Suggested Answers Introduction to Management (MB111): January 2006

Suggested Answers
Introduction to Management (MB111): January 2006
1. Answer : (c)
Reason : Programmed decisions do not require managers to exercise discretion.

2. Answer : (d)
Reason : Transformational leader is the one who motivates individuals to perform beyond normal
expectations by inspiring subordinates to focus on broader missions that transcend their
own immediate interests, to concentrate on intrinsic higher-level goals and to have
confidence in their abilities to achieve the extraordinary missions articulated by the leader.
Hence, option (d) is correct.

3. Answer : (c)
Reason : (II), (IV), (I), (III) is the correct sequence of the steps involved in value engineering.
Therefore, option (c) is the correct answer.

4. 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.

5. Answer : (b)
Reason : Groupthink is a form of conformity whereby group members withhold information or
discussion in order to give the appearance of agreement.

6. Answer : (c)
Reason : (I) Overemphasizing short-term production as opposed to long-term production and (III)
Inflexibility are the barriers to successful controlling. Periodic review of standards is
essential to implement successful controls. Identification of only major exceptions allows
managers to benefit from the time-honored principle of management by exception by
identifying only those areas that require their attention.

7. Answer : (b)
Reason : All options except (b) establishing planned activities, are steps in the control process.

8. 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, option (e) is correct.

9. Answer : (b)
Reason : In Japanese Management style, the staffing position is characterized by
(I) Young people hired out of school.
(III) Slow promotion through ranks.
(IV) Promotions based on multiple criteria.
Hence, (b) is the correct answer.

10. Answer : (d)
Reason : Ohio State Studies called the dimensions of leadership behavior “initiating structure” and
“consideration”. Initiating structure is the degree to which a leader 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. (a) University of Michigan studies
confirmed the usefulness of an employee-centered approach when compared to other
approaches like job-centered or production-centered approach. (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)
Fiedler’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.

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11. Answer : (b)
Reason : Creation of “assistant-to” positions is an on-the-job training technique.

12. Answer : (a)
Reason : Workplace culture sets its own production standards is the finding of the Hawthorne
studies. Statements (II) and (III) are pre-judgements of the Hawthorne studies.

13. Answer : (b)
Reason : The bargaining power of buyers is high when their purchases form a large chunk of the
sellers’ total sales. The remaining options are factors that make buying power of suppliers
high. Hence, option (b) is the answer.

14. Answer : (b)
Reason : Differentiation strategy involves attempting to offer products and services that are
considered unique in the industry. Hence, option (b) is correct.

15. Answer : (e)
Reason : All the stated reasons cause line-staff conflict as seen from the line personnels’ perspective.

16. Answer : (a)
Reason : Strategic controls are probably least useful when exact measurement is difficult and the
environment is fluctuating rapidly because strategic control involves monitoring critical
environment factors to ensure that strategic plans as implemented as intended.

17. Answer : (b)
Reason : Mr. Amit is a theory Y manager as theory Y supports self-direction and self-control by the
subordinates and the integration of individual needs with organizational goals.

18. Answer : (c)
Reason : Operations management oversees the transformation process that converts resources such
as labor and raw materials into finished goods and services. Hence, from above discussion,
we can infer that option (c) is true regarding operations management. Options (a), (b), (d)
and (e) are false regarding operations management.

19. 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, option (d) is false with respect to organization chart.
Options (a), (b), (c) and (e) are true with respect to organization chart.

20. 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.

21. Answer : (b)
Reason : Tina, in the example given, is operating under conditions of certainty.

22. 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.

23. Answer : (a)
Reason : Organizational development relies on the use of interventions, which are change strategies
developed and initiated with the help of a change agent.

24. Answer : (a)
Reason : In an open system, negative entropy pertains to the ability of a system to repair itself,
survive, and grow by importing resources from its environment and transforming them into
outputs.

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25. Answer : (b)
Reason : The given situation is best described as a nonprogrammed decision. Non-programmed
decisions deal with unusual or exceptional problems, which connote a kind of uncertainty.

26. Answer : (c)
Reason : Enterprise self-audit appraises an organization’s position and helps it determine where it is,
where it is heading with its current plans and programs, whether it is meeting its
objectives, and whether any revision of plans is required to enable the organization to
achieve its predefined goals and objectives.

