Organizational Design: Structure and Performance
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Questions and Answers

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?

  • 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?

  • 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?

    <p>Prospector business units</p> Signup and view all the answers

    What is the primary characteristic of a functional organizational design?

    <p>Simple and bureaucratic form of organizational design</p> Signup and view all the answers

    What is the result of high formalization in an organization?

    <p>Reduced flexibility and adaptability</p> Signup and view all the answers

    Which of the following is a characteristic of a decentralized organization?

    <p>Location of decision authority and control at lower levels</p> Signup and view all the answers

    What is the primary benefit of centralization in an organization?

    <p>Enhanced decision-making authority</p> Signup and view all the answers

    Which type of business strategy is characterized by high levels of centralization?

    <p>Low-cost defender</p> Signup and view all the answers

    What is a key characteristic of a differentiated defender business strategy in terms of organizational design?

    <p>Moderate levels of specialization</p> Signup and view all the answers

    Which type of business strategy is likely to have high levels of inter-functional conflict?

    <p>Low-cost defender</p> Signup and view all the answers

    What is a key factor in the successful implementation of a low-cost defender strategy?

    <p>Hierarchical conflict resolution mechanisms</p> Signup and view all the answers

    What is a major pitfall in corporate strategy formation?

    <p>Failure to recognize the shifting importance of product differentiation and service</p> Signup and view all the answers

    Which of the following is a characteristic of a reactor business strategy?

    <p>Low levels of specialization</p> Signup and view all the answers

    What is emphasized by National Motors in their high-end automobiles?

    <p>Performance and handling</p> Signup and view all the answers

    What is a key benefit of high levels of synergy and shared programs in a business strategy?

    <p>Better allocation of resources</p> Signup and view all the answers

    What dimension of product quality refers to consistency of performance?

    <p>Reliability</p> Signup and view all the answers

    What occurs when a firm's policies concerning customer service are unclear or haphazardly enforced?

    <p>A gap between management perceptions and service quality specifications</p> Signup and view all the answers

    Which type of business strategy is likely to prioritize ROI and cash flow dimensions?

    <p>Low-cost defender</p> Signup and view all the answers

    What is a key characteristic of a prospector business strategy in terms of organizational design?

    <p>High levels of decentralization</p> Signup and view all the answers

    Which business strategy involves removing all extras from a product or service?

    <p>Production of no-frills goods</p> Signup and view all the answers

    What is a major challenge in implementing an effective corporate strategy?

    <p>Failure to recognize shifting market importance</p> Signup and view all the answers

    What is critical for business unit performance?

    <p>Specialization of tasks and roles</p> Signup and view all the answers

    What is a key aspect of organizational design?

    <p>Specialization of tasks and roles</p> Signup and view all the answers

    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.

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