Introduction to Management (MB111) – July 2004

Suggested Answers
Introduction to Management (MB111) – July 2004
1. 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 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.
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2. 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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3. Answer : (b)
Reason : If an MNC feels that “It is best to give foreign subsidiaries, staffed by local nationals, a
great deal of managerial freedom”, its orientation is known as Polycentric.
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4. Answer : (d)
Reason : Raj, Ramesh and Rajesh are all making decisions about how to approach the team project
and they will probably rely on Bounded rationality, which is defined as a concept that
suggests that the ability of managers to be perfectly rational in making decisions is limited
by such factors as cognitive capacity and time constraints. (a)In rational decision making
managers possess and understand all the information that is relevant to their decisions at the
time they make them and (b)the opposite of rational decision-making is irrational decision
making.(c) Intuition is "direct perception of truth, fact, etc., independent of any reasoning
process; immediate apprehension.". (e)Garbage can model is a nonrational model of
managerial decision-making stating that managers behave in virtually a random pattern in
making nonprogrammed decisions
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5. Answer : (d)
Reason : Peter Drucker identified eight Key Result Areas applicable to most organizations: i.
Profitability, ii. Market standing, iii. Innovation, iv. Productivity, v. worker performance, vi.
Financial and physical resources, vii. Manager performance, viii. Public responsibility.
Physical distribution is not one of the KRAs.
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6. Answer : (c)
Reason : Kanban is a subsystem of the JIT approach involving a simple parts movement system that
depends on cards and containers to pull parts from one work center to another(a)ABC
analysis is a technique of inventory management, in which the inventory is distributed based
on price & usage of the inventory.(b) A JIT is an approach to inventory control that
emphasizes having materials arrive just as they are needed in the production process.(d)
Kaizen is a Japanese term implying continuous improvement (e)EOQ is an inventory
control method developed to minimize ordering plus holding costs, while avoiding stock
out costs
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7. Answer : (b)
Reason : Susan is playing a liaison role which is serving as a link in a horizontal chain of
communication. In a figurehead role, the manager performs ceremonial and social duties as
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the organizations representative. A project manager is responsible for the success of the overall
project. In operational tasking the manager is directly responsible for a specific job task. A
multi-tasking is the practice of assigning two or more comparably sized tasks to one.
8. Answer : (e)
Reason : If a group of Afro- American female managers meet once a month to discuss possible
career paths within their organization, this is an example of an interest group
Nominal group members are generally used to generate creative and innovative
alternatives or ideas. Delphi groups is a form of group decision making which aims to
achieve a consensus of expert opinion. Interacting form is the most common form of group
decision making. It is decision-making group in which members openly discuss , argue
about, and agree on the best alternative. A quality circle is a small group of operations
employees who periodically brainstorm on how to increase the firm’s output, improve
quality, or improve the efficiency of the workplace.
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9. Answer : (d)
Reason : Planning reduces flexibility is one of the myths about planning. Options (a), (b) and (c) are
the features of planning
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10. Answer : (a)
Reason : According to the open system model of organizing a boundary-spanning sub-system helps
the organization in interacting with its external environment.
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11. Answer : (c)
Reason : An Entrepreneur a person who focuses on innovation and creativity and transforms a dream
or an idea into a profitable venture by operating within the organizational environment.
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12. Answer : (e)
Reason : According to Bottom-up approach of organizational model, a subordinate identifies the
communication from his superior as being authoritative and tries to comply with it if he or
she (a) understands the message, (b) feels that it serves his/her personal interests, (c) is in a
position to comply with it and (d) believes that it matches with the organization’s purpose
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13. Answer : (b)
Reason : MIS (Management Information System) gives the output in the form of summary and
exception reports that are useful to the manager.
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14. Answer : (b)
Reason : In this case Richard would be considered as having an external locus of control, which is
thinking that what happens to them is a result of fate, chance, luck or the behavior of the
people
Personality variables such as ego strength have an impact on an individual’s ethical
behavior. The strength of a person’s convictions is referred to as ego strength. People with
more ego strength tend to do what they think is right. People with low ego strength show a
lesser consistency between moral judgment and moral actions where as an intuition is an
innate belief about something without conscious consideration. An individual with an
internal locus of control believes that he or she has control over his or her future.
