MBA 705 Final Exam – Advanced Business
Administration Study Guide & Practice
An increase in the breadth of an organization's structure is known as
__________.A. centralizationB. decentralizationC. horizontal growthD. vertical
growth - -- answer --C. horizontal growth
Which of the following structures tends to be the most centralized?A. functional
structureB. product divisionalC. geographic divisional structureD. matrix structure
- -- answer --A. functional structure
The notion of a profit center is consistent with which form of organizational
structure?A. functional structureB. product divisionalC. geographic divisional
structureD. matrix structure - -- answer --B. product divisional
Which form of organizational structure is actually a combination of two other
forms?A. functional structureB. product divisionalC. geographic divisional
structureD. matrix structure - -- answer --D. matrix structure
Which of the following structures tends to be the most decentralized?A.
functional structureB. product divisionalC. geographic divisional structureD.
matrix structure - -- answer --D. matrix structure
,Structural Forms Four Options - -- answer --1.Functional Structure- organize by
functions.
2.Product Divisional Structure- organize by products.
3.Geographic Divisional Structure- organize by geography.
4.Matrix Structure- combine functional and product divisional structures.
●
Product and geographic divisional structures are also called multidivisional or M-
form structures.
Functional Structure - -- answer --}Each subunit of the organization engages in
firm-wide activities related to a particular function, such as marketing, human
resources, finance, or production.
}Common to new organizations
}Emphasizes specialization
}Fosters development of economies of scale
Product Divisional Structure - -- answer --}Divides the organization's activities
into self-contained entities, each responsible for producing, distributing, and
selling its own products.
}Focus on products, the "real source" or success for the firm
}Pinpointing the responsibility for profits or losses is also easier because each
product division becomes a profit center—a well-defined organizational unit
headed by a manager accountable for its revenues and expenditures.
Geographic Divisional Structure - -- answer --}Activities and personnel are
grouped by specific geographic locations.
, }Useful when two or more divisions can be dissected easily along geographical
lines
}Attractive when there are substantial differences in various geographical regions
Matrix Structure - -- answer --}A combination of the functional and product
divisional structures
}Members have "two (or more) bosses," one for the functional area and one or
more for the project area(s)
}Attractive when the organization faces a high degree of technological change,
but can be confusing and complex
Assessing Organizational Structure - -- answer --}Functional, product divisional,
geographic divisional, and matrix structures are pure forms. In reality, they are
often combined to create an approach uniquely tailored to the strategic needs of
the firm.
Considerations When Selecting A Structure - -- answer --}Level of corporate
involvement in business unit operations
}Compatibility of the structure with the corporate profile and the corporate
strategy
}Number of hierarchical levels in the organization
}The extent to which the structure permits the appropriate grouping of activities
}The extent to which the structure promotes effective coordination
}The extent to which the structure allows for appropriate centralization or
decentralization of authority
Administration Study Guide & Practice
An increase in the breadth of an organization's structure is known as
__________.A. centralizationB. decentralizationC. horizontal growthD. vertical
growth - -- answer --C. horizontal growth
Which of the following structures tends to be the most centralized?A. functional
structureB. product divisionalC. geographic divisional structureD. matrix structure
- -- answer --A. functional structure
The notion of a profit center is consistent with which form of organizational
structure?A. functional structureB. product divisionalC. geographic divisional
structureD. matrix structure - -- answer --B. product divisional
Which form of organizational structure is actually a combination of two other
forms?A. functional structureB. product divisionalC. geographic divisional
structureD. matrix structure - -- answer --D. matrix structure
Which of the following structures tends to be the most decentralized?A.
functional structureB. product divisionalC. geographic divisional structureD.
matrix structure - -- answer --D. matrix structure
,Structural Forms Four Options - -- answer --1.Functional Structure- organize by
functions.
2.Product Divisional Structure- organize by products.
3.Geographic Divisional Structure- organize by geography.
4.Matrix Structure- combine functional and product divisional structures.
●
Product and geographic divisional structures are also called multidivisional or M-
form structures.
Functional Structure - -- answer --}Each subunit of the organization engages in
firm-wide activities related to a particular function, such as marketing, human
resources, finance, or production.
}Common to new organizations
}Emphasizes specialization
}Fosters development of economies of scale
Product Divisional Structure - -- answer --}Divides the organization's activities
into self-contained entities, each responsible for producing, distributing, and
selling its own products.
}Focus on products, the "real source" or success for the firm
}Pinpointing the responsibility for profits or losses is also easier because each
product division becomes a profit center—a well-defined organizational unit
headed by a manager accountable for its revenues and expenditures.
Geographic Divisional Structure - -- answer --}Activities and personnel are
grouped by specific geographic locations.
, }Useful when two or more divisions can be dissected easily along geographical
lines
}Attractive when there are substantial differences in various geographical regions
Matrix Structure - -- answer --}A combination of the functional and product
divisional structures
}Members have "two (or more) bosses," one for the functional area and one or
more for the project area(s)
}Attractive when the organization faces a high degree of technological change,
but can be confusing and complex
Assessing Organizational Structure - -- answer --}Functional, product divisional,
geographic divisional, and matrix structures are pure forms. In reality, they are
often combined to create an approach uniquely tailored to the strategic needs of
the firm.
Considerations When Selecting A Structure - -- answer --}Level of corporate
involvement in business unit operations
}Compatibility of the structure with the corporate profile and the corporate
strategy
}Number of hierarchical levels in the organization
}The extent to which the structure permits the appropriate grouping of activities
}The extent to which the structure promotes effective coordination
}The extent to which the structure allows for appropriate centralization or
decentralization of authority
