7.7 TEXTBOOK ANSWER KEYS

7.7a Return to Inside Business

Kraft Foods

1. Would you expect the two spinoffs to be flatter or taller, compared with the structure of Kraft Foods before the split? Why?

The case states that some jobs were cut as the two spinoffs finalized their structure and determined who would fill each position. Because of this, their structures are likely to be flatter than that of Kraft Foods prior to the split. Also, standard operating procedures are probably being carried over from Kraft, and most of the managers and employees will know each other. This makes a wide span of management (flat structure) more workable than a narrow span of management (tall structure).

2. The structure of the two spinoffs is geared toward location, for responsiveness to local needs. How can each of the spinoffs use this structure as a global strength, not just a local strength?

Students will suggest a variety of answers to this question. One answer is that managers from each location should be sharing ideas on a regular basis so they can learn from each other, turning local strengths into global strengths. Specifically, a new product that succeeds in one location might be tested in another location to determine its appeal. Internal processes that work in one location might be tested in other locations, as well. Corporate culture in both spinoffs can influence such sharing.

7.7b Review Questions

1. In what way do organization charts create a picture of an organization?

Organization charts are diagrams that represent positions in the organization and the relationships among them. They also illustrate the five considerations in the organizing process: specialization, departmentalization, centralization, span of management, and chain of command.

2. What is the chain of command in an organization?

The chain of command is the line of authority that extends from the highest to the lowest levels of the organization. Chains can be long as is typical in a large organization, or chains can be short as is typical in a small business. No matter what the length, the communication along the chain must be clear.

3. What determines the degree of specialization within an organization?

The degree of specialization within an organization is determined through division of the entire organization’s work into separate parts and assignment of those parts to positions within the organization. The ability to separate the activities into distinct tasks and having the people to efficiently perform those tasks will help determine the degree of specialization.

4. Describe how job rotation can be used to combat the problems caused by job specialization. In job rotation, each employee is shifted periodically to a different job. The idea behind job rotation is to provide a variety of tasks so that workers are less likely to get bored and dissatisfied.

5. What are the major differences among the four departmentalization bases?

The four most common bases of departmentalization are by function, by product, by location, and by type of customers. Departmentalization by function groups jobs that relate to the same organizational activity. Departmentalization by product groups activities related to a particular good or service. Departmentalization by location groups activities according to the defined geographic area in which they are performed. Departmentalization by customer groups activities according to the needs of various customer populations.

6. Why do most firms employ a combination of departmentalization bases?

A departmentalization base is the scheme by which jobs are grouped into units. In fact, few organizations exhibit only one departmentalization base. The most common bases are function, product, location, and customer. The decision to use multiple bases is usually based on the specific needs of the corporation and on the determination of which combination of bases will enable the organization to accomplish its goals and objectives.

7. What three steps are involved in delegation? Explain each.

The three steps involved in delegation are (1) assigning responsibility, which is the duty to perform the job or task; (2) granting authority, which is the power within the organization to accomplish the task or job; and (3) creating accountability, which is the obligation of a subordinate to accomplish an assigned task or job.

8. How does a firm’s top management influence its degree of centralization?

If top management consciously attempts to spread authority widely to the lower levels of management, the firm is decentralized. If top management works to keep authority at the upper levels, the firm is centralized.

9. How is organizational height related to the span of management?

If the span of management is generally narrow, more levels of management are needed, resulting in a tall organization. If the span of management is wider, fewer levels are needed and the organization is flat.

10. What are the key differences between line and staff positions?

Line managers have line authority, meaning they can make decisions and issue directives that relate to the organization’s goals. Staff managers, by contrast, generally have either advisory or functional authority.

11. Contrast line-and-staff and matrix forms of organizational structure.

The line-and-staff structure is characterized by a A chain of command line structure coupled with specialists (staff managers) who support the line managers b Departmentalization by function c. Formal patterns of delegation d. A high degree of centralization e. Clearly defined line and staff positions, with formal relationships between the two

The matrix structure features a. Vertical and horizontal lines of authority b. Departmentalization superimposed on a functionally departmentalized organization c Workers who report to more than one supervisor at a time d. Cross-functional teams that include project managers

12. What is corporate culture? Describe the major types.

Corporate culture is generally defined as the inner rites, rituals, heroes, and values of a firm. It can have a powerful influence on how its employees think and act, as well as determine how the public perceives the organization.

