Organizational Design, Structure & Corporate Strategy – Lecture Flashcards

A comprehensive set of question-and-answer flashcards covering organizational design, structure types, culture, controls, M&A, corporate strategy, diversification, the BCG matrix, strategic entrepreneurship, and the industry life-cycle stages.

What are the three key components of organizational design?

Structure, culture, and control.

Why should structure follow strategy?

To ensure the chosen business strategy can be implemented effectively and to avoid failure caused by structural inertia.

What are the four building blocks of organizational structure?

Specialization, formalization, centralization, and hierarchy.

What is specialization in an organizational context?

Dividing work into distinct jobs so employees can become highly skilled and efficient at a specific task.

What does formalization describe?

The extent to which employee behavior is steered by rules, procedures, and policies.

How do centralization and decentralization differ?

Centralization concentrates decision-making at the top; decentralization disperses decision authority throughout the organization.

What does hierarchy define within a firm?

The formal reporting lines—who reports to whom—and each manager’s span of control.

What characterizes a simple structure?

Low formalization and centralization, typically used in small or start-up firms where the founder makes most decisions.

What is a functional structure?

An organizational form that groups employees by specialized functions such as marketing, HR, or R&D.

Describe a multidivisional (M-form) structure.

A structure with semi-autonomous divisions organized by product line, geography, or customer segment, overseen by a corporate headquarters.

What is a matrix structure?

An organizational design that combines functional and divisional forms, creating dual reporting lines and cross-functional teams.

Key traits of a mechanistic structure?

Highly centralized, rigid departmentalization, high formalization, and narrow spans of control.

Key traits of an organic structure?

Decentralized authority, low formalization, high flexibility, broad job descriptions, and adaptive communication flows.

Define organizational culture.

A system of shared values, norms, and expectations that shapes employee attitudes and behaviors.

How is organizational culture expressed?

Through observable artifacts such as office layout, dress code, rituals, language, and company events.

What are input controls?

Rules, standard operating procedures, and budgets that guide activities before employees begin their work.

What are output controls?

Performance targets or expected results that let employees decide how best to achieve them.

What is the difference between a merger and an acquisition?

A merger creates a new combined company; an acquisition occurs when one firm purchases and absorbs another.

Why do companies pursue mergers and acquisitions?

To access new markets or products, achieve synergies, gain competitive advantage, and realize economies of scale or scope.

What is a hostile takeover?

An acquisition attempt made without the approval of the target company’s management or board of directors.

Explain a poison pill.

An anti-takeover defense that dilutes the bidder’s stake—often allowing existing shareholders to purchase additional shares at a discount.

What is horizontal integration?

The merger or acquisition of firms operating at the same stage of the value chain within the same industry.

What are strategic alliances?

Cooperative agreements between firms to share resources, knowledge, or capabilities without a full merger or acquisition.

What fundamental question does corporate strategy answer?

"Where should we compete?"—in terms of industries, markets, and geographies.

Define vertical integration.

A firm’s expansion upstream or downstream along the value chain by taking ownership of additional production or distribution stages.

What is backward integration?

Moving upstream in the value chain—for example, acquiring suppliers of raw materials.

What is forward integration?

Moving downstream in the value chain—for example, acquiring distributors or retail outlets.

Name two risks of vertical integration.

Potential complacency and skill gaps, reduced flexibility, higher fixed costs, or bureaucratic inefficiencies.

What qualifies as a single-business strategy?

Generating 95 percent or more of revenues from one business line (e.g., Coca-Cola).

What is a dominant-business strategy?

Earning 70–95 percent of revenues from one primary business, with the remainder from related areas (e.g., Nestlé).

Define related diversification.

Entering new businesses that share meaningful links with the firm’s existing businesses in products, markets, or technologies.

Define unrelated diversification.

Adding businesses with no significant connection to the firm’s current operations—a true conglomerate approach.

What is meant by a core competency?

A unique, valuable, and hard-to-imitate capability that underpins a firm’s competitive advantage (e.g., Honda’s engine expertise).

List the four categories of the BCG growth-share matrix.

Star, Cash Cow, Question Mark, and Dog.

What is a Star in the BCG matrix?

A business unit with high market growth and high market share—worthy of continued investment.

What is a Cash Cow in the BCG matrix?

A unit with high market share in a low-growth market—generates excess cash to fund other units.

What is a Question Mark in the BCG matrix?

A unit in a high-growth market but with low market share—requires resources to grow or should be divested.

What is a Dog in the BCG matrix?

A unit with low growth and low market share—often harvested or divested.

Define strategic entrepreneurship.

The integration of entrepreneurial opportunity seeking with strategic advantage seeking through innovation.

What are the four stages of the innovation process?

Idea generation, invention/prototyping, commercialization, and imitation by rivals.

What is social entrepreneurship?

Creating and managing ventures that pursue social or environmental missions while maintaining financial sustainability.

Name the four stages of the industry (product) life cycle.

Introduction, Growth, Maturity, and Decline.

Key characteristics of the Introduction stage?

High R&D costs, low sales, few competitors, and the need to build market awareness—profits are generally negative.

Key characteristics of the Growth stage?

Rapid market acceptance, rising revenues and profits, entry of competitors, and some product standardization.

Key characteristics of the Maturity stage?

Market saturation, slow demand growth, intense price competition, and a focus on cost efficiency and process innovation.

Key characteristics of the Decline stage?

Falling demand, industry shake-out or exit, possible niche repositioning, consolidation, or liquidation.