Introduction to Management - I (MB111): October 2006:Suggested Answers

Suggested Answers Introduction to Management - I (MB111): October 2006

1.
Answer : (a)
Reason : The step of formulating supporting plans in the planning process, involves plans to buy equipment, materials, and hire and train worker.
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2.
Answer : (a)
Reason : When managers delegate authority, they must allocate commensurate responsibility.
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3.
Answer : (a)
Reason : The functions of management include planning, organizing, staffing, leading, and controlling. Influencing is not a function of management.
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4.
Answer : (b)
Reason : Making proper use of the staff abilities is an appropriate technique for line personnel in reducing line-staff conflict. Hence, from above discussion, we can infer that option (b) is correct.
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5.
Answer : (c)
Reason : Power requires no formal position in an organization.
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6.
Answer : (d)
Reason : The principle which intends to eliminate the practice of “passing the buck”, is known as downward delegation of authority. In downward delegation, a superior has the right to get tasks accomplished by his subordinates, but the responsibility remains with the superior.
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7.
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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8.
Answer : (a)
Reason : When Sony first introduced the laser disk as a new way to view movies, it was classified as a question mark.
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9.
Answer : (b)
Reason : The following are advantages of organization charts:
I. They provide a visual map of the chain of command.
II. They help managers identify inconsistencies in lines of authority.
Relationships between subordinates and superiors are essentially determined by means of reporting relationships and not merely organization charts. Hence, statement (III) is not an advantage.
Statement (IV) – many charts show ideal structures, rather than what they really are is a limitation and not an advantage.
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10.
Answer: (d)
Reason : Roles are not associated with the study of individual characteristics. Hence from above discussion, we can infer that option (d) is correct. Options (a), (b), (c) and (e) are all associated with individual characteristics.
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11.
Answer: (c)
Reason : “Generating more alternatives” is an advantage of group decision-making, not a disadvantage.
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12.
Answer: (e)
Reason : Executives’ track record is not a factor to be considered in external environmental analysis.
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13.
Answer: (c)
Reason : The Better Than Ordinary Fast Food Company desires to focus on the varying customer needs found at its many operations across the country. This organization would probably derive the most benefit from engaging in geographic-based divisions within its structure.
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14.
Answer : (d)
Reason : The original source of an organization’s culture is most strongly associated with the vision of the organization’s founder(s). Hence, from above discussion, we can infer that option (d) is correct.
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15.
Answer : (e)
Reason : A geographical structure is designed to serve geographic areas. A geographical structure helps managers get extensive knowledge of diverse activities. Hence, option (e) is not true. Attaining specialized knowledge in a particular area is an advantage of the functional structure.
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16.
Answer : (b)
Reason : The final responsibility for organizational planning rests with the chief executive.
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17.
Answer : (c)
Reason : Centralization will be adopted when few functions rely on lower-level decision making.
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18.
Answer : (c)
Reason : Statement (I) – objectives and planning programs are co-existential and co-relational and statement (III) – a manager can effectively pursue only a few objectives, are true about objectives. Statement (II) is not true as goals and plans are rarely linear, in fact they are interlocked and form a network. Statement (IV) not true, as objectives require deadlines for results to be accomplished. Therefore option (c) is the answer.
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19.
Answer : (c)
Reason : Hari has expert power.
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20.
Answer : (c)
Reason : An office supply firm that has three departments based upon retail, wholesale, and governmental customers, is using customer departmentalization.
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21.
Answer : (b)
Reason : The process of designing and maintaining an environment in which individuals, working together in groups, effectively accomplish selected aims is termed as management.
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22.
Answer : (c)
Reason : Acceptability refers to the degree of support extended to the chosen alternative by the decision makers and those who will be affected by its implementation.
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23.
Answer : (e)
Reason : Weber’s bureaucracy theory was supposed to be an epitome of efficiency, but in actual practice, it reflected an opposite picture. In practice, any organization that adopted a bureaucratic approach was found to slow, insensitive to individual needs and grossly inefficient. Hence (e) is correct answer.
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24.
Answer : (c)
Reason : The following are reasons for line-staff conflict from the viewpoint of staff personnel:
I. Line managers do not seek input from staff personnel.
III. Line managers resist new ideas.
Statement (II) and (IV) are reasons for line-staff conflict from the viewpoint of line personnel.
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25.
Answer : (a)
Reason : The two managerial practices that emerged from Taylor’s scientific management are piece-rate incentive system and time and motion study.
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26.
Answer : (a)
Reason : Environmental analysis is the required first step in incorporating quality into strategic planning. Hence from above discussion, we can infer that option (a) is correct.
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27.
Answer : (c)
Reason : Employee satisfaction is not an advantage of the functional structure as it (functional structure) leads to boredom and monotony.
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28.
