Testbankbusinessessentials9theditionbyeberttestbank 180703233111

Test bank Business Essentials 9th Edition by
Ebert Test Bank

Click link below to buy:
https://www.homeworkmerit.com/test-bank-
for-business-essentials-9th-edition-by-ebert-
test-bank-a/
OR
Email us at: homeworkmerit@gmail.com
OR visit: https://www.homeworkmerit.com/
Instant Download
Description
Business Essentials 9th Edition by Ebert Test Bank
Business Essentials, 9e (Ebert/Griffin)
Chapter 6 Organizing the Business
1) 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
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
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
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
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
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
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
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
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

Objective: 6.1
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
Objective: 6.2
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
Objective: 6.2
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
Objective: 6.2
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
Objective: 6.2
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
Objective: 6.2
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.4
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
Objective: 6.4
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
Objective: 6.4
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
Objective: 6.4
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
Objective: 6.5
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
Objective: 6.5
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
Objective: 6.5
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
Objective: 6.1
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
Objective: 6.2
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
Objective: 6.2
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
Objective: 6.4
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.3
structure
Skill: Concept
35) A divisional structure relies on functional departmentalization.
Answer: FALSE
Explanation: A divisional structure relies on product departmentalization.
Page Ref: 150

Objective: 6.4
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
Objective: 6.4
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?
1. A) delegation
2. B) a mission statement
3. C) job specialization
4. D) role responsibility
5. 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
structure
Skill: Concept
38) Which of the following clarifies structure and shows employees where they fit into a
firm’s operations?
1. A) delegation
2. B) departmentalization
3. C) organization charts
4. D) mission statement
5. 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
structure
Skill: Concept
39) What do the solid lines on an organization chart show in reporting relationships
within a company?
1. A) mission statement
2. B) chain of command
4. D) grapevine activity
5. 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
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?
1. A) departmentalization
2. B) job specialization
3. C) group tasks
4. D) segmentation
5. 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
structure
Skill: Concept
41) Which term covers grouping jobs into logical units?
1. A) specialization
2. B) accountability
3. C) authorization
4. D) departmentalization
5. 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
structure
Skill: Concept
42) What kind of departmentalization happens when an organization is divided into

operations related to different products?
1. A) functional departmentalization
2. B) process departmentalization
3. C) customer departmentalization
4. D) geographic departmentalization
5. 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
structure
Skill: Concept
43) What is the main organizational characteristic of decentralized firms?
1. A) flat
2. B) tall
3. C) diverse
4. D) multi-layered
5. E) matrix
Answer: A
Explanation: A) Decentralized firms share the characteristic of a flat organizational

structure.
Page Ref: 146
Difficulty: Easy
Objective: 6.3
structure
Skill: Concept
44) Which feature characterizes the organization of centralized firms?
1. A) flat
2. B) tall
3. C) very large
4. D) responsive to change
5. 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
structure
Skill: Concept
45) What is an employee’s duty to perform an assigned task?
1. A) delegation
2. B) authority
3. C) responsibility
4. D) accountability
5. 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
structure
Skill: Concept
46) What is the power to make the decisions necessary to complete a task called?
1. A) delegation
2. B) specification
3. C) authority
4. D) responsibility
5. 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
structure
Skill: Concept
47) What is authority that flows up and down the chain of command called?
1. A) staff authority
2. B) departmental authority
3. C) delegated authority
4. D) divisional authority
5. 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
structure
Skill: Concept
48) What type of departments are linked to the production and sales of specific
products?
1. A) staff departments
2. B) matrix departments
3. C) line departments
4. D) organizational departments
5. 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
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?
1. A) risk aversion
2. B) committee and team
3. C) line
4. D) matrix
5. 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
structure
Skill: Concept
50) What are everyday social interactions among employees that transcend formal jobs
and job interrelationships called?
1. A) traditional structure
2. B) informal organization
3. C) networking opportunities
4. D) production organization
5. 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
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?
1. A) basic structuring
2. B) process organization
3. C) intrapreneuring
4. D) extrapolating
5. 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
structure
Skill: Concept
52) Which factor plays a key role in determining an organization’s structure?
1. A) competition and technology

