Question Paper

Introduction to Management - I (MB111) : October 2006

• Answer all questions.
• Marks are indicated against each question.

1. Which of the following steps in the planning process involves plans to buy equipment, materials, and hire and train < Answer >
workers?
(a) Formulating supporting plans
(b) Comparing alternatives in the light of goals
(c) Considering planning premises
(d) Identifying alternatives
(e) Numberizing plans by making budgets.
< Answer >
2. When managers delegate authority, they must allocate commensurate
(a) Responsibility
(b) Power
(c) Money
(d) Influence
(e) Respect.
< Answer >
3. Which of the following is not a function of management?
(a) Influencing
(b) Planning
(c) Organizing
(d) Leading
(e) Controlling.
< Answer >
4. Which of the following can be said to be an appropriate technique for line personnel in reducing line-staff conflict?
(a) Work independent of staff personnel
(b) Make proper use of the staff abilities
(c) Obtain any necessary skills they do not already possess
(d) Treat staff personnel as sub-ordinates instead of partners so that there is no overlap of roles
(e) Do the critical work themselves.
< Answer >
5. Which of the following requires no formal position in an organization?
(a) Authority
(b) Delegation
(c) Power
(d) Policy
(e) Norm.
6. In an organization, a superior has the right to get tasks accomplished by his subordinates, but the responsibility< Answer >
remains with the superior. This principle which intends to eliminate the practice of "passing the buck", is known as
(a) Authority on par with responsibility
(b) Hierarchy of authority
(c) Unity of direction
(d) Downward delegation of authority
(e) Unity of command.
7. Which of the following arguments against social responsibility of business points out that since the cost of social < Answer >
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?
(a) Opposing the profit maximization principle
(b) Excessive costs
(c) Weakened international balance of payments
(d) Increase in firm's power and influence
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 (e) Lack of accountability.
8. When Sony first introduced the laser disk as a new way to view movies, it was classified as a _________ because it < Answer >
had high market attractiveness but low relative market share. The product was eventually withdrawn from the market
place as VHS technology and DVDs became more popular.
(a) Question mark
(b) Star
(c) Cash cow
(d) Dog
(e) Cat.
< Answer >
9. Which of the following is/are advantage/s of organization charts?
I. They provide a visual map of the chain of command.
II. They help managers identify inconsistencies in lines of authority.
III. Relationships between subordinates and superiors are essentially determined by organization charts.
IV. Many charts show ideal structures.
(a) Only (III) above
(b) Both (I) and (II) above
(c) Both (III) and (IV) above
(d) (I), (II) and (IV) above
(e) All (I), (II), (III) and (IV) above.
10. Complex interactions between the manager's stage of moral development and various moderating variables determine < Answer >
whether he will act in an ethical or unethical manner. Moderating variables include individual characteristics,
structural design of the organization, the organizational culture and the intensity of the ethical issue. Which of the
following is not an individual characteristic?
(a) Perception
(b) Attitudes
(c) Motivation
(d) Roles
(e) Ego Strength.
< Answer >
11. Which of the following is not a disadvantage of group decision-making?
(a) More time taken to reach a solution
(b) Minority domination
(c) More alternatives
(d) Groupthink
(e) Goal displacement.
< Answer >
12. All of the following are factors to be considered in external environmental analysis except
(a) Suppliers
(b) Economic issues
(c) Demographics
(d) Social values
(e) Executives' track record.
13. The Better Than Ordinary Fast Food Company desires to focus on the varying customer needs found at its many< Answer >
operations across the country. This organization would probably derive the most benefit from engaging in ______
within its structure
(a) Customer divisions
(b) Product divisions
(c) Geographic divisions
(d) Functional divisions
(e) Hybrid divisions.
14. In modern times, organizations have been trying to create a corporate culture with a distinct identity by moulding the < Answer >
behavior of their members. The original source of an organization’s culture is most strongly associated with
(a) Overseas influences
(b) Political factors in the external environment
(c) General economic trends
(d) The vision of the organization’s founder(s)
(e) 2
The make-up of organizational members when the organization was established.
 (e) The make-up of organizational members when the organization was established.
< Answer >
15. Which of the following is not an advantage of a geographic division?
(a) It improves an organization’s relationship with customers
(b) It improves coordination in a region
(c) It places emphasis on local markets
(d) Local manufacturing facilities reduce transportation costs
(e) It helps managers attain specialized knowledge in a particular area.

