Org. Theory and Design: Chapter 4 (MC)

Play an AI-generated podcast conversation about this lesson

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

Transaction costs decrease

Bureaucratic costs decrease

Uncertainty decreases

Transaction costs increase (correct)

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

Long-term contracts (correct)

Increased uncertainty

Informal linkage mechanism

More exchange partners

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

Costs of operating linkage mechanisms (correct)

Difficult to avoid

Costs of achieving integration and communication

External transaction costs

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

By weighing transaction cost savings against bureaucratic costs Signup and view all the answers

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

When transaction costs increase Signup and view all the answers

What is the impact of uncertainty on transaction costs?

Uncertainty increases transaction costs Signup and view all the answers

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

Differentiation Signup and view all the answers

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 Signup and view all the answers

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

Integrating Signup and view all the answers

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

Hierarchy of authority Signup and view all the answers

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

Vertical differentiation Signup and view all the answers

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

Integrating department Signup and view all the answers

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

Authority Signup and view all the answers

What enables an organization to keep its departments in operation?

Maintenance functions Signup and view all the answers

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 Signup and view all the answers

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

Keiretsu Signup and view all the answers

What are the building blocks of differentiation?

Subunits Signup and view all the answers

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

Adap ve func ons Signup and view all the answers

What is the advantage of centralization?

Lets top managers coordinate organizational activities and keep the organization focused on its goals Signup and view all the answers

What is the downside of decentralization?

Makes planning and coordination very difficult Signup and view all the answers

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 Signup and view all the answers

What is the purpose of formalization in organizational structures?

To induce people to behave in predictable, accountable ways Signup and view all the answers

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 Signup and view all the answers

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 Signup and view all the answers

What is the purpose of socialization in an organization?

To learn the norms of an organization and internalize unwritten rules of conduct Signup and view all the answers

What is the disadvantage of high formalization in an organization?

Promotes inflexibility and slows down decision-making processes Signup and view all the answers

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