OM Organizational Structure & Design 1 — Questions and Answers
Question 1: Which organizational structure groups employees by function (e.g., marketing, finance, operations) and is most common in smaller or single-product organizations?
- Divisional structure
- Functional structure (Correct answer)
- Matrix structure
- Flat structure
Correct answer: Functional structure
A functional structure organizes employees by their specialized function or department, making it ideal for organizations with a single product line or limited complexity.
Question 2: In a matrix organizational structure, employees typically report to:
- Only their functional manager
- Only their project manager
- Both a functional manager and a project manager (Correct answer)
- A cross-functional steering committee
Correct answer: Both a functional manager and a project manager
The defining feature of a matrix structure is dual reporting: employees report to both a functional manager (for expertise) and a project/product manager (for task direction).
Question 3: Span of control refers to:
- The geographic reach of an organization's operations
- The number of subordinates a manager directly supervises (Correct answer)
- The budget authority granted to a department head
- The range of products a business unit manages
Correct answer: The number of subordinates a manager directly supervises
Span of control is the number of direct reports a single manager oversees, which directly influences organizational hierarchy and communication flow.
Question 4: A wide span of control generally leads to:
- More management layers and slower decision-making
- Fewer management layers and a flatter organization (Correct answer)
- Increased specialization within departments
- Higher administrative overhead costs
Correct answer: Fewer management layers and a flatter organization
A wide span of control means each manager oversees many employees, reducing the need for multiple management layers and creating a flatter, more decentralized structure.
Question 5: Which type of organizational structure is best suited for a large company that operates in multiple, distinct product markets with different customer needs?
- Functional structure
- Flat structure
- Divisional structure (Correct answer)
- Simple structure
Correct answer: Divisional structure
A divisional structure groups the organization by product, market, or geography, allowing each division to function semi-autonomously and respond to its specific market demands.
Question 6: Centralization in organizational design means that:
- Decision-making authority is distributed throughout the organization
- Key decisions are made at the top levels of management (Correct answer)
- All departments share equal access to resources
- Physical offices are co-located in a single headquarters
Correct answer: Key decisions are made at the top levels of management
Centralization concentrates decision-making authority at the upper levels of the hierarchy, while decentralization delegates it to lower levels.
Question 7: Which organizational design principle refers to the degree to which jobs are divided into specialized tasks?
- Formalization
- Departmentalization
- Work specialization (Correct answer)
- Chain of command
Correct answer: Work specialization
Work specialization (also called division of labor) is the extent to which organizational tasks are subdivided into separate jobs, improving efficiency through focused expertise.
OM Organizational Structure & Design 1
Which organizational structure groups employees by function (e.g., marketing, finance, operations) and is most common in smaller or single-product organizations?