best be grouped together is called
what?
A) Departmentalization
B) Specialization
C) Controlling
D) Leadership
E) Directing

19) What is dividing a store into a men's department, a women's department, and a luggage
department an example of?
A) Product departmentalization
B) Customer departmentalization
C) Process departmentalization
D) Geographic departmentalization
E) International departmentalization

20) A snack food firm is divided by the areas they serve, including one division for the United
States, one for Europe, and another for Asia. How is this firm departmentalized?
A) By customer
B) By process
C) By geography
D) By function
E) By productivity

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21) What is the process of designing specific jobs that need to be done and identifying the people
who will perform them called?
A) Departmentalization
B) Job specialization
C) Group tasks
D) Segmentation
E) Team cohesion

22) Which term identifies the grouping of jobs into logical units?
A) Specialization
B) Accountability
C) Authorization
D) Departmentalization
E) Process management

23) What kind of departmentalization happens when an organization is divided into operations
categorized by tasks performed by employees?
A) Functional departmentalization
B) Process departmentalization
C) Customer departmentalization
D) Geographic departmentalization
E) Regional departmentalization

24) What type of departmentalization would be most effective for a small or new organization?
A) Geographic
B) Functional
C) Customer
D) Product
E) Process

25) If specific jobs are grouped into logical units based on location, what type of
departmentalization is being utilized?
A) Functional
B) Product
C) Process
D) Customer
E) Geographic

26) A separate company unit responsible for its own cost and revenue is referred to as which of
the following?
A) Centralized organization
B) Decentralized organization
C) Department
D) Job specialty
E) Profit center

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27) Job specialization is the process of eliminating unnecessary or undesirable jobs.
TRUE/FALSE

28) Departmentalization refers to the process of grouping jobs into logical units. TRUE/FALSE

29) Geographic departmentalization divides firms according to the areas of the country or the
world that they serve. TRUE/FALSE

30) The building blocks of all organizations are specialization and centralization. TRUE/FALSE

31) As organizations grow and become larger, jobs tend to become less specialized.
TRUE/FALSE

32) Firms with production, marketing, human resource, and finance departments have a process
form of organization. TRUE/FALSE

33) Firms typically use the same form of departmentalization at upper and lower levels.
TRUE/FALSE

34) Profit centers can occur based on function, product, process, customer, or geographical areas.
TRUE/FALSE

35) Briefly describe the five basic forms of departmentalization.

36) Explain geographic departmentalization and discuss how and why an organization might use
this structure.

37) What process is used to assign work to subordinates?

A) Authority
B) Decentralization
C) Delegation
D) Staffing
E) Matrix

38) Granting the authority or power to make decisions is done through the process of
A) line authority.
B) committee.
C) delegation.
D) functional structure.
E) department authority.

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39) What is the main organizational characteristic of decentralized firms?
A) Flat
B) Tall
C) Diverse
D) Multi-layered
E) Matrix

40) Which feature characterizes the organization of centralized firms?

A) Flat
B) Tall
C) Very large
D) Responsive to change
E) Well capitalized

41) What is an employee's duty to perform an assigned task?

A) Delegation
B) Authority
C) Responsibility
D) Accountability
E) Specialization

42) What is the power to make the decisions necessary to complete a task called?
A) Delegation
B) Specification
C) Authority
D) Responsibility
E) Accountability

43) What is authority that flows up and down the chain of command called?
A) Staff authority
B) Departmental authority
C) Delegated authority
D) Divisional authority
E) Line authority

44) What type of departments are linked to the production and sales of specific products?
A) Staff departments
B) Matrix departments
C) Line departments
D) Organizational departments
E) Entrepreneurial departments

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45) What is authority given to a decision-making body with power beyond that possessed by any
one person?
A) Risk aversion
B) Committee and team
C) Line
D) Matrix
E) Product and labor

46) In which type of organization are most lower-level decisions approved by upper management
before they are implemented?
A) Line
B) Staff
C) Decentralized
D) Centralized
E) Learning

47) In what type of organization is decision-making authority delegated to levels of management

at various points below the top?
A) Centralized
B) Decentralized
C) Point-of-sale
D) Geographic
E) Autocratic

48) What kind of organization becomes more responsive to its environment by breaking the
company into more manageable units?
A) Centralized
B) Decentralized
C) Geographic
D) Process-oriented
E) Customer departmentalized