There are four distinct types of corporate culture: a. Networked culture is a relaxed and informal environment. There is a strong commitment and a feeling of loyalty to the organization, characterized by a base of trust and friendship among employees. b. In the mercenary culture, employees are very intense, focused, and determined to win. In addition to employees working to earn money, feelings of passion, energy, sense of purpose, and excitement for one’s work play a large role in motivating an organization’s employees. c Fragmented culture suggests that employees do not necessarily become friends but have a high degree of autonomy, flexibility, and equality. Employees in this type of culture consider themselves as working “at” the organization, not “for” it. d. In the communal culture, the positive traits of the networked culture and the mercenary culture are combined. Traits such as friendship, commitment, high focus on performance, and high energy contribute to the organization resulting in an environment where success by anyone is celebrated by all.

13. Which form of organizational structure probably would lead to the strongest informal organization? Why?

The matrix organization would probably lead to the strongest informal organization because it allows interaction both vertically and horizontally. On the other hand, a line structure, especially where staff members have very similar positions and status, could also lead to a strong informal organization.

14. What is the role of the informal organization?

The role of the informal organization is whatever the group members who created it wish the role to be. As indicated in the text, workers may create an informal group to go bowling, form a union, get a particular manager fired or transferred, or share lunch. The members determine the role and the rules.

7.7c Discussion Questions

1. How does the corporate culture of a local Best Buy store compare to that of a local McDonald’s?

Best Buy appears to be a mercenary culture in that its workers appear to be goal oriented and competitive as they sell high-priced electronics products and accessories. McDonald’s is more of a communal culture in that its workers are much more regimented as they work in teams for the common goal of superior customer service.

2. Which kinds of firms probably would operate most effectively as centralized firms? As decentralized firms?

Production firms would probably operate most effectively as centralized firms because the degree of specialized technical knowledge required is usually limited. Research firms, by contrast, need to be decentralized because of the great degree and variety of specialized knowledge required to do the job in such firms.

3. How do decisions concerning span of management and the use of committees affect organizational structure?

Decisions concerning span of management and the use of committees affect basic organizational structure by altering chains of command, delegation chains, individual authorities, accountabilities, and so on.

4. How might a manager go about formalizing the informal organization?

A manager can formalize the informal organization by officially recognizing its presence and structure. He or she can also rewrite the informal organization chart to more closely approximate the formal organization IF that makes sense for the organization Because the informal organization comes from personal relationships, it might be better to recognize its existence and “work with it” rather than attempting to formalize the informal organization.

7.7d Comments on Video Case 7.1

Suggestions for using this video case are provided in the Pride/Hughes/Kapoor Video Guide.

At Numi Organic Tea, Teams and Organizational Culture Are Critical

1. Numi’s customer service manager, Cindy Graffort, says the company is like a “living, breathing organism.” What does she mean? How does the company’s culture reflect this belief?

The customer service manager likely means the company is constantly growing and changing to meet the needs of its customers, suppliers, employees, and community. Flexibility is the key to this type of organic growth, and the company’s culture encourages flexibility in its operations for instance, workers are trained to do more than one task in their department, flextime permits individuals to create their own shifts, and team meetings allow for changes in the way the group gets its work done.

2. Numi’s distribution manager, Dannielle Oviedo, says her philosophy of management means she gets involved in what her team is doing: “I do what I ask folks to do.” Do you think she is a good delegator? Why or why not?

The distribution manager seems to be an excellent delegator, as demonstrated by her strategy of training everyone in her department to complete multiple tasks, which grants them authority and responsibility for their work. She also takes time to explain the reasons for changing things, empowering her people to act on their own by giving them the bigger picture of the team’s and the company’s goals.

3. What can you infer about Numi’s basis for departmentalization and its chain of command?

Numi’s basis for departmentalization is probably functional, since it clearly has a customer service department and a distribution center. It likely has a marketing department as well, which is probably responsible for its Facebook and MySpace pages and the company blog. Since it operates abroad, it may also have separate domestic and international sales departments. Although Numi does not appear to have many layers of management, its chain of command is likely narrow (few workers per manager) simply because the company is small.

7.7e Comments on Case 7.2

HP’s Corporate Challenge: To Remain Agile and Responsive in an Ever-Changing Environment

1. How is corporate culture likely to affect HP’s ability to integrate acquired companies into its organizational structure?

Students will be aware that any company HP acquires will already have a corporate culture in place. If the corporate cultures clash or if employees have negative attitudes toward acquisition, HP will have difficulty integrating a newly acquired company into its organizational structure. As a result, HP’s executives must consider how to build on corporate culture to help an acquisition fit within the parent company’s structure (and with other divisions within HP). Students may suggest other ways that corporate culture might influence HP’s ability to integrate acquisitions.

