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 Chapter 7
Organizational Structure and Change

True/False
1. In centralized companies, many important decisions are made at lower levels of
the hierarchy. False: In centralized companies, many important decisions are
made at higher levels of the hierarchy. (Easy; Comprehension)

2. In decentralized companies, decisions are made and problems are solved at lower
levels by employees who are closer to the problem in question. True (Easy;
Comprehension)

3. Decentralized companies give more authority to a higher-level employee,

resulting in a sense of empowerment. False: Decentralized companies give
more authority to lower-level employees, resulting in a sense of
empowerment. (Medium; Comprehension)

4. Decisions can be made more quickly in centralized companies. False: Decisions

can be made more quickly in decentralized companies. (Medium;
Comprehension)

5. Some employees are more comfortable in a centralized organization where their

manager confidently gives instructions and makes decisions. True (Easy;
Comprehension)

6. Formalized structures are those in which there are few written rules and
regulations. False: Formalized structures are those in which there are many
written rules and regulations. (Medium; Comprehension)

7. Research indicates that flat organizations provide greater need satisfaction for
employees, and greater levels of self-actualization. True (Medium;
Comprehension)

8. Functional structures tend to be effective when an organization has a large

number of products and services requiring special attention. False: Functional
structures (Medium; Knowledge)

9. When a company has a diverse product line, each product will have unique
demands, deeming divisional structures more useful. True (Medium;
Knowledge)

10. Functional structures are more effective in stable environments that are fast to
change. False: Functional structures are more effective in stable
environments that are slower to change. (Medium; Knowledge)

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 11. Mechanistic structures limit individual autonomy and self determination which
will likely lead to lower levels of intrinsic motivation on the job. True (Medium;
Comprehension)

Multiple Choice

1. A disadvantage of formalization in organization structure is:

a. Decision making is at a faster pace
b. Formalized structure is associated with increased motivation and job
satisfaction
c. Strategic decision making occurs often
d. Reduced innovativeness occurs because employees are used to behaving
in a certain manner
(d: Medium; Comprehension)

2. The following statements regarding tall structures in an organization are true

EXCEPT:
a. Tall structures are better at satisfying security needs of employees then in
flat structures
b. Number of employees reporting to each manager tends to be smaller in tall
structures
c. Employees feel a greater sense of job security in tall structures
d. In tall structures, there is a greater level of freedom of action for each
employee
(d: Medium; Comprehension)

3. Which of the following is true regarding functional structures?:

a. Jobs are based on differences in functions
b. Departments include manufacturing, finance, accounting, human resources
and information technology
c. Each person is trained to do several job functions.
d. Each person handles specific transactions
(b Hard; Comprehension)

4. Mechanistic structures include which of the following?:

a. Structures that are informal and decentralized.
b. Structures where communication follows informal channels
c. Structures that are flexible and easy to change
d. Structures where employees are given specific job descriptions delineating
their roles and responsibilities
(d: Medium; Knowledge)

Fill-in

©2013 Flat World Knowledge, Inc. 3

1. __________________ refers to how individual and team-work within an
organization is coordinated. (Organizational structure: Easy; Knowledge)

2. _______________ is the degree to which decision making authority is

concentrated at higher levels in an organization. (Centralization: Medium;
Knowledge)

3. _______________ companies give more authority to lower-level employees,

resulting in a sense of empowerment. (Decentralized: Easy; Knowledge)

4. In a ______________ company decisions can be made more

quickly.(decentralized: Medium; Comprehension)

5. Centralization may lead to a more efficient operation if the company is operating

in a(n) ______________ environment. (stable: Hard; Comprehension)

6. ________________ is the extent to which an organization’s policies, procedures,

job descriptions, and rules are written and explicitly articulated. (Formalization:
Easy; Knowledge)

7. Structures control employee behavior using written rules, so that employees have
little _____________ to decide on a case-by-case basis. (autonomy: Medium;
Comprehension)

8. Formalization tends to make employee behavior more ____________.

(predictable: Medium; Comprehension)

9. When a company has several layers of management between frontline employees

and the top level, it is said to have ____________ structures. (tall: Medium;
Knowledge)

10. _____________structures consist of only a few layers between frontline

employees and the top level. (Flat: Medium; Knowledge)

11. ____________structures involve a larger number of employees reporting to each

manager. (Flat: Medium; Knowledge)

12. In a _____________ structure, advancement opportunities will be more limited

because there are fewer management layers. (flat: Medium; Comprehension)

13. Organizational structures differ in terms of _______________, which is broadly

categorized as either functional or divisional. (departmentalization: Medium;
Knowledge)

