Business A Changing World 10th Edition Ferrell Test Bank 1

Chapter 07 - Organization, Teamwork, and Communication
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Chapter 07
Organization, Teamwork, and Communication
True / False Questions
1. The more complex organizations become, the less they need to develop formal structures to
function efficiently.
FALSE
With more people and greater specialization, an organization needs to develop a formal
structure to function efficiently. Growth requires organizing—the structuring of human,
physical, and financial resources to achieve objectives in an effective and efficient manner.
AACSB: Analytic
Accessibility: Keyboard Navigation
Bloom's: Remember
Difficulty: 1 Easy
Learning Objective: 07-01 Define organizational structure and relate how organizational structures develop.
Topic: Organizational Structure
7-1
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
2. Disadvantages of product departmentalization are that it duplicates functions and does not
focus on an organization's overall objectives.
TRUE
Organizing by products duplicates functions and resources and emphasizes the product rather
than achievement of an organization's overall objectives. Each division develops and
implements its own product plans, monitors the results, and takes corrective action as
necessary.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
Learning Objective: 07-02 Describe how specialization and departmentalization help an organization achieve its goals.
7-2
3. A wide span of management works best when a manager and subordinates are not in close
proximity.
FALSE
A narrow span of management is appropriate when superiors and subordinates are not in close
proximity, the manager has many responsibilities in addition to the supervision, the
interaction between superiors and subordinates is frequent, and problems are common.
AACSB: Analytic
Bloom's: Understand
Difficulty: 2 Medium
Learning Objective: 07-03 Determine how organizations assign responsibility for tasks and delegate authority.
Topic: Delegation and Authority
4. Multidivisional structure is the simplest organizational structure that is based on direct lines
of authority extending from the top executive to the lowest level employees of an
organization.
FALSE
Line structure, with its direct lines of authority that extend from the top manager to employees
at the lowest level of an organization, is the simplest organizational structure. A
multidivisional structure organizes departments into larger groups called divisions.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
Learning Objective: 07-04 Compare and contrast some common forms of organizational structure.
7-3
5. Horizontal communication involves the traditional flow of information from upper

organizational levels downward.
FALSE
Horizontal communication involves the exchange of information among colleagues and peers
on the same organizational level, such as across or within departments. Horizontal
information informs, supports, and coordinates activities both within the department and with
other departments.
AACSB: Communication
Bloom's: Remember
Difficulty: 1 Easy
Learning Objective: 07-06 Describe how communication occurs in organizations.
Topic: Communication in Organizations
Multiple Choice Questions
6. _____ refers to a firm's shared values, beliefs, traditions, philosophies, rules, and role
models for behavior.
A. Organizational chart
B. Centralization
C. Organizational culture
D. Organizational structure
E. Business record
Organizational culture is a firm's shared values, beliefs, traditions, philosophies, rules, and
role models for behavior. An organizational culture exists in every organization, regardless of
size, organizational type, product, or profit objective.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
Topic: Culture in Organizations
7-4
7. Which of the following is true of organizational culture?

A. Organizational culture exists only in large organizations that have more than 500
employees.
B. Organizational culture is different from corporate culture.
C. Organizational culture is more commonly expressed informally.
D. Organizational culture cannot be expressed formally through mission statements, memos,
or manuals.
E. Organizational culture is a visual display of an organizational structure, lines of authority,
and staff relationships.
A firm's culture may be expressed formally through its mission statement, codes of ethics,
memos, manuals, and ceremonies, but it is more commonly expressed informally.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
8. Which of the following is a means of informally expressing an organization's culture?

A. Ceremonies
B. Code of ethics
C. Mission statement
D. Manuals
E. Employee dress codes
Informal expressions of culture include dress codes (or the lack thereof), work habits,
extracurricular activities, and stories. A firm's culture may be expressed formally through its
mission statement, codes of ethics, memos, manuals, and ceremonies, but it is more
commonly expressed informally.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-5
9. Which of the following is a formal expression of an organization's culture?

A. Dress codes
B. Extracurricular activities
C. Codes of ethics
D. Grapevine
E. Work habits
A firm's culture may be expressed formally through its mission statement, codes of ethics,
memos, manuals, and ceremonies, but it is more commonly expressed informally. Examples
of informal expressions of culture include dress codes (or the lack thereof), work habits,
extracurricular activities, and stories.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
10. Identify a true statement about organizational culture?

A. It is absent in small organizations.
B. It can only be communicated formally.
C. It can only be seen in nonprofit organizations.
D. It is reflected in an organization's relationships with stakeholders.
E. It does not encompass employee behavior and ways of dealing with problems.
Organizational culture can be reflected in an organization's relationships with stakeholders.

When positive values and philosophies are shared by all members of an organization, they
will be expressed in its relationships with stakeholders.
AACSB: Analytic
Bloom's: Understand
7-6
11. Which of the following statements is true about organizational structure?

A. It is only applicable to formal organizations.
B. It is the arrangement or relationship of positions within an organization.
C. It is usually not seen in government and nonprofit organizations.
D. It does not require any planning in small organizations.
E. It remains the same even as a company grows in size.
Structure is the arrangement or relationship of positions within an organization. Rarely is an

organization, or any group of individuals working together, able to achieve common
objectives without some form of structure, whether that structure is explicitly defined or only
implied.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
12. Which of the following does an organizational chart display?

