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Strategic Management Chapter 11
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Chapter 11—Organizational Structure and ControlsTRUE/FALSE
1. As shown in the chapter Opening Case, Cisco’s three semiautonomous lines of business each
containing a self-contained organization with separate marketing and operational groups was
appropriate for its rapid growth market.
ANS: T PTS: 1 DIF: Easy REF: 317
OBJ: 11-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
2. In the chapter Opening Case, the reorganization of Cisco’s structure was necessary given the dramatic
drop in growth. The new structure, however, caused costs to rise as many more groups or divisions
were created.
ANS: F PTS: 1 DIF: Hard REF: 317
OBJ: 11-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
3. According to the chapter Opening Case, to manage its expansion, Cisco will likely change its structure
to a corporate M-form.
ANS: T PTS: 1 DIF: Hard REF: 317
OBJ: 11-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
4. Decisions about strategy and structure are interrelated.
ANS: T PTS: 1 DIF: Easy REF: 318
OBJ: 11-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Knowledge of general business functions
5. Over time, large and complex organizations must customize their structure to fit their unique strategic
needs.
ANS: T PTS: 1 DIF: Easy REF: 318-319
OBJ: 11-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing administration & control
6. Organizational structures must be both stable and flexible.
ANS: T PTS: 1 DIF: Medium REF: 319
OBJ: 11-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing administration & control
, 7. Organizational inertia often prompts top management to initiate structural change when organizational
performance levels drop.
ANS: F PTS: 1 DIF: Easy REF: 319
OBJ: 11-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing administration & control
8. With a related diversification corporate-level strategy, financial controls are used by corporate leaders
to verify the sharing of appropriate strategic factors such as knowledge, markets, and technologies
across businesses.
ANS: F PTS: 1 DIF: Hard REF: 320
OBJ: 11-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing administration & control
9. Strategic controls are largely subjective criteria intended to verify that the firm is using appropriate
strategies for the conditions in the external environment and the company’s competitive advantages.
ANS: T PTS: 1 DIF: Medium REF: 320
OBJ: 11-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing administration & control
10. Organizational controls guide the use of strategy, indicate how to compare actual results with expected
results, and suggest corrective actions to take when the difference is unacceptable.
ANS: T PTS: 1 DIF: Easy REF: 320
OBJ: 11-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing administration & control
11. To properly execute strategic controls in firms using related diversification, the executives must have a
deep understanding of each unit’s business-level strategy.
ANS: T PTS: 1 DIF: Medium REF: 320
OBJ: 11-01 TYPE: comprehension
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing administration & control
12. RexMacDonald, Inc., uses a differentiation strategy that relies on cooperation, communication, and
sharing of ideas among employees. In order to foster this behavior, RexMacDonald should emphasize
strategic controls over financial controls.
ANS: T PTS: 1 DIF: Medium REF: 320
OBJ: 11-01 TYPE: application
NOT: AACSB: Business Knowledge & Analytical Skills | Management: Strategy | Dierdorff &
Rubin: Managing administration & control
13. Companies and business units of large diversified firms using the cost leadership strategy should use
strategic controls.
ANS: F PTS: 1 DIF: Medium REF: 320
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