) Organization charts are graphical representations of employee salary information.
Answer: FALSE
Explanation: Organization charts are graphical representations of the structures of an organization and the relationships and relative ranks of its positions.
Page Ref: 141
Difficulty: Easy
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
2) Job specialization is the process of eliminating unnecessary or undesirable jobs.
Answer: FALSE
Explanation: Job specialization is the process of identifying the specific jobs that need to be done and designating the people who will perform them.
Page Ref: 142
Difficulty: Easy
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
3) Departmentalization refers to the process of grouping jobs into logical units.
Answer: TRUE
Explanation: The practice of grouping jobs into units is called departmentalization.
Page Ref: 143
Difficulty: Easy
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
4) Geographic departmentalization divides firms according to the areas of the country or the world that they serve.
Answer: TRUE
Explanation: Geographic departmentalization divides firms according to the areas of the country or the world that they serve.
Page Ref: 144
Difficulty: Easy
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
5) In a centralized structure, most decision-making authority is delegated to levels of management at various points below the top.
Answer: FALSE
Explanation: In a centralized structure, most decision-making authority is delegated to levels of management at the top.
Page Ref: 146
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
6) Accountability refers to the liability of subordinates for accomplishing tasks assigned by managers.
Answer: TRUE
Explanation: Accountability means that subordinates are responsible for accomplishing tasks assigned by managers.
Page Ref: 148
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
7) Divisional structure is the relationships between group functions and activities that determine authority.
Answer: FALSE
Explanation: Divisional structure relies on product departmentalization.
Page Ref: 150
Difficulty: Easy
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
8) International organizational structures are an approach to organizational structure developed in response to the need to manufacture, purchase, and sell in global markets.
Answer: TRUE
Explanation: International organizational structures developed in response to the need to manufacture, purchase, and sell in global markets.
Page Ref: 153
Difficulty: Easy
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
9) The chain of command is depicted by solid lines on an organization chart.
Answer: TRUE
Explanation: These lines represent reporting relationships.
Page Ref: 141
Difficulty: Moderate
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
10) Organizational structure is a function of the organization’s mission and strategy.
Answer: TRUE
Explanation: Size of the company and aspects of the organization’s environment also affect organizational structure.
Page Ref: 141
Difficulty: Moderate
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
11) The building blocks of all organizations are specialization and centralization.
Answer: FALSE
Explanation: The building blocks of all organizations are specialization and departmentalization.
Page Ref: 142
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
12) As organizations grow and become larger, jobs tend to become less specialized.
Answer: FALSE
Explanation: As organizations grow, jobs tend to become more specialized; job specialization is a natural part of organizational growth.
Page Ref: 142
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
13) Acme Oil Company has three divisions: Exploration, Extraction, and Refining. This is an example of process departmentalization.
Answer: TRUE
Explanation: With process departmentalization, the firm is divided according to production processes used to create a good or service.
Page Ref: 143
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
14) Firms with production, marketing, human resource, and finance departments have a process form of organization.
Answer: FALSE
Explanation: Such firms have a functional form of departmentalization.
Page Ref: 144
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
15) Firms typically use the same form of departmentalization at upper and lower levels.
Answer: FALSE
Explanation: Because different forms of departmentalization have different advantages, larger companies, for example, tend to adopt different types of departmentalization for various levels.
Page Ref: 144
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
16) Flat organizational structures are usually associated with centralized decision making.
Answer: FALSE
Explanation: Flat organizational structures are usually associated with decentralized decision making.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
17) Employees’ abilities and the supervisor’s managerial skills help determine whether span of control is wide or narrow.
Answer: TRUE
Explanation: Other factors include job similarity and job difficulty.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
18) When several employees perform the same simple task, a narrow span of control is most appropriate.
Answer: FALSE
Explanation: Job simplicity typically leads to a wider span of control.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
19) For the delegation process to work smoothly, responsibility and authority must be equivalent.
Answer: TRUE
Explanation: First, responsibility is assigned; then, authority is granted, followed by the creation of accountability.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
20) Line departments are linked directly to the production and sales of a specific product.
Answer: TRUE
Explanation: As the doers and producers, each line department is essential to an organization’s ability to sell and deliver finished goods.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
21) The functional organizational structure is the approach to organizational structure used by most small to medium-sized firms.
Answer: TRUE
Explanation: Functional organization is used by most small to medium-sized firms.
Page Ref: 150
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
22) The matrix form of organizational structure was pioneered by NASA.
Answer: TRUE
Explanation: A matrix structure is organized along two dimensions—a “permanent” structure, along with a temporary structure needed for project completion.
Page Ref: 151
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
23) An international organization is one in which traditional boundaries and structures are minimized or eliminated altogether.
Answer: FALSE
Explanation: Some companies perform operations in global structures without any regard for national boundaries.
Page Ref: 154
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
24) A virtual organization has little or no formal structure.
Answer: TRUE
Explanation: A virtual organization has the structure of a handful of employees and a modest administrative facility.
Page Ref: 154
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
25) Frequently, the informal organization effectively alters a company’s formal structure.
Answer: TRUE
Explanation: This level, furthermore, is sometimes just as powerful—if not more powerful—than the formal structure.
Page Ref: 155
Difficulty: Moderate
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
26) The informal organization is not as powerful as the formal structure.
Answer: FALSE
Explanation: This level of organization is sometimes just as powerful—if not more powerful—than the formal structure.
Page Ref: 155
Difficulty: Moderate
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
27) Intrapreneuring attempts to create and maintain the innovation and flexibility found in large, bureaucratic structures.
Answer: FALSE
Explanation: Many large firms support the intrapreneuring process to encourage individual employees to innovate and maintain the organizational flexibility of a smaller firm.
Page Ref: 156
Difficulty: Moderate
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
28) After an organizational structure has been created, it is set in stone.
Answer: FALSE
Explanation: Even after an organizational structure has been created it is rarely set in stone. Most organizations change their structures on an almost continuous basis.
Page Ref: 141
Difficulty: Moderate
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
29) Job specialization is a natural part of organizational growth.
Answer: TRUE
Explanation: Specialized jobs are learned more easily and can be performed more efficiently.
Page Ref: 142
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
30) To avoid bureaucracy within the organization, most large organizations tend to adopt the same types of departmentalization for all levels.
Answer: FALSE
Explanation: Larger companies tend to adopt different types of departmentalization for various levels of the company.
Page Ref: 143
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
31) Coordination across functional departments becomes more complicated in smaller firms than in larger firms.
Answer: FALSE
Explanation: Coordination becomes more complicated across functional departments within large organizations.
Page Ref: 143
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
32) Decentralization works best in a complex, rapidly changing environment.
Answer: TRUE
Explanation: Decision-making authority is delegated to levels of management at various points below the top; this allows the organization to be more adaptive to change.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
33) For the delegation process to work smoothly, responsibility must slightly exceed one’s level of authority.
Answer: FALSE
Explanation: Responsibility and authority must be equivalent for the delegation process to work smoothly.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
34) Line, staff, and committee and team forms of authority are not likely to all be found within the same organization.
Answer: FALSE
Explanation: Like departmentalization, all three forms of authority may be found in a given company, especially a large one.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
35) A divisional structure relies on functional departmentalization.
Answer: FALSE
Explanation: A divisional structure relies on product departmentalization.
Page Ref: 150
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
36) A team organization typically does not utilize functional hierarchy.
Answer: TRUE
Explanation: People float from project to project as dictated by their skills and the demands of those projects.
Page Ref: 154
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
37) 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) job specialization
- D) role responsibility
- E) organizational structure
Answer: E
Explanation: E) Organizational structure refers to the jobs undertaken within an organization and how these jobs are related to one another.
Page Ref: 141
Difficulty: Easy
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
38) 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
Answer: C
Explanation: C) An organization chart is a diagram showing the structure and employee placement in terms of operations.
Page Ref: 141
Difficulty: Easy
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
39) 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
Answer: B
Explanation: B) The chain of command is shown on an organization chart as a solid line.
Page Ref: 141
Difficulty: Easy
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
40) 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
Answer: B
Explanation: B) Job specialization is a result of identifying specific roles that need to be undertaken within the organization.
Page Ref: 142
Difficulty: Easy
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
41) Which term covers grouping jobs into logical units?
- A) specialization
- B) accountability
- C) authorization
- D) departmentalization
- E) process management
Answer: D
Explanation: D) Departmentalization is the process of grouping jobs into logical units.
Page Ref: 143
Difficulty: Easy
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
42) What kind of departmentalization happens when an organization is divided into operations related to different products?
- A) functional departmentalization
- B) process departmentalization
- C) customer departmentalization
- D) geographic departmentalization
- E) regional departmentalization
Answer: B
Explanation: B) Process departmentalization refers to organizational divisions based on product process.
Page Ref: 143
Difficulty: Easy
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
43) What is the main organizational characteristic of decentralized firms?
- A) flat
- B) tall
- C) diverse
- D) multi-layered
- E) matrix
Answer: A
Explanation: A) Decentralized firms share the characteristic of a flat organizational structure.
Page Ref: 146
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
44) Which feature characterizes the organization of centralized firms?
- A) flat
- B) tall
- C) very large
- D) responsive to change
- E) well capitalized
Answer: B
Explanation: B) The main feature of centralized firms is their tall organizational structure.
