Introduction to Management (MB111) : Section A (Answers)

1. Answer : (c)
Reason : (a) Early views of management include concern for welfare of workers.
(b) Human relations approach focuses on group influence on individual performance.
(c) Scientific management is based on a set of principles that include achieving cooperation of
human beings rather than chaotic individualism.
(d) Administrative theory considers management as a series of functions.
(e) Bureaucracy is based on specialization of labor, formal rules and procedures, and
impersonality.
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2. Answer : (d)
Reason : (a) Figurehead performs ceremonials and social duties as the organization’s representative.
(b) Leader motivates the employees to get the job done properly.
(c) Disseminator passes information to subordinates.
(d) Entrepreneur designs and initiates change within the organization.
(e) Disturbance handler takes corrective action when the need arises.
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3. Answer : (d)
Reason : (a) Technical skills include knowledge of and proficiency in activities involving method, processes,
and procedures.
(b) Technical skills refer to the ability to work well with other people both individually and in groups.
(c) Conceptual skills refer to the ability to think and conceptualize abstract situations.
(d) Design skills refer to the ability to solve problems in ways that benefit the enterprise. They include
an ability to design rational and implementable solutions to the problems faced by the organization.
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4. Answer : (c)
Reason : One of the organizational features peculiar to Japanese companies that can affect the conduct of
negotiations is the group decision-making system known as ringi. Ringi is a multistep procedure for
building consensus and involves a complex set of negotiations through which divergent viewpoints are
considered and accommodated.
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5. Answer : (c)
Reason : At the pre-conventional stage of moral development, the decisions are influenced exclusively by
personal interest and are made in terms of self-benefit as defined by the rewards and punishments
resulting from different types of behavior. Decisions made by executives at the conventional stage of
moral development are influenced by the expectations of others, including obedience to the law,
response to the expectations of significant others, and a general sense of what is expected. At the postconventional
stage of moral development, the decisions are influenced by personal ethical principles of
what is right. These may or may not be in accordance with the rules or law of society.
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6. Answer : (b)
Reason : (a) The rational decision-making model assumes that managers possess and understand all the
information that is relevant to their decisions. They are also aware of different possible alternatives, all
potential outcomes and ramifications, and hence make optimal decisions.
(b) The incremental model is concerned more about achieving short-run solution of a problem than
making decisions that would facilitate long-term goal accomplishment. This model does not require
managers to process a great deal of information for decision-making.
(c) The satisficing model suggests that the ability of managers to be completely rational in their
decisions is limited by certain factors.
(d) The garbage can approach to decision-making holds that managers behave in a random fashion in
making non-programmed decisions.
(e) Decision tree is a sophisticated mathematical tool that enables a decision-maker to consider various
alternative courses of action and select the best one.
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7. Answer : (d)
Reason : BARS minimizes subjective interpretation inherent in graphic rating scales. They make use of
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‘anchors’ (common reference points of performance) and they concentrate on job-specific behaviors and hence are
highly meaningful. However, BARS are time-consuming and costly to develop, as they should cover
each dimension of all jobs in the department. As a result, BARS tend to be used in situations in which
relatively large numbers of individuals perform similar jobs.
8. Answer : (c)
Reason : (a) Victor Vroom’s expectancy theory holds that people will be motivated to do things to achieve some
goals to the extent that they expect that certain actions on their part will help them to achieve the goal.
(b) Maslow’s need hierarchy classifies human needs into five categories: physiological, safety,
belongingness, esteem, and self-actualization needs and states that they follow an order. A satisfied
need no longer motivates.
(c) Herzberg’s two-factor model distinguishes between motivators and hygiene factors. The presence
of the former (motivators) causes satisfaction but their absence doesn’t cause dissatisfaction. The
absence of the latter (hygiene factors) causes dissatisfaction but their presence doesn’t guarantee
satisfaction.
(d) J.S.Adam’s equity theory points out that people are motivated to maintain fair relationship between
their performance and reward in comparison to others.
(e) Alderfer’s ERG theory categorizes human needs into three: existence, relatedness, and growth
needs.
