CAIB 3 Chapter 2 Study Questions with
Answers
Organizing involves determining the way the brokerage's activities will be divided into
measurable units. Identify the three elements to organizing effectively. - ✔✔1. Creating an
Organizational Structure
2. Defining Employee Relationships
3. Establishing Position Descriptions
The organizational structure is the skeleton upon which the brokerage grows and interacts. The
structure also defines who has authority and responsibility for activities. Identify three basic
forms of organizational structure based on the way authority and responsibility is delegated. -
✔✔1. Line Organization
2. Functional Organization
3. Line and Staff Organization
Identify which type of brokerage is best suited for a line organization. Briefly explain why this is
so. - ✔✔Best suited to a smaller brokerage in which senior management personally directs the
activities of subordinates. This organizational form presumes that the senior executives are fully
familiar with all aspects of the brokerage's business, as all decisions are made directly by them.
In a line organization, each subordinate has only one person to whom they are responsible.
Identify three advantages of the line organization - ✔✔1. Simplicity
2. Clear delegation of authority
3. Quick decision making
Identify three disadvantages of the line organization - ✔✔1. Line managers must be fully
knowledgeable in a wide range of areas in order to be able to make decisions.
2. Power is concentrated at the top because senior management must be involved in all
decisions.
, 3. It limits the growth and development of employees by stifling innovation.
Identify why the functional organization form was created. - ✔✔To overcome the key weakness
of the line organization which is the concentration of too many activities in too few managers.
Identify two advantages of a functional organization - ✔✔1. Provides employees with expert
advice
2. Decisions are made by a management specialist
Identify three disadvantages of a functional organization - ✔✔1. Employees will find that they
have more than one "boss", so that in areas of overlapping authority they may be given
conflicting or inconsistent instructions.
2. When a decision is required that does not firmly belong to any one manager, decision-
making can be slow. Employees may be referred by one manager to another without any
decision being made.
3. When there are too many managers giving instructions, employees are frequently distracted
from their primary roles of serving their clients.
Most brokerages find it an extremely difficult form to implement the the functional
organization properly. True or False? - ✔✔True.
Line and Staff organization combines the strengths of both the line and the functional forms of
organization. Identify three 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 three 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. In some cases line managers resent having to seek advice which they feel obligated to accept.
Answers
Organizing involves determining the way the brokerage's activities will be divided into
measurable units. Identify the three elements to organizing effectively. - ✔✔1. Creating an
Organizational Structure
2. Defining Employee Relationships
3. Establishing Position Descriptions
The organizational structure is the skeleton upon which the brokerage grows and interacts. The
structure also defines who has authority and responsibility for activities. Identify three basic
forms of organizational structure based on the way authority and responsibility is delegated. -
✔✔1. Line Organization
2. Functional Organization
3. Line and Staff Organization
Identify which type of brokerage is best suited for a line organization. Briefly explain why this is
so. - ✔✔Best suited to a smaller brokerage in which senior management personally directs the
activities of subordinates. This organizational form presumes that the senior executives are fully
familiar with all aspects of the brokerage's business, as all decisions are made directly by them.
In a line organization, each subordinate has only one person to whom they are responsible.
Identify three advantages of the line organization - ✔✔1. Simplicity
2. Clear delegation of authority
3. Quick decision making
Identify three disadvantages of the line organization - ✔✔1. Line managers must be fully
knowledgeable in a wide range of areas in order to be able to make decisions.
2. Power is concentrated at the top because senior management must be involved in all
decisions.
, 3. It limits the growth and development of employees by stifling innovation.
Identify why the functional organization form was created. - ✔✔To overcome the key weakness
of the line organization which is the concentration of too many activities in too few managers.
Identify two advantages of a functional organization - ✔✔1. Provides employees with expert
advice
2. Decisions are made by a management specialist
Identify three disadvantages of a functional organization - ✔✔1. Employees will find that they
have more than one "boss", so that in areas of overlapping authority they may be given
conflicting or inconsistent instructions.
2. When a decision is required that does not firmly belong to any one manager, decision-
making can be slow. Employees may be referred by one manager to another without any
decision being made.
3. When there are too many managers giving instructions, employees are frequently distracted
from their primary roles of serving their clients.
Most brokerages find it an extremely difficult form to implement the the functional
organization properly. True or False? - ✔✔True.
Line and Staff organization combines the strengths of both the line and the functional forms of
organization. Identify three 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 three 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. In some cases line managers resent having to seek advice which they feel obligated to accept.