2. B) location and life-cycle stage
3. C) profitability and leverage
4. D) research and development
5. 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
Objective: 6.1
structure
Skill: Concept
53) What do managers do when the “job” of a firm is broken down into smaller jobs?
1. A) fragment the task

2. B) specialize the job
3. C) respond to the job
4. D) assign the task
5. 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
Objective: 6.2
structure
Skill: Concept
54) At Chaparral Steel, some employees transport scrap steel while others operate
shredding equipment. What does this example demonstrate?
2. B) specialization
3. C) functionalization
4. D) responsibility
5. 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
Objective: 6.2
structure
Skill: Application
55) Which of the following is a natural part of organizational growth?
1. A) retrenchment
2. B) entrepreneurship
4. D) outsourcing
5. 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
Objective: 6.2
structure
Skill: Concept
56) Determining how people performing certain tasks can best be grouped together is
called what?
2. B) specialization
3. C) controlling
4. D) leadership
5. 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
Objective: 6.2
structure
Skill: Concept
57) What type of departmentalization does Kraft Foods use by having separate divisions
for different types of foods?
1. A) customer
2. B) functional
3. C) geographic
4. D) product
5. E) brand
Answer: D
Explanation: D) In addition, a department can be treated as a profit center.

Page Ref: 143
Objective: 6.2
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?
5. 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
Objective: 6.2
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?
1. A) product departmentalization
2. B) customer departmentalization
3. C) process departmentalization
5. 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
Objective: 6.2
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?
1. A) by customer
2. B) by process
3. C) by geography
4. D) by function
5. 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
Objective: 6.2
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?
1. A) line
2. B) staff
3. C) decentralized
4. D) centralized
5. E) learning
Answer: D
Explanation: D) In a centralized organization, most decision-making authority is held by

upper-level managers.
Page Ref: 146
Objective: 6.3
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?
1. A) authoritarian
2. B) committee
3. C) decentralized
4. D) centralized
5. E) team
Answer: D
Explanation: D) McDonald’s practices centralization as a way to maintain

standardization.
Page Ref: 146
Objective: 6.3
structure
Skill: Application
63) In what type of organization is decision-making authority delegated to levels of

management at various points below the top?
1. A) centralized
2. B) decentralized
3. C) point-of-sale
4. D) geographic
5. 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
Objective: 6.3
structure
Skill: Concept
64) What kind of organization becomes more responsive to its environment by breaking
the company into more manageable units?
1. A) centralized
2. B) decentralized
3. C) geographic
4. D) process-oriented
5. 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
Objective: 6.3
structure
Skill: Concept
65) With relatively few layers of managers, what do decentralized organizations tend to
reflect?
1. A) tall organizational structure

2. B) short organizational structure
3. C) flat organizational structure
4. D) elliptical organizational structure
5. E) triangular organizational structure
Answer: C
Explanation: C) Delegation and authority are pushed downward in the organizational

hierarchy.
Page Ref: 146
Objective: 6.3
structure
Skill: Concept
66) Companies with centralized authority systems typically require multiple layers of
management. What type of organizational structures are these companies utilizing?
1. A) tall
2. B) short
3. C) flat
4. D) broad
5. E) oblique
Answer: A
Explanation: A) Decisions are made mostly by upper-level managers.
Page Ref: 146
Objective: 6.3
structure
Skill: Concept
67) With its many organizational layers, what type of organizational structure does the
U.S. Army demonstrate?
1. A) tall
2. B) step
3. C) flat
4. D) broad
5. E) triangular
Answer: A
Explanation: A) The U.S. Army has a centralized, and tall, authority system.
Page Ref: 146
Objective: 6.3
structure
Skill: Application
68) In tall organizations, which feature describes the span of control?
1. A) short
2. B) tall
3. C) wide
4. D) narrow
5. 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
Objective: 6.3
structure
Skill: Concept
69) What is the preferred span of control when jobs are more diversified or prone to
change?
1. A) wide
2. B) narrow
3. C) tall
4. D) deep
5. E) authoritative
Answer: B
Explanation: B) Job difficulty and job dissimilarity can lead to a narrower span of control
for managers.
Page Ref: 146
Objective: 6.3
structure
Skill: Concept
70) Which of the following begins when a manager assigns responsibility to a
subordinate?
1. A) centralization
2. B) delegation
3. C) liability
4. D) authority
5. E) training
Answer: B
Explanation: B) The delegation process involves three steps: assigning responsibility,

