Organizational Structure and Design 5 6 7 8

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What is the primary purpose of establishing a clear organizational structure?

To limit resource allocation within the organization.

To facilitate task completion and establish accountability. (correct)

To ensure every employee can perform all types of tasks.

To create ambiguity in roles to promote individual competition.

Which of the following best describes the interrelationship between differentiation and integration in organizational structure?

Differentiation focuses on tasks and duties, while integration ensures they operate independently.

Differentiation divides work, and integration coordinates these divisions to function as a cohesive unit. (correct)

Integration encourages employee specialization, whereas differentiation promotes collaboration.

Differentiation establishes hierarchy, and integration keeps it flexible.

In the context of organizational structures, what is a primary difference between centralization and decentralization?

Centralization concentrates decision-making authority, and decentralization distributes it throughout the organization. (correct)

Centralization requires all employees to work in a single location, and decentralization allows remote work.

Centralization focuses on quick decision-making processes, whereas decentralization takes more time.

Centralization emphasizes equal power distribution, while decentralization consolidates it at the top.

Why does an organization need to tailor its strategies to changing conditions?

To remain effective and competitive in dynamic environments. (A) Signup and view all the answers

Which statement best describes the relationship between an organization’s structure and its efficiency?

An organization's structure enables it to operate effectively by defining tasks and roles. (B) Signup and view all the answers

Which type of organizational structure focuses on project-based tasks and requires flexibility in roles?

Adhocracy (A) Signup and view all the answers

What is a primary characteristic of sustainable business practices?

Accomplishing economic viability within planetary boundaries (C) Signup and view all the answers

How can circular business models contribute to sustainability?

By encouraging reuse, recycling, and waste reduction (B) Signup and view all the answers

Which term refers to companies acting in a socially responsible manner towards their communities and environment?

Corporate citizenship (D) Signup and view all the answers

What does the term 'drivers of sustainable business' refer to?

Elements that encourage the adoption of sustainable practices (A) Signup and view all the answers

What does the Uppsala model suggest about market entry strategies?

It emphasizes entering many markets simultaneously. (B) Signup and view all the answers

What is a key characteristic of business ethics as stated in the content?

It must adapt to varying cultural norms. (D) Signup and view all the answers

What was a significant consequence of the Volkswagen Emissions Scandal?

Legal actions and penalties exceeding $30 billion. (C) Signup and view all the answers

What does the term 'multidomestic structure' refer to in international business?

A strategy focused on tailoring products to local markets. (C) Signup and view all the answers

According to the content, why is internationalization significant for a business?

It extends and alters the management processes. (C) Signup and view all the answers

Which of the following statements about the ethical perspective on business is accurate?

Business ethics is a flexible code that varies by company. (A) Signup and view all the answers

What impact did the Volkswagen scandal have on its brand value?

It severely damaged public trust in the brand. (B) Signup and view all the answers

What type of organizational structure is characterized by combining domestic structure with an international division?

Export-oriented structure. (B) Signup and view all the answers

What stage of the institutionalisation process seeks to demonstrate the value of sustainability beyond the initial action?

Theorisation (B) Signup and view all the answers

Which of the following is NOT a characteristic of the 'innovative practice' stage in the institutionalisation process?

Integrated into core business activities (D) Signup and view all the answers

Which of the following is an example of a 'moral motive' for a company to adopt sustainable practices?

Maintaining a positive public image (B) Signup and view all the answers

What is the primary goal of the 'diffusion' stage in the institutionalisation process?

Communicating sustainability targets and involving all business actors (B) Signup and view all the answers

Which of the following statements accurately describes the relationship between 'mainstreaming' and 'institutionalisation' in the context of sustainable business?

Mainstreaming precedes institutionalisation, laying the foundation for widespread adoption (D) Signup and view all the answers

What is the primary advantage of centralization in management?

Low coordination costs (B) Signup and view all the answers

Which type of departmentalisation focuses on geographical areas?

Geographic departmentalisation (C) Signup and view all the answers

What is one disadvantage of high formalisation in an organisation?

Dissuading process improvement options (C) Signup and view all the answers

Which integration mechanism involves collaboration among team members?

Mutual adjustment (B) Signup and view all the answers

What characterizes a professional bureaucracy?

High specialization and high formalisation (B) Signup and view all the answers

Which of the following is NOT a pro of decentralisation?

Consistency and integration (D) Signup and view all the answers

What best describes the concept of informalisation?

It fosters emerging characteristics of expected behavior. (D) Signup and view all the answers

Which factor contributes to a larger span of control?

Task homogeneity and high standardization (D) Signup and view all the answers

What is a major downside of high decentralisation?

High coordination costs (B) Signup and view all the answers

Which configuration is characterized by a coherent combination of design elements?

Viable configuration (A) Signup and view all the answers

Why might increased formalisation be detrimental to an organisation?

It may hinder adaptability to environmental changes. (D) Signup and view all the answers

Which aspect is NOT typically considered an internal contingency for organisational structure?

Environmental complexity (A) Signup and view all the answers

In the context of differentiation, creating distinct tasks is aimed at:

Accomplishing learning effects. (A) Signup and view all the answers

Which of the following depicts a risk associated with informalisation?