16. Plans form an integral part of any organization. They are necessary for successful achievement of organizational < Answer >
goals and objectives and also for surviving in a complex and competitive world. The final responsibility for
organizational planning rests with
(a) The planning department
(b) The chief executive
(c) Departmental supervisors
(d) The organizational planner
(e) The entire organization.
< Answer >
17. Centralization will be adopted under which of the following conditions?
(a) When decisions made at the lower levels are many
(b) When decisions made at the lower levels have a great impact on organizational success
(c) When few functions rely on lower-level decision making
(d) When there is little top management monitoring of lower level decision making
(e) When there is a greater need to improve market responsiveness.
< Answer >
18. Which of the following is/are true about objectives?
I. Objectives and planning programs are co-existential and co-relational.
II. Goals and plans are always linear.
III. A manager can effectively pursue only a few objectives.
IV. Objectives do not require deadlines for results to be accomplished.
(a) Only (I) above
(b) Only (II) above
(c) Both (I) and (III) above
(d) Both (II) and (IV) above
(e) (I), (II) and (III) above.
19. Hari is the only person who fully understands the new computer network in the office area. Whenever someone has < Answer >
questions, he goes to Hari. Hari has _____ power.
(a) Coercive
(b) Reward
(c) Expert
(d) Referent
(e) Legitimate.
20. An office supply firm that has three departments based upon retail, wholesale, and governmental customers is using < Answer >
which of the following types of departmentalization?
(a) Functional
(b) Product
(c) Customer
(d) Geographic
(e) Process.
21. The process of designing and maintaining an environment in which individuals, working together in groups, < Answer >
effectively accomplish selected aims is termed as
(a) Administration
(b) Management
(c) Organizing
(d) Staffing
(e) Controlling.
22. Alternatives in the decision making process are evaluated based on various criteria. Which criterion refers to the < Answer >
degree of support extended to the chosen alternative by the decision makers and those who will be affected by its
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 degree of support extended to the chosen alternative by the decision makers and those who will be affected by its
implementation?
(a) Feasibility
(b) Quality
(c) Acceptability
(d) Costs
(e) Ethics.

23. Max Weber, a German sociologist, believed that effective organizations had a formal structure and followed a < Answer >
predefined set of rules and regulations. He identified these organizations as
(a) Autocratic
(b) Authoritative
(c) Hierarchy
(d) Bottom-up
(e) Bureaucracy.
< Answer >
24. Which of the following is/are reason/s for line-staff conflict from the viewpoint of staff personnel?
I. Line managers do not seek input from staff personnel.
II. Staff function dilutes the line manager’s authority.
III. Line managers resist new ideas.
IV. Staff personnel lack a first-hand experience of operations.
(a) Only (I) above
(b) Only (IV) above
(c) Both (I) and (III) above
(d) Both (II) and (IV) above
(e) (I), (II) and (III) above.
< Answer >
25. The two managerial practices that emerged from Taylor's scientific management are piece-rate incentive system and
(a) Time and motion study
(b) Work study
(c) Fatigue study
(d) Organization study
(e) Job study.
26. Strategic planning provides direction to an organization's mission, objectives and strategies, facilitating the < Answer >
development of plans for each of the organization's functional areas. So, right quality should be instilled in the
strategic planning process. Which of the following could be the first step in incorporating quality into strategic
planning?
(a) Environmental analysis
(b) Strategy formulation
(c) Strategic control
(d) Establishment of an organizational direction
(e) Strategy implementation.
< Answer >
27. Which of the following is not an advantage of the functional structure?
(a) Economies of scale
(b) Minimization of duplication
(c) Employee satisfaction
(d) Pursuit of functional goals
(e) Specialization.
< Answer >
28. Which of the following statements is/are true about the satisficing decision model?
I. Managers seek alternatives only until they identify one that looks satisfactory.
II. Managers search for the perfect or ideal decision.
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.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (III) above
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 (d) Both (I) and (III) above
(e) Both (II) and (III) above.
29. Major decisions in organizations are most often made by groups rather than a single individual. One of the techniques < Answer >
for group decision-making that involves questionnaires is
(a) Brainstorming
(b) Nominal group technique
(c) Delphi technique
(d) Interacting group
(e) Focus group.
30. Span of control refers to the number of subordinates a superior can supervise efficiently and effectively. It is an < Answer >
important factor which is to be taken into account when undertaking organizational design. Which of the following is
not true about span of control?
(a) Wide spans of control empower employees
(b) Wide spans of control speed up decision-making
(c) Wide spans decrease flexibility
(d) Wide spans are related to a flat organization structure
(e) Wide spans of control imply fewer hierarchical levels.
< Answer >
31. Which of the following is not a limitation of rational decision making?
(a) It is difficult to determine all alternative courses of action that might be followed to accomplish a goal
(b) All possible alternatives cannot be thoroughly analyzed even with the most sophisticated techniques
(c) It becomes an impossible task when one has to explore areas which have never been ventured into before
(d) Limitations of information, time and certainty curb rationality
(e) High quality solutions are not attainable due to goals being unclear.
32. ‘Many aspects of management cannot be explained in terms of models.’ This is a limitation of which of the following < Answer >
approaches to management?
(a) Contingency approach
(b) Management science approach
(c) McKinseys’ 7-s framework
(d) Operational approach
(e) Systems approach
33. Which of the following decision-making models implies that “the ability of managers to be completely rational in < Answer >
making decisions is limited by certain factors”?
(a) Rational model
(b) Satisficing model
(c) Incremental model
(d) Garbage-can model
(e) Queuing model.
34. Span of control an important factor which is to be taken into account when undertaking organizational design. < Answer >
Maintaining a large span of control within an organization is most effective in all except which of the following
situations?
(a) When subordinates prefer autonomy
(b) When tasks are routine
(c) When jobs are similar but have varying performance measures
(d) When subordinates are highly trained
(e) When managers are competent.
35. Tina is the department chair of a local college. She is preparing the 2006 schedule of classes. She knows < Answer >
approximately how many students will be in the classes from the pre-registration that is required. She also knows
how many faculty members are available and which classes they can teach. As she prepares the 2006 schedule of
classes, unless something extraordinary occurs, she is operating under the condition of
(a) Uncertainty
(b) Certainty
(c) Risk
(d) Probability
(e) Minimax.