granting authority, and creating accountability.
Page Ref: 148
Objective: 6.3
structure
Skill: Concept
71) After responsibility for a task is assigned, which of the following comes next?
1. A) the centralization of the task

2. B) the liability of the task
3. C) the span of control is decided
4. D) the work team is created
5. 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
Objective: 6.3
structure
Skill: Concept
72) Which of the following best describes responsibility?
1. A) the power to make the decisions necessary to complete a task

2. B) the liability of subordinates for accomplishing tasks assigned by managers
3. C) the number of people supervised by one manager
4. D) the duty to perform an assigned task
5. 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
Objective: 6.3
structure
Skill: Concept
73) Which of the following best describes authority?

2. B) the liability of subordinates for accomplishing tasks assigned by managers
3. C) the number of people supervised by one manager
4. D) the ability to take on new responsibility
5. 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

Objective: 6.3
structure
Skill: Concept
74) Which of the following best describes accountability?

2. B) the obligation employees have to their manager for the successful completion of an
assigned task
3. C) the decision to communicate clear expectations related to assigned tasks
4. D) the number of people supervised by one manager
5. 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
Objective: 6.3
structure
Skill: Concept
75) What authority is based on special expertise and usually involves counseling and
advising?
1. A) line authority
2. B) matrix authority
3. C) delegated authority
4. D) staff authority
5. 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
Objective: 6.3
structure
Skill: Concept
76) What are specialists in law, accounting, and human resource management
commonly called?
1. A) profit centers
2. B) cost centers
3. C) staff members
4. D) line members
5. 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
Objective: 6.3
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?
1. A) task forces
2. B) standing committees
3. C) work teams
4. D) division committees
5. 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
Objective: 6.3
structure
Skill: Concept
78) Which form of organization is used by most small to medium-sized firms?
1. A) divisional
2. B) functional
3. C) matrix
4. D) international
5. 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
Objective: 6.4
structure
Skill: Concept
79) Firms with what structure are structured around departments for each basic
business action?
1. A) divisional structure
2. B) matrix structure
3. C) functional structure
4. D) international structure
5. E) regional structure
Answer: C
Explanation: C) Benefits of this structure include specialization within functional areas

and smoother coordination among them.
Page Ref: 150
Objective: 6.4
structure
Skill: Concept
80) Which of the following structures relies on product departmentalization?
1. A) matrix
2. B) functional
3. C) divisional
4. D) international
5. 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
Objective: 6.4
structure
Skill: Concept
81) What are departments called that resemble separate businesses in that they
produce and market their own products?
1. A) regions
2. B) divisions
3. C) function centers
4. D) cost centers
5. 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
Objective: 6.4
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?
1. A) departments
2. B) regions
3. C) units
4. D) divisions
5. E) committees
Answer: D
Explanation: D) Johnson & Johnson can thus evaluate the performance of each
division independently.
Page Ref: 150
Objective: 6.4
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?
1. A) team
2. B) virtual
3. C) learning
4. D) flexible
5. 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
Objective: 6.4
structure
Skill: Concept
84) What structure does an organization with little or no formal structure and with only a
handful of permanent employees use?
1. A) team structure
2. B) virtual structure
3. C) learning structure
4. D) flexible structure
5. 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
Objective: 6.4
structure
Skill: Concept
85) What type of organization seeks to integrate continuous improvements with

continuous employee development?
1. A) team
2. B) virtual
3. C) learning
4. D) flexible
5. 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
Objective: 6.4
structure
Skill: Concept
86) Which of the following organizational systems is the part that can be seen and
represented in chart form?
1. A) networking
2. B) formal organization
3. C) informal organization
4. D) grapevine
5. 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
Objective: 6.5
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?
1. A) formal organization
2. B) informal organization
3. C) intrapreneuring
4. D) entrepreneurship
5. 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
Objective: 6.5
structure
Skill: Application
88) Which of the following is an advantage of job specialization?
1. A) Workers can develop expertise in their jobs.