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15. Answer : (c)
Reason : The four basic functions of management are Planning, Leading, Organizing and
Controlling, which are defined as follows:
Planning: Planning is a process by which managers set objectives, assess the future, and
develop courses of action to accomplish these objectives
Leading: The management function that involves influencing others to engage in the work
behaviors necessary to reach organizational goals.
Organizing: It is a process of organizing people and physical resources into a structured
grouping to carry out plans and accomplish organization objectives.
Controlling: The management function that is aimed at regulating organizational activities
so that actual performance conforms to expected organizational standards and goals.
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16. Answer : (b)
Reason : Risk is a situation where the decision-maker has incomplete information about available
alternatives but has a good idea of the probability of particular outcomes associated with
each alternative. Option (a) is known as certainty and option (c) is known as uncertainty
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17. Answer : (d)
Reason : Question marks are sometimes called "problem children" or "wildcats", and these are new
products with a potential for success, but need a lot of cash for development.(a) cash cows
are the businesses that have a high relative market share in a slowly growing market.(b)
Dogs are businesses that have a low relative market share in a slowly growing or stagnant
market.(c) A business in the star category has a high relative market share in a rapidly
growing market
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18. Answer : (c)
Reason : Code of ethics is a written document that explains the purpose of guiding organization
members when they encounter an ethical dilemma. (a) A vision statement is aware of what
is in contrast to what ought to be and expresses a desire to make what ought to be a reality
(b) In Ethics training the goal is to encourage ethical behavior. Ethical training enables
managers to integrate employee behavior in ethical arena with major organizational goals.
(d)Ethics audit involve systematic assessment of conformance to organizational ethical
policies, understanding of those policies and identification of serious deviations requiring
remedial action.(e) Mission statement is a broad declaration of the fundamental, unique
purpose that distinguishes an organization from others of its type; a general, enduring
statement of the company intent.
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19. 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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20. Answer : (c)
Reason : Delphi group involves seeking expert opinion iteratively through anonymous participation.
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21. 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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22. Answer : (e)
Reason : As a practice, though not documented, a brokerage house tries to promote its own
employees into a broker's slot whenever one becomes available. This is an example of a
norm. Norms are standards set by a group that regulate and foster uniformity in member
behaviors.(a) Rules are statements of actions that must be taken or not taken to a given
situation.(b) A procedure is a guide to action that explains in detail the manner in which
activities are to be performed. (c) A policy is defined as a general guidelines for decision
making. (d) Management by objectives is a organizational planning technique in which
specific goals are set collaboratively for the organization as a whole and every unit and
individual within it.
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23. Answer : (d)
Reason : Scientific management has all the said limitations mentioned in (a)(b)(c)(e)except the
failure to consider external and internal environmental influences on the organization,
which, in fact, is a limitation of administrative theory
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24. Answer : (d)
Reason : Leverage ratio’s indicate the firms financial risk.(a) Profitability ratios provide a firms
overall economic performance(b) Liquidity ratios measure a firm’s capacity to meet its
short-term financial obligations.(c) Activity ratios reflects a firm’s efficiency in resource
utilization.
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25. Answer : (d)
Reason : When a firm buys all or part of another business, such as Philip Morris acquired Kraft and
General Foods, the organization redesign is called an acquisition. The term integration is
used place of coordination, to designate the degree to which members of various
departments work together in a unified manner.. A synergy is a situation in which the whole
is greater than its parts. In organizational terms, the fact that departments that interact
cooperatively can be more productive than if they operate in isolation. A divestiture
involves the sale of a firm or a major component of a firm. The term merger is a transaction
in which two firms agree to integrate their operations on a relatively coequal basis because
they have resources and capabilities that together may create a stronger competitive
advantage.
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26. Answer : (c)
Reason : The relationship between a cause and consequence is a premise. Planning premise is
defined as the anticipated environment in which plans are expected to operate. They include
assumptions or forecasts of the future and known conditions that will affect the operation of
plans.
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27. Answer : (e)
Reason : Noise is anything that has a disturbing influence on the message and it can occur at any
stage of communication process
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28. 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) Cooptation normally involves token participation. In this a leader or a influential
person among potential resisters is given a seemingly desirable role in the change
process to gain cooperation. Manipulation refers to covert influence attempts.
(e) Education and communication involves explaining the need for and the logic of
change to individuals.
