Test Bank for Contemporary Strategy Analysis: Text and Cases Edition, 9th Edition

Test Bank for Contemporary Strategy Analysis: Text

and Cases Edition, 9th Edition

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 TESTBANK: CHAPTER 6
Organization Structure and Management Systems:
The Fundamentals of Strategy Implementation

True/False Questions

1. Jamie Dimon’s comment, “I’d rather have first-rate execution and second-rate strategy anytime than
brilliant ideas and mediocre management” reflects the view that strategy implementation is more
important than strategy formulation.
[See p.139]
*a. T
b. F

2. The comment, “Brilliant strategy; lousy implementation” confirms the essential fact that strategy
formulation and strategy implementation are distinct, separable activities.
[See p.141]
a. T
*b. F

3. For strategy to be effectively implemented, all enterprises need a strategic planning system.
[See p.141]
a. T
*b F

4. Linking medium-term strategic planning to annual operating plans and an operating budget is
undesirable since it encourages short-term thinking.
[See p.143]
a. T
*b. F

5. Conventionally, strategy is viewed as preceding organizational structure. Management writer Tom

Peters states the opposite: “strategy follows structure.” The relationship between strategy and structure
is best described as:
[See p.144]
a. Strategy and structure are interdependent
b. Designing organizational structure is a key component of strategy implementation
c. How a firm is organized may be a central feature of its strategy
*d. All of these

6. Operating plans and capital expenditure budgets are the key mechanisms through which strategy
drives resource allocation.
[See p.143]
*a. T
b. F

7. Firm and markets represent the two primary modes of economic organization in the capitalist
economy.
[See pp.146-147]
*a. T
b. F

© 2016 Robert M. Grant 6-1

8. A major organizational innovation of the first two decades of the 20 th century was the
multidivisional corporation.
[See p.146]
*a. T
b. F

9. Corporations are not the dominant organizational form in all industries—in agriculture and many
service industries other forms of business enterprise predominate.
[See p.147]
*a. T
b. F

10. Holding companies are organizational forms that exist primarily to facilitate control over
large family-owned businesses.
[See p.146]
*a. T
b. F

11. Firms exist in order to achieve the efficiency benefits of specialization and division of labor.
[See p.145]
*a. T
b. F

12. The rigidities of hierarchical control have resulted in most business enterprises no longer being
organized as hierarchies.
[See p.151]
a. T
*b. F

13. During recent decades, the hierarchical structures of business enterprises have become more
oriented towards control than coordination.
[See p.151]
a. T
*b. F

14. The fundamental organizational problem is that specialisation creates the need for cooperation and
coordination.
[See p.145]
*a. T
b. F

15. The shared values embodied in an organization’s culture cannot substitute for direct management
control.
[See p.148]
a. T
*b. F

16. Hierarchy is a feature of all complex organizational forms whether human, biological, or physical.
[See p.151]
*a. T
b. F

© 2016 Robert M. Grant 6-2

17. In determining how to group the employees into organizational units, the intensity with which they
need to collaborate with one another is less important than the need for social harmony.
[See p.150]
a. T
*b. F

18. Organic structures are superior to mechanistic structures.

[See p.153]
a. T
*b. F

19. Contingency theory advocates that the best organizational design is one that can respond to
multiple contingencies.
[See p.153]
a. T
*b. F

20. When markets become unstable, bureaucratic approaches to management become more effective
because they are a source of stability.
[See p.153]
a. T
*b. F

21. According to James Thompson, “pooled interdependence” is the most intensive form of interaction
between organizational members.
[See p.155]
a. T
*b. F

22. As companies and their industries mature, the need for efficiency and more centralized control,
often results in companies replacing their functional structures with multidivisional structures.
[See p.156]
a. T
*b. F

23. In recent decades many large corporations have reorganized their matrix structures such that
financial and strategic control is exercised through a single dimension.
[See p.159]
*a. T
b. F

24. Adhocracy is a structure where values, motivation, participation, and mutual respect, allow a high
level of coordination without the need for formal control
[See p.160]
*a. T
b. F

25. The distinctive feature of project–based organizations is that the operating units—the project
teams—are temporary.
[See p.160]
*a. T
b. F

© 2016 Robert M. Grant 6-3

Multiple Choice Questions

26. Jay Galbraith and Ed Lawler’s comment that: “Ultimately, there may be no long-term sustainable
advantage that the ability to organize and manage” may be justified by:
[See p. 139]
a. The impact of disruptive technologies in most industries
b. The realities of Schumpeterian competition
*c. The need for firms to continually develop and renew their organizational capabilities
d. Of all the most strategically important resources, good managers are the scarcest

27. The epithet “Great strategy; lousy implementation” is typically wrong because:
[See p.141]
a. Strategies are typically formulated in the course of their implementation (i.e. they are “emergent”)
*b. Strategies whose formulation does not take account of their potential for implementation are not
great strategies
c. Both (a) and (b)
d. Neither (a) nor (b)

28. In most large companies strategic planning is:

[See p.142]
a. Primarily a top-down process
b. Primarily a process of managed emergence
*c. A process that combines top-down initiatives and directives and bottom-up proposals
d. A formalized ritual that has little to do with real strategy formulation

29. The main reason that most entrepreneurial start-up companies adopt a formalized process of
strategic planning processes at some stage of their development is:
[See p.141]
a. To allow quantitative analysis to be applied to strategic decision
b. To limit the power of founders
*c. To facilitate coordination and control as a company grows in size and complexity
d. To enable decisions to become focused more on long term development

30. In most large companies the strategic planning cycle begins with:
[See p.142]
*a. Top management setting strategic priorities
b. Business units developing business plans
c. The financial requirements set by investors and the stock market
d. Guidelines developed by the board of directors

31. The primary mechanisms through which companies translate strategic plans into action are:
[See p.143]
a. Statements of vision and mission.
*b. Operating plans and capital expenditure budgets.
c. CEO leadership.
d. Resolutions by the board of directors.

