IIA IIA Certifications IIA-CIA-PART3 Questions & Answers

• Question 691:

  The primary difference between centralization and decentralization is:

  A. Separate offices for all managers.

  B. Geographical separation of divisional headquarters and central headquarters.

  C. The extent of freedom of decision making by many levels of management.

  D. The relative size of the firm.

  Correct Answer: C

  The primary distinction between centralization and decentralization is in the degree of freedom of decision making by managers at many levels. In decentralization, decision making is at as low a level as possible. The premise is that the local manager can make better more informed) decisions than a centralized manager. Centralization is based on the theory that decision making must be consolidated so that activities throughout the organization may be more effectively coordinated. In most organizations, a mixture of these approaches is found to be best.

• Question 692:

  Advantages of decentralization include all of the following except:

  A. Decisions are more easily made.

  B. Managers' motivation increases.

  C. Greater uniformity in decisions.

  D. Problems can be dealt with on the spot.

  Correct Answer: C

  Organizational design should achieve a balance between centralization and decentralization. The main benefits of centralization are more effective control and reduced costs through resource sharing. The main benefits of decentralization are flexibility and adaptability that permit a rapid response to changes in circumstances. Accordingly, increased uniformity in decision making is an advantage of centralization. It reflects the benefit of more effective control.

• Question 693:

  Which of the following is a reason that a manager may be reluctant to delegate?

  A. The manager fears being held accountable for the subordinate's performance.

  B. The manager fears failing because of some lack of knowledge.

  C. The manager did not monitor the subordinate's work.

  D. The manager fears unknown goals.

  Correct Answer: A

  Managers fear delegating because of insecurity, mistrust, insufficient planning, and/or aversion to the risk of being responsible for subordinates' actions.

• Question 694:

  A network organizational structure is one in which:

  A. An employee reports to two bosses.

  B. Authority and responsibility are concentrated at the top of the organization.

  C. Labor is specialized.

  D. Major business functions are subcontracted to third-party providers.

  Correct Answer: D

  The subcontracting of major business functions to others is a feature of network structures.

• Question 695:

  Which of the following is a benefit of decentralization?

  A. The head of the company is aware of and can influence all decisions before they are made.

  B. The company is operated as one unit.

  C. Specialists for a particular product have no authority but advise the company's top management.

  D. Decisions are made on a more timely basis.

  Correct Answer: D

  Decentralization is the extent to which decision-making power is delegated within an entity. When approval from upper-level management is not required, lower-level managers can make more timely decisions because they are closer to the necessary sources of information.

• Question 696:

  A claimed advantage of decentralizing is:

  A. Concentration of authority.

  B. Manager development.

  C. Elimination of duplication of effort.

  D. Departmentalization.

  Correct Answer: B

  When an organization changes from a centralized to a decentralized structure, top management is delegating more authority to middle and lower levels. Thus, managers at these lower levels are usually hired and developed more rigorously than under the centralized structure.

• Question 697:

  Which of the following is a reason for delegating?

  A. The manager wants to make more decisions.

  B. Subordinates lack initiative.

  C. The manager wants to remain the sole expert in the manager's field.

  D. Subordinates have too many responsibilities.

  Correct Answer: B

  Delegation is the assignment of a manager's authority and/or workload to the manager's subordinates. By increasing subordinates' responsibilities, the manager gives them more opportunity to exercise judgment and become more confident.

• Question 698:

  Centralization and decentralization are defined according to the relative delegation ofdecisionmakingauthority by top management. Many managers believe that decentralized organizations have significant advantages over centralized organizations. A major advantage of a decentralized organization is that:

  A. Decentralized organizations are easier to control.

  B. Decentralized structures streamline organizations and eliminate duplication of resources.

  C. Decentralized organizations have fewer managers than centralized organizations.

  D. Decentralized organizations encourage increased initiative among employees.

  Correct Answer: D

  A decentralized organization allows lower level employees to participate in decision making. This increased involvement encourages initiative and creative thinking and is especially appropriate in complex and rapidly changing environments.

• Question 699:

  A flat organization structure is one with relatively few levels of hierarchy and is characterized by wide spans of management control. A tall organization has many levels of hierarchy and narrow spans of control. Which of the following situations is consistent with a flat organization structure?

  A. Tasks require little direction and control of subordinates.

  B. Work areas are geographically dispersed.

  C. Tasks are highly complex and varied.

  D. Subordinates perform distinctly different tasks.

  Correct Answer: A

  Flat structures have the advantages of fast information flow from the top to the bottom of the organization and increased employee satisfaction. Tall structures are faster and more effective at problem resolution because of the increased frequency of interaction between superior and subordinate and the greater order imposed by the hierarchy. For a flat structure to be successful, employees must be able to work without supervision much of the time because a manager with many employees has little time for each one.

• Question 700:

  Which of the following is a disadvantage of a flat organizational structure?

  A. Employees are not encouraged to be creative.

  B. The input of fresh ideas from outside the company is limited because employee turnover is low.

  C. Managers spend too much time training individuals and not enough time supervising.

  D. Employees may not be performing work tasks properly.

  Correct Answer: D

  A flat organizational structure concentrates decision-making authority at one level. Tasks and performance objectives may be unclear to employees because of a lack of supervision.