Question

1. Organization Structure and Design: Skill-Building Exercise

Exercise Overview

Diagnostic skills enable a manager to visualize the most appropriate response to a situation. Communication skills refer to the manager’s abilities to both effectively convey ideas and information to others and effectively receive ideas and information from others. In this exercise, you’re asked to apply your diagnostic skills to the question of centralization versus decentralization in an organization. You are also asked about communication issues as they relate to the decision to move between centralization and decentralization.

Exercise Background

Managers sometimes find it necessary to change an organization’s degree of centralization or decentralization. Begin this exercise by reflecting on two very different scenarios in which this issue has arisen:

Scenario A. You’re the top manager in a large organization with a long, successful history of centralized operations. For valid reasons beyond the scope of this exercise, however, you’ve decided to make the firm much more decentralized.

Scenario B. Assume the exact opposite of the situation in Scenario A: You still occupy the top spot in your firm, which has long been decentralized, but have made the decision to centralize operations.

Use your diagnostic and communication skills to answer the following questions.

Which of these approaches to organization design is likely to have the highest level of decentralization?

A.Bureaucratic organization

B.Divisional (M-Form) organization

C.Team organization

D.Functional (U-Form) organization

In scenario B, which of these factors would most likely have helped you decide to become more centralized?  Check all that apply.

A.You have recently lost several talented managers and worry that your remaining managers don’t all have the skills needed to make significant decisions.

B.Your business environment is becoming more complex and uncertain.

C.You plan to expand internationally to several foreign markets.

D.Your firm is facing more and more costly and risky decisions.

Assume that your business has ten levels of management, including the CEO (you), the first-line managers, and all others in between. If you decide to eliminate two levels of management so the business will have eight levels in total, what effect might this have on the organization?

A.It may become more decentralized because there will be fewer managers.

B.It will become larger and more profitable.

C.It may become more centralized because there will be less work to do.

D.It may become more specialized because managers will have less responsibility.

Answer 1

1)The correct answer is C. Team Organization since teams are the most basic unit of an organization.

2)The correct option is B and D since complex and uncertain environments require external informations which may not be available to Functional managers. Risky and costly decisions need to be taken by top management with experienced professionals. Option A is wrong since talented managers will be replaced by equally talented people with required skills and option C is not chosen because the expansion operational risks can be managed by skilled managers.

3)The correct answer is option A. Option C and D are not possible since work and responsibilities will increase. Option B cannot be chosen as there are other factors which can increase the size and profitability of company or it may not necessarily be larger and profitable by just removing management levels.