Principle of Business CH7

Chapter 07
Organization, Teamwork, and Communication
True / False Questions
1. Organizational culture is expressed informally through a firm's mission statement or

code of ethics.
True
False
2. Organizational structures are always explicitly defined.

True
False
3. An organization's structure develops as managers assign tasks to work groups and

specific individuals and coordinate the diverse activities required to attain
organizational objectives.
True
False
4. Organizational growth requires organizing different resources.

True
False
5. The more complex organizations become, the more they need to develop formal
structures to function efficiently.
True
False
Multiple Choice Questions
7-1
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6. Which of the following is not part of organizational culture?
A.
B.
C.
D.
E.
Values
Beliefs
Role models
Religion
Traditions
7. Which is not a means of formally expressing an organization's culture?
A.
B.
C.
D.
E.
Ceremonies
Code of ethics
Mission statement
Manuals
Employee dress codes
8. Dress codes, work habits, extracurricular activities, and stories are informal
expressions of an organization's
A.
B.
C.
D.
E.
grapevine.
lack of organization.
informality.
culture.
formality.
9. Organizational structure is defined as
A. the arrangement or relationship of positions within an organization.

B. a group of people working together to achieve an objective.
C.
the division of labor into small specific tasks.
D.
the grouping of jobs into working units.
E. the grouping of working units into departments or divisions.
10. When managers assign work activities to groups and individuals and coordinate the
diverse activities required to attain organizational objectives, they contribute to the
development of organizational
A.
B.
C.
D.
E.
structure.
informality.
spontaneity.
growth.
accountability.
7-2
11. A department store's organizational structure defines the relationships between
A.
salespersons and merchandise buyers.
B.
credit managers and maintenance people.
C.
department managers and customers.
D.
maintenance people and salespersons.
E. all the individuals working together to achieve its objectives.
12. Which of the following requires an increasing degree of organizing within an
organization?
A.
B.
C.
D.
E.
Profits
Sales
Growth
Decline
Aging
13. Organizational cultures that lack positive values may result in
A.
B.
C.
D.
E.
excessive profits.
inefficient division of labor.
productive and motivated employees.
unproductive and indifferent employees.
happy customers.
14. An organization's shared values, beliefs, traditions, philosophies, rules, and role
models for behavior represent its
A.
B.
C.
D.
E.
formal organization.
information system.
organizational culture.
grapevine.
organizational manual.
Essay Questions
7-3
15. What is organizational culture and how is it expressed?
16. What is organizational structure? How does it develop?
17. The rationalization for specialization is that people can perform several tasks more
efficiently than just one.
True
False
18. Departmentalization is the division of labor into small, specialized tasks and the
assignment of single tasks to employees.
True
False
19. An advantage of functional departmentalization is that managers need only the skills
that apply to their department's function.
True
False
7-4
20. Disadvantages of product departmentalization are that it duplicates functions and

does not focus on the organization's overall objectives.
True
False
21. Product departmentalization allows the coordination of all activities related to a

product or product group and simplifies decision-making.
True
False
22. The rationale for job specialization is that
A.
B.
C.
D.
E.
it is more efficient.
workers become less bored.
workers shift from one job to another.
workers have fewer injuries.
it improves quality.
23. The benefits of division of labor were described in The Wealth of Nations by
A.
B.
C.
D.
E.
Henry Ford.
John Adams.
Adam Smith.
Cyrus McCormick.
Sam Walton.
24. Adam Smith illustrated improvements in efficiency through the application of
A.
B.
C.
D.
E.
departmentalization.
specialization.
generalization.
registration.
delegation.
7-5
25. Many experts believe people can perform most efficiently if they master just one task
rather than all tasks. A famous book that supports this point was published in 1776
and is titled
A.
B.
C.
D.
E.
The Wealth of Nations.

The Principles of Scientific Management.
The Declaration of Independence.
The Prosperity of Specialization.
The 7 Habits of Highly Effective People.
26. Small businesses commonly employ
A.
B.
C.
D.
E.
line departmentalization.
customer departmentalization.
functional departmentalization.
product departmentalization.
geographical departmentalization.
27. All of the following are approaches to departmentalization except
A.
B.
C.
D.
E.
function.
product.
geographic region.
customer.
line.
28. A company that has departments for marketing, finance, personnel, and production is
organized by
A.
B.
C.
D.
E.
product.
function.
territory.
customer.
geographic region.
7-6
29. If the type of departmentalization used by an organization tends to emphasize

departmental units rather than the organization as a whole and decision making is
slow, then these would be weaknesses indicative of _______ departmentalization.
A.
B.
C.
D.
E.
territorial
functional
product
customer
process
30. _____ departmentalization arranges jobs around the needs of various types of
customers.
A.
B.
C.
D.
E.
Product
Functional
Geographical
Customer
Matrix
Essay Questions
31. What are some of the advantages of specialization? What are some of its
disadvantages?
7-7
32. What are the different means of organizational departmentalization? Be sure to give
an illustrative example of each.
33. Accountability is the obligation employees have to carry out assigned tasks.
True
False
34. In decentralized organizations, lower-level managers have a good understanding of

their external environment and need to react quickly to it.
True
False
35. A wide span of management is best when a manager and subordinates are not in
close proximity.
True
False
36. Flat organizations have narrow spans of management.

True
False
37. A company with many layers of managers is considered tall.