Page Ref: 146
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
45) What is an employee’s duty to perform an assigned task?
- A) delegation
- B) authority
- C) responsibility
- D) accountability
- E) specialization
Answer: C
Explanation: C) Within an organization, the duty to perform an assigned task is called responsibility.
Page Ref: 148
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
46) What is the power to make the decisions necessary to complete a task called?
- A) delegation
- B) specification
- C) authority
- D) responsibility
- E) accountability
Answer: C
Explanation: C) Authority is defined as the power to make decisions that are necessary to ensure the completion of a task.
Page Ref: 148
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
47) 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
Answer: E
Explanation: E) Line authority is the term that describes the flow of authority along the chain of command.
Page Ref: 148
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
48) 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
Answer: C
Explanation: C) Line departments are defined as departments linked to the production and sales of specific departments.
Page Ref: 148
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
49) What is authority given to a special group of employees that play central roles in the firm’s daily operations called?
- A) risk aversion
- B) committee and team
- C) line
- D) matrix
- E) product and labor
Answer: B
Explanation: B) Committee and team authority is the term given to the authority exercised by a special group of employees.
Page Ref: 149
Difficulty: Easy
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
50) 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
Answer: B
Explanation: B) The informal organization of a company includes the everyday social interactions among employees that go beyond the formal job-related interactions.
Page Ref: 155
Difficulty: Easy
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
51) 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
Answer: C
Explanation: C) Intrapreneuring is the creation and maintenance of the innovation and flexibility of a small business environment within the confines of a large, bureaucratic structure.
Page Ref: 156
Difficulty: Easy
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
52) 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
Answer: E
Explanation: E) Many factors determine an organization’s optimal structure, including mission, strategy, company size, and the organization’s environment.
Page Ref: 141
Difficulty: Moderate
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
53) What do managers do when the “job” of a firm is broken down into smaller jobs?
- A) fragment the task
- B) specialize the job
- C) respond to the job
- D) assign the task
- E) control the job
Answer: B
Explanation: B) In a sense, all firms have one major job; to perform this one overall job, managers actually break it down, or specialize it, into several smaller jobs.
Page Ref: 142
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
54) At Chaparral Steel, some employees transport scrap steel while others operate shredding equipment. What does this example demonstrate?
- A) departmentalization
- B) specialization
- C) functionalization
- D) responsibility
- E) innovation
Answer: B
Explanation: B) When the overall job of the organization is broken down like this, workers can develop real expertise in their jobs, and employees can better coordinate their work with that done by others.
Page Ref: 142
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
55) Which of the following is a natural part of organizational growth?
- A) retrenchment
- B) entrepreneurship
- C) job specialization
- D) outsourcing
- E) team consolidation
Answer: C
Explanation: C) As an organization grows, the need to specialize jobs so that others can perform them also becomes a priority.
Page Ref: 142
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
56) Determining how people performing certain tasks can best be grouped together is called what?
- A) departmentalization
- B) specialization
- C) controlling
- D) leadership
- E) directing
Answer: A
Explanation: A) Departmentalized companies benefit from this division of activities; control and coordination are narrowed and made easier, and top managers can see more easily how various units are performing.
Page Ref: 143
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
57) What type of departmentalization does Kraft Foods use by having separate divisions for different types of foods?
- A) customer
- B) functional
- C) geographic
- D) product
- E) brand
Answer: D
Explanation: D) In addition, a department can be treated as a profit center.
Page Ref: 143
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
58) Vlasic has separate departments to transform cucumbers into fresh-packed pickles, pickles cured in brine, and relishes. What is this an example of?
- A) functional departmentalization
- B) process departmentalization
- C) customer departmentalization
- D) geographic departmentalization
- E) centralized departmentalization
Answer: B
Explanation: B) With process departmentalization, the organization is divided according to production processes used to create a good or service.
Page Ref: 143
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
59) 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
Answer: B
Explanation: B) Customer departmentalization is a form of organization in which departments are created to offer products and meet needs for identifiable customer groups.
Page Ref: 144
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
60) A snack food firm has 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
Answer: C
Explanation: C) With geographic departmentalization, an organization is divided according to the areas of the country or the world that they serve.
Page Ref: 144
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
61) In what type of organization do most lower-level decisions need to be approved by upper management before they can be implemented?
- A) line
- B) staff
- C) decentralized
- D) centralized
- E) learning
Answer: D
Explanation: D) In a centralized organization, most decision-making authority is held by upper-level managers.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
62) 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?
- A) authoritarian
- B) committee
- C) decentralized
- D) centralized
- E) team
Answer: D
Explanation: D) McDonald’s practices centralization as a way to maintain standardization.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
63) 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
Answer: B
Explanation: B) As a company gets larger, decision making tends to become more decentralized; decentralization is typical in firms that have complex and rapidly changing environmental conditions.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
64) 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) brand conscious
Answer: B
Explanation: B) In doing so, the organization can operate more efficiently in complex, rapidly changing environmental conditions.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
65) With relatively few layers of managers, what do decentralized organizations tend to reflect?
- A) tall organizational structure
- B) short organizational structure
- C) flat organizational structure
- D) elliptical organizational structure
- E) triangular organizational structure
Answer: C
Explanation: C) Delegation and authority are pushed downward in the organizational hierarchy.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
66) 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) oblique
Answer: A
Explanation: A) Decisions are made mostly by upper-level managers.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
67) With its many organizational layers, what type of organizational structure does the U.S. Army demonstrate?
- A) tall
- B) step
- C) flat
- D) broad
- E) triangular
Answer: A
Explanation: A) The U.S. Army has a centralized, and tall, authority system.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
68) In tall organizations, which feature describes the span of control?
- A) short
- B) tall
- C) wide
- D) narrow
- E) vertical
Answer: D
Explanation: D) Due to multiple layers of employees, different levels of employee skill levels, job dissimilarities and job difficulties, tall organizations tend to lead to a narrower managerial span of control.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
69) 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
Answer: B
Explanation: B) Job difficulty and job dissimilarity can lead to a narrower span of control for managers.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
70) Which of the following begins when a manager assigns responsibility to a subordinate?
- A) centralization
- B) delegation
- C) liability
- D) authority
- E) training
Answer: B
Explanation: B) The delegation process involves three steps: assigning responsibility, granting authority, and creating accountability.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
71) After responsibility for a task is assigned, which of the following comes next?
- A) the centralization of the task
- B) the liability of the task
- C) the span of control is decided
- D) the work team is created
- E) the granting of authority
Answer: E
Explanation: E) The delegation process involves three steps: assigning responsibility, granting authority, and creating accountability.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
72) 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
Answer: D
Explanation: D) In contrast, authority is the power to make the decisions necessary to complete the task.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
73) 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
Answer: A
Explanation: A) In contrast, responsibility is the duty to perform an assigned task.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
74) 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
Answer: B
Explanation: B) Creating accountability is the final step of the delegation process; for the process to work smoothly, authority and responsibility must be equivalent.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
75) 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
Answer: D
Explanation: D) For example, a corporate attorney may be asked to advise the marketing department as it prepares a new contract with the firm’s advertising agency.
Page Ref: 149
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
76) What are 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
Answer: C
Explanation: C) Staff members help departments in making decisions but do not usually have the authority to make final decisions.
Page Ref: 149
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
77) What are groups of operating employees called 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
Answer: C
Explanation: C) The organization will usually find it beneficial to grant special authority to work teams so that they may function more effectively.
Page Ref: 149
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
78) Which form of organization is used by most small to medium-sized firms?
- A) divisional
- B) functional
- C) matrix
- D) international
- E) stratified
Answer: B
Explanation: B) Functional structure is a form of organization in which authority is determined by the relationships between group functions and activities; it is based on the use of functional departmentalization at the highest level of the business.
Page Ref: 150
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
79) Firms with what structure are structured around departments for each basic business action?
- A) divisional structure
- B) matrix structure
- C) functional structure
- D) international structure
- E) regional structure
Answer: C
Explanation: C) Benefits of this structure include specialization within functional areas and smoother coordination among them.
Page Ref: 150
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
80) Which of the following structures relies on product departmentalization?
- A) matrix
- B) functional
- C) divisional
- D) international
- E) regional
Answer: C
Explanation: C) The firm organizes itself around product-based divisions, each of which may then be managed as a separate enterprise.
Page Ref: 150
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
81) 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
Answer: B
Explanation: B) Further, the head of each division may be a corporate vice president or, if the organization is large enough, a divisional president.
Page Ref: 150
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
82) 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?
- A) departments
- B) regions
- C) units
- D) divisions
- E) committees
Answer: D
Explanation: D) Johnson & Johnson can thus evaluate the performance of each division independently.
Page Ref: 150
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
83) 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
Answer: A
Explanation: A) People float from project to project as dictated by their skills and the demands of those projects.
Page Ref: 154
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
84) What structure does an organization with little or no formal structure and with only a handful of permanent employees use?
- A) team structure
- B) virtual structure
- C) learning structure
- D) flexible structure
- E) balanced structure
Answer: B
Explanation: B) Typically, a virtual organization has only a handful of permanent employees, a very small staff, and a modest administrative facility.
Page Ref: 154
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
85) What type of organization seeks to integrate continuous improvements with continuous employee development?