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36. As a practice, though not documented, a brokerage house tries to promote its own employees into a broker's slot < Answer >
whenever one becomes available. This is an example of a (n)
(a) Rule
(b) Procedure
(c) Policy
(d) Budget
(e) Norm.
37. Decision-making is a systematic process and involves a series of stages. Scanning, categorization and diagnosis are < Answer >
involved in which of the following stages of the decision-making process?
(a) Generating alternative solutions
(b) Identifying resource and constraints
(c) Determining the problem
(d) Implementing the decision
(e) Evaluating the alternatives.
< Answer >
38. Which of the following statements is/are true about preference or utility theory?
I. It is an approach to decision-making under uncertainty.
II. It holds that individual attitudes towards risk vary with situations.
III. When stakes are low, most managers tend to be risk averters; when stakes are high they tend to be gamblers.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
39. The efficiency with which an organization accomplishes its goals and objectives is largely dependent on the structure < Answer >
it adopts. Which of the following organizational structures violates the 'unity of command' principle?
(a) Functional
(b) Matrix
(c) Geographic
(d) Divisional
(e) Customer.
40. In the strategic management process, any organizational skills or resources that are exceptional or unique are the < Answer >
organization's
(a) Potential external opportunities
(b) Potential internal strengths
(c) Core competencies
(d) Bargaining Power
(e) Marketing niche skills.
41. Standing plans are the plans developed for activities that occur regularly over a period of time. The three major kinds < Answer >
of standing plans are policies, rules, and
(a) Projects
(b) Programs
(c) Procedures
(d) Standards
(e) Schedules.
< Answer >
42. The management concept that recommends that employees should have one and only one boss is termed
(a) Departmentalization
(b) Function
(c) Unity of command
(d) Scalar relationship
(e) Unity of direction.
< Answer >
43. Which of the following is/are strengths of the divisional structure?
I. It combines the advantages of functional and product structures.
II. It can respond quickly as it does not need to coordinate with other divisions.
III. Coordination is simplified.
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 IV. Activities are grouped around customers.

(a) Only (I) above

(b) Both (I) and (IV) above
(c) Both (II) and (III) above
(d) (I), (II) and (III) above
(e) (II), (III) and (IV) above.

44. When managers behave in a random manner in making non-programmed decisions, the manager's approach can be < Answer >
categorized under which of the following decision-making models?
(a) Rational model
(b) Satisficing model
(c) Incremental model
(d) Brainstorming model
(e) Garbage-can model.
45. Product divisions are divisions created to concentrate on a single product or service or at least a relatively< Answer >
homogenous set of products or services. Which of the following is not an advantage of product departmentation?
(a) It facilitates the use of specialized capital, promotes coordination and allows optimum utilization of
personal skills and specialized knowledge
(b) It facilitates growth and diversity of products and services offered by the organization
(c) The performance of each product line can be compared and analyzed
(d) It provides an excellent training ground for managerial personnel
(e) Managerial costs are lower because of the decentralization of various activities such as personnel,
production, sales and accounts.
< Answer >
46. The major disadvantage of the matrix structure is
(a) Duplication of resources
(b) Lack of employee satisfaction
(c) Lack of economies of scale
(d) Its propensity to foster power, struggles
(e) Monotony of work.

47. Which of the following management functions specifies goals to be achieved and decides in advance the appropriate < Answer >
actions to achieve those goals?
(a) Leading
(b) Controlling
(c) Organizing
(d) Planning
(e) Staffing.
< Answer >
48. Which of the following is the most appropriate reason for a manager to plan?
(a) Planning maximizes redundancy
(b) Planning eliminates the need for management attention
(c) Planning reduces the need for standards
(d) Planning gives direction
(e) Planning always ensures success in any business endeavor.
< Answer >
49. A strategy can be defined as
(a) A specific, narrow plan designed to achieve tactical planning
(b) Designed to be the end of tactical planning
(c) A plan designed to reach long-term objectives
(d) Being timeless, so the same strategy can meet organizational needs anytime
(e) Being independent of organizational objectives.