True
False
7-8
38. Which of the following concepts frees a manager to attend to matters that he or she
is especially qualified to deal with?
A.
B.
C.
D.
E.
Delegation of authority
Responsibility
Accountability
Knowledge
Education
39. If Juan's manager gives him an assignment without providing Juan with the resources
to complete the assignment, Juan's manager is exhibiting improper
A.
B.
C.
D.
E.
accountability.
delegation of authority.
centralization.
40. Joe is a copywriter in his company's marketing department. The copy for an ad
placed in Time magazine for his company spelled the company's name wrong. Who is
ultimately responsible for the mistake?
A.
B.
C.
D.
E.
The copywriter
The marketing vice president
Time magazine
The customer
Nobodythings just happen
41. When the decisions of a company are very risky and low-level managers lack
decision-making skills, the company will tend to
A.
B.
C.
D.
E.
decentralize.
delegate.
centralize.
organize.
specialize.
7-9
42. An organization operating in a complex and unpredictable environment is likely to be

_______ in order to improve responsiveness and enhance creativity.
A.
B.
C.
D.
E.
highly centralized
decentralized
informal
formal
very productive
43. One of the things to consider when determining the appropriate span of management
is
A. physical distances between subordinate and supervisor, and subordinate

competence.
B. responsibilities of subordinate outside the organization.
C.
organizational culture and ethical values.
D.
the management style of the manager.
E.
products that the company sells.
44. When superiors and subordinates are not in close proximity and the manager has
many responsibilities in addition to supervision, the appropriate span of management
would be
A.
B.
C.
D.
E.
big.
wide.
narrow.
flat.
circular.
45. Companies that have flat organizations tend also to have
A.
B.
C.
D.
E.
tall spans of management.

minimal spans of management.
narrow spans of management.
short spans of management.
wide spans of management.
Essay Questions
7-10
46. What is a span of management? What are the differences between organizations with
wide versus narrow spans of management?
47. Define delegation of authority and show its relationship to responsibility.
48. Line structure is based on direct lines of authority from the top executive to the
lowest level of employee.
True
False
49. The line-and-staff structure divides general managing duties into functional areas,
each with a separate supervisor.
True
False
50. In a line-and-staff structure, staff managers do not have direct authority over line
managers.
True
False
7-11
51. Matrix structures are often complex and expensive, and can lead to confusion
regarding who has the ultimate authority.
True
False
52. Multidivisional structures are not good at allowing for delegation of authority, and
therefore do not allow divisional and departmental managers a chance to specialize.
True
False
53. Which of the following is not a basis for organizing using a multidivisional structure?
A.
B.
C.
D.
E.
Geography
Project
Product
Customer
Function
54. An organizational form that is based on direct lines of authority from the top
executive to the lowest level of employees is called
A.
B.
C.
D.
E.
line structure.
functional structure.
line-and-staff structure.
matrix structure.
a committee.
55. An advantage of line structure in organizations is
A.
B.
C.
D.
E.
a clear chain of command.

a high level of centralization.
shared decision making.
that managers possess a wide range of knowledge.
there are many layers.
7-12
56. A disadvantage of line structure is
A.
an unclear chain of command.
B.
the speed of decision making.
C.
that there are no direct lines of authority.
D.
that it is very uncommon.
E. that managers must possess a wide range of knowledge and skills.
57. Which of the following organizational forms allows managers to take responsibility for
the areas in which they specialize?
A.
B.
C.
D.
E.
Line structure
Functional structure
Line-and-staff structure
Matrix structure
A committee
58. Multidivisional structures
A.
are temporary.
B. organize departments into larger divisions, often based on geography, product,
and/or customer.
C. bring together specialists from a variety of areas to work on a single project.
D.
make slower decisions.
E. are less innovative but make quicker decisions.
59. Which of the following organizational forms is also called a project management
structure?
A.
B.
C.
D.
E.
Bureaucratic structure
Line structure
Multidivisional structure
Matrix structure
60. Which of the following organizational forms is most likely to be complex and
expensive?
A.
B.
C.
D.
E.
Line structure
Matrix structure
Committee
7-13
Essay Questions
61. What are the benefits and drawbacks of using a matrix structure to organize?
62. What is the difference between line structure and line-and-staff structure?
63. Regardless of how a business is organized, most of the essential work of business
occurs in individual work groups and teams.
True
False
64. All groups are teams, but not all teams are groups.
True
False
65. Teams can create more solutions for solving problems than individuals.
True
False
7-14
66. Product-development teams are a special type of task force formed to devise, design,
and implement a new product.
True
False
67. Quality assurance teams are groups of employees brought together to solve specific
quality, productivity, or service problems.
True
False
68. Which of the following is formed to address specific quality, service, or productivity
problems?
A.
B.
C.
D.
E.
Self-directed work team

Product-development team
Work group
Quality-assurance team
Task force
69. Which of the following is a temporary group of employees, usually chosen for their
expertise, responsible for bringing out a specific change?
A.
B.
C.
D.
E.

Work group
Task force
70. Work groups
A.
B.
C.
D.
E.
have shared leadership roles.

have a specific purpose that the group itself delivers.
create collective work products.
have individual accountability.
encourage open-ended discussion.
7-15
71. Teams
A.
B.
C.
D.
E.
have a strong, clearly focused leader.

share leadership and create collective work products.
run efficient meetings.
measure effectiveness indirectly.
72. A permanent, formal group that performs a specific task is a
A.
B.
C.
D.
E.
task force.
product-development team.
project team.
committee.
self-directed work team.
73. A temporary group of employees responsible for bringing about a particular change is
a
A.
B.
C.
D.
E.
task force.
project team.
committee.
74. Project teams
A.
are permanent, formal groups.
B. are composed of individuals from one functional area.
C.
never last for more than six months.
D. run their operation and have control of a specific work project.
E.
solve specific quality problems.
75. A special type of project team formed to devise, design, and implement a new
product is a
A.
B.
C.
D.
E.
committee.
task force.
coalition.
quality-assurance team.
7-16
Essay Questions
76. What is a self-directed work team?
77. Horizontal communication involves the traditional flow of information from upper
organizational levels downward.
True
False
78. Downward communication typically involves directions, the assignment of tasks and
responsibilities, performance feedback, and certain details about the organization's
strategies and goals.
True
False
79. The most significant informal communication occurs while playing golf.
True
False
80. Communication flows within an organization are always formal.

