Question 1

A disadvantage of decentralisation is that it:
A)creates greater responsiveness to local needs.
B)does not result in a duplication of activities.
C)encourages suboptimal decision making.
D)focuses managers' attention on the organisation as a whole.

Accepted Answer

Decentralisation may lead to suboptimal decision making as different units operate independently and may not have access to the same level of information or resources. This can also result in inconsistency and lack of coordination across different units or departments.

Question 2

Products transferred between subunits within an organisation are considered intermediate products.

Accepted Answer

Products transferred between subunits are not yet finished goods or services, therefore they are considered intermediate products.

Question 3

decentralisation is defined as the degree of freedom to make decisions:

Accepted Answer

The answer of decentralisation is defined as the degree of...

Question 4

Discuss the possible problems a corporation might have if its operations are totally decentralised.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Discuss the possible problems a corporation might...

Question 5

Surveys indicate that decisions made most frequently at the corporate level are related to sources of supplies and products to manufacture.

Accepted Answer

Decisions made most frequently at the corporate level typically involve strategic planning, financial management, mergers and acquisitions, and overall organizational direction rather than operational decisions like sources of supplies and products to manufacture, which are more often handled at the business unit or operational level.

Question 6

Suboptimal decision making is also called 'congruent decision making'.

Accepted Answer

Suboptimal decision making refers to making choices that are not the best or most optimal for a particular situation. It is not commonly referred to as congruent decision making.

Question 7

What is the term used to describe the situation when a manager's decision,which benefits one subunit,is more than offset by the costs to the organisation as a whole?
A)Suboptimal decision making
B)Dysfunctional decision making
C)Congruent decision making
D)Both A and B are correct.

Accepted Answer

Suboptimal and dysfunctional decision making both describe situations where decisions benefit a part of an organization at the expense of the whole. Suboptimal decision making refers to choices that are not the best for the overall organization, while dysfunctional decision making highlights decisions that are harmful or counterproductive to the organization's goals.

Question 8

The benefits of a decentralised organisation are greater when a company:
A)is facing great uncertainties in their environment.
B)has few interdependencies among divisions.
C)is large and unregulated.
D)All of these answers are correct.

Accepted Answer

Decentralised organisations allow for more flexibility, quicker decision-making, and better responsiveness to uncertainties and changes in the environment, making them beneficial for companies facing great uncertainties, having few interdependencies among divisions, and being large and unregulated.

Question 9

Bathurst Company's CEO has just returned from a series of professional development courses and is very excited that she can have responsibility centres with the organisation's system of centralised structure.However,she is somewhat confused about how responsibility centres relate to centralised organisations where a few managers have most of the authority.
Required:
Explain how a centralised organisation might allow for responsibility centres.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Bathurst Company's CEO has just returned from...

Question 10

A transfer-pricing method leads to goal congruence when managers:
A)act in their own best interest and the decision is in the short-term best interest of the company.
B)act in their own best interest and the decision is in the long-term best interest of the company.
C)act in their own best interest and the decision is in the long-term best interest of the manager's subunit.
D)always act in their own best interest.

Accepted Answer

Goal congruence occurs when the interests of individual managers align with the overall goals of the company. In transfer-pricing, managers must make decisions that benefit their subunit, but also consider the long-term best interest of the company as a whole. Option B aligns with this approach as it includes both individual (acting in their own best interest) and overall company goals (long-term best interest), while options A, C, and D do not fully consider both individual and company goals.

Question 11

A benefit of decentralisation should be increased motivation of subunit managers.

Accepted Answer

Decentralisation allows subunit managers to have more responsibility and autonomy in decision-making, which can increase their motivation by giving them a sense of ownership and control over their work. This can lead to improved performance and innovation.

Question 12

Which of the following is NOT a benefit of decentralisation?
A)Sharpens the focus of managers
B)Leads to quicker decision making
C)Decreases management and worker morale
D)Creates greater responsiveness to local needs

Accepted Answer

Decentralisation generally improves management and worker morale rather than decreases it. A key benefit of decentralisation is that it allows decisions to be made closer to the point of impact, which can increase responsiveness to local needs. Additionally, decentralisation often sharpens the focus of managers and leads to quicker decision making.

Question 13

A product may be passed from one subunit to another subunit in the same organisation.The product is known as a(n):
A)subunit product
B)intermediate product
C)transfer product
D)interdepartmental product

Accepted Answer

An intermediate product refers to a product that is passed from one subunit to another subunit in the same organization. This product is not intended to be sold to external customers but rather serves as an input for the next stage of production or service delivery within the same organization. Thus, option B is the best choice. The other options are not commonly used terms in organizational contexts to refer to products that are transferred between subunits.

Question 14

All of the following statements are correct,EXCEPT for:
A)The extent to which decisions are pushed downward,and the types of decisions that are pushed down,provide a measure of the level of centralisation/decentralisation in an organisation.
B)A decentralised structure forces top management to lose some control over the organisation.
C)Decentralisation slows responsiveness to local needs for decision making.
D)A centralised structure does not empower employees to handle customer complaints directly.

Accepted Answer

Decentralisation actually speeds up responsiveness to local needs for decision making as local managers are empowered to make decisions that are specific to their area of expertise. Option A, B, and D are correct statements.