- A) team
- B) virtual
- C) learning
- D) flexible
- E) evolving
Answer: C
Explanation: C) A learning organization works to facilitate the learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs.
Page Ref: 155
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
86) 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) sales forecasting
Answer: B
Explanation: B) The structure of a company, however, is by no means limited to the organization chart and the formal assignment of authority.
Page Ref: 155
Difficulty: Moderate
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
87) What has Rubbermaid used to create and maintain the innovation and flexibility of a small business environment within the large, bureaucratic structure?
- A) formal organization
- B) informal organization
- C) intrapreneuring
- D) entrepreneurship
- E) capitalization
Answer: C
Explanation: C) The firm has one major division, the New Business Group. When a manager or engineer has an idea for a new product or product application, the individual takes it to the New Business Group and “sells” it. The managers in the group then help the innovator develop the idea for testing.
Page Ref: 156
Difficulty: Moderate
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
88) 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.
Answer: A
Explanation: A) However, jobs at lower levels of the organization are especially susceptible to overspecialization. If such jobs become too narrowly defined, employees may become bored and careless, derive less satisfaction from their jobs, and lose sight of their roles in the organization.
Page Ref: 142
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Synthesis
89) 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?
- A) customer departmentalization
- B) process departmentalization
- C) geographic departmentalization
- D) functional departmentalization
- E) product departmentalization
Answer: E
Explanation: E) With product departmentalization, the organization is divided according to the specific product or service being created.
Page Ref: 143
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
90) 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?
- A) functional departmentalization
- B) process departmentalization
- C) customer departmentalization
- D) geographic departmentalization
- E) brand departmentalization
Answer: B
Explanation: B) With process departmentalization, the organization is divided according to production processes used to create a good or service.
Page Ref: 143
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
91) 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?
- A) functional departmentalization
- B) process departmentalization
- C) customer departmentalization
- D) product departmentalization
- E) geographic departmentalization
Answer: C
Explanation: C) Customer departmentalization follows specialization for certain types of customers.
Page Ref: 144
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
92) Which statement about organizational structure is TRUE?
- A) Decentralized firms tend to have many layers of management.
- B) As a company gets larger, it tends to adopt a decentralized structure.
- C) The purpose of centralization is to make a company more responsive to a changing, complex environment.
- D) In a centralized organization, most decision-making authority is held by lower-level managers.
- E) Decentralized companies must change to centralized structures in response to unpredictable environments.
Answer: B
Explanation: B) In a decentralized structure, much decision-making authority is delegated to levels of management at various points below the top.
Page Ref: 146
Difficulty: Difficult
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
93) 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?
- A) authentic management
- B) linear management
- C) centralized management
- D) group management
- E) decentralized management
Answer: E
Explanation: E) In a decentralized structure, delegation of authority flows downward.
Page Ref: 146
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
94) What is the sequence of events in the delegation process?
- A) assigning responsibility follows granting authority
- B) granting authority follows creating accountability
- C) granting authority follows assigning responsibility
- D) assigning responsibility follows creating accountability
- E) assigning accountability follows creating authority
Answer: C
Explanation: C) The steps in the delegation process, in order, include assigning responsibility, granting authority, and creating accountability.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
95) Which statement about line departments is TRUE?
- A) They include those with special counseling and advising expertise.
- B) They include those directly linked to the sales of products.
- C) They include staff members who provide services to management.
- D) They have little effect on the production of goods.
- E) Customer preference has little effect on them.
Answer: B
Explanation: B) Line departments include those employees directly linked to the production and sales of products.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
96) Which of the following are the “doers” and producers in a company?
- A) line employees
- B) staff employees
- C) matrix employees
- D) the legal department
- E) the finance department
Answer: A
Explanation: A) Line employees include those related to goods and services production.
Page Ref: 148
Difficulty: Difficult
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
97) Which statement about staff responsibility is TRUE?
- A) It is likely to include those employees involved in the production of products.
- B) It is not likely to include those who provide services to managers.
- C) It is linked directly to delivery of a product.
- D) It is clearly different from line authority.
- E) It is not related to the work of managers.
Answer: D
Explanation: D) The separation between line authority and staff responsibility is clearly delineated; staff responsibility is typically carried out by those employees who provide services to managers.
Page Ref: 148
Difficulty: Difficult
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
98) Which feature will a committee have?
- A) inclusion of only top managers from one specific area
- B) mandate to change the corporate culture
- C) some decision-making responsibility
- D) ability to work together only for a short period of time
- E) inclusion of employees from all company levels
Answer: C
Explanation: C) A committee will likely be comprised of top managers from several major areas; the entire committee may be granted decision-making power.
Page Ref: 149
Difficulty: Difficult
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
99) 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?
- A) divisional
- B) matrix
- C) regional
- D) functional
- E) international
Answer: D
Explanation: D) Functional structure is a form of business organization in which authority is determined by the relationships between group functions and activities.
Page Ref: 150
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
100) What does functional structure foster?
- A) competitiveness
- B) centralization
- C) decentralization
- D) diversity
- E) accountability
Answer: B
Explanation: B) This, in turn, makes accountability more difficult.
Page Ref: 150
Difficulty: Difficult
AACSB: Analytic skills
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
101) Thomas Corp. has three basic departments: children’s books, games, and toys. What type of structure does the company have?
- A) divisional
- B) matrix
- C) functional
- D) process
- E) global
Answer: A
Explanation: A) A divisional structure relies on product departmentalization.
Page Ref: 150
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
102) Which of the following types of structure entails a second chain of command?
- A) divisional
- B) departmental
- C) committee
- D) matrix
- E) team
Answer: D
Explanation: D) A matrix structure is often referred to as a “combination” structure.
Page Ref: 151
Difficulty: Difficult
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
103) To provide a state-of-the-art classroom and instructional technology, Shell Oil recently purchased an executive conference center north of Houston. What type of organization does this purchase reflect?
- A) team
- B) virtual
- C) learning
- D) acquisitive
- E) traditional
Answer: C
Explanation: C) The facility boasts state-of-the-art classrooms and instructional technology, lodging facilities, a restaurant, and recreational amenities.
Page Ref: 155
Difficulty: Difficult
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
104) Why do most businesses use organization charts?
Answer: Organization charts clarify structure and show employees where they fit into a firm’s operations. The solid lines define the chain of command, or reporting relationship, within the company.
Explanation: An organization chart is a graphical representation and therefore is able succinctly to convey information about departmental and reporting structures.
Page Ref: 141
Difficulty: Easy
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
105) Why is the structure typically found within a virtual organization different from the structure of a large corporation?
Answer: A main feature of a virtual organization is that it has little or no formal structure.
Explanation: A typical virtual organization has only a handful of employees and a modest administrative facility.
Page Ref: 154
Difficulty: Easy
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
106) Describe a learning organization.
Answer: A learning organization works to facilitate the lifelong learning and personal development of all of its employees while continually transforming itself to respond to changing demands and needs.
Explanation: Generally a learning organization is characterized by five main features: systems thinking, personal mastery, mental models, shared vision, and team learning.
Page Ref: 155
Difficulty: Easy
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
107) Why is company size a critical factor in fostering intrapreneuring?
Answer: Historically, most innovations have come from individuals in small businesses. As businesses increase in size, however, innovation and creativity tend to become casualties in the battle for more sales and profits.
Explanation: Intrapreneuring is more commonly encouraged in larger companies.
Page Ref: 156
Difficulty: Easy
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Synthesis
108) Explain why retail stores are referred to by a generic name.
Answer: Retail stores actually derive their generic name—department stores—from the manner in which they are structured.
Explanation: Large retail stores utilize departmentalization in their organizational structure.
Page Ref: 143
Difficulty: Moderate
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
109) List three factors that may affect a manager’s span of control.
Answer: Factors that may affect a manager’s span of control include employees’ abilities, the similarity and simplicity of tasks, and the extent to which tasks are interrelated.
Explanation: Other factors may include the supervisor’s management skills and the synergy between the assigned tasks.
Page Ref: 146
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
110) Briefly explain the steps in the delegation process.
Answer: The delegation process begins when responsibility is assigned. Then, authority is granted. Finally, accountability is created.
Explanation: The delegation sequence includes assigning responsibility, granting authority, and instigating accountability processes.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
111) Discuss the difference between delegation and accountability.
Answer: Delegation is the process through which managers allocate work to subordinates. Accountability, one of the steps in the delegation process, is the obligation employees have to their managers for completion of the assigned task.
Explanation: Delegation is the overall process whereas accountability is a step in the process.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
112) How do the job duties of line employees and staff employees differ?
Answer: Line employees are directly involved in the production and/or sales of goods or services produced; staff employees generally provide services to management but are not directly involved in goods and services production.
Explanation: Line employees are involved in core business while staff employees provide support.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
113) What is the difference between responsibility and authority?
Answer: Responsibility is the duty to perform an assigned task, whereas authority is the power to make the decisions necessary to complete the task.
Explanation: Responsibility relates to task assignment; authority relates to task completion.
Page Ref: 149
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
114) What does a divisional structure rely on and why does it rely on this feature?
Answer: A division structure relies on product departmentalization. Organizations using this approach are typically structured around several product-based divisions that operate like separate businesses.
Explanation: Divisional structures can resemble separate businesses where each is responsible for the production and marketing of their own products.
