All Test Bank OD

Organizational Behavior, Design, and Change, 6e (Jones)
Chapter 1 Organizations and Organizational Effectiveness
1) Studying organizations is relatively easy because they are tangible. That is, we can see and touch them.
Answer: FALSE
Diff: 1 Page Ref: 1
LO: 1-1
2) One of the difficulties in studying organizations is that they are intangible. In other words, we cannot
touch or see them.
Answer: TRUE
Diff: 1 Page Ref: 1
LO: 1-1
3) Entrepreneurship is the process by which people recognize opportunities to structure organizations more
efficiently.
Answer: FALSE
Diff: 1 Page Ref: 2
LO: 1-1
4) Amazon.com was created to satisfy the need to buy books over the Internet.
Answer: TRUE
Diff: 1 Page Ref: 3
LO: 1-2
5) The degree of specialization in small companies tends to be lower than that of large companies.
Answer: TRUE
Diff: 2 Page Ref: 4
LO: 1-3
6) Transaction costs are the costs associated with negotiating, monitoring, and governing exchanges
between people.
Answer: TRUE
Diff: 1 Page Ref: 6
LO: 1-2
7) The environment in which an organization operates is a major source of uncertainty.

Answer: TRUE
Diff: 1 Page Ref: 6
LO: 1-5
8) One reason that organizations exist is so that they can exert power and control.
Answer: TRUE
Diff: 1 Page Ref: 6
LO: 1-1
9) One reason for starting an organization is to create jobs for individuals.

Answer: FALSE
Diff: 3 Page Ref: 6
LO: 1-1
10) Economies of scope are cost savings achieved when an organization manufactures products in large
volumes.
Answer: FALSE
Diff: 1 Page Ref: 6
LO: 1-1
11) Economies of scale are cost savings achieved when an organization manufactures products in large
volumes.
Answer: TRUE
Diff: 1 Page Ref: 6
LO: 1-1
12) Transaction costs are the costs associated with negotiating, monitoring, and governing exchanges
between people.
Answer: TRUE
Diff: 1 Page Ref: 6
LO: 1-1
13) Organizational structure is used to control and coordinate people's actions.

Answer: FALSE
Diff: 2 Page Ref: 7
LO: 1-2
14) Organizational theory is primarily concerned with how an organization can outperform its competitors.
Answer: FALSE
Diff: 2 Page Ref: 7
LO: 1-2
15) Organizations that operate in the same environment will always have similar organizational cultures.
Answer: FALSE
Diff: 2 Page Ref: 8
LO: 1-2
16) Organizational structure can be shaped by organizational culture.
Answer: TRUE
Diff: 2 Page Ref: 8
LO: 1-2
17) The external resource approach evaluates an organization's ability to obtain scarce resources.
Answer: TRUE
Diff: 2 Page Ref: 15
LO: 1-4
18) The internal systems approach considers corporate culture.

Answer: TRUE
LO: 1-3
19) The internal systems approach evaluates an organization's ability to obtain resources.
Answer: FALSE
LO: 1-3
20) The guiding principles that the organization formally states in its annual report is called the mission
statement.
Answer: FALSE
LO: 1-3
21) Operative goals give employees direction.

Answer: TRUE
LO: 1-3
22) An organization's mission as stated in public documents is an official goal.

Answer: TRUE
LO: 1-3
23) Operative goals can be either short or long term in nature.

Answer: TRUE
LO: 1-3
24) One of the main problems with Xerox's structure was that the decentralized structure was not very
effective for creating new and innovative products
Answer: TRUE
LO: 1-3
25) In the Xerox case, Mulcahy's structural changes were the primary reason for the successful turnaround
Answer: TRUE
LO: 1-3
26) ________ is a tool used by people to coordinate their actions to obtain something they desire or value.
A) Entrepreneurship
B) An organization
C) A hierarchy
D) Shareholder wealth
Answer: B
Diff: 1 Page Ref: 2
LO: 1-1
27) ________ is recognizing the opportunity to satisfy a need and collecting resources to meet that need.
A) Organizational theory
B) Organizational behavior
C) Entrepreneurship
D) Strategic management
Answer: C
Diff: 2 Page Ref: 2
LO: 1-1
28) Jeffrey Bezos saw the opportunity to sell books over the Internet, which was growing. This is an
example of ________.
A) organizational theory
B) managerial expertise
C) education
D) entrepreneurship
Answer: D
Diff: 1 Page Ref: 2
LO: 1-1
29) Which of the following is not a stage in the value creation process?
A) Input
B) Conversion
C) Output
D) Market
Answer: D
Diff: 2 Page Ref: 3
LO: 1-1
30) An organization's inputs include all except ________.
A) finished goods
B) raw materials
C) money and capital
D) information and knowledge
Answer: A
Diff: 1 Page Ref: 3
LO: 1-1
31) In the conversion process, an organization creates value by applying all except ________.
A) machinery
B) raw materials
C) computers
D) human skills
Answer: B
Diff: 1 Page Ref: 3
LO: 1-1
32) An organization's output include all except ________.

A) finished goods
B) services
C) suppliers
D) value for stakeholders
Answer: C
Diff: 1 Page Ref: 3
LO: 1-1
33) An organization:
A) facilitates the division of labor.
B) increases transaction costs.
C) has little power over individuals.
D) is a tangible entity.
Answer: A
Diff: 2 Page Ref: 4
LO: 1-1
34) Which of the following is not a reason for creating an organization?

A) To achieve economies of scale
B) To manage the external environment
C) To provide people with jobs
D) To exert power and control to achieve goals
Answer: C
Diff: 2 Page Ref: 6
LO: 1-1
35) The organization's environment includes all except ________.
A) distributors
B) competitors
C) suppliers
D) raw materials
Answer: D
Diff: 1 Page Ref: 6
LO: 1-5
36) When an organization shares resources across several products and tasks, it is able to:
A) minimize transaction costs.
B) maximize transaction costs.
C) achieve economies of scale.
D) achieve economies of scope.
Answer: D
Diff: 2 Page Ref: 6
LO: 1-1
37) Because a toy maker sells a large amount of toys, it is able to acquire plastic products to make the toys
at a cheaper price than the competition. The toy maker is taking advantage of:
A) economies of scale.
B) economies of scope.
C) organizational culture.
D) organizational design.
Answer: A
Diff: 2 Page Ref: 6
LO: 1-1
38) ________ are cost savings that result when goods and services are produced in large volume on
automated production lines.
A) Economies of scope
B) Economies of scale
C) Inputs
D) Output
Answer: B
Diff: 1 Page Ref: 6
LO: 1-1
39) A large restaurant chain decides that they are going to start serving breakfast in order to better utilize
the expense equipment that they purchased to cook with. They are taking advantage of:
A) economies of scope.
B) economies of scale.
C) transaction costs.
D) outputs.
Answer: A
Diff: 2 Page Ref: 6
LO: 1-1
40) ________ are the costs associated with negotiating, monitoring, and governing exchanges between
people.
A) Economies of scale
B) Economies of cost
C) Transaction costs
D) Salaries
Answer: C
Diff: 1 Page Ref: 6
LO: 1-1
41) When local store managers attempt to spot trends and changes so they can respond to customer needs,
they are:
A) using large-scale technology.
B) exerting power and control.
C) managing the external environment.
D) increasing division of labor.
Answer: C
Diff: 2 Page Ref: 6
LO: 1-5
42) ________ is the study of how organizations function and how they affect and are affected by the
environment in which they operate.
A) Organizational behavior
B) Organizational theory
C) Organizational culture
D) Organizational structure
Answer: B
Diff: 2 Page Ref: 7
LO: 1-2
43) The process of selecting organizational structure and organizational culture is ________.
A) organizational design
B) organizational behavior
C) organizational domain
D) organizational environment
Answer: A
Diff: 2 Page Ref: 9
LO: 1-2
44) ________ is the formal system of task and authority relationships.

B) Organizational behavior
C) Organizational structure
D) Organizational culture
Answer: C
Diff: 2 Page Ref: 7
LO: 1-2
45) At Microsoft, to control scientists and make use of their talents, Bill Gates put them in teams. This was
a change in ________.
A) culture
B) strategy
C) theory
D) structure
Answer: D
Diff: 2 Page Ref: 8
LO: 1-2
46) Organizational culture:

A) remains the same once it is developed.
B) controls behavior within an organization.
C) is shaped primarily by an organization's environment.
D) is the formal system of task and authority relationships.
Answer: B
Diff: 3 Page Ref: 8
LO: 1-2
47) Finding new and improved ways of using resources and capabilities to increase value is called:
A) organizational design.
B) environmental analysis.
C) organizational change.
D) environmental scanning.
Answer: C
Diff: 3 Page Ref: 9
LO: 1-3
48) The process by which organizations move from their present state to some desired future state is called
________.
A) restructuring
B) scanning the environment
C) organizational change
D) transaction analysis
Answer: C
Diff: 2 Page Ref: 9
LO: 1-3
49) Coca-Cola takes pride in a long-term commitment to employees; Pepsi is very political and
competitive. These are differences in ________.
A) culture
B) structure
C) theory
D) design
Answer: A
Diff: 2 Page Ref: 9
LO: 1-2
50) The means an organization uses to achieve its goals are:

A) organizational structure and organizational design.
B) organizational culture and organizational design.
C) organizational structure and organizational culture.
D) organizational theory and organizational culture.
Answer: C
Diff: 3 Page Ref: 9
LO: 1-2
51) Which of the following is not an advantage of organizational design?

