Principles of Management Course Number: ECO 10150 (Section) Fall Semester 2017 M

Question

Principles of Management Course Number: ECO 10150 (Section) Fall Semester 2017 Make-Up Mid-term Exam 2 Royal Dutch/Shell Royal Dutch/ Shell operates in 130 countries around the world and controls every aspect of oil production from the ground to the gas pump. This large international company is also an insular company, saddled with introverted control freaks, a huge and convoluted organizational structure, and a controversial public image. Many of its managers rarely talk to the rank and file. The top brass at headquarters constantly wrestle for power with the 100 or so influential country CEOs who run local operations. Shell Chairman Cornelius Herkstroter wants to create a fast, flexible, environmentally aware organization that runs more efficiently, is more innovative, and is capable of moving Shell into profitable new businesses. The organization Herkstroter inherited has been described as bureaucratic, inward looking, complacent, self- satisfied, and arrogant 1. Refer to Royal Dutch/Shell. One of the major causes of Shell's problems was the 100 or so influential country CEOs who run local operations autonomously. This information would suggest that Shell used a functional b integrated c geographic d product e operations authority 2. Refer to Royal Dutch/Shell. Shell Chairman Cornelius Herkstroter has a stakeholder b staff c equity d line e departmentalized 3. Refer to Royal Dutch/Shell. In 1959, Shell initiated a matrix organizational structure. This means the company a adopted a market growth strategy eliminated any span of management problems created a new corporate culture without the aid of a change agent b c

Explanation / Answer

1)

Since each CEO was located out of different countries, this is an example of geographical departmentalization.

2) In this case, the chairman is in his position because, his family, or the company he represent has the majority shareholding in the company.

Thus, his authority is because of the equity. Thus Option C

3) While using matrix organizational structure, the employees will have to report to more than 1 person. Thus, employees belong to departments. Hence at least 1 kind of departmentalization will be created. Option E.

4) The central top brass is always fighting about various decisions taken in the different countries and thus the country heads have very less autonomy. Thus, it means the organization structure of shell is centralized.

Option C.

5)

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