CAIB 4 - Chapter 2
1. Creating an organizational structure.
2. Defining employee relationships.
3. Establishing position descriptions.—ANSWER--Identify 3 elements to organizing
effectively:
1. Line organization
2. Functional organization
3. Line and staff organization—ANSWER--Identify 3 basic forms of organizational
structure based on the way authority and responsibility is delegated.
Smaller brokerages in which senior management personally directs the activities of the
subordinates.
Presuming all senior executives are fully familiar with all aspects of the brokerage's
business, line organization is best suited for the noted brokerage as all decisions are
directly made by senior executives. Authority flows vertically downward from the most
senior executive officer. Responsibility flows upward to the most senior position.—
ANSWER--Identify which type of brokerage is best suited for a line organization and
briefly explain why this is so.
, 1. Simplicity
2. Clear delegation of authority
3. Quick decision making—ANSWER--Identify 3 advantages of the line organization
1. Line managers must be knowledgeable in a wide range of areas in order to make
decisions.
2. Power is concentrated at the top
3. Limits growth and development of employees by stifling innovation.—ANSWER--
Identify 3 disadvantages of the line organization.
It was created to overcome the key weakness of the line organization which is the
concentration of too many activities in too few managers.—ANSWER--Identify why the
functional organization form was created.
Provides employees with expert advice—ANSWER--Identify 1 advantage of a functional
organization.
1. Overlap in authority, resulting in conflicting and inconsistent instructions.
(Employees feel they have more than one "boss.")
2. Decision making can be slow if it does not firmly belong to 1 manager.
3. Employees are frequently distracted from their primary roles, as there are too many
managers giving instructions.—ANSWER--Identify 3 disadvantages of a functional
organization.
True—ANSWER--True or False - Most brokerages find it an extremely difficult form to
implement the functional organization properly.
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
1. Creating an organizational structure.
2. Defining employee relationships.
3. Establishing position descriptions.—ANSWER--Identify 3 elements to organizing
effectively:
1. Line organization
2. Functional organization
3. Line and staff organization—ANSWER--Identify 3 basic forms of organizational
structure based on the way authority and responsibility is delegated.
Smaller brokerages in which senior management personally directs the activities of the
subordinates.
Presuming all senior executives are fully familiar with all aspects of the brokerage's
business, line organization is best suited for the noted brokerage as all decisions are
directly made by senior executives. Authority flows vertically downward from the most
senior executive officer. Responsibility flows upward to the most senior position.—
ANSWER--Identify which type of brokerage is best suited for a line organization and
briefly explain why this is so.
, 1. Simplicity
2. Clear delegation of authority
3. Quick decision making—ANSWER--Identify 3 advantages of the line organization
1. Line managers must be knowledgeable in a wide range of areas in order to make
decisions.
2. Power is concentrated at the top
3. Limits growth and development of employees by stifling innovation.—ANSWER--
Identify 3 disadvantages of the line organization.
It was created to overcome the key weakness of the line organization which is the
concentration of too many activities in too few managers.—ANSWER--Identify why the
functional organization form was created.
Provides employees with expert advice—ANSWER--Identify 1 advantage of a functional
organization.
1. Overlap in authority, resulting in conflicting and inconsistent instructions.
(Employees feel they have more than one "boss.")
2. Decision making can be slow if it does not firmly belong to 1 manager.
3. Employees are frequently distracted from their primary roles, as there are too many
managers giving instructions.—ANSWER--Identify 3 disadvantages of a functional
organization.
True—ANSWER--True or False - Most brokerages find it an extremely difficult form to
implement the functional organization properly.
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
