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Exam 8: Structuring Organizations for Todays Challenges

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Question 141

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When Eric Schmidt became the CEO of Google, he reported that the company in the hands of founders Larry Page and Sergey Brinn was running well, it just needed a little structure. CEO Schmidt helped develop:

A) the innovative culture.
B) the informal organization.
C) the formal organization.
D) the grapevine.

E) A) and B)
F) A) and C)

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Question 142

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Dividing the required work among a group of employees is called:

A) departmentalization.
B) delegation of responsibility.
C) division of labor.
D) separation of control.

E) B) and D)
F) A) and B)

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Question 143

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When management structures the organization, it clarifies who gets to make decisions, how many people report to one manager, and how many different departments the company needs in order to operate effectively.

Joe, a production engineer at Freestone Tires recently joined a team of specialists from other areas, such as marketing and finance. His long-term assignment to this team has produced several new products. Joe enjoys this work environment, in part because Freestone's management has given the team the freedom and flexibility to make decisions. A recent development is the inclusion of "outsiders" from Freestone's major distributors and suppliers on the team. It appears that Joe's team is a(n) :

Last week at Happy Trails Financial Services Company, all financial advisors who each serve more than 150 clients received a notice from the VP of Operations that every client's investment portfolio should consist of 50% individual stock purchases, 25% bonds, and 25% property. Advisors were ordered to review all client portfolios for compliance to this directive. Clearly, Happy Trails is an inverted organization because management directives such as the one described are very common.

According to the Spotlight on Small Businesses box, titled, "Keeping that Small Company Feeling", the main idea is to:

Organizing the structure of the company means deciding how many jobs need to be done and who is responsible for doing them.

Mini-Case Angelica Canizales is the CEO of Mucho Dinero Enterprises. Sales have declined for four consecutive years and the firm's accountants have reported net losses in each of the last two years. Employees appear demoralized and frustrated. Recently, Angelica met with managers from marketing, production, and finance to listen to their views regarding the company's problems. The managers unanimously agreed that the main problem was a lack of communication between the several functional areas of the business. Each manager felt that the firm could increase quality and customer satisfaction with better interdepartmental communication. Angelica also met with marketing and production employees to get their respective opinions on the problems of the firm. One employee from the production department observed that, "We have so many layers of management that it takes forever to make decisions." An employee from marketing complained that, "This place is so bogged down with rules and regulations that there is no opportunity to be creative." Several employees shared their opinions regarding their bosses. Specifically, one employee expressed "My boss never pays attention to my ideas. He just issues orders and expects me to obey them." Angelica decided, after listening to many comments from employees, suppliers, and customers, that the only way to end Mucho Dinero's slide was to completely rethink the firm's structure and to make radical changes in its organization. She presented her ideas to the board of directors, promising to voluntarily resign if her efforts to reorganize did not return the firm to profitability. -From her discussions with employees, Angelica learned quickly that production workers put their trust in 20-year veteran Willie McClaren. Many people told her that if you wanted something done, Willie was the person to see. Willie appears to be an important part of the:

Ben was confident that sports fans would fill the seats in his brewery restaurant after major league baseball games if they just knew about the place - after all, he offered convenience, easy walking distance, great local talent for entertainment and several fresh premium brews. He decided to join social networks such as Twitter and Facebook, and offer wireless services and lunch for afternoon customers. These are worthy strategies for reaching digital natives.

Line organizations clearly define the lines of authority and responsibility.

Reorganizing in order to compete better may require a firm to reduce its number of business units.

As a result of rapidly changing markets and global differences in consumer tastes, more firms are considering centralized authority.

Excite Enterprises, a corporation of amusement parks uses an accounting firm to handle the payroll and tax functions for the company. Using the services of another firm in this manner is an example of:

refers to the process of dividing organizational functions (sales, production, accounting/bookkeeping) into separate units.

Inverted organizations define the role of front-line employees as those workers who follow the orders of top and middle management.

The optimum number of subordinates a manager should supervise is referred to as the span of control.

The informal organization appears as dashed lines on a firm's organizational chart.

In Weber's view of a bureaucratic organization, the organization demanded:

One of Javier's coworkers was recently promoted to a middle management position at their company. He seems to have quickly distanced himself from Javier and their other coworker, Carlos. In fact, yesterday Carlos described the situation by saying, "He's gone to the dark side." Javier understands what Carlos means because management keeps themselves removed from other employees, and seldom seriously solicit ideas for improvements or change from those in the trenches. The disadvantage in continuing this type of organizational culture is:

Job descriptions are an important part of Max Weber's organizational theory.