Org. Theory and Design: Chapter 4 (MC)

29 Questions

What happens when organizations begin to exchange more specific goods and services?

Transaction costs increase

In a high-transaction-cost situation, what should an organization choose to manage exchanges?

Long-term contracts

What are bureaucratic costs considered to be according to the text?

Costs of operating linkage mechanisms

How can transaction cost theory help managers in choosing an interorganizational strategy?

By weighing transaction cost savings against bureaucratic costs

When should an organization use more formal linkage mechanisms to govern its exchanges?

When transaction costs increase

What is the impact of uncertainty on transaction costs?

Uncertainty increases transaction costs

What is the process of establishing and controlling the division of labor, or degree of specialization, in the organization?

Differentiation

Which of the following is a subunit composed of a group of people who possess similar skills or use the same kind of knowledge, tools, or techniques to perform their jobs?

Function

What is the process of coordinating various tasks, functions, and divisions so they work together, not at cross purposes?

Integrating

Which mechanism coordinates various organizational roles by differentiating people based on the amount of authority they possess?

Hierarchy of authority

What refers to the way an organization groups organizational tasks into roles and roles into subunits (functions and divisions)?

Vertical differentiation

Which type of department is created to coordinate the activities of functions or divisions?

Integrating department

What is the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources?

Authority

What enables an organization to keep its departments in operation?

Maintenance functions

What is a business authorized to sell a company’s products in a certain area, with the right to use its resources in return for a fee or a share of the profits?

Franchising

Which mechanism can be seen as a way to achieve the benefits of a formal linkage mechanism without incurring its costs?

Keiretsu

What are the building blocks of differentiation?

Subunits

Which function allows an organization to adjust to changes in the environment?

Adap ve func ons

What is the advantage of centralization?

Lets top managers coordinate organizational activities and keep the organization focused on its goals

What is the downside of decentralization?

Makes planning and coordination very difficult

What is mutual adjustment in the context of organizational structures?

The evolving process through which people use their current best judgment of events rather than standardized rules

What is the purpose of formalization in organizational structures?

To induce people to behave in predictable, accountable ways

In what type of organizational structure do specific norms and values develop emphasizing personal competence, expertise, and freedom to act in innovative ways?

Organic structure

According to the contingency theory, what must an organization do in response to various contingencies?

Tailor the design of its structure to control the external environment

What is the purpose of socialization in an organization?

To learn the norms of an organization and internalize unwritten rules of conduct

What is the disadvantage of high formalization in an organization?

Promotes inflexibility and slows down decision-making processes

What results when an organization chooses joint specialization, complex integrating mechanisms, decentralization, and mutual adjustment?