Chapter 8

Question 1

Economies of Scale

Answer 1

Companies can reduce their production costs by purchasing raw materials in bulk. Therefore, the average cost of goods decrease as production levels rise.

Question 2

Hierarchy

Answer 2

A system in which one person is at the top of an organization and there is a ranked or sequential ordering from the top down.

Question 3

Chain of Demand

Answer 3

The line of authority that moves from the top of the hierarchy to the lowest level.

Question 4

Organization Chart

Answer 4

A visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom.

Question 6

Bureaucracy

Answer 6

An organization with many layers of managers who set rules and regulations and oversee all decisions.

Question 7

Departmentalization

Answer 7

The dividing of organizational functions into separate units. Workers are grouped by skills and expertise to specialize their skills.

Question 8

Span of control

Answer 8

The optimum number of subordinates a manager supervises or should supervise.

Question 9

Line Personnel

Answer 9

Employees who are part of the chain of command that is responsible for achieving organizational goals. (Pilots, college professors, store managers, etc)

Question 10

Staff Personnel

Answer 10

Employees who advise and assist line personnel in meeting their goals.

Question 11

Benchmarking

Answer 11

Compares an organization’s practices, processes, and products against the world’s best.

Question 12

Core competencies

Answer 12

Those functions that the organization can do as well as or better than any other organization.