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29. Answer : (e)
Reason : According to Porter’s Five Competitive Forces Model Rivalry and The Threat of New
Entrants pull prices down and push costs of doing business up.
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30. Answer : (b)
Reason : Middle level management is responsible for Intermediate tactical plans. Top level
management deals with long range strategic plans and lower level management deals with
short range operational plans.
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31. Answer : (e)
Reason : According to Henri Fayol business operations of an organization can be divided into six
activities. Those six activities are: Technical, Security, Accounting, Financial, Commercial
and Managerial
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32. Answer : (b)
Reason : Negative entropy: the tendency of a system to degrade
Dynamic homeostasis: the process of maintaining the internal balance necessary for
survival by importing needed resources from the environment
Differentiation: the tendency of a system to move towards increased specialization of
various tasks.
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Equifinality: reaching the same result by different means
Feedback mechanism: the information used by a system to monitor its performance
33. Answer : (d)
Reason : Productivity can be measured in two ways: total productivity and partial productivity. In
both the cases it is expressed as a ratio of outputs to inputs and labor is the input which is
common to both the measures.
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34. Answer : (d)
Reason : A standing plan is used for activities that recur regularly over a period of time and are
predetermined courses of action developed for repetitive situations. Hence, statement I is
not true.
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35. 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 post-conventional 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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36. Answer : (d)
Reason : In an informal organization, the source of leader power is given by group
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37. Answer : (a)
Reason : Here madhu is dealing with risk, which is defined as the probability of loss or
failure in a business venture or course of action. (b) Uncertainty is an aspect
of Nonprogrammed decisions that are a condition in which the decision
maker must choose a course of action without complete knowledge of the consequences that
will follow implementation. (c) Certainty is a decision situation in which sufficient
information exists to determine the results of each alternative successive layer in between.
(d) Programmed decisions are those involving simple, common, frequently occurring
problems that have well-established and understood solutions. (e)Non-programmed
decisions are those decisions that deal with unusual or exceptional problems
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38. Answer : (b)
Reason : The theories proposed by Alderfer (Existence needs), Maslow (Physiological needs) and
Herzberg (Hygiene factors) take account of physiological needs to explain the motivation.
But, Mc Clelland’s Acquired Needs theory ignores Physiological needs as one of the factors
of motivation.
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39. 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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40. Answer : (c)
Reason : “Time and expenditure is warranted” is a questionable assumption underlying the direct
control
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41. Answer : (d)
Reason : A small group gathered in the conference room to discover the impact they had on others,
to explore and express their feelings, and to learn more about them. This Organization
Development (OD) application called as sensitivity training. Sensitivity training is the
process of group dynamics in laboratory training that influences a T-group participant’s
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behavior. (a) Team building is aimed at helping work groups become effective at task accomplishment.
.(b)Hostile confrontation is the reverting back of employees for the attempted changes (c)A
strategic intervention is a systematic attempt to correct an organizational deficiency
uncovered through diagnosis. (e)Process consultation is concerned with the impersonal
relations and dynamics operating in work groups.
42. Answer : (e)
Reason : Avoidance, problem solving, compromise, forcing and smoothing are techniques of conflict
resolution. Job rotation is not a technique for resolving the conflict.
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43. 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 large differences in the product or service lines make coordination
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.
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44. Answer : (c)
Reason : 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. (a) 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. (b)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) 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. (e) Alderfer’s ERG theory categorizes human needs into three: existence, relatedness,
and growth needs.
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45. Answer : (b)
Reason : Organization development( O.D) is a change effort that is planned , focused on an entire
organization or a large subsystem, aimed at enhancing organizational effectiveness. O.D can
be used for mergers, managing conflict, revitalizing organizations except creating barriers to
change.
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46. 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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47. 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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48. Answer : (a)
Reason : (a) Linear programming is a mathematical technique used in optimum allocation of
resources in the organization.
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(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.
49. Answer : (e)
Reason : Smoothing is a conflict resolution technique, which emphasizes on the areas of agreement
and common goals and de-emphasizes disagreements.
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50. Answer : (c)
Reason : Corporate Culture is distinctive, based on certain norms, promotes dominant and stable
values, leads to observed behavioral regularities and shapes priorities and rules.
Organization expects all participants to share some major values like high product quality,
low absenteeism and high efficiency. The values of an organization are stable in nature and
usually change only over time. Corporate Culture affects performance and responsiveness
in two main ways-some values support responsiveness and some values act as guides.
