Podcast
Questions and Answers
What is the primary benefit of specialization in an organization?
What is the primary benefit of specialization in an organization?
- Increased formalization
- Improved communication channels
- Division of tasks and activities across positions (correct)
- Enhanced decision-making authority
Which of the following is a characteristic of a highly centralized organization?
Which of the following is a characteristic of a highly centralized organization?
- Location of decision authority and control at lower levels (correct)
- Decentralized decision-making authority
- Emphasis on functional areas
- High degree of formalization
What is formalization in the context of organizational design?
What is formalization in the context of organizational design?
- The emphasis on managing business processes in contrast to functional areas
- The location of decision authority and control within an organization's hierarchy
- The degree to which formal rules and standard policies and procedures govern decisions and working relationships (correct)
- The process of dividing tasks and activities across positions
Which type of business unit is most likely to perform well in a situation with high specialization?
Which type of business unit is most likely to perform well in a situation with high specialization?
What is the primary characteristic of a functional organizational design?
What is the primary characteristic of a functional organizational design?
What is the result of high formalization in an organization?
What is the result of high formalization in an organization?
Which of the following is a characteristic of a decentralized organization?
Which of the following is a characteristic of a decentralized organization?
What is the primary benefit of centralization in an organization?
What is the primary benefit of centralization in an organization?
Which type of business strategy is characterized by high levels of centralization?
Which type of business strategy is characterized by high levels of centralization?
What is a key characteristic of a differentiated defender business strategy in terms of organizational design?
What is a key characteristic of a differentiated defender business strategy in terms of organizational design?
Which type of business strategy is likely to have high levels of inter-functional conflict?
Which type of business strategy is likely to have high levels of inter-functional conflict?
What is a key factor in the successful implementation of a low-cost defender strategy?
What is a key factor in the successful implementation of a low-cost defender strategy?
What is a major pitfall in corporate strategy formation?
What is a major pitfall in corporate strategy formation?
Which of the following is a characteristic of a reactor business strategy?
Which of the following is a characteristic of a reactor business strategy?
What is emphasized by National Motors in their high-end automobiles?
What is emphasized by National Motors in their high-end automobiles?
What is a key benefit of high levels of synergy and shared programs in a business strategy?
What is a key benefit of high levels of synergy and shared programs in a business strategy?
What dimension of product quality refers to consistency of performance?
What dimension of product quality refers to consistency of performance?
What occurs when a firm's policies concerning customer service are unclear or haphazardly enforced?
What occurs when a firm's policies concerning customer service are unclear or haphazardly enforced?
Which type of business strategy is likely to prioritize ROI and cash flow dimensions?
Which type of business strategy is likely to prioritize ROI and cash flow dimensions?
What is a key characteristic of a prospector business strategy in terms of organizational design?
What is a key characteristic of a prospector business strategy in terms of organizational design?
Which business strategy involves removing all extras from a product or service?
Which business strategy involves removing all extras from a product or service?
What is a major challenge in implementing an effective corporate strategy?
What is a major challenge in implementing an effective corporate strategy?
What is critical for business unit performance?
What is critical for business unit performance?
What is a key aspect of organizational design?
What is a key aspect of organizational design?
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.
