Introduction to Management – I (MB111): April 2007:Suggested Answers

Suggested Answers
Introduction to Management – I (MB111): April 2007

1. Answer: (e)
Reason: The operational approach to management draws together concepts, principles, techniques, and
knowledge from other fields and managerial approaches.
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2. Answer: (a)
Reason: Legitimate power is the manager’s ability to influence behaviour because of the manager's formal
position within the organization. The extent of power is influenced by the type of organization.
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3. Answer: (b)
Reason: Process departmentation is the grouping of activities by workflow.
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4. Answer: (b)
Reason: The limitation of the socio-technical systems approach to management is that it emphasizes only on
blue-collar and lower level office work.
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5. Answer: (d)
Reason: Decision-making is a course of action selected as a way to deal with a specific problem.
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6. Answer: (c)
Reason: The argument ‘weakened international balance of payments’ points out that, since the cost of social
initiatives would be added to the price of products, multinational companies selling in domestic
markets would be at a disadvantage when competing with domestic companies not involved in social
activities.
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7. Answer: (e)
Reason: The key result areas in business suggested by Peter Drucker include.
I. Physical and financial resources.
II. Profitability.
III. Innovation.
IV. Worker performance and attitude. Hence, option (e) is the answer.
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8. Answer: (b)
Reason: Ego Strength is the strength of a person's convictions. Hence from above discussion, we can infer that
option (b) is correct.
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9. Answer: (e)
Reason: Corporate portfolio approach is a rational and analytical approach and involves the evaluation of the
various business units of an organization by its top management.
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10. Answer: (d)
Reason: Power is a broader concept; authority is a narrow concept. Hence, option (d) is not true.
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11. Answer: (c)
Reason: Delphi technique is a common form of group decision-making.
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12. Answer: (d)
Reason: Maintaining strategic control involves analyzing the affect of strategic actions on the organization.
Therefore, option (d) is the answer.
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13. Answer: (b)
Reason: Nominal group technique is a method that can be used to overcome the tendency toward conformity
in group decision-making.
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14. Answer: (a)
Reason: Managerial vacuum results when there are not many managers with general management skills or
abilities to fill the top positions.
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15. Answer: (c)
Reason: As the structure becomes flat and span of control grows wider the disadvantage is that there is a
danger of superior’s loss of control. Option (a) - superiors are forced to delegate is an advantage of a
wide span of control. Options (b), (d) and (e) are disadvantages of a tall structure and narrow span of
control.
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16. Answer: (a)
Reason: The management function of influencing, motivating, and directing human resources toward the
achievement of organizational goals is leading.
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17. Answer: (c)
Reason: The management function of organizing involves determining (I). Tasks to be performed. (II). How
tasks can best be combined into specific jobs. (III) Authority and reporting relationships within the
corporate hierarchy. Promotions and career planning are part of the staffing function. Hence, option
(c) is the answer.
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18. Answer: (b)
Reason: According to the rational decision making model, even though the decision-maker strives to be
completely rational, sometimes limitations of information, time and certainty, curb rationality.
Therefore, it cannot be stated that rational decision makers do not face any limitations of information,
time and certainty.
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19. Answer: (c)
Reason: The planning process begins with stating organizational objectives.
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20. Answer: (e)
Reason: Management is best understood as a process of reaching organizational goals, utilizing people and
other resources.
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21. Answer: (d)
Reason: Dogs are business units that do not hold out much economic purpose and as such the organization
must either not invest in them or should consider selling them as soon as possible.
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22. Answer: (b)
Reason: The process of assessing the organization's strategy and environmental demands and then determining
the appropriate organizational structure is called organizational design.
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23. Answer: (c)
Reason: In the ‘Management by objectives (MBO)’ process, subordinates are given autonomy to carry out
their activities and the ability to evaluate their performance during the implementing and maintaining
self-control stage.
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24. Answer: (d)
Reason: Analyzing the external environment and the organization’s resources are usually part of Strategic
planning process. Hence, from above discussion, we can infer that option (d) is correct.
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25. Answer: (d)
Reason: Customer Departmentation is done to service particular types of clients or customers. Coordination
between sales and other functions becomes difficult as Customer-based Departmentation is applicable
only to the sales function. Hence from above discussion, we can infer that option (d) is not true about
Customer Departmentation. Options (a), (b), (c) and (e) are all true about Customer Departmentation.
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26. Answer: (b)
Reason: Developing a culture of secrecy is not an important factor in building trust, as it creates an atmosphere
of suspicion among people. Hence, from above discussion, we can infer that option (b) is correct.
Options (a), (c), (d) and (e) are all important factors in building trust.