50. Tommy has a remarkable ability to get his employees to do what he directs. He is an upper level manager at the < Answer >
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. Which of the following is the type of power Tommy has over his workers?
(a) Reward power
(b) Referent power
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 (b) Referent power
(c) Expert power
(d) Coercive power
(e) Legitimate power.
< Answer >
51. Which of the following is/are integral part(s) of an effective organizing effort?
I. Rationale for the orderly use of management system resources.
II. Responsibility.
III. Authority.
IV. Delegation.
(a) Only (II) above
(b) Both (I) and (II) above
(c) Both (III) and (IV) above
(d) (I), (III) and (IV) above
(e) All (I), (II), (III) and (IV) above.
< Answer >
52. The effect of planning on managers is that it induces them to
(a) Consider the impact of change
(b) React to change
(c) Retrench the troublemakers in the organization
(d) Develop bureaucratic response models
(e) Respond indiscriminately.
< Answer >
53. Organizational structure is defined as
(a) A set of managerial decisions and actions
(b) A formal framework by which job tasks are divided, grouped, and coordinated
(c) A process that is done best if it is done quickly
(d) A specification of the broad parameters within which organization members are expected to operate in
pursuit of organizational goals
(e) A chronological sequence of steps to be undertaken to enforce a policy and to achieve an objective.
< Answer >
54. Bargaining power of suppliers, as described by Porter, is high when
I. Customers make bulk purchases.
II. There are few players in the industry.
III. There are no substitutes for their products or services.
IV. Customer’s purchases form a large chunk of the seller’s sales.
(a) Only (II) above
(b) Both (I) and (IV) above
(c) Both (II) and (III) above
(d) (I), (III) and (IV) above
(e) (II), (III) and (IV) above.
55. In recent years, research has proved that culture has a tremendous impact on management practices. Which of the < Answer >
following is not a feature of organizational culture?
(a) It is based on certain norms
(b) It promotes dominant and stable values
(c) It shapes philosophy and rules
(d) It focuses on profit
(e) It leads to observed behavioral regularities.
< Answer >
56. Which of the following refers to the process that helps new employees adapt to the organization’s culture?
(a) Grapevine
(b) Orientation
(c) Socialization
(d) Introduction
(e) Training.
< Answer >
57. Which of the following is not a problem faced in the MBO (Management By Objectives) process?
(a) It is difficult to pinpoint specific objectives which determine a subordinate’s effectiveness
(b) Predetermined goals leave less scope for creativity, spontaneity and innovation
(c) Setting of objectives is done over a long span of time, which delays the decision-making
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 (c) Setting of objectives is done over a long span of time, which delays the decision-making
(d) Interdependence of managerial work is not reflected in job descriptions
(e) The process tends to be biased as subordinates are appraised based on compatibility of their goals with
those of their superiors.
< Answer >
58. Conceptual skills require that management view the organization as
(a) A profit center
(b) A decision-making unit
(c) A problem-solving group
(d) A whole
(e) Individual contributions.
59. Which of Henri Fayol’s principles implies that the right person is placed in the right job and everything is kept in the < Answer >
right place to facilitate smooth coordination of activities?
(a) Order
(b) Initiative
(c) Centralization
(d) Unity of direction
(e) Discipline.
< Answer >
60. Which of the following is/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.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
61. Which of the following are factors that help measure an organization’s social responsiveness?
I. Valuing diversity
II. Fund-raising.
III. Direct Corporate investment.
IV. Personal values.
V. Stage of moral development.
(a) (I), (II) and (III) above
(b) (I), (II) and (V) above
(c) (I), (IV) and (V) above
(d) (II), (III) and (IV) above
(e) (III), (IV) and (V) above.
< Answer >
62. Which of the following is/are advantage/s 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.
IV. It facilitates decentralization of decisions.
(a) Only (IV) above
(b) Both (I) and (III) above
(c) Both (II) and (IV) above
(d) (I), (II) and (III) above
(e) All (I), (II), (III) and (IV) above.
63. A problem with groupthink is that no one is actually in charge of making the final decision or outcome, which results < Answer >
in
(a) Ambiguous responsibility
(b) Role incoherence
(c) Role ambiguity
(d) Ambiguous delegation
(e) Ambiguous output.
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 (e) Ambiguous output.
< Answer >
64. Which of Henry Fayol's principles of management states that 'work specialization leads to efficiency of operations'?
(a) Division of labor
(b) Stability
(c) Esprit de corps
(d) Discipline
(e) Decentralization.
< Answer >
65. Which of 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.
III. Principles such as specialization lead to the development of a healthy personality.
(a) Only (I) above
(b) Only (III) above
(c) Both (I) and (II) above
(d) Both (II) and (III) above
(e) All (I), (II) and (III) above.
< Answer >
66. Which of the following is incorrect with respect to formal and informal organizations?
(a) Major concepts in a formal organization are authority and responsibility
(b) The primary focus in an informal organization is the person
(c) In an informal organization, source of leader power is given by the group
(d) In a formal organization rules constitute the guidelines for behavior
(e) Sanctions serve as sources of control in a formal organization.
< Answer >
67. Which of the following is not an advantage of the ‘nominal group process’, of group decision making?
(a) It requires a skilled group facilitator
(b) If the process is well-organized, a definite conclusion can be arrived at from a heterogeneous group
(c) It can be used to elaborate upon data obtained from surveys or existing documents
(d) It allows people of different backgrounds and experience to give their inputs
(e) It promotes creative thinking and effective communication.
68. An objective is the object or aim of an action. Management by Objectives (MBO) is a management process that is < Answer >
popular in many organizations. It is the joint setting of goals and objectives by superiors and subordinates. A major
difference between traditional objective setting and MBO is
(a) In MBO, there are multiple objectives covering a range of organizational activities
(b) In traditional objective setting the objectives, once formulated, provide direction for management
decisions
(c) In traditional objective setting the objectives, once established, form the criteria against which actual
accomplishments can be measured
(d) In MBO, organization members may actually pursue objectives other than the formal organizational
objectives
(e) Traditional objective setting is 'top down' only, while MBO is both a 'top down' and 'bottom up' process.
< Answer >
69. Which of the following statements pertain/s 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.
III. Every situation produces two or more possible outcomes leading to subsequent decision points.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
70. With respect to strengths, weaknesses, opportunities and threats of the competitive environment in which a company< Answer >
operates, which of the following constitute ‘potential opportunities’ for an organization?
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 operates, which of the following constitute ‘potential opportunities’ for an organization?
I. A widely recognized market leader and an attractive customer base.
II. Alliances/joint ventures that provide access to valuable technology, competencies etc.
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.
(a) Both (I) and (II) above
(b) Both (III) and (IV) above
(c) (I), (II) and (V) above
(d) (III), (IV) and (V) above
(e) All (I), (II), (III), (IV) and (V) above.
71. Practicing ethical guidelines enables managers to become followers of moral management approach. One such < Answer >
ethical guideline is ‘primum non-nocere’, which means
(a) Telling the truth
(b) Above all, doing no harm
(c) Always acting when one has responsibility
(d) Obeying the law
(e) Allowing room for participation of stakeholders in the decision-making process.
< Answer >
72. Which of the following is not one of the steps in strategic planning?
(a) Strategy formulation
(b) Strategy implementation
(c) Review of strategy
(d) Environmental analysis
(e) Portfolio Analysis.
< Answer >
73. Which of the following are subsystems that are frequently an integral part of ‘Management By Objectives (MBO)’?
I. Manpower planning.
II. Compensation.
III. Organization design.
IV. Operations research.
(a) Only (III) above
(b) Both (I) and (II) above
(c) Both (III) and (IV) above
(d) (I), (II) and (III) above
(e) (I), (II) and (IV) above.
74. As per Frederick Winslow Taylor, which of the following is/are the main reasons for workers indulging in < Answer >
soldiering?
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.
IV. Lack of training forced employees to perform poorly.
(a) Only (I) above
(b) Both (I) and (II) above
(c) Both (III) and (IV) above
(d) (I), (II) and (III) above
(e) All (I), (II), (III) and (IV) above.
75. Which of the following is not a situational variable on which an organization’s position on the decentralization- < Answer >
centralization continuum depends?
(a) Size of the organization
(b) Line-staff conflict
(c) Geographical dispersion
(d) Technical complexity of tasks
(e) View of subordinates.
< Answer >
76. Which of the following is not a factor that would make Management by Objectives (MBO) more effective?
(a) Emphasis on short-term goals
(b) Top management support
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 (b) Top management support
(c) Formulating clear objectives
(d) Training for MBO
(e) Encouraging participation.
77. Managers making ethical decisions may belong to any of the three levels of moral development. Which of the < Answer >
following stages describes the conventional level of moral development?
(a) Following rules only when it is in one’s immediate interest
(b) Valuing rights of others and upholding absolute values and rights, regardless of the majority's opinion
(c) Sticking to rules to avoid physical punishment
(d) Living up to what is expected by people who are close to oneself
(e) Following self-chosen ethical principles even if they violate the law.
< Answer >
78. As per Henry Mintzberg, which of the following roles constitute the decisional role?
I. Disturbance handler.
II. Resource allocator.
III. Negotiator.
IV. Figurehead.
V. Liaison.
(a) Both (I) and (II) above
(b) Both (III) and (V) above
(c) (I), (II) and (III) above
(d) (II), (III) and (IV) above
(e) (III), (IV) and (V) above.
< Answer >
79. Which of the following steps in the planning process should be completed before the others can be addressed?
(a) Put plans into action
(b) State organizational objectives
(c) List alternative ways of reaching objectives
(d) Develop premises on which to base each alternative
(e) Evaluate alternatives by weighing them in the light of premises and goals.
80. Every decision-making situation falls into one of the three categories: (i) certainty, (ii) risk and (iii) uncertainty. < Answer >
Which of the following is a characteristic of decision-making under risk?
(a) The decision-maker has complete information about available alternatives, and has a good idea of the
probability of particular outcomes for each alternative
(b) The decision-maker has complete information about available alternatives, but has no idea of the
probability of particular outcomes for each alternative
(c) The decision-maker has incomplete information about available alternatives, but has a good idea of the
probability of particular outcomes for each alternative
(d) Future environment is unpredictable and everything is in a state of flux
(e) The decision-maker is not aware of all alternatives, the risks associated with each, or the consequences
of each alternative, or their probabilities.