27. Answer : (c)
Reason : Robert House’s Path-Goal theory places equal “very strong emphasis” on all three of the
leadership perspectives – the leader, the follower, and the situation.

28. Answer : (e)
Reason : For international companies, what works at home is not always appropriate in another
nation and hence organizations should adapt to conditions abroad. Therefore, option (e) is
the answer.

29. Answer : (e)
Reason : Alderfer proposed a condensed version of Maslow's Need Hierarchy theory with only three
groups of core needs. viz., existence, relatedness and growth. According to this ERG
theory, different needs can emerge simultaneously, and people can move backward and
forward through the need continuum as circumstances change. There is every possibility
that a higher-level need may emerge before a lower-level need, given the right
circumstances. Hence, option (e) is not true about Alderfer's ERG theory. Options (a), (b),
(c) and (d) are all true about Alderfer's ERG theory.

30. Answer : (d)
Reason : Lack of self-confidence is the delegant’s aspect that affects delegation of authority.
Therefore, option (d) is the answer.

31. Answer : (d)
Reason : Dynamic homeostasis is an organization’s tendency towards adjusting and maintaining
itself in an optimal situation in order to survive and continue performing its tasks.

32. Answer : (c)
Reason : The characteristics of the planning process usually adopted in US Management style are:
(I) Short-term orientation, (III) Decisions initiated at the top, flowing down, (IV) Fast
decision-making. Hence, (c) is the correct answer.

33. Answer : (c)
Reason : Tying every success to monetary reward cannot be considered a step in the refreezing
process. Linking success to monetary reward may be short lived. It may lead to the
employees being more interested in the reward rather than the change itself.

34. Answer : (e)
Reason : Managers who deliver beyond the company’s expectations are not one of the types of
managers described by Jack Welch.

35. Answer : (a)
Reason : Decision tree involves a graphic representation of alternative courses of action and the
possible outcomes and risks associated with each action.

36. Answer : (c)
Reason : A successful JIT program requires that suppliers be located in close proximity of the
company, so that materials can arrive as and when needed. Hence from above discussion,
we can infer that option (c) would generally not be associated with a successful JIT
program. Options (a), (b), (d) and (e) would all be associated with a successful JIT
program.

37. Answer : (b)
Reason : Design skill implies the ability to solve problems in ways that will benefit the enterprise.

38. Answer : (c)
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Reason : PERT is especially useful in scheduling projects.
39. Answer : (a)
Reason : The best explanation of why Japanese companies tend to make decisions by consensus is
that it is a reflection of the larger societal cultural value on groups.

40. Answer : (b)
Reason : Recruitment is process of identifying and attempting to attract candidates who are capable
of effectively filling up job vacancies.

41. Answer : (a)
Reason : Controlling plays an important role in assisting managers with changes like coping with
uncertainty and detecting irregularities. Centralizing authority and avoiding complex
situations are not applicable.

42. Answer : (c)
Reason : Position analysis questionnaire is an approach to systematic job analysis.

43. Answer : (c)
Reason : According to Henri Fayol’s principles, Espirit de Corps means sense of union.

44. Answer : (d)
Reason : In brainstorming none of the ideas are criticized. Therefore, statement (I) is not a rule of
brainstorming. All other statements are rules observed in brainstorming. Hence, option (d)
is the answer.

45. Answer : (b)
Reason : Structural inertia is an organization’s built-in mechanism to produce stability. e.g., formal
rules and procedures for employees to follow. When an organization is confronted with
change, this structural inertia acts as a counterbalance to sustain stability. Hence, option (b)
is correct. Options (a), (c), (d) and (e) are all individual sources of resistance to change.

46. Answer : (c)
Reason : Job enrichment is an attempt to build into jobs a higher sense of challenge and
achievement, which does not involve payment of any financial incentives to the workers.

47. 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 jobspecific
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.

48. Answer : (e)
Reason : Customer support system is not a type of information system.

49. Answer : (a)
Reason : A centralized structure is more suitable when the product line is homogeneous. Hence,
option (a) is correct.

50. Answer : (c)
Reason : Statements (I) and (II) are objectives of sensitivity training. Sensitivity training involves
training in small groups in which people develop a sensitive awareness and understanding
of themselves and of their relationships with others. Statement (III) is an objective of
university management programs.

