CAIB 4 Chapter 2- Study Guide Questions with Complete Solutions

CAIB 4 Chapter 2- Study Guide Questions with Complete Solutions Organizing involves determining the way the brokerage's activities will be divided into manageable units. Identify 3 elements to organizing effectively. 1. Creating an Organizational Structure 2. Defining employee relationships 3.Establishing Position Descriptions Identify 3 basic forms of organizational structure based on the way authority and responsibility is delegated. 1. Line Organization- best suited for smaller brokerages in which senior management personally directs the activities of subordinates. 2. Functional Organization-Departments are headed by specialists who have authority over a specific area of operation. Employees report to their immediate department manager. 3.Line and Staff Organization- this combines both forms of organization structure. Sales, service and financial management are treated as line management. Those who support the line are staff. the training manager is only able to advise the office and sales manager. What type of brokerage is suited for line organization and why? Best suited to smaller brokerage in which senior management personally directs the activities of others. Identify 3 advantages of the line organization. 1. Simplicity 2. Clear delegation of authority 3. Quick Decision Making Identify 3 disadvantages of line organization. 1. Line managers must be experts in all areas to make decisions. 2. Power is concentrated at the top b/c senior management is involved in all decision making 3.It limits growth and development of employees by stifling innovation. Identify why the functional organization form was created. The functional organization was created to overcome the key weaknesses of the line organization which is the concentration of too man activities and too few managers. Identify one advantage of a functional organization 1. Provides employees with expert advice. Identify 3 disadvantages of a functional organization 1. Since there is more than one boss, areas of overlapping authority staff may receive conflicting or inconsistent instructions. 2. Decision-making can be slow when a decision is required that does not firmly belong to any one manager. Employees can be referred to different managers without a decision actually being made. 3. When there are too many managers giving instructions, employees are frequently distracted from their primary roles of servicing their clients. Most brokerages find it an extremely difficult form to implement the functional organization properly (True or False) True Identify 2 advantages of the line and staff organization. 1. Areas of authority and responsibility are clearly defined. 2. As each employee has a line manager decisions can be made quickly. Expert advice is readily available to line managers when they need it. 3. Encourages better communication and co-operation on all levels Identify 3 disadvantages of the line and staff organization 1. Conflicts can arise when staff managers attempt to exert line authority or when line managers ignore staff advice. 2 Sometimes line managers resent having to seek advice which they feel obliged to accept. 3. Cost that is not directly related to producing revenue. The brkg must be big enough to generate enough revenue to cover the costs of production