32. During the 19th century the principle source of ideas about how to organize large business
enterprises derived from:
[See p.146]
a. Max Weber’s principles of bureaucracy

© 2016 Robert M. Grant 6-4

b. The ideas of industrial leaders such as Andrew Carnegie, John D. Rockefeller and Alfred Krupp
c. Frederick Taylor’s “scientific management” The introduction of limited liability, the railroad, and
the telegraph
*d. The military

33. The Tata Group, the Virgin Group, and Alphabet Inc. are examples of:
[See p.146]
a. Multidivisional corporations.
b. Adhocracies.
c. Line-and-staff organizations.
*d. Holding companies.

34. The creation of business enterprises where a head office managed geographically-separate
operational units was facilitated by:
[See p.148
a. The development of management as a practical science
*b. Improvements in transportation and communication—especially the railroad and telegraph
c. The development of the multidivisional corporation
d. The introduction of limited liability

35. The success of the multidivisional structure as an organizational form was because:
[See p.148
a. Line-and-staff structures allowed companies to serve to a broader geographical area
*b. The separation of strategic from operational decision allowed corporate management to exercise
more effective strategic and financial control
c. Divisions were forced to compete with one another for corporate resources
d. It permitted decision making ot be decentralized

36. The pioneers of the multidivisional structure were:

[See p.146]
a. Ford and General Motors
b. Standard Oil and Shell
c. Sears Roebuck and General Electric
*d. DuPont and General Motors

37. According to Henry Mintzberg, organizational structure can be defined as:

[See p.144]
*a. The ways in which labor is divided into distinct tasks, and coordination is achieved among these
tasks
b. The ways in which tasks are divided among divisions and managerial coordination achieved from
the highest level of the organization
c. The allocation of an organization’s resources to divisions and departments
d. The way in which coordination and cooperation between productive tasks is organized

38. A fundamental task of organization is to manage:

[See p.144]
a. Cooperation and coordination
b. The division of labor into separate tasks
*c. The division of labor into separate tasks and their subsequent integration
d. The problem of agency

© 2016 Robert M. Grant 6-5

39. The tendency for societies to revert to subsistence economies when the fabric of civilization breaks
down is because:
[See p.145]
a. Shops cannot operate when there is a risk of looting
b. Uncertainty reinforces the role of the family and family-based production
*c. Specialization and the division of labor require an exchange economy which depends upon mutual
trust and the rule of law
d. The modern economy requires money which requires a stable national government

40. The “agency problem” refers to:

[See p.145]
a. The inability the owners of a company to control the managers they appoint to run the company
b. The misalignment of goals between the shareholders and managers of a company
*c. The misalignment of goals between a principal and his/her agent
d. The tendency for the CEOs of public corporations to receive excessive compensation

41. An important role of shared values within an organization is to:

[See p.148]
a. Increase employee productivity.
*b. Support cooperation and goal alignment among organizational members.
c. Economize on the need for financial incentives.
d. Resolve stakeholder conflict

42. The major determinant of the organizational culture of most companies is:
[See p.152
*a. The personality and beliefs of the founder
b. The impact of the company’s local environment
c. The personal traits of employees
d. The cultural change initiatives promoted by top management.

43. It is important for in incoming CEO to be intimately familiar with the culture of the organization
he/she is joining because:
[See p.149]
a. Culture is a vital lever that the CEO can manipulate
*b. Top management initiatives that conflict with the culture of the organization are likely to fail
c. A critical task for a new CEO is to adapt the organization’s culture to the strategy that the CEO
wishes to pursue
d. The fact that “Culture eats strategy for lunch” means that managing culture is a more important task
for a CEO than managing strategy

44. Roles and directives, mutual adjustment, and routines are:

[See p.150]
a. Mechanisms for overcoming goal misalignment among organizational members
b. Means for controlling employees in an organization
c. Means for people to build a hierarchy within the firm
*d. Mechanisms for achieving coordination among organizational members

45. In doubles tennis, the main mechanism through which the players coordinate their actions is:
[See p.150]
a. Rules and directives
b. Organizational routines
*c. Mutual adjustment

© 2016 Robert M. Grant 6-6

Test Bank for Contemporary Strategy Analysis: Text and Cases Edition, 9th Edition

d. Shared values

46. Hierarchy is a feature of:

[See p.151]
a. All human societies
*b. Most complex systems
c. Most companies before the digital era
d. Authority-based organizations only

47. For hierarchical organizations to be adaptable requires:

[See p.155
a. Separation between centralized strategic decisions and decentralized operating decisions
*b. Some degree of decomposability
c. Shared values
d. Adequate resources

48. Organic organizational forms are preferable to mechanistic organizational forms:

[See pp.152-153
a. For large, diversified firms.
b. For firms supplying consumer goods.
*c. For firms in dynamic, uncertain environments.
d. In countries with well-educated workforce.

49. Firms organized around functional structures tend to experience management problems when:
[See p.156]
a. Top managers must envision their succession.
*b. The range of products expands.
c. The business environment becomes more turbulent.
d. A global strategy is pursued.

50. Large corporations with matrix structures where control is shared among different organizational
dimensions have experienced:
[See pp.158-159]
a. Benefits from superior coordination
b. The need to put primary emphasis upon their regional and country-based organizational units
*c. Excessive headquarters cost and complexity
d. Lower levels of politicization s compared with functional and divisional structures

© 2016 Robert M. Grant 6-7

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