Page Ref: 150
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Synthesis
115) Because international organizational structures have emerged in response to the need to manufacture, purchase, and sell in global markets, why do some companies adopt a truly global structure?
Answer: Some companies adopt a truly global structure in which they acquire resources (including capital), produce goods and services, engage in research and development, and sell products in whatever local market is appropriate, without consideration of national boundaries.
Explanation: The advantage of an international organizational structure is that it allows the company to function as one integrated global organization.
Page Ref: 154
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
116) What is the informal organization and how does it relate to the formal structure?
Answer: The informal organization consists of the everyday social interactions among employees that go beyond formal jobs and job interrelationships. It can affect the company’s formal structure by changing the way information is sourced and distributed.
Explanation: In certain cases the informal organization is sometimes just as powerful, if not more powerful, than the formal structure.
Page Ref: 155
Difficulty: Moderate
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Synthesis
117) What are the four basic forms of organizational structure? Briefly describe each.
Answer: The basic forms of organizational structure are functional, divisional, matrix, and international. In a functional organization, authority is determined by the relationships between groups and activities. Functional organizations tend to be structured around basic functions. In a divisional organization, corporate divisions operate as autonomous businesses under the larger corporate umbrella. Organizations with matrix structures form teams, and team members report to two or more managers. International organizational structures have developed in response to the need to manufacture, purchase, and sell in global markets.
Explanation: The basic forms of organizational structure are functional, divisional, matrix, and international.
Page Ref: 141
Difficulty: Difficult
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
118) Briefly describe the five basic forms of departmentalization.
Answer: The five basic forms of departmentalization are customer, product, process, geographic, and functional. Customer departmentalization occurs when the organization is divided according to the types of customers they serve. An organization with product departmentalization groups people and functions according to the specific products being created. Process departmentalization occurs when the organization is divided according to production processes. Organizations with geographic departmentalization create divisions to serve different geographic areas. Finally, functional departmentalization occurs when departments are created around their function or activity.
Explanation: The five basic forms of departmentalization are customer, product, process, geographic, and functional.
Page Ref: 143
Difficulty: Difficult
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
119) What is delegation? Identify four reasons that managers have trouble delegating.
Answer: Delegation is the process by which managers allocate work to employees. Experts pinpoint several reasons why managers may have trouble delegating effectively. Some managers may be concerned that employees are less able to perform a job. Managers may also be concerned that the employee will “show them up” in front of others by doing a superior job. Managers may be hesitant to delegate because of a desire to keep as much control as possible over operations. Finally, managers may lack the ability to effectively delegate.
Explanation: The four reasons that managers have trouble with delegation include perception of employee ability to complete a task, concern about appearing inadequate, desire to exert control, and lack of effective delegation skills.
Page Ref: 148
Difficulty: Difficult
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Synthesis
120) List and describe the three forms of authority.
Answer: The three forms of authority are line authority, staff authority, and committee and team authority. Line authority flows in a direct chain of command from the top of the company to the bottom. Staff authority is based on expertise and usually involves counseling and advising managers. Committee and team authority is granted to committees or work teams involved in a firm’s daily operations.
Explanation: The three forms of authority are line authority, staff authority, and committee and team authority.
Page Ref: 148-149
Difficulty: Difficult
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
121) List and describe three advantages of a divisional structure.
Answer: In a divisional organization, corporate divisions operate as autonomous businesses under the larger corporate umbrella. A divisional structure allows the corporation to evaluate the performance of each division independently. Because the divisions are relatively autonomous, a firm can sell or eliminate a single division with minimal disruption to the remaining business operations. Finally, a divisional structure can create healthy competition. Divisions can share certain corporate-level resources.
Explanation: Divisions operate as autonomous businesses. The advantages include independent evaluation, ability to sell or disband with minimal disruption to the corporation, and the opportunity to compete and share resources.
Page Ref: 150
Difficulty: Difficult
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
122) Why is it important for organizations to create and communicate their organizational structure?
Answer: Each organization must develop an appropriate organizational structure: the specification of the jobs to be done and the ways in which those jobs relate to one another. Most organizations change structures almost continuously. Firms prepare organization charts to clarify structure and to show employees where they fit into a firm’s operations. Each box represents a job, and solid lines define the chain of command, or reporting relationships. The charts of large firms are complex and include individuals at many levels. Because size prevents them from charting every manager, they may create single organization charts for overall corporate structure and separate charts for divisions.
Page Ref: 145-146
Difficulty: Easy
Objective: 6.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
123) Explain specialization and departmentalization.
Answer: The process of identifying specific jobs and designating people to perform them leads to job specialization. After they are specialized, jobs are grouped into logical units—the process of departmentalization. Departmentalization follows one of five forms: (1) product departmentalization, (2) process departmentalization, (3) functional departmentalization, (4) customer departmentalization, or (5) geographic departmentalization. Larger companies take advantage of different types of departmentalization for various levels.
Page Ref: 150
Difficulty: Easy
Objective: 6.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
124) Why are centralization and decentralization, delegation, and authority the key ingredients in establishing the decision-making hierarchy?
Answer: After jobs have been specialized and departmentalized, firms establish decision-making hierarchies. One major issue addressed through the creation of the decision-making hierarchy involves whether the firm will be relatively centralized or relatively decentralized. Centralized authority systems typically require multiple layers of management and thus tall organizational structures. Decentralized firms tend to have relatively fewer layers of management, resulting in a flat organizational structure. Delegation is the process through which a manager allocates work to subordinates. In general, the delegation process involves three steps: (1) assigning responsibility; (2) granting authority; and (3) creating accountability. As individuals are delegated responsibility and authority in a firm, a complex web of interactions develops. These interactions may take one of three forms of authority: line, staff, or committee and teams.
Page Ref: 148
Difficulty: Moderate
Objective: 6.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
125) Explain the differences among functional, divisional, matrix, and international organizational structures and describe the most popular new forms of organizational design.
Answer: Most firms rely on one of four basic forms of organizational structure: (1) functional, (2) divisional, (3) matrix, or (4) international. Functional structure is a form of business organization in which authority is determined by the relationships between group functions and activities. A divisional structure relies on product departmentalization. A so-called matrix structure is organized along two dimensions, instead of just one, by combining, for example, a functional and a divisional structure. International organizational structures are developed in response to the need to manufacture, purchase, and sell in global markets. As global competition becomes more complex, companies may experiment with ways to respond. Some adopt truly global structures, acquiring resources and producing and selling products in local markets without consideration of national boundaries. Organizations also continue to seek new forms of organization that permit them to compete effectively. The most popular new forms include (1) team organization; (2) virtual organization; and (3) learning organization.
Page Ref: 150-153
Difficulty: Moderate
Objective: 6.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Synthesis
126) Describe the informal organization and the position of intrapreneuring within this structure.
Answer: The formal organization is the part that can be represented in chart form. The informal organization, everyday social interactions among employees that transcend formal jobs and job interrelationships, may alter formal structure. The impact on a firm may be positive, negative, or irrelevant. Because it can be harnessed to improve productivity, some organizations encourage the informal organization. Many firms also support intrapreneuring, creating and maintaining the innovation and flexibility of a small business within the confines of a large, bureaucratic structure.
Page Ref: 155-157
Difficulty: Difficult
Objective: 6.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Synthesis
Samantha Grant has assumed leadership of Ace Products after many years of loyal service. Ace Products is an international manufacturer of copiers, printers, and fax machines. Historically, its customers have fallen into four groups: hospitals, small businesses, airlines, and state and local governments. After talking with her daughter, who has just completed her business degree, Samantha is beginning to wonder if reorganizing would benefit Ace Products. The organization chart shows that there is a Vice President of Manufacturing, Vice President of Accounting and Finance, and a Vice President of Marketing; they all report to the President of Ace Products.
127) Describe the span of control likely to prevail at Ace Products.
Answer: In tall organizations, such as Ace, span of control tends to be relatively narrow.
Page Ref: 146
Difficulty: Easy
AACSB: Reflective thinking skills
Objective: 6.3
Skill: Application
128) What are three factors that may impact span of control at Ace Products?
Answer: Job similarity, job simplicity, employees’ skill levels, and other possible factors could affect span of control.
Page Ref: 146-148
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.3
Skill: Application
129) Based on the organization chart described in the scenario, how is Ace Products organized?
Answer: It appears that Ace Products is organized as a functional organization.
Page Ref: 150
Difficulty: Moderate
AACSB: Analytic skills
Objective: 6.4
Skill: Application
130) Samantha’s daughter has recommended that Ace Products be reorganized into a divisional organization. Including only top layers of management, how might the organization chart differ from what it looks like now?
Answer: Under the President, a vice president of various divisions could lead; for example, a Vice President of Hospitals, a Vice President of Airlines, etc. could all report to the President.
Page Ref: 150-151
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.4
Skill: Application
131) How might a divisional structure benefit Ace Products?
Answer: Divisional structures are popular among larger organizations and enjoy a number of benefits. Each division usually has its own identity and operates as a relatively autonomous business under the larger corporate umbrella. Divisionalized companies are free to buy, sell, create, and disband divisions without disrupting the rest of their operations. Divisions can maintain healthy competition among themselves by sponsoring separate advertising campaigns and fostering different corporate identities. They can also share certain corporate-level resources.
Page Ref: 150-151
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.4
Skill: Application
132) How would you advise Samantha about the best organizational structure for Ace Products? Why?
