Org. Theory and Design: Chapter 3 (True/False)

An organization's environment refers to the set of pressures and forces surrounding it that have the potential to affect how it operates and its ability to acquire scarce resources.

The term 'organizational domain' refers to the specific range of goods and services that an organization produces and the customers it serves.

Expanding internationally is a way for an organization to enlarge and protect its domain by managing the forces in its environment.

The specific environment of an organization includes forces from outside stakeholder groups that directly affect its ability to secure resources.

Global supply chain management involves planning and controlling supply/distribution activities, including acquiring and storing raw materials, controlling work-in-process inventory, and efficiently moving finished goods from point of manufacture to point of sale.

The term 'organizational environment' only includes internal factors that impact an organization's operations.

An interlocking directorate occurs when a director from one company sits on the board of another company.

Strategic alliances involve an agreement between two or more companies to share their resources and develop joint business opportunities.

Keiretsu is a group of organizations where each one owns shares in the others and work together for their mutual interests.

Collusion is a legal agreement among competitors to share information for a deceitful or illegal purpose.

A cartel is an association of firms that explicitly agree to coordinate their activities.

Bureaucratic costs are external transaction costs.

Transaction costs increase when organizations exchange more specific goods and services.

Merger and takeover is considered the ultimate weapon for managing competitive interdependencies.

A third-party linkage mechanism is a regulatory body that allows organizations to share information and regulate the way they compete.

Long-term contracts are used to reduce costs by sharing resources or sharing the risk of research and development, marketing, construction, etc.

Environmental complexity increases if the company produces a wider variety of products for different groups of customers. (True/False)

Environmental dynamism is the degree to which forces in the specific and general environments change quickly over time and thus contribute to the uncertainty an organization faces. (True/False)

Environmental richness is a function of the amount of resources available to support an organization’s domain. In rich environments, uncertainty is high because resources are plentiful so organizations don’t need to compete over it. (True/False)

The resource dependence theory emphasizes that an organization's goal is to maximize its dependence on other organizations for the supply of scarce resources. (True/False)

According to the resource dependence theory, an organization must only respond to the needs and demands of the other organizations in its environment. (True/False)

The strength of one organization’s dependence on another for a particular resource is not affected by how vital the resource is to the organization’s survival. (True/False)

Interdependencies are symbiotic when the outputs of one organization are not inputs for another. (True/False)

Informal linkages involve direct coordination based on explicit written agreements or common ownership between organizations. (True/False)

To manage symbiotic interdependencies, organizations can use a strategy called cooptation, which involves bringing problematic forces within the organization to make them inside stakeholders. (True/False)

A formal way to manage symbiotic interdependencies with suppliers and customers is to develop a reputation, a state in which an organization is known for its fair and honest business practices. (True/False)

In rich environments, uncertainty is low because resources are plentiful so organizations need to compete over them. (True/False)

Environmental richness refers to the amount of resources available to support an organization’s domain. (True/False)

According to the passage, integration and communication are easy to achieve?

Managers have to spend their time in meetings rather than creating value, according to the passage?

Transaction cost theory can help managers choose an interorganizational strategy, as per the passage?

Keiretsu can be seen as a mechanism for achieve the benefits of a formal linkage mechanism without incurring its costs, according to the passage?

Outsourcing involves the process of moving a value creation activity that was performed inside an organization to outside where it is done by another company, according to the passage?

Franchising involves selling the right to use resources to a person or group in return for a flat fee or a share of the profits, as per the passage?

Managers deciding which strategy to pursue must take only one step, according to the passage?

According to the passage, managers have to weigh the saving in transaction costs against the bureaucratic costs of operating the linkage mechanisms?

Franchising and outsourcing are mentioned as two of the three linkage mechanisms that help organizations to avoid bureaucratic costs while still minimizing transaction costs?

According to the passage, managers do not need to consider estimating the transaction cost saving from using different linkage mechanisms?