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1) ________ means minimum constraints and maximum freedom for managers at the lowest levels of an organization to make decisions and to take actions.
A) Total centralization
B) Use of market-based transfer pricing
C) Total decentralization
D) Use of negotiated transfer pricing
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C
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2) An advantage of decentralization is that it:
A) creates greater responsiveness to local needs
B) focuses manager’s attention on the organization as a whole
C) does not result in a duplication of activities
D) reduces the cost of gathering information
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A
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3) A DISADVANTAGE of decentralization is that it:
A) creates greater responsiveness to local needs
B) focuses manager’s attention on the organization as a whole
C) does not result in a duplication of activities
D) encourages suboptimal decision making
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D
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4) All of the following are benefits of decentralization EXCEPT that it:
A) creates greater responsiveness to local needs
B) decreases management and worker morale
C) leads to quicker decision making
D) sharpens the focus of managers
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B
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5) 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 organization as a whole?
A) suboptimal decision making
B) dysfunctional decision making
C) congruent decision making
D) Both A and B are correct.
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D
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6) Which of the following statements is FALSE?
A) A centralized structure does not empower employees to handle customer complaints directly.
B) A decentralized structure forces top management to lose some control over the organization.
C) Decentralization slows responsiveness to local needs for decision making.
D) The extent to which decisions are pushed downward, and the types of decisions that are pushed down, provide a measure of the level of centralization/decentralization in an organization.
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C
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7) Area(s) which is/are usually appropriate for decentralized decision making is(are):
A) sources of supplies and materials
B) long-term financing
C) product advertising
D) Both A and C are correct.
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D
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8) The benefits of a decentralized organization are greater when a company:
A) is large and unregulated
B) is facing great uncertainties in their environment
C) has few interdependencies among division
D) All of these answers are correct.
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D
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