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27. Answer: (a)
Reason: Problems in structuring the organization is not a problem associated with a poor ‘span of control.
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28. Answer: (a)
Reason: Meeta is the only direct supervisor for all fourteen employees within her department. The practices of
her company stipulate that employees only have to report to one immediate supervisor. This concept
is referred to as unity of command.
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29. Answer: (d)
Reason: Span of control is the concept that defines the number of subordinates that report to a manager and
that indirectly specifies the number of levels of management in an organization. Hence from above
discussion, we can infer that option (d) is correct.
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30. Answer: (a)
Reason: The divisional approach organizes employees into units based on common products, services, or
markets.
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31. Answer: (b)
Reason: A review helps a manager to
I. Identify deviations and take necessary corrective actions.
II. Compare outcomes with expected results.
Statement (III) - examining advantages and disadvantages of alternative plans is done while
evaluating the alternative plans.
Statement (IV) - laying down the limitations within which the plans are to be carried out is done while
determining planning premises. Hence, option (b) is the answer.
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32. Answer: (e)
Reason: All the stated reasons cause line-staff conflict as seen from a line personnel perspective.
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33. Answer: (c)
Reason: Risk analysis includes
I. Risk assessment.
II. Risk management.
III. Risk communication.
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34. Answer: (e)
Reason: Centralisation refers to the degree to which decision-making is concentrated at a single point in the
organization.
The characteristic that makes centralisation more appropriate is when lower level managers are
reluctant to be involved in decision-making.
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35. Answer: (d)
Reason: Goals are important for an organization because they
I. Direct the activities of the organization.
II. Encourage focused work
III. Act as the motivational force for employees.
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36. Answer: (b)
Reason: An SBU formulates its own interdependent plans, which are different from those of other SBUs.
Therefore, option (b) is not true about why an organization adopts a strategic business unit (SBU)
structure.
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37. Answer: (b)
Reason: Linear programming technique cannot be applied to pricing decisions, which are better decide
through simulation.
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38. Answer: (a)
Reason: The general type of managerial role identified by Mintzberg that includes the specific roles of
entrepreneur, disturbance handler, resource allocator, and negotiator, is decisional role.
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39. Answer: (b)
Reason: Statement (II) – job performance depends on the individual worker is a pre-judgement of the
Hawthorne Studies. The other two statements are findings.
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40. Answer: (d)
Reason: The generic strategies developed by Porter to illustrate the kind of strategies managers might develop
to make their organizations more competitive are as follows:
II. Cost leadership.
III. Differentiation.
IV. Focus.
Hence, from above discussion, we can infer that option (d) is correct.
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41. Answer: (c)
Reason: In an organic organization a large amount of collaboration occurs and decision-making authority is
decentralized. There are few rules, and duties are adaptable.
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42. Answer: (a)
Reason: Functional departmentalization groups jobs by tasks they perform. Hence from above discussion, we
can infer that option (a) is correct.
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43. Answer: (c)
Reason: A learning organization is typically least characterized by rigid job procedures.
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44. Answer: (c)
Reason: Charles Babbage advocated the division of labor.
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45. Answer: (a)
Reason: Option (a) is not an appropriate technique for staff personnel to solve line-staff conflict as staff
personnel should be proactive and advice line managers when they feel it necessary, rather than being
passive and waiting for line managers to ask for it.
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46. Answer: (c)
Reason: The intensity of an ethical issue is greater in the following cases:
I. The number of people harmed is large.
II. Everyone agrees that the action is wrong.
IV. The person feels close to the victims.
The intensity of an ethical issue is greater when the consequences of the action may be felt
immediately. Therefore, statement (III) does not hold good.
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47. Answer: (c)
Reason: When managers engage in production planning and control, which of the following techniques do
they use the Gantt chart to determine what activities have to be done, the order in which they are to be
done, who is to do each, and when they are to be completed.
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48. Answer: (e)
Reason: The authority relationship between functions which have a direct bearing on the accomplishment of
organizational objectives and functions which facilitate or assist the work of those who have a direct
bearing on the achievement of organizational objectives is referred to as Line-staff relationship.
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49. Answer: (e)
Reason: The following can be stated about projects:
I. It helps in precise allocation of duties and effective control and easy implementation of the plan.
III. A project may be a component of a program, or it may be a self-contained, single-use plan.
Statement (II) is not correct about projects as a project may be similar to a program, but is smaller in
scale and less complex.
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50. Answer: (c)
Reason: The incremental model states that managers put in the least possible effort – only enough to reduce
the problem to a tolerable level.
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51. Answer: (b)
Reason: Ms. Shah is currently addressing her planning efforts at the business level.