Question 15

________ means minimum constraints and maximum freedom for managers at the lowest levels of an organisation to make decisions and to take actions.
A)Total decentralisation
B)Use of negotiated transfer pricing
C)Use of market-based transfer pricing
D)Total centralisation

Accepted Answer

Total decentralisation allows managers at the lowest levels of an organisation to have minimum constraints and maximum freedom to make decisions and take actions. This means that decision-making and control are delegated to lower levels of the organisation, allowing for greater flexibility and responsiveness to local conditions. In contrast, total centralisation would mean that all decisions and control are consolidated at the top levels of the organisation, which could limit the ability of lower-level managers to act autonomously. The use of transfer pricing methods (such as negotiated or market-based) is related to how different business units within a company are compensated for goods or services provided to other units, but it is not directly related to levels of decentralisation or centralisation.

Question 16

Which of the following is an advantage of decentralisation?
A)Focuses managers' attention on the organisation as a whole
B)Does not result in a duplication of activities
C)Reduces the cost of gathering information
D)Creates greater responsiveness to local needs

Accepted Answer

Decentralisation creates greater responsiveness to local needs, as decision-making power is dispersed to lower levels of the organisation. This ensures that decisions are made based on the specific needs of a particular region or department, rather than being made at a higher level with less knowledge of the local situation.

Question 17

A profit centre is related to a decentralised unit,whereas a cost centre is related to a centralised unit.

Accepted Answer

Both profit centers and cost centers can exist in both decentralized and centralized organizations. The distinction lies in their functions: a profit center is responsible for generating revenue and controlling costs, while a cost center only focuses on controlling costs.

Question 18

Improving corporate control is an important advantage of decentralised operations.

Accepted Answer

Decentralized operations often lead to less corporate control as decision-making is distributed across various levels or locations, rather than being centralized.

Question 19

For each of the following activities,characteristics,and applications,identify whether they can be found in a centralised organisation,a decentralised organisation,or both types of organisations.
  
a.Freedom for managers at lower organisational levels to make decisions
b.Gathering information may be very expensive
c.Greater responsiveness to user needs
d.Have few interdependencies among divisions
e.Maximum constraints and minimum freedom for managers at lowest levels
f.Maximisation of benefits over costs
g.Minimisation of duplicate functions
h.Minimum of suboptimisation
i.Multiple responsibility centres with various reporting units
j.Profit centres

Accepted Answer

The answer of For each of the following activities,characteristics,and applications,identify...

Question 20

Area(s)which is/are usually appropriate for decentralised decision making is/are:
A)sources of supplies and materials.
B)long-term financing.
C)product advertising.
D)Both A and C are correct.

Accepted Answer

Sources of supplies and materials and product advertising are areas in which decentralised decision making is usually appropriate as they involve individuals or teams with specialised knowledge and experience making decisions that are tailored to local or regional needs. Long-term financing typically requires coordination and oversight from a central authority, such as a finance or accounting department, to ensure consistency and adherence to overall organizational goals and priorities.

Quiz 19: Management Control Systems, Transfer Pricing and Multinational Considerations

A disadvantage of decentralisation is that it:

Products transferred between subunits within an organisation are considered intermediate products.

decentralisation is defined as the degree of freedom to make decisions:

Discuss the possible problems a corporation might have if its operations are totally decentralised. _ _

Surveys indicate that decisions made most frequently at the corporate level are related to sources of supplies and products to manufacture.

Suboptimal decision making is also called 'congruent decision making'.

What is the term used to describe the situation when a manager's decision,which benefits one subunit,is more than offset by the costs to the organisation as a whole?

The benefits of a decentralised organisation are greater when a company:

A transfer-pricing method leads to goal congruence when managers:

A benefit of decentralisation should be increased motivation of subunit managers.

Which of the following is NOT a benefit of decentralisation?

A product may be passed from one subunit to another subunit in the same organisation.The product is known as a(n) :

All of the following statements are correct,EXCEPT for:

________ means minimum constraints and maximum freedom for managers at the lowest levels of an organisation to make decisions and to take actions.

Which of the following is an advantage of decentralisation?

A profit centre is related to a decentralised unit,whereas a cost centre is related to a centralised unit.

Improving corporate control is an important advantage of decentralised operations.

Area(s) which is/are usually appropriate for decentralised decision making is/are:

Quiz 19: Management Control Systems, Transfer Pricing and Multinational Considerations

A disadvantage of decentralisation is that it:

Products transferred between subunits within an organisation are considered intermediate products.

decentralisation is defined as the degree of freedom to make decisions:

Discuss the possible problems a corporation might have if its operations are totally decentralised. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Surveys indicate that decisions made most frequently at the corporate level are related to sources of supplies and products to manufacture.

Suboptimal decision making is also called 'congruent decision making'.

What is the term used to describe the situation when a manager's decision,which benefits one subunit,is more than offset by the costs to the organisation as a whole?

The benefits of a decentralised organisation are greater when a company:

A transfer-pricing method leads to goal congruence when managers:

A benefit of decentralisation should be increased motivation of subunit managers.

Which of the following is NOT a benefit of decentralisation?

A product may be passed from one subunit to another subunit in the same organisation.The product is known as a(n) :

All of the following statements are correct,EXCEPT for:

________ means minimum constraints and maximum freedom for managers at the lowest levels of an organisation to make decisions and to take actions.

Which of the following is an advantage of decentralisation?

A profit centre is related to a decentralised unit,whereas a cost centre is related to a centralised unit.

Improving corporate control is an important advantage of decentralised operations.

Area(s) which is/are usually appropriate for decentralised decision making is/are:

Discuss the possible problems a corporation might have if its operations are totally decentralised. _ _