Answer: Answers will vary and will likely include some of the advantages listed in the textbook. In addition, students may mention that coordination may become difficult in a functional organization. In divisional structures, corporate managers may lose touch with daily operations if too much control is delegated to division managers. In addition, competition between divisions can become disruptive, and efforts in one division may be duplicated by those of another.
Page Ref: 150-153
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.4
Skill: Application
133) Samantha has wondered about the informal organization at Ace. Describe how the informal organization may negatively affect the organization.
Answer: The informal organization can reinforce office politics that put individuals’ interests ahead of those of the firm. Also, information can be distorted when communicated without management input or review.
Page Ref: 155-157
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.5
Skill: Application
At Appleson Publishing, products are produced by a team representing different functional groups, none of which have supervisory authority over any of the others. Represented departments include Design, Production, and Marketing.
Design department members are skilled at identifying customer requirements and creating product specifications. Their success is measured by return on product investment, which takes into account both the money earned by a product and the money spent on that product.
Production department members are skilled at project execution. They are responsible for creating products according to the Design department members’ specification. The Production department is considered successful when it completes projects according to schedule and project spending does not exceed the project’s budget.
Marketing department members are responsible for building profitable relationships with target market segments. They are skilled at communicating a product’s value and persuading customers to make purchases. Marketing department members’ success is measured by the revenue that the products take in.
134) Which of the following questions would most likely lead to a conflict between Design department members and Production department members?
- A) Should Appleson invest in a new project that requires heavy initial investment but is expected to lead to a large stream of revenue in the long run?
- B) Should a project be launched later than planned in order to make changes that will make it more attractive to customers?
- C) Should product management focus on the needs that customers have already expressed or should it try to anticipate unexpressed needs?
- D) Is the team project process at Appleson more effective than it would be if it followed a more traditional organizational structure?
- E) When projects do not meet expectations, is the failure likely to be caused by faulty product design or inadequate market development?
Answer: B
Explanation: B) The Design department gets rewarded when projects earn high returns, but schedules don’t matter. The Production department gets rewarded when projects are on time, but the money that those projects earn doesn’t matter. So the Design department members and Production department members would most likely clash over Choice B. Choices A and C: The Production department would have no special reason to have an opinion on these questions. Choice D: We don’t know if anyone thinks the system should be changed. Choice E is likely to be a clash between Design and Marketing.
Page Ref: 142
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.2
Skill: Critical Thinking
135) Executives claim that this division of labor keeps employees focused on the tasks that fit their skills and leads to a better product. Which of the following, if true, would strengthen that claim?
- A) During every project, Design department members spend a large amount of time consulting with Marketing department members to learn how the Marketing department will attempt to sell the completed project.
- B) When environmental changes that take place after the project has been launched make the project unattractive to customers, the Production department attempts to complete the project according to the original schedule and budget.
- C) After a product specification is completed, knowledge of the thinking that went into the product specification is not necessary to complete the project effectively.
- D) The team process is based on the process that Appleson’s executives used during the era of print-only product development.
- E) The reasoning behind the team process is presented to new employees as part of their initial orientation.
Answer: C
Explanation: C) The Design department knows what customers want and come up with a plan. Production executes the plan. But do they need to know what customers want in order to execute the plan? If Choice C is true, then the answer is no, they don’t. So Choice C strengthens the argument by supporting the notion that the Production department has what they need to do their job effectively. Choice A undermines the argument by suggesting that discussions need to take place that would be unnecessary if the distinction between the Design department and the Marketing department were eliminated. The fact that these discussions are necessary suggests that splitting these functions is inefficient. Choice B undermines the argument by suggesting that Production keeps spending resources on doomed projects. Choice D doesn’t matter because this is a new era, and we don’t even know how effective the model was in that older era. Choice E doesn’t address the wisdom of the process; it doesn’t help us decide if this is a good thing to try to do.
Page Ref: 142
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.2
Skill: Critical Thinking
136) Which of the following, if true, would weaken the claim that this division of labor keeps employees focused on the tasks that fit their skills and leads to a better product?
- A) Some employees who work in the Marketing department used to work in the Design department.
- B) Projects often fail to meet their revenue goals because the Design department develops products for market segments that the Marketing department cannot reach.
- C) Projects are often late because of product distribution problems that occur after the project is completed.
- D) The number of projects that fail because they do not meet their revenue goals is lower than the number of projects that fail because they go too far over budget.
- E) Projects often are unprofitable because of changes in the external environment that could not have been predicted before the project started.
Answer: B
Explanation: B) Does this structure make sense? If Choice B is true, then Design is working in a way that will not allow Marketing to do its job. Choice B suggests that a top-down approach would be more effective in keeping everyone on the same page. Choices A and D are not problems in and of themselves. So they aren’t evidence of a structural problem. Choices C and E are problems, but not ones that are related to the structural decisions here.
Page Ref: 142
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.2
Skill: Critical Thinking
All American Burger is a nationwide fast food chain that competes with McDonald’s, Burger King, and Wendy’s. Management at All American Burger is debating whether to have a more centralized or a more decentralized organizational structure.
137) Which of the following, if true, would most strongly support the conclusion that All American Burger should operate in a highly centralized manner?
- A) All American Burger restaurants are spread over a large geographic area.
- B) A greater number of managers have expressed an interest in making policy.
- C) Entry-level workers at All American Burger are likely to be part-time or flex-time employees.
- D) The organizations that choose more centralized operations are likely to be organizations in crisis.
- E) Customers choose All American Burger in large part because of the consistency of the dining experience.
Answer: E
Explanation: E) Centralized operations make more sense when consistency is the goal. If Choice E is true, then consistency is a critical success factor, and therefore strengthens the conclusion. Choice A supports a decentralized approach. Choice B: The ambitions of the managers aren’t pivotal to this question, but if anything, their ambitions suggest that they would prefer a decentralized approach. Choice C is irrelevant. Entry-level employees at a fast food chain aren’t managers, and the policy for handling them could just as easily be centralized or decentralized. Choice D says nothing about All American Burger.
Page Ref: 146
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.3
Skill: Critical Thinking
138) Which of the following, if true, would most strongly support the conclusion that All American Burger should adopt a decentralized approach?
- A) The value of a decentralized approach has been a popular topic in academic research.
- B) A large percentage of All American Burger’s revenue comes from a small number of menu items.
- C) The popularity of All American Burger’s special menu items has varied greatly across different regions.
- D) All American Burger has been growing more quickly than most of its major competitors.
- E) A well-publicized instance of discrimination at a single All American Burger can alter the public’s perception of the entire company.
Answer: C
Explanation: C) The varied reaction to All American Burger’s special menu items (Choice C) suggests that local tastes vary, which would argue against a “one size fits all” centralized approach and for a more decentralized approach. Choice A is irrelevant. We don’t even know what that academic research says about decentralized approaches. Choice B suggests that consistency in those few items is critical, which supports centralization. Choice D is vague, but if anything it goes the other way. Increased size supports more centralization. Choice E says that a single bad incident could be disastrous, which would weigh against tolerating any differences.
Page Ref: 146
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.3
Skill: Critical Thinking
139) Which of the following decisions would likely be made by a centralized authority?
- A) What are the procedures All American Burger should use to ensure food safety?
- B) If All American Burger wishes to recruit current students for entry-level management positions, which colleges and universities should All American Burger choose?
- C) How should a regional division spend the money in its advertising budget?
- D) What special menu items should be offered in order to encourage new customers?
- E) Should marketing focus on bringing in new customers or taking customers from the competition?
Answer: A
Explanation: A) It is always possible to come up with some argument for individual differences, but that argument is hardest to make in the case of things like food safety, Choice A. Everyone needs safe food, and it is hard to argue that the steps required for safety would be different for different places. The other choices involve decisions that might be made at more local levels.
Page Ref: 146
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.3
Skill: Critical Thinking
140) Which of the following questions would different All American Burger restaurants be most likely to answer differently?
- A) What color should All American Burger restaurants be?
- B) What are the core values of All American Burger?
- C) What price should All American Burger charge for its products?
- D) What policies should be put in place to prevent sexual harassment in the workplace?
- E) What ingredients should be used when making the food products that made All American’s Burger famous?
Answer: C
Explanation: C) Different areas have different costs of living, and so pricing is likely to vary from restaurant to restaurant. Choices A, B, and E: The restaurants are not likely to change anything essential to the brand, such as core values (Choice B), colors (Choice A), or “signature” items (Choice E). Choice D: Companies need to have a uniform policy on preventing sexual harassment. Having different policies in different places could be evidence that the company does not take the issue seriously.
Page Ref: 146
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.3
Skill: Critical Thinking
Tarnopol Learning Services (TLS) offers tutoring to high school students, college students, and adults returning to school. TLS also bids on government-sponsored contracts. TLS’s major product offerings include academic tutoring, standardized test preparation, and admissions consulting. Its operations spread over many geographic regions. Currently, the company is deciding whether it should change from its current approach of organizing by geographical area. A senior manager has predicted that if TLS is not profitable this year and fails to develop any new products, the company will switch to either a functional approach or a product approach.
141) Which of the following, if true, would strengthen the argument that TLS should change its organizational structure?
- A) TLS values corporate social responsibility as well as profitability.