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52. Answer: (d)
Reason: The approaches for selecting among alternatives, in the decision-making process are
I. Experience.
II. Experimentation.
III. Research and analysis.
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53. Answer: (a)
Reason: Economies of scale and the ability to coordinate interdependent projects is the primary strength of the
matrix structure.
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54. Answer: (e)
Reason: Major social responsibility areas in which business can become involved include urban affairs,
consumer affairs, pollution control, and natural resource conservation.
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55. Answer: (e)
Reason: An organization where decisions are made by those employees closest to the problems is said to be
following decentralization.
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56. Answer: (c)
Reason: Many decisions fail after the final choice has been made because people affected failed to accept the
solution.
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57. Answer: (d)
Reason: Non-programmed decisions are those that deal with unusual or exceptional problems. They are the
decisions for which predetermined decision rules are impractical because the situations are novel
and/or ill-structured. So, we can say that Arjun excels at deriving non-programmed decisions.
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58. Answer: (b)
Reason: The main components of informal organization are:
I. General nature – unofficial.
IV. Guidelines for behavior – norms.
The following are components of a formal organization:
II. Sources of control – rewards and penalties.
III. Source of leader power is – delegated by the management.
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59. Answer: (c)
Reason: According to Henri Fayol’s principles, Espirit de Corps means sense of union.
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60. Answer: (b)
Reason: Statements (II) and (V) describe the principled level of the stages of moral development.
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61. Answer: (a)
Reason: Functional authority is the authority to control the functions of other departments, related to specific
tasks. Hence, from above discussion, we can infer that option (a) is correct.
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62. Answer: (e)
Reason: Division of labor enables workers to gain specialized knowledge of a single task, and not crossfunctional
expertise.
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63. Answer: (d)
Reason: Lack of self-confidence is the delegant’s aspect that affects delegation of authority. Therefore, option
(d) is the answer.
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64. Answer: (a)
Reason: The following statements aare characterisitics of a closed system:
I. It is perfectly deterministic and predictable.
II. There is no exchange between the system and the external environment.
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65. Answer: (c)
Reason: The aim of the principle of hierarchy of authority is to ensure the pursuit of organizational goals by
the employees in a coordinated manner.
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66. Answer: (e)
Reason: Management earmarking $30 million for project A and $20 million for Project B is indicative of
resource allocation.
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67. Answer: (a)
Reason: When decisions must be made with limited information because full knowledge of the problem is
unavailable and the probability of outcomes is unknown, the condition of uncertainty exists.
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68. Answer: (d)
Reason: After all factors have been determined, weights have been assigned, and alternatives have been
identified, the next step in decision-making is to implement the alternative.
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69. Answer: (c)
Reason: Rate of change determines the degree to which policies can be formulated and the stability that can be
achieved in the policies.
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70. Answer: (b)
Reason: Plans may be updated, modified or replaced by new ones as the demand of the situation may be. Plans
can be modified or changed, but never abandoned. This best reflects that planning is a perpetual
process.
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71. Answer: (c)
Reason: An objective is the aim of an action. It implies a specific work to be accomplished within a given
period of time. Short-term objective is developed to accomplish a work in a very short period of time.
Hence, from above discussion, we can infer that option (c) is correct.
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72. Answer: (d)
Reason: Systematic evaluation of alternatives in the decision-making process is usually done on the basis of
five general criteria. They are feasibility, quality, acceptability, costs and ethics. Hence, from above
discussion, we can infer that option (d) is correct.
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73. Answer: (c)
Reason: Waiting lines occur when demand for service exceeds the service facilities.
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74. Answer: (e)
Reason: The art of successful organizational planning has several key factors but utilization of only numerical
methodologies is not considered a key factor.
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75. Answer: (b)
Reason: Organizational structure is defined as a formal framework by which job tasks are divided, grouped,
and coordinated. Hence from above discussion, we can infer that option (b) is correct.
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76. Answer: (c)
Reason: Opportunity is an external condition that that an organization can exploit to improve its
competitiveness and get ahead of its competitors.
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77. Answer: (c)
Reason: The following statements are true with respect to the nature of strategies and policies:
I. The key function of strategies and policies is to give a specific direction to plans.
II. Strategies and policies serve as a guide in furnishing a framework for planning.
III. If strategies are to be effective, they must be supported by effective tactics.
Statement (IV) is not true as strategies and policies have an effect on all areas of management.
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78. Answer: (e)
Reason: The prominent reason/s for the decline of departmentation by number is/are:
I. It is useful only at the lowest level of the organization structure.
III. It proves ineffective when any factor other than just the number of people performing similar
duties gains importance.