A. Shared values
B. Shared beliefs
C. Plant layouts
D. Assembly lines
E. Staff relationships
An organizational chart is a visual display of the organizational structure, lines of authority

(chain of command), staff relationships, permanent committee arrangements, and lines of
communication.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-7
13. Which of the following statements is true about an organizational chart in the context of
organizational structure?
A. It only lists the financial assets of an organization.
B. It is essentially designed for the customers of an organization.
C. It can only be accessed by the owners of an organization.
D. It gives information about an organization's chain of command.
E. It cannot represent the evolution or growth of an organization.
An organizational chart is a visual display of organizational structure, lines of authority (chain

of command), staff relationships, permanent committee arrangements, and lines of
communication.
AACSB: Analytic
Bloom's: Understand
14. Which of the following is a primary function of an organizational chart?

A. It lists the financial assets of an organization.
B. It depicts the processes involved in the assembly line of an organization.
C. It is a visual display of the organizational structure.
D. It is essentially designed to help customers track their products.
E. It is a visual display of a firm's shared values and philosophies.
Organizational chart is a visual display of the organizational structure, lines of authority

(chain of command), staff relationships, permanent committee arrangements, and lines of
communication.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-8
15. _____ is the division of labor into small, specific tasks and the assignment of employees
to do a single task.
A. Specialization
B. Job rotation
C. Crowdsourcing
D. Outsourcing
E. Centralization
Specialization is the division of labor into small, specific tasks and the assignment of
employees to do a single task. The rationale for specialization is efficiency.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
16. What is the rationale for specialization?

A. Duplication
B. Centralization
C. Accountability
D. Efficiency
E. Transparency
Specialization is the division of labor into small, specific tasks and the assignment of
employees to do a single task. The rationale for specialization is efficiency.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-9
17. Which of the following is an advantage of job specialization?

A. It allows workers to specialize in a variety of skills.
B. It enables workers to perform their work more quickly and efficiently.
C. It can never lead to dissatisfaction and boredom among employees.
D. It completely eliminates the need for departmentalization within an organization.
E. It requires employees to perform more than one task within a firm.
Specialization means workers do not waste time shifting from one job to another, and training
is easier. By dividing work into smaller specialized tasks, employees can perform their work
more quickly and efficiently.
AACSB: Analytic
Bloom's: Understand
18. Which of the following is a disadvantage of job specialization?

A. It makes the process of training employees complex.
B. It causes waste of time as employees keep shifting roles.
C. It can lead to dissatisfaction and boredom among employees if overly done.
D. It adversely affects the efficiency of employees in a particular job.
E. It restricts an organization from outsourcing employees.
Overspecialization can have negative consequences. Employees may become bored and
dissatisfied with their jobs, and the result of their unhappiness is likely to be poor quality
work, more injuries, and high employee turnover.
AACSB: Analytic
Bloom's: Understand
7-10
19. 18th-century economist Adam Smith illustrated improvements in efficiency in

manufacturing units through the application of:
A. standardization.
B. specialization.
C. crowdsourcing.
D. decentralization.
E. downsizing.
The rationale for specialization is efficiency. Adam Smith used the concept of specialization
to illustrate improvements in efficiency.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
20. _____ is the grouping of jobs into working units usually called units, groups, or divisions.
A. Downsizing
B. Specialization
C. Nearshoring
D. Departmentalization
E. Centralization
Departmentalization is the grouping of jobs into working units usually called departments,
units, groups, or divisions. Departments are commonly organized by function, product,
geographic region, or customer.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-11
21. Small businesses commonly employ:

A. line departmentalization.
B. customer departmentalization.
C. functional departmentalization.
D. product departmentalization.
E. geographical departmentalization.
Functional departmentalization is common in small organizations. Functional

departmentalization groups jobs that perform similar functional activities, such as finance,
manufacturing, marketing, and human resources.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
22. A company that has departments for marketing, finance, personnel, and production is
organized by:
A. product.
B. function.
C. territory.
D. customer.
E. geographic region.
Functional departmentalization groups jobs that perform similar functional activities, such as
finance, manufacturing, marketing, and human resources. This approach is common in small
organizations.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-12
23. If the type of departmentalization used by an organization tends to emphasize

departmental units rather than the organization as a whole and decision making is slow, then
these would be weaknesses indicative of _____ departmentalization.
A. geographical
B. functional
C. product
D. customer
E. process
A weakness of functional departmentalization is that because it tends to emphasize

departmental units rather than the organization as a whole, decision making that involves
more than one department may be slow, and it requires greater coordination.
AACSB: Analytic
Bloom's: Understand
24. An airlines company having different departments for frequent travelers and occasional
travelers illustrates _____ departmentalization.
A. product
B. functional
C. geographical
D. seniority
E. customer
Customer departmentalization arranges jobs around the needs of various types of customers.
Airlines provide prices and services customized for either business/frequent travelers or
infrequent/vacationing customers.
AACSB: Analytic
Bloom's: Understand
Difficulty: 1 Easy
7-13
25. Which of the following is a similarity between customer departmentalization and

geographical departmentalization?
A. They both prohibit specialization.
B. They both group jobs according to a customer's geographic location.
C. They both do not focus on an organization as a whole.
D. They both require minimal administrative staff to coordinate operations.
E. They both cannot be used in large organizations.
Customer departmentalization, like geographical departmentalization, does not focus on the

organization as a whole and therefore requires a large administrative staff to coordinate the
operations of the various groups.
AACSB: Analytic
Bloom's: Understand
26. An electronic company has a computer electronics division, telecommunications

equipment division, and kitchen appliances division. Which of the following methods of
departmentalization does the company use to structure its organization?
A. Product departmentalization
B. Geographical departmentalization
C. Functional departmentalization
D. Customer departmentalization
E. Process departmentalization
Product departmentalization is the organization of jobs in relation to the products of a firm.

Each division develops and implements its own product plans, monitors the results, and takes
corrective action as necessary.
AACSB: Reflective Thinking

Bloom's: Apply
7-14
27. Which of the following is an advantage of product departmentalization?