Answer: (d)
Reason : The following statements are true about the satisficing decision model:
I. Managers seek alternatives only until they identify one that looks satisfactory.
III. It is appropriate when the cost of searching for a better alternative exceeds the potential gain that is likely by following the satisficing approach.
Statement (II) Managers search for the perfect or ideal decision is true with respect to rational decision making.
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29.
Answer: (c)
Reason : Delphi technique is a group decision-making technique that involves a group of experts responding to a questionnaire.
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30.
Answer: (c)
Reason : Span of control refers to the number of subordinates, a superior can supervise efficiently and effectively. Wide spans increase flexibility, as there are fewer hierarchical levels. Hence, from above discussion, we can infer that option (c) is not true about span of control. Options (a), (b), (d) and (e) are all true about span of control.
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31.
Answer: (e)
Reason : High quality solutions are not attainable due to goals being unclear is not a limitation of rational decision making.
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32.
Answer: (b)
Reason : Many aspects of management cannot be explained in terms of models. This is a limitation of the management science approach.
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33.
Answer: (b)
Reason : Satisficing model says, “the ability of managers to be completely rational in making decisions is limited by certain factors”.
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34.
Answer: (c)
Reason : Maintaining a large span of control within an organization is most effective in all situations except when jobs are similar but have varying performance measures.
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35.
Answer: (b)
Reason : Tina is operating under certainty.
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36.
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 guideline 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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37.
Answer: (c)
Reason : Determining the problem involves scanning, categorization and diagnosis.
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38.
Answer: (d)
Reason : Most managers tend to be risk averters when stakes are high and they tend to be gamblers when stakes are low. Hence, statement (III) is not true and option (d) is the answer.
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39.
Answer: (b)
Reason : Matrix organizational structure violates the ‘unity of command’ principle as stated by Henry Fayol.
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40.
Answer: (c)
Reason : In the strategic management process, any organizational skills or resources that are exceptional or unique are the organization’s Core competencies. Hence from above discussion, we can infer that option (c) is correct.
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41.
Answer: (c)
Reason : Procedures are standing plans. They are guides to action that explain in detail the manner in which activities are to be performed.
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42.
Answer : (c)
Reason : Unity of command is a management concept that recommends that employees should have one and only one boss.
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43.
Answer : (c)
Reason : The following are strengths of the divisional structure:
II. It can respond quickly as it can make independent decisions and does not need to coordinate with other divisions.
III. Coordination is simplified as each division is similar to an organization containing various functions.
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44.
Answer : (e)
Reason : The Garbage-can approach to decision-making holds that managers behave in a random manner in making non-programmed decisions. That is, decisions occur by chance and depend on such factors as the participants who happen to be involved in decision-making, the problems about which they happen to be concerned at the moment. (e) is correct answer.
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45.
Answer : (e)
Reason : In case of Product Departmentation, managerial costs are higher because of the decentralization of various activities such as personnel, production, sales and accounts. Hence from above discussion, we can infer that option (e) is a disadvantage of Product Departmentation. Options (a), (b), (c) and (d) are all advantages of Product Departmentation.
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46.
Answer : (d)
Reason : The major disadvantage of the matrix structure is its propensity to foster power struggles.
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47.
Answer : (d)
Reason : The management function that specifies goals to be achieved and decides in advance the appropriate actions to achieve those goals is planning.
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48.
Answer : (d)
Reason : The most appropriate reason for a manager to plan is that planning gives direction to an organization.
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49.
Answer : (c)
Reason : Strategy is a plan designed to reach long-term objectives.
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50.
Answer : (d)
Reason : Tommy has a remarkable ability to get his employees to do what he directs. He is an upper level manager at the company and is very gifted with business knowledge. The employees fear that if they do not act as directed Tommy would give them a poor work reference. We can say Tommy has Coercive power.
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51.
Answer : (e)
Reason : An effective organizing effort involves rationale for the orderly use of management system resources, responsibility, authority, and delegation.
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52.
Answer : (b)
Reason : The effect of planning on managers is that it forces them to react to change.
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53.
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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54.
Answer : (c)
Reason : Bargaining power of suppliers, as described by Porter, is high when
II. There are few players in the industry.
III. There are no substitutes for their products or services.
When (I) customers make bulk purchases and (IV) customer’s purchases form a large chunk of the seller’s sales, then bargaining power of buyers is high.
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55.
Answer : (d)
Reason : Organizational Culture is the collection of shared beliefs, values, rituals, stories, myths and specialized language that foster a feeling of community among organization members. It does not focus on profit. Hence, from above discussion, we can infer that option (d) is not a feature of Organizational Culture. Options (a), (b), (c) and (e) are all characteristics of Organizational Culture.
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56.
Answer: (c)
Reason: Socialization refers to the process that helps new employees adapt to the organization’s culture.
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57.