A) It can help a company manage diversity.
B) It can increase organizational efficiency.
C) It can help an organization control its environment.
D) It is a good approach for evaluating organizational effectiveness.
Answer: D
Diff: 3 Page Ref: 9
LO: 1-2
52) Organizational design is:

A) a way to measure organizational effectiveness.
B) a way to measure organizational efficiency.
C) a source of competitive advantage.
D) important only to large companies.
Answer: C
Diff: 2 Page Ref: 9
LO: 1-3
53) Organizational design:

A) consists of two componentsstrategic management and organizational behavior.
B) can help a company control its environment.
C) reduces innovation.
D) does not allow for contingencies.
Answer: B
Diff: 2 Page Ref: 9
LO: 2-3
54) ________ is a means of implementing strategy.

B) Entrepreneurship
C) Organizational design
D) Organizational missions
Answer: C
Diff: 2 Page Ref: 9
LO: 1-3
55) Which of the following are contingencies that cause the organization to face uncertainty?
A) Organizational design and organizational processes
B) The technological environment and organizational design
C) The technological environment and organizational processes
D) The organizational environment and organizational design
Answer: C
LO: 1-5
56) ________ is the ability of one company to outperform another because its managers are able to create
more value from the resources at their disposal.
A) Strategy
B) Competitive advantage
C) Organizational design
D) Managerial expertise
Answer: B
LO: 1-5
57) The specific pattern of decisions and actions that managers take in order to use core competences to
achieve a competitive advantage is called ________.
A) strategy
B) change management
C) organizational design
D) the organization's mission
Answer: A
LO: 1-3
58) Differences in race, gender, and national origin of organizational members pertain to
________.
A) organizational design
B) efficiency and innovation
C) diversity
D) competitive advantage
Answer: C
LO: 1-3
59) When organizational design is poor, ________.

A) an organization will decline
B) managers usually increase R&D expenses
C) bureaucratic costs are lower
D) managers usually increase the number of products offered
Answer: A
LO: 1-3
60) Which of the following approaches is concerned with measuring productivity?

A) External resource
B) Internal system
C) Technical
D) Transaction cost
Answer: C
LO: 1-4
61) The ________ is a method that allows managers to evaluate how effectively an organization manages
and controls its external environment.
A) external research approach
B) internal research approach
C) technical approach
D) transaction approach
Answer: A
LO: 1-4
62) The ________ is a method that allows managers to evaluate how effectively an organization
functions and operates.
A) external research approach
B) internal research approach
C) technical approach
D) economic approach
Answer: B
LO: 1-4
63) If a company uses the external resource approach, which of the following goals will it consider most
important?
A) Increasing the rate of product innovation
B) Raising stock price
C) Reducing conflict
D) Reducing production costs
Answer: B
LO: 1-4
64) Which of the following approaches is most concerned with the conversion stage of the value creation
process?
B) Internal system
C) Strategic group
D) Technical
Answer: D
LO: 1-4
65) In the late 1990s, what did the toy maker Mattel do in response to what it perceived were changing
consumer needs?
A) Tried to become a major player in the computer game market
B) Re-focused its efforts on classic toys, such as Barbie
C) Tried to acquire more of the game market through lower prices
D) Entered the retail arena
Answer: A
LO: 1-5
66) A computer manufacturer was concerned about its effectiveness, so it eliminated a level in its hierarchy
and decentralized decision-making authority. Which of the following approaches is it using to evaluate
organizational effectiveness?
B) Internal system
C) Technical
D) Transaction cost
Answer: B
LO: 1-4
67) Which of the following approaches considers organizational culture?
B) Internal system
C) Technical
D) Transaction cost
Answer: B
LO: 1-4
68) ________ means developing modern production facilities using new information technologies that can
produce and distribute products in a timely and cost-effective manner.
A) Efficiency
B) Control
C) Innovation
D) Organizational design
Answer: A
LO: 1-2
69) ________ means developing an organization's skills and capacities so that the organization can
discover and take advantage of new products and processes.
A) Efficiency
B) Innovation
C) Control
D) Organizational theory
Answer: B
LO: 1-2
70) ________ means having control over the external environment and having the ability to attract
resources and customers.
A) Effectiveness
B) Managerial expertise
C) Control
D) Organizational strategy
Answer: A
LO: 1-4
71) The Ford Motor case best illlustrates ________.

A) how different cultures can both succeed
B) how not managing change can negatively impact the organization
C) how a structure that is tall and inefficient can cause an organization to decline.
D) how important it is to restructure in the global economy
Answer: C
LO: 1-3
72) The case, "Mattel's Rocky Road" best illlustrates ________.
A) how mergers and acquisitions are not always the best strategy
B) how operative goals can change over time
C) economies of Scale in production.
D) the technical approach to measurement
Answer: A
LO: 1-5
73) ________ goals provide legitimacy to the organization.

A) Operative
B) Profit
C) Long-term
D) Official
Answer: D
LO: 1-3
74) The Southwest Airlines case illustrates ________.

A) how a structure that results in lower costs can be a competitive advantage
B) how Herb Keheller created a "fun place to work"
C) the contingency approach to organizational design
D) How economies of scope can make an airline profitable
Answer: A
LO: 1-4
75) ________ goals provide employee direction.

A) Operative
B) Profit
C) Long-term
D) Official
Answer: A
LO: 1-3
76) Operative goals:

A) provide legitimacy to the organization.
B) focus only on the long term.
C) focus only on the short term.
D) can be used to measure how well an organization is managing its environment.
Answer: D
LO: 1-3
77) Reducing time to market is:
A) an official goal.
B) an operative goal.
C) a goal using the external resource approach.
D) a goal using the technical approach.
Answer: B
LO: 1-3
78) List four examples of "organizational inputs."

Answer: Raw materials
Money and capital
Human resources
Information and knowledge
Customers
Diff: 2 Page Ref: 4
LO: 1-1
79) List two examples of what an organization uses to transform inputs and add value.
Answer: Machinery
Computers
Human skills and abilities
Diff: 2 Page Ref: 4
LO: 1-1
80) List four examples of "organizational outputs."

Answer: Finished Goods
Services
Dividends
Salaries
Value for stakeholders
Diff: 3 Page Ref: 4
LO: 1-1
81) List four examples of factors or entities impacting the organization's environment.
Answer: customers
shareholders
suppliers
distributors
Government
Competitors
Diff: 2 Page Ref: 4
LO: 1-1
82) A large company was successful, but has been losing market share and laying off workers. Product
development has been slow. What could be the source of the problem, and what can be done to resolve it?
Answer: It is likely that the organization has neglected organizational design. Its structure and culture may
have worked well in the past, but both culture and structure need to be continually evaluated. The
organization needs to reevaluate both its structure and culture. To speed up product development time, the
organization could eliminate levels in the hierarchy and decentralize decision-making authority. In
addition, the structure can be designed to create cross-functional teams to increase innovation and
flexibility. In addition to changing the structure, the organization can foster a culture that encourages
innovation and risk taking.
Diff: 2 Page Ref: 9
LO: 1-2
83) Compare and contrast how structure played a role in the success/failure of Michael Dell at Dell
Computer versus the Steven Jobs at Apple computer.
Answer: This case shows students how important the proper structure is in organizing a company. Jobs
main mistake was that he did not want a management role, yet he "stuck his fingers" in others' departments
as the company grew. His management style seemed arbitrary and overbearing, and he often played
favorites between employees and teams. In short, his structure didn't work because he created a climate of
distrust and unhealthy competition between teams. Michael Dell, on the other hand, was able to create
more of a participative management approach in which he truly involved the employees in the decision
making process. Although also very hands-on, he recognized the importance of team camaraderie and trust.
In addition, he recognized that a growing company needed expert managers.
The key to this question is to make sure students understand that management is a separate field.
Entrepreneurs may have good ideas, but structuring companies and using resources effectively involves an
entirely separate skill-set.
LO: 1-2
84) You are a consultant to Company X. The CEO insists that effectiveness must be evaluated by an
increase in stock price to satisfy stockholders. The marketing vice president insists that the main goal is to
reduce the time to bring products to the customer. The manufacturing vice president states that costs should
be the key focus of the organization. What approach is each manager using to evaluate organizational
effectiveness, and what can this organization do to ensure that effectiveness is properly evaluated?
Answer: Goals will often conflict, but the three major tasks of management are control, innovation, and
efficiency. Each of the three managers is evaluating effectiveness on one of these three tasks. The CEO is
using the external resource approach, which measures an organization's ability to control the environment.
The marketing manager is using an internal systems approach, which is concerned with innovation. The
manufacturing manager is using a technical approach, which is concerned with efficiency. It is
understandable why each manager uses their respective approach; after all, those are the goals that the
mangers are likely to be evaluated on. However, it is very important for an organization to evaluate all
three tasks: control, innovation, and efficiency. All three approaches must be used. The company should
concerned most about the overall collective performance of the organization.
LO: 1-4
85) Describe the value creation process for a university