True
False
81. When individuals from different units and organizational levels communicate, it is
diagonal communication.
True
False
7-17
82. Diagonal communication
A. is the traditional flow of communication from higher to lower levels of the

organization.
B. occurs when individuals from different units and departments within an
organization communicate.
C. flows from lower organizational levels to higher ones.
D. occurs with communication between peers and colleagues.
E. is an informal method of communication in organizations that can improve decision
making.
83. The increased use of electronic communication in the workplace has caused many
organizations to implement all but which of the following?
A.
Formal policies on appropriate Internet use
B. Software programs to monitor employee Internet use
C. Most companies simply let employees do what they want on the Internet
D. Requiring employees to use corporate computers while at work
E. Consulting online resources on how to handle employee Internet usage
84. Which of the following is an informal communication channel?
A.
B.
C.
D.
E.
Leaflets
Telecommunications
Job descriptions
Grievances
The grapevine
85. Which of the following is not typically part of downward communication?
A.
B.
C.
D.
E.
Performance feedback
Assignment of tasks
Details on organizational strategy
Gossip
Directions
7-18
86. What is upward communication?
A. The traditional flow of communication from higher to lower levels of the

organization
B. When individuals from different units and departments within an organization
communicate
C. Communication that flows from lower organizational levels to higher ones
D. Communication between peers and colleagues
E. Communication among friends as well as in nonwork social relationships
87. Downward communication conveys
A.
B.
C.
D.
E.
information about the grapevine.

explanations of decisions and orders.
complaints.
status reports.
policy questions.
88. Upward communication conveys
A.
B.
C.
D.
E.
orders.
explanation of decisions.
requests for information.
progress reports and complaints.
information about procedures and methods.
89. When managers recognize that a grapevine exists, they should
A.
eliminate it.
B.
use it to their advantage by feeding it facts.
C. find out if its goals are contrary to the organization's goals.
D.
send incorrect information through it.
E.
send upward communications through it.
Essay Questions
7-19
90. How can managers use the "grapevine" to their advantage?
91. What did Quest Star do, structurally, to help it become more competitive with
Japanese firms?
A. It increased the number of management layers

B.
It flattened its layers of management
C. It reduced the emphasis on teams in the organization
D. It decided that its employees could not be trusted to make decisions
E.
It increased managers' authority
92. Why are upper level managers facing frustration and increased stress as Quest Star
transitions to a new organizational structure?
A.
They do not like their jobs
B. They are faced with training employees to supervise themselves
C.
They miss the old system
D.
The employees don't like the new system
E. Management does not trust employees to make decisions for themselves
Essay Questions
7-20
93. What techniques or skills should Quest Star employees have to assume a leadership
role within a work group?
94. If each Quest Star work group has a team representative, what problems will be faced
in supervising these representatives?
95. Evaluate the pros and cons of the system developed by Quest Star.
7-21
Chapter 07 Organization, Teamwork, and Communication

Answer Key
1.
Organizational culture is expressed informally through a firm's mission statement

or code of ethics.
FALSE
Examples of informal expressions of culture include dress codes (or the lack
thereof), work habits, extracurricular activities, and stories.
AACSB: Communication
Blooms: Remember
Learning Objective: 07-01 Define organizational structure; and relate how organizational structures develop.
Level of Difficulty: 1 Easy
Topic: Organizational Culture
2.
Organizational structures are always explicitly defined.

FALSE
An organizational structure can be explicitly defined or merely implied.
AACSB: Reflective Thinking

Blooms: Understand
Topic: Developing Organizational Structure
3.
An organization's structure develops as managers assign tasks to work groups and

specific individuals and coordinate the diverse activities required to attain
organizational objectives.
TRUE
An organization's structure is created when managers assign work activities to
work groups and individuals, along with coordinating many different activities that
are needed to reach the organizational objectives.

Blooms: Remember
7-22

4.
Organizational growth requires organizing different resources.

TRUE
Growth requires organizingthe structuring of human, physical, and financial
resources to achieve objectives in an effective and efficient manner.

Blooms: Remember
5.
The more complex organizations become, the more they need to develop formal
structures to function efficiently.
TRUE
With more people and greater specialization, the organization needs to develop a
formal structure to function efficiently.

Blooms: Remember
Level of Difficulty: 2 Medium
6.
Which of the following is not part of organizational culture?
A.
B.
C.
D.
E.
Values
Beliefs
Role models
Religion
Traditions
Organizational culture is a firm's shared values, beliefs, traditions, philosophies,

rules, and role models for behavior.
AACSB: Diversity
Blooms: Understand
7-23
7.
Which is not a means of formally expressing an organization's culture?
A.
B.
C.
D.
E.
Ceremonies
Code of ethics
Mission statement
Manuals
Employee dress codes
A firm's culture may be expressed formally through its mission statement, codes of
ethics, memos, manuals, and ceremonies, but it is more commonly expressed
informally.
AACSB: Diversity
Blooms: Understand
8.
Dress codes, work habits, extracurricular activities, and stories are informal
expressions of an organization's
A.
B.
C.
D.
E.
grapevine.
lack of organization.
informality.
culture.
formality.
Examples of informal expressions of culture include dress codes (or the lack
thereof), work habits, extracurricular activities, and stories.
AACSB: Diversity
Blooms: Understand
7-24
9.
Organizational structure is defined as
A. the arrangement or relationship of positions within an organization.

B. a group of people working together to achieve an objective.
C.
the division of labor into small specific tasks.
D.
the grouping of jobs into working units.
E. the grouping of working units into departments or divisions.
Structure is the arrangement or relationship of positions within an organization.

Blooms: Remember
10.
When managers assign work activities to groups and individuals and coordinate
the diverse activities required to attain organizational objectives, they contribute
to the development of organizational
A.
B.
C.
D.
E.
structure.
informality.
spontaneity.
growth.
accountability.
An organization's structure develops when managers assign work tasks and

activities to specific individuals or work groups and coordinate the diverse
activities required to reach the firm's objectives.
Blooms: Remember
7-25
11.
A department store's organizational structure defines the relationships between
A.
B.
C.
D.
E.
salespersons and merchandise buyers.

credit managers and maintenance people.
department managers and customers.
maintenance people and salespersons.
all the individuals working together to achieve its objectives.
All the people occupying positions in the department store must work together to
achieve the store's objectives. The ways that they work together are defined by
the store's organizational structure.
Blooms: Apply
12.
Which of the following requires an increasing degree of organizing within an

organization?
A.
B.
C.
D.
E.
Profits
Sales
Growth
Decline
Aging
Growth requires organizing.