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51. Answer : (d)
Reason : Ohio State Studies called the dimensions of leadership behavior “initiating structure” and
“consideration”. Initiating structure is the degree to which leadership defines his or her own
role and the roles of subordinates in terms of achieving unit goals. Consideration is another
aspect, which emphasizes people related issues. (b) Blake and Mouton’s managerial grid is a
well-developed approach to defining leadership styles. They argue that managerial behavior
is a function of two variables: concern for people and concern for production.(c) House’s
path-goal theory of leadership attempts to explain how leader behavior can positively
influence the motivation and job satisfaction of subordinates. (e)Fielder’s contingency
approach suggested a contingency theory of leadership which holds that people become
leaders not only because of the attributes of their personalities but because of various
situational factors and the interactions between leaders and managers. University of
Michigan confirmed the usefulness of an employee-centered approach when compared to
other approaches like job centered, production centered approach.
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52. Answer : (e)
Reason : Job analysis is not a motivational technique while all others are techniques of motivation.
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53. Answer : (b)
Reason : Innovation is defined as a new idea applied to initiating or improving a process, product or
service where as change is any alteration of the status quo.
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54. Answer : (d)
Reason : BARS minimizes subjective interpretation inherent in graphic rating scales. They make use
of ‘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.
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55. Answer : (b)
Reason : Mark's Embroidery is departmentalized by customer, i.e. to say customer divisions are
divisions set up to service particular types of clients or customers. Under this method,
activities are grouped according to the customers the organization serves and service to the
customers is of top priority.(b) Product divisions are divisions created to concentrate on a
single product or service of at least a relatively homogeneous set of products or services.(c)
Geographic divisions are divisions are designed to serve different geographic areas. Under
this method, territory or location is taken as the basis for departmentation.(d) Process
divisions are designed to departmentalize the activities through the different process which
the organization follows.(e) In Functional departmentation activities are grouped according
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to their main functional or specialized area such as Production, Finance, Marketing, HR, etc.
56. Answer : (d)
Reason : Blake and Mouton’s Managerial Grid is an approach to defining leadership styles based on
a manager’s concern for people and concern for production. Impoverished management
assumes that exertion of minimum effort to get required work done is appropriate to sustain
organization membership
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57. Answer : (e)
Reason : While making decisions managers generate a number of alternatives to solve a particular
problem. The criterion on which they do not evaluate the alternatives is habit.
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58. 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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59. Answer : (d)
Reason : Immoral managers have strong inclination to minimize expenditure, exclusive concern for
company gains and success at virtually at any price.
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60. Answer : (d)
Reason : The determination of an individuals work related responsibilities is called job design.
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61. Answer : (b)
Reason : Mc Gregor suggested that there are two sets of assumptions that shape the way managers
treat their employees. The assumption that Theory Z is a combination of theory ‘X’ and
theory ‘Y’ is not correct. Options (a), (c), (d) and (e) are correct.
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62. Answer : (b)
Reason : A skills inventory is a computerized database containing basic information about each
employee that 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.
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63. 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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64. Answer : (d)
Reason : Hersey and Blanchard’s Situational Leadership Model recommends a dynamic and flexible
leadership style rather than static style and is based on the premise that the leaders need to
alter their behaviors depending on one major situational factor – the readiness of followers
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65. Answer : (b)
Reason : The term associated with things such as tuition reimbursement, recreational opportunities
etc is benefits which is provided apart form the regular compensation. i.e. Benefits are forms
of supplementary compensation. They represent monetary and non-monetary payments over
and above the wages paid. Compensation is the financial remuneration given by the
organization to its employers for their work. Incentives represent special compensation
opportunities that are usually tied to performance. Rewards are given in recognition of
specific achievements whereas social benefits in the form of say club memberships are
given to enhance the employees status
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66. Answer : (a)
Reason : Tarun, Shreya, Aparna and Sheila all worked together, and to be more effective they taught
each other their job skills and this process is called job rotation or cross training. This is
defined as a job design approach that involves periodically shifting workers through a set of
jobs in a planned sequence. (b)Role perception is the individual’s understanding of the
behavior needed to accomplish a task or perform a job.(c) Training is the systematic
development of knowledge, skills and attitudes required by an individual to perform
adequately a given job or a task.(d)Simulation is a quantitative planning technique that uses
mathematical models to imitate reality. (e)Apprenticeship is providing training in basic
skills and impart knowledge in specified trades to apprentices in order to improve
opportunities for employment or to help them promote their own business.