Answer: This relates to the McDonalds example in Figure 1.2, but for a service organization such as a
university. Answers will vary, but make sure students understand that the value creation process applies to
organizations that produce intangible goods also.
Diff: 2 Page Ref: 3
LO: 1-1
86) Discuss how an organization can help organizations manage their external environment.
Answer: This question is based on figure 1.3. Make sure students know why organizations exist, and also
that they understand the basic definition of the external environment
Diff: 2 Page Ref: 5
LO: 1-1
87) What is the difference between economies of scale and economies of scope?
Answer: Economies of scale are cost savings from producing large volumes, economies of scope are cost
savings because of the use of shared resources.
Diff: 1 Page Ref: 6
LO: 1-1
88) Give an example of how a fast-food restaurant can use economies of scope to achieve cost savings.
Answer: Answers need to reflect the use of underutilized resources. Serving breakfast, or staying open
until midnight are a couple of examples. Make sure the answers are not confused with economies of scale.
Diff: 3 Page Ref: 6
LO: 1-2
89) Give an example of how a fast-food restaurant can use economies of scale to achieve cost savings.
Answer: Answers should reflect techniques that will result in large volume production, such as using the
same hamburger patty for various products.
Diff: 3 Page Ref: 6
LO: 1-1
90) Discuss how structure may have played a role in the problems associated with the U.S. auto industry.
Answer: You can use Organizational Insight 1.2 as a basis for this question, along with any contemporary
news about this industry.
LO: 1-3
91) Give one example each of the external, internal, and technical approaches to measuring organizational
effectiveness.
Answer: See table 1.1 on page 15.
LO: 1-4
Test Bank for Organizational Theory Design and Change 7th Edition by Jones Full
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Solutions Manual for Organizational Theory Design and Change 7th Edition by Jones
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Organizational Theory, Design, and Change, 7e (Jones)

Chapter 2 Stakeholders, Managers, and Ethics
1) In general, stakeholders are motivated to participate in an organization if they receive

inducements that exceed the value of the contributions they are required to make.
Answer: TRUE
Page Ref: 28
Difficulty: Easy LO:
2-1
2) Shareholders are a part of inside stakeholders.

Answer: TRUE
Page Ref: 28
2-1
3) Shareholders' claim on organizational resources is often considered inferior to the claims of

other inside stakeholders.
Answer: FALSE
Page Ref: 29
Difficulty: Moderate
LO: 2-1
4) Shareholders are the owners of the organization.

Answer: TRUE
Page Ref: 29
2-1
5) The workforce and managers are considered outside stakeholders.

Answer: FALSE
Page Ref: 29
2-1
6) Customers are usually an organization's smallest outside stakeholder group.

Answer: FALSE
Page Ref: 30
2-1
7) Suppliers have a direct effect on the organization's efficiency and an indirect effect on its
ability to attract customers.
Answer: TRUE
Page Ref: 32
Difficulty: Easy
LO: 2-1
8) All stakeholder groups are equally important for an organization.
Answer: FALSE
Page Ref: 35
LO: 2-2
9) To be effective, an organization must at least minimally satisfy the interests of all the groups
that have a stake in the organization.
Answer: TRUE
Page Ref: 35
2-2
10) The stakeholder group with ultimate authority over the use of a corporation's resources is
customers. Answer: FALSE
Page Ref: 37
2-3
11) The board has the legal authority to hire, fire, and discipline corporate management.
Answer: TRUE
Page Ref: 37
2-3
12) Outside directors of a corporation are full-time employees of the corporation.

Answer: FALSE
Page Ref: 38
2-3
13) An inside director of a company can be a professional director who holds positions on the
boards of many companies.
Answer: FALSE
Page Ref: 38
LO: 2-3
14) Inside directors hold offices in a company's formal hierarchy.

Answer: TRUE
Page Ref: 38
Difficulty: Easy
LO: 2-3
15) The system of hierarchical reporting relationships in an organization is known as a chain of
command. Answer: TRUE
Page Ref: 39
Difficulty: Easy
LO: 2-3
16) The CEO determines top management's rewards and incentives.

Answer: TRUE
Page Ref: 39
Difficulty: Easy
LO: 2-2
17) A manager who has direct responsibility for the production of goods and services is said to
be holding a staff role.
Answer: FALSE
Page Ref: 40
2-3
18) A manager who is in charge of sales holds a staff role.

Answer: TRUE
Page Ref: 40
2-3
19) The chief operating officer, functional managers, and divisional managers form a company's
top management team.
Answer: FALSE
Page Ref: 40
2-3
20) A problem in determining managerial accountability that arises when delegating authority to
managers is known as an agency problem.
Answer: TRUE
Page Ref: 41
2-4
21) Divisional managers are not corporate managers.

Answer: TRUE
Page Ref: 41
Difficulty: Easy
LO: 2-4
22) "Self-dealing" is the term used to describe the conduct of managers who take advantage of
their position to act in their own interests rather than in the interests of other stakeholders.
Answer: TRUE
Page Ref: 42
2-4
23) Stock-based compensation schemes help solve the agency problem.

Answer: TRUE
Page Ref: 42
2-4
24) An ethical dilemma is the quandary people experience when they must decide whether or not
they should act in a way that benefits someone else, even if it harms others and isn't in their
own interest.
Answer: TRUE
Page Ref: 43
Difficulty: Easy
LO: 2-5
25) Ethics and law change as time passes.

Answer: TRUE
Page Ref: 44
2-5
26) As per the moral rights model of ethics, an ethical decision is one that produces the greatest
good for the greatest number of people.
Answer: FALSE
Page Ref: 46
2-5
27) As per the justice model of ethics, an ethical decision is a decision that best maintains and
protects the fundamental rights and privileges of the people affected by it.
Answer: FALSE
Page Ref: 46
Difficulty: Easy
LO: 2-5
28) As per the moral rights model of ethics, an ethical decision is a decision that distributes
benefits and harms among stakeholders in a fair, equitable, or impartial way.
Answer: FALSE
Page Ref: 46
Difficulty: Easy
LO: 2-5
29) Behaving ethically can reduce transaction costs through the reputation effect.
Answer: TRUE
Page Ref: 50
2-5
30) Organizations that are doing badly in an economic sense and are struggling to survive are the
ones most likely to commit unethical and illegal acts.
Answer: TRUE
Page Ref: 51
2-5
31) In the long run, an organization that follows unethical practices tends to spend more on
research and development and less on advertising and managerial salaries.
Answer: FALSE
Page Ref: 52
LO: 2-5
32) are people who have an interest or claim in an organization, in what it does, and in how well
it performs. A) Stakeholders
B) Early adopters
C) Boundary spanners
D) Late adopters Answer: A
Page Ref: 28
2-1
33) The rewards that stakeholders receive for participating in an organization are called
.
A) inducements B)
contributions
C) annuity
D) dividends
Answer: A
Page Ref: 28
Difficulty: Easy
LO: 2-1
34) are people who are closest to an organization and have the strongest or most direct
claim on organizational resources.
A) Early adopters
B) Free riders
C) Whistle-blowers
D) Internal stakeholders
Answer: D
Page Ref: 28
2-1
35) Stakeholders will generally participate in an organization if .
A) the goods and services produced by the organization are of high quality
B) they receive inducements that exceed the value of the contributions they are required to make
C) the organization has a well-defined structure and culture
D) the organization is large and takes advantage of economies of scale and economies of scope
Answer: B
Page Ref: 28
LO: 2-1
36) are the owners of an organization, and, as such, their claim on organizational
resources is often considered superior to the claims of other inside stakeholders.
A) Employees
B) Customers
C) Shareholders D) Trade unions
Answer: C
Page Ref: 29
2-1
37) Which of the following groups of stakeholders receives inducements in the form of dividends
and stock appreciation?
A) trade unions
B) suppliers
C) shareholders D) workforce Answer: C
Page Ref: 29
Difficulty: Easy
LO: 2-1
38) Which of the following is an inside stakeholder group?
A) government
B) customers
C) suppliers
D) shareholders
Answer: D
Page Ref: 29
2-1
39) Which of the following is an inside stakeholder group that contributes money and capital? A)
government
B) suppliers
C) shareholders
D) managers Answer: C
Page Ref: 29
2-1
40) Which of the following groups of stakeholders receives inducements in the form of bonuses,
status, and power?
A) shareholders
B) managers
C) suppliers
D) unions
Answer: B
Page Ref: 29
Difficulty: Easy
LO: 2-1
41) Which of the following group of outside stakeholders contributes high-quality inputs? A)
unions
B) government
C) customers D) suppliers Answer: D
Page Ref: 29
Difficulty: Easy
LO: 2-1
the following
42) Which of is an outside stakeholder group?

