IIA IIA Certifications IIA-CIA-PART4 Questions & Answers

• Question 291:

  An organization has 10 groups of teams that each consists of multi-skilled workers. Workers are often transferred between teams when needed, and communication among and within groups is emphasized. The corporation would be classified as a(n)

  A. Hourglass organization.

  B. Cluster organization.

  C. Network organization.

  D. Virtual organization.

  Correct Answer: B

  A cluster organization is essentially a group of teams. The workers are often multi-skilled and shift among teams as needed. The workers undergo special training and team-building exercises. The pay is also based upon knowledge.

• Question 292:

  Which of the following is not a cost of decentralization?

  A. Dysfunctional decision making owing to disagreements of managers regarding overall goals and sub goals of the individual decision makers.

  B. A decreased understanding of the overall goals of the organization.

  C. Increased costs for developing the information system.

  D. Increased costs of corporate-level staff services and management talent.

  Correct Answer: D

  The costs of centralized staff may actually decrease under decentralization. On the other hand, the corporate staff and the various services they provide may have to be duplicated in various divisions, thereby increasing overall costs. Suboptimal decisions may result fromdisharmony among organizational goals, subgoals of the division, and the individual goals of managers. The overall goals of the firm may more easily be misunderstood because individual managers may not see the larger picture. Moreover, the information system necessary for adequate reporting in a decentralized mode will tend toward redundancy, which increases costs.

• Question 293:

  Which of the following is most likely to be a disadvantage of decentralization?

  A. Lower-level employees will develop less rapidly than in a centralized organization.

  B. Top management will have less time available to devote to unique problems.

  C. Lower-level managers may make conflicting decisions.

  D. Lower-level managers may lose motivation.

  Correct Answer: C

  The disadvantages of decentralization include a tendency to focus on short-run results to the detriment of the long-term health of the entity, an increased risk of loss of control by top management, the increased difficulty of coordinating interdependent units, and less cooperation and communication among competing decentralized unit managers.

• Question 294:

  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 295:

  Which of the following is not a characteristic of decentralized organizations?

  A. Decentralized organizations are usually more flexible.

  B. Decentralized organizations have reduced costs through resource sharing.

  C. Decentralized organizations have fewer decisions made lower in the hierarchy that are monitored by senior management.

  D. Decentralization has a positive influence on morale.

  Correct Answer: B

  The main benefits of centralization are more effective control and reduced costs through resource sharing. In a centralized organization, senior management is able to direct control over subordinates and direct the flow of resources. Senior management is able to allocate reduce costs most effectively because they are aware of where expenses can be reduced across departments within an organization.

• Question 296:

  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 297:

  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 298:

  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 299:

  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 300:

  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.