A. It avoids duplication of functions.
B. It emphasizes the achievement of an organization's overall objectives rather than a product
itself.
C. It eliminates functional activities within a department.
D. It simplifies decision making and helps coordinate all activities related to a product.
E. It allows an organization to effectively share resources between two or more product
departments.
Product departmentalization organizes jobs around the products of a firm. It simplifies

decision making and helps coordinate all activities related to a product or product group.
AACSB: Analytic
Bloom's: Understand
28. Multinational corporations often use a geographical approach to departmentalization

because:
A. they lack resources.
B. of vast differences between different regions.
C. they want to avoid duplication of tasks.
D. they require a small administrative staff.
E. of their ability to standardize products and services.
Multinational corporations often use a geographical approach to departmentalization because

of vast differences between different regions. Geographical departmentalization groups jobs
according to geographic location, such as a state, region, country, or continent.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-15
29. Red Finch Products Inc. groups employees based on whether they are going to handle the
sales account of a wholesale customer, regular consumer, first-time buyer, or a one-time
buyer. Which of the following methods of departmentalization is the company using?
A. Product departmentalization
B. Geographical departmentalization
C. Functional departmentalization
D. Customer departmentalization
E. Process departmentalization
Red Finch Products Inc. is using customer departmentalization. Customer departmentalization

arranges jobs around the needs of various types of customers. This allows a company to
address the unique requirements of each group.

Bloom's: Apply
30. Razor Automobiles Inc. has slightly different versions of the same car for the American,
European, and Asian markets. Its employees are grouped into divisions based on the market
they have been assigned. This is an example of _____.
A. demographic departmentalization
B. geographical departmentalization
C. functional departmentalization
D. customer departmentalization
E. process departmentalization
This is an example of geographical departmentalization. Geographical departmentalization

groups jobs according to geographic location, such as a state, region, country, or continent.

Bloom's: Apply
7-16
31. A software company that has different representatives to assist business clients and
individual clients is organized by _____.
A. processes
B. products
C. geographical regions
D. functions
E. customers
Customer departmentalization arranges jobs around the needs of various types of customers.
This allows the company to address the unique requirements of each group.
AACSB: Analytic
Bloom's: Understand
32. Which of the following is a disadvantage of geographical departmentalization?

A. It focuses on an organization as a whole rather than emphasizing on departmental units.
B. It prohibits specialization among employees.
C. It results in duplication of tasks.
D. It is limited to small organizations.
E. It is inefficient when businesses want to quickly respond to regional customers.
Organizing by geographic region requires a large administrative staff and control system to
coordinate operations, and tasks are duplicated among the different regions.
AACSB: Analytic
Bloom's: Understand
7-17
33. Which of the following concepts deals with giving employees the power to make
commitments and use resources to accomplish the assigned tasks?
A. Delegation of authority
B. Accountability
C. Downsizing
D. Centralization
E. Specialization of tasks
Delegation of authority means not only giving tasks to employees but also empowering them
to make commitments, use resources, and take whatever actions are necessary to carry out
those tasks.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
34. _____ is the obligation placed on employees through delegation to perform assigned tasks
satisfactorily.
A. Hierarchy
B. Specialization
C. Transparency
D. Responsibility
E. Bureaucracy
Responsibility is the obligation placed on employees through delegation to perform assigned

tasks satisfactorily.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-18
35. _____ is the principle that employees who accept an assignment and the authority to carry
it out are answerable to a superior for the outcome.
A. Accountability
B. Specialization
C. Decentralization
D. Bureaucracy
E. Enforceability
The principle of accountability means that employees who accept an assignment and the
authority to carry it out are answerable to a superior for the outcome.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
36. Which of the following statements is true about delegation of authority in the context of
an organization?
A. It does not relieve a superior of accountability for a delegated job.
B. It does not give employees the power to make decisions about using resources to
accomplish assigned tasks.
C. It does not hold an employee to whom the authority was delegated accountable for the
results of a task.
D. It is meant to put additional pressure and burden on managers who are delegating tasks to
subordinates.
E. It is a concept popular only in small businesses and sole proprietorships.
The act of delegating authority to a subordinate does not relieve a superior of accountability
for a delegated job. Even though the vice president of marketing delegates work to
subordinates, he or she is still ultimately accountable to the president for all marketing
activities.
AACSB: Analytic
Bloom's: Understand
7-19
37. The extent to which authority is delegated throughout an organization determines its:
A. unity of command.
B. degree of centralization.
C. locus of control.
D. economies of scale.
E. level of standardization.
The extent to which authority is delegated throughout an organization determines its degree of
centralization.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
38. Which of the following is a drawback of centralization?

A. It fails to delegate responsibility for carrying out daily and routine procedure to lower level
employees.
B. It is ineffective when the decisions to be made are risky.
C. It results in a flat organizational structure.
D. It requires lower-level managers to have strong decision-making skills.
E. It may take long for an organization as a whole to implement decisions and respond to
changes on a regional scale.
Overcentralization can cause serious problems for a company, in part because it may take
longer for the organization as a whole to implement decisions and to respond to changes and
problems on a regional scale.
AACSB: Analytic
Bloom's: Understand
7-20
39. _____ is usually preferred when the decisions of a company are very risky and low-level
managers lack decision-making skills.
A. Liberalization
B. Delegation of authority
C. Centralization
D. Employee empowerment
E. Specialization
Businesses tend to be more centralized when the decisions to be made are risky and when
low-level managers are not highly skilled in decision making. In a centralized organization,
authority is concentrated at the top, and very little decision-making authority is delegated to
lower levels.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
40. Which of the following is true of decentralization?