A) shareholders
B) suppliers
C) managers
D) workforce
Answer: B
Page Ref: 29
Difficulty: Easy
LO: 2-1
43) In effect, are the agents or employees of shareholders.

A) suppliers
B) customers
C) managers D) unions
Answer: C
Page Ref: 30
Difficulty: Easy
LO: 2-1
44) are usually an organization's largest outside stakeholder group.

A) Suppliers
B) Customers
C) Shareholders
D) Workforce Answer: B
Page Ref: 30
2-1
45) To be effective, an organization must .

A) satisfy interests of all the stakeholders equally
B) consider employees as the most important stakeholder group and give priority to
their interests over the interests of all the other stakeholders
C) at least minimally satisfy the interests of all the stakeholders
D) consider customers as the most important stakeholder group and give priority to
their interests over the interests of all the other stakeholders
Answer: C
Page Ref: 35
Difficulty: Hard
LO: 2-2
46) According to the capitalistic view, the primary goal of an organization is to .
A) maximize shareholder wealth
the following
B) form long-term relationships with suppliers

C) satisfy employees D) satisfy customers
Answer: A
Page Ref: 35
LO: 2-2
47) The stakeholder group with ultimate authority over the use of a corporation's resources is
.
A) managers
B) customers
C) government
D) shareholders Answer: D
Page Ref: 37
Difficulty: Easy
LO: 2-3
48) In an organization, the position of the is one of trusteeship.

A) managers
B) members of the board of directors
C) customers
D) government
Answer: B
Page Ref: 37
LO: 2-3
49) In the case of a large organization, which of the following options best represents
the accurate chain of command at the corporate management stage? A) CEO, president,
senior vice presidents, executive vice presidents
B) board, CEO, executive vice presidents, presidents
C) CEO, president, executive vice presidents, vice presidents
D) president, divisional managers, executive vice presidents, vice presidents
Answer: C
Page Ref: 38
Difficulty: Easy
LO: 2-3
50) Which of persons can be an inside director in an organization?
A) a government official
B) a professional director who holds positions on the board of many companies
C) a full-time employee of the organization
the following
D) an executive of another company that operates in the same industry

Answer: C
Page Ref: 38
LO: 2-3
51) Which of the following statements is true about an outside director?

A) An outside director of an organization should have worked with the organization for at
least 10 years at some point during his career.
B) Outside directors tend to dominate boards because as compared to inside directors, these
people have better access to most of the information about the company.
C) An outside director should be a current employee of the organization.
D) An outside director of an organization can be an executive of some other company.
Answer: D
Page Ref: 38
LO: 2-3
52) Which of the following would be considered to be the lowest level of management in a chain
of command?
A) executive vice presidents
B) functional managers
C) divisional managers
D) vice presidents
Answer: B
Page Ref: 38
2-3
53) Which of the following terms best describes the system of hierarchical reporting
relationships in an organization?
A) line of control
B) span of authority
C) matrix of hierarchy
D) chain of command
Answer: D
Page Ref: 39
Difficulty: Easy
LO: 2-3
the following
54) Which of employees would be considered to have a line role?

A) sales manager
B) executive vice president of finance
C) R&D director
D) vice president of production
Answer: D
Page Ref: 40
Difficulty: Easy
LO: 2-3
55) Which of the following is a primary responsibility of a chief operating officer?

A) selecting the members of the board of directors
B) managing the organization's internal functions
C) selecting key executives to occupy the topmost levels of the managerial hierarchy D)
determining top management's rewards and incentives
Answer: B
Page Ref: 40
LO: 2-3
56) Managers who have direct responsibility for the production of goods and services are
considered to be holding a(n) role.
A) staff
B) integrative
C) line
D) distributive
Answer: C
Page Ref: 40
2-3
57) Managers who are in charge of a specific organizational function such as sales or R&D hold
a(n) role.
A) distributive
B) line
C) staff
D) integrative Answer: C
Page Ref: 40
Difficulty: Easy
LO: 2-3
58) Which of organizational positions is a part of an organization's top management
team?
the following
A) functional manager
B) executive vice president
C) divisional manager
D) plant supervisor
Answer: B
Page Ref: 40
Difficulty: Easy
LO: 2-3
59) Which of the following organizational positions is considered to be a part of corporate

management?
A) project manager
B) chief operating officer
D) plant supervisor
Answer: B
Page Ref: 40
2-3
60) Vice presidents are part of management.

A) corporate
B) divisional
C) functional
D) line
Answer: A
Page Ref: 40
2-3
61) Which of the following managers has a staff role?

A) R&D manager
B) production manager
D) assembly line supervisor
Answer: A
Page Ref: 40
Difficulty: Easy
LO: 2-3
62) A(n) problem is a problem in determining managerial accountability that arises
when delegating authority to managers.
A) self-dealing
the following
B) organizational contract
C) line of command
D) agency
Answer: D
Page Ref: 41
Difficulty: Easy
LO: 2-4
63) Which of the following is one of the two conditions that lead to a moral hazard problem?
A) the principal possesses more information than the agent
B) the agent has an incentive to pursue goals and objectives that are different from the principal's
C) the principal acts in his own best interest, as opposed to the interests of the other stakeholders
D) the agent is given the authority to allocate scarce organizational resources Answer: B
Page Ref: 41
LO: 2-4
64) Which of the following statements is true regarding a divisional manager? A)

A divisional manager is a part of the top-management team.
B) Divisional managers act as outside directors for the company.
C) A divisional manager is not a corporate manager.
D) A marketing manager is an example of a divisional manager.
Answer: C
Page Ref: 41
LO: 2-3
65) "Self-dealing" is defined as .

A) a manager acting in his own best interest, as opposed to the interests of the other
stakeholders
B) a cash bonus distributed privately amongst the top-management team
C) a manager promoting family members at the expense of others
D) a form of control that aligns the interests of principal and agent so both parties have the
incentive to work together to maximize organizational effectiveness
Answer: A
Page Ref: 42
LO: 2-4
66) Which of is generally used to solve agency problems?
A) self-dealing
B) stock-based compensation schemes
C) a highly centralized organization structure
the following
D) a matrix organization structure

Answer: B
Page Ref: 42
Difficulty: Easy
LO: 2-4
67) As per the Act, CEOs, COOs, and the chief financial officer are required to sign
off on their company's balance statements so they can be held personally and legally liable for
accidental or deliberate mistakes found later.
A) Sarbanes-Oxley
B) Taft-Hartley
C) Walsh-Healey
D) Davis-bacon Answer: A
Page Ref: 43
2-4
68) A manager decides to locate a manufacturing plant in a location that maximizes the overall
benefits to the stakeholders. Which model of ethics is being used by the manager? A) justice
B) moral rights
C) utilitarian
D) mutual association
Answer: C
Page Ref: 46
LO: 2-5
69) A manager chooses to tell affected employees about an impending layoff, despite the damage
this causes to the stock price of the organization. She did this because it was "the right thing to
do." Which model of ethics is she using?
A) justice
B) moral rights
C) utilitarian
Answer: B
Page Ref: 46
LO: 2-5
70) A manager decides to distribute the pool of bonus money equally among all of the
subordinates, even though some performed better than others. Which model of ethics is being
used by him in making this decision?
A) justice
the following
B) moral rights
C) utilitarian
Answer: A
Page Ref: 46
LO: 2-5
71) As per the model of ethics, an ethical decision is one that produces the greatest
good for the greatest number of people.
A) mutual association
B) utilitarian
C) justice
D) moral rights
Answer: B
Page Ref: 46
2-5
72) Which of the following is a model of ethics?

A) mutual association
B) utilitarian
C) value integration
D) incremental benefit
Answer: B
Page Ref: 46
2-5
73) A doctor was banned from practicing medicine because he consistently prescribed
unnecessary procedures. This doctor violated .
A) professional ethics
B) the justice model of ethics
C) individual ethics
D) the utilitarian model of ethics
Answer: A
Page Ref: 48
Difficulty: Easy
LO: 2-5
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6th-Edition-by-Jones
74) The "tragedy of the commons" illustrates that .
A) the utilitarian model of ethics is the most effective model of ethics
B) all unethical actions are always illegal
C) the rational pursuit of individual self interest results in a collective disaster
D) all the available resources should be equally distributed among all the stakeholders
Answer: C
Page Ref: 50
Difficulty:
Moderate LO:
2-5
75) The reputation effect .