Blooms: Remember
7-26
13.
Organizational cultures that lack positive values may result in
A.
B.
C.
D.
E.
excessive profits.
inefficient division of labor.
productive and motivated employees.
unproductive and indifferent employees.
happy customers.
Organizational cultures that lack positive values may result in unproductive and
inefficient employees, whose poor attitudes will be reflected externally to
customers.

Blooms: Understand
Level of Difficulty: 3 Hard
14.
An organization's shared values, beliefs, traditions, philosophies, rules, and role

models for behavior represent its
A.
B.
C.
D.
E.
formal organization.
information system.
grapevine.
organizational manual.
A firm's organizational culture is its shared values, beliefs, traditions, philosophies,

rules, and role models for behavior.
AACSB: Diversity
Blooms: Remember
Essay Questions
7-27
15.
What is organizational culture and how is it expressed?
Organizational culture is a firm's shared values, beliefs, traditions, philosophies,

rules, and role models for behavior. It can be expressed formally through an
organization's mission statement, codes of ethics, memos, manuals, and
ceremonies, but it is more commonly expressed informally. Examples of informal
expressions of culture include dress codes (or the lack thereof), work habits,
extracurricular activities, and stories. Employees often learn the accepted
standards through discussions with co-workers.

Blooms: Remember
16.
What is organizational structure? How does it develop?
Organizational structure refers to the arrangement or relationship of positions

within an organization. This structure develops when managers assign work tasks
and activities to specific individuals or work groups and coordinate the diverse
activities required to reach the firm's objectives.

Blooms: Remember
17.
The rationalization for specialization is that people can perform several tasks more
efficiently than just one.
FALSE
The rationale for specialization is efficiency; people can perform more efficiently if
they master just one task rather than all the tasks.

Blooms: Remember
7-28
Learning Objective: 07-02 Describe how specialization and departmentalization help an organization achieve
its goals.
Topic: Assigning Tasks
18.
Departmentalization is the division of labor into small, specialized tasks and the
assignment of single tasks to employees.
FALSE
Departmentalization is the grouping of jobs into working units usually called
departments, units, groups, or divisions.

Blooms: Remember
its goals.
19.
An advantage of functional departmentalization is that managers need only the

skills that apply to their department's function.
TRUE
Each of these functions is managed by an expert in the work done by the
departmentan engineer supervises the production department; a financial
executive supervises the finance department, etc.

Blooms: Remember
its goals.
20.
Disadvantages of product departmentalization are that it duplicates functions and

does not focus on the organization's overall objectives.
TRUE
Organizing by products duplicates functions and resources and emphasizes the
product rather than achievement of the organization's overall objectives.

Blooms: Remember
its goals.
7-29
21.
Product departmentalization allows the coordination of all activities related to a

product or product group and simplifies decision-making.
TRUE
Product departmentalization organizes jobs around the products of the firm,
simplifies decision making, and helps coordinate all activities related to a product
or product group.

Blooms: Remember
its goals.
22.
The rationale for job specialization is that
A.
B.
C.
D.
E.
it is more efficient.
workers become less bored.
workers shift from one job to another.
workers have fewer injuries.
it improves quality.
The rationale for specialization is efficiency.

Blooms: Remember
its goals.
7-30
23.
The benefits of division of labor were described in The Wealth of Nations by
A.
B.
C.
D.
E.
Henry Ford.
John Adams.
Adam Smith.
Cyrus McCormick.
Sam Walton.
In The Wealth of Nations, 18th-century economist Adam Smith discussed

specialization, using the manufacture of straight pins as an example.

Blooms: Remember
its goals.
24.
Adam Smith illustrated improvements in efficiency through the application of
A.
B.
C.
D.
E.
departmentalization.
specialization.
generalization.
registration.
delegation.
Adam Smith used the concept of specialization to illustrate improvements in

efficiency.

Blooms: Remember
its goals.
7-31
25.
Many experts believe people can perform most efficiently if they master just one
task rather than all tasks. A famous book that supports this point was published in
1776 and is titled
A.
B.
C.
D.
E.
The Wealth of Nations.

The Principles of Scientific Management.
The Declaration of Independence.
The Prosperity of Specialization.
The 7 Habits of Highly Effective People.
Adam Smith wrote The Wealth of Nations to demonstrate specialization, the idea
that people can perform most efficiently if they master just one task rather than all
tasks.

Blooms: Remember
its goals.
26.
Small businesses commonly employ
A.
B.
C.
D.
E.
line departmentalization.
functional departmentalization.
product departmentalization.
geographical departmentalization.
Functional departmentalization is common in small organizations.

Blooms: Remember
its goals.
7-32
27.
All of the following are approaches to departmentalization except
A.
B.
C.
D.
E.
function.
product.
geographic region.
customer.
line.
Departments are commonly organized by function, product, geographic region, or

customer.

Blooms: Remember
its goals.
28.
A company that has departments for marketing, finance, personnel, and

production is organized by
A.
B.
C.
D.
E.
product.
function.
territory.
customer.
geographic region.
Functional departmentalization groups jobs that perform similar functional

activities, such as finance, manufacturing, marketing, and human resources.

Blooms: Remember
its goals.
7-33
29.
If the type of departmentalization used by an organization tends to emphasize

departmental units rather than the organization as a whole and decision making is
slow, then these would be weaknesses indicative of _______ departmentalization.
A.
B.
C.
D.
E.
territorial
functional
product
customer
process
A weakness of functional departmentalization is that because it tends to

emphasize departmental units rather than the organization as a whole, decision
making that involves more than one department may be slow, and it requires
greater coordination.