A. It concentrates the decision-making authority at the top.
B. It is highly effective for businesses where risky decisions are to be made.
C. It reduces an organization's ability to react to changes quickly.
D. It isolates lower-level managers from decision making.
E. It is characteristic of organizations that operate in complex environments.
Decentralization is characteristic of organizations that operate in complex, unpredictable

environments. Businesses that face intense competition often decentralize to improve
responsiveness and enhance creativity.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-21
41. Which of the following is an advantage of decentralization?

A. It does not require low-level managers to be highly skilled in decision making.
B. It is highly effective when risky decisions have to be made.
C. It allows businesses to improve their responsiveness and enhance creativity.
D. It increases the levels of management within an organization.
E. It results in a tall organizational structure.
Decentralization is characteristic of organizations that operate in complex, unpredictable

environments. Businesses that face intense competition often decentralize to improve
responsiveness and enhance creativity.
AACSB: Analytic
Bloom's: Understand
42. When an organization has a structure in which decision-making authority is delegated as

far down the chain of command as possible, it is said to be exercising:
A. bureaucracy.
B. hierarchy.
C. downsizing.
D. overspecialization.
E. decentralization.
A decentralized organization is one in which decision-making authority is delegated as far

down the chain of command as possible. Decentralization is characteristic of organizations
that operate in complex, unpredictable environments.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-22
43. Span of management refers to the:

A. number of subordinates reporting to a manager.
B. experience, in terms of years, of managers in a company.
C. duration of time required for an employee to get promoted to a manager's position.
D. number of roles that the management of an organization performs.
E. number of managers working at the top management of an organization.
Span of management refers to the number of subordinates who report to a particular manager.
A wide span of management exists when a manager directly supervises a very large number
of employees. A narrow span of management exists when a manager directly supervises only
a few subordinates.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
44. A wide span of management is appropriate when:

A. superiors and subordinates are not in close proximity.
B. managers have many responsibilities in addition to supervision.
C. interactions between superiors and subordinates are frequent.
D. subordinates are highly competent.
E. problems are common.
When superiors and subordinates are located close to one another, a manager has few
responsibilities other than supervision, the level of interaction between superiors and
subordinates is low, few problems arise, subordinates are highly competent, and a set of
specific operating procedures governs the activities of managers and their subordinates, a
wide span of management will be more appropriate.
AACSB: Analytic
Bloom's: Understand
7-23
45. A narrow span of management is appropriate when:

A. superiors and subordinates are not in close proximity.
B. managers have few responsibilities other than supervision.
C. interactions between superiors and subordinates are not frequent.
D. subordinates are highly competent.
E. managers face few problems.
A narrow span of management is appropriate when superiors and subordinates are not in close
proximity, a manager has many responsibilities in addition to the supervision, the interaction
between superiors and subordinates is frequent, and problems are common.
AACSB: Analytic
Bloom's: Understand
46. Which of the following statements is true about span of management?

A. According to experts, top managers should directly supervise more than 10 to 20 people.
B. A narrow span of management exists when a manager directly supervises a large number
of subordinates.
C. Wide spans of management work well when a manager has many responsibilities in
addition to the supervision and faces many problems.
D. Wide spans of management are more common in decentralized firms, whereas narrow
spans of management are typical in centralized organizations.
E. In narrow spans of management, the level of interaction between superiors and
subordinates is usually low.
Narrow spans of management are typical in centralized organizations, while wide spans of
management are more common in decentralized firms.
AACSB: Analytic
Bloom's: Understand
7-24
47. Organizational layers, in the context of assigning responsibility in an organization, refer to

the levels of:
A. management in the organization.
B. stakeholders present outside the organization.
C. tests that a job applicant has to go through to be hired.
D. stakeholders present within the organization itself.
E. communication that an employee has to go through on a normal work day.
Complementing the concept of span of management is organizational layers, the levels of

management in an organization.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
48. Which of the following statements accurately describes the difference between tall and
flat organizations?
A. Tall organizations have lower administrative costs when compared to flat organizations.
B. Tall organizations have a narrow span of management, whereas in flat organizations the
span of management is wide.
C. Communication is faster in tall organizations when compared to flat organizations.
D. Flat organizations employ more number of managers compared to tall organizations.
E. Managers in tall organizations spend more time supervising and working with subordinates
when compared to managers in flat organizations.
A company with many layers of managers is considered tall; in a tall organization, the span of
management is narrow. Organizations with few layers are flat and have wide spans of
management.
AACSB: Analytic
Bloom's: Understand
7-25
49. Which of the following statements is true about organizational layers?

A. The more layers in an organization, the lower its administrative costs.
B. The more layers in an organization, the flatter its organizational structure.
C. The more layers in an organization, the wider its span of management.
D. The more layers in an organization, the slower the communication.
E. The more layers in an organization, the lesser the number of managers.
A company with many layers of managers is considered a tall organization. Because there are
more managers in tall organizations than in flat organizations, administrative costs are usually
higher. Communication is slower because information must pass through many layers.
AACSB: Analytic
Bloom's: Understand
50. In the context of different forms of organizational structure, which of the following is true
of line structure?
A. It has an ambiguous chain of command.
B. It slows down decision making.
C. It is the simplest organizational structure.
D. It requires managers to specialize in any one particular skill.
E. It is common in large, multinational organizations.
The simplest organizational structure, line structure, has direct lines of authority that extend
from the top manager to employees at the lowest level of an organization.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-26
51. An organizational form that is based on direct lines of authority from the top executive to
the lowest level of employees is called a:
A. line structure.
B. web structure.
C. line-and-staff structure.
D. matrix structure.
E. multidivisional structure.
A line structure has direct lines of authority that extend from the top manager to employees at
the lowest level of an organization.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
52. Gerald is the owner of a popular restaurant. He has appointed a manager who takes care of
the day-to-day operations of the restaurant and reports to Gerald at the end of a week. The
manager is assisted by a junior manager, who supervises the rest of the staff in the restaurant.
Thus, Gerald's restaurant is using a _____.
A. matrix structure.
B. line structure.
C. line-and-staff structure.
D. multidivisional structure.
E. web structure.
Gerald's restaurant is using a line structure. The simplest organizational structure, line
structure, has direct lines of authority that extend from the top manager to employees at the
lowest level of an organization.