A) solves the agency problem
B) leads to equal distribution of resources among all the stakeholders
C) increases the problems of self-dealing
D) reduces transaction costs
Answer: D
Page Ref: 50
LO: 2-5
76) Behavior that follows accepted ethical rules confers a(n) effect on an
individual or an organization. A) observer-expectancy
B) framing
C) focusing
D) reputation
Answer: D
Page Ref: 50
Difficulty:
Easy LO:
2-5
77) Which of the following organizations is most likely to commit unethical and illegal
acts such as collusion, price fixing, or bribery?
A) an organization that is introducing a new product in the market
B) an organization that is struggling to survive
C) an organization that is entering into a new market
D) an organization that has a flat and decentralized organizational structure
Answer: B
Page Ref: 51
Difficulty: Easy
LO: 2-5
78) A son of a mobster believes that it is ethical to steal if it is in the best interest of his
family. This view comes from .
A) justice model of ethics
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B) professional ethics
C) personal ethics
D) moral rights model of ethics
Answer: C
Page Ref: 51
Difficulty:
Easy LO:
2-5
79) In the long run, an organization that follows unethical practices is most likely to
.
A) be more innovative
B) spend less on advertising or managerial salaries
C) be bureaucratized
D) spend more on research and development
Answer: C
Page Ref: 52
LO: 2-5
80) occurs when an employee informs an outside person or agency, such as

a government agency, a newspaper, or television reporter, about an organization's (its
managers') illegal or immoral behavior.
A) Boundary spanning
B) Moonlighting
C) Whistle-blowing
D) Dumping
Answer: C
Page Ref: 53
Difficulty:
Easy LO:
2-5
81) List the outside stakeholders of an organization.

Answer: The outside stakeholders of an organization are:
Customers
Suppliers
The government
Trade unions
Local
communities
The general
public
Page Ref: 29
Difficulty: Easy

LO: 2-1
82) Who are the inside stakeholders of an organization?
Answer: Inside stakeholders are people who are closest to an organization
and have the strongest or most direct claim on organizational resources. The
inside stakeholders of an organization are:
Shareholders: Shareholders are the owners of the organization, and, as such, their
claim on organizational resources is often considered superior to the claims of other
inside stakeholders. The shareholders' contribution to the organization is to invest
money in it by buying the organization's shares or stock. The shareholders' inducement
to invest is the prospective money they can earn on their investment in the form of
dividends and increases in the price of stock.
Managers: Managers are the employees responsible for coordinating organizational

resources and ensuring that an organization's goals are met successfully. Top managers
are responsible for investing shareholder money in resources to maximize the value of
an organization's future output of goods and services.
Workforce: An organization's workforce consists of all nonmanagerial employees.

Members of the workforce have task responsibilities and duties (usually outlined in a
job description) that they are accountable for performing at the required level.
Page Ref: 29, 30
Difficulty: Easy
LO: 2-1
83) Discuss the significance of suppliers as an outside stakeholder group.

Answer: Suppliers contribute to the organization by providing reliable raw materials
and component parts that allow the organization to reduce uncertainty in its technical
or production operations and thus reduce production costs. Suppliers have a direct
effect on the organization's efficiency and an indirect effect on its ability to attract
customers. An organization that has high- quality inputs can make high-quality
products and attract customers. In turn, as demand for its products increases, the
organization demands greater quantities of high-quality inputs from its suppliers. Page
Ref: 32
Difficulty: Easy
LO: 2-1
84) Describe the various reasons due to which managers may follow goals that
promote their own interests and not the interests of shareholders.
Answer: When shareholders delegate to managers the right to coordinate and use
organizational skills and resources, a divorce of ownership and control occurs.
Although in theory managers are the employees of shareholders, in practice because
managers have control over organizational resources, they have real control over the
company even though shareholders own it. The result is that managers may follow
goals that promote their own interests and not the interests of shareholders.
An attempt to maximize stockholder wealth may involve taking risks into uncharted
territory and making capital investments in R&D that may bear fruit only in the long

term as new inventions and discoveries generate new products and a stream of new
revenues. Managers, however, may prefer to maximize short-term profits because that
is the goal on which they are evaluated by their peers and by stock market analysts
who do not take the long-term view.
Also, because managers' salaries are closely correlated with organizational size,
managers may prefer to pursue low-risk strategies even though these may not
maximize return on invested capital.
Page Ref: 35
Difficulty:
Moderate LO:
2-2
85) Explain why shareholders are considered the stakeholder group with ultimate
authority over the use of a corporation's resources.
Answer: The stakeholder group with ultimate authority over the use of a corporation's
resources is shareholders. Legally, they own the company and exercise control over it
through their representatives, the board of directors. Through the board, shareholders
delegate to managers the legal authority and responsibility to use the organization's
resources to create value and to meet goals. Accepting this authority and
responsibility from shareholders and the board of directors makes corporate managers
accountable for the way they use resources and for how much value the organization
creates. Page Ref: 37
LO: 5-3
86) Differentiate between inside directors and outside directors.

Answer: There are two kinds of directors: inside directors and outside directors. Inside
directors are directors who also hold offices in a company's formal hierarchy; they are
full-time employees of the corporation. Outside directors are not employees of the
company; many are professional directors who hold positions on the board of many
companies, or they are executives of other companies who sit on other companies'
boards. The goal of having outside directors is to bring objectivity to a company's
decision-making and to balance the power of inside directors, who obviously side with
an organization's management. In practice, however, inside directors tend to dominate
boards because these people have access to the most information about the company,
and they can use that information to influence decision-making in management's favor.
Page Ref: 38
Difficulty: Easy
LO: 2-3
87) Describe the various ways in which a CEO can influence organizational
effectiveness and decision-making.
Answer: The five principal ways in which a CEO can influence organizational
effectiveness and decision-making are:
1. The CEO is responsible for setting the organization's goals and designing its
structure.

2. The CEO selects key executives to occupy the topmost levels of the managerial
hierarchy.
3. The CEO determines top management's rewards and incentives.
4. The CEO controls the allocation of scarce resources such as money and decision-
making power among the organization's functional areas or business divisions.
5. The CEO's actions and reputation have a major impact on inside and outside
stakeholders' views of the organization and affect the organization's ability to attract
resources from its environment. Page Ref: 39,40
Difficulty:
Easy LO:
5-3
88) What is an agency problem?

Answer: An agency problem is a problem in determining managerial accountability
that arises when delegating authority to managers. The average shareholder has no in-
depth knowledge of a particular industry or how to run a company. They appoint
experts in the industry—managers— to perform this work for them. As a result,
shareholders are at an information disadvantage compared with top managers. It is
very difficult for them to judge the effectiveness of a top- management team's actions
when it can often only be judged over several years. Moreover the goals and interests
of managers and shareholders may diverge. Managers may prefer to pursue courses of
action that lead to short-term profits, or short-term control over the market, whereas
shareholders might prefer actions that lead to long-term profitability such as increased
efficiency and long-term innovation. Page Ref: 41
LO: 2-4
89) What are the three models of ethics?

Answer: The three models of ethics are as follows:
1. Utilitarian model: According to this model an ethical decision is one that
produces the greatest good for the greatest number of people.
2. Moral rights model: According to this model an ethical decision is a decision
that best maintains and protects the fundamental rights and privileges of the people
affected by it. For example, ethical decisions protect people's rights to freedom, life
and safety, privacy, free speech, and freedom of conscience.
3. Justice model: According to this model an ethical decision is a decision that
distributes benefits and harms among stakeholders in a fair, equitable, or impartial
way.
Page Ref: 46
Difficulty: Easy
LO: 5-5
90) What are the three principal sources of ethical values that influence organizational
ethics?
Answer: The three principal sources of ethical values that influence organizational
ethics are:

1. Societal ethics: One important determinant of organizational ethics is societal
ethics. Societal ethics are codified in a society's legal system, in its customs and
practices, and in the unwritten norms and values that people use to interact with each
other.
2. Professional ethics: Professional ethics are the moral rules and values that a
group of people uses to control the way they perform a task or use resources.
3. Individual ethics: Individual ethics are the personal and moral standards used by
individuals to structure their interactions with other people. Many behaviors that one
person may find unethical another person may find ethical.
Page Ref: 47,48
Difficulty: Easy
LO: 2-5

Organizational Theory Design and Change 6th Edition Jones Test Bank
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edition-jones-test-bank/
Chapter 4: Basic Challenges of Organizational Design
1. Differentiation entails establishing and controlling the division of labor.

Answer: True False
Diff: 2 Type: TF Page Ref: 114
2. The B.A.R. and Grille is a good example of the challenges differentiation poses.
Answer: True False
3. In a simple organization, differentiation is low because division of labor is low.