2. Analyze HP’s use of departmentalization. Why are its choices appropriate for a technology company?

HP organizes its business according to function, product, and customer, a multi-pronged approach to departmentalization that allows the company to use its resources productively while being nimble enough to respond to technological developments and customer needs. For example, organizing by function allows HP to make efficient use of centralized technology groups such as data-center operations, rather than duplicating these functions in every unit. Departmentalizing by product allows HP to focus on specific technology products that its customers want and need. Departmentalizing by customer helps HP stay close to its markets, understand any changes, and prepare for opportunities and threats that new technology might bring.

3. Analyze HP’s approach to delegation and decentralization. Are its choices appropriate for a technology company? Why or why not?

HP has delegated and decentralized day-to-day decisions so managers of each unit can take action without needing or waiting for upper-management approvals. This is appropriate for a technology company because managers often have to make quick decisions to contend with rapid changes in the business environment, including technical breakthroughs or competitive moves. If managers had to wait for upper-level approvals, HP might miss valuable opportunities or see its business threatened by unexpected environmental shifts. At the same time, HP has centralized some functions (such as research and development). Senior managers for the corporation now decide how many projects HP Labs will pursue at one time and have set standards for evaluating ongoing projects.

7.7f Building Skills for Career Success

1. Social Media Exercise

Zappo’s is a company that embraces the notion that customers come first. It is well known that this company is customer-centered. One of the ways that is allows employees to communicate with customers is through it blog www.zapposinsights.com/blog.

1. Take a look at this blog. What can you tell about the corporate culture of Zappo’s?

The following information was taken directly from the blog: The words corporate culture still have many definitions to many people. At the base level, corporate culture is how the individual team members, teams, and managers act on a daily basis. If you were to write out a list of actions that you want your people to display on a daily basis, “trust” should be close to the top. One of the phrases that our manager Robert Richman said that has stuck with me is, “The quickest way to trust is through transparency.” This culture of trust and transparency builds employee loyalty and commitment.

2. How do they approach customer service? Do you think it works? Why or why not?

The following information was taken directly from the blog: Having a strong company culture is great, but the best culture in the world doesn’t matter if you do not take care of your customers. From the Web site: “We are not an average company, our service is not average, and we don’t want our people to be average. We expect every employee to deliver WOW.” These messages are communicated throughout the organization, and the messages are part of the culture. When a company embraces a philosophy as part of its core, and the philosophy is not just a message but internal to every part of the organization, it works!

2. Journaling for Success

Assume that after leaving school, you are hired by your “dream company.”

1. What are the major corporate culture dimensions of your dream company?

In answering this question, students should examine the inner rites, rituals, heroes, and values of a firm. Values are probably the most important and easiest to articulate. Some potentially attractive values might include reward for performance, demonstrated caring for employees, advancement from within, etc. In terms of heroes, students might suggest that people with integrity and proven ability ought to be heroes. Rites and rituals might include aspects of socialization that are so important to young people when they leave the ready-made social setting of college.

2. Before accepting a job at your “dream company,” how will you find out about the company’s corporate culture?

Information is readily available on the Internet, whether from corporate press releases, Web sites, or news articles from sites such as www.findarticles.com. Better yet, students should try to speak to young employees at the company, or even walk around if possible.

3. From Figure 7.7, identify the type of corporate culture that you prefer and explain why.

This is a personal preference question. Students should be encouraged to provide thoughtful reasons for their choice.

4. Thinking back to previous jobs that you have had, describe the worst corporate culture you have ever experienced.

Again, this is a personal preference question. The instructor might consider having the students compare answers to see if there are any consistent elements.

3. Developing Critical-Thinking Skills

Factors that influence the cultural environment within a company include the attitudes and beliefs of employees; the decision-making process; the communications system; the reward and promotion program; the organizational structure; rules, regulations, and policies; ethnic diversity; risk taking; the training program; and dress and behaviors of employees.

To improve a company’s cultural environment, the employees must understand and support the mission of the company. The mission sets the priorities, determines values, and influences decisions. Employee behavior must be consistent with the mission. The communication system must provide the proper flow of information to the sources where it is needed. Managers must be examples that reflect the desired culture. Skills must be continually upgraded, if employees are expected to perform at certain levels. Changes in technology and in the industry can impact companies and be reflected in their cultural environment.

4. Building Team Skills

The organization chart on the following page is a line-and-staff structure. There are three staff positions: one payroll and billing position and two appointment coordinators. The other positions are line positions. In this organization, the span of control ranges from zero to seven people. The executive vice-president works with builders to establish their programs and provides the center managers with training, guidelines, and expectations. It is the responsibility of the managers to run their centers in a courteous and profitable manner.

5. Researching Different Careers

The answers will vary. Emphasize that honesty is important in completing the assessment. Nothing changes unless a plan is prepared to improve weaknesses. Possessing excellent skills, knowing how to network, understanding one’s accomplishments, and having a positive attitude are key factors in being promoted within a company, as well as in being hired to fill a better position with another company.

