What does a business organization coordinate as people work toward shared goals?
A People, tasks, and resources
B Customer complaints alone
C Only legal ownership
D Unrelated personal interests
Answer: A. People, tasks, and resources An organization arranges people and other resources so they can work toward a common objective.
How is an organization commonly described in business studies?
A Order and design of relationships
B A list of product prices
C A collection of advertising slogans
D A firm’s tax return
Answer: A. Order and design of relationships An organization is the designed pattern of relationships among people, tasks, and resources in a firm.
Why should managers distinguish a firm’s legal form from its internal structure?
A They describe different choices
B Each measures sales volume
C Both name product categories
D They are interchangeable terms
Answer: A. They describe different choices Legal form concerns ownership and legal status; internal structure describes how work, authority, and reporting are arranged.
Departments for finance, marketing, and operations at a retailer reflect which grouping basis?
A Regional territories
B Production stages
C Business functions
D Customer age groups
Answer: C. Business functions Functional departmentalization groups roles by the work they perform, such as finance, marketing, or operations.
Around distinct product lines, how are organizational units grouped?
A By products or services
B By work shifts
C By employee seniority
D By supplier location
Answer: A. By products or services Product departmentalization organizes units around the goods or services they produce or sell.
Separate teams for household and business clients reflect which grouping basis?
A Professional discipline
B Company ownership
C Customer type
D Production method
Answer: C. Customer type Customer departmentalization groups work around the main types of customers served.
What grouping suits a company with sales teams for different territories?
A Skill levels
B Geographic areas
C Job grades
D Product materials
Answer: B. Geographic areas Geographic departmentalization organizes units around regions or locations served.
At a food plant, workers are grouped by processing stage. Which principle is used?
A Ownership type
B Customer preference
C Reporting seniority
D Production process
Answer: D. Production process Process departmentalization groups jobs by the production or service steps they perform.
Why can a functional structure suit a small firm with one main product?
A It builds specialist expertise
B It removes all managers
C It creates separate legal entities
D It requires dual supervisors
Answer: A. It builds specialist expertise Functional departments let specialists share knowledge and coordinate similar work, which can suit a relatively focused firm.
Why might functional departments create silos as a firm grows?
A Teams focus inward
B Customers manage departments
C Every role becomes temporary
D Products lose legal ownership
Answer: A. Teams focus inward Specialized departments can concentrate on their own targets and communicate less across the wider organization.
Which model groups functions under product, market, or regional divisions?
A Committee structure
B Divisional structure
C Single-line structure
D Informal network
Answer: B. Divisional structure Divisional structures group related functions within product, customer, or geographic units.
Each product group has its own finance, sales, and operations teams. What benefit can this design offer?
A Clear product accountability
B No duplicated work
C Zero need for coordination
D One universal reporting line
Answer: A. Clear product accountability A product division can coordinate functions around its own results and make responsibility for that product clearer.
What drawback may accompany a divisional design with separate teams for every product?
A No local customer focus
B Abolished product ownership
C Fewer managers everywhere
D Duplicated functional resources
Answer: D. Duplicated functional resources Separate divisions may duplicate functions and systems that could otherwise be shared across the company.
During a product launch, finance, design, and marketing staff join a project team. Which structure is this?
A Sole proprietorship
B Matrix structure
C Functional structure
D Line-only structure
Answer: B. Matrix structure A matrix brings employees from different functions together for a project while retaining functional relationships.
What typically distinguishes matrix reporting from a single functional chain?
A One owner per team
B No formal supervisors
C Only customer reporting
D Two reporting relationships
Answer: D. Two reporting relationships Matrix employees commonly report to a functional manager and a project or product manager.
Why can a matrix team use scarce specialists efficiently?
A Projects avoid deadlines
B Staff serve focused projects
C Every team hires duplicates
D Managers remove specialists
Answer: B. Staff serve focused projects Project leaders can draw on needed specialists without creating a fully separate permanent department for each project.
When two managers set conflicting deadlines, what should the employee clarify first?