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9. Answer : (d)
Reason : (a) Authority-obedience management assumes efficiency in operatons results from arranging
conditions of work in such a way that human elements interfere to a minimum degree.
(b) Team management assumes work accomplishment is from committed people; interdependence
through a common stake in organization purpose leads to relatioships of trust and respect.
(c) Country Club management assumes thoughtful attention to needs of people for satisfying
relationships leads to a comfortable friendly organizaion atmosphere and work tempo.
(d) Impoverished management assumes exertion of minimum effort to get required work done is
appropriate to sustain organization membership.
(e) Organization-man management assumes adequate organization performance is possible through
balancing the necessity to get work done with maintaining the morale of employees at a satisfactory
level.
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10. Answer : (e)
Reason : The authority to control other departments, related to specific tasks, is known as functional authority. It
is defined as the formal authority staff members have over line members within the limits of their
functions. It has the same effect as line authority but it does not have the right that line authority has, to
punish violations or deviations in order to ensure compliance. Functional authority is limited to those
areas where a staff person has some technical competence. The use of functional authority should be
restricted to the procedural aspects of a function. But functional authority violates the principle of unity
of command since authority over specific functional activities is exercised not only by line managers
but also by staff managers.
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11. Answer : (d)
Reason : Creativity is the ability to develop new ideas. The creative process comprises for phaes:
unconscious scanning, intuition, insight, and logical formulation. Intuition connects the unconscious
with the conscious and leads to insight. In the final phase of the creative process, insight is tested against
organizational reality.
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12. Answer : (c)
Reason : (a) Brainstorming involves generating ideas on a problem with emphasis on quantity rather than
quality.
(b) Nominal groups restrict discussion or interpersonal communication where members are all present
but they operate individually.
(c) Delphi groups involve seeking expert opinion iteratively through anonymous participation.
(d) In interacting groups members do interact with one another.
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13. Answer : (a)
Reason : (a) A functional structure suits small or medium-sized organizations that have a limited number of
products or services.
(b) A product structure is suitable to extremely large, complex and multi-product organizations, where
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large differences in the product or service lines make co-ordination within a functional design extremely slow and
inefficient.
(c) A territorial structure is adopted by organizations that operate over wide geographic areas such as
banking, insurance, and transportation firms.
(d) Large organizations requiring functional expertise and which operate in uncertain environments
adopt a hybrid structure.
(e) A matrix structure is usually found in construction, in the installation of electronic data processing
systems, in aerospace, or in a consultancy firm.
14. Answer : (b)
Reason : (a) A knowledge test evaluates the applicant’s knowledge about the company, its competitors and
customers, its products, the target markets and the like.
(b) A work sample test measures practical ability on a job where an applicant completes some job
activity under structured conditions.
(c) An intelligence test explores alertness, comprehension, and reasoning abilities of the applicants.
(d) A personality test measures characteristics, such as patterns of thoughts, feelings, and behaviors
that are distinctively combined in a particular individual and influence that individual’s interactions in
various situations.
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15. Answer : (c)
Reason : (a) Expert power is that influence which one wields as a result of one’s experience, special skill, or
knowledge.
(b) Legitimate power is based on agreement and commonly held values allowing one person to have
power over another person.
(c) Referent power is based on identification with the person who may have some form of power. The
target of the influence feels attracted towards the person having power because of his/her personality
characteristics and tries to behave accordingly.
(d) Coercive power rests upon the application or threat of application of physical sanctions.
(e) Reward power is the opposite of coercive power and is based on one’s control and allocation of
material resources and rewards.
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16. Answer : (b)
Reason : (a) Current ratio is the ratio of current assets to current liabilities.
(b) Debt-equity ratio indicates what percentage of the organization’s assets is financed by creditors.
(c) Return on investment (ROI) is the ratio of net income to total assets.
(d) Net profit margin is the ratio of net income to net sales.
(e) Inventory turnover is the ratio of cost of goods sold to inventory.
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17. Answer : (c)
Reason : (a) Work simplification involves teaching workers the concepts of time and motion studies, layout of
work situations, and workflow analysis in order to improve work methods.
(b) Time-event network is a logical extension of the Gantt chart and uses Critical Path Method to help
in planning and controlling operations.