81. Companies identify their strengths, weaknesses, opportunities and threats in the business environment through < Answer >
SWOT analysis. Which of the following constitutes ‘potential resource weaknesses’ for an organization?
I. A weak balance sheet burdened with too much debt.
II. Loss of sales to substitute products.
III. Sub par e-commerce systems and capabilities relative to rivals.
IV. Costly new regulatory requirements.
V. Not attracting customers as rapidly as rivals due to ho-hum product attributes.
(a) Both (I) and (II) above
(b) Both (IV) and (V) above
(c) (I), (III) and (V) above
(d) (II), (III) and (IV) above
(e) All (I), (II), (III), (IV) and (V) above.
82. Which of the following refers to the use of an open system of rating an employee’s work on a daily basis, < Answer >
recommended by Robert Owen?
12
 recommended by Robert Owen?
(a) Silent monitor
(b) Accomplishment monitor
(c) Piece-rate incentive system
(d) Therbligs
(e) Open monitor.
< Answer >
83 Which of the following is not a contingency variable that determines the appropriate span of control for managers?
(a) Employee training
(b) Task complexity
(c) Management style preferences
(d) Expenses
(e) Hierarchy levels.
< Answer >
84. Which of the following statements about grapevine are true?
I. At times information shared through the grapevine may only be gossip.
II. It is bound by the authority relationships defined by the organization.
III. It weakens the cohesiveness of a formal organization.
IV. It survives on information that is not available to the entire group.
V. It facilitates quick and effective communication.
(a) Both (I) and (II) above
(b) Both (II) and (III) above
(c) Both (IV) and (V) above
(d) (I), (IV) and (V) above
(e) (II), (III) and (IV) above.
< Answer >
85. Which of the following statement is incorrect with respect to functional authority?
(a) Managing functional authority relationships is similar to managing dual-boss relationships
(b) It should be restricted to the procedural aspects of a function
(c) It is similar to line authority except that staff personnel with functional authority do not have a right to
punish violations from the intended course of action
(d) It should not be delegated too much down the line as such delegation may create problems
(e) If unity of command were to be applied without exception, functional authority would be exercised only
by staff managers.
86. Among the characteristics of an open system, which of the following is an organization's tendency towards adjusting < Answer >
and maintaining itself in an optimal situation or a state of equilibrium over a period of time?
(a) Equifinality
(b) Negative entropy
(c) Differentiation
(d) Dynamic homeostasis
(e) Cycle of events.
< Answer >
87. Which of 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.
II. Legitimate power works only downwards.
III. Referent power functions at superior and peer levels.
IV. Coercive power is used to ensure a minimum standard of performance.
V. Power can be personal.
(a) Both (I) and (II) above
(b) Both (III) and (IV) above
(c) (I), (III) and (IV) above
(d) (I), (IV) and (V) above
(e) All (I), (II), (III), (IV) and (V) above.
< Answer >
88. Which of the following statements pertain(s) to ‘procedures’?
I. They ensure uniformity in action.
II. They are the most general form of a standing plan.
III. They are the simplest type of standing plans.
IV. They help in streamlining the administrative activities of an organization.