Blooms: Remember
its goals.
30.
_____ departmentalization arranges jobs around the needs of various types of

customers.
A.
B.
C.
D.
E.
Product
Functional
Geographical
Customer
Matrix
Customer departmentalization arranges jobs around the needs of various types of

customers.

Blooms: Remember
its goals.
Essay Questions
7-34
31.
What are some of the advantages of specialization? What are some of its
disadvantages?
Specialization, or division of labor, allows a company to divide work into small,

specialized tasks and assign employees to do each task. The advantage of
specialization is that it minimizes the time lost from workers shifting from one task
to another. Thus, it improves efficiency and quality.
However, overspecialization can result in bored and dissatisfied employees, poor
quality work, more injuries, and high employee turnover.

Blooms: Remember
its goals.
32.
What are the different means of organizational departmentalization? Be sure to

give an illustrative example of each.
The four means of departmentalization are functional, geographic, product, and

customer. Student's examples will vary, but be sure that they provide enough
information to support their example.

Blooms: Understand
its goals.
33.
Accountability is the obligation employees have to carry out assigned tasks.

FALSE
Accountability means that employees who accept an assignment have the
authority to carry it out and are answerable to a superior for the outcome.

7-35
Blooms: Remember
Learning Objective: 07-03 Determine how organizations assign responsibility for tasks and delegate authority.
Topic: Assigning Responsibility
34.
In decentralized organizations, lower-level managers have a good understanding of

their external environment and need to react quickly to it.
TRUE
In decentralized business environments, lower-level managers who interact with
the external environment often develop a good understanding of it and thus are
able to react quickly to change.

Blooms: Understand
35.
A wide span of management is best when a manager and subordinates are not in
close proximity.
FALSE
A narrow span of management is appropriate when superiors and subordinates are
not in close proximity, the manager has many responsibilities in addition to the
supervision, the interaction between superiors and subordinates is frequent, and
problems are common.
Blooms: Remember
36.
Flat organizations have narrow spans of management.

FALSE
Organizations with few layers are flat and have wide spans of management.
Blooms: Remember
7-36
37.
A company with many layers of managers is considered tall.

TRUE
A company with many layers of managers is considered tall, and the span of
management is narrow.
Blooms: Remember
38.
Which of the following concepts frees a manager to attend to matters that he or

she is especially qualified to deal with?
A.
B.
C.
D.
E.
Delegation of authority
Responsibility
Accountability
Knowledge
Education
Delegation of authority frees a manager to concentrate on larger issues, such as

planning and dealing with problems and opportunities, that managers are more
qualified to address.

Blooms: Remember
7-37
39.
If Juan's manager gives him an assignment without providing Juan with the
resources to complete the assignment, Juan's manager is exhibiting improper
A.
B.
C.
D.
E.
accountability.
delegation of authority.
centralization.
Delegation of authority involves giving employees not only tasks, but also the
power to make commitments, use resources, and take whatever actions are
necessary to carry out those tasks.

Blooms: Understand
40.
Joe is a copywriter in his company's marketing department. The copy for an ad

placed in Time magazine for his company spelled the company's name wrong.
Who is ultimately responsible for the mistake?
A.
B.
C.
D.
E.
The copywriter
The marketing vice president
Time magazine
The customer
Nobodythings just happen
The act of delegating authority to a subordinate does not relieve the superior of
accountability for the delegated job. Even though the vice president of marketing
delegates work to subordinates, he or she is still ultimately accountable to the
president for all marketing activities, including their mistakes.

Blooms: Apply
7-38
41.
When the decisions of a company are very risky and low-level managers lack
decision-making skills, the company will tend to
A.
B.
C.
D.
E.
decentralize.
delegate.
centralize.
organize.
specialize.
Businesses tend to be more centralized when the decisions to be made are risky
and when low-level managers are not highly skilled in decision making.

Blooms: Remember
42.
An organization operating in a complex and unpredictable environment is likely to

be _______ in order to improve responsiveness and enhance creativity.
A.
B.
C.
D.
E.
highly centralized
decentralized
informal
formal
very productive
Decentralization is characteristic of organizations that operate in complex,

unpredictable environments.

Blooms: Remember
7-39
43.
One of the things to consider when determining the appropriate span of

management is
A. physical distances between subordinate and supervisor, and subordinate

competence.
B. responsibilities of subordinate outside the organization.
C.
organizational culture and ethical values.
D.
the management style of the manager.
E.
products that the company sells.
problems are common. However, when superiors and subordinates are located
close to one another, the manager has few responsibilities other than supervision,
the level of interaction between superiors and subordinates is low, few problems
arise, subordinates are highly competent, and a set of specific operating
procedures governs the activities of managers and their subordinates, a wide span
of management will be more appropriate.

Blooms: Remember
44.
When superiors and subordinates are not in close proximity and the manager has
many responsibilities in addition to supervision, the appropriate span of
management would be
A.
B.
C.
D.
E.
big.
wide.
narrow.
flat.
circular.

problems are common.

Blooms: Understand
7-40
45.
Companies that have flat organizations tend also to have
A.
B.
C.
D.
E.
tall spans of management.

minimal spans of management.
narrow spans of management.
short spans of management.
wide spans of management.
Organizations with few layers are flat and have wide spans of management
because managers supervise larger number of employees and there are fewer
organizational layers.

Blooms: Remember
Essay Questions
46.
What is a span of management? What are the differences between organizations

with wide versus narrow spans of management?
Span of management refers to the number of subordinates who report to a

particular manager. A wide span of management exists when a manager directly
supervises a very large number of employees. A narrow span of management
exists when a manager directly supervises only a few subordinates.
The organization must consider factors when choosing the best span of
management. A narrow span of management is appropriate when superiors and
subordinates are not in close proximity, the manager has many responsibilities in
addition to the supervision, the interaction between superiors and subordinates is
frequent, and problems are common. However, when superiors and subordinates
are located close to one another, the manager has few responsibilities other than
supervision, the level of interaction between superiors and subordinates is low, few
problems arise, subordinates are highly competent, and a set of specific operating
procedures governs the activities of managers and their subordinates, a wide span
of management will be more appropriate. Narrow spans of management are
typical in centralized organizations, while wide spans of management are more
common in decentralized firms.