(c) Value engineering involves analyzing the operations of the products or service, estimating the
value of each operation, and modifying that operation so that the cost is lowered.
(d) Total Quality Management (TQM) calls for active participation of all the members at all levels of
the organization in order to ensure its (the organization’s) long-term commitment to improvement of
quality.
(e) A quality circle is a group of people who belong to an organizational area and who meet regularly
to solve the problems they face at work.
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18. Answer : (c)
Reason : (a) A management information system (MIS) is a convergence of people, computer and
communication technologies, and procedures designed to quickly provide relevant data or information,
collected from both internal and external organization sources, for organization use.
(b) A decision support system (DSS) is an interactive computer system that is easily accessible to and
operated by people who are not computer specialists, who use the DSS to help them to plan and make
decisions.
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(c) An executive support system (ESS) supports effective functioning and decision-making at the top
levels of an organization. An effective ESS provides intelligent information – market intelligence,
investment intelligence, and technological intelligence.
(d) A transaction processing system (TPS) records and executes the routine, day-to-day transactions
required to conduct an organization’s business.
(e) An office automation system (OAS) aims at facilitating communication and increasing the
efficiency and productivity of managers and office workers through document and message processing.
19. Answer : (e)
Reason : (a) Sales forecast is an estimate of sales in a future period, which is future-oriented and hence is an
example of feed forward control.
(b) Budgetary control, which is allocation of resources for future activities, is also an example of feed
forward control.
(c) Inventory control is planning the requirement of parts etc. for production operations and hence is
an example of feed forward control.
(d) Programme Evaluation and Review Technique (PERT) is a time-event network analysis system
used for managing a large project in which the various elements in the project/programme are
identified, with a planned time established for each. This too, being future-oriented, is feed forward
control.
(e) Quality control however, takes place while production operations are in progress and hence is
concurrent control.
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20. Answer : (d)
Reason : (a) Perception is the process of organizing and interpreting stimuli to draw meaningful conclusions.
(b) Attitude is a learned predisposition to behave in a particular way towards a particular object.
(c) Personality is the set of characteristics that determines an individual’s interactions in various
situations.
(d) Values are fairly permanent beliefs about what is appropriate and what is not that guide the actions
and behavior of employees in fulfilling the organization’s aims. Values can be thought of as forming an
ideology that permeates everyday decisions.
(e) Learning is a relatively permanent change in an individual’s behavior.
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21. Answer : (a)
Reason : (a) Linear programming is a mathematical technique used in optimum allocation of resources in the
organization.
(b) Decision tree is a graphical method for identifying alternative actions, estimating probabilities, and
indicating the resulting expected pay-off.
(c) Simulation is the technique of developing a model that represents a real or existing system for
solving complex problems that cannot be readily solved by other techniques.
(d) Waiting-line or queuing model is a mathematical model that describes the operating characteristics
of queuing situations, in which service is provided to persons or units waiting in line.
(e) Game theory is a technique for determining the strategy that is likely to produce maximum profits
in a competitive situation.
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22. Answer : (e)
Reason : A product structure facilitates growth and diversity of products and services offered by the
organization. The performance of each product line can be compared and analyzed. A product structure
also provides an excellent training ground for managerial personnel. An organization structure based on
geographic division allows a manager to pay special attention to the needs and problems of local
markets.
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23. Answer : (c)
Reason : Decentralization is the systematic delegation of authority in an organization-wide context. The degree
of decentralization in an organization depends on various factors such as history of the organization,
size of the organization, geographical dispersion, and not location, of the organization, knowledge and
experience of executives, technical complexity of tasks, planning and control procedures, and
environmental influences.
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24. Answer : (b)
Reason : A skills inventory is a computerized database containing basic information about each employee that
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can be used to assess the availability of candidates for meeting current and future human resource needs. It
typically contains information regarding each employee’s knowledge, skills, experience, interests,
performance, and relevant personal characteristics. A skills inventory is one of the means of assessing
internal labor supply, which is one way of forecasting manpower supply. Forecasting manpower
demand implies how many people with what abilities the organization will need in the foreseeable
future to remain in operation. While forecasting manpower demand, factors such as expected growth of
the organization, budget constraints, and introduction of new technology, need to be considered.
