Questions of 2015

1. Define span of control. What are the difference between tall structure and flat structure?
From the authority to the subordinates, there exists a line of control , the size of that line is called the span of
control.
The difference between tall and flat organizational structures is the layers of management. In a flat
organizational structure, there may be just one top manager who is an owner or CEO of the company, overseeing a
handful of other employees, all with equal levels of authority. In a tall organizational structure, by contrast, there are
multiple layers of authority between the CEO and low-level employees. For example, an entry-level employee may
report to a supervisor, who reports to a manager, who reports to a director, who reports to a vice president, who,
finally, reports to top management.
2. What is understood by MBO?
Management by Objectives (MBO) is a personnel management technique where managers and employees
work together to set, record and monitor goals for a specific period of time. Organizational goals and planning flow
top-down through the organization and are translated into personal goals for organizational members.
3. What are the merits and demerits of centralization and decentralization of power
Centralization means the authority is centralized at the top level of management. Decisions are made by the
higher level managers. It is opposite of decentralization. Top managers make all the decisions. Subordinates simply
carry them out.
MERITS OF CENTRALIZATION
1. Specialization management: The higher the specialization of jobs, the greater the need for centralization. Tall
hierarchical organizations with functional departments are best managed through centralization.
2. Complexity management: Specialization of jobs creates complexity. Narrow spans of management also create
complexity. Centralization provides advantage to manage complexity. Uniform policies and practices are fostered.
Specialists can be used.
3. Significant decision making: Non-programmed significant decisions require centralized decision making by top
management. Decentralization is not suitable for making such decisions. Moreover, management philosophy may
also favor centralization in such decision.
4. Environmental stability: Centralization is the most suitable model for making decisions in stable environment.
5. Improved capacity at lower levels: Subordinates may lack capacity or be unwilling and inexperienced to
exercise decentralized authority. Such situations give advantage to centralization.
6. Crisis management: When organizations face crisis or risk of failure, centralized decision making by top
management has advantage.
7. Cost effective: High cost of decentralization makes centralization advantageous. Duplication of efforts is
minimized.
DEMIRITS OF CENTRALIZATION
1. Poor environmental adaptation: Organizational environment tends to be dynamic, complex and uncertain.
Centralization cannot quickly adapt to the changing environment.
2. Poor diversification management: Modern organizations tend to be highly diversified. They are also
geographically dispersed. Centralization is not suitable to manage diversified and dispersed organizations.
3. Unsuitable for programmed decisions: Programmed decisions are routine-type decisions. They are relatively
minor decisions. Such decisions are not suitable for centralization. They burden top managers.
4. Poor management development: Centralization blocks the management development of subordinates. Their
skills and talents remain unutilized because of lack of participation and involvement in decision making.
5. Delayed decisions: Centralization creates multiple layers for decision making purposes. The files move through
the hierarchy from subordinates to bosses. This delays decision making.
Decentralization is the result of delegation of authority. It is devolution of decision making authority downward.
MERITS OF DECENTRALIZATION
1. Quicker and better decisions: it disperses decision making authority close to unit managers who execute
decisions. It reduces problems of communication and red tape. This leads to quicker and better decision making
2. Diversification: decentralization facilitates diversification of products, activities and markets. Profit centers can
be established with independence in decision making.
3. Competitive organizational climate: Decentralization promotes competitive climate for improving performance
among divisions and profit centers.
4. Management development: decentralization encourages managers to exercise freedom and independence in
decision making. They learn to make decisions and exercise judgment. This develops managerial competency.
5. Environmental adaptation: Decentralization helps organizations to adapt to fast-changing environment.
6. Relieves burden of top management: Top managers are relieved from making routine decisions. They can
concentrate on important issues of strategic relevance.
7. Higher motivation and morale: Decentralization provides power, prestige and status to subordinates. This
increases motivation and morale of subordinates.
DEMERITS OF DECENTRALIZATION
1. Problem of coordination and control: Decentralization provides freedom and independence in decision making.
This can lead to inconsistencies in policies, programs and procedures. This can create the problem of poor
coordination and control.
2. High cost: Decentralization can result in duplication of efforts and waste of resources. Human resources need
to be trained. This results in increased costs. It is also time consuming.
3. Unsuitable for specialized services: Decentralization is not suitable in tackling emergency situations.
Adjustment to fast changing situation may be difficult.
4. Handicap in emergency: Decentralization can become a handicap in tackling emergency situations. Adjustment
to fast changing situation may be difficult.
5. Lack of managerial capacity: Decentralization requires competent and skilled subordinates. It may be difficult
to find them.
6. Managerial desires and fears.
4. What is delegation of authority and responsibility?

Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation
is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and
sub-allocation of powers to the subordinates in order to achieve effective results.
Managers can delegate authority however they cannot delegate responsibility, this is important. Although an
employee is responsible for meeting deadlines, goals and objectives, the Manager is still ultimately responsible for
the success of the delegated task.
5. Difference between planning and controlling.

Planning is looking forward whereas controlling is looking back.
6. Difference between formal and informal organisation.

 An organization type in which the job of each member is clearly defined, whose authority, responsibility
and accountability are fixed is formal organization.
An organization formed within the formal organization as a network of interpersonal relationship, when
people interact with each other, is known as informal communication.
 Formal organisation is created deliberately by top management.
Informal organisation is created spontaneously by members.
 The purpose of formal organisation is to fulfill, the ultimate objective of the organization.
The purpose of informal organisation is to satisfy their social and psychological needs.
 Formal organisation is stable, it continues for a long time.
Informal organisation is not stable.
 Formal organistion is controlled by rules and regulations.
Informal organisation is controlled by norms, beliefs and values.
 Frmal organisation focuses on work performance.
Informal organisation focuses on interpersonal relationships.
 Formal organisation are of a large size.
Informal organisation are of of a small size.
7. What is departmentalisation?
Departmentalization involves dividing an organization into different departments, which perform tasks
according to the departments' specializations in the organization. Departmentalization as a means of
structuring an organization can be found in both public and private organizations.
8. What is change?
What is resistance to change?
Change management is the process, tools and techniques to manage the people side of change to achieve
the required business outcome. Change management incorporates the organizational tools that can be
utilized to help individuals make successful personal transitions resulting in the adoption and realization of
change.
Resistance to change is the action taken by individuals and groups when they perceive that a change that is
occurring as a threat to them. Key words here are 'perceive' and 'threat'. The threat need not be real or large
for resistance to occur.

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Questions of 2015

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1. Define span of control. What are the difference between tall structure and flat structure?

2. What is understood by MBO?

4. What is delegation of authority and responsibility?

5. Difference between planning and controlling.

6. Difference between formal and informal organisation.

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