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Chapter 3 Fundamentals OF Organizational Structure

Introduction to Organization Theory (Carleton University)

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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

1. What element of organizational structure deals with the pattern of interactions among employees?
a. the design of systems to ensure effective communication, coordination, and
integration of effort across each position
b.the identification of the tasks and processes for each position within the
organization
c. the grouping together of individuals into departments and of departments into
the total organization
d.designating formal reporting relationships, including the number of levels in
the hierarchy and the span of control of managers and supervisors
ANSWER: a

2. According to a researcher in organizational structure, what is important about managing information in an

organization?
a. Information should flow horizontally, but not vertically.
b. Information should flow vertically, but not horizontally.
c. The structure should fit the information requirements of the organization.
d. It is not possible to give people too much information.
ANSWER: c

3. Which of the following are used to coordinate activities between the top and bottom of an organization and
are designed primarily for control of the organization?
a. horizontal linkages
b. functional groupings
c. vertical linkages
d. divisional groupings
ANSWER: c

4. Which of the following is being used when problems and decisions are funnelled to top levels of the
hierarchy for resolution?
a. centralized decision making
b. functional structure
c. horizontal linkage
d. full-time integration
ANSWER: a

5. What structural device includes periodic reports, written information, and computer-based communications
distributed to managers?
a. rules and plans
b. hierarchical referral
c. vertical information systems
d. task forces

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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

ANSWER: c

6. What horizontal linkage mechanism includes a liaison person who communicates and coordinates activities
between other departments?
a. direct contact
b. task forces
c. information systems
d. teams
ANSWER: a

7. Why would an organizational structure researcher say horizontal linkage mechanisms are important to an
organization?
a. They cause employees to feel a lack of unity of command.
b. They coordinate functional areas when added to a divisional structure.
c. They confuse vertical linkages.
d. They enable people in different functional departments to exchange
information.
ANSWER: d

8. When does a liaison role exist?

a. when there is direct contact between managers affected by a problem
b.when there is an exchange of paperwork about a problem
c. when a temporary committee composed of representatives from each
department affected by a problem is formed
d.when a person located in one department is required to communicate and
coordinate other departments
ANSWER: d

9. Which statement best defines the role of a “full-time integrator”?

a. He or she improves vertical linkage of the organization.
b. He or she is responsible for the entire project and is located outside of any one
department.
c. He or she reports to one of the functional departments being coordinated.
d. He or she has the responsibility of coordinating only one department.
ANSWER: b

10. Which of the following would best be linked with “full-time integrator”?
a. product
manager
b. task force
c. direct contact

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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

d. vertical control
ANSWER: a

11. Which of the following is made up of organizationally or geographically dispersed members who are linked
primarily through advanced information and communications technologies?
a. virtual teams
b. task forces
c. full-time integrators
d. information systems
ANSWER: a

Organizational Chart 3.1

12. Refer to Organizational Chart 3.1. What can we accurately conclude from Organizational Chart 3.1?
a. There should be no assistant manager.
b. The company has a functional structure.
c. The company has a divisional structure.
d. The general manager has a span of control of five.
ANSWER: b

13. Refer to Organizational Chart 3.1. What are some of the strengths of the structure shown in Organizational
Chart 3.1?
a. clear and simple product responsibility
b. the hierarchy makes activity cost determination straightforward
c. suitability for an unstable environment
d. economies of scale
ANSWER: d

14. Refer to Organizational Chart 3.1. From the perspective of an organizational structure analyst, what is the
best assessment of the structure shown in Organizational Chart 3.1?
a. It could have a weakness of slow response to environmental changes that

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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

require coordination across functional areas.
b.It should be changed immediately to a horizontal grouping if the company is
growing.
c. It would have increased the span of control for the general manager when the
assistant manager position was added.
d.It has caused high levels of bureaucracy.
ANSWER: a

Organizational Chart 3.2

15. Refer to Organizational Chart 3.2. From the perspective of an organizational structure analyst, what is the
best assessment of the structure shown in Organizational Chart 3.2?
a. To lower fixed costs, this organization should change to a divisional structure
with customer account executives heading each major division.
b.To improve the communications flow, it is recommended that this company add
a full-time integrator between each account executive and operations head.
c. The customer account executives can be considered to be integrators.
d.The organization does not take advantage of economies of scale within the
operations department.
ANSWER: c

16. Refer to Organizational Chart 3.2. Which statement is the best assessment of this organizational structure?
a. If well managed, it achieves coordination both within and between customer
accounts.
b.Efficiency and economy of scale are gained in the functional operations
departments.
c. It facilitates in-depth artistic and technical competence in operations.
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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

d.Balanced joint formal authority between functional and customer account heads
ensures decisions not being “bumped up” to the president.
ANSWER: a