A Priorities and decision rights
B Employee social activities
C Company logo standards
D Office seating preferences
Answer: A. Priorities and decision rights Matrix roles can create competing priorities, so managers and employees need clear responsibilities and aligned priorities.
What can make a matrix structure confusing for employees?
A Too few customer groups
B A single product line
C Shared office equipment
D Competing authority lines
Answer: D. Competing authority lines Dual reporting can blur responsibilities when functional and project managers are not aligned.
In a committee structure, where may authority and responsibility reside?
A With a group
B Only with one specialist
C Only with suppliers
D With outside customers
Answer: A. With a group A committee structure assigns some authority and responsibility to a group rather than an individual.
Why can committees help with complex organizational decisions?
A They remove decision accountability
B They eliminate every disagreement
C They avoid gathering evidence
D They combine diverse viewpoints
Answer: D. They combine diverse viewpoints Committee members can contribute different knowledge and perspectives when considering a complex issue.
Which weakness can slow a committee’s work?
A Specialists contribute expertise
B Members share information
C Group decisions take time
D Tasks have clear owners
Answer: C. Group decisions take time Group discussion and agreement can take longer than an individual decision, and accountability may be less direct.
How does a self-managed team differ from an advisory committee?
A It carries out assigned work
B It has no shared goals
C It only publishes advice
D It replaces every manager
Answer: A. It carries out assigned work Self-managed teams have autonomy to organize and perform their work; advisory committees mainly recommend actions.
What visual tool maps jobs and reporting relationships?
A Organization chart
B Customer survey
C Production schedule
D Cash-flow statement
Answer: A. Organization chart An organization chart displays formal roles and relationships, including who has authority for particular tasks.
Which network can influence information sharing without appearing on an organization chart?
A Formal job grades
B Published procedures
C Informal relationships
D Registered trademarks
Answer: C. Informal relationships Informal relationships develop among employees and can affect how information moves beyond formal reporting lines.
Which management levels commonly form an organizational hierarchy?
A Buyer, seller, lender
B Designer, maker, retailer
C Owner, auditor, customer
D Top, middle, supervisory
Answer: D. Top, middle, supervisory A typical hierarchy includes top, middle, and supervisory levels of management.
In organizational design, what does span of control measure?
A Projects per company
B Direct reports per manager
C Customers per region
D Departments per product
Answer: B. Direct reports per manager Span of control is the number of employees a manager directly supervises.
Why can narrow spans increase operating costs?
A They reduce reporting layers
B They eliminate job specialization
C They remove supervisory roles
D They add management levels
Answer: D. They add management levels Narrow spans can require more managers and levels, increasing administrative costs.
Which conditions can make a wider span workable?
A Unclear tasks and roles
B Experienced, independent employees
C Constant emergency supervision
D Inexperienced teams only
Answer: B. Experienced, independent employees A wider span is easier to manage when employees are capable and work can proceed with less close supervision.
Many management layers usually create which broad organizational shape?
A Flat structure
B Network structure
C Tall structure
D Project structure
Answer: C. Tall structure A tall structure has many layers between top management and frontline work.
Few management layers and broad spans often create which shape?
A Flat structure
B Committee structure
C Product structure
D Tall structure
Answer: A. Flat structure A flat structure has fewer managerial levels and often broader spans of control.
What does a chain of command clarify?
A Customer payment terms
B Product quality standards
C Reporting authority path
D Supplier delivery routes
Answer: C. Reporting authority path The chain of command shows formal authority and reporting relationships through the hierarchy.
Where are key decisions concentrated in a centralized organization?
A Frontline teams only
B Higher management levels
C External suppliers
D Customer advisory panels
Answer: B. Higher management levels Centralization keeps important decision authority near the upper levels of management.
What changes when decision authority is decentralized?
A All roles become temporary
B Lower levels gain authority
C Departments lose responsibility
D Managers stop setting goals
Answer: B. Lower levels gain authority Decentralization pushes decision-making authority down the hierarchy and gives lower-level staff greater responsibility.
What practice gives a team authority to handle a defined assignment?
A Specialization
B Centralization
C Delegation
D Departmentalization
Answer: C. Delegation Delegation assigns authority and responsibility for specified work to another person or team.