7-41
Blooms: Remember
47.
Define delegation of authority and show its relationship to responsibility.
The delegation of authority is the assigning of tasks to employees, giving them the
power to make commitments, use the resources, and take the actions that are
necessary to accomplish the tasks. Delegation creates a responsibility, or
obligation, for the employee to carry out the assigned task satisfactorily and
makes the employee accountable for the proper execution of the work. With many
employees, this increased responsibility will lead to improved morale and a greater
drive to perform his or her job satisfactorily.

Blooms: Remember
48.
Line structure is based on direct lines of authority from the top executive to the
lowest level of employee.
TRUE
Line structure, with its direct lines of authority that extend from the top manager
to employees at the lowest level of the organization, is the simplest organizational
structure.

Blooms: Remember
Learning Objective: 07-04 Compare and contrast some common forms of organizational structure.
Topic: Forms of Organizational Structure
7-42
49.
The line-and-staff structure divides general managing duties into functional areas,
each with a separate supervisor.
FALSE
The line-and-staff structure has a traditional line relationship between superiors
and subordinates, and specialized managerscalled staff managersare available
to assist line managers.

Blooms: Remember
50.
In a line-and-staff structure, staff managers do not have direct authority over line
managers.
TRUE
Staff managers do not have direct authority over line managers or over the line
manager's subordinates, but they do have direct authority over subordinates in
their own departments.

Blooms: Remember
51.
Matrix structures are often complex and expensive, and can lead to confusion
regarding who has the ultimate authority.
TRUE
Although matrix structures can foster flexibility, coordination, and creativity, they
are expensive, complex, and can create confusion as to which manager's authority
has priority.

Blooms: Remember
7-43
52.
Multidivisional structures are not good at allowing for delegation of authority, and
therefore do not allow divisional and departmental managers a chance to
specialize.
FALSE
Multidivisional structures allow for delegation of authority, and therefore also allow
divisional and departmental managers a chance to specialize.

Blooms: Remember
53.
Which of the following is not a basis for organizing using a multidivisional

structure?
A.
B.
C.
D.
E.
Geography
Project
Product
Customer
Function
Matrix structures are usually utilized for projects. Multidivisional structures can be
organized around geography, product, customer, function, or a combination.

Blooms: Remember
7-44
54.
An organizational form that is based on direct lines of authority from the top
executive to the lowest level of employees is called
A.
B.
C.
D.
E.
line structure.
functional structure.
line-and-staff structure.
matrix structure.
a committee.
A line structure has direct lines of authority that extend from the top manager to
employees at the lowest level of the organization.

Blooms: Remember
55.
An advantage of line structure in organizations is
A.
B.
C.
D.
E.
a clear chain of command.

a high level of centralization.
shared decision making.
that managers possess a wide range of knowledge.
there are many layers.
Line structures have a clear chain of command, which enables managers to make
decisions quickly.

Blooms: Remember
7-45
56.
A disadvantage of line structure is
A.
an unclear chain of command.
B.
the speed of decision making.
C.
that there are no direct lines of authority.
D.
that it is very uncommon.
E. that managers must possess a wide range of knowledge and skills.
A line structure requires that managers possess a wide range of knowledge and
skills.

Blooms: Remember
57.
Which of the following organizational forms allows managers to take responsibility

for the areas in which they specialize?
A.
B.
C.
D.
E.
Line structure
Matrix structure
A committee
In a line-and-staff structure, line managers can focus on their area of expertise in

the operation of the business, while staff managers provide advice and support to
line departments on specialized matters such as finance, engineering, human
resources, and the law.

Blooms: Remember
7-46
58.
Multidivisional structures
A.
are temporary.
B. organize departments into larger divisions, often based on geography, product,
and/or customer.
C. bring together specialists from a variety of areas to work on a single project.
D.
make slower decisions.
E.
are less innovative but make quicker decisions.
A multidivisional structure organizes departments into larger groups called
divisions. Just as departments might be formed on the basis of geography,
customer, product, or a combination of these, so too divisions can be formed
based on any of these methods of organizing.

Blooms: Remember
59.
Which of the following organizational forms is also called a project management

structure?
A.
B.
C.
D.
E.
Bureaucratic structure
Line structure
Multidivisional structure
Matrix structure
The matrix structure is also called a project management structure because it is

often set up temporarily for interdepartmental projects. It superimposes the
project structure on functional structures.

Blooms: Understand
7-47
60.
Which of the following organizational forms is most likely to be complex and

expensive?
A.
B.
C.
D.
E.
Line structure
Matrix structure
Committee
Matrix structures are generally expensive and quite complex, and employees may
be confused about whose authority has priority.

Blooms: Understand
Essay Questions
61.
What are the benefits and drawbacks of using a matrix structure to organize?
Matrix structures provide flexibility, enhanced cooperation, and creativity, and

they enable the company to respond quickly to changes in the environment by
giving special attention to specific projects or problems. However, they are
generally expensive and quite complex, and employees may be confused as to
whose authority has prioritythe project manager's or the immediate supervisor's.

Blooms: Remember
7-48
62.
What is the difference between line structure and line-and-staff structure?
Line structure is based on direct lines of authority that extend from the top
executive to employees at the lowest level of the organization. The line-and-staff
structure has a traditional line relationship between superiors and subordinates,
but includes staff managers to assist line managers.

Blooms: Remember
63.
Regardless of how a business is organized, most of the essential work of business

TRUE
Regardless of how they are organized, most of the essential work of business

Blooms: Remember
Learning Objective: 07-05 Distinguish between groups and teams; and identify the types of groups that exist in
organizations.
Topic: The Role of Groups and Teams in Organizations
64.
All groups are teams, but not all teams are groups.
FALSE
All teams are groups, but not all groups are teams.