Bloom's: Apply
Difficulty: 3 Hard
7-27
53. An advantage of line structure in organizations is that it:

A. has a clear chain of command.
B. gives all employees the power to veto a decision, irrespective of hierarchy.
C. allows managers facing a decision to consult any and as many superiors as they wish.
D. does not require managers to possess a wide range of knowledge and skills.
E. works best in large organizations with many different departments.
A line structure has direct lines of authority that extend from the top manager to employees at
the lowest level of an organization. This structure has a clear chain of command, which
enables managers to make decisions quickly.
AACSB: Analytic
Bloom's: Understand
54. A disadvantage of line structures is that they:

A. lack a clear chain of command.
B. make decision making excessively complicated for managers.
C. provide no direct lines of authority.
D. create work duplication and confusion.
E. require managers to possess a wide range of knowledge and skills.
Line structure requires that managers possess a wide range of knowledge and skills. They are
responsible for a variety of activities and must be knowledgeable about them all.
AACSB: Analytic
Bloom's: Understand
7-28
55. Which of the following statements is true about the line-and-staff structure?
A. It allows line managers to focus on their expertise in the business operation.
B. It creates work duplication.
C. It eliminates the problem of overstaffing.
D. It provides clear and unambiguous lines of communication.
E. It gives staff managers direct authority over line managers.
In a line-and-staff structure, line managers can focus on their area of expertise in the operation
of the business, while staff managers provide advice and support to line departments on
specialized matters such as finance, engineering, human resources, and the law.
AACSB: Analytic
Bloom's: Understand
56. Which of the following is a disadvantage of line-and-staff structures?

A. They result in both line and staff managers performing the same functions or tasks.
B. They are limited to small organizations.
C. They allow staff managers to have direct authority over line managers.
D. They create ambiguous lines of communication.
E. They fail to allow managers to have direct authority over subordinates in their own
departments.
Line-and-staff organizations may experience problems with overstaffing and ambiguous lines
of communication. Additionally, employees may become frustrated because they lack the
authority to carry out certain decisions.
AACSB: Analytic
Bloom's: Understand
7-29
57. Multidivisional structures:

A. are less likely to provide products that meet the needs of customers.
B. organize departments into larger groups called divisions.
C. bring together specialists from various divisions to work on a single project.
D. make decision making slower.
E. are traditional and less innovative.
A multidivisional structure organizes departments into larger groups called divisions. Just as
departments might be formed on the basis of geography, customer, product, or a combination
of these, so too divisions can be formed based on any of these methods of organizing.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
58. Which of the following is an advantage of multidivisional structures?

A. They make it easy to realize economies of scale that result from grouping functions
together.
B. They completely eliminate work duplication among different divisions.
C. They are the simplest form of organizational structure.
D. They are highly effective when standardized products are required.
E. They allow divisional and department managers to specialize.
Multidivisional structures permit delegation of decision-making authority, allowing divisional

and department managers to specialize. They allow those closest to the action to make the
decisions that will affect them.
AACSB: Analytic
Bloom's: Understand
7-30
59. Which of the following is a disadvantage of a multidivisional structure?

A. It does not permit delegation of decision-making authority.
B. It slows down decision making.
C. It inevitably creates work duplication.
D. It does not allow divisional and department managers to specialize.
E. It fails to create products that meet the needs of particular customers.
A multidivisional structure inevitably creates work duplication, which makes it more difficult
to realize the economies of scale that result from grouping functions together.
AACSB: Analytic
Bloom's: Understand
60. In Red Bridge Infrastructure, specialists from different departments are deployed together
to form a project team and work on a single project, such as building a bridge or restoring a
road. As a result, employees have to report to their functional managers as well the concerned
project managers. Thus, Red Bridge Infrastructure is using a _____.
A. multidivisional structure
B. line structure
C. line-and-staff structure
D. matrix structure
E. web structure
Red Bridge Infrastructure is using a matrix structure. In matrix structures, project teams bring
together specialists from a variety of areas to work together on a single project, such as
developing a new fighter jet. In this arrangement, employees are responsible to two
managers—functional managers and project managers.

Bloom's: Apply
7-31
61. Which of the following is a basis for using a matrix structure within an organization?
A. Geographic region
B. Projects
C. Products
D. Customers
E. Revenue
A matrix structure superimposes project-based departments on the more traditional, function-

based departments. Project teams bring together specialists from a variety of areas to work
together on a single project.
AACSB: Analytic
Bloom's: Understand
62. Which of the following organizational structures is also called a project management
structure?
A. Web structure
B. Line structure
C. Matrix structure
D. Multidivisional structure
E. Line-and-staff structure
A matrix structure, also called a project management structure, sets up teams from different
departments, thereby creating two or more intersecting lines of authority. It superimposes the
project structure on functional structures.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-32
63. Which of the following is true of matrix structures?

A. In matrix structures, employees are responsible to two managers.
B. Matrix structures are rarely temporary.
C. Matrix structures are generally inexpensive and simple.
D. In matrix structures, the problem of intersecting lines of authority is eliminated.
E. Matrix structures reduce flexibility and creativity with an organization.
In matrix structures, employees are responsible to two managers—functional managers and

project managers. As a result, employees may be confused as to whose authority has
priority—the project manager's or the immediate supervisor's.
AACSB: Analytic
Bloom's: Understand
64. Which of the following is an advantage of a matrix structure?