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67. Answer : (c)
Reason : Xavier has used the empowerment approach which is defined as making employees full
partners in the decision making process and giving them the necessary tools and rewards. (a)
Authority is defined as the right to make decisions, carry out actions, and direct others in
matters related to the duties and goals of a position.(b) Power is the capacity to affect the
behavior of others. (d) Team work is a group whose individual effort result in a performance
that is greater than the sum of those individual outputs (e) Inspirational leadership is the
ability to inspire the employees to apply their full capacities to a task.
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68. Answer : (b)
Reason : When a manager listens to only part of what another manager is saying at a meeting
because he already knows what the manager will say next is an example of selective
perception. (a) Downward communication is defined as a vertical communication that flows
from a higher level to one or more levels in the organization. (c) Horizontal communication
is a lateral or diagonal message exchange either within work-unit boundaries, involving
peers who report to the same supervisor, or across work-unit boundaries involving
individuals who report to different supervisors. (d) Impersonal communication is the
communication through mass media like Radio, T.V etc. (e) Semantic distortion, either
deliberate or accidental, acts as a barrier to effective communication. In this words may
generate different responses.
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69. Answer : (d)
Reason : Phenomenological model of people proposes that people are unpredictable, subjective,
relative and unique. Rational view holds that people behave in a rational manner. According
to behavioristic approach the environment controls an individual’s behavior. Economic view
proposes that people are motivated by economic factors and that they get satisfaction from
material rewards.
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70. Answer : (a)
Reason : When a manager interviews a job candidate by asking him a list of questions from an
outline is an example of a structured interview. In this the interviewee has a predetermined
set of questions that are asked in sequence with virtually no deviations. (b) A stress
interview relies on a series of harsh rapid-fire questions that are indeed to upset the
applicant and show how the applicant handles stress. (c) Unstructured interviews are
informal and unorganized.(d) A Comprehensive interview is an in-depth selection interview
is designed to find out more about the applicant as an individual, and in general, obtain
information of interest to the interviewer so that the suitability of the candidate for the job
and the organization can be determined. (e) Semi-structured interview is a combination of
structured and unstructured interview.
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71. Answer : (d) <>
Reason : A budget is a formal quantitative statement of resources allocated for planned activities
over stipulated period of time. i.e it is an numerical plan for allocating resources over a
specific period. All other statements are not true with regard to a budget.
72. Answer : (c)
Reason : A key difference between the theories of Fiedler and Hersey and Blanchard is that Fiedler
examined a variety of characteristics, while Hersey and Blanchard focused solely on the
individual (the subordinate’s maturity level i.e. ability and willingness to do a given job).
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73. Answer : (c)
Reason : Creative process is rarely simple and linear and usually comprises four overlapping and
interacting phases. Phase (I): Unconscious scanning, Phase (II): Intuition, Phase III: Insight
and Phase (IV): Logical formulation
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74. Answer : (e)
Reason : The purpose of job rotation is to broaden the knowledge of managers or potential managers
and trainees learn through different enterprise functions like non-supervisory works,
observation assignments etc by rotation into different positions. But they cannot be posted
in top level management positions as high stakes are involved.
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75. Answer : (c)
Reason : Fixed budget express what individual costs should be at one specified volume.
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76. Answer : (b)
Reason : Encoding is a process by which a sender translates his thoughts into a series of symbols that
he feels, will communicate the message to the intended receiver. A channel is anything that
links the sender with the receiver. Decoding is the interpretation and translation of a
message into meaningful information. A feedback is a message that is generated by the
receiver in response to the senders original message. A modelling is not relevant in this
context.
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77. 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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78. Answer : (d)
Reason : The principle Unity of direction states that “in an organization, the operations that have the
same objective should be directed by one manager using one plan”. The principle Authority
states that “the managers should give orders so that they can get the things done”. The
principle Discipline states that “the members of an organization should respect the rules and
agreements that govern the organization”. The principle Unity of command states that “an
employee must receive instructions about a particular operation from only one person”. The
principle Equity states that “managers should be both friendly and fair to their
subordinates”.