Blooms: Remember
organizations.
7-49
65.
Teams can create more solutions for solving problems than individuals.
TRUE
Teams can create more solutions to problems than can individuals because
multiple people work together to solve the problem and bring different knowledge,
skills and perspectives to the table.
Blooms: Remember
organizations.
66.
Product-development teams are a special type of task force formed to devise,

design, and implement a new product.
FALSE
Product development teams are a special type of project team formed to devise,

Blooms: Remember
organizations.
67.
Quality assurance teams are groups of employees brought together to solve

specific quality, productivity, or service problems.
TRUE
Quality assurance teams are fairly small groups of workers brought together from
throughout the organization to solve specific quality, productivity, or service
problems.

Blooms: Remember
organizations.
7-50
68.
Which of the following is formed to address specific quality, service, or productivity

problems?
A.
B.
C.
D.
E.

Work group
Task force
Quality-assurance teams, sometimes called quality circles, are fairly small groups
of workers brought together from throughout the organization to solve specific
quality, productivity, or service problems.
Blooms: Remember
organizations.
69.
Which of the following is a temporary group of employees, usually chosen for their
expertise, responsible for bringing out a specific change?
A.
B.
C.
D.
E.

Work group
Task force
A task force is a temporary group of employees, usually chosen for their expertise,
responsible for bringing out a specific change.
Blooms: Remember
organizations.
7-51
70.
Work groups
A.
B.
C.
D.
E.
have shared leadership roles.

have a specific purpose that the group itself delivers.
create collective work products.
encourage open-ended discussion.
Work groups emphasize individual work products, individual accountability, and

even individual leadership.
Blooms: Remember
organizations.
71.
Teams
A.
B.
C.
D.
E.
have a strong, clearly focused leader.

share leadership and create collective work products.
run efficient meetings.
measure effectiveness indirectly.
Work teams share leadership roles, have both individual and mutual
accountability, and create collective work products.
Blooms: Remember
organizations.
7-52
72.
A permanent, formal group that performs a specific task is a
A.
B.
C.
D.
E.
task force.
project team.
committee.
A committee is usually a permanent, formal group that does some specific task.

Blooms: Remember
organizations.
73.
A temporary group of employees responsible for bringing about a particular

change is a
A.
B.
C.
D.
E.
task force.
project team.
committee.
A task force is a temporary group of employees responsible for bringing about a

particular change.

Blooms: Remember
organizations.
7-53
74.
Project teams
A.
B.
C.
D.
E.
are permanent, formal groups.

are composed of individuals from one functional area.
never last for more than six months.
run their operation and have control of a specific work project.
solve specific quality problems.
Project teams are similar to task forces, but they normally run their operation and
have total control of a specific work project.

Blooms: Remember
organizations.
75.
A special type of project team formed to devise, design, and implement a new
product is a
A.
B.
C.
D.
E.
committee.
task force.
coalition.
quality-assurance team.
A product-development team is a special type of project team formed to devise,


Blooms: Remember
organizations.
Essay Questions
7-54
76.
What is a self-directed work team?
A self-directed work team is a group of employees responsible for an entire work

process or segment that delivers a product to an internal or external customer.
These teams reduce the need for extra layers of management and can help control
costs.

Blooms: Remember
organizations.
77.
Horizontal communication involves the traditional flow of information from upper

organizational levels downward.
FALSE
Horizontal communication involves the exchange of information among colleagues
and peers.

Blooms: Understand
Learning Objective: 07-06 Describe how communication occurs in organizations.
Topic: Communicating in Organizations
78.
Downward communication typically involves directions, the assignment of tasks

and responsibilities, performance feedback, and certain details about the
organization's strategies and goals.
TRUE
Downward communication refers to the traditional flow of information from upper
organizational levels to lower levels. This type of communication typically involves
directions, the assignment of tasks and responsibilities, performance feedback,
and certain details about the organization's strategies and goals.

Blooms: Understand
7-55

79.
The most significant informal communication occurs while playing golf.

FALSE
The most significant informal communication occurs through the grapevine.

Blooms: Understand
80.
Communication flows within an organization are always formal.

FALSE
Along with the formal channels of communication, all firms communicate
informally through the grapevine which could improve decision making.

Blooms: Understand
81.
When individuals from different units and organizational levels communicate, it is

diagonal communication.
TRUE
When individuals from different units and organizational levels communicate, it is
known as diagonal communication.

Blooms: Remember
7-56
82.
Diagonal communication
A. is the traditional flow of communication from higher to lower levels of the

organization.
B. occurs when individuals from different units and departments within an
organization communicate.
C.
flows from lower organizational levels to higher ones.
D. occurs with communication between peers and colleagues.
E. is an informal method of communication in organizations that can improve
decision making.
Diagonal communication occurs when individuals from different units and
departments within an organization communicate.

Blooms: Understand
83.
The increased use of electronic communication in the workplace has caused many
organizations to implement all but which of the following?
A.
Formal policies on appropriate Internet use
B.
Software programs to monitor employee Internet use
C. Most companies simply let employees do what they want on the Internet
D. Requiring employees to use corporate computers while at work
E. Consulting online resources on how to handle employee Internet usage
Most companies have taken steps to monitor and restrain employee Internet use
while at work. Excessive non-work-related Internet communications while on the
job can result in lost productivity and therefore lost profits for the company.

Blooms: Understand
7-57
84.
Which of the following is an informal communication channel?
A.
B.
C.
D.
E.
Leaflets
Telecommunications
Job descriptions
Grievances
The grapevine
The grapevine is the primary informal communication channel.

Blooms: Understand
85.
Which of the following is not typically part of downward communication?
A.
B.
C.
D.
E.
Performance feedback
Assignment of tasks
Details on organizational strategy
Gossip
Directions


Blooms: Understand
7-58
86.
What is upward communication?
A. The traditional flow of communication from higher to lower levels of the

organization
B. When individuals from different units and departments within an organization
communicate
C. Communication that flows from lower organizational levels to higher ones
D.
Communication between peers and colleagues
E. Communication among friends as well as in nonwork social relationships
Upward communication flows from lower to higher levels of the organization and
includes information such as progress reports, suggestions for improvement
inquiries, and grievances.

