Introduction to Management - I (MB111) : January 2007 Suggested Answers

Suggested Answers Introduction to Management - I (MB111) : January 2007
1.
Answer : (d)
Reason : Management by objectives is a method under which a manager is given specific objectives to achieve and is evaluated according to the accomplishment of these objectives.

2.
Answer : (d)
Reason : The following are the weaknesses of the Delphi method of group decision-making III. There is too much emphasis on obtaining consensus. IV. It consumes considerable amount of time. (V) It does not produce accurate results. Statements (I) and (II) are disadvantages of the nomial group technique.

3.
Answer : (e)
Reason : Companies can achieve a sustainable competitive advantage with, I. Non-physical assets, such as customer database information. II. Online ordering systems and other continual product and process innovations. III. Employee knowledge sharing.

4.
Answer : (b)
Reason : Strategic Management is the process by which managers find out ways to achieve a competitive advantage for the organization's product or service offerings. Hence, from above discussion, we can infer that option (b) is correct. Options (a), (c), (d) and (e) are all incorrect regarding Strategic Management.

5.
Answer : (b)
Reason : Leading is substantially more important for first level supervisors than for managers at higher levels. Hence, statement (II) is not true and option (b) is the answer.

6.
Answer : (d)
Reason : The garbage-can model is effective in the following situations, I. When managers have no specific goal preferences. II. When the means of achieving goals are unclear. III. When there are frequent changes in the participants involved in decision-making. Statement (IV) is a condition under which a satisficing decision is made. Hence, option (d) is the answer.

7.
Answer : (e)
Reason : An effective organizing effort involves rationale for the orderly use of management system resources, responsibility, authority, and delegation.

8.
Answer : (d)
Reason : Allow the person to proceed with the task without interference is included in the ‘monitoring progress’ stage. Options (a), (b) and (c) are included in the briefing stage whereas option (e) is included in the evaluation stage.

9.
Answer : (c)
Reason : Line-staff conflict is intergroup conflict arising from perceived differences between those directly involved in producing or selling products and those that support functions such as information systems and human resources.

10.
Answer : (c)
Reason : With respect to factors that affect reorganization, when a single change triggers off a sequence of related changes, it is called the domino effect.

11.
Answer : (a)
Reason : In Departmentation by Process or Equipment, activities are grouped on the basis of processes or equipment. This type of Departmentation enables an organization to get the benefits of specialization, and makes optimum maintenance of resources and equipment. Hence from above discussion, we can infer that option (a) is false regarding Departmentation by Process or Equipment. Options (b), (c), (d) and (e) are all true regarding Departmentation by Process or Equipment.

12.
Answer : (b)
Reason : An organization that groups activities according to women's footwear, men's footwear, apparel, accessories, and leggings would use product departmentalization.

13.
Answer : (b)
Reason : An absolute cost advantage would most likely appear as a decision variable for new entrants.

14.
Answer : (a)
Reason : Restructuring involves major changes in organizational structure and changes in some major components of the organization.

15.
Answer : (d)
Reason : An open system model is based on organization-environment interaction. This system is viewed as comprising a set of interactive subsystems, out of which three important subsystems can be identified. They are (i) Technical, (ii) Boundary-spanning and (iii) Managerial.

16.
Answer : (a)
Reason : A staff manager is a specialist not a generalist. A line manager is a generalist.
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17.
Answer : (d)
Reason : The major difference in skill requirements between middle and top managers is that top managers generally require higher level conceptual skills but less technical skills than middle managers. Hence, from above discussion, we can infer that option (d) is correct.

18.
Answer : (d)
Reason : Establishing departmental policies is a function of middle level management, hence is not true of the responsibilities of the chief executive, who forms a part of the top management.

19.
Answer : (b)
Reason : The following is/are mechanisms for ethical management I. Code of ethics. II. Ethics hot line. The following are ethical guidelines for managers and not mechanisms for ethical management III. Adhering to golden rule. IV. Allowing room for participation.

20.
Answer : (e)
Reason : The following are steps that can help overcome problems associated with the MBO process I. Motivational assessment. II. Group action. III. Appraisal of appraisers.

21.
Answer : (b)
Reason : Managers need fewer formal rules and regulations in an organization with a strong culture.

22.
Answer : (d)
Reason : Strategic planning encourages firms to take the most rational and risk-free decision. Therefore, option (d) is not a limitation.

