BAD 4013 - EXAM 2 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
Division of Labor - Answers -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 - Answers -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 - Answers -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 - Answers -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 - Answers -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 -
Answers -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. - Answers -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. - Answers When people make a boundedly rational decision, they gather and
analyze as much information as they can and then make a satisficing decision.
, Satisficing - Answers 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. -
Answers Decisions continue to be made, but the quality of the decision will decrease.
Understand information processing requirements and how that affects organizational structure. -
Answers -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 - Answers -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.
Functional Structure - Answers -Orgs are structured around business functions that must take place
for a firm to succeed
-Those functions are identified around the value chain activities and a manager is assigned to each.
-An important benefit of adopting a functional structure is that each person tends to learn a great
deal about their particular function.
-A functional structure tends to create highly-skilled specialists.
Grouping everyone that serves a particular function into one department tends to keep costs low and
create efficiency.
-Functional structures tend to work best for organizations that offer narrow and stable product lines
and therefore should be considered in enacting a business level strategy.
-In this structure, the important tasks associated with running the organization are each assigned to a
functional manager (i.e. Marketing Manager, Finance Manager etc.).
-The CEO is responsible for looking to the big picture, setting the overall strategic direction of the firm
and in coordinating the activities of the functional departments to accomplish that overall direction.
-CEO is also responsible for managing any conflict that may arise between the different departments.
Multidivisional Structure - Answers -Employees are divided into divisions based on product areas
and/or geographic regions
-You break a firm into these different divisions to allow them to better serve its specific customers'
needs.
-By giving division the autonomy to act quickly can backfire if people in those divisions take actions
that do not fit with the company's overall strategy.
-Multidivisional structures tend to be more costly to operate than functional structures because of
the additional expense in management as well as the duplication of functional structures in each
division
Division of Labor - Answers -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 - Answers -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 - Answers -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 - Answers -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 - Answers -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 -
Answers -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. - Answers -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. - Answers When people make a boundedly rational decision, they gather and
analyze as much information as they can and then make a satisficing decision.
, Satisficing - Answers 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. -
Answers Decisions continue to be made, but the quality of the decision will decrease.
Understand information processing requirements and how that affects organizational structure. -
Answers -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 - Answers -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.
Functional Structure - Answers -Orgs are structured around business functions that must take place
for a firm to succeed
-Those functions are identified around the value chain activities and a manager is assigned to each.
-An important benefit of adopting a functional structure is that each person tends to learn a great
deal about their particular function.
-A functional structure tends to create highly-skilled specialists.
Grouping everyone that serves a particular function into one department tends to keep costs low and
create efficiency.
-Functional structures tend to work best for organizations that offer narrow and stable product lines
and therefore should be considered in enacting a business level strategy.
-In this structure, the important tasks associated with running the organization are each assigned to a
functional manager (i.e. Marketing Manager, Finance Manager etc.).
-The CEO is responsible for looking to the big picture, setting the overall strategic direction of the firm
and in coordinating the activities of the functional departments to accomplish that overall direction.
-CEO is also responsible for managing any conflict that may arise between the different departments.
Multidivisional Structure - Answers -Employees are divided into divisions based on product areas
and/or geographic regions
-You break a firm into these different divisions to allow them to better serve its specific customers'
needs.
-By giving division the autonomy to act quickly can backfire if people in those divisions take actions
that do not fit with the company's overall strategy.
-Multidivisional structures tend to be more costly to operate than functional structures because of
the additional expense in management as well as the duplication of functional structures in each
division