13
 (a) Only (IV) above
(b) Both (I) and (IV) above
(c) Both (II) and (III) above
(d) (II), (III) and (IV) above
(e) All (I), (II) (III) and (IV) above.
< Answer >
89. Which of the following is not an advantage of decentralization?
(a) Decisions making is fast
(b) It results in creating low-cost shared resources
(c) Decisions can be quickly adapted to the competitive environment
(d) Provides autonomy to employees
(e) Allows top management to concentrate on strategic issues.

90. Every company wants to gain competitive advantage over its competitors. If a company is able to be unique in its < Answer >
industry in a manner widely valued by the market, it follows a
(a) Diversification strategy
(b) Differentiation strategy
(c) Focus strategy
(d) Cost-leadership strategy
(e) Growth strategy.
< Answer >
91. Which of the following is not a benefit of strategic planning?
(a) It provides managers with consistent guidelines
(b) It improves the organization’s responsiveness to the environment
(c) It helps managers take appropriate decisions after an analysis of opportunities
(d) It prepares managers to deal with problems before they occur and become critical
(e) It encourages organizations to adopt the most rational and risk-free option.
< Answer >
92. Which of the following is/are approaches to that aid in developing better corporate strategies?
I. Values-based approach.
II. Corporate portfolio approach.
III. Human relations approach.
(a) Only (I) above
(b) Only (II) above
(c) Only (III) above
(d) Both (I) and (II) above
(e) All (I), (II) and (III) above.
93. A careful analysis of argument for and against the involvement of organizations in social welfare is necessary to < Answer >
determine whether an organization should implement social initiatives. Which of the following is an argument for
social responsibility of Business?
(a) Loss of Profit Maximization
(b) Excessive Costs
(c) Weakened International Balance of Payments
(d) Balance of Responsibility and Power
(e) Lack of Accountability.

94. Organizations that adopt a matrix structure generally pass through some structural stages. In which of the structural < Answer >
stages, are managerial integrator positions established so that individuals can take responsibility for particular
projects, oversee product launches or deal with issues where coordination across functional departments is necessary?

(a) Functional (stage 1)

(b) Temporary overlay (stage 2)
(c) Permanent overlay (stage 3)
(d) Mature matrix (stage 4)
(e) Hybrid matrix (stage 5).
< Answer >
95. Departmentation is required for which of the following reason/s?
I. It facilitates control, coordination and communication.

