Test on Company Structures and Organizational Design

Question 1: The modern tendency in organizational structure is to increase the chain of command and add more layers of management.

A. Ano

B. Ne

Explanation: The text states that 'the modern tendency is to reduce the chain of command, take out layers of management, and make the organization much flatter'.

Question 2: According to the provided text, what is a primary disadvantage of a functional organizational structure?

A. People within departments tend to prioritize their own department's success over the company's overall success.

B. It makes it difficult to establish a clear chain of command.

C. It necessitates that lower levels pass on all important decisions to their boss.

D. It often results in permanent conflicts between different departments regarding objectives.

Explanation: The text states, 'A disadvantage of functional organization is that people are often more concerned with the success of their own department than that of the company as a whole, so there are permanent conflicts between, say, finance and marketing or marketing and production over what the objectives are.' Options 0 and 3 directly reflect this statement.

Question 3: Maintaining large inventories helps ensure that products are available.

A. Ano

B. Ne

Explanation: The study materials explicitly list 'large inventories to make sure that products are available' as a strategy.

Question 4: The study materials indicate that generous credit facilities for customers are favored by the production department.

A. Ano

B. Ne

Explanation: The study materials list 'generous credit facilities for customers' as a strategy to be classified but do not provide information on which specific department would favour it. Therefore, the statement that the production department favors it is not supported by the provided text.

Question 5: The study materials provide a list of strategies to be classified by the department that would most likely favour them. Which of the following strategies is listed as an item to be classified?

A. A focus on reducing inventory to cut costs

B. A factory working at full capacity

C. Investing heavily in employee training programs

D. Outsourcing all production to third-party manufacturers

Explanation: The study materials list 'a factory working at full capacity' as one of the strategies to be classified according to which department would probably favour it.