51. Answer : (d)
Reason : With its ‘Everyday Low Pricing (EDLP)’ strategy, Wal-Mart generally follows the cost
leadership strategy.

52. Answer : (d)
Reason : Duplication of activities and resources is a major disadvantage of the divisional structure.
High administration costs and being slow in responding to changes are disadvantages of
the matrix structure. Requirement of people with general managerial capabilities is a
disadvantage of product divisions. Managerial vacuum is a disadvantage of the functinal

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structure.
53. Answer : (d)
Reason : Authority is a narrow concept and power is a broader concept that creates action when
authority fails to achieve results. Therefore, option (d) is not true about authority and
power.

54. Answer : (b)
Reason : Social auditing is a technique for measuring the social impact of an organization in relation
to its stakeholders.

55. Answer : (a)
Reason : A line manager is a generalist and not a specialist. A staff manager has expertise in a
specialized field. Therefore, option (a) is not true about line authority. Options (b), (c), (d)
and (e) are true about line authority.

56. Answer : (a)
Reason : A closed system has two characteristics – (I) it is perfectly deterministic and predictable
and (II) there is no exchange between the system and the external environment. Hence,
option (a) is the answer.

57. 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,
option (c) is correct. Options (a), (b), (d) and (e) are all potential advantages of planning.

58. Answer : (b)
Reason : McClelland’s needs theory highlights the need for achievement, need for affiliation and the
need for power.

59. Answer : (d)
Reason : In order to manage their businesses effectively, successful global management requires
enhanced sensitivity to differences in national customs and practices.

60. Answer : (c)
Reason : Using diversity in the organization to expand perspectives on creative efforts, stressing less
on conformity would be the best option for Ms. Sondhi to explore.

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

62. Answer : (a)
Reason : Vroom’s expectancy theory assumes that an individual tends to act in a certain way, with
the expectation that the act will be followed by a given outcome and according to the
attractiveness of the outcome.

63. Answer : (c)
Reason : The information attribute which tells whether the information pertains to the situation at
hand or not, is known as information relevance.

64. Answer : (e)
Reason : Quality of work life is a broad approach to job enrichment.

65. Answer : (b)
Reason : According to Kurt Lewin, a laissez-faire leader allows his employees complete freedom to
make decisions and to complete work in whatever way they think is best.

66. Answer : (e)
Reason : Performance appraisals are important in an organization because they provide systematic
judgements to support promotions; provide a basis for coaching; provide a basis for
counseling; and let subordinates know where they stand with the boss.

67. Answer : (d)
Reason : According to the Japanese management practices, Kaisha refers to “my/one’s company”

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where people are treated as family members.
68. Answer : (e)
Reason : In the given situation, self-actualization in Maslow’s need hierarchy categories would
apply.

69. Answer : (a)
Reason : Sony’s laser disk was classified as a question mark as it had high market attractiveness and
low market share.

70. Answer : (a)
Reason : Balance sheet describes the company in terms of its assets, liabilities and net worth.

71. Answer : (c)
Reason : The Economic Order Quantity (EOQ) is an inventory control method developed to
minimize ordering and holding costs, while avoiding stock-out costs.

72. Answer : (b)
Reason : Robert Owen proposed legislative reforms to improve working conditions of labor.

73. Answer : (d)
Reason : Analyzing managerial performance to determine capability and readiness for promotion is
a function of middle management. Hence, option (d) is the answer.

74. Answer : (b)
Reason : As per the managerial grid, the 9,9 manager believes that concern for people and tasks are
compatible and that tasks need to be carefully explained and decisions endorsed by
subordinates to achieve a high level of commitment. Hence, from above discussion, we can
infer that option (b) is correct.

75. Answer : (d)
Reason : Productivity can be improved by (I) producing more output with the same inputs, (II)
reducing inputs, but maintaining the same level of outputs and (III) increasing outputs and
reducing inputs. Therefore, option (d) is the answer.

76. Answer : (a)
Reason : Delphi technique is a group decision-making technique that involves a group of experts
responding to a questionnaire. Here, there is anonymous participation. Hence, option (a) is
correct.

77. Answer : (b)
Reason : Decision support system is an interactive computer system that provides managers with the
necessary information for making intelligent decisions.