Hence, option (e) is the answer.
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79. Answer: (a)
Reason: Intensity of rivalry refers to competition amongst organizations in order to gain the top position in the
industry.
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80. Answer: (b)
Reason: First level managers are managers at the lowest level of the hierarchy who are directly responsible for
the performance of operational employees.
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81. Answer: (e)
Reason: A cadre based structure is not a major structural alternative which organizations can adopt.
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82. Answer: (d)
Reason: Planning involves defining the organization’s goals, establishing an overall strategy for achieving
those goals, and developing a comprehensive set of plans to integrate and coordinate organizational
work. Hence from above discussion, we can infer that option (d) is correct.
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83. Answer: (e)
Reason: A Budget is a formal quantitative statement of resources allocated for planned activities over
stipulated periods of time. Budgeting is an important managerial activity because it forces financial
discipline and structure throughout the organization.
Hence from above discussion, we can infer that option (e) is correct.
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84. Answer: (d)
Reason: Organization Chart is a vital tool for providing information about organizational relationships. It
shows authority relationships and neglects significant informal and informational relationships. Hence
from above discussion, we can infer that option (d) is false with respect to Organization Chart.
Options (a), (b), (c) and (e) are all true with respect to Organization Chart.
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85. Answer: (b)
Reason: Boundary spanning sub-system consists of jobs that require the interaction of personnel with the
general environment.
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86. Answer: (c)
Reason: Marketing strategies are designed to make customers aware of company’s products and services.
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87. Answer: (c)
Reason: According to Kreitner, "Centralization is the relative retention of decision-making authority by top
management." Hence, from above discussion, we can infer that option (c) is correct.
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88. Answer: (d)
Reason: The following are the characteristics of organization culture: member identity, distinctiveness,
observed behavioral regularities, variable strength and dominant and stable values. Hence, option (d)
is not a characteristic of organization culture.
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89. Answer: (c)
Reason: The following constitutes ‘potential threats’ for an organization:
I. A shift in buyer needs and tastes away from the industry’s product.
II. Loss of sales to substitute products.
IV. Costly new regulatory requirements.
Statement (III) - sub par e-commerce systems and capabilities relative to rivals and statement (V) -
higher overall unit costs relative to key competitors are potential resource weaknesses and not threats.
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90. Answer: (b)
Reason: MBO is the joint setting of goals and objectives by superiors and subordinates and clarifying on the
objective itself.
The final step of a typical MBO process is that successful achievement of objectives is reinforced by
performance based rewards.
Hence, from above discussion, we can infer that option (b) is correct.
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91. Answer: (e)
Reason: The repetitive process by which an organization receives inputs from its environment, processes them
and produces the output required by a system is called Cycle of events.
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92. Answer: (a)
Reason: When managers delegate authority, they must allocate commensurate responsibility.
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93. Answer: (c)
Reason: Planning can be defined as the process by which managers set missions and objectives, assess the
future, and develop courses of action to accomplish these objectives. However, it need not increase
the amount of time available for other managerial functions. Hence, from above discussion, we can
infer that option (c) is correct. Options (a), (b), (d) and (e) are all potential advantages of planning.
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94. Answer: (d)
Reason: David is most probably at the stage of checking for organizational congruence.
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95. Answer: (d)
Reason: Duplication of activities and resources is a major disadvantage of the divisional structure. Option (a)
is not a disadvantage as unlike the functional structure where managers specialize in a particular area
managers in a divisional structure are exposed to various functional areas in their divisions. Option
(b) is not a disadvantage because in a divisional structure coordination is simplified as each division is
similar to an organization. Option (c) is not a disadvantage as divisional structure provides a good
training ground for managers and hence there is no managerial vacuum. Option (e) is not a
disadvantage because in a divisional structure each unit can respond quickly as it can make
independent decisions.
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96. Answer: (a)
Reason: The briefing stage includes discussing the areas of the task that are sensitive to error or risk. Options
(b), (c) and (d) are included in the progress monitoring stage. Option (e) is included in the evaluation
stage.
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97. Answer: (a)
Reason: Informal communication is also referred to as grapevine.
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98. Answer: (d)
Reason: Sometimes it is necessary to deviate from the plans. Plans need to be redesigned and adjusted based
on deviations.
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99. Answer: (c)
Reason: The most significant ways that culture is transmitted to employees consist of shared beliefs, values,
rituals, stories, myths and specialized language that foster a feeling of community among organization
members. Hence from above discussion, we can infer that option (c) is correct.
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100. Answer: (a)
Reason: The limitation of Weber’s bureaucracy is that it destroys individual creativity and the flexibility to
respond to complex changes in the environment.
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