17. Refer to Organizational Chart 3.2. Which statement best describes the structure of this organization?
a. The structure is divisional.
b. There is duplication of activities between the customer accounts and marketing
departments.
c. The structure is primarily functional.
d. Hierarchical referral is the best means for coordination in this organization.
ANSWER: c

18. Chantal Roy is the vice-president of marketing for her company. Other officers in the company include the
vice-presidents of engineering, production, finance, and human resource management. What type of structure
does this small company have?
a. product
b. matrix
c. functional
d. hybrid
ANSWER: c

19. What is characteristic of an organization with a functional structure?

a. It reacts quickly to environmental changes.
b. It diminishes economies of scale compared to the divisional structure.
c. It often results in hierarchy overload.
d. It cannot work in small organizations.
ANSWER: c

20. A company wishes to maintain its basic functional structure, but is having difficulty coordinating across
departments because of growth. What should it do?
a. It should develop horizontal linkages.
b. It should realize that the functional structure cannot work and replace it with a
matrix structure.
c. It may find it necessary to abolish liaison roles.
d. It can profit most by adding more functional departments.
ANSWER: a

21. What is likely to be the result if a domestic company that manufactures four different types of products
changes from a functional structure to a divisional structure?
a. lower fixed costs
b. better coordination within a product area between different functional areas

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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

c. more technical development within functional areas
d. more centralized decision making
ANSWER: b

22. What is one of the benefits of a product or divisional structure?

a. It is best suited to fast change in an unstable environment.
b. It centralizes decision making.
c. It facilitates integration and standardization across product lines.
d. It allows units to adapt to differences in products, regions, and clients.
ANSWER: d

23. What is one of the benefits of a matrix structure?

a. It maintains dual-authority relationships.
b. It is most effective in an unstable environment.
c. It is designed for use within a bureaucracy.
d. It is known for its quality of centralization of key decisions for organizational
control.
ANSWER: a

24. The matrix structure is the correct structure when three conditions are met. What is one of the three
conditions?
a. Pressure exists to share scarce resources across product lines.
b. Technical quality is not very important.
c. The environmental domain of the organization is simple.
d. The environmental domain of the organization is certain and stable.
ANSWER: a

25. When is the geographic structure the correct structure to implement?

a. Different regions require different operations and there is no reason to link with
other regions.
b. Different regions require similar operations and there are many reasons to link
with other regions.
c. Different regions have similar product tastes and preferences.
d. Different regions require vertical information linkages.
ANSWER: d

26. What is one of the benefits of the horizontal structure?

a. It promotes flexibility and rapid response to changes in customer needs.
b.Because team members become recognized experts in a single area, less cross-
training that characterizes other organizational forms is needed
c. Boundaries between departments are clearly defined to ensure functional

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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

expertise.
d.The horizontal structure is easy to implement, even if the organization has been
rooted in a strict vertical, hierarchical structure.
ANSWER: a

27. What is a key aspect of an organization whose employees are assigned to core processes along a horizontal
structure?
a. Self-directed teams are the basis of the organizational design and performance.
b. The dual-authority structure facilitates communication and coordination.
c. The culture is closed, untrustworthy, non-collaborative, and focused on
individual accomplishments.
d. The structure is grouped based on organizational outputs.
ANSWER: a

28. What is a potential weakness of the horizontal structure?

a. It is inflexible and slow to respond to rapid changes in customer needs.
b. Determining core processes to organize around is often difficult.
c. There is a failure to promote teamwork.
d. Organizational goals are not well understood by employees.
ANSWER: b

29. What is one of the benefits of a virtual network structure?

a. Managers have hands-on control over all their employees and organizational
activities.
b. Employee loyalty is increased due to a strong, shared culture.
c. Organizations gain immediate scale without huge investments in factories.
d. Organizations gain greater insight into different national cultures gaining
valuable market information.
ANSWER: c

30. What is a potential weakness of a virtual network structure?

a. Overhead costs are increased significantly due to the need to manage multiple
locations.
b. A great deal of time is required to manage relationships with contract partners.
c. Smaller organizations find it difficult to access talent needed to achieve their
goals.
d. Contract partners create a potential conflict of interest.
ANSWER: b

31. Two types of hybrid structures are common today. What two things do these structures combine?
a. product and matrix structures; product and horizontal structures

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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

b. functional and divisional structures; functional and horizontal
structures
c. marketing and sales; marketing and logistics
d. horizontal and teams; vertical and authority
ANSWER: b