Propagation of uncertainty-related anxiety (A) Signup and view all the answers

What was a major contributing factor to the Enron scandal?

Aggressive culture focused on short-term profits (C) Signup and view all the answers

What impact did the Enron scandal have on its accounting firm?

Arthur Andersen lost its license and disbanded (B) Signup and view all the answers

Which financial practice contributed to Lehman Brothers' collapse?

Heavy investment in subprime mortgages (D) Signup and view all the answers

What was a significant outcome of Lehman Brothers' bankruptcy?

It initiated discussions on financial regulations and reform (B) Signup and view all the answers

What unethical practice did Fortis engage in regarding its shareholders?

Misleading shareholders with false financial health information (A) Signup and view all the answers

What was a common feature among the scandals of Enron and Lehman Brothers?

Both companies used aggressive accounting practices (A) Signup and view all the answers

In what year did Enron declare bankruptcy?

2001 (D) Signup and view all the answers

What was one outcome of the Sarbanes-Oxley Act following the Enron scandal?

It introduced stricter regulations for financial reporting (B) Signup and view all the answers

Study Notes

Structural Design Elements

Structure is the formal arrangement of tasks within a business organization.
Structure is needed for:
- Determining who is in charge of what
- Allocating resources
- Creating consistency among activities
Key organizational elements are:
- Differentiation and integration
- Centralization and decentralization
- Formalization and informalization

Differentiation

Dividing organizational practices into distinct tasks by smaller units.
Setting up individual tasks to match individual capabilities, potentially favouring efficiency but potentially undermining motivation.
Creating units to accomplish joint tasks and cluster related tasks.

Integration

Coordinating distinct tasks of smaller units to complete coherent organizational practices.
Coordinating tasks within a unit and across units using mechanisms like direct supervision, mutual adjustment, and standardization.

Span of Control

Larger span of control when task homogeneity and standardization are high.

Centralization and Decentralization

Centralization: Concentrating decision-making. -Pros: Low coordination costs, consistency and integration, speed of overall response. -Cons: Information overload, demotivation, slowness of local response.
Decentralization: Distributing decision-making. -Pros: Manageability of information, speed of local response, match with specific expertise. -Cons: High coordination costs, consistency and integration issues, slowness of overall response.

Formalization and Informalization

Formalization: Prescribed characteristics of expected behavior, reducing uncertainty, variability in processes and products, enhancing procedural fairness, discouraging undesired behavior. -Cons: Ignoring environmental changes, ignoring situational diversity, discouraging process improvement, discouraging creativity.
Informalization: Emerging characteristics of expected behaviour. -Pros: Responding to unforeseen circumstances, improving processes, tailoring products, tapping into employee creativity. -Cons: Provoking uncertainty, risking low quality processes, undesired products, and decisions.

Contingencies Impacting Structure

Internal contingencies (Size and age, Technology)
- Larger and older organizations tend toward more formalized, elaborate structures.
- Technology impacting formalization (regulating technology leads to higher formalization; unit production leads to smaller teams).
External contingencies (Environmental complexity, Environmental turbulence)
- Higher complexity in the environment leads to more decentralization.
- High turbulence in the environment leads to more organic structure.
Viable configurations: A coherent and consistent combination of design elements matching organizational contingencies.

Basic Configurations

Simple
Machine bureaucracy
Professional bureaucracy
Divisionalised form
Adhocracy

Managing Sustainably

Sustainable business: Economic viability and stakeholder satisfaction within planetary boundaries.
Drivers of sustainable business(Instrumental, Relational, Moral, Legal).

International Environment

International convergence - increasing similarities in countries due to globalization.
International PESTEL Analysis: Political, Economic, Social, Technological, Ecological, Legal.
Ghemawat's CAGE framework: Cultural, Administrative/Political, Geographic, Economic.

Internationalization Strategies

Economic logics: Cost saving, Market access, Competition, Government policies.
Vehicles for Internationalisation: Exporting, Sales subsidiaries, Production Subsidiaries, Locally oriented subsidiaries, Globally specialized subsidiaries.
- Greenfield, Brownfield.

Types of international structure

Domestic Structure+Export
Multidomestic Structure
Transnational Structure

Ethical Manager

Ethical dilemmas are situations where a decision benefits one party at the expense of another.
Theories of ethics include Utilitarian, Moral rights, Fairness/Justice, Individualism, and Common good approach.
Factors that influence ethical behavior: Individual characteristics (values, personality traits), organizational/structural variables, organizational culture, intensity of ethical dilemmas, moral decision-making (group dynamics, heuristics).

How to Improve Ethical Behavior

Establish codes of ethics, hire individuals with high ethical standards, lead by example, set realistic goals, incorporate ethics into performance appraisals, provide ethics training, conduct independent social audits, and provide support for whistle-blowers.
Ethical standards can be universal (universalism); and/or relative to the culture (relativism).

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Description

This quiz explores key concepts in organizational structure, including differentiation and integration. Learn how these elements impact efficiency and motivation within a business. Understand the role of span of control and the importance of coordination among tasks.