Question 1

The information to be gathered for a decision depends on which of the following?
A)The current market conditions and on the expected costs and benefits of acquiring the information.
B)The model that underlies a decision and on the expected costs and benefits of acquiring the information.
C)The cost of the information and the current market conditions.
D)The model that underlies a decision and the amount of information that is internally available.

Accepted Answer

The information needed to make a decision depends not only on current market conditions and cost, but also on the underlying model that is being used to make the decision. Therefore, choice B is the most accurate. The cost and availability of the information, as well as the amount of information already available internally, may also be factors to consider, but they are not as fundamental as the model and expected costs and benefits of acquiring the information.

Question 2

Hayle Motors specializes in the production of fire trucks and has production units in five countries.Which of the following is NOT true about Hayle Motors?
A)It is a geographically divisionalized organization.
B)It is divisionalized along product lines.
C)Each of its five production units in the five countries function as stand-alone firms.
D)Activities in each of its five units may be categorized functionally.

Accepted Answer

The statement mentions that Hayle Motors specializes in the production of fire trucks and has production units in five countries, which indicates that the organization is divisionalized along geographic lines, not product lines. Therefore, option B is not true. Options A, C and D are all true.

Question 3

Tiffany needs to assess the market risk in order to decide when to launch a new product.He decides to delegate the task of risk assessment to Joe who is a competent employee of the firm.Which of the following conclusions can be drawn from this?
A)Joe has the required tools and resources to carry out the order.
B)Joe is above Tiffany in the hierarchy of this firm.
C)The chances that Joe's assessment will be accurate are very high.
D)Tiffany is well equipped to analyze the information he passes on to Joe.

Accepted Answer

Delegating the task to Joe implies that he is competent and likely has the necessary tools and resources to perform the risk assessment.

Question 4

When each box in an organization chart contains individuals who specialize in some field, then the activities in the organization are categorized by _____.
A)divisionalization
B)functionalization
C)decentralization
D)de-integration

Accepted Answer

Functionalization is the process of categorizing activities in an organization according to specialized functions or departments. This is reflected in the organization chart where every box represents a specialized function or department. Hence, option B is the correct answer. Divisionalization refers to the process of grouping departments based on products, markets, or geography. Decentralization refers to delegation of decision-making power to lower-level employees. De-integration is not a commonly used term in organizational context.

Question 5

Identify the characteristic of a U-form organization from the following.
A)A divisionally organized firm is often called a U-form firm.
B)The heads of the different branches at different locations report to the headquarters.
C)Information submitted by all departments are used by the headquarters to make all the decisions.
D)There is a substantial degree of inter-dependence between various departments.

Accepted Answer

In a U-form (unitary form) organization, the headquarters centralizes decision-making, using information from all departments to make decisions.

Question 6

Which of the following statements is true of members of an organization?
A)They are either principals or subordinates.
B)Agents are closely monitored by principals at all times.
C)Each member generates information for the use of others in the organization.
D)Decision-makers decide on the basis of the information they generate themselves.

Accepted Answer

Members of an organization generate information for the use of others in the organization. This information sharing facilitates communication and decision-making within the organization. Options A, B, and D are incorrect because they are oversimplifications and do not capture the complexities of organizational structures and dynamics.

Question 7

Categorization of activities in an organization along product or geographic lines is called:
A)globalization.
B)decentralization.
C)functionalization.
D)divisionalization.

Accepted Answer

Divisionalization is the process of grouping activities within an organization along product or geographic lines. This allows for better control and coordination of activities within each division. Decentralization is the delegation of decision-making authority to lower levels of an organization, and functionalization is the grouping of activities by function (e.g. finance, human resources, marketing). Globalization refers to the process of expanding operations across national boundaries.

Question 8

Axis Group has a publishing house, operates in the sports gear market, and owns a coffee plantation.A board of directors is responsible for the overall performance of the group.Fabrics Inc., on the other hand specializes in women's apparel.Which of the following statements will be true?
A)Decision-making at Axis will be more decentralized in comparison to Fabrics, Inc.
B)Many decisions at Fabrics is likely to be made at lower levels.
C)Individuals at higher levels at Fabrics are less likely to have all of the knowledge that exists at lower levels.
D)Information transfer within Axis Group will be easier as compared to Fabrics, Inc.