7.8 QUIZZES I AND II

True-False Questions

Select the correct answer.

Quiz I

1 T F The step that distributes responsibility and authority within an organization is called delegation.

2 T F Job specialization is the systematic shifting of employees from one job to another.

3. T F The obligation of a worker to accomplish an assigned job or task is called accountability.

4. T F Span of management and span of control are synonymous terms.

5. T F There are fewer conflicts when the areas of responsibility for line managers and staff managers are clearly defined.

Multiple-Choice Questions

Circle the letter before the most accurate answer.

6. The line of authority extending from the top to the bottom of the organization is known as a(n) a. informal organization. b line structure. c. line-and-staff structure. d chain of command. e. matrix structure. a Karl Marx b. Victor Vroom c. George Washington d Adam Smith e. Frederick Taylor

7 In his book, The Wealth of Nations, __________ emphasized the power of specialization.

8 Grouping all jobs related to the same organizational activity is departmentalization by a function. b. employee. c location. d. customer. e. product.

9 The act of distributing part of a manager’s work and power to workers is called a. departmentalization. b. organizing. c delegation. d. decentralization. e job sharing.

10. When authority is spread to lower-level management, a business is said to be a. centralized. b decentralized. c. progressive. d. tall. e upwardly mobile.

True-False Questions

Select the correct answer.

Quiz II

1 T F The span of management is the number of subordinates who will report to each manager.

2. T F There seems to be a movement from variety in jobs to more specialization.

3 T F Most small and new organizations base departmentalization on customers.

4. T F When a manager has many subordinates, a wide span of management exists.

5. T F Staff managers usually provide support, advice, and expertise to line managers.

Multiple-Choice Questions

Circle the letter before the most accurate answer.

6. Two or more people working together in a predetermined way to achieve common goals is known as a(n) a. organization. b chain of command. c. structure. d. enterprise. e functional arrangement.

7. All of the following are reasons for job specialization except that a. boredom from repetition is eliminated. b special equipment can be produced to do a specific job. c. most jobs are too large for one person to handle. d a specialized job can be efficiently learned. e. there is no loss of time by switching from one operation to another.

8 Employees at a chemical factory are systematically moved every two weeks among three different departments in the organization. This is called a. job trading. b specialization. c. departmentalization by function. d. job enlargement. e job rotation.

9 All of the following are departmentalization bases except a function. b. product. c location. d. customer. e. employee.

10. A subordinate’s obligation to accomplish an assigned job is called a accountability. b. responsibility. c job requirements. d. delegation. e authority.

7.9 ANSWER KEY FOR QUIZZES I AND II

7.10 CLASSROOM EXERCISES

7.10a Homework Activities

 Developing an Organizational Chart. Have students research their favorite sports team on the Internet and develop an organization chart for its management. Have them identify whether it is a line-and-staff structure, a matrix organization, etc.

 Researching and Following a Company Throughout the Course (continuing assignment). Have students research how their company is organized. Does it seem to be organized by function, product, location, customer, or some combination of bases?

 Comparing Organizational Charts. Have students contact two very different local organizations (retailing firm, manufacturing firm, church, civic club, etc.) and interview managers to develop organization charts for each organization. How do they account for the similarities and differences between them?

7.10b Classroom Activities

 The Delegator Exercise.

Make enough copies of “The Delegator” handout for each student. In class, each student should have no more than five minutes to fill out the questionnaire. At the end of five minutes, give students the scoring key and discuss the results. This assessment test helps show each student his or her own willingness to delegate. Every task listed in the test would be a suitable task for an administrative assistant to handle. A variation of this test is to see if students’ answers would change if the administrative assistant had been with them for only six months (or for five years).

 What’s My Culture? Group Exercise.

Place students into groups of four or five and have them review the snippets of information contained in the handout. They should have approximately 15 minutes to consider the values of each of the five cultures outlined and develop a point of view as to which one or ones they prefer. After 15 minutes, ask each group to report their conclusions and review the pros and cons of each of the cultures outlined.

 Virtual Network Structure Exercise.

Have students form groups of four. Consider assigning background research such as the tasks faced by a motion picture company, which will give the students an idea of the complexity of tasks involved in bringing a group of contractors together. This is a longer exercise where it might be appropriate to stop at intervals to determine how students are progressing in each of their groups.

 Boxed Insert: Dell Restructures to Jump-Start Innovation.

Have students read the information in the Going for Success feature. Then go to the Dell Web site at www.dell.com and view the information on its corporate structure. Discuss how Dell is organized and the impact the restructuring will have on the company’s goals. Is this an effective restructuring strategy? Why or why not?