23.
Answer : (d)
Reason : A statement of manager intuition is generally not an important component of a plan.

24.
Answer : (e)
Reason : Opportunity to offer promotions within various department levels is not considered an organizational benefit of a properly executed operational plan.

25.
Answer : (c)
Reason : Differentiation is the tendency of a system to move towards increased specialization of various tasks. Hence, from above discussion, we can infer that option (c) is correct.

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26.
Answer : (b)
Reason : The following are benefits of position descriptions · They identify duties and responsibilities that are overlapping or neglected · They provide guidance regarding candidate requirements, salary levels, and training needs of new employees · They help managers determine the tasks to be done and the employees who should do them. · They act as means of control over the organization by furnishing standards against which the necessity of the position can be ascertained.

27.
Answer : (d)
Reason : An organization that has four sales regions, North, Midwest, South, and Southwest is using geographic departmentalization.

28.
Answer : (a)
Reason : All options except grapevine are considered coordination mechanisms.

29.
Answer : (c)
Reason : Game Theory decision-making technique provides many useful insights into situations involving elements of competition. Hence, from above discussion, we can infer that option (c) is correct.

30.
Answer : (c)
Reason : Divisional structure is an organization design made up of self-contained units

31.
Answer : (c)
Reason : In an organization of very big size, Managing director and General Manager come under senior management cadre and Branch Manager and Assistant Branch Manager come under lower management cadre. Regional Manager comes under middle management cadre in big organizations. So, (c) is correct answer.

32.
Answer : (c)
Reason : Non-allowance for participation of stakeholders in the decision-making process is not an ethical guideline for managers. Hence from above discussion, we can infer that option (c) is correct. Options (a), (b), (d) and (e) are all ethical guidelines for managers.

33.
Answer : (d)
Reason : Matrix Structure is a type of departmentalization that superimposes a horizontal set of divisional reporting relationships onto a hierarchical functional structure. A matrix organization is sometimes extremely slow in responding to changes. This may be due to poor interpersonal skills of employees, or because the top-management wishes to retain complete control. Hence from above discussion, we can infer that option (d) is not an advantage of Matrix Structure.

34.
Answer : (a)
Reason : Departmentation by simple numbers was used to classify tribes, clans and armies in the past.

35.
Answer : (a)
Reason : Delegation is the process by which managers allocate a chunk of their work to subordinates along with sufficient authority to accomplish the work..

36.
Answer : (c)
Reason : Planning is defined as the process by which managers set missions and objectives, assess the future and develop courses of action to accomplish these objectives. Management that does a good job of planning will have direction and purpose, and planning is likely to minimize wasted effort. All this can occur, even if the objectives being sought are missed. Hence, from above discussion, we can infer that option (c) is a common misconception about planning.

37.
Answer : (a)
Reason : Question marks either need more investment or can be considered for withdrawal.

38.
Answer : (c)
Reason : Work specialization concerns making efficient use of workers' special skills.

39.
Answer : (b)
Reason : Majority of the decisions in an organization flows through the organization structure level by level. If managers are totally involved in all processes at their level, to their optimum capacity, the management system followed is bottom-up management system. (b) is correct answer.

40.
Answer : (c)
Reason : Shared standards is not a component of McKinsey’s 7-S framework.

41.
Answer : (a)
Reason : The continual analysis and measurement of actual operations against the established standards developed during the planning process is termed as controlling.

42.
Answer : (d)
Reason : A bureaucracy is a highly structured, formalized and impersonal organization. It has narrow spans of control, as there are multiple hierarchical levels. Hence, from above discussion, we can infer that option (d) is not a characteristic of bureaucracy. Options (a), (b), (c) and (e) are all characteristic of bureaucracy.

43.
Answer : (d)
Reason : The following are factors which force an organization to reorganize I. Merger or acquisition. II. Government policies. IV. Labor union demands.

44.
Answer : (c)
Reason : The final step in strategic planning is about monitoring and adopting strategic plans. It consists of a feedback process, which enables the manager to evaluate the effectiveness of the strategy in action. Hence from above discussion, we can infer that option (c) is correct.

45.
Answer : (d)
Reason : The eight key result areas in which Peter Drucker advises managers to set strategic goals include market standing, innovation, human resources, financial resources, physical resources, productivity, social responsibility, and profit requirements. Inventory control is not included.

46.
Answer : (a)
Reason : A well-managed company, according to Moskowitz, blurs distinction in ranks.

47.
Answer : (e)
Reason : Managers who deliver beyond the company’s expectations are not included in Jack Welch’s categorisation of four types of managers.