Accepted Answer

Axis Group has a diverse range of businesses, which requires a more decentralized decision-making process to accommodate the different needs of each business unit. Fabrics Inc., on the other hand, specializes in a single product line, which allows for more centralized decision-making.

Question 9

Orders can lose accuracy:
A)if they are too complicated.
B)as they are transmitted within the organization.
C)in organizations where decision-making is decentralized.
D)unless they are given to the right recipient.

Accepted Answer

Orders can lose accuracy as they are transmitted within the organization due to misinterpretation, miscommunication, or distortion. This is known as the transmission phase of the communication process. Hence, option B is the correct choice. Option A is not necessarily true, as complicated orders can still be accurately transmitted if communicated effectively. Option C may be true, but not necessarily in all cases. Option D is true, but it is not the only reason for losing accuracy.

Question 10

Which of the following is a disadvantage of the U-form structure?
A)In case of multiple products sold in different markets, a U-form structure is difficult to maintain.
B)A U-form structure requires a larger staff to evaluate top-level decision making than other organization structures.
C)A U-form structure necessitates a multiple-level decision-making process.
D)The amount of information that is considered for decision-making in a U-form structure is less than other structures.

Accepted Answer

The U-form structure is best suited for organizations that produce a single product or service, as it is difficult to maintain for multiple products sold in different markets. This can lead to a lack of focus and inefficiencies in decision-making. The other options are not disadvantages of the U-form structure.

Question 11

Centralization of decision-making in a firm is a good idea when:
A)the people who produce the information also have decision-making skills.
B)all the information comes from internal sources.
C)the incentives of the decision-makers is not aligned with the firm's share holders.
D)those who have the relevant information are not equipped to analyze it.

Accepted Answer

Centralization is beneficial when those with the relevant information lack the skills to analyze it, allowing centralized decision-makers to make informed choices.

Question 12

Joanne can choose to selectively disclose information to her superiors in an attempt to elicit decisions in her favor if:
A)the information is easily available to all.
B)she is the only source of the information concerned.
C)the information is easily verifiable.
D)there are other sources of the same information in the firm.

Accepted Answer

If Joanne is the only source of the information concerned, selectively disclosing information to her superiors may give her an advantage in obtaining favorable decisions. However, if the information is easily available to all, readily verifiable, or there are other sources of the same information in the firm, withholding or selectively disclosing it would be unethical and likely counterproductive to her goals.

Question 13

Axis Group has a publishing house, operates in the sports gear market, and owns a coffee plantation.A board of directors is responsible for the overall performance of the group.Identify the correct statement from the following.
A)The board will be responsible for all decision-making process.
B)The board will be in the best position to solve even a minor problem at the coffee plantation.
C)The sports gear firm's risk assessment team will also be responsible for assessing market risk for the group's other functional areas.
D)Decisions for the publishing house are likely to be taken by the individuals who head it, rather than the board of directors heading the entire group.

Accepted Answer

Decisions for each functional area of the group are likely to be taken by the individuals who head them. The publishing house is a separate functional area, and its decisions are likely to be taken by its own leadership team rather than the board of directors heading the entire group.

Question 14

Each of the following can explain why an order could not been carried out as intended, EXCEPT:
A)incompetence.
B)opportunism.
C)impossibility.
D)obedience.

Accepted Answer

Obedience typically involves following orders or commands, so it would not be a reason for an order not being carried out as intended. In contrast, incompetence, opportunism, and impossibility can all hinder the execution of an order.

Question 15

An information is beneficial to the decision-maker only when:
A)its marginal cost is zero.
B)its marginal benefits exceeds its marginal cost.
C)the possibility of inaccurate transmission is nullified.
D)its marginal benefit is positive.

Accepted Answer

The value of information to a decision-maker is determined by its ability to improve decision outcomes, which occurs when the additional benefits gained from the information (marginal benefits) exceed the additional costs incurred to obtain it (marginal cost).