14
 II. It provides a platform for healthy competition amongst employees within the organization.
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.
(a) Only (III) above
(b) Both (I) and (III) above
(c) Both (II) and (IV) above
(d) (I), (II) and (IV) above
(e) (I), (III) and (IV) above.
< Answer >
96. Which of the following is/are contributions of behavioral thinker Mary Parker Follet’s to management thought?
I. Focus on human relations.
II. Focus on group influences.
III. Emphasis on the concept of power sharing and integration.
IV. Classification of organizations based on the employees’ set of values.
(a) Only (III) above
(b) Both (I) and (IV) above
(c) Both (II) and (III) above
(d) (I), (II) and (III) above
(e) (I), (II) and (IV) above.
< Answer >
97. Which of the following statements is not true about tactical plans?
(a) They are concerned more with actually getting things done than with deciding what to do
(b) The time frame covered by tactical plans is usually 1 to 3 years
(c) They indicate actions that major departments and sub-units should take to execute an operational plan
(d) They are developed by middle level managers
(e) A tactical planer deals with much less uncertainty as compared to a strategic planner.
< Answer >
98. Middle level managers would engage in setting which of the following objectives?
I. Division objectives.
II. Overall organization objectives.
III. Individual performance objectives.
IV. Specific overall organization objectives such as those pertaining to key result areas.
(a) Only (I) above
(b) Both (I) and (II) above
(c) Both (I) and (IV) above
(d) Both (II) and (III) above
(e) (II), (III) and (IV) above.
< Answer >
99. Span of management includes
I. Assigning equal number of subordinates to managers at the same level.
II. Assessing employee skill and motivation levels.
III. Determination of how many people working with each other report to a single manager.
IV. Determination of the number of individuals a manager can effectively supervise.
(a) Only (II) above
(b) Only (IV) above
(c) Both (I) and (III) above
(d) Both (III) and (IV) above
(e) (I), (II) and (IV) above.
< Answer >
100. According to which of the following management approaches, does managerial practice depend on circumstances?
(a) Systems approach
(b) Contingency approach
(c) Mc Kinsey's 7-S framework
(d) Empirical approach
(e) Human relations approach.

15
 Suggested Answers
Introduction to Management - I (MB111): October 2006
1. Answer : (a) < TOP >

Reason : The step of formulating supporting plans in the planning process, involves plans to buy equipment,
materials, and hire and train worker.
2. Answer : (a) < TOP >

Reason : When managers delegate authority, they must allocate commensurate responsibility.
3. Answer : (a) < TOP >

Reason : The functions of management include planning, organizing, staffing, leading, and controlling.
Influencing is not a function of management.
4. Answer : (b) < TOP >

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.
5. Answer : (c) < TOP >

Reason : Power requires no formal position in an organization.

6. Answer : (d) < TOP >

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.
7. Answer : (c) < TOP >

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.
8. Answer : (a) < TOP >

Reason : When Sony first introduced the laser disk as a new way to view movies, it was classified as a question
mark.
9. Answer : (b) < TOP >

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.
10. Answer : (d) < TOP >

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.
11. Answer : (c) < TOP >

Reason : “Generating more alternatives” is an advantage of group decision-making, not a disadvantage.

12. Answer : (e) < TOP >

Reason : Executives’ track record is not a factor to be considered in external environmental analysis.
13. Answer : (c) < TOP >

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.
14. Answer : (d) < TOP >

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.
16
15. Answer : (e) < TOP >

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.
16. Answer : (b) < TOP >

Reason : The final responsibility for organizational planning rests with the chief executive.
17. Answer : (c) < TOP >

Reason : Centralization will be adopted when few functions rely on lower-level decision making.
18. Answer : (c) < TOP >

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.
19. Answer : (c) < TOP >

Reason : Hari has expert power.

20. Answer : (c) < TOP >

Reason : An office supply firm that has three departments based upon retail, wholesale, and governmental
customers, is using customer departmentalization.
21. Answer : (b) < TOP >

Reason : The process of designing and maintaining an environment in which individuals, working together in
groups, effectively accomplish selected aims is termed as management.
22. Answer : (c) < TOP >

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.
23. Answer : (e) < TOP >

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.
24. Answer : (c) < TOP >

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.
25. Answer : (a) < TOP >

Reason : The two managerial practices that emerged from Taylor’s scientific management are piece-rate
incentive system and time and motion study.
26. Answer : (a) < TOP >

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.
27. Answer : (c) < TOP >

Reason : Employee satisfaction is not an advantage of the functional structure as it (functional structure) leads to
boredom and monotony.
28. Answer : (d) < TOP >

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.

17
29. Answer : (c) < TOP >

Reason : Delphi technique is a group decision-making technique that involves a group of experts responding to a
questionnaire.
30. Answer : (c) < TOP >

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.
31. Answer : (e) < TOP >

Reason : High quality solutions are not attainable due to goals being unclear is not a limitation of rational
decision making.
32. Answer : (b) < TOP >
Reason : Many aspects of management cannot be explained in terms of models. This is a limitation of the
management science approach.
33. Answer : (b) < TOP >

Reason : Satisficing model says, “the ability of managers to be completely rational in making decisions is limited
by certain factors”.
34. Answer : (c) < TOP >

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.
35. Answer : (b) < TOP >

Reason : Tina is operating under certainty.

36. Answer : (e) < TOP >

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.
37. Answer : (c) < TOP >

Reason : Determining the problem involves scanning, categorization and diagnosis.