32. What are too much conflict and delayed decision-making symptoms of?
a. bureaucracy
b. structural alignment
c. structural deficiency
d. lack of employee
motivation
ANSWER: c

33. The organizational chart is the visual representation of a whole set of underlying activities and processes in
an organization.
a. True
b. Fals
e
ANSWER: True

34. Rules and plans are lower on the ladder of mechanisms for vertical linkage than is adding positions to the
hierarchy.
a. True
b. Fals
e
ANSWER: True

35. Horizontal linkages are used to coordinate activities between the top and bottom of an organization and are
designed primarily for control of the organization, whereas vertical linkages refer to the amount of
communication and coordinate across organizational departments.
a. True
b. Fals
e
ANSWER: Fals
e

36. A task force is located in one department but has responsibility for communicating and achieving
coordination with another department.
a. True
b. Fals
e
ANSWER: Fals
e
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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

37. Integrator roles require excellent people skills.

a. True
b. Fals
e
ANSWER: True

38. It would be logical for a full-time integrator to have no direct subordinates.

a. True
b. Fals
e
ANSWER: True

39. A full-time integrator such as a project manager has the various functional managers—finance, engineering,
marketing—reporting to him or her.
a. True
b. Fals
e
ANSWER: Fals
e

40. Project teams can be thought of as permanent task forces.

a. True
b. Fals
e
ANSWER: True

41. As the amount of required horizontal coordination increases, the costs of time and resources decrease.
a. True
b. Fals
e
ANSWER: Fals
e

42. Grouping by output means that people are organized by similar functions or work processes, with similar
knowledge and skills.
a. True
b. Fals
e
ANSWER: Fals
e

43. Functional grouping puts together employees who perform similar work processes and typically have similar
knowledge and skills.
a. True
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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

b. Fals
e
ANSWER: True

44. A weakness of the functional structure is that it results in a slow response time to environmental change.
a. True
b. Fals
e
ANSWER: True

45. Divisional structure may be organized by product, services, major projects or programs, or profit centres.
a. True
b. Fals
e
ANSWER: True

46. A strength of the divisional structure compared to the functional structure is that the former tends to
decentralize decision making.
a. True
b. Fals
e
ANSWER: True

47. One disadvantage of the divisional structure is that the organization loses potential economies of scale.
a. True
b. Fals
e
ANSWER: True

48. One advantage of the divisional structure is that coordination of functional matters for any one given product
is maximized.
a. True
b. Fals
e
ANSWER: True

49. One advantage of the geographical structure is that the organization can adapt to specific needs of its own
region.
a. True
b. Fals
e
ANSWER: True

50. One disadvantage of the geographical structure is that employees and operations tend to focus on global
organizational goals rather than more regionally specific goals.
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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

a. True
b. Fals
e
ANSWER: Fals
e

51. Pressure for innovation is sufficient cause for adopting the matrix structure.
a. True
b. Fals
e
ANSWER: Fals
e

52. There are two variations of matrix structure: the functional matrix and the divisional matrix.
a. True
b. Fals
e
ANSWER: Fals
e

53. The horizontal structure organizes employees around core processes.

a. True
b. Fals
e
ANSWER: True

54. A horizontal structure is characterized by coordination around geographical areas.

a. True
b. Fals
e
ANSWER: Fals
e

55. The virtual organization may be viewed as a central hub surrounded by a network of outside specialists.
a. True
b. Fals
e
ANSWER: Fals
e

56. Extreme outsourcing is also known as a modular structure.

a. True
b. Fals
e
ANSWER: True
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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

57. Many companies are hybrids as they combine characteristics of multiple structures to take advantage of the
strengths and avoid some of the weaknesses.
a. True
b. Fals
e
ANSWER: True

58. Explain what we can and cannot learn from an organizational chart. What structural and contextual variables
studied in organizational theory appear on the organizational chart?
ANSWER An organizational chart is a visual representation of the set of underlying
: activities and processes in the organization. It portrays the hierarchy of
authority, and may portray the degree of specialization. It can provide some
indirect clues about the organization’s size. It shows the formal vertical and
horizontal relationships in the organization at one moment in time. It does not
show the informal reporting relationships that are often very critical.

59. Explain the information processing perspective for the study of organizational structure.
ANSWER The perspective argues that an organization’s structure should fit the
: information requirements of the organization. Otherwise, employees will have
either too little information or will spend time looking for and processing
information that is not vital to their work and therefore will not be effective.

60. How can rules and plans serve as an information-linking mechanism in organizations?
ANSWER Rules and plans provide scripted guidance to employees about how to respond
: to situations so they do not have to communicate directly with their manager.
Rules and plans enable coordination by providing standard operating procedures
that everyone knows to follow without having to ask others for guidance.