Answer: True False
4. In a complex organization, both the division of labor and differentiation are high.
Answer: True False
5. Subunit orientation is the tendency to view one's role in the organization strictly
from the perspective of one's own subunit, or department.
Answer: True False
6. To prevent subunit orientation, management should have clear job descriptions in

place.
Answer: True False

7. Integration is the way in which a company allocates people and resources to
organizational tasks.
Answer: True False
8. If an organization has a high degree of integration, then it should have a low

degree of differentiation.
Answer: True False
9. The simplest integrating mechanism is simply direct contact between people in

different subunits.
Answer: True False
10. The primary difference between a task force and a team is that a task force is
designed to be temporary.
Answer: True False
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11. An organization that differentiates too much will experience higher costs in terms
of the amount of time spent on coordinating activities.
Answer: True False
12. An organization that integrates too much will experience higher costs in terms of
the amount of time spent on coordinating activities.
Answer: True False
13. Formalization is more appropriate in an environment that requires high levels of

mutual adjustment.
Answer: True False

14.External rules often become internalized norms.
Answer: True False
15.Mechanistic structures usually have a high level of formalization.

Answer: True False
16.The organization is very status conscious in a mechanistic structure.

Answer: True False
17. Employees are encouraged to use their judgment in making decisions in a

mechanistic structure.
Answer: True False
18. Organic structures promote flexibility. Answer: True False

19. Lawrence and Lorsch studied the following three industries: plastics, food
processing, and car manufacturing.
Answer: True False
20.Lawrence and Lorsch found that subunits in an organization respond to subparts

of the environment.
Answer: True False
21. The Burns and Stalker research supports the notion that in a rapidly changing
environment, top managers should make all major decisions because they have the
experience and expertise. Answer: True False
22.McDonald's has made its organizational structure more organic.

Answer: True False

23. McDonald's solved most of its organizational problems by becoming more

organic.
Answer: True False
24.________ is the process by which an organization allocates people and resources

to organizational tasks and establishes the task and authority relationships to reach
goals.
A. Structure
B. Management
C. Differentiation D. Strategy
Answer: C
Diff: 1 Type: MC Page Ref: 114
25. At the B.A.R and Grille Restaurant, Bob and Amanda took turns cooking and
waiting on tables. This type of organization is ________ .
A. complex
B. simple
C. specialized
D. coordinated
Answer: B
26. As the B.A.R. and Grille Restaurant grew, Bob and Amanda did not: A. allocate
resources to tasks.
B. perform all the tasks themselves.
C. increase the division of labor.
D. allocate people to tasks.
Answer: B
27. In a simple organization, differentiation is and the division of labor is ________ .

A. low/high B. low/low
C
.
h
i
g

h
/
h
i
g
h
D
.
h
i
g
h
/
l
o
w
Answer: B
28. In a complex organization, differentiation is ________ and division of labor is

________ . A. low/high B. low/low
C. high/low
D. high/high
Answer: D
29. ________ are task-related behaviors required of a position in an organization.

A. Norms
B. Controls
C. Organizational roles
D. Rules
Answer: C
30. ________ is the power to hold people accountable for their actions and to make
decisions concerning the use of resources.
A
.
C
o

n
t
r
o
l
B
.
A
u
t
h
o
r
i
t
y
C
.
D
i
f
f
e
r
e
n
t
i
a
t
i
o
n
D
.
F
u
n
c
t

i
o
n
Answer: B
31. A ________ is a subunit composed of a group of people, working together, who

possess similar skills or use the same kind of knowledge, tools, or techniques to
perform their jobs. A. role
B. function
C. hierarchy
D. norm
Answer: B
32. The two main subunits that develop in an organization are: A. functions and
divisions.
B. marketing and R&D.
C. organizational roles and functions.
D. horizontal differentiation and vertical differentiation.
Answer: A
33. Which of the following functions helps an organization control its relations with
its environment and its stakeholders?
A. Production
B. Support
C. Managerial
D. Adaptive
Answer: B
34. Personnel is a ________ function.

A. support
B. managerial
C. production
D. maintenance
Answer: D

35. Which of the following is an adaptive function?

A. Public relations
B. Sales
C. Engineering
D. Long-range planning
Answer: D
36. Which of the following is not a maintenance function?

A
.
M
a
r
k
e
t
r
e
s
e
a
r
c
h
B
.
J
a
n
i
t
o
r
i
a
l
s
e

r
v
i
c
e
s
C
.
E
n
g
i
n
e
e
r
i
n
g
D
.
P
e
r
s
o
n
n
e
l
Answer: A
37. Which of the following functions manages the conversion process?

A. Production
B. Maintenance C. Managerial
D. Support
Answer: A

38. A subunit of people who possess similar skills or use the same kind of techniques
to perform their jobs are termed a(n) ________ subunit.
A. function
B. department
C. division
D. task
Answer: A
39. An organizational chart is a drawing that primarily depicts ________.

A. socialization
B. differentiation C. integration
D. standardization
Answer: B
40. A ________ is a classification of people according to authority and rank. A.

team B. norm
C. hierarchy
D. role
Answer: C
41. Determining the number of levels to have in the hierarchy is part of ________ .
A. mutual adjustment
B. horizontal differentiation C. vertical
differentiation
D. standardization
Answer: C
42. Which is not a part of horizontal differentiation?

A. Specialization
B. Division of labor
C. Increased productivity
D. Centralization
Answer: D

43. Grouping tasks into roles is part of ________.
A. integration
B. formalization
C. horizontal differentiation D. vertical differentiation
Answer: C
44. ________ causes functions or divisions to develop subunit orientations.

A. Horizontal differentiation
B. Integration
C. Vertical differentiation
D. Authority
Answer: A
45. At the B.A.R. & Grille restaurant, Bob and Amanda noticed conflicts between
the cooks and the waitstaff.
Both acting as if they were the most important to the success of the restaurant. The cooks
noted that "without us, sides we wouldn't have customers," while the waitstaff touted it's
excellent service as the reason for success. This is were an example of ________.
A. subunit orientation
B. integrating mechanisms that are too complex
C. the downside of vertical differentiation
D. integrating mechanisms that are too simple
Answer: A
46. Subunit orientations are the result of differences in: A. the personalities of
organizational managers.
B. official goals.
C. perspectives of time frames and goals among departments.
D. external environments among departments.
Answer: C
47. Production is concerned about reducing costs in the short-term whereas R&D is
concerned about innovation, which is long-term. This is an example of
________.
A.
educa
tional

differ
ences
B.
stand
ardiza
tion
C.
sub
uni
t
ori
ent
ati
on
D.
int
egr
ati
on
Answer: C
48. Which of the following is the simplest integrating mechanism?

A. Task force
B. Liaison role
C. Direct contact
D. Hierarchy of authority
Answer: D
49. Which of the following integrating mechanisms are listed from simplest to most
complex?
A. Liaison roles, integrating
roles, teams, task forces B.
Direct contact, liaison roles,
task forces, teams
C. Liaison roles, integrating roles, task forces, teams
D. Liaison roles, direct contact, teams, integrating roles
Answer: B
50. A salesperson reports to the sales manager of a computer company. This

integrating mechanism is ________.

A. task force
B. hierarchy of authority C. team
D. liaison role
Answer: B
51. A committee is formed to find new ways to recycle cans in a container company.
This integrating mechanism is called ________.
A. direct contact
B. hierarchy of authority C. integrating
role
D. task force
Answer: D
52. A waiter sets up a meeting with the cook to discuss why the food keeps taking so
long to cook. This integrating mechanism is called ________.
A. hierarchy of authority
B. direct contact
C. integrating role D. task force
Answer: B
53. A waiter sets up a meeting with his boss to see if he can meet with the cook and
find out why the food keeps taking so long to cook. This integrating mechanism
is called ________.
A. a liaison role
B. hierarchy of authority
C. task force
D. direct contact
Answer: A
54. A restaurant has so much conflict between the cooks and the wait staff that they
hire a supervisor to handle communication between the two functions. They have
created a(n) ________.
A. task force
B. integrating role C. direct contact
D. level in the hierarchy
Answer: B

55. One manager has responsibility for coordinating the Diaper and Baby Soap
divisions to enhance marketing activities. Which of the following integrating
mechanisms is being used in this example? A. Liaison role B. Direct contact
C. Integrating role
D. Hierarchy of authority
Answer: C
56. Direct contact is an integrating mechanism that:
A. gives one functional manager the authority to tell another functional manager
how to solve a problem.
B. involves a vice president meeting directly with two functional managers to
resolve their problem.
C. is more complex than an integrating role.
D. entails two functional managers meeting to solve a common problem.
Answer: D
57. The relationship between teams and task forces as integrating mechanisms is
that:
A. task forces involve many departments and teams involve only a few
departments.
B. task forces are formally assigned and teams evolve.
C. task forces are used for routine problems and teams are created to solve
specific problems.
D. teams are permanent task forces.
Answer: D
58. One important difference between an integrating role and a liaison role is:
A. the liaison role is a formal position inside one of the departments and the
integrating role is informal.
B. the integrating role is a formal position inside one of the departments and the
liaison role is informal.
C. the integrating role is located outside the departments that are being
coordinated.
D. the liaison role is a more complex integrating mechanism.
Answer: C