2. B) Workers will not need to be trained.
3. C) Jobs become more interesting.
4. D) Workers derive more satisfaction from their jobs.
5. 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
Objective: 6.2
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?
1. A) customer departmentalization
3. C) geographic departmentalization
4. D) functional departmentalization
5. 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
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?
5. 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
Objective: 6.2
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?
4. D) product departmentalization
5. E) geographic departmentalization
Answer: C
Explanation: C) Customer departmentalization follows specialization for certain types of

customers.
Page Ref: 144
Objective: 6.2
structure
Skill: Application
92) Which statement about organizational structure is TRUE?
1. A) Decentralized firms tend to have many layers of management.

2. B) As a company gets larger, it tends to adopt a decentralized structure.
3. C) The purpose of centralization is to make a company more responsive to a changing,
complex environment.
4. D) In a centralized organization, most decision-making authority is held by lower-level
managers.
5. 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
Objective: 6.3
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?
1. A) authentic management
2. B) linear management
3. C) centralized management
4. D) group management
5. E) decentralized management
Answer: E
Explanation: E) In a decentralized structure, delegation of authority flows downward.
Page Ref: 146
Objective: 6.3
structure
Skill: Application
94) What is the sequence of events in the delegation process?
1. A) assigning responsibility follows granting authority

2. B) granting authority follows creating accountability
3. C) granting authority follows assigning responsibility
4. D) assigning responsibility follows creating accountability
5. 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
Objective: 6.3
structure
Skill: Concept
95) Which statement about line departments is TRUE?
1. A) They include those with special counseling and advising expertise.

2. B) They include those directly linked to the sales of products.
3. C) They include staff members who provide services to management.
4. D) They have little effect on the production of goods.
5. 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
Objective: 6.3
structure
Skill: Concept
96) Which of the following are the “doers” and producers in a company?
1. A) line employees
2. B) staff employees
3. C) matrix employees
4. D) the legal department
5. E) the finance department
Answer: A
Explanation: A) Line employees include those related to goods and services

production.
Page Ref: 148
Objective: 6.3
structure
Skill: Concept
97) Which statement about staff responsibility is TRUE?
1. A) It is likely to include those employees involved in the production of products.

2. B) It is not likely to include those who provide services to managers.
3. C) It is linked directly to delivery of a product.
4. D) It is clearly different from line authority.
5. 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
Objective: 6.3
structure
Skill: Concept
98) Which feature will a committee have?
1. A) inclusion of only top managers from one specific area

2. B) mandate to change the corporate culture
3. C) some decision-making responsibility
4. D) ability to work together only for a short period of time
5. 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
Objective: 6.3
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?
1. A) divisional
2. B) matrix
3. C) regional
4. D) functional
5. 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
Objective: 6.4
structure
Skill: Application
100) What does functional structure foster?
1. A) competitiveness
2. B) centralization
3. C) decentralization
4. D) diversity
5. E) accountability
Answer: B
Explanation: B) This, in turn, makes accountability more difficult.
Page Ref: 150
AACSB: Analytic skills
Objective: 6.4
structure
Skill: Concept
101) Thomas Corp. has three basic departments: children’s books, games, and toys.
What type of structure does the company have?
1. A) divisional
2. B) matrix
3. C) functional
4. D) process
5. E) global
Answer: A
Explanation: A) A divisional structure relies on product departmentalization.
Page Ref: 150
Objective: 6.4
structure
Skill: Application
102) Which of the following types of structure entails a second chain of command?
1. A) divisional
2. B) departmental
3. C) committee
4. D) matrix
5. E) team
Answer: D
Explanation: D) A matrix structure is often referred to as a “combination” structure.
Page Ref: 151