38. Answer : (d) < TOP >

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.
39. Answer : (b) < TOP >

Reason : Matrix organizational structure violates the ‘unity of command’ principle as stated by Henry Fayol.
40. Answer : (c) < TOP >

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.
41. Answer : (c) < TOP >

Reason : Procedures are standing plans. They are guides to action that explain in detail the manner in which
activities are to be performed.
42. Answer : (c) < TOP >

Reason : Unity of command is a management concept that recommends that employees should have one and only
one boss.
43. Answer : (c) < TOP >

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

18
 other divisions.
III. Coordination is simplified as each division is similar to an organization containing various
functions.
44. Answer : (e) < TOP >

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.
45. Answer : (e) < TOP >

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.
46. Answer : (d) < TOP >

Reason : The major disadvantage of the matrix structure is its propensity to foster power struggles.
47. Answer : (d) < TOP >

Reason : The management function that specifies goals to be achieved and decides in advance the appropriate
actions to achieve those goals is planning.
48. Answer : (d) < TOP >

Reason : The most appropriate reason for a manager to plan is that planning gives direction to an organization.
49. Answer : (c) < TOP >

Reason : Strategy is a plan designed to reach long-term objectives.

50. Answer : (d) < TOP >

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.
51. Answer : (e) < TOP >

Reason : An effective organizing effort involves rationale for the orderly use of management system resources,
responsibility, authority, and delegation.
52. Answer : (b) < TOP >

Reason : The effect of planning on managers is that it forces them to react to change.
53. Answer : (b) < TOP >

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.
54. Answer : (c) < TOP >

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.
55. Answer : (d) < TOP >

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.
56. Answer : (c) < TOP >

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

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

19
 interaction among different levels of an organization.
58. Answer : (d) < TOP >

Reason : Conceptual skills require that management view the organization as a whole.
59. Answer : (a) < TOP >

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.
60. Answer : (e) < TOP >

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.
61. Answer : (a) < TOP >

Reason : The following are factors that help measure social responsiveness:
I. Valuing diversity
II Fund-raising.
III. Direct Corporate investment.
62. Answer : (d) < TOP >

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.
63. Answer : (a) < TOP >

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.
64. Answer : (a) < TOP >

Reason : Henry Fayol’s principle of division of labor states that ‘work specialization leads to efficiency of
operations’.
65. Answer : (c) < TOP >
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.
66. Answer : (e) < TOP >

Reason : Sanctions serve as sources of control in an informal organization. Therefore, option (e) is incorrect.
67. Answer : (a) < TOP >

Reason : It requires a skilled group facilitator is a disadvantage of the nominal group process of decision making.
68. Answer : (e) < TOP >

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.
69. Answer : (d) < TOP >

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.

20
70. Answer : (d) < TOP >

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.
71. Answer : (b) < TOP >

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.
72. Answer: (e) < TOP >

Reason : Portfolio analysis is not a step involved in the strategic planning process.
73. Answer : (b) < TOP >

Reason : The following are subsystems that are frequently an integral part of ‘management by objectives’:
I. Manpower planning.
II. Compensation.
74. Answer : (d) < TOP >
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.
75. Answer : (b) < TOP >

Reason : Line-staff conflict is not a situational variable on which an organization’s position on the
decentralization-centralization continuum depends.
76. Answer : (a) < TOP >

Reason : Emphasis on short-term goals is not a factor that would make Management by Objectives (MBO) more
effective
77. Answer : (d) < TOP >
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.
78. Answer: (c) < TOP >

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.
79. Answer : (b) < TOP >

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.
80. Answer : (c) < TOP >

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.
81. Answer : (c) < TOP >
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.

21
82. Answer : (a) < TOP >

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
83. Answer : (d) < TOP >

Reason : The appropriate span of control for managers does not, in any way, depend on expenses incurred by the
organization.
84. Answer : (d) < TOP >

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.
85. Answer : (e) < TOP >

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.
86. Answer : (d) < TOP >
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.
87. Answer : (c) < TOP >

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.
88. Answer : (b) < TOP >

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.
89. Answer : (b) < TOP >
Reason : Centralization creates low-cost shared resources. Hence, option (b) is not an advantage of
decentralization.
90. Answer : (b) < TOP >

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.
91. Answer : (e) < TOP >

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.
92. Answer : (d) < TOP >

Reason : The following are approaches to that aid in developing better corporate strategies:
I. Values-based approach.
II. Corporate portfolio approach.
93. Answer : (d) < TOP >

Reason : Social responsibility is defined as a business firm’s obligation, beyond that required by law and
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 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.
94. Answer : (b) < TOP >
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.
95. Answer : (e) < TOP >

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.
96. Answer : (c) < TOP >

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.
97. Answer : (c) < TOP >

Reason : Tactical plans indicate actions that major departments and sub-units should take to execute a strategic
plan. Hence, option (c) is not true.
98. Answer : (c) < TOP >

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.
99. Answer : (d) < TOP >

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.
100. Answer : (b) < TOP >

Reason : According to contingency approach to management, managerial practice depends on circumstances.

< TOP OF THE DOCUMENT >

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