Answer : (c)
Reason : Setting of objectives is done over a long span of time, which delays the decision-making is not true about MBO as setting of objectives is done over a short span of time, which may not allow adequate interaction among different levels of an organization.
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58.
Answer : (d)
Reason : Conceptual skills require that management view the organization as a whole.
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59.
Answer: (a)
Reason : The principle of order implies that the right person is placed in the right job and everything is kept in the right place to facilitate smooth coordination of activities.
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60.
Answer: (e)
Reason : The following are organizational factors that affect the delegation of authority I. Policy towards centralization or decentralization. II. Availability of managerial personnel. III. Type of control mechanisms. Hence, option (e) is the answer.
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61.
Answer: (a)
Reason : The following are factors that help measure social responsiveness:
I. Valuing diversity
II Fund-raising.
III. Direct Corporate investment.
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62.
Answer: (d)
Reason : The following are advantages of a hybrid structure:
I. Specific competency and economies of scale with focus on products, services and markets.
II. It strikes a balance between divisional and corporate goals.
III. It facilitates flexibility in handling diverse product lines, territories or differing needs of customers.
Statement (IV) is an advantage of the matrix structure.
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63.
Answer: (a)
Reason : A problem with groupthink is that no one is actually in charge of making the final decision or outcome, which results in ambiguous responsibility.
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64.
Answer: (a)
Reason : Henry Fayol’s principle of division of labor states that ‘work specialization leads to efficiency of operations’.
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65.
Answer: (c)
Reason : The following are postulates of the maturity-immaturity theory proposed by Chris Argyris:
I. Chris Argyris believed that people progress from a stage of immaturity and dependence to a state of maturity and independence.
II. Many organizations tend to keep their employees in a dependent state thereby, blocking further progress and keeping an individual from realizing his/her true potential.
Hence, option (c) is the answer.
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66.
Answer: (e)
Reason : Sanctions serve as sources of control in an informal organization. Therefore, option (e) is incorrect.
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67.
Answer: (a)
Reason : It requires a skilled group facilitator is a disadvantage of the nominal group process of decision making.
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68.
Answer: (e)
Reason : MBO is the joint setting of goals and objectives by superiors and subordinates and clarifying on the objective itself. Traditional objective setting is ‘top down’ only, while MBO is both a ‘top down’ and ‘bottom up’ process. Hence, from above discussion, we can infer that option (e) is correct.
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69.
Answer : (d)
Reason : The following statements pertain to linear programming:
I. Application of this technique involves two or more activities competing for limited resources.
II. It can be applied to product mix decisions, inventory management problems, scheduling production facilities etc.
Statement (III) pertains to decision trees.
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70.
Answer : (d)
Reason : The following constitute ‘potential opportunities’ for an organization:
III. Integrating forward or backward.
IV. Alliances/joint ventures that expand the company’s market coverage.
V. Expanding the company’s product line to meet a broader range of customer needs.
Statements (I) and (II) constitute potential resource strengths for an organization.
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71. Answer : (b)
Reason : Primum Non-Nocere means above all, doing no harm. It serves as an ethical guideline for managers. Hence from above discussion, we can infer that option (b) is correct.
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72.
Answer: (e)
Reason : Portfolio analysis is not a step involved in the strategic planning process.
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73.
Answer : (b)
Reason : The following are subsystems that are frequently an integral part of ‘management by objectives’:
I. Manpower planning.
II. Compensation.
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74.
Answer : (d)
Reason : According to Taylor, workers indulged in soldiering for which of the following main reasons?
I. Workers feared that if they increased their productivity, other workers would lose their jobs.
II. Faulty wage systems employed by the organization encouraged them to work at a slow pace.
III. Outdated methods of working handed down from generation to generation led to a great deal of wasted efforts.
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75.
Answer : (b)
Reason : Line-staff conflict is not a situational variable on which an organization’s position on the decentralization-centralization continuum depends.
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76.
Answer : (a)
Reason : Emphasis on short-term goals is not a factor that would make Management by Objectives (MBO) more effective
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77.
Answer : (d)
Reason: Living up to what is expected by people who are close to oneself describes the conventional level of moral development. Options (a) and (c) describe the pre-conventional stage. Options (b) and (e) describe the principled stage.
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78.
Answer: (c)
Reason : As per Henry Mintzberg, the following roles constitute the decisional role: I. Disturbance handler, II. Resource allocator, III. Negotiator. (IV) – figurehead and (V) liaison constitute the interpersonal role.
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79.
Answer : (b)
Reason : The various steps in the planning process are as follows (i) Analyse opportunities. (ii) Establish organizational objectives. (iii) Determine planning premises. (iv) Identify alternatives. (v) Evaluate alternatives by weighing them in the light of premises and goals. (vi) Select the best alternative. (vii) Implement the plan. (viii) Review the implemented plan. Hence, from above discussion, we can infer that option (b) is correct.