Objective: 6.4
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?
1. A) team
2. B) virtual
3. C) learning
4. D) acquisitive
5. 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
Objective: 6.4
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
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
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
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
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
Objective: 6.2
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.3
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
Objective: 6.4
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
Objective: 6.4
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
Objective: 6.5
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
Objective: 6.4
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
Objective: 6.2
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
Objective: 6.3
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

Objective: 6.3
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
Objective: 6.4
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
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
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
Objective: 6.3
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
Objective: 6.4
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
Objective: 6.5
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
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
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
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
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
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
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
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?
1. 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?
2. B) Should a project be launched later than planned in order to make changes that will
make it more attractive to customers?
3. C) Should product management focus on the needs that customers have already
expressed or should it try to anticipate unexpressed needs?
4. D) Is the team project process at Appleson more effective than it would be if it followed a
more traditional organizational structure?
5. 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
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?
1. 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.
2. 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.
3. 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.
4. D) The team process is based on the process that Appleson’s executives used during
the era of print-only product development.
5. 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

Objective: 6.2
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?
1. A) Some employees who work in the Marketing department used to work in the Design
department.
2. B) Projects often fail to meet their revenue goals because the Design department
develops products for market segments that the Marketing department cannot reach.
3. C) Projects are often late because of product distribution problems that occur after the
project is completed.
4. 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.
5. 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
Objective: 6.2
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?
1. A) All American Burger restaurants are spread over a large geographic area.
2. B) A greater number of managers have expressed an interest in making policy.
3. C) Entry-level workers at All American Burger are likely to be part-time or flex-time
employees.
4. D) The organizations that choose more centralized operations are likely to be
organizations in crisis.
5. 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
Objective: 6.3
138) Which of the following, if true, would most strongly support the conclusion that All
American Burger should adopt a decentralized approach?
1. A) The value of a decentralized approach has been a popular topic in academic

research.
2. B) A large percentage of All American Burger’s revenue comes from a small number of
menu items.
3. C) The popularity of All American Burger’s special menu items has varied greatly across
different regions.
4. D) All American Burger has been growing more quickly than most of its major
competitors.
5. 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
Objective: 6.3
139) Which of the following decisions would likely be made by a centralized authority?
1. A) What are the procedures All American Burger should use to ensure food safety?
2. B) If All American Burger wishes to recruit current students for entry-level management
positions, which colleges and universities should All American Burger choose?
3. C) How should a regional division spend the money in its advertising budget?
4. D) What special menu items should be offered in order to encourage new customers?
5. 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

Objective: 6.3
140) Which of the following questions would different All American Burger restaurants
be most likely to answer differently?
1. A) What color should All American Burger restaurants be?

2. B) What are the core values of All American Burger?
3. C) What price should All American Burger charge for its products?
4. D) What policies should be put in place to prevent sexual harassment in the workplace?
5. 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
Objective: 6.3
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?
1. A) TLS values corporate social responsibility as well as profitability.

2. B) New product offerings have been neglected as divisions have focused on traditional
revenue sources.
3. C) TLS division managers have focused on short-term revenue at the expense of
developing profitable relationships with long-term customers.
4. D) The markets TLS serves have different requirements in different geographic areas.
5. 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
Objective: 6.4
142) Which of the following, if true, would most strongly suggest that TLS should
change its organizational structure to a product-based approach?
1. A) The largest growth area for TLS is governmental contracts, which have buying
procedures that are very different from those of other customers.
2. B) TLS currently maintains separate accounting departments in each of its regions.
3. C) To be effective, TLS managers need to be experts in at least one of the products that
TLS sells.
4. D) TLS hopes to build sustained relationships with customers, selling the same person
academic tutoring, standardized test preparation, and admissions consulting.
5. 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 relationshi p
across products.
Page Ref: 150
Objective: 6.4
143) Which of the following, if true, would most strongly suggest that TLS should
change its organizational structure to a functional-based approach?
1. A) TLS currently maintains separate human resource departments in each of its regions.
2. B) Research suggests that product development failures happened because the product
developers were isolated from customers.
3. C) TLS earns large streams of revenue from services it offers to schools.
4. D) In the current regional structure, managers complain about having a limited view of
organizational goals.
5. 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

