Domain I – Business Acumen – Section B: Organizational Structure and Business Processes

Question 1

Organization Structure

Answer 1

refers to a set of building blocks that can be used to configure and organize an organization.
=> An organizational structure is usually depicted in an organizational chart.

Question 2

Unity of Objective

Answer 2

whereby the structure should provide for the individuals’ contributions to meet organizational objectives.

Question 3

Organizational Efficiency

Answer 3

whereby the structure should facilitate the achievement of organizational objectives in an efficient manner, thus with the minimum waste and forfeited opportunities.

Question 4

Organizational Effectiveness

Answer 4

whereby the structure should facilitate the achievement of organizational objectives.

Question 5

Authority

Answer 5

is the power granted by the organization to individuals to direct and prescribe operations.
=> Authority may be delegated.

Question 6

Responsibility

Answer 6

is the obligation to perform in anticipation of achieving desired objectives.
=> Responsibility should be linked to authority, as individuals should assume responsibility over actions that they control (or have authority over).

Question 7

Accountability

Answer 7

relates to the performance measurement of employees in relation to the discharge of their operating responsibilities.

Question 8

Span of Control

Answer 8

is the number of employees that report to a particular supervisor.
OR
refers to the maximum number of subordinates that a manager could effectively manage.

Question 9

Centralized Structure

Answer 9

is characterized by the concentration of authority and

responsibility at certain (relatively higher) levels of management.

Question 10

Tall structures

Answer 10

have more levels of management and a smaller span of control.

• The smaller number of subordinates assigned for each manager allows for relatively tighter controls and more strict disciplines.
• Tall structures offer more personal contact between managers and subordinates.
• Tall structures tend to have slower communication with a higher probability of distortions and inaccuracies in communication.

Question 11

Flat structures

Answer 11

have less levels of management and a larger span of control.

• Flat structures tend to have less levels of management.
• Wide spans of control encourage decentralization for individual initiative, self‐control and higher morale.
• Flat structures simplify both downward and upward communication and reduce the probability of distortions and inaccuracies in communication.

Question 12

Mechanistic

Answer 12

is characterized by a bureaucratic and inflexible structure appropriate for more stable environments.

Question 13

Organic

Answer 13

is characterized by a less formal and complex structure appropriate for unstable and continuously changing environments.

Question 14

Departmentalization

Answer 14

relates to the grouping of functions and divisions in the organization.
=> Departmentalization may be by: customer, product, territory or location, project, functional.

Question 15

Matrix Design

Answer 15

1. Refers to a structure of departmentalization that allows flexibility to conduct operations utilizing the benefits of the product/project departmentalization while also benefiting from the functional departmentalization.
2. Matrix organizations are appropriate for companies that have several complex multidisciplinary projects.

Question 16

The virtual organization

Answer 16

refers to a network of established organizations that come together temporarily to exploit an opportunity.

Question 17

Cluster organizations

Answer 17

are based on a group of teams with multi‐skilled members that shift between the teams as deemed necessary.

Question 18

Network organizations

Answer 18

1. Refers to a group of interrelated organizations that are deemed as a network rather than a vertically integrated organization.
2. Members of the network engage in a strategic long‐term relationship based on implicit agreements.

Question 19

Hourglass (sablier)

Answer 19

1. As the name suggests, tends to have a relatively flat structure with the typical shape of an hour glass.
2. Hourglass structure is usually comprised of three layers:
   a. The first layer is the strategic layer that includes top management.
   b. The second layer is the coordinating managers who coordinate between the first and the third layer.
   c. The third layer includes empowered specialists who are often not supervised.