49) What type of structure represents one with relatively few layers of managers?
A) Tall organizational structure
B) Short organizational structure
C) Flat organizational structure
D) Elliptical organizational structure
E) Triangular organizational structure

50) Companies with centralized authority systems typically require multiple layers of
management. What type of organizational structures are these companies utilizing?
A) Tall
B) Short
C) Flat
D) Broad
E) Compressed

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51) In tall organizations, which feature describes the span of control?
A) Short
B) Tall
C) Wide
D) Narrow
E) Vertical

52) What is the preferred span of control when jobs are more diversified or prone to change?
A) Wide
B) Narrow
C) Tall
D) Deep
E) Authoritative

53) Which of the following begins when a manager assigns responsibility to a subordinate?
A) Centralization
B) Delegation
C) Liability
D) Authority
E) Training

54) After responsibility for a task is assigned, which of the following comes next to ensure the
successful completion of the task?
A) The centralization of the task is identified.
B) The liability of the task is determined.
C) The span of control is decided.
D) The work team is created.
E) Authority is granted.

55) What type of management is exemplified by the idea that managers should delegate to
subordinates and allow those subordinates to be responsible for decisions?
A) Authentic management
B) Linear management
C) Centralized management
D) Group management
E) Decentralized management

56) Which of the following BEST describes responsibility?

A) The power to make the decisions necessary to complete a task
B) The liability of subordinates for accomplishing tasks assigned by managers
C) The number of people supervised by one manager
D) The duty to perform an assigned task
E) The need to prove satisfactory work performance

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57) Which of the following BEST describes authority?
A) The power to make the decisions necessary to complete a task
B) The liability of subordinates for accomplishing tasks assigned by managers
C) The number of people supervised by one manager
D) The ability to take on new responsibility
E) The duty to perform an assigned task

58) Which of the following BEST describes accountability?

A) The power to make the decisions necessary to complete a task
B) The obligation employees have to their manager for the successful completion of an assigned
task
C) The decision to communicate clear expectations related to assigned tasks
D) The number of people supervised by one manager
E) The duty to perform a financial task

59) What authority is based on special expertise and usually involves counseling and advising?
A) Line authority
B) Matrix authority
C) Delegated authority
D) Staff authority
E) Divisional authority

60) What are an organization's specialists in law, accounting, and human resource management
commonly called?
A) Profit centers
B) Cost centers
C) Staff members
D) Line members
E) Unit managers

61) 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?
A) Task forces
B) Standing committees
C) Work teams
D) Division committees
E) Board members

62) In a centralized structure, most decision-making authority is delegated to levels of

management at various points below the top. TRUE/FALSE

63) Accountability refers to the obligation of subordinates for accomplishing tasks assigned by
managers. TRUE/FALSE

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64) Flat organizational structures are usually associated with centralized decision making.
TRUE/FALSE

65) Employees' abilities and the supervisor's managerial skills help determine whether span of
control is wide or narrow. TRUE/FALSE

66) When several employees perform the same simple task, a narrow span of control is most
appropriate. TRUE/FALSE

67) Line departments are linked directly to the production and sales of a specific product.
TRUE/FALSE

68) Identify and discuss three factors that may affect a manager's span of control.

69) Briefly summarize the steps in the delegation process.

70) What is the difference between responsibility and authority?

71) What is delegation? Identify four reasons that managers have trouble delegating.

72) List and describe the three forms of authority.

73) Which form of organization is used by most small to medium-sized firms?

A) Divisional
B) Functional
C) Matrix
D) International
E) Stratified

74) Firms with what structure are organized around departments for each basic business action?
A) Divisional structure
B) Matrix structure
C) Functional structure
D) International structure
E) Regional structure

75) Which of the following structures relies on product departmentalization?