Objective: 6.4
144) If the senior manager’s prediction is accurate, which of the following is inferable?
1. 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.
2. 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.
3. C) If TLS is profitable, then it could organize itself by customer groups.
4. D) If TLS does not change to either a product approach or a functional approach, then it
could not have been profitable this year.
5. 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
Objective: 6.4

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?
1. 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.
2. 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.
3. C) Carl authorizes purchases for Company X, but he is very concerned about making a
large purchase without the input of his CEO.
4. 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.
5. 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

Objective: 6.5
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?
1. 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.
2. B) Next I’ll identify competitors’ products and detail why Wilson walkie-talkies are
superior.
3. C) I’m including here an audit report and licensing credentials for Wilson.
4. D) Shown here are a variety of ways that Wilson walkie-talkies can also be used in a
home situation.
5. 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
Objective: 6.5

Testbankbusinessessentials9theditionbyeberttestbank 180703233111

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Testbankbusinessessentials9theditionbyeberttestbank 180703233111

Uploaded by

Copyright:

Available Formats

Test bank Business Essentials 9th Edition by

Ebert Test Bank

Email us at: homeworkmerit@gmail.com

Business Essentials 9th Edition by Ebert Test Bank

Business Essentials, 9e (Ebert/Griffin)

Chapter 6 Organizing the Business

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

Explanation: Organization charts are graphical representations of the structures of an

Page Ref: 141

2) Job specialization is the process of eliminating unnecessary or undesirable jobs.

Page Ref: 142

3) Departmentalization refers to the process of grouping jobs into logical units.

Explanation: The practice of grouping jobs into units is called departmentalization.

Page Ref: 143

4) Geographic departmentalization divides firms according to the areas of the country or

Explanation: Geographic departmentalization divides firms according to the areas of

Page Ref: 144

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

Explanation: In a centralized structure, most decision-making authority is delegated to

Page Ref: 146

Explanation: Accountability means that subordinates are responsible for accomplishing

Page Ref: 148

Explanation: Divisional structure relies on product departmentalization.

Page Ref: 150

8) International organizational structures are an approach to organizational structure

Page Ref: 153

9) The chain of command is depicted by solid lines on an organization chart.

Explanation: These lines represent reporting relationships.

Page Ref: 141

10) Organizational structure is a function of the organization’s mission and strategy.

Page Ref: 141

Explanation: The building blocks of all organizations are specialization and

Page Ref: 142

Explanation: As organizations grow, jobs tend to become more specialized; job

Page Ref: 142

Explanation: With process departmentalization, the firm is divided according to

Page Ref: 143

Explanation: Such firms have a functional form of departmentalization.

Page Ref: 144

Explanation: Because different forms of departmentalization have different advantages,

Page Ref: 144

Explanation: Flat organizational structures are usually associated with decentralized

Page Ref: 146

Explanation: Other factors include job similarity and job difficulty.

Explanation: Job simplicity typically leads to a wider span of control.

Page Ref: 146

Explanation: First, responsibility is assigned; then, authority is granted, followed by the

Page Ref: 148

Explanation: As the doers and producers, each line department is essential to an

Page Ref: 148

21) The functional organizational structure is the approach to organizational structure

Explanation: Functional organization is used by most small to medium-sized firms.

Page Ref: 150

Explanation: A matrix structure is organized along two dimensions—a “permanent”

Page Ref: 151

23) An international organization is one in which traditional boundaries and structures

Explanation: Some companies perform operations in global structures without any

Page Ref: 154

24) A virtual organization has little or no formal structure.

Page Ref: 154

Explanation: This level, furthermore, is sometimes just as powerful—if not more

Page Ref: 155