78. Answer : (c)
Reason : ‘Shared perceptions’ is not a component of McKinsey’s 7-S framework. ‘Shared values‘ is
a component of the 7S framework.

79. Answer : (a)
Reason : Avoiding non-verbal cues is not likely to improve communication effectiveness. Rather,
non-verbal cues are very important for effective communication as they often help in
understanding the hidden feelings in people. Hence, option (a) is correct. Options (b), (c),
(d) and (e) are all likely to improve communication effectiveness.

80. Answer : (a)
Reason : Companies such as Ford, Federal Express, Boeing, or Proctor & Gamble put together
cross-functional teams because each member has unique knowledge that adds value to the
overall decision. A cross-functional team, in business, consists of a group of people
working toward a common goal and made of people with different functional expertise,
which makes their knowledge unique.

81. Answer : (a)
Reason : Process theories of work motivation deal with the way different variables combine to
influence the amount of effort people put forth. Process theories attempt to explain the
thought processes of individuals when they decide whether or not to behave in a certain
way.

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82. 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.

83. Answer : (a)
Reason : Emphasis on short-term goals is a limitation of MBO and not a factor that would make
Management by Objectives (MBO) more effective.

84. Answer : (a)
Reason : The step formulating supporting plans includes plans to buy equipment, materials, and
hiring and train workers.

85. Answer : (b)
Reason : In the given example, JetBlue’s action is best described by option (b) which states that
internal and external environmental forces do not have to be in conflict with one another;
in this case they were complimentary

86. Answer : (b)
Reason : The term “standards” can be best described as targets of performance.

87. Answer : (e)
Reason : The illustration is that of horizontal communication, which refers to the flow of
information among people at the same or similar organizational level and who have no
direct reporting relationships.

88. Answer : (c)
Reason : Socialization refers to the process that helps new employees adapt to the organization’s
culture.

89. Answer : (e)
Reason : Grapevine facilitates quick and effective communication and thereby a top manager can
used it for quick communication by providing accurate information. Hence, option (e) is
not true about grapevine.

90. Answer : (c)
Reason : Operational control regulates the activities or methods an organization uses to produce the
goods and services it supplies to customers and clients. Operational control involves
monitoring day-to-day results and taking corrective actions. It focuses on schedules,
budgets, rules etc., that help in accomplishing day-to-day activities.

91. Answer : (d)
Reason : As organizations attempt to form international strategy and build organizational structures,
the organization will most likely choose the matrix structure if it has high foreign sales and
high international product diversity.

92. Answer : (b)
Reason : Hersey and Blanchard's Situational Leadership Model would most likely be of use to Mr.
Mallik as he prepares to solve his problem. This theory is a contingency approach to
leadership and is based on the premise that leaders need to alter their behaviors depending
on a major situational factor – the readiness of followers.

93. Answer : (d)
Reason : Liquidity ratio measures the ability of an organization to meet its short-term obligations by
using its current assets.

94. Answer : (b)
Reason : Mr. Patel currently addressing his planning efforts at the business level. Business level
strategies attempt to identify ways and means to achieve a competitive advantage. They
also try to respond to changing environment and competitive conditions.

95. Answer : (e)
Reason : Charging reasonable prices for their products is an obligation of a business enterprise
towards its customers and not towards its employees. Hence, option (e) is the answer.

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96. Answer : (b)
Reason : Statements (I) and (II) are limitations of Maslow’s theory. Statement (III) is not true about
Maslow’s theory and is not a limitation of the theory. Hence, option (b) is the answer.

97. Answer : (a)
Reason : The classical idea of management thought can be divided into two separate schools – the
scientific management and the administrative management.

98. Answer : (c)
Reason : The trait approach is based on early research that assumes that a good leader is born, not
made.

99. Answer : (b)
Reason : Replacement Planning is a means of identifying potential candidates to fill specific
managerial positions. Hence, option (b) is correct.

100. Answer : (c)
Reason : The recruitment procedure consists of the following steps:
(i) Performing Job Analysis.
(ii) Designing Job Description.
(iii) Developing a Job Specification.
(iv) Attracting a Pool of Applicants.
(v) Selecting Best Recruits.
Hence, option (c) is correct