BAD 4013 - Exam 2 questions with
complete solutions
Division of Labor - correct answer ✔✔-Process of splitting up a task into a series of smaller tasks, each of
which is performed by a specialist. This fuels efficiency.
-By subdividing those tasks, it makes the overall process more productive
-There are limits to divisions of labor
1. If you subdivide the task too much, the costs of paying people becomes greater than the efficiency
benefits associated with division of labor
2. If you subdivide the tasks too much, the job can become monotonous, leading workers to be less
engaged and motivated
3. A challenge with division of labor is coordinating the people doing the smaller tasks to insure that the
overall task is done as expected.
Vertical linkages - correct answer ✔✔-Tie supervisors and subordinates together.
-Show the lines of responsibility through which a supervisor delegates authority to subordinates,
oversees their activities, evaluates their performance, and guides them toward improvement when
necessary.
Horizontal linkages - correct answer ✔✔-Relationships between equals in an organization.
-Often these linkages are called committees, task forces, or teams.
-These are of great importance when close coordination is needed across different segments of an
organization.
,Informal linkages - correct answer ✔✔-Unofficial relationships between organization members that do
not appear on the organization chart.
-Could be an effective way for information to flow between organization members.
Unity of Command - correct answer ✔✔-In general, each person should only report directly to one
supervisor.
-This helps to avoid confusion.
-When a person with multiple supervisors make a mistake, they will be reprimanded multiple times,
which can be demotivating
-A person could play their two bosses off of each other (telling each boss that they are busy with work
for the other) allowing them to shirk.
Information processing requirements exceed individual cognitive capacity, managers can feel
overwhelmed by the amount of information they have to process in order to make decisions - correct
answer ✔✔-As organizations get larger and become more complex (diversification, vertical integration,
internationalization, etc), this sense of overwhelmedness increases.
-This limit is why perfectly rational decisions cannot be made.
-Structure helps reduce information processing requirements on people
Perfectly rational decisions assume that you gather every piece of information which allows you to
consider every possible option and outcome and then you choose the "best" option that maximizes your
outcomes. - correct answer ✔✔-It is difficult to impossible to make perfectly rational decisions
1. It is impossible to gather perfect information.
2. Even if you could, considering all that information would take too long to make a decision.
, Bounded rationality- people have a limit on what they can process, therefore they may not make the
best or rational decision. - correct answer ✔✔When people make a boundedly rational decision, they
gather and analyze as much information as they can and then make a satisficing decision.
Satisficing - correct answer ✔✔picking the best alternative out of the alternatives considered. This
alternative may be the best of the universe of alternatives, but could also be a lower quality alternative.
Information processing requirements may even overwhelm the ability to be boundedly rational. - correct
answer ✔✔Decisions continue to be made, but the quality of the decision will decrease.
Understand information processing requirements and how that affects organizational structure. - correct
answer ✔✔-Organization structure allows the processing requirements to be spread more, and is
intended to increase the quality of decisions.
-When the "right" information is considered by a decision maker, they tend to make better decisions
(closer and closer to the maximizing outcome.)
-Dividing into manageable blocks should hopefully get the right information to the location where it can
best help in making an optimal decision.
Simple structure - correct answer ✔✔-There is no formal division of labor. One or two people does
everything.
-This does make coordination easier (those people know the tasks are being done to their satisfaction
since they're doing everything), but it's hard to do everything by yourself.
-By multitasking you do not give adequate attention to each task.
-Because of the limitations of the simple structure, oftentimes entrepreneurial start-ups skip this step
and go straight to the functional structure.
complete solutions
Division of Labor - correct answer ✔✔-Process of splitting up a task into a series of smaller tasks, each of
which is performed by a specialist. This fuels efficiency.
-By subdividing those tasks, it makes the overall process more productive
-There are limits to divisions of labor
1. If you subdivide the task too much, the costs of paying people becomes greater than the efficiency
benefits associated with division of labor
2. If you subdivide the tasks too much, the job can become monotonous, leading workers to be less
engaged and motivated
3. A challenge with division of labor is coordinating the people doing the smaller tasks to insure that the
overall task is done as expected.
Vertical linkages - correct answer ✔✔-Tie supervisors and subordinates together.
-Show the lines of responsibility through which a supervisor delegates authority to subordinates,
oversees their activities, evaluates their performance, and guides them toward improvement when
necessary.
Horizontal linkages - correct answer ✔✔-Relationships between equals in an organization.
-Often these linkages are called committees, task forces, or teams.
-These are of great importance when close coordination is needed across different segments of an
organization.
,Informal linkages - correct answer ✔✔-Unofficial relationships between organization members that do
not appear on the organization chart.
-Could be an effective way for information to flow between organization members.
Unity of Command - correct answer ✔✔-In general, each person should only report directly to one
supervisor.
-This helps to avoid confusion.
-When a person with multiple supervisors make a mistake, they will be reprimanded multiple times,
which can be demotivating
-A person could play their two bosses off of each other (telling each boss that they are busy with work
for the other) allowing them to shirk.
Information processing requirements exceed individual cognitive capacity, managers can feel
overwhelmed by the amount of information they have to process in order to make decisions - correct
answer ✔✔-As organizations get larger and become more complex (diversification, vertical integration,
internationalization, etc), this sense of overwhelmedness increases.
-This limit is why perfectly rational decisions cannot be made.
-Structure helps reduce information processing requirements on people
Perfectly rational decisions assume that you gather every piece of information which allows you to
consider every possible option and outcome and then you choose the "best" option that maximizes your
outcomes. - correct answer ✔✔-It is difficult to impossible to make perfectly rational decisions
1. It is impossible to gather perfect information.
2. Even if you could, considering all that information would take too long to make a decision.
, Bounded rationality- people have a limit on what they can process, therefore they may not make the
best or rational decision. - correct answer ✔✔When people make a boundedly rational decision, they
gather and analyze as much information as they can and then make a satisficing decision.
Satisficing - correct answer ✔✔picking the best alternative out of the alternatives considered. This
alternative may be the best of the universe of alternatives, but could also be a lower quality alternative.
Information processing requirements may even overwhelm the ability to be boundedly rational. - correct
answer ✔✔Decisions continue to be made, but the quality of the decision will decrease.
Understand information processing requirements and how that affects organizational structure. - correct
answer ✔✔-Organization structure allows the processing requirements to be spread more, and is
intended to increase the quality of decisions.
-When the "right" information is considered by a decision maker, they tend to make better decisions
(closer and closer to the maximizing outcome.)
-Dividing into manageable blocks should hopefully get the right information to the location where it can
best help in making an optimal decision.
Simple structure - correct answer ✔✔-There is no formal division of labor. One or two people does
everything.
-This does make coordination easier (those people know the tasks are being done to their satisfaction
since they're doing everything), but it's hard to do everything by yourself.
-By multitasking you do not give adequate attention to each task.
-Because of the limitations of the simple structure, oftentimes entrepreneurial start-ups skip this step
and go straight to the functional structure.