Blooms: Understand
87.
Downward communication conveys
A.
B.
C.
D.
E.
information about the grapevine.

explanations of decisions and orders.
complaints.
status reports.
policy questions.


Blooms: Understand
7-59
88.
Upward communication conveys
A.
B.
C.
D.
E.
orders.
explanation of decisions.
requests for information.
progress reports and complaints.
information about procedures and methods.
Upward communication flows from lower to higher levels of the organization and
includes information such as progress reports, suggestions for improvement,
inquiries, and grievances.

Blooms: Understand
89.
When managers recognize that a grapevine exists, they should
A.
B.
C.
D.
E.
eliminate it.
use it to their advantage by feeding it facts.
find out if its goals are contrary to the organization's goals.
send incorrect information through it.
send upward communications through it.
Managers who understand how the grapevine works also can use it to their
advantage by feeding it facts to squelch rumors and incorrect information.

Blooms: Remember
Essay Questions
7-60
90.
How can managers use the "grapevine" to their advantage?
Managers who recognize the existence of a grapevine can use it to their

advantage in several ways. For one, they can use it as a "sounding device"
regarding potential policy changes. They can obtain valuable information that may
facilitate decision making, although they should verify all information, as
grapevine information is not always accurate. Managers can attempt to feed the
grapevine facts to squelch rumors and incorrect information circulating through
the firm.

Blooms: Understand
91.
What did Quest Star do, structurally, to help it become more competitive with
Japanese firms?
A.
It increased the number of management layers
B.
It flattened its layers of management
C.
It reduced the emphasis on teams in the organization
D. It decided that its employees could not be trusted to make decisions
E.
It increased managers' authority
QS flattened its layers of management and instead uses teams and peer pressure
to accomplish the plant's goals.
AACSB: Analytic
Blooms: Apply
Learning Objective: 07-07 Analyze a business's use of teams.
Topic: Solve the Dilemma
7-61
92.
Why are upper level managers facing frustration and increased stress as Quest
Star transitions to a new organizational structure?
A.
They do not like their jobs
B. They are faced with training employees to supervise themselves
C.
They miss the old system
D.
The employees don't like the new system
E. Management does not trust employees to make decisions for themselves
Upper-level management is feeling increased stressed as QS transitions to the new
organizational structure because they have to train employees to supervise
themselves and to make decisions for themselves.
AACSB: Analytic
Blooms: Apply
Essay Questions
93.
What techniques or skills should Quest Star employees have to assume a

leadership role within a work group?
To assume a leadership role within a work group, a Quest Star employee should
have a very good technical knowledge of the tasks conducted by the team. This
individual should also have some conceptual skills in order to relate the various
activities performed within the group. Finally, human relations skills are necessary
for the leader to provide information to the rest of the group and for the members
of the group to give feedback to their leader.
AACSB: Analytic
Blooms: Apply
7-62
94.
If each Quest Star work group has a team representative, what problems will be
faced in supervising these representatives?
Each team representative is likely to defend the interests of his or her own group
and to neglect the actions that may favor the performance of the other groups. In
other words, the degree of collaboration between teams is likely to be low.
AACSB: Analytic
Blooms: Apply
95.
Evaluate the pros and cons of the system developed by Quest Star.
Students' responses will vary, but most will agree that the program introduced by
QS is likely to lead to greater employee involvement, innovation, improved
collaboration between employees of each team, and employees' enhanced sense
of accomplishment. Overall, it is likely to increase the firm's productivity and
competitiveness. Students should be able to defend their responses.
AACSB: Analytic
Blooms: Apply
7-63

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Chapter 07

Organization, Teamwork, and Communication

True / False Questions

1. Organizational culture is expressed informally through a firm's mission statement or

2. Organizational structures are always explicitly defined.

3. An organization's structure develops as managers assign tasks to work groups and

4. Organizational growth requires organizing different resources.

Multiple Choice Questions

6. Which of the following is not part of organizational culture?

7. Which is not a means of formally expressing an organization's culture?

9. Organizational structure is defined as

A. the arrangement or relationship of positions within an organization.

11. A department store's organizational structure defines the relationships between

13. Organizational cultures that lack positive values may result in

15. What is organizational culture and how is it expressed?

16. What is organizational structure? How does it develop?

True / False Questions

20. Disadvantages of product departmentalization are that it duplicates functions and

21. Product departmentalization allows the coordination of all activities related to a

Multiple Choice Questions

22. The rationale for job specialization is that

24. Adam Smith illustrated improvements in efficiency through the application of

The Wealth of Nations.

26. Small businesses commonly employ

27. All of the following are approaches to departmentalization except

29. If the type of departmentalization used by an organization tends to emphasize

True / False Questions

34. In decentralized organizations, lower-level managers have a good understanding of

36. Flat organizations have narrow spans of management.

37. A company with many layers of managers is considered tall.

Multiple Choice Questions

42. An organization operating in a complex and unpredictable environment is likely to be

A. physical distances between subordinate and supervisor, and subordinate

45. Companies that have flat organizations tend also to have

tall spans of management.

47. Define delegation of authority and show its relationship to responsibility.

True / False Questions

Multiple Choice Questions

55. An advantage of line structure in organizations is

a clear chain of command.

56. A disadvantage of line structure is

58. Multidivisional structures

True / False Questions

Multiple Choice Questions

Self-directed work team

Self-directed work team

70. Work groups

have shared leadership roles.

have a strong, clearly focused leader.

72. A permanent, formal group that performs a specific task is a

74. Project teams

76. What is a self-directed work team?

True / False Questions

80. Communication flows within an organization are always formal.

Multiple Choice Questions

82. Diagonal communication

A. is the traditional flow of communication from higher to lower levels of the

85. Which of the following is not typically part of downward communication?

86. What is upward communication?

A. The traditional flow of communication from higher to lower levels of the

information about the grapevine.

88. Upward communication conveys

89. When managers recognize that a grapevine exists, they should