14. Organizations using a____________ structure group jobs based on similarity in

functions. (functional: Easy; Knowledge)

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 15. In organizations using _____________ structures, departments represent the
unique products, services, customers, or geographic locations the company is
serving. (divisional: Easy; Knowledge)

16. There are _________ configurations of organizational structures depending on

how the different elements are arranged. (two: Hard; Knowledge)

17. ____________ structures are flexible and decentralized, with low levels of
formalization. (Organic: Easy; Knowledge)

Short Answer
1. What are the four aspects of organizational structure that have been frequently
studied in the literature and are mentioned in your text? Centralization,
formalization, hierarchical levels and departmentalization. (Easy;
Knowledge)

2. Explain how the manufacturer Caterpillar suffered the consequences of

decentralized decision making. At the time, all pricing decisions were made in
the corporate headquarters. This meant that when a sales representative
working in Africa wanted to give a discount on a product, they needed to
check with headquarters. Headquarters did not always have accurate or
timely information about the subsidiary markets to make an effective
decision. Caterpillar was at a disadvantage against competitors. (Medium;
Knowledge)

3. Describe McDonald’s bureaucratic structure. In McDonald’s bureaucratic

structure, employee jobs are highly formalized, with clear lines of
communication and very specific job descriptions. (Easy; Knowledge)

Chapter 7, Section II

True/False
1. In a matrix structure, product managers have control and say over product related
matters, while department managers have authority over matters related to
company policy. True (Medium; Comprehension)

2. In an example of a matrix structure at a software development company, business

analysts, developers, and testers each report to a functional department manager
and to a project manager simultaneously. True (Medium; Comprehension)

3. In a matrix, each employee reports to only one manager at a time. False: In a

matrix, each employee reports to two or more managers. (Easy; Knowledge)

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 4. Boundaryless organizations eliminate barriers that separate employees between
different departments. True (Easy; Knowledge)

Multiple Choice

1. Despite potential benefits, the disadvantages of a matrix structure include which

of the following?:
a. Power struggles or turf wars among managers are lessened, taking away
an important source of new ideas and innovation.
b. Managers will spend less effort coordinating their work, believing that
someone else can pick-up the slack.
c. Role ambiguity or role conflict is very low
d. There is potential for interpersonal conflict with team members as well as
with leaders
(d: Medium; Knowledge)

2. An example of a company that utilizes the matrix organization successfully is:

a. Starbucks
b. Nike
c. 3M
d. Ben and Jerry’s
(b: Medium; Comprehension)

3. An example of a company that is a modular organization is:

a. Toyota
b. Nike
c. 3M
d. Starbucks
(a: Easy; Knowledge)

4. All of the following are characteristics which describe learning organizations

EXCEPT:
a. Learning organizations are good at learning from experience
b. Some companies choose to conduct formal retrospective meetings to
analyze the challenges encountered and areas for improvement
c. Learning organizations hire only employees who are willing to learn from
past mistakes
d. Learning organizations are good at studying customer habits to generate
ideas
(c: Medium; Comprehension)

Fill-in

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 1. Organizations with a design that combines a traditional structure and a product
structure are called ________________ organizations. (matrix: Medium;
Knowledge)

2. A term coined by Jack Welch during his tenure at GE and refers to an

organization that eliminates traditional barriers between departments as well as
barriers between the organization and the external environment is
_________________. (boundaryless organization: Medium; Knowledge)

3. A form of boundaryless organization in which all nonessential functions are

outsourced is ________________. (modular organization: Medium;
Knowledge)

4. An example of a boundaryless organization that outsources many of its operations

is __________________. (Toyota: Medium; Knowledge)

5. __________________ constitutes a form of boundaryless design similar to a joint

venture. (Strategic alliance: Medium; Knowledge)

6. A __________________ is one whose design actively seeks to acquire knowledge

and change behavior as a result of the newly acquired knowledge. (learning
organization: Medium; Knowledge)

Short Answer
1. Who did Starbucks form a successful partnership with and why? Starbucks
formed a successful partnership with PepsiCo to market its Frappuccino cold
drinks. (Easy; Knowledge)

2. What is IBM’s EBO? At IBM, leaning is encouraged by taking highly

successful business managers and putting them in charge of Emerging
Business Opportunities. By setting up a structure where failure is tolerated
and risk taking is encouraged, the company took a big step toward becoming
a learning organization. (Medium; Knowledge)

Chapter 7, Section III

True/False
1. The act of including employees in the change process can drastically reduce
opposition to new methods. True (Easy; Knowledge)

