Organizational Structure
Which of the following is a characteristic of a mechanistic organization?
a. low formalization
b. flat hierarchy
c. decentralization
d. high degree of specialization
d. high degree of specialization
________ define appropriate employee attitudes and behaviors.
a. Values
b. Artifacts
c. Appraisals
d. Norms
d. Norms
In ________, the stockholders are the legal owners of the company who delegate decision-making authority to professional managers.
a. family-owned firms
b. private businesses
c. nonprofit companies
d. public stock companies
d. public stock companies
Bader is trying to understand the relationship between what is legal and what is ethical. His friend explains that both of these terms are often synonymous (the same) in business. Your response is
a. His friend is correct; law and ethics are synonymous and should be used interchangeably in business.
b. His friend is correct; whatever is legal is always ethical in business.
c. His friend is incorrect; a manager’s actions can be legal but ethically questionable.
d. His friend is incorrect; there is no relationship between laws and ethics except when the board of directors approve an action.
c. His friend is incorrect; a manager’s actions can be legal but ethically questionable.
If a company’s core competency is innovation, a(n) ________ would not be suitable for the company.
a. mechanistic structure
b. organic structure
c. differentiation strategy
d. integration strategy
a. mechanistic structure
Bader is the Chief Operating Officer of One Spice Inc., a firm that grows and processes one of the world’s hottest peppers. Bader wants to better understand the relationship between her firm’s organizational culture and the ability to achieve competitive advantage. The relationship between these two states that
a. a firm is unable to achieve a competitive advantage if they are pursuing a differentiation strategy.
b. a firm can achieve competitive advantage if their organizational culture follows the VRIO principles.
c. a firm can achieve and sustain competitive advantage if their balanced scorecard is implemented correctly.
d. a firm cannot achieve a competitive advantage when they have an effective organizational culture.
b. a firm can achieve competitive advantage if their organizational culture follows the VRIO principles.
Which of the following is a problem that corporate governance seeks to address?
a. limited liability for investors
b. shared-value creation
c. the principal-agent problem
d. the Ecomagination problem
c. the principal-agent problem
Bader is a mid-level manager for a high-tech start-up. He’s just been asked by his boss to perform an activity that may be unethical. To improve his ethical decision making, Bader should
a. imagine whether he would feel comfortable explaining and defending the decision in public.
b. go forward with the decision without considering the ethical ramifications.
c. think about the ethical dilemma but base his decision upon what’s best for his career in the short term.
d. call his parents and ask them for advice.
a. imagine whether he would feel comfortable explaining and defending the decision in public.
Which of the following is a benefit of a high degree of formalization in an organization?
a. increased creativity
b. excellent customer service
c. consistent results
d. fast decision making
c. consistent results
Bader just graduated from law school and wants to open his own law firm. Bader should probably adopt a(n) ______ structure for the firm.
a. simple
b. functional
c. M-form
d. Matrix
a. simple
All of the following are examples of external-governance mechanisms except
a. industry analysts.
b. shareholders.
c. auditors.
d. government regulators.
b. shareholders.
Bader is a board member of firm A but is not an employee of firm A. He is a senior executive from firm B. In firm A, Bader can best be described as a(n)
a. outside director.
b. inside director.
c. shareholder.
d. philanthropists.
a. outside director.
One disadvantage of a functional structure is that it
a. cannot be converted into a different structure.
b. frequently lacks effective communication channels across departments.
c. does not facilitate rich and extensive communication between members of the same department.
d. does not allow the setting up of cross-functional teams.
b. frequently lacks effective communication channels across departments.
The three key components of organizational ________ are structure, culture, and control.
a. design
b. control
c. culture
d. inertia
a. design
How is the characteristic of separation of legal ownership and management control disadvantageous to publicly traded companies?
a. The managers might pursue their personal interests rather than the shareholders'.
b. The shareholders may misuse their power to make decisions for the company and make decisions only for their profit.
c. The managers delegated to make decisions may be too focused on maximizing total returns to shareholders.
d. The shareholders do not directly supervise the activities of the board of directors.
a. The managers might pursue their personal interests rather than the shareholders'.
Bader works for Alhashel Industries, a large corporation. His work requires him to travel extensively and, as a result, he spends much time working remotely. Taking advantage of the situation, Bader often works on personal projects instead of company projects. Alhashel Industries has difficulty checking on Bader’s work because he has no supervision in many of the places where he travels. This scenario exemplifies a(n)
a. moral hazard.
b. inverse selection.
c. poison pill.
d. outside director.
a. moral hazard.
Which of the following is a shortcoming of the matrix structure?
a. It cannot effectively address a higher level of diversification, which often stems from further growth.
b. Its implementation is difficult due to significant organizational complexity and increased administrative costs.
c. It frequently lacks effective communication channels across departments.
d. It often leads to an overload for the founder and/or CEO when the firms experience growth
b. Its implementation is difficult due to significant organizational complexity and increased administrative costs.
Kuwait University has a typical College of Business Administration which houses several specific mini-departments such as management, marketing, finance, accounting, economics, and real estate. This College of Business Administration best resembles a(n) ________ structure.
a. simple
b. functional
c. multidivisional
d. matrix
b. functional
Which of the following is one of the implications of information asymmetry between principals and agents?
a. The information comes to all stakeholders simultaneously, which is disadvantageous to the stockholders.
b. Principals tend to be better informed than the agents, and thus will avoid delegating decision-making authority to their agents.
c. Outsiders, such as shareholders, are the first to learn about important developments, before the information is released to the employees.
d. Agents can pass on the information to select principals who can trade stocks based on this information.
d. Agents can pass on the information to select principals who can trade stocks based on this information.
Bader hires Khaled to perform a critical task in his organization. However, Khaled has misrepresented his knowledge, skills and abilities and Bader has no way of knowing whether Khaled can indeed perform well. This is an example of
a. agency theory.
b. random event.
c. adverse selection.
d. ineffective corporate governance.
c. adverse selection.