59. Which of the following integrating mechanisms is/are independent of the
subunits or divisions being
integrated?
A. Liaison roles
B. Integrating roles C. Task forces
D. Teams
Answer: B
60. An important implication of high differentiation in an organization is that: A.

controlling the environment will be difficult.
B. the hierarchy of authority will be the most important integrating mechanism.
C. coordination between departments will be difficult.
D. the organization will be more organic.
Answer: C
61. ________ is the process of coordinating various tasks, functions, and divisions to
work together and not be at cross-purposes.
A. Integration
B. Organizational behavior C.
Supervision
D. Subunit orientation
Answer: A
62. Which of the following integrating mechanisms is most appropriate for an

organization that has low differentiation?
A. Teams
B. Integrating roles C. Direct
contact D. Task forces
Answer: C
63. A large computer manufacturer makes complex products such as notebook

computers and multimedia software. This company uses direct contact and the
hierarchy of authority to coordinate and control activities. What design challenge
does this organization face?
A. Balancing centralization and decentralization
B. Balancing standardization and mutual adjustment
C. Balancing differentiation and integration

Coordinating the informal and formal organizations
D.
Answer: C
64. Company XYZ is missing many new opportunities because employees do not
take responsibilities or risks. What is the primary design challenge facing this
organization?
B. Establishing levels of horizontal and vertical differentiation
C. Coordinating the formal and informal organization
D. Balancing differentiation and integration
Answer: A
65. ________ means that the authority to make important decisions is retained by
managers at the top of the hierarchy.
A. Centralization
B. Decentralization C. Integration
D. Coordination
Answer: A
66. ________ allows top managers to keep an organization focused on organizational

goals. A. Horizontal differentiation B. Decentralization
C. Mutual adjustment
D. Centralization
Answer: D
67. ________ means that the authority to make important decisions about
organizational resources and new projects is delegated to managers at all levels
in the hierarchy.
A. Standardization
B. Decentralization C.
Centralization D. Direct contact
Answer: B
68. A disadvantage of centralization is that:

A. it is hard to predict employees' behavior.
B. it makes coordination difficult.

top managers may neglect strategic decision making about future
C.
organizational activities such as deciding on which strategy to use to expand
globally.
D. top managers may neglect operational decision making about day-to-day
activities such as hiring.
Answer: C
69. An advantage of centralization is that it:

A. allows top managers to keep the organization focused on organizational
goals.
B. encourages flexibility.
C. gives top managers time to focus on strategic decision making.
D. increases the motivation of middle managers.
Answer: A
70. An advantage of decentralization is that it:

A. allows top managers to keep the organization focused on organizational
goals.
B. simplifies the coordination process.
C. may increase the motivation of managers.
D. ensures predictable behavior.
Answer: C
71. One disadvantage of decentralization is that:

A. the decision-making process is inflexible.
B. it may be hard to motivate managers.
C. it may be hard to coordinate activities.
D. top managers may neglect strategic decision making.
Answer: C
72. A regular customer went to a retail store that required two forms of identification
to process a check. Because the customer had only one form of identification, the
clerk refused to accept the check, and this action resulted in lost business. What
is the design challenge this organization faces?
B. Balancing differentiation and integration

C. Coordinating the informal and formal organizations D. Balancing standardization and
mutual adjustment
Answer: D
73. IBM experienced coordination and communication problems due to ineffective

________. A. formalization B. differentiation
C. standardization
D. integration
Answer: D
74. The opposite of standardization is ________.

A. de-standardization
B. decentralization
C. mutual adjustment D. customization
Answer: C
75. When individuals use their own judgment rather than relying on rules, it is called
________. A. decentralization
B. empowerment
C. standardization
D. mutual adjustment
Answer: D
76. ________ is conformity to specific models defined by sets of rules and norms
that are considered proper in a given situation.
A. Integration
B. Management
C. Standardization D. Differentiation
Answer: C
77. ________ is the process through which people use their judgment rather than
standardized rules to address problems, guide decision making, and promote
coordination.
A
.

S
t
a
n
d
a
r
d
i
z
a
t
i
o
n
B
.
F
o
r
m
a
l
i
z
a
t
i
o
n
Centralization
C.
Mutual adjustment
D.
Answer: D
78. Which of the following would be least appropriate for a company that desires
flexibility? A. Decentralization
B. An organic structure
C. Mutual adjustment
D. Standardization
Answer: D

79. ________ is the extent to which an organization depends on rules and

procedures.
A. Formalization
B. Horizontal differentiation
C. Socialization
D. Vertical differentiation
Answer: A
80. ________ is the process by which organizational members learn the norms of the
organization. A. Mutual adjustment
B. Standardization
C. Socialization D. Integration
Answer: C
81. Task forces and teams can increase ________.

A. mutual adjustment
B. standardization
C. vertical differentiation
D. horizontal differentiation
Answer: A
82. Top managers of a telecommunication company must make complex decisions,

such as whether to enter unstable, developing countries. These managers are
most likely to rely on ________ to coordinate and control their decisions about
global expansion.
A. formalization
B. standardization C. the hierarchy
D. mutual adjustment
Answer: B
83. Norms are:

A. formal written statements that control behavior.
B. often established by the informal organization.
C. easier to change than rules.
D. used only at lower levels in the organization.

Answer: B
84. Mutual adjustment is the:

A. process of using the hierarchy of authority to integrate subunits.
B. process of strictly following written rules.
C. process of using judgment to address a problem.
D. result of centralization.
Answer: C
85. When an organization has a high level of formalization, it will generally: A.

promote innovation and flexibility.
B. decentralize decision-making authority.
C. centralize decision-making authority.
D. encourage mutual adjustment.
Answer: C
86. "Chiselers" are:

A. punished because they violate the norm by working too slow.
B. punished because they violate the norm by working too fast.
C. punished by managers because they break the rules.
D. praised because they slow down the pace of work.
Answer: A
87. "Rate-Busters" are:

A. punished because they violate the norm by working too slow.
B. punished by managers because they break the rules.
C. punished because they violate the norm by working too fast.
D. praised because they slow down the pace of work.
Answer: C
88. Amazon.com ensured customer service through all the design choices except
________.
A. centralized control
B. mutual adjustment
C. empowerment

decentralized control
D.
Answer: A
89. The primary integrating mechanism used in a mechanistic structure is/are

________.
A. direct contact
B. the hierarchy of authority
C. task forces
D. liaison roles
Answer: B
90. ________ structures are designed to induce people to behave in predictable,

accountable ways. A. Decentralized B. Mechanistic C. Organic D. Simple
Answer: B
91. ________ structures promote flexibility, so people initiate change and can adapt
quickly to changing conditions.
A. Mechanistic
B. Organic
C. Complex
D. Formalized
Answer: B
92. If a company desires predictable behavior, it should authority and adopt a(n)
________ structure. A. decentralize/mechanistic
B.
centra
lize/m
echan
istic
C.
centra
lize/o
rganic
D. decentralize/organic
Answer: B

93. A mechanistic structure is characterized by: A. loosely defined rules.

B. a high level of standardization.
C. complex integrating mechanisms.
D. decentralization.
Answer: B
94. Which of the following is not a characteristic of a mechanistic structure? A.

Roles are clearly defined.
B. The informal organization is very status conscious.
C. Complex integrating mechanisms are used.
D. The information flow is mainly vertical.
Answer: C
95. An organic structure is characterized by: A. simple integrating mechanisms.

B. a high level of standardization.
C. loosely defined roles.
D. centralization.
Answer: C
96. Which of the following structures is most appropriate for an organization that
operates in a stable
environment?
A
.
M
e
c
h
a
n
i
s
t
i
c

.
O
r
g
a
n
i
c
C
.
D
i
f
f
e
r
e
n
t
i
a
t
e
d
D
.
S
y
s
t
e
m
a
t
i
c
Answer: A

97. Which of the following structures is most appropriate for an organization that
operates in a dynamic
environment?
A
.
D
i
f
f
e
r
e
n
t
i
a
t
e
d
B
.
S
y
s
t
e
m
a
t
i
c
C
.
O
r
g
a
n
i
c

D. Mechanistic
Answer: C
98. Status in an organic organization is determined by: A. organizational structure.

B. the team to which a person is assigned.
C. the hierarchy of authority.
D. the ability to provide creative leadership.
Answer: D
99. Which of the following is not a characteristic of an organic structure? A.