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80.
Answer : (c)
Reason : The characteristic of decision-making under risk is that the decision-maker has incomplete information about available alternatives, but has a good idea of the probability of particular outcomes for each alternative. Hence, from above discussion, we can infer that option (c) is correct.
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81.
Answer: (c)
Reason : The following constitute ‘potential resource weaknesses’ for an organization:
I. A weak balance sheet burdened with too much debt.
III. Sub par e-commerce systems and capabilities relative to rivals.
V. Not attracting customers as rapidly as rivals due to ho-hum product attributes.
Statement (II) and (IV) are potential threats to an organization.
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82.
Answer: (a)
Reason : Silent monitor refers to the use of an open system of rating an employee’s work on a daily basis, recommended by Robert Owen
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83.
Answer: (d)
Reason : The appropriate span of control for managers does not, in any way, depend on expenses incurred by the organization.
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84.
Answer: (d)
Reason : The following statements about grapevine are true:
I. At times information shared through the grapevine may only be gossip.
IV. It survives on information that is not available to the entire group.
V. It facilitates quick and effective communication.
Grapevine is not bound by the authority relationships defined by the organization. Hence statement (II) is not true. Informal organization or grapevine enhances the cohesiveness of a formal organization. Hence, statement (III) is not true.
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85.
Answer: (e)
Reason : If unity of command were to be applied without exception, functional authority would be exercised only by line managers. Hence, option (e is incorrect and is the answer.
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86.
Answer: (d)
Reason : An organization’s towards adjusting and maintaining itself in an optimal situation or a state of equilibrium over a period of time is called dynamic homeostasis.
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87.
Answer: (c)
Reason : The following statements are true with respect to power and the types of power:
I. Legitimate power is similar to authority and is very important in the organizational context.
III.Referent power functions at superior and peer levels.
IV.Coercive power is used to ensure a minimum standard of performance.
Statement (II) is not true as legitimate power works both downwards and upwards.
Statement (V) is not true as power can be institutional or impersonal.
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88.
Answer: (b)
Reason : The following statements pertain to ‘procedures’:
I. They ensure uniformity in action.
IV. They help in streamlining the administrative activities of an organization.
Statement (II) – They are the most general form of a standing plan – pertains to policies. Statement (III) – They are the simplest type of standing plans – pertains to rules.
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89.
Answer: (b)
Reason : Centralization creates low-cost shared resources. Hence, option (b) is not an advantage of decentralization.
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90.
Answer: (b)
Reason : Differentiation strategy involves attempting to offer products and services that are considered unique in the industry. Hence, from above discussion, we can infer that option (b) is correct.
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91.
Answer : (e)
Reason : Encouraging organizations to adopt the most rational and risk-free option is a limitation of strategic planning and not a benefit. Therefore, option (e) is the answer.
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92.
Answer : (d)
Reason : The following are approaches to that aid in developing better corporate strategies:
I. Values-based approach.
II. Corporate portfolio approach.
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93.
Answer : (d)
Reason : Social responsibility is defined as a business firm’s obligation, beyond that required by law and economics, to pursue long-term goals that are good for society.
Balance of Responsibility and Power is an argument for Social Responsibility of Business.
Hence from above discussion, we can infer that option (d) is correct.
Options (a), (b), (c) and (e) are all arguments against Social Responsibility of Business.
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94.
Answer : (b)
Reason : In the temporary overlay stage (stage 2) managerial integrator positions are established so that individuals can take responsibility for particular projects, oversee product launches or deal with issues where coordination across functional departments is necessary.
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95.
Answer : (e)
Reason : Departmentation is required for the following reasons:
I. It facilitates control, coordination and communication.
III. It defines roles of each individual and identifies competencies vital for managerial decisions.
IV. It provides a platform necessary for building loyalty among members of the organization.
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96.
Answer : (c)
Reason : Behavioral thinker Mary Parker Follet’s contribution to management includes focus on group influences and emphasis on the concept of power sharing and integration.
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97.
Answer : (c)
Reason : Tactical plans indicate actions that major departments and sub-units should take to execute a strategic plan. Hence, option (c) is not true.
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98.
Answer : (c)
Reason : Middle level managers would specifically engage in setting (I) division objectives and (IV) specific overall organization objectives such as those pertaining to key result areas. Top level managers would set (II) overall organization objectives, while lower level managers would set (III) individual performance objectives.
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99.
Answer : (d)
Reason : Span of management includes Statement (III) – Determination of how many people working with each other report to a single manager. Statement (IV) – Determination of the number of individuals a manager can effectively supervise. Hence, option (d) is the answer.
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100.
Answer : (b)
Reason : According to contingency approach to management, managerial practice depends on circumstances.
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