48.
Answer : (a)
Reason : Pre-conventional Level of Moral Development is influenced exclusively by personal interest. It is concerned with following rules only when it's of interest. Hence from above discussion, we can infer that option (a) is correct.

49.
Answer : (d)
Reason : Analyzing managerial performance to determine capability and readiness for promotion is not a function of the supervisory level of management.

50.
Answer : (d)
Reason : Scientific management conducts business or affairs by standards established, by facts or truths gained through systematic observation, experiment, or reasoning.

51.
Answer : (b)
Reason : Strategic plans are plans that apply to the entire organization, that establish the organization’s overall objectives, and that seek to position the organization in terms of its environment.

52.
Answer : (d)
Reason : In the first step of the extended model of the planning process, i.e., being aware of opportunity, an organization focuses on its strengths and weaknesses, competition, and customers’ needs.

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53.
Answer : (b)
Reason : Strategic plan is used to establish overall objectives for the organization and position the organization in terms of its environment. Facts for strategic planning are generally more difficult to gather than facts for tactical planning. Hence, from above discussion, we can infer that option (b) is correct.

54.
Answer : (b)
Reason : Identifying a problem is the first step in the decision-making process. Hence from above discussion, we can infer that option (b) is correct.

55.
Answer : (e)
Reason : In departmentation by time, workers may concentrate on narrow and specified technical aspects rather than the total system. Therefore, option (e) is the answer.

56.
Answer : (c)
Reason : The strengths and weaknesses of each alternative become obvious in “analyzing the alternatives” stage of the decision-making process.

57.
Answer : (b)
Reason : The behavioural science theories were mainly influenced by the concepts of psychology and sociology.

58.
Answer : (a)
Reason : Open-system focus is characteristic of organization that describes the degree to which the organization monitors and responds to changes in the external environment.

59.
Answer : (d)
Reason : The decision-making process concludes with the evaluation of decision effectiveness.

60.
Answer : (c)
Reason : As per Frederick Taylor, Soldiering refers to the practice of employees deliberately working at a place slower than their capabilities.

61.
Answer : (d)
Reason : Using the BCG matrix requires considering market shares and growth of markets in which products are selling.

62.
Answer : (a)
Reason : Management might strive to encourage ethical behavior in organizations in order to be morally correct; to gain a business advantage by having employees and customers perceive their company as ethical; and avoid possible costly legal fees.

63.
Answer : (b)
Reason : The major approaches utilized by managers to induce employees to accomplish the planned actions associated with implementation should normally include all of the given options except Coercion.

64.
Answer : (b)
Reason : Hawthorne effect is defined as the possibility that individuals selected to participate in a study may show higher productivity only because of the added attention they receive from the researchers rather than any other factor being tested in the study.

65.
Answer : (d)
Reason : In boundaryless organizations, sometimes called network organizations or virtual organizations, there is increased interdependence between the organization and its environment.

66.
Answer : (a)
Reason : A scalar chain defines the communication path in an organization.

67.
Answer : (c)
Reason : Linear programming is a quantitative technique used in decisions involving the allocation of scarce or limited resources to reach a particular objective. The objective can be maximization of profits or minimization of costs. Hence, from above discussion, we can infer that option (c) is correct.

68.
Answer : (b)
Reason : Logrolling refers to politically wheeling and dealing, which can displace sound thinking, when an individual’s pet project or vested interest is at stake. So it is a disadvantage of group decision-making. Hence, from above discussion, we can infer that option (b) is the answer. Options (a), (c), (d) and (e) are advantages of group decision-making.

69.
Answer : (b)
Reason : Subordinates having similar functions would have a tendency to increase the span of management in an organization.

70.
Answer : (d)
Reason : Locus of Control indicates the degree to which people believe they are masters of their own fate.
Hence from above discussion, we can infer that option (d) is correct.

71.
Answer : (b)
Reason : When a firm advertises that it uses only recycled paper products, it is being socially responsive.
Hence from above discussion, we can infer that option (b) is correct.

72.
Answer : (b)
Reason : The statement–Internal and external environmental forces do not have to be in conflict with one another; in this case they were complimentary - best characterizes what JetBlue was able to do with respect to the internal and external environments.

73.
Answer : (d)
Reason : Policies are standing plans that furnish broad guidelines for channeling management thinking in specified direction.

74.
Answer : (b)
Reason : Planning can’t eliminate change, but managers usually plan in order to anticipate changes and develop the most-effective response to changes.
Hence from above discussion, we can infer that option (b) is correct.