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79. Answer : (a)
Reason : If the degree of centralization in an organization is low, the controls should be reduced in
number.
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80. Answer : (d)
Reason : The major difference between a nominal group technique and Delphi group technique is
that nominal group members are brought together for discussions on the problem where as
Delphi group involves anonymous participation of experts. Other options (a),(b),(c) and (e)
are not correct.
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81. Answer : (b)
Reason : MBWA is a practice whereby managers frequently tour areas for which they are
responsible, talk to various employees, and encourage upward communication.
A grapevine is an informal communication channel. A horizontal communication is that
which flows laterally within the organization, downward communication occurs when
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information flows down the hierarchy form superiors to subordinates. Upward communication consists
of messages form subordinates to superiors
82. Answer : (c)
Reason : Titan has offered diamond-studded watches in the ‘jewellery watch segment’ under the
brand name of Tanishq. In this Titan has attempted niche marketing. (a)Buzz marketing is
word of mouth marketing I,e to say oral marketing . (b)Direct marketing is the use of
consumer –direct channels to reach and deliver goods and services to customers without
using marketing middlemen. (d) The societal marketing concept hold that the organizations
task is to determine the needs, wants, and interests of target markets and to deliver the
desired satisfactions more effectively and efficiently than competitors in a way that
preserves or enhances the consumer’s and the society’s well being. (e)Ethical marketing
refers to doing of social good unrelated on minimally related to the business activity in
view.
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83. Answer : (c)
Reason : If Boeing Aerospace Co. has difficulty communication with the British Air force because of
the abbreviations used by the British Military, this is a problem in Semantics. (a)The
grapevine is an informal communication channel. (b)A message that is generated by the
receiver in response to the sender’s original message is known as feedback.(d) Decoding is
the interpretation and translation of a message into meaningful information. (e) Encoding is
the process, in communication, of translating the intended meaning into words and gestures
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84. Answer : (a)
Reason : Only option (a) is one of the findings of Hawthorne Studies. Options (b) and (c) are
prejudgments.
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85. Answer : (b)
Reason : Concurrent control takes place while operations are going on and is intended to minimize
problems as they occur. Concurrent control is a control type based on timing that involves
the regulation, monitoring and adjusting of ongoing activities that are part of the
transformation process to ensure that they confirm to organizational standards. Feedback
control takes place after operations are finished and is intended to correct problems that
have already occurred. A feed forward control is a control type based on timing that focuses
on the regulation of inputs to ensure that they meet the standards necessary for the
transformation process. Steering control is a technique used to detect deviations and allow
corrective actions to be taken while the activity is being performed.
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86. 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 causeand-
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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87. Answer : (b)
Reason : When a shop foreman at a Ford Motor Co. plant orders a worker to change the way he is
working in order to improve the productivity of the production line, the foreman is using
the principle of authority, which is defined as the right to make decisions, carry out actions,
and direct others in matters related to the duties and goals of a position. (a)Delegation is the
act of assigning formal authority and responsibility for completion of specific activities to a
subordinate. .(c) Unity of command is a concept stating that each organization member
should report to only one supervisor for any single function.(d) Division of work is defined
as breakdown of a complex task into components so that individuals are responsible for a
limited set of activities instead of the task as a whole.(e) Span of control is an organization
concept referring to the optimum number of subordinates a person can effectively manage;
also called span of management
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88. Answer : (c)
Reason : The idea that a marketing manager should focus his efforts only on those lines of the
budget that deviate significantly from planned expenditures is part of Exception principle.
The exception principle is also referred to as management by exception which is practice in
which only exceptional deviations from the planned things are reported to the higher
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authority so as to optimize the use of time (a) Decentralization is a vertical coordination method that
addresses the extent to which power and authority are delegated to lower levels.(b)
Centralization of authority is the tendency to restrict delegation of decision-making in an
organization structure, usually by holding authority at or near the top of the organization
structure.(d) Planned change is the management function that involves actions based on a
carefully thought-out process that anticipates future difficulties, threats and opportunities.
(e) Delegation is the act of assigning formal authority and responsibility for completion of
specific activities to a subordinate.
89. Answer : (b)
Reason : The task group accomplishes the tasks, which are clearly spelled out to them with the
responsibility of achieving it.