2. Instead of including employees, organizations should recruit a small number of

opinion leaders to promote the benefits of coming changes. False: In addition to
including employees, organizations can recruit a small number of opinion
leaders to promote the benefits of coming changes. (Medium; Knowledge)

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 3. Change management is an important leadership skill that spans the entire range of
P-O-L-C functions. True (Easy; Comprehension)

4. The U.S. Department of Labor and the Organization for Economic Co-operation
and Development have reported that the average age of the U.S. workforce will
decrease as the baby boom generation nears retirement age. False: The U.S.
Department of Labor and the Organization for Economic Co-operation and
Development have reported that the average age of the U.S. workforce will
increase as the baby boom generation nears retirement age. (Easy;
Knowledge)

5. Globalization is a threat and opportunity for organizations, depending on their

ability to adapt to it. True (Easy; Knowledge)

6. Knowledge work is thought to be safe from outsourcing. False: Knowledge work

is not safe from outsourcing. (Medium; Comprehension)

7. According to a 2007 SHRM survey, employee resistance to change is one of the

top reasons why change efforts fail. True (Medium; Knowledge)

8. Some of a company’s most committed employees may be the least vocal

opponents to a change effort. False: Some of a company’s most committed
employees may be the most vocal opponents to a change effort. (Medium;
Comprehension)

Multiple Choice
1. Organizational change can take the form of which of the following?:
a. Structure, strategy, policies, or culture
b. Change should be planned on quarterly basis and measured for progress
c. Fundamentally, organizational change is a process that involved effective
products or services
d. Change should moderate so as to not disrupt corporate cultural norms..
(a: Medium; Comprehension)

Fill-in
1. Organizational change is often a response to changes in the ________________.
(environment: Medium; Knowledge)

2. Sometimes change is motivated by rapid developments in _______________.

(technology: Medium; Knowledge)

3. Because of differences in national economies and standards of living from one

country to another, organizations ______________ their manufacturing

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 operations to countries like China and Mexico. (outsource or offshore: Medium;
Knowledge)

4. ______________ is the most negative reaction to a proposed change attempt.

(Active resistance: Medium; Knowledge)

5. ______________ involves being disturbed by changes without necessarily

voicing these opinions. (Passive resistance: Medium; Knowledge)

6. _______________ involves going along with proposed changes with little

enthusiasm. (Compliance: Medium; Knowledge)

7. ________________ are defenders of the new way and actually encourage others
around them to give support to the change effort. (Enthusiastic support:
Medium; Knowledge)

8. To be successful, any change attempt will need to overcome _____________ on

the part of employees. (resistance: Medium; Knowledge)

9. Resistance to change is a valuable ____________ tool that should not be ignored.

(feedback: Hard; Comprehension)

Short Answer
1. What does it mean for companies that the workforce is getting older?
Organizations may realize that as the workforce gets older, the types of
benefits workers prefer may change. Work arrangements such as flexible
work hours and job sharing may become more popular as employees remain
in the workforce even after retirement. (Medium; Comprehension)

2. How did companies in the music industry respond when peer-to-peer file sharing
threatened their business? Their first response was to sue the users of file
sharing software. They also kept looking for a technology which would make
it impossible to copy a CD or DVD. (Easy; Knowledge)

3. What changes are companies coping with as a result of outsourcing? Dealing

with employee stress resulting from jobs being moved overseas, retraining
the workforce, and learning to compete with a global workforce on a global
scales are changes companies are trying to come to grips with. (Medium;
Knowledge)

4. How does a change in the environment create change within an organization?

Whether the organization changes or not in response to the environmental
challenges and threats depends on the decision makers’ reactions to what is
happening in the environment. (Hard; Comprehension)

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 5. Why do poorly performing companies often find it easier to change compared to
successful companies? High performance actually leads to overconfidence and
inertia. As a result, successful companies often keep doing what made them
successful in the first place. (Medium; Comprehension)

6. How does Nokia keep their organization open to change? Nokia finds that it is
important to periodically change the perspective of key decision makers. For
this purpose, they rotate heads of businesses to different posts to give them a
fresh perspective. Change in a company’s upper-level management is a
motivator for change at the organization level. (Medium; Comprehension)

7. Why did the Dvorak keyboard fail in change? When the typewriter was first
invented, the first prototypes of the keyboard would jam if the keys right
next to each other were hit at the same time. The manufacturers slowed
typists down by putting the most commonly used letters to the left hand side
and scattering the most frequently used letters all over the keyboard. Dvorak
provided a much more efficient design and allowed individuals to double
traditional typing speeds. The Dvorak keyboard never gained wide
acceptance because large numbers of people resisted the change. (Medium;
Knowledge)