75.
Answer : (d)
Reason : A standing plan is used for activities that occur regularly over a period of time and are predetermined courses of action developed for repetitive situations. Hence, statement I is not true.

76.
Answer : (b)
Reason : A well-known approach to implementing goal theory is management by objectives. All statements about MBO are true except goal achievement has no preset time frame.

77.
Answer : (b)
Reason : Environmental scanning, forecasting, and benchmarking are the three most effective tools that managers can use to analyze their organization’s environment.
Hence from above discussion, we can infer that option (b) is correct.

78.
Answer : (b)
Reason : Porter’s five competitive forces are:
(i) Intensity of rivalry
(ii) Bargaining power of suppliers
(iii) Bargaining power of customers
(iv) Threat of new entrants
(v) Threat of substitutes
Threat of technological advances is not one of Porter’s five competitive forces.
Hence, from above discussion, we can infer that option (b) is the answer.

79.
Answer : (d)
Reason : With its Everyday Low Pricing (EDLP) strategy, Wal-Mart generally follows the cost leadership generic strategy to meet or beat competitors.

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80.
Answer : (a)
Reason : The corporate level would be appropriate to address the questions facing Mr. Anusheel Gupta as the purpose of corporate level strategy is to identify the business areas in which an organization will carry out its operations.

81.
Answer : (a)
Reason : Strong coordination among functions in R&D, product development and marketing is a ‘common organizational requirement’ with respect to Porter’s differentiation strategy.

82.
Answer : (b)
Reason : Bounded rationality differs from the rational model in that decision makers focus on easy-to-find choices.

83.
Answer : (c)
Reason : The fact that managers make consistent, value-maximizing choices within specified constraints is known as rational decision-making.

84.
Answer : (a)
Reason : Anil, in the example given, is operating under conditions of uncertainty.

85.
Answer : (c)
Reason : Programmed decisions require managers to exercise little discretion.

86.
Answer : (d)
Reason : The preference or utility theory is based on the belief that individual attitudes toward risk vary with events, with people and positions.

87.
Answer : (b)
Reason : Criticism of poor ideas is not allowed in a brainstorming session.

88.
Answer : (d)
Reason : The major difference between a Nominal Group technique and Delphi technique is that Nominal Group members are brought together for discussions on the problem whereas Delphi Group involves anonymous participation of experts. Other options (a), (b), (c) and (e) are not correct.

89.
Answer : (c)
Reason : Hybrid structure is a form of departmentation that adopts parts of both functional and divisional structures at the same level of management.

90.
Answer : (a)
Reason : Organization design decisions are typically made by senior management.

91.
Answer : (a)
Reason : Strategic Business Units (SBUs) are distinct little businesses set up as units in a larger company to ensure that a certain product or product line is promoted and handled as though it were an independent business.

92.
Answer : (b)
Reason : The benefits associated with engaging in the divisional approach include all but reduced specialization.

93.
Answer : (b)
Reason : Downsizing is the process of significantly reducing the layers of middle management, increasing the spans of control and shrinking the size of the workforce. Thus it results in reduction in the workforce and flatter organization structure.

94.
Answer : (d)
Reason: The following are advantages of ‘customer departmentation’
I. It encourages concentration on customer needs.
II. Develops expertise in customer area.

95.
Answer : (c)
Reason : Line authority is the employer-employee authority relationship that follows the chain of command.

96.
Answer : (c)
Reason : Delegate means to grant or confer. Thus, a manager grants or confers on subordinates certain tasks and duties along with sufficient authority, to accomplish these.
Explaining the relevance of delegated tasks to larger projects or to department or organization goals is most likely to increase the effectiveness of delegation.
Hence, from above discussion, we can infer that option (c) is correct.

97.
Answer : (b)
Reason : Referent power is best described as power derived from the satisfaction people receive from identifying themselves with the leader.

98.
Answer : (d)
Reason : Decentralizing an organization is a structural change aimed at reducing the cost of coordination, increasing the controllability of subunits, and increasing motivation.

99.
Answer : (c)
Reason : Centralization refers to the degree to which decision making is concentrated at a single point in the organization.
Hence, from above discussion, we can infer that option (c) is correct.

100.
Answer : (b)
Reason : Authority refers to the rights inherent in a managerial position to give orders and expect the orders to be obeyed.
Hence, from above discussion, we can infer that option (b) is correct.