- B) New product offerings have been neglected as divisions have focused on traditional revenue sources.
- C) TLS division managers have focused on short-term revenue at the expense of developing profitable relationships with long-term customers.
- D) The markets TLS serves have different requirements in different geographic areas.
- E) The expected revenue of some of the regional divisions is higher than that of some of the other divisions.
Answer: B
Explanation: B) A geographic organization has advantages, but it is not the best for focusing attention on new products. If Choice B is true, then smaller products are not getting the attention they deserve. Choices A and C: None of the choices available to TLS affects its ability to be responsible (Choice A) or think long-term (Choice C). Choice D would support keeping the current approach. Choice E says that some of the divisions are bigger than others, but that doesn’t suggest that the current approach isn’t working.
Page Ref: 150
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.4
Skill: Critical Thinking
142) Which of the following, if true, would most strongly suggest that TLS should change its organizational structure to a product-based approach?
- A) The largest growth area for TLS is governmental contracts, which have buying procedures that are very different from those of other customers.
- B) TLS currently maintains separate accounting departments in each of its regions.
- C) To be effective, TLS managers need to be experts in at least one of the products that TLS sells.
- D) TLS hopes to build sustained relationships with customers, selling the same person academic tutoring, standardized test preparation, and admissions consulting.
- E) Communication between different marketing departments in different regions has been substandard.
Answer: C
Explanation: C) A product-based approach helps to build the subject-matter expertise of the managers. So if the managers need to know the products, as Choice C indicates, then the product model looks a little better. Choice A favors an approach based on customer type. Choices B and E would be no better in a product-based approach. Consolidation of those departments might help, but the product-based approach would not require consolidation. Choice D would suggest that a product-specific approach wouldn’t be the way to go, because it might interfere with a continuous relationship across products.
Page Ref: 150
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.4
Skill: Critical Thinking
143) Which of the following, if true, would most strongly suggest that TLS should change its organizational structure to a functional-based approach?
- A) TLS currently maintains separate human resource departments in each of its regions.
- B) Research suggests that product development failures happened because the product developers were isolated from customers.
- C) TLS earns large streams of revenue from services it offers to schools.
- D) In the current regional structure, managers complain about having a limited view of organizational goals.
- E) Sales techniques that work in one region are often much less effective in other regions.
Answer: A
Explanation: A) One disadvantage of the geographic approach is the potential duplication of functions. But the functional approach consolidates functions. So if Choice A is true then the functional approach sounds a little better. Choices B and D would likely be worse under a functional approach. Choice C suggests more an approach based around customer types. Choice E would be better addressed by the current structure.
Page Ref: 150
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.4
Skill: Critical Thinking
144) If the senior manager’s prediction is accurate, which of the following is inferable?
- A) If TLS does not change to either a product approach or a functional approach, then it will not change its organizational approach at all.
- B) If TLS is not profitable this year and fails to develop any new products, the company will first switch to a functional approach and then to a product approach.
- C) If TLS is profitable, then it could organize itself by customer groups.
- D) If TLS does not change to either a product approach or a functional approach, then it could not have been profitable this year.
- E) If TLS does not change to either a product approach or a functional approach, then it could not have developed any new products.
Answer: C
Explanation: C) The senior manager predicts what will happen if the company is not profitable and if it fails to develop new products. However, the senior manager makes no prediction about what would happen if TLS is profitable. So, according to the senior manager, if the company is profitable, anything can happen, and so the scenario suggested in Choice C is possible. Choice A: There may be other ways that TLS could organize itself. Choice B suggests that the company will change twice, but the senior manager doesn’t say that. Choices D and E have the same problem. Together, failing to be profitable and failing to develop new products would be enough to force TLS to go to one of those two organizational approaches, but the fact that it doesn’t adopt one of those approaches doesn’t tell us what failed to happen. For example, if the company is not profitable, then the company might not reorganize regardless of its success in developing new products, so Choice E is not inferable. Similarly, if the company fails to develop any new products, then the company might not reorganize whether or not it is profitable, so Choice D is not inferable.
Page Ref: 150
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.4
Skill: Critical Thinking
Wilson Communication Devices manufactures walkie-talkies for use in a business environment, primarily in the industrial manufacturing industry. The walkie-talkies are small and lightweight and do not interfere with Wi-Fi or radio signals that the companies may use for other purposes. Wilson’s walkie-talkies typically are used for communication between workers in high noise environments, such as automobile manufacturing, welding shops, and construction sites. They can be used to talk or text, depending on the noise level, and also contain a feature that allows the worker to input information and store it for later use.
145) Since Wilson sells its walkie-talkies only to businesses, it needs to take into account factors that affect business buying centers, such as organizational influences and individual factors. Two salespeople for Wilson are arguing over which set of factors is more important to consider when making a sale. Bill argues that organizational influences such as company goals and operating environment are more important. Aubrey argues that individual factors of the buyer are more important. Which of the following statements, if true, would support Bill’s stand for organizational influences?
- A) Company V has liquid assets and a firm financial standing, even during the economic downturn. It determines it can afford to buy new equipment like Wilson walkie-talkies in order to upgrade its manufacturing process.
- B) Kirk, the buyer for Company W, cannot stand Bill, and therefore refuses to buy any Wilson walkie-talkies from him. However, he will order them from Aubrey.
- C) Carl authorizes purchases for Company X, but he is very concerned about making a large purchase without the input of his CEO.
- D) The buyer at Company Y is motivated to advance his career as quickly as possible. Therefore, he completes a thorough research project on Wilson walkie-talkies: He compares other available walkie-talkies, researches price comparisons, and analyzes their use in his company.
- E) Company Z has never purchased Wilson walkie-talkies because the secretary has never passed along the information from any of the sales calls made by Wilson reps.
Answer: A
Explanation: A) Choice A is the only answer that supports Bill’s argument for the importance of organizational influences on sales. The finances of the company, along with its goals and operating environment, are all organizational influences. Choices B, C, D, and E are all examples of individual influences on business buying centers, and thus would more accurately support Aubrey’s argument. Personality, roles, motivation, level of power, risk, level of involvement, and personal objectives are types of individual influence.
Page Ref: 156
Difficulty: Moderate
AACSB: Reflective thinking skills
Objective: 6.5
Skill: Critical Thinking
146) In the business-to-business buying process, the buyer goes through a variety of steps before making a purchase. Included in these steps are identifying needs and vendors, evaluating vendors, and negotiating terms. Hollis, a salesman for Wilson, understands this process and provides a detailed precontract PowerPoint program for each company that he approaches. Which of the following statements, if true, would he NOT consider putting in his presentation?
- A) There is a variety of ways that Wilson walkie-talkies can be used to maximize the communications of the business, as well as reduce overhead by eliminating communication errors.
- B) Next I’ll identify competitors’ products and detail why Wilson walkie-talkies are superior.
- C) I’m including here an audit report and licensing credentials for Wilson.
- D) Shown here are a variety of ways that Wilson walkie-talkies can also be used in a home situation.
- E) Displayed is a table detailing the cost per unit and how the unit costs decrease with order size.
Answer: D
Explanation: D) Choice D, demonstrating how the walkie-talkies can be used at home, would not be an appropriate choice when selling business-to-business, as it would not have an application directly related to the business. Choices A, B, C, and E all reflect aspects of a business-to-business buying process which includes identification of business needs (Choice A), identification of competitors (Choice B), vendor evaluation (Choice C), and negotiation of terms (Choice E).
Page Ref: 156
Difficulty: Difficult
AACSB: Reflective thinking skills
Objective: 6.5
Skill: Critical Thinking
Business Essentials, 9e (Ebert/Griffin)
Chapter 7 Operations Management and Quality
1) Firms that make only tangible products are engaged in goods production.
Answer: TRUE
Explanation: Goods are tangible products, while services may be either tangible or intangible.
Page Ref: 166
Difficulty: Easy
Objective: 7.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
2) In a low-contact system, the customer must be a part of the system to receive the service.
Answer: FALSE
Explanation: An example of a low-contact system is mail delivery, where the customer need not be present to receive the service.
Page Ref: 170
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
3) A firm’s capacity depends on both how many people it employs and the number and size of its facilities.
Answer: TRUE
Explanation: Capacity is the amount of a product that a company can produce under normal conditions.
Page Ref: 173
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
4) If parts A, B, and C must be produced this week, a detailed schedule will indicate the sequence of work.
Answer: TRUE
Explanation: Detailed schedules show day-to-day activities that will occur in production.
Page Ref: 177
Difficulty: Easy
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
5) Quality improvement teams are groups of employees from various work areas who define, analyze, and solve common production problems.
Answer: TRUE
Explanation: Quality improvement teams seek to improve both their own work methods and the products they make.
Page Ref: 184
Difficulty: Easy
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
6) ISO 9000 is a certification program attesting to the fact that a factory, laboratory, or office has improved its environmental performance.
Answer: FALSE
Explanation: This is a description of ISO 14000.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
7) Each stage in the supply chain adds value for the final customer.
Answer: TRUE
Explanation: The supply chain starts with raw-materials suppliers and continues until the product reaches the end customer.
Page Ref: 185
Difficulty: Easy
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
8) By turning raw materials into finished goods, production creates form utility.
Answer: TRUE
Explanation: Form utility is created when raw materials and human skills are converted into finished goods and services.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
9) When a company turns out ornaments in time for Christmas, it creates time utility.