8. Why do people resist change? People often resist change for the simple reason
that change disrupts our habits. (Easy; Comprehension)

Chapter 7, Section IV

True/False
1. According to Lewin, executing change without prior preparation is likely to lead
to failure. True (Medium; Knowledge)

2. In order to convince people that change is needed, the change leader must
convince every person individually. False: In order to convince people that
change is needed, the change leader does not have to convince every person
individually. (Medium; Comprehension)

3. After the change is implemented, the long-term success of a change effort

depends on the extent to which the change becomes part of the company’s
strategy. False: After the change is implemented, the long term success of a
change effort depends on the extent to which the change becomes part of the
company’s culture. (Hard; Comprehension)

4. Breaking up the proposed change into phases may be a bad idea because it creates
the wrong targets. False: Breaking up the proposed change into phases may be
a good idea because it creates smaller targets. (Medium; Comprehension)

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 5. When the new behaviors employees are expected to demonstrate are made part of
an organization’s reward, those behaviors are more likely to be taken seriously
and repeated. True (Medium; Knowledge)

Multiple Choice
1. A number of things organizations can do prior to change to prepare employees
include which of the following?:
a. Provide employees with HR support in the event they choose to leave the
organzaition.
b. Allow employees to participate
c. Effectively communicate the pros and cons of the expected change.
d. Unfreeze
(b: Medium; Comprehension)

2. Why do employees who participate in planning change efforts tend to have more
positive opinions about the change?
a. They have the opportunity to reject the proposed change
b. They will have the opportunity to know more than others about the change
c. They will be able to convince customers the change was the right thing to
do
d. They will feel a sense of ownership of planned change and are more likely
to be on board.
(d: Medium; Comprehension)

3. Lewin’s change model includes which of the following steps?:

a. Develop
b. Make sure employees are receptive to change
c. Build a coalition
d. Inform employees that you are open to new ideas and that the the change
may not be permanent
(b: Medium; Knowledge)

4. In order to make change permanent, the organization may benefit from sharing
the results of the change effort with:
a. Employees
b. Managers
c. Customers
d. Board members
(a: Medium; Comprehension)

Fill-in
1. One of the most useful frameworks in the area of change is the three-stage mode
of planned changed developed by psychologist _______________. (Kurt Lewin:
Medium; Knowledge)

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 2. Organizations should start with _______________, or making sure that
organizational members are ready for and receptive to change. (unfreezing:
Medium; Knowledge)

3. ________________ involves ensuring that change becomes permanent and the

new habits, rules, or procedures become the norm. (Refreezing: Medium;
Knowledge)

4. Ensuring that top management communicates with employees about the

upcoming changes also has symbolic _____________. (value: Hard;
Comprehension)

5. Management may prepare employees for change by providing ____________ and

instrumental support. (emotional: Medium; Comprehension)

6. The second stage of Lewin’s change model is ______________ change.

(executing: Medium; Knowledge)

7. The learning organization is an example of a company embracing _____________

change. (continuous: Hard; Comprehension)

Short Answer
1. Describe Kurt Lewin’s model of change. This model assumes that change will
encounter resistance. Lewin’s process of change emphasizes the importance
of preparation or unfreezing before change, and reinforcement of change
afterwards, or refreezing. (Easy; Knowledge)

2. What can organizations do prior to change to prepare employees? Ensure that

top management communicates with employees about the upcoming changes.
The leader not only communicates a plan but also an overall vision for the
change. People are more likely to accept change if they feel that there is a
need for it. Instead of trying to get everyone on board at the same time, it
may be more useful to convince and prepare the opinion leaders.
Management may prepare employees for change by providing emotional and
instrumental support. Finally, employees who participate in planning
change efforts tend to have more positive opinions about the change.
(Medium; Comprehension)

3. How did Lou Gerstner, the former CEO of IBM, execute a successful
transformation of the company in the early 1990s? Gerstner achieved
cooperation by keeping the crisis front and center. He did not want to lose
the sense of urgency. (Medium; Comprehension)

Chapter 7, Section V

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True/False
1. You may think that your idea is great, but listening to those who resist may not
give you valuable ideas about your idea. False: You may think that your idea is
great, but listening to those who resist may give you valuable ideas about
your idea. (Medium; Knowledge)

2. If you are trying to dramatically change the way things are done, you will find
resistance is lowest. False: If you are trying to dramatically change the
way things are done, you will find that resistance is greater. (Medium;
Knowledge)

Fill-in
1. When trying to persuade people to change their ways, it helps if you have a
____________ of suggesting implementable changes. (history: Medium;
Comprehension)

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