Why should a manager clarify authority and responsibility when delegating?
A They replace organizational goals
B They should stay undefined
C They belong to customers
D They must match
Answer: D. They must match People need sufficient authority to carry out assigned responsibilities, while roles and expectations remain clear.
What does division of labor do?
A Removes all job roles
B Transfers company ownership
C Splits work into tasks
D Combines separate firms
Answer: C. Splits work into tasks Division of labor separates work into tasks that can be assigned to particular jobs or employees.
Which process groups related jobs into units?
A Centralization
B Delegation
C Departmentalization
D Incorporation
Answer: C. Departmentalization Departmentalization groups related jobs, employees, or resources into organizational units.
How does horizontal coordination help different functions work together?
A It removes common targets
B It aligns shared work
C It separates project teams
D It adds reporting layers
Answer: B. It aligns shared work Horizontal coordination connects functions or teams that must contribute to the same process, customer outcome, or project.
Marketing and production disagree about launch timing. What organizational need is evident?
A More product ownership
B Cross-functional coordination
C Wider legal liability
D Less communication
Answer: B. Cross-functional coordination The departments need shared planning and communication because their interdependent tasks affect one launch.
Which description fits a highly formalized, centralized design?
A Organic organization
B Virtual team
C Self-managed network
D Mechanistic organization
Answer: D. Mechanistic organization Mechanistic designs tend to use formal procedures, specialized roles, centralized authority, and more hierarchy.
Which traits often characterize an organic organization?
A Flexible, decentralized work
B Rigid rules and layers
C Centralized routine decisions
D Narrow spans only
Answer: A. Flexible, decentralized work Organic designs use flexible relationships and more decentralized decision-making to adapt to changing conditions.
When external conditions change rapidly, which structural trait becomes more valuable?
A Fixed reporting layers
B Narrow job boundaries
C Central approval for all
D Adaptability
Answer: D. Adaptability Flexible structures can help organizations respond faster to changing customer needs and competitive conditions.
Why should organizational structure fit the firm’s strategy?
A It prevents all changes
B It replaces business goals
C It supports strategic priorities
D It guarantees market dominance
Answer: C. It supports strategic priorities Structure should help the organization coordinate work and resources in service of its goals and strategy.
For distant regions with distinct customer needs, which design choice may improve local responsiveness?
A Identical local procedures
B A single functional supervisor
C Regional decision authority
D One central approval queue
Answer: C. Regional decision authority Regional units with appropriate decision authority can respond to local needs while staying aligned with company goals.
Which structure may help a firm deepen expertise in accounting, marketing, and operations?
A Geographic structure
B Committee structure
C Matrix structure
D Functional structure
Answer: D. Functional structure Functional structures group similar work, supporting specialization and expertise within each function.
Product lines serve very different markets. Which model may improve focus on each line?
A Narrower spans
B Informal networks
C Product divisions
D Single committee
Answer: C. Product divisions Product divisions can coordinate functions around different offerings and their distinct markets.
What risk arises when departments optimize only their own targets?
A Customers gain authority
B Ownership becomes permanent
C All reporting disappears
D Organization-wide coordination weakens
Answer: D. Organization-wide coordination weakens Local optimization can create silos and make it harder to coordinate work across the whole organization.
New products and regions are added as a company grows. What should managers review?
A Product slogans alone
B Organizational design
C Employee birthday lists
D Only office decoration
Answer: B. Organizational design Growth can change the firm’s coordination needs, so managers should review whether the current structure still fits.
What can unclear task ownership produce?
A Faster shared decisions
B Gaps and duplicate work
C Perfect accountability
D Clearer authority lines
Answer: B. Gaps and duplicate work When responsibilities are not assigned clearly, some tasks may be missed while others are repeated.
Which principle helps managers choose among functional, divisional, and matrix designs?
A Use the newest design
B Fit with work and context
C Keep every layer identical
D Choose the largest structure
Answer: B. Fit with work and context No single design suits every firm; the choice should reflect its work, goals, size, and environment.