Organizational Design, Structure & Corporate Strategy – Lecture Flashcards

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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.

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46 Terms

1
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What are the three key components of organizational design?

Structure, culture, and control.

2
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Why should structure follow strategy?

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

3
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What are the four building blocks of organizational structure?

Specialization, formalization, centralization, and hierarchy.

4
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What is specialization in an organizational context?

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

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What does formalization describe?

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

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How do centralization and decentralization differ?

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

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What does hierarchy define within a firm?

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

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What characterizes a simple structure?

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

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What is a functional structure?

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

10
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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.

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What is a matrix structure?

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

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Key traits of a mechanistic structure?

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

13
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Key traits of an organic structure?

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

14
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Define organizational culture.

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

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How is organizational culture expressed?

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

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What are input controls?

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

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What are output controls?

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

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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.

19
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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.

20
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What is a hostile takeover?

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

21
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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.

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What is horizontal integration?

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

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What are strategic alliances?

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

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What fundamental question does corporate strategy answer?

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

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Define vertical integration.

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

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What is backward integration?

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

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What is forward integration?

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

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Name two risks of vertical integration.

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

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What qualifies as a single-business strategy?

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

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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).

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Define related diversification.

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

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Define unrelated diversification.

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

33
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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).

34
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List the four categories of the BCG growth-share matrix.

Star, Cash Cow, Question Mark, and Dog.

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What is a Star in the BCG matrix?

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

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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.

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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.

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What is a Dog in the BCG matrix?

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

39
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Define strategic entrepreneurship.

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

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What are the four stages of the innovation process?

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

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What is social entrepreneurship?

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

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

Introduction, Growth, Maturity, and Decline.

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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.

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Key characteristics of the Growth stage?

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

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Key characteristics of the Maturity stage?

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

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Key characteristics of the Decline stage?

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