Answer: TRUE
Explanation: Time utility is created when products are made available for consumers when they want them.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Describe the major components of effective distribution
Skill: Concept
10) Services are more tangible, more customized, and more storable than most products.
Answer: FALSE
Explanation: Services are less tangible and less storable than goods.
Page Ref: 168
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Describe the major components of effective distribution
Skill: Concept
11) Getting a haircut and having your lawn mowed are both examples of low-contact services.
Answer: FALSE
Explanation: Getting a haircut is a high-contact service.
Page Ref: 170
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
12) A company typically selects the kind of production used by most of its competitors.
Answer: FALSE
Explanation: A company picks the one that best achieves its larger business strategy.
Page Ref: 170
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
13) In a same-steps layout, equipment and people are set up to produce one type of good in a fixed sequence of steps and are arranged according to its production requirements.
Answer: TRUE
Explanation: A same-steps layout allows for the efficient use of an assembly line, where production operations are set up along a product-flow line.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
14) An assembly line is an example of a custom-products layout.
Answer: FALSE
Explanation: An assembly line is a same-steps layout.
Page Ref: 174
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
15) A process flowchart identifies the sequence of production activities, movements of materials, and work performed at each stage of the process.
Answer: TRUE
Explanation: A process flowchart can be analyzed to isolate wasteful activities, sources of delay, and other inefficiencies.
Page Ref: 176
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
16) Staff schedules identify which products will be produced and when.
Answer: FALSE
Explanation: Staff schedules, in general, specify assigned working times in upcoming days—perhaps for as many as 30 days or more—for each employee on each work shift.
Page Ref: 177
Difficulty: Moderate
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
17) Materials management involves the flow of materials inside of the production facility, while distribution management involves the flow of finished goods.
Answer: FALSE
Explanation: Materials management is the process by which managers plan, organize, and control the flow of materials from design through distribution of finished goods.
Page Ref: 180
Difficulty: Difficult
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
18) Just-in-time (JIT) production systems normally require large amounts of “safety stock” to be maintained in a firm’s warehouse.
Answer: FALSE
Explanation: JIT production reduces inventory levels by bringing needed materials together only at the precise time they are needed for production and/or shipment to the customer.
Page Ref: 180
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
19) Japanese companies adapted the concept of quality circles from quality improvement teams used by U.S. companies.
Answer: FALSE
Explanation: Quality improvement teams are patterned after the Japanese concept of quality circles.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
20) ISO 9000 is a certification program attesting that a factory, laboratory, or office has met the rigorous requirements set by the International Organization for Standardization.
Answer: TRUE
Explanation: More than 160 countries have adopted ISO 9000 as a national standard.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
21) The goal of supply chain management is better overall flow in the system.
Answer: TRUE
Explanation: After several companies work to improve the flow of materials through the system, the ultimate reward is better value for customers.
Page Ref: 186
Difficulty: Moderate
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
22) Successful companies, such as 3M and FedEx, use the same operations strategy.
Answer: FALSE
Explanation: Companies adopt the kind of production that achieves their larger business strategy.
Page Ref: 171
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
23) Operations capability is a special ability that production does especially well to outperform the competition.
Answer: TRUE
Explanation: The chosen operations capability should be compatible with the overall business strategy.
Page Ref: 170
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
24) Even excellent firms focus on one competence at a time.
Answer: FALSE
Explanation: Excellent firms learn, over time, how to achieve more than just one competence.
Page Ref: 172
Difficulty: Moderate
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
25) According to the text, to ensure that truckloads of merchandise flow quickly to stores, Wal-Mart distribution centers are located near the hundreds of stores that they supply, not near the companies that supply them.
Answer: TRUE
Explanation: At Wal-Mart, managers of the company’s huge distribution centers regard Wal-Mart outlets as their customers.
Page Ref: 174
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Describe the major components of effective distribution
Skill: Concept
26) A detailed schedule will indicate how many employees will be working on a given shift.
Answer: FALSE
Explanation: A detailed schedule shows day-to-day activities that will occur in production. A staff schedule identifies how many employees will be working.
Page Ref: 177
Difficulty: Moderate
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
27) Operations control includes materials management and quality control.
Answer: TRUE
Explanation: Both activities are a part of operations control and ensure that schedules are met and products delivered, both in quantity and in quality.
Page Ref: 179
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
28) For manufacturing firms, typical materials costs make up 50 to 75 percent of total product costs.
Answer: TRUE
Explanation: Materials stakes are high for service firms as well.
Page Ref: 180
Difficulty: Moderate
Objective: 7.6
Learning Outcome: Discuss strategies for setting and adjusting prices
Skill: Concept
29) The biggest challenge of TQM is motivating employees throughout the company to achieve quality goals.
Answer: TRUE
Explanation: The backbone of TQM is motivating employees throughout the company to achieve quality goals. Leaders of the quality movement use various methods and resources to foster a quality focus; when those efforts succeed, employees will ultimately accept quality ownership.
Page Ref: 183
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that affect motivation and behavior in the workplace
Skill: Concept
30) Managers of a restaurant eat at a competing restaurant in order to identify desirable improvements in their own operations; this illustrates quality control.
Answer: FALSE
Explanation: Competitive product analysis is a process by which a company analyzes a competitor’s products to identify desirable improvements.
Page Ref: 182
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Concept
31) Value-added analysis might focus on both the elimination of waste and cost minimization.
Answer: TRUE
Explanation: Value-added analysis refers to the evaluation of all work activities, material flows, and paperwork to determine the value that they add for customers; it often reveals wasteful or unnecessary activities that can be eliminated without jeopardizing customer service.
Page Ref: 183
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Concept
32) The sales department relies on the engineering department to send samples and quotes to prospective customers on a timely basis; the sales department may be considered the engineering department’s internal customer.
Answer: TRUE
Explanation: Customers are both internal and external.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
33) ISO 14000 may result in a recycling program at a company.
Answer: TRUE
Explanation: ISO 14000 certifies improvements in environmental performance, extending the ISO approach into the arena of environmental protection and hazardous waste management.
Page Ref: 184
Difficulty: Moderate
Objective: 7.7
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
34) A value chain includes an entire network of firms, beginning with suppliers and ending when production is complete.
Answer: FALSE
Explanation: A value chain, also known as a supply chain, includes the flow of information, materials, and services that starts with raw-materials suppliers and continues adding value through other stages in the operations process until the product reaches the end customer.
Page Ref: 185
Difficulty: Difficult
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
35) Because supply chain strategy is based on the collective effort of a number of firms, no one firm in the chain gains a competitive advantage.
Answer: FALSE
Explanation: Supply chain strategy is based on the idea that members of the chain will gain competitive advantage by working as a coordinated unit.
Page Ref: 186
Difficulty: Moderate
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
36) Which term refers to all the activities involved in making products—goods and services—for customers?
- A) operations
- B) processes
- C) planning
- D) scheduling
- E) performance
Answer: A
Explanation: A) “Operations” and “production” refer to the same activities.
Page Ref: 166
Difficulty: Easy
Objective: 7.1
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
37) Which of the following is the ability of a product to satisfy a human want or need?
- A) utility
- B) relative advantage
- C) content
- D) satisfaction
- E) capacity
Answer: A
Explanation: A) Production adds customer value by providing utility.
Page Ref: 166
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
38) Which type of utility is created when a company makes products available where consumers want them?
- A) time
- B) place
- C) possession
- D) form
- E) operations
Answer: B
Explanation: B) An example of place utility is a theater showing a wide selection of movies in a popular shopping mall.
Page Ref: 167
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
39) Which term refers to a set of methods and technologies used to produce a good or service?
- A) contingency plan
- B) production episode
- C) reduction
- D) methods plan
- E) operations process
Answer: E
Explanation: E) Banks use document shredding and data encryption to protect confidential information. Both are examples of operations processes.
Page Ref: 169
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
40) In which of the following is the customer part of the system during service delivery?
- A) a high-contact system
- B) a low-contact system
- C) a customer system
- D) a quality system
- E) a utility system
Answer: A
Explanation: A) A manicure is an example of a high-contact system.
Page Ref: 170
Difficulty: Easy
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
41) What term describes a special ability that production does especially well to outperform the competition?
- A) supply chain management
- B) total quality management
- C) process engineering
- D) operations capability
- E) value-added analysis
Answer: D
Explanation: D) A company chooses an operation capability that is compatible with its overall business strategy.
Page Ref: 170
Difficulty: Easy
Objective: 7.3
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
42) Which of the following is the amount of a product that a company can produce under normal working conditions ?
- A) capacity
- B) output
- C) efficiency
- D) burden
- E) performance
Answer: A
Explanation: A) A firm’s capacity depends on how many people it employs and the number and size of its facilities.
Page Ref: 173
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
43) Equipment and people are grouped according to function in which type of production layout?
- A) cellular
- B) same-steps
- C) custom-products
- D) supply-chain
- E) service
Answer: C
Explanation: C) A custom-products layout is well suited to make-to-order shops.
Page Ref: 174
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
44) Thousands of empty jugs move down a conveyor belt at Colgate-Palmolive before stopping to be filled and moving on to be labeled. What type of layout is utilized?