A) Matrix
B) Functional
C) Divisional
D) International
E) Regional

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76) What are departments called that resemble separate businesses in that they produce and
market their own products?
A) Regions
B) Divisions
C) Function centers
D) Cost centers
E) Work hubs

77) What style of organization relies almost entirely on employees working on a common project
with little or no underlying functional hierarchy?
A) Team
B) Virtual
C) Learning
D) Flexible
E) Stratified

78) What structure is used when an organization has little or no formal structure and with only a
handful of permanent employees, and when needed, is supplemented by temporary employees?
A) Team structure
B) Virtual structure
C) Learning structure
D) Flexible structure
E) Balanced structure

79) What type of organizational structure seeks to integrate continuous improvements with
lifelong learning and personal employee development?
A) Team
B) Virtual
C) Learning
D) Flexible
E) Evolving

80) In a large firm, what can a functional structure foster, even though it can be counter-
productive to the goals of the organization?
A) Competitiveness
B) Centralization
C) Decentralization
D) Diversity
E) Creativity

81) Which of the following types of structure entails a second chain of command, and is often
used when developing new products?
A) Divisional
B) Departmental
C) Committee
D) Matrix
E) Team
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82) International organizational structures are an approach to organizational structure developed
in response to the need to manufacture, purchase, and sell in global markets. TRUE/FALSE

83) Divisional structure is the relationships between group functions and activities that determine
authority. TRUE/FALSE

84) The functional organizational structure is the approach to organizational structure used by
most small to medium-sized firms. TRUE/FALSE

85) An international organization is one in which traditional boundaries and structures are
minimized or eliminated altogether. TRUE/FALSE

86) A virtual organization has little or no formal structure. TRUE/FALSE

87) A divisional structure relies on functional departmentalization. TRUE/FALSE

88) What does a divisional structure rely on and why does it rely on this feature?

89) Because international organizational structures have emerged in response to the need to
manufacture, purchase, and sell in global markets; how do some companies adopt a truly global
structure?

90) Describe the four basic forms of organizational structure.

91) List and describe three advantages of a divisional structure.

92) What are everyday social interactions among employees that transcend formal jobs and job
interrelationships called?
A) Traditional structure
B) Informal organization
C) Networking opportunities
D) Production organization
E) Community structure

93) Which term describes creating and maintaining the innovation and flexibility of a small
business environment within the confines of a large, bureaucratic structure?
A) Basic structuring
B) Process organization
C) Intrapreneuring
D) Extrapolating
E) Product innovation

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94) Which of the following organizational systems is the part that can be seen and represented in
chart form?
A) Networking
B) Formal organization
C) Informal organization
D) Grapevine
E) Intrapreneuring

95) Which of the following can effectively, but unintentionally, change the formal structure of an
organization?
A) Everyday social interaction of employees
B) Suppliers and vendors
C) Market conditions
D) Members of the Board of Directors
E) Intrapreneuring

96) Which of the following is an informal communications network within the organization?
A) Work groups
B) Social groups
C) The grapevine
D) The corporate structure
E) Teams

97) Which of the following has played an increasingly important role in the growth of the
communication, including the company grapevine?
A) The accuracy of information shared along the grapevine
B) The emergence of smaller organizations, fewer mergers and acquisitions
C) The move of facilities from the suburbs to the inner cities
D) The availability of information technology
E) The increased communication with people outside the organization and decreased
communication with those inside the organization

98) How can an organization minimize the potential damage caused by inaccurate information
spread through the grapevine?
A) Ban employees from using the internet and e-mail for personal reasons.
B) Identify a list of off-limit topics.
C) Respond vigorously to inaccurate information.
D) Allow new information to be released only through formal communication channels.
E) Keep groups small and focused.

99) What is the name given to the middle manager who learns about a new project and becomes
committed to the support of the idea?
A) Stakeholder
B) Sponsor
C) Intrapreneur
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D) Innovator
E) Product champion

100) To move a new idea to a marketable entity, who must approve and support the project,
including the funding of the idea?
A) Inventors
B) Sponsors
C) Stakeholders
D) Product champions
E) Project committees

101) When a firm wants to gather information on the potential reaction to a new policy or idea,
how can a manager collect information?
A) Through intrapreneuring
B) Through social media monitoring
C) By utilizing the company grapevine
D) By utilizing the informal chain of command
E) By organizing new reporting relationships

102) Frequently, the informal organization effectively alters a company's formal structure.
TRUE/FALSE

103) The informal organization is not as powerful as the formal structure. TRUE/FALSE

104) Intrapreneuring attempts to create and maintain the innovation and flexibility found in large,
bureaucratic structures. TRUE/FALSE

105) What is an informal organization and how does it relate to the formal structure?

106) How can a firm utilize and control an informal company grapevine?

107) Discuss the types of grapevines within an organization and how accurate the grapevine can
be.

108) Discuss reasons why informal communication plays a growing role in an organization.

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