Replacement training is a means of identifying potential candidates to fill specific managerial positions.
Succession planning is a means of identifying individuals with high potential. It ensures that individuals
receive appropriate training and job assignments aimed at their long run growth and development.
Human resource actions refer to matching of projected human resource needs with projected
availability of human resources, which provides the basis for taking various actions to ensure that
supply will equal demand at the time specified.
25. Answer : (b)
Reason : (a) Survey feedback lets people know where they stand in relation to others on important
organizational issues so that constructive problem solving can take place.
(b) In process consultation, the consultant observes the group and gives feedback regarding
dysfunctions in such areas as decision-making, handling of conflicts, and communication patterns. The
main aim of this technique is to help group members gain the skills they need to identify and resolve
group dynamics issues on their own.
(c) Team building aims at helping work groups become effective at task accomplishment. The
consultant helps in assessing group tasks, member roles and strategies for accomplishing work tasks.
(d) Third-party intervention is concerned with helping individuals, groups, or departments resolve,
through problem solving and conciliation, serious conflicts that may be caused by suboptimal
interpersonal relations or may relate to specific work issues.
(e) Technostructural activities are intended to improve work technology and/or organization structure.
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26. Answer : (c)
Reason : The Porter-Lawler model of motivation, which is an improvement of the expectancy theory, assumes
that motivation does not equal satisfaction. It assumes satisfaction does not lead to performance. Rather, the
converse is true: performance can, but does not always, lead to satisfaction through the reward process. It assumes
that motivation is not a simple cause-and-effect matter. The model advocates that managers carefully assess their
reward structures and also assumes that performance leads to intrinsic as well as extrinsic rewards.
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27. Answer : (e)
Reason : Corporate Social Responsibility (CSR) is seriously considering the impact of the company’s actions on
society. CSR involves three types of behavior – positive, neutral, and negative. Organizations must
fulfill their obligations to various interest groups, which include shareholders, employees, customers,
creditors, suppliers, government, and the society. Since organization is a part and parcel of the society,
the management must be conscious of its CSR. The organization’s obligations to the society, however,
may vary from society to society. Though social responsiveness is similar to social responsibility, it’s
not exactly the same as the latter. Social responsiveness is the ability of a corporation to relate its
operations and policies to the social environment in ways that are mutually beneficial to the company
and to the society.
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28. Answer : (d)
Reason : Organization culture is the collection of shared values, beliefs, rituals, stories, myths, and specialized
language that foster a feeling of community among organization members. Organizational culture is
distinctive and it differentiates one organization from another. It is based on certain norms, which
define the internal environment of an organization. When the members of an organization interact with
each other, they use a common language, and follow the same norms and hence organizational culture
ensures consistency in their behavior. It is perceived by the members of the organization as well as by
outsiders. Though organizational culture is fairly stable, it keeps evolving from time to time.
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29. Answer : (e)
Reason : MBO helps in better managing the organizational resources and activities through clarity of objectives,
role clarity, periodic feedback on performance, and participation by managers. It provides the key result
areas (KRAs) where organizational efforts are needed, which leads to clarity in organizational action.
Since MBO allows participation of employees in objective setting and a rational performance appraisal,
it provides the greatest opportunity for personnel satisfaction. Also, MBO stimulates organizational
change and provides a framework and guidelines for planned change, enabling the top management to
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initiate, plan, direct, and control the direction and speed of change. However, MBO has some limitations also,
which include inflexibility in the organization, particularly when the objectives need to be changed.
30. Answer : (d)
Reason : (a) Participation and involvement means allowing the individuals who will be affected by a change to
participate in planning and implementing it. Personal involvement through participation tends to diffuse
rational and irrational fears about a change.
(b) Facilitation and support involves giving encouragement and support in the form of special training,
job stress counseling, and compensatory time-off.
(c) In negotiation and agreement, the management neutralizes potential or actual resistance by
exchanging something of value for cooperation.
(d) In negotiation and agreement, the management neutralizes potential or actual resistance by
exchanging something of value for cooperation.
(e) Education and communication involves explaining the need for and the logic of change to
individuals.