Coordination is achieved through standardization.
B. Both the informal and formal authority relationships change in response to
changing internal conditions.
C. Integrating mechanisms are complex.
D. Roles are loosely defined.
Answer: A
________ states that in order to manage effectively, an organization should

100.
design its structure to fit with the environment.
A. Contingency theory
B. Organizational theory
C. Organizational behavior D. Environmental richness
Answer: A
101. The success of Trader Joe's upscale supermarket can be attributed to:
A. A mechanistic structure that allows them to sell upscale products at a lower
cost.
B. An organic structure that allowed them to focus on the customer better.
C. Integrating mechanisms that balanced cost with customer service.
D. Successful use of the Contingency structure.
Answer: B
102. The study by Lawrence and Lorsch:

A. analyzes mechanistic and organic structures.
B. supports resource dependency theory.

supports contingency theory.
C.
supports transaction cost theory.
D.
Answer: C
103. According to Lawrence and Lorsch, a poor fit between an organization and its
environment leads to ________.
A
.
f
a
i
l
u
r
e
B
.
s
u
c
c
e
s
s
profit minimization
C.
effectiveness
D.
Answer: A
104.Which of the following findings were discovered by Lawrence and Lorsch?

A. Organizations that operate in certain environments were more effective if
they relied on standardization instead of mutual adjustment.
B. Effective companies in stable environments were less formalized.
C. Organizations that operate in uncertain environments were more effective if
they relied on standardization instead of mutual adjustment.
D. All effective companies used complex integrating mechanisms.
Answer: A

105.Centralization is most effective when an organization: A. has complex

environmental forces.
B. operates in a poor environment.
C. operates in a stable environment.
D. operates in a dynamic environment.
Answer: C
106.Decentralization is most effective when an organization: A. operates in a

complex environment.
B. operates in a simple environment.
C. operates in a stable environment.
D. operates in a rich environment.
Answer: A
107.According to Burns and Stalker, an organization should ________ its structure to

match its environment for effectiveness.
A. simplify
B. centralize C. adapt
D. decentralize
Answer: C
108.According to Burns and Stalker, an organization in a stable environment should:

A. adopt a mechanistic structure.
B. use complex integrating mechanisms.
C. adopt an organic structure.
D. use mutual adjustment.
Answer: A
109.McDonald's faced competition from Olive Garden and Chili's so it adopted a

more ________ structure. A. organic
B. centralized
C. standardized D. mechanistic
Answer: A

110. McDonald's early efforts at restructuring were a disaster in part because
________.
A. the pricing strategy was poorly planned
B. certain departments were not structured so as to adapt to the major
changes taking place C. the environment was stable, requiring a more
mechanistic structure D. the changes came way too late Answer: B
 Size and height limitations
 Tall organization: an organization in which the

hierarchy has many levels relative to the size of the
organization
 Flat organization: an organization that has few levels in

its hierarchy relative to its size
Ideal number of hierarchical levels determined by:
Principle of minimum chain of command: an organization should choose

the minimum number of hierarchical levels consistent with its goals and
the environment in which it operates
Span of control: the number of subordinates a manager directly manages
Control: Factors Affecting the Shape of the Hierarchy

Horizontal differentiation: an organization that is divided into subunits

has many different hierarchies, not just one
Each function or division has its own hierarchy
Horizontal differentiation is the principal way an organization retains
control over employees without increasing the number of hierarchical
levels
Standardization: reduces the need for levels of management because

rules substitute for direct supervision
Gain control over employees by making their behavior and actions more
predictable
Max Weber designed a hierarchy so that it effectively allocates decision-

making authority and control over resources
Bureaucracy: a form of organizational structure in which people can be

held accountable for their actions because they are required to act in
accordance with rules and standard operating procedures
 Principle one: a bureaucracy is founded on the concept of

rational-legal authority
 Rational-legal authority: the authority a person

possesses because of his or her position in an
organization
 Hierarchy should be based on the needs of the task, not

on personal needs
 People’s attitudes and beliefs play no part in how the

bureaucracy operates
 Principle two: Organizational roles are held on the basis of

technical competence, not because of social status, kinship,
or heredity
 Principles one and two establish the organizational role as

the basic component of organization structure
Principle three: A role’s task responsibility and decision-making

authority and its relationship to other roles in the organization should be
clearly specified

Role conflict: when two or more people have different views of what
another person should do, and as a result, make conflicting demands on
that person
 Role ambiguity: the uncertainty that occurs for a person whose
tasks or Principle four: the organization of roles in a
bureaucracy is such that each lower office in the hierarchy is
under the control and supervision of a higher office
 Organizations should be arranged hierarchically so that

people can recognize the chain of command
authority are not clearly defined
 Principle five: rules, standard operating procedures, and

norms should be used to control the behavior and the
relationships among roles in an organization
 Rules and SOPs are written instructions that specify a

series of actions intended to achieve a given end
 Norms are unwritten
 Rules, SOPs, and norms clarify people’s expectations

and prevent misunderstanding
 Principle six: administrative acts, decisions, and rules

should be formulated and put in writing
 Bureaucratic structure provides an organization with

memory
 Organizational history cannot be altered

Management by objectives (MBO): a system of evaluating

subordinates on their ability to achieve specific organizational
goals or performance standards and to meet operating budgets
Steps in Management by Objectives
Step 1: Specific goals and objectives are established at each level

of the organization
Step 2: Managers and their subordinates together determine the

subordinates’ goals
Step 3: Managers and their subordinates periodically review the

subordinates’ progress toward meeting goals
Informal organization can actually enhance organizational performance
IT, Empowerment, and Self-Managed Teams
The use of information technology (IT) is making it easier to cost

effectively design structures to control subordinates
IT provides people with the information they need at all levels
IT is encouraging decentralization and use of teams
Empowerment: the process of giving employees the authority to make

important decisions and to be responsible for their outcomes

Self-managed teams: self-lead work groups consisting of people who are

jointly responsible for ensuring that the team accomplishes its goals
Cross-functional teams: groups of employees from across an

organization’s different functions who are empowered to direct and
coordinate the value-creation activities
Contingent workers: workers who are employed temporarily by an

organization and who receive no indirect benefits such as health
insurance or pensions

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What are some of the principles of bureaucracy according to the text?

What are some of the principles of bureaucracy according to the text?

What are some approaches to evaluating organizational effectiveness mentioned in the text?

What are some approaches to evaluating organizational effectiveness mentioned in the text?

Organizational Behavior, Design, and Change, 6e (Jones)

Chapter 1 Organizations and Organizational Effectiveness

7) The environment in which an organization operates is a major source of uncertainty.

9) One reason for starting an organization is to create jobs for individuals.

13) Organizational structure is used to control and coordinate people's actions.

18) The internal systems approach considers corporate culture.

21) Operative goals give employees direction.

22) An organization's mission as stated in public documents is an official goal.

23) Operative goals can be either short or long term in nature.

32) An organization's output include all except ________.

34) Which of the following is not a reason for creating an organization?

44) ________ is the formal system of task and authority relationships.

46) Organizational culture:

50) The means an organization uses to achieve its goals are:

51) Which of the following is not an advantage of organizational design?

52) Organizational design is:

53) Organizational design:

54) ________ is a means of implementing strategy.

59) When organizational design is poor, ________.

60) Which of the following approaches is concerned with measuring productivity?

71) The Ford Motor case best illlustrates ________.

73) ________ goals provide legitimacy to the organization.

74) The Southwest Airlines case illustrates ________.

75) ________ goals provide employee direction.

76) Operative goals:

78) List four examples of "organizational inputs."

80) List four examples of "organizational outputs."

85) Describe the value creation process for a university

Organizational Theory, Design, and Change, 7e (Jones)

1) In general, stakeholders are motivated to participate in an organization if they receive

2) Shareholders are a part of inside stakeholders.

3) Shareholders' claim on organizational resources is often considered inferior to the claims of

4) Shareholders are the owners of the organization.

5) The workforce and managers are considered outside stakeholders.

6) Customers are usually an organization's smallest outside stakeholder group.

12) Outside directors of a corporation are full-time employees of the corporation.

14) Inside directors hold offices in a company's formal hierarchy.

16) The CEO determines top management's rewards and incentives.

18) A manager who is in charge of sales holds a staff role.

21) Divisional managers are not corporate managers.

23) Stock-based compensation schemes help solve the agency problem.

25) Ethics and law change as time passes.

42) Which of is an outside stakeholder group?

43) In effect, are the agents or employees of shareholders.

44) are usually an organization's largest outside stakeholder group.

45) To be effective, an organization must .

B) form long-term relationships with suppliers

48) In an organization, the position of the is one of trusteeship.

D) an executive of another company that operates in the same industry

51) Which of the following statements is true about an outside director?

54) Which of employees would be considered to have a line role?

55) Which of the following is a primary responsibility of a chief operating officer?

59) Which of the following organizational positions is considered to be a part of corporate

60) Vice presidents are part of management.

61) Which of the following managers has a staff role?