A. It provides a clear chain of command to employees.
B. It eliminates the problem of intersecting lines of authority.
C. It is the least expensive method to organize a business.
D. It is the simplest form of organizational structure.
E. It provides flexibility, enhanced cooperation, and creativity.
Matrix structures provide flexibility, enhanced cooperation, and creativity, and they enable a
company to respond quickly to changes in the environment by giving special attention to
specific projects or problems.
AACSB: Analytic
Bloom's: Understand
7-33
65. Which of the following is a disadvantage of matrix structures?

A. They do not permit intersecting lines of authority.
B. They provide no scope for flexibility and creativity.
C. They require employees to report to only one manager.
D. They are generally expensive and quite complex.
E. They bring together specialists from the same department.
Matrix structures are generally expensive and quite complex, and employees may be confused
as to whose authority has priority—the project manager's or the immediate supervisor's.
AACSB: Analytic
Bloom's: Understand
66. A _____ sets up teams from different departments, thereby creating two or more
intersecting lines of authority.
A. line structure
B. multidivisional structure
C. matrix structure
D. line-and-staff structure
E. traditional structure
A matrix structure, also called a project management structure, sets up teams from different
departments, thereby creating two or more intersecting lines of authority. The matrix structure
superimposes project-based departments on the more traditional, function-based departments.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-34
67. Compared to work teams, work groups:

A. have shared leadership roles.
B. have a specific purpose that is different from the broader organizational mission.
C. create collective work products.
D. have individual accountability.
E. measure performance directly by assessing collective work.
Work groups emphasize individual work products, individual accountability, and even
individual leadership. In contrast, work teams share leadership roles, have both individual and
mutual accountability, and create collective work products.
AACSB: Analytic
Bloom's: Understand
Learning Objective: 07-05 Distinguish between groups and teams and identify the types of groups that exist in organizations.
Topic: The Types and Functions of Teams
68. In comparison to work groups, work teams:

A. have a strong, clearly focused leader.
B. have individual accountability.
C. share leadership and create collective work products.
D. discourage open-ended discussions and active problem-solving meetings.
E. measure effectiveness indirectly.
Work teams share leadership roles, have both individual and mutual accountability, and create
collective work products. In contrast, work groups emphasize individual work products,
individual accountability, and even individual leadership.
AACSB: Analytic
Bloom's: Understand
7-35
69. Which of the following statements is true of work teams?

A. They do not share leadership roles.
B. They do not allow open-ended discussions or problem-solving meetings.
C. They create individual work products.
D. They measure performance directly by assessing collective work products.
E. They have individual accountability.
Work teams measure performance directly by assessing collective work products. A work
group's performance depends on what its members do as individuals, while a team's
performance is based on creating a knowledge center and a competency to work together to
accomplish a goal.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
70. Which of the following statements is true of work groups?

A. They measure performance directly by assessing collective work products.
B. They share leadership roles.
C. They create individual work products.
D. They pursue objectives that are different from the broader organizational mission.
E. They have both individual and mutual accountability.
Work groups emphasize individual work products, individual accountability, and even
individual leadership. Salespeople working independently for the same company could be a
work group.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-36
71. A permanent, formal group that performs a specific task is a:

A. task force.
B. committee.
C. project team.
D. cooperative.
E. focus group.
A committee is usually a permanent, formal group that does some specific task. For example,
many firms have a compensation or finance committee to examine the effectiveness of these
areas of operation as well as the need for possible changes.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
72. MB Inc. has an independent, permanent work group that develops and revises codes of
ethics, suggests ways the organization can contribute toward the environment, and regularly
reviews other specific issues and concerns within the organization. This is an example of a
_____.
A. cooperative
B. labor union
C. committee
D. task force
E. project team
This is an example of a committee. A committee is usually a permanent, formal group that

does some specific task. For example, many firms have a compensation or finance committee
to examine the effectiveness of these areas of operation as well as the need for possible
changes.

Bloom's: Apply
7-37
73. Which of the following is a temporary group of employees, usually chosen for their
expertise, responsible for bringing out a particular change?
A. Interest group
B. Committee
C. Union
D. Cooperative
E. Task force
A task force is a temporary group of employees responsible for bringing about a particular
change. Task force membership is usually based on expertise rather than organizational
position.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
74. Which of the following statements is true about task forces?

A. They are usually permanent.
B. They comprise members from a single functional department.
C. Their membership is usually based on organizational position rather than expertise.
D. They are responsible for routine quality checks.
E. They may occasionally comprise of individuals from outside an organization.
Task force membership is usually based on expertise rather than organizational position.
Occasionally, a task force may be formed from individuals outside a company.
AACSB: Analytic
Bloom's: Understand
7-38
75. Task force memberships are usually based on:

A. organizational position.
B. expertise.
C. seniority.
D. economic status.
E. hierarchy.
A task force is a temporary group of employees responsible for bringing about a particular
change. Task force membership is usually based on expertise rather than organizational
position.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
76. Project teams:

A. are permanent, informal groups that work on multiple projects.
B. are composed of individuals from one functional area.
C. recruit employees based on organizational position and hierarchy.
D. run their operation and have total control of a specific work project.
E. only solve specific quality problems.
Project teams are similar to task forces, but they normally run their operation and have total
control of a specific work project. Like task forces, their membership is likely to cut across a
firm's hierarchy and be composed of people from different functional areas.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-39
77. A special type of project team that focuses on devising, designing, and implementing a
new product is a:
A. product-development team.
B. committee.
C. cooperative.
D. focus group.
E. quality-assurance team.
A product-development team is a special type of project team formed to devise, design, and
implement a new product. Sometimes product-development teams exist within a functional
area—research and development—but now they more frequently include people from
numerous functional areas and may even include customers to help ensure that an end product
meets customers' needs.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
78. To meet the competition in the mobile phone industry, Vibgyor Electronics Inc. has
created a new project team to conceive, design, and implement a smart phone that will have
some breakthrough features. The team includes specialists from various divisions, such as the
computer division, software division, and television division. This project team is an example
of a _____.
A. committee
B. focus group
C. quality circle
D. functional team
E. product-development team
This project team is an example of a product development team. Product-development teams

are a special type of project team formed to devise, design, and implement a new product.