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90. Answer : (b)
Reason : A budget is a plan expressed in numerical terms. They are usually expressed in financial
terms. The budget, which shows costs of major assets such as new plant, machinery, land
etc is known as capital budget. The other budgets included are cash budget which shows all
the sources of cash income and cash expenditure revenue budget shows the anticipated
income from normal operations, operating budget is concerned with planned operations
within the organization, expense budget shows the anticipated expenses for the organization
during the coming time period.
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91. Answer : (c)
Reason : Organizations that have divisional structure but do not treat the divisions as autonomous
businesses may opt to set up Profit Centers. When Organizations treat the divisions as
autonomous businesses they may opt to set up Investment Centers.
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92. Answer : (b)
Reason : Advertisements for products and services such as life insurance policies, mouthwash, and
deodorants play upon fear. By showing the unfortunate consequences that a consumer faces
if he doesn’t use the service or product, advertisers force the consumers to purchase the
product or service. Such ads use Coercive power. This is the power to influence behavior
through punishment or by withholding rewards.(a) Legitimate power stems from a
member’s perception that the group has the legitimate right to influence him (c) Expert
power results from the expertise gained in due course of time either by an individual or a
group.(d)Referent power is the power that results from being admired, personally identified
with, or liked by others.(e) Reward power is based on the perception one has about
another’s ability to reward him.
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93. Answer : (c)
Reason : When a manager asks another manager how he makes important marketing decisions and is
told: oh, I just go with my gut-feeling,’ this marketing manager is using intuitive decision
making approach. (a) Programmed decisions are those involving simple, common,
frequently occurring problems that have well-established and understood solutions.(b) In
rational decision making managers possess and understand all the information that is
relevant to their decisions at the time they make them and the(d) Satisficing model is the
term used by Hermon Simon to describe the way modern managers must, of necessity, make
decisions with incomplete information by choosing from among the few most likely
alternatives (e) opposite of rational decision-making is irrational decision making.
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94. Answer : (b)
Reason : Benchmarking is the practice of comparing, on some measurable scale, the performance of
a key business operation in-house vis-à-vis a similar operation in another organization. It
involves identifying, studying and building upon the best practices of organizational role
models.
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95. Answer : (d)
Reason : In the mentioned question AT&T is pursuing a corporate level strategy, which is defined as
the set of strategic alternatives that an organization chooses from as it manages its
operations simultaneously across several industries and several markets. Whereas a business
level strategy is a set of strategic alternatives than an organization chooses from as it
conducts business in a particular industry or market. The strategy formulated by a specific
functional area in an effort to carry out business-unit strategy is Functional level strategy.
Internal growth strategy is used for development of a firm in its own operations. A company
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is said to be pursuing a diversification strategy when it enters a new line of business.
96. Answer : (c)
Reason : Shushin Koyo is known as life time employment which means recruitment of employees
immediately after graduation, generation of employment until retirement, and mandatory
retirement (a) Seniority system is closely related to lifelong employment and provides
privileges for older employees who has been with the enterprise for a long time. (b)
Continuous training is to acquire new skills for the organizational improvement. (d) As a
kacho(manager) the task of a leader is not only supervising his people on the work, but also
showing fatherly concern for his subordinates off-the-work life. (e) Kanban is a subsystem
of the JIT approach involving a simple parts-movement system that depends on cards and
containers to pull parts from one work center to another.
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97. 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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98. Answer : (d)
Reason : According to "expectancy theory", the probability of an individual acting in a particular
way depends on: The strength of that individual's belief that the act will have a particular
outcome and on whether the individual values that outcome
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99. Answer : (c)
Reason : A functional-level strategy is concerned with the question that “How do we support our
chosen strategy”.
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100. Answer : (c)
Reason : The major drawback of feedback is that the manager does not receive the information in
time to stop the damage, the feedback control is defined as a control type based on timing
that involves regulation exercised after a product or service has been completed to ensure
that the final output meets organizational standards or goals. (a) Feed forward control is a
type based on timing that focuses on the regulation of inputs to ensure that they meet the
standards necessary for the transformation process. (b)A concurrent control is a control type
based on timing that involves the regulation, monitoring and adjusting of ongoing activities
that are part of the transformation process to ensure that they confirm to organizational
standards. (d) Yes-No controls are a technique used at one or more screening point when
specific approval is needed to permit the activity to continue.(e) Steering controls are the
techniques used to detect deviations and allow corrective actions to be taken while activity
is being performed.