Question 16

The method of payment that a principal can use to elicit effort from an agent is called:
A)a contract.
B)an order.
C)an incentive.
D)garbling.

Accepted Answer

The answer of The method of payment that a principal...

Question 17

The board of directors of Fast Food Inc., have the final say in all decisions made for the firm.Market conditions and recent poor performance has caused some discord among the board members.Which of the following statements is likely to be true?
A)The decisions the board members take may lead to compromises that are not in the interests of the shareholders.
B)Decision-making will be decentralized in this firm.
C)People lower in the hierarchy of this firm will be better equipped to take decisions.
D)The board's incentives are aligned with those of the firm's principals.

Accepted Answer

The discord among the board members may lead to compromises that prioritize the personal interests of certain members over the interests of the shareholders.

Question 18

_____ is the only type of firm where it is possible for a person to hold all of the information that matters for all types of decisions.
A)Corporation
B)A firm where decision-making is centralized
C)Sole proprietorship
D)A firm where there is separation of ownership and management

Accepted Answer

In a sole proprietorship, there is only one owner who is responsible for making all decisions, holding all information and managing the operations of the firm. Thus, this type of firm is the only one where a person can have complete information for all types of decisions. In other types of firms, decision-making is often decentralized or divided among multiple individuals or departments.

Question 19

The following is an organization chart depicting a single row of individuals A, B, and C.

-Identify the statement which is true of the organization depicted in this figure?
A)There is a strong linkage between the individuals represented in the chart.
B)It is a sole proprietorship firm.
C)The above organization chart depicts a U-form firm.
D)Team production is unimportant in this organization.

Accepted Answer

The answer of 
 The following is an organization chart...

Question 20

_____ transfer the necessary information within a firm and bind the recipients to take certain actions.
A)Contracts
B)Decision-makers
C)Owners of information
D)Orders

Accepted Answer

Orders are directives that are issued from a higher authority to those who are bound to comply with them. They transfer necessary information within a firm and bind the recipients to take certain actions. Unlike contracts, orders do not require mutual agreement or negotiation between parties. They are unilaterally issued by those in charge of decision-making, and their purpose is to achieve organizational goals effectively and efficiently by ensuring that everyone involved is on the same page.

Quiz 13: Organizational Design

The information to be gathered for a decision depends on which of the following?

Hayle Motors specializes in the production of fire trucks and has production units in five countries.Which of the following is NOT true about Hayle Motors?

Tiffany needs to assess the market risk in order to decide when to launch a new product.He decides to delegate the task of risk assessment to Joe who is a competent employee of the firm.Which of the following conclusions can be drawn from this?

When each box in an organization chart contains individuals who specialize in some field, then the activities in the organization are categorized by _____.

Identify the characteristic of a U-form organization from the following.

Which of the following statements is true of members of an organization?

Categorization of activities in an organization along product or geographic lines is called:

Axis Group has a publishing house, operates in the sports gear market, and owns a coffee plantation.A board of directors is responsible for the overall performance of the group.Fabrics Inc., on the other hand specializes in women's apparel.Which of the following statements will be true?

Orders can lose accuracy:

Which of the following is a disadvantage of the U-form structure?

Centralization of decision-making in a firm is a good idea when:

Joanne can choose to selectively disclose information to her superiors in an attempt to elicit decisions in her favor if:

Axis Group has a publishing house, operates in the sports gear market, and owns a coffee plantation.A board of directors is responsible for the overall performance of the group.Identify the correct statement from the following.

Each of the following can explain why an order could not been carried out as intended, EXCEPT:

An information is beneficial to the decision-maker only when:

The method of payment that a principal can use to elicit effort from an agent is called:

The board of directors of Fast Food Inc., have the final say in all decisions made for the firm.Market conditions and recent poor performance has caused some discord among the board members.Which of the following statements is likely to be true?

_____ is the only type of firm where it is possible for a person to hold all of the information that matters for all types of decisions.

The following is an organization chart depicting a single row of individuals A, B, and C. -Identify the statement which is true of the organization depicted in this figure?

_____ transfer the necessary information within a firm and bind the recipients to take certain actions.