Bloom's: Apply
7-40
79. Which of the following teams consists of fairly small groups of workers brought together
to address specific quality, service, or productivity problems within an organization?
A. Project teams
B. Product-development teams
C. Focus groups
D. Quality-assurance teams
E. Service providers
Quality-assurance teams, sometimes called quality circles, are fairly small groups of workers
brought together from throughout an organization to solve specific quality, productivity, or
service problems.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
80. A _____ is a group of employees responsible for an entire work process or segment that
delivers a product to an internal or external customer.
A. labor union
B. focus group
C. functional group
D. committee
E. self-directed work team
A self-directed work team (SDWT) is a group of employees responsible for an entire work
process or segment that delivers a product to an internal or external customer. SDWTs permit
the flexibility to change rapidly to meet the competition or respond to customer needs.
AACSB: Analytic
Bloom's: Remember
Difficulty: 1 Easy
7-41
81. Which of the following is true of self-directed work teams?

A. They are designed to give employees a feeling of ownership of a whole job.
B. They reduce an organization's ability to respond to customer needs.
C. They offer limited job assignments to their members.
D. They are designed to allow members to report to both functional and project managers.
E. They limit an employee's ability to cross-train to master other jobs.
The defining characteristic of a self-directed work team (SDWT) is the extent to which it is
empowered or given authority to make and implement work decisions. Thus, SDWTs are
designed to give employees a feeling of ownership of a whole job.
AACSB: Analytic
Bloom's: Understand
82. What is upward communication?

A. Communication about organizational goals to employees
B. Communication between different units and departments within an organization
C. Communication that flows from lower to higher levels of an organization
D. Communication between peers and colleagues
E. Communication between customers and employees
Upward communication flows from lower to higher levels of an organization and includes
information such as progress reports, suggestions for improvement inquiries, and grievances.
Bloom's: Understand
7-42
83. Which of the following is part of upward communication?

A. Performance feedback
B. Progress reports
C. Assignment of tasks
D. Procedure manuals
E. Job descriptions
Upward communication flows from lower to higher levels of an organization and includes
information such as progress reports, suggestions for improvement, inquiries, and grievances.
Bloom's: Remember
Difficulty: 1 Easy
84. Which of the following is an example of downward communication?

A. Progress reports
B. Information exchange between team members
C. Grievances
D. Employee suggestions to top management
E. Directions
Downward communication refers to the traditional flow of information from upper

organizational levels to lower levels. This type of communication typically involves
directions, the assignment of tasks and responsibilities, performance feedback, and certain
details about an organization's strategies and goals.
Bloom's: Remember
Difficulty: 1 Easy
7-43
85. Upward communication conveys:

A. orders.
B. Feedback of decisions.
C. mission statements.
D. inquiries and complaints.
E. details about an organization's strategies.
Upward communication flows from lower to higher levels of an organization. This type of
communication typically involves information such as progress reports, suggestions for
improvement, inquiries, and grievances.
Bloom's: Understand
86. Downward communication typically conveys:

A. organizational rumors.
B. performance feedback.
C. complaints.
D. improvement suggestions.
E. grievances.
Downward communication typically involves directions, the assignment of tasks and

responsibilities, performance feedback, and certain details about an organization's strategies
and goals. Speeches, policy and procedures manuals, employee handbooks, company leaflets,
telecommunications, and job descriptions are examples of downward communication.
Bloom's: Understand
7-44
87. In an automobile company, the vice president of research and development wants to plan
and coordinate the launch of a new car with the vice president of marketing. Any related
communication between them will be referred to as _____.
A. upward communication
B. informal communication
C. horizontal communication
D. asynchronous communication
E. downward communication
Any related communication between the vice president of research and development and the
vice president of marketing is referred to as horizontal communication. Horizontal
communication involves the exchange of information among colleagues and peers on the
same organizational level, such as across or within departments.

Bloom's: Apply
88. Which of the following is a part of informal communication channels?

A. Performance feedback
B. Assignment of tasks
C. Details on organizational strategy
D. Gossip
E. Directions
The most significant informal communication occurs through the grapevine, an informal
channel of communication, separate from management's formal, official communication
channels. Information passed along the grapevine may relate to a job or organization, or it
may be gossip and rumors unrelated to either.
Bloom's: Remember
Difficulty: 1 Easy
7-45
89. Which of the following refers to the exchange of information among colleagues and peers
on the same organizational level?
A. Upward communication
B. Asynchronous communication
C. Horizontal communication
D. Diagonal communication
E. Downward communication
Horizontal communication involves the exchange of information among colleagues and peers
on the same organizational level, such as across or within departments. Horizontal
information informs, supports, and coordinates activities both within the department and with
other departments.
Bloom's: Remember
Difficulty: 1 Easy
90. A project manager informing his or her subordinates of the organization's new policies
and code of conduct would be an example of _____.
B. informal communication
D. diagonal communication
E. downward communication
This would be an example of downward communication. Downward communication refers to

the traditional flow of information from upper organizational levels to lower levels.
Bloom's: Understand
7-46
91. Diagonal communication:

A. is the traditional flow of communication between employees and customers.
B. occurs when individuals from different units and departments within an organization
communicate.
C. flows from lower organizational levels to higher ones.
D. occurs with communication between peers and colleagues within a department.
E. is an informal method of communication that can improve decision making within an
organization.
Diagonal communication occurs when individuals from different units and departments
within an organization communicate. With more and more companies downsizing and
increasing the use of self-managed work teams, many workers are being required to
communicate with others in different departments and on different levels to solve problems
and coordinate work.
Bloom's: Remember
Difficulty: 1 Easy
92. To ensure that its products best suit the needs of its customers, the head of marketing
department at Venus Electronics Inc. holds a meeting with the managers of production
department. This illustrates _____.
B. asynchronous communication
D. grapevine communication
E. diagonal communication
This scenario illustrates diagonal communication. When individuals from different units and
organizational levels communicate to coordinate work, it is diagonal communication.

Bloom's: Apply
7-47
93. Which of the following is an informal communication channel?

A. Company leaflets
B. Progress reports
C. Job descriptions
D. Grievances
E. Grapevine
The most significant informal communication occurs through the grapevine, an informal
channel of communication, separate from management's formal, official communication
channels.
Bloom's: Remember
Difficulty: 1 Easy
94. Over a coffee table discussion, two coworkers were casually discussing how the new
performance incentive policy would affect the quality of their work. This is an example of
_____.
B. downward communication
C. informal communication
D. diagonal communication
E. asynchronous communication
This is an example of informal communication. The most significant informal communication

occurs through the grapevine, an informal channel of communication, separate from
management's formal, official communication channels. Information passed along the
grapevine may relate to the job or organization, or it may be gossip and rumors unrelated to
either.

Bloom's: Apply
7-48
95. Which of the following statements is true about grapevine?

A. It seldom carries incorrect information.
B. It is absent in large organizations.
C. It carries formal and official information.
D. It sometimes carries information that could help in decision making.
E. It never carries information related to a job or organization.
Managers can turn the grapevine to their advantage. Using it as a "sounding device" for
possible new policies is one example. Managers can obtain valuable information from the
grapevine that could improve decision making.
Bloom's: Understand
7-49

Business A Changing World 10th Edition Ferrell Test Bank 1

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Chapter 07 - Organization, Teamwork, and Communication

Business A Changing World 10th Edition Ferrell Solutions

True / False Questions

5. Horizontal communication involves the traditional flow of information from upper

Multiple Choice Questions

7. Which of the following is true of organizational culture?

8. Which of the following is a means of informally expressing an organization's culture?

9. Which of the following is a formal expression of an organization's culture?

10. Identify a true statement about organizational culture?

Organizational culture can be reflected in an organization's relationships with stakeholders.

11. Which of the following statements is true about organizational structure?

Structure is the arrangement or relationship of positions within an organization. Rarely is an

12. Which of the following does an organizational chart display?

An organizational chart is a visual display of the organizational structure, lines of authority

An organizational chart is a visual display of organizational structure, lines of authority (chain

14. Which of the following is a primary function of an organizational chart?

Organizational chart is a visual display of the organizational structure, lines of authority

16. What is the rationale for specialization?

17. Which of the following is an advantage of job specialization?

18. Which of the following is a disadvantage of job specialization?

19. 18th-century economist Adam Smith illustrated improvements in efficiency in

21. Small businesses commonly employ:

Functional departmentalization is common in small organizations. Functional

23. If the type of departmentalization used by an organization tends to emphasize

A weakness of functional departmentalization is that because it tends to emphasize

25. Which of the following is a similarity between customer departmentalization and

Customer departmentalization, like geographical departmentalization, does not focus on the

26. An electronic company has a computer electronics division, telecommunications

Product departmentalization is the organization of jobs in relation to the products of a firm.

AACSB: Reflective Thinking

27. Which of the following is an advantage of product departmentalization?

Product departmentalization organizes jobs around the products of a firm. It simplifies

28. Multinational corporations often use a geographical approach to departmentalization

Multinational corporations often use a geographical approach to departmentalization because

Red Finch Products Inc. is using customer departmentalization. Customer departmentalization

AACSB: Reflective Thinking

This is an example of geographical departmentalization. Geographical departmentalization

AACSB: Reflective Thinking

32. Which of the following is a disadvantage of geographical departmentalization?

Responsibility is the obligation placed on employees through delegation to perform assigned

38. Which of the following is a drawback of centralization?

40. Which of the following is true of decentralization?

Decentralization is characteristic of organizations that operate in complex, unpredictable

41. Which of the following is an advantage of decentralization?

Decentralization is characteristic of organizations that operate in complex, unpredictable

42. When an organization has a structure in which decision-making authority is delegated as

A decentralized organization is one in which decision-making authority is delegated as far

43. Span of management refers to the:

44. A wide span of management is appropriate when:

45. A narrow span of management is appropriate when:

46. Which of the following statements is true about span of management?

47. Organizational layers, in the context of assigning responsibility in an organization, refer to

Complementing the concept of span of management is organizational layers, the levels of

49. Which of the following statements is true about organizational layers?

AACSB: Reflective Thinking

53. An advantage of line structure in organizations is that it:

54. A disadvantage of line structures is that they:

56. Which of the following is a disadvantage of line-and-staff structures?

57. Multidivisional structures:

58. Which of the following is an advantage of multidivisional structures?

Multidivisional structures permit delegation of decision-making authority, allowing divisional

59. Which of the following is a disadvantage of a multidivisional structure?

AACSB: Reflective Thinking