- A) supply-chain
- B) custom-products
- C) hybrid
- D) fixed-position
- E) same-steps
Answer: E
Explanation: E) An assembly line is a same-steps layout.
Page Ref: 175
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
45) Which term refers to how well a product does what it is supposed to do?
- A) capacity
- B) consistency
- C) reliability
- D) performance
- E) quality control
Answer: D
Explanation: D) The performance of a fast-food meal might be judged by whether it tastes good and is reasonably filling.
Page Ref: 175
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
46) The sameness of product quality from unit to unit is referred to by which term?
- A) utility
- B) reliability
- C) performance
- D) consistency
- E) quality control
Answer: D
Explanation: D) High consistency at its many locations has made Courtyard by Marriott a leader in the lodging industry.
Page Ref: 175
Difficulty: Easy
Objective: 7.4
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
47) Which of the following is a scheduling tool that breaks down large projects into steps to be performed and specifies the time required to perform each one?
- A) Myers graphic
- B) critical path chart
- C) Gantt chart
- D) process analysis graph
- E) master schedule
Answer: C
Explanation: C) A project manager uses a Gantt chart to keep the project moving on schedule.
Page Ref: 178
Difficulty: Easy
Objective: 7.5
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
48) Which type of system is designed for smooth production flow to avoid inefficiencies, eliminate unnecessary inventories, and continuously improve production processes?
- A) quality system
- B) lean system
- C) managed system
- D) production system
- E) flexible system
Answer: B
Explanation: B) Lean production systems were pioneered by Toyota.
Page Ref: 180
Difficulty: Easy
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
49) Which of the following is NOT a major objective of JIT production?
- A) increasing stop-and-go production
- B) reducing goods in process
- C) complying with schedules
- D) eliminating disruptions by continuous improvement
- E) reducing inventory levels
Answer: A
Explanation: A) JIT production replaces stop-and-go production with smooth movement.
Page Ref: 180
Difficulty: Easy
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Critical Thinking
50) Which term refers to the acquisition of the raw materials a company needs to produce its products?
- A) development
- B) purchasing
- C) goods control
- D) quality control
- E) wholesaling
Answer: B
Explanation: B) Most large firms have purchasing departments to buy proper services and materials in the amounts needed.
Page Ref: 180
Difficulty: Easy
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
51) Which of the following refers to the receiving, storing, handling, and counting of all raw materials, partly finished goods, and finished goods?
- A) materials handling
- B) inventory control
- C) quality control
- D) wholesaling
- E) distribution control
Answer: B
Explanation: B) Inventory control ensures that enough materials inventories are available to meet production schedules, while at the same time avoiding expensive excess inventories.
Page Ref: 180
Difficulty: Easy
Objective: 7.6
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
52) Which of the following terms refers to all activities involved in getting quality products into the marketplace?
- A) quality control
- B) quality reliability
- C) total quality management
- D) performance quality
- E) quality overview
Answer: C
Explanation: C) TQM must consider all aspects of a business, including customers, suppliers, and employees.
Page Ref: 181
Difficulty: Easy
Objective: 7.7
Learning Outcome: Describe the skills and functions of management
Skill: Concept
53) Which term describes the idea that quality belongs to each person who creates it while performing a job?
- A) quality control
- B) quality ownership
- C) quality circles
- D) total quality management
- E) quality improvement teams
Answer: B
Explanation: B) A goal of total quality management is to motivate employees to accept quality ownership.
Page Ref: 182
Difficulty: Easy
Objective: 7.7
Learning Outcome: Discuss the factors that affect motivation and behavior in the workplace
Skill: Concept
54) What name is given to the process by which a company analyzes another company’s product to identify desirable improvements in its own product?
- A) quality reliability analysis
- B) benchmarking
- C) performance quality analysis
- D) competitive product analysis
- E) quality outsourcing
Answer: D
Explanation: D) Using competitive analysis, for example, Toshiba might take apart a Xerox copier and test each component.
Page Ref: 182
Difficulty: Easy
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
55) Which of the following is patterned after the successful Japanese concept of quality circles?
- A) supply chain management
- B) quality improvement team
- C) total quality management
- D) quality ownership
- E) value-added analysis
Answer: B
Explanation: B) Quality improvement teams organize their own work, select leaders, and address problems in the workplace.
Page Ref: 184
Difficulty: Easy
Objective: 7.7
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
56) Which term refers to the flow of information, materials, and services from raw-materials suppliers through stages in the operations process until the product reaches the end customer?
- A) distribution chain
- B) supply chain
- C) service channel
- D) distribution channel
- E) performance channel
Answer: B
Explanation: B) The term supply chain refers to the group of companies and stream of activities that work together to create a product.
Page Ref: 185
Difficulty: Easy
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
57) Which of the following is another term for the supply chain?
- A) the distribution chain
- B) the distribution network
- C) the value chain
- D) the supply network
- E) the wholesale network
Answer: C
Explanation: C) Each stage in the value chain adds value for the final customer.
Page Ref: 185
Difficulty: Easy
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
58) Which term refers to the strategy of paying suppliers and distributors to perform certain business processes or to provide needed materials or services?
- A) outsourcing
- B) reengineering
- C) controlling
- D) scheduling
- E) warehousing
Answer: A
Explanation: A) The decision to outsource expands supply chains.
Page Ref: 186
Difficulty: Easy
Objective: 7.8
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
59) When a company turns out costumes in time for Halloween, it creates which type of utility?
- A) ownership
- B) time
- C) form
- D) place
- E) value
Answer: B
Explanation: B) Time utility is created when products are made available when customers want them.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Application
60) When a company makes products available where they are convenient for consumers, it creates which type of utility?
- A) time
- B) form
- C) place
- D) possession
- E) leisure
Answer: C
Explanation: C) A fast-food restaurant located in a college union is an example of place utility.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the roles of ethics and corporate responsibility in business
Skill: Concept
61) In a business, whose job is it to draw up plans to transform resources into products and bring together basic resources, such as knowledge, physical materials, equipment, and labor?
- A) CEO
- B) operations manager
- C) quality manager
- D) floor foreman
- E) supply manager
Answer: B
Explanation: B) Operations managers are responsible for ensuring that operations processes create value and provide benefits to customers.
Page Ref: 167
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Describe the skills and functions of management
Skill: Concept
62) Which term describes services which cannot be produced ahead of time?
- A) transformed
- B) low-contact
- C) unstorable
- D) intangible
- E) consistent
Answer: C
Explanation: C) Unstorable services cannot be used at a later time.
Page Ref: 169
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
63) Which of the following would be considered a low-contact service?
- A) surgery
- B) haircut
- C) massage
- D) electric power
- E) piano lesson
Answer: D
Explanation: D) All of the other choices are considered high-contact services in which the consumer must be present during the service transaction.
Page Ref: 170
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
64) The check-processing operations at your bank would be considered to be which type of system?
- A) high-contact
- B) low-contact
- C) conversion
- D) synthetic
- E) performance
Answer: B
Explanation: B) Check-processing operations can be completed without the consumer being present.
Page Ref: 170
Difficulty: Moderate
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
65) Which of the following would be considered a high-contact system?
- A) gas company
- B) electric company
- C) lawn care company
- D) barber shop
- E) postal delivery
Answer: D
Explanation: D) A barber’s services require that the consumer be present during the service transaction.
Page Ref: 170
Difficulty: Moderate
AACSB: Analytic skills
Objective: 7.2
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Critical Thinking
66) Save-A-Lot grocery stores use which type of strategy for attracting customers?
- A) flexibility
- B) quality
- C) low-cost
- D) dependability
- E) consistency
Answer: C
Explanation: C) Save-A-Lot offers items at savings up to 40 percent less than conventional food chains.
Page Ref: 171
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
67) 3M uses which strategy for attracting customers?
- A) quality
- B) low-cost
- C) dependability
- D) flexibility
- E) consistency
Answer: D
Explanation: D) The flexibility strategy at 3M emphasizes new product development.
Page Ref: 171
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
68) Machine, woodworking, and dry cleaning shops typically use which type of layout?
- A) product
- B) custom-products
- C) same-steps
- D) hybrid
- E) make-to-stock
Answer: B
Explanation: B) In a custom-products layout, machines and people are grouped by function in the production facility; custom-products layouts allow for greater flexibility and are well suited to make-to-order shops.
Page Ref: 174
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
69) Which type of layout is designed to move resources through a smooth, fixed sequence of steps?
- A) same-steps
- B) location
- C) custom-products
- D) quality
- E) make-to-order
Answer: A
Explanation: A) A same-steps layout is set up to make one type of product in a fixed sequence and is arranged according to its production requirements.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Concept
70) Automobile, food-processing, and television assembly plants use which type of layout?
- A) make-to-order
- B) location
- C) custom-products
- D) quality
- E) same-steps
Answer: E
Explanation: E) These production processes require a fixed sequence that is arranged according to production requirements.
Page Ref: 175
Difficulty: Moderate
Objective: 7.4
Learning Outcome: Discuss the factors that influence decisions about organizational structure
Skill: Application
71) Which term is defined as the combination of “characteristics of a product or service that bear on its ability to satisfy stated or implied needs”?
- A) quality
- B) production
- C) quantity
- D) clarification
- E) capacity
Answer: A
Explanation: A) Such characteristics can include a reasonable price.
Page Ref: 175
Difficulty: Moderate
