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Sample Mid-term exam

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Date: **************

Time: *********

Student Name:______________________________________________________________
Student Roll Number:________________________________________________________
Student Section:_____________________________________________________________

This test booklet comprises 8 pages back to back.


This is a closed book exam.
Section 1:
Each of the multiple choice questions below is worth one (1) point. Clearly mark the best
answer to the question. If you have to change your answer, the change should be clear. In case
of ambiguity it will be marked incorrect. There will be negative points for wrong answers - each
wrong answer will get you - 0.5 points.
1.

Scientific management, pioneered by Frederick Taylor, claimed that decisions about


organizations and job design should be based on
(A)
precise, scientific procedures after careful study of individual situations
(B)
the insight of practitioners
(C)
better utilization of skills
(D)
improved coordination

2.

When Shikhar Ghosh adopted the functional structure at Appex Corporation, several
deficiencies were observable. He introduced product teams to
(A)
increase coordination across functions
(B)
integrate the functional requirements for each product
(C)
launch new products in the market
(D)
provide managerial assistance to technical experts

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3.

When an organization is in an environment that is changing, where the technology is


non-routine and interdependent, there is a strong need for
(A)
hierarchical referral
(B)
vertical information displacement
(C)
Horizontal coordination
(D)
a mechanistic organizational structure

4.

Grouping by activity means that people are organized according to


(A)
what people are required to produce
(B)
the type of customer they serve
(C)
the functions they perform
(D)
all of the above

5.

The ___________ structure dis-aggregates major functions into separate companies or


individuals that are coordinated or brokered by a small headquarters organization.
(A)
self-managed team
(B)
dynamic network
(C)
heterarchy
(D)
cross-functional team

6.

The advantages of division of labor in an organization are


(A)
improved efficiency
(B)
simplified tasks
(C)
better utilization of skills
(D) improved coordination

7.

When information processing needs are high, an organization may try to increase its
information processing capacity by implementing
(A)
liaison roles
(B)
teams
(C)
matrix organization
(D)
all of the above

8.

In an operation room of a hospital, several professionals have to work in close


coordination because none of them can perform their function independent of the
functions performed by the others. This is an illustration of
(A)
pooled interdependence
(B)
sequential interdependence
(C)
reciprocal interdependence
(D)
none of the above

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9.

Certain services required by all units in a multi-business organization, such as pension


administration, can be centralized at the corporate office in order to
(A)
achieve economies of scale
(B)
provide overall strategic guidance
(C)
monitor and control use of resources
(D)
achieve economies of scope

10. In an organization, managers can control decision making of subordinates/units


reporting to them by using outcome controls when
(A)
the relationship between effort and outcome is strong
(B)
outcomes can be easily measured
(C)
A and B
(D)
A but not B
11. Behavioral control of managerial decision making should be adopted when
(A)
it is too expensive to monitor outcomes
(B)
there is a strong correlation between effort and outcome
(C)
there are many uncontrollable factors that influence outcomes
(D)
managers cannot be trusted
12. Formal coordination of multiple units in an organization may be necessary to
(A)
optimize outcomes at the corporate level
(B)
force some units to produce at sub-optimum level in order to maximize
corporate outcomes
(C)
A and B
(D)
A but not B
13. The disadvantages of a functional structure are
(A)
poor horizontal coordination among departments
(B)
it enables in-depth skill development
(C)
A and B
(D)
A but not B
14.

An important implication of high differentiation in an organization is that


(A) the organization will be more organic.
(B) coordination between departments will be difficult.
(C) controlling the environment will be difficult.
(D) the hierarchy of authority will be the most important integrating mechanism.

15.

One disadvantage of decentralization is that


(A)
top managers may neglect strategic decision making.
(B)
the decision-making process is inflexible.
(C)
it may be hard to motivate managers.
(D)
it may be hard to coordinate activities.

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Section 2:
Read the case below and write your answers in the space provided. No extra sheets allowed.
CASE:
Case: Aquarius Advertising Agency
The Aquarius Advertising Agency is a middle-sized firm that offered two basic services to its
clients: (1) customized plans for the content of an advertising campaign (e.g. slogans, layouts),
and (2) complete plans for media (such as radio, TV, newspapers, billboards, magazines, etc.).
Additional services included aid in marketing and distribution of products, and marketing
research to test advertising effectiveness.
Its activities are organized in a traditional manner. The formal organization is shown in
Figure 1. Each department consists of persons who perform similar functions. Each client
account is coordinated by an account executive who acts as a liaison between the client and the
various specialists on the professional staff of the operations and marketing divisions.

Figure 1
President
Vice-President
Accounts

Accounts
Dept.

Vice-President
Operations

Art
Copy TV/Radio
Dept. Dept. Production
Dept.

Vice-President
Marketing

Newspaper/ Research Media


Magazine
Dept
Dept.
Production
Dept.

Merchandising
Dept.

Although an account executive was designated to be the liaison between the client and
specialists within the agency, communications frequently occurred directly between clients and
specialists and bypassed the account executive. These direct contacts involved a wide range of
interactions such as meetings, telephone calls, letters, and so on. A large number of direct
communications occurred between agency specialists and their counterparts in the client
organization. For example, an art specialist working as one member of a team on a particular
client account would often be contacted directly by the client's in-house art specialist, and
agency research personnel had direct communication with research people of the client firm.
Also, some of the unstructured contacts often led to more formal meetings with clients in

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which agency personnel made presentations, interpreted and defended agency policy, and
committed the agency to certain courses of action.
Both hierarchical and professional systems operated within the departments of the
operations and marketing divisions. Each department was organized hierarchically with a
director, an assistant director, and several levels of authority. Professional communications
were widespread and mainly concerned with sharing knowledge and techniques, technical
evaluation of work, and development of professional interests. Control in each department
was exercised mainly through control of promotions and supervision of work done by
subordinates. Many account executives, however, felt the need for more influence, and one
commented:
Creativity and art. That's all I hear around here. It is hard as hell to effectively
manage six or seven hot shots who claim they have to do their own thing. Each
of them tries to sell his or her idea to the client and most of the time I don't know
what has happened until a week later. If I were a despot I would make all of
them check with me first to get approval. Things would sure change around here.
The need for reorganization was made more acute by changes in the environment.
Within a short period of time, there was a rapid turnover in the major accounts handled by the
agency. It was typical for advertising agencies to gain or lose clients quickly, often with no
advance warning as consumer behavior and lifestyle changes emerged and product innovations
occurred.
An agency reorganization was one solution proposed by top management to increase
flexibility in this unpredictable environment. The reorganization was aimed at reducing the
agency's response time to environmental changes and at increasing cooperation and
communication among specialists from different departments. The top managers are not sure
what type of reorganization is appropriate. They would like your help analyzing their context
and current structure, and welcome your advice on proposing a new structure.

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Questions:
1.

Explain why the organization is experiencing problems dealing effectively with its
clients.

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2.

Describe the organization structure that you would recommend to overcome some of
the problems.

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