Questions and Answers
What is the primary benefit of specialization in an organization?
Which of the following is a characteristic of a highly centralized organization?
What is formalization in the context of organizational design?
Which type of business unit is most likely to perform well in a situation with high specialization?
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What is the primary characteristic of a functional organizational design?
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What is the result of high formalization in an organization?
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Which of the following is a characteristic of a decentralized organization?
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What is the primary benefit of centralization in an organization?
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Which type of business strategy is characterized by high levels of centralization?
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What is a key characteristic of a differentiated defender business strategy in terms of organizational design?
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Which type of business strategy is likely to have high levels of inter-functional conflict?
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What is a key factor in the successful implementation of a low-cost defender strategy?
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What is a major pitfall in corporate strategy formation?
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Which of the following is a characteristic of a reactor business strategy?
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What is emphasized by National Motors in their high-end automobiles?
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What is a key benefit of high levels of synergy and shared programs in a business strategy?
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What dimension of product quality refers to consistency of performance?
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What occurs when a firm's policies concerning customer service are unclear or haphazardly enforced?
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Which type of business strategy is likely to prioritize ROI and cash flow dimensions?
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What is a key characteristic of a prospector business strategy in terms of organizational design?
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Which business strategy involves removing all extras from a product or service?
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What is a major challenge in implementing an effective corporate strategy?
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What is critical for business unit performance?
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What is a key aspect of organizational design?
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Study Notes
Organizational Design
- Formalization is the degree to which formal rules and standard policies and procedures govern decisions and working relationships.
- Centralization refers to the location of decision authority and control within an organization's hierarchy.
- Specialization is the division of tasks and activities across positions within the organizational unit.
- In a prospector business unit, the marketing department is most likely to perform better when there is a high degree of specialization.
- Functional organizational design is the simplest and most bureaucratic form of organizational design.
- Highly structured business units and marketing departments are unlikely to quickly adapt to changing environmental circumstances and are unlikely to be very innovative.
Business Strategies
- Prospector business strategy comprises high incentives based on sales and share growth.
- Differentiated defender business strategy is characterized by a moderate level of SBU autonomy.
- Low-cost defender business strategy is characterized by a high level of synergy and shared programs.
- Reactor business strategy does not have a clear characterization.
Strategy Implementation
- For a low-cost defender strategy, SBU will perform best on ROI and cash flow dimensions when conflict resolution mechanisms are hierarchical.
Product Quality
- Performance is a product quality dimension that emphasizes a product's attributes such as excellent handling, acceleration, comfort, and braking.
- Reliability is a product quality dimension that refers to the consistency of performance from purchase to purchase or to a product's uptime.
- Durability is a product quality dimension that refers to the length of time a product can perform its intended function.
- Serviceability is a product quality dimension that refers to the ease and speed of repair and maintenance.
Service Quality
- The gap between management perceptions and service quality specifications occurs when a firm's policies concerning customer service are unclear or haphazardly enforced.
- The gap can also occur when a firm does not have an accurate understanding of service evaluation by customers.
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Description
Understand the key concepts of organizational design, including formalization, centralization, specialization, and how they impact business unit performance.