61. List and explain the structural devices used to achieve vertical linkage.
ANSWER There are three types of vertical linkage devices. (1) Hierarchical referral can be
: used if an employee does not know how to solve a problem. He or she can refer
the problem to the level above, and when the problem is solved it is passed
down to the employee. (2) Rules and plans can be used to standardize
behaviours and decisions. (3) Vertical information systems can be used to make
communication up and down the hierarchy more efficient.

62. Contrast the following structural alternatives to achieving horizontal integration: liaison, task force, and full-
time integrator.
ANSWER A liaison is one method of direct contact between two departments. A task force
: is a temporary committee comprising members from several departments. A
full-time integrator is located outside the functional departments and is
responsible for coordinating the work of several departments. A full-time
integrator often has a title such as brand or project manager. The alternatives
vary by the degree of coordination necessary and cost.
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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

63. What qualifications would be expected for the position of full-time integrator? Why?
ANSWER Full-time integrators need strong interpersonal skills and strong skills of
: persuasion and expertise. These skills are critical as the role is one of significant
responsibility with little authority.

64. What are the similarities and differences between a functional structure with horizontal linkages and a
divisional structure?
ANSWER In a functional structure with horizontal linkages, people from different
: functions are brought together in a group to work on a core process. In a
divisional structure, employees work in their functions even though they are
grouped by what the organization produces. The former is a grouping around
core processes while the latter is by product.

65. List and describe the conditions of the matrix structure.

ANSWER There are three conditions: (1) pressure exists to share scarce resources across
: product lines, (2) environmental pressure exists for two or more critical outputs,
and (3) the organization’s environmental domain is very uncertain.

66. Compare and contrast a functional matrix and a project matrix.

ANSWER In a functional matrix, the functional manager has primary authority and the
: project or product manager simply coordinates activities. In the product matrix,
the product or project manager has primary authority and the functional
manager simply assigns technical people to projects and provides advisory
expertise.

67. What are the strengths and weaknesses of the horizontal structure?
ANSWER There are five strengths and weaknesses.
:
Strengths Weaknesses
1. Promotes flexibility and rapid
response to changing customer
demands
1. Hard to determine the core processes
2. Directs attention to the production
2. Often requires a cultural change
and delivery of what the customer
3. Traditional managers may become
wants
disaffected
3. Each employee has a broader view of
4. Requires significant training
the organization’s goals
5. Can limit in-depth skill development
4. Promotes a focus on teamwork and
collaboration
5. Empowers employees

68. What are the two types of hybrid structure? Discuss each type.
ANSWER One type often used combines the characteristics of the functional and
: divisional structures. When organizations get larger, they often create self-

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CHAPTER 3 - FUNDAMENTALS OF ORGANIZATIONAL STRUCTURE

contained divisions. However, some functions require economies of scale and
in-depth specialization, and they remain centralized at headquarters. The second
type of hybrid combines the characteristics of the functional and horizontal
structures. Teams are created to provide the flexibility to meet the organization’s
key success factors.

69. List and give examples of two symptoms of structural deficiency provided in your textbook. Explain how an
organization might cope with those two symptoms of structural deficiency.
ANSWER (1) To deal with the symptom of delayed or inadequate decision making, an
: organization could use vertical information linkages such as information
systems or horizontal linkages such as task forces. (2) To deal with the symptom
of employee performance declines, an organization could be redesigned so that
the structure meets the actual degree of uncertainty in its environmental domain.

70. What symptoms of structural deficiency would make a firm consider changing its structure?
ANSWER If there is significant conflict and/or the organization is not meeting its goals,
: then it should consider redesigning its structure.

71. Assume that you are being interviewed for the position of project manager by a corporate recruiter. The
recruiter says, “We’ve been having some problems with product communication and so we have just created
new project manager positions. I see on your transcript that you took a course in organizational theory. Tell me
what you learned about project managers, and why you feel that this would be a good position for your career in
management.”
ANSWER As you have good interpersonal and negotiation skills, you have the necessary
: skills to succeed in the role. As a project manager, you will have lots of
responsibility without much authority so if you can succeed in the role, you
should be able to manage in many different situations.

72. Describe Morgan’s eight images of organizational design. How might organizations use the images for
designing an appropriate structure?
ANSWER Morgan’s eight images are organizations as (1) machines, (2) organisms, (3)
: brains, (4) cultures, (5) political systems, (6) psychic prisons, (7) flux and
transformation, and (8) instruments of domination. The images provide insight
into possible structures and processes that need to be considered when making
design choices.

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