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QUESTION 1

Which type of organisation is primarily owned and controlled by the government?

A. Private limited company
B. Public sector organisation
C. Cooperative
D. NGO

Correct answer: B — Public sector organisation

Explanation: Public sector organisations are owned, controlled, and run by the government. Private limited companies are owned by private shareholders. Cooperatives are jointly owned by members. NGOs operate independently of government.

QUESTION 2

A company whose shares are freely traded on a stock exchange is best described as:

A. Private limited company
B. Cooperative
C. Public limited company
D. Partnership

Correct answer: C — Public limited company

Explanation: A public limited company (PLC) lists its shares on a stock exchange for public trading. A private limited company restricts share transfers. Cooperatives are member-owned. Partnerships have no share capital.

QUESTION 3

Which of the following best describes a cooperative?

A. An organisation run by the government
B. An organisation jointly owned and run by its members who share profits
C. An organisation with unlimited liability
D. An organisation that cannot make a profit

Correct answer: B — An organisation jointly owned and run by its members who share profits

Explanation: Cooperatives are jointly owned and run by members who share profits or benefits. They are not government-run, can make profits, and members typically have limited liability.

QUESTION 4

A non-governmental organisation (NGO) differs from a private company primarily because it:

A. Cannot employ staff
B. Operates independently of government to serve social or political causes
C. Must be owned by the government
D. Always operates at a loss

Correct answer: B — Operates independently of government to serve social or political causes

Explanation: NGOs are citizen-based associations operating independently of government, usually serving social or political causes. They can employ staff, are not government-owned, and may or may not generate surpluses.

QUESTION 5

Which of the following is a key characteristic of a private limited company?

A. Shares are freely available to the public
B. Shares are not publicly traded
C. It is owned by the government
D. It has no legal identity

Correct answer: B — Shares are not publicly traded

Explanation: Private limited companies restrict share transfers and do not list shares publicly. PLCs have publicly traded shares. Private companies are not government-owned and have their own legal identity.

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QUESTION 6

Synergy in an organisation refers to:

A. The process of outsourcing non-core activities
B. The combined output being greater than the sum of individual efforts
C. Reducing the workforce to cut costs
D. Dividing tasks among departments

Correct answer: B — The combined output being greater than the sum of individual efforts

Explanation: Synergy (often expressed as 2+2=5) means collective effort produces more than the sum of individual contributions. It is a key reason organisations exist, not related to outsourcing or downsizing.

QUESTION 7

A virtual organisation is best described as one that:

A. Has no employees at all
B. Uses information technology to connect detached and dispersed entities
C. Operates only within a single building
D. Is owned by the government

Correct answer: B — Uses information technology to connect detached and dispersed entities

Explanation: A virtual organisation uses IT to link dispersed employees or enterprises. It does not necessarily have no employees, is not confined to one location, and is not government-owned.

QUESTION 8

In a hollow organisation, what happens to non-core business processes?

A. They are brought in-house
B. They are eliminated entirely
C. They are outsourced to external providers
D. They are transferred to the government

Correct answer: C — They are outsourced to external providers

Explanation: A hollow organisation keeps its core competencies in-house and outsources the rest. Non-core processes are not eliminated or transferred to government.

QUESTION 9

According to Mintzberg, which part of an organisation is responsible for the basic production of goods and services?

A. Strategic apex
B. Middle line
C. Operating core
D. Technostructure

Correct answer: C — Operating core

Explanation: The operating core carries out the basic work directly related to producing products and services. The strategic apex sets direction, middle line connects apex to core, and technostructure designs systems.

QUESTION 10

The span of control in an organisation refers to:

A. The range of products a company sells
B. The number of subordinates reporting to one manager
C. The geographic area a company covers
D. The number of management levels in a hierarchy

Correct answer: B — The number of subordinates reporting to one manager

Explanation: Span of control is the number of subordinates directly reporting to a manager. It can be narrow or wide. It does not refer to product range, geography, or hierarchy depth.

QUESTION 11

Which of the following factors would lead to a wider span of control?

A. Geographically dispersed workforce
B. Highly capable, self-sufficient workers
C. Complex and varied tasks
D. Manager with many other responsibilities

Correct answer: B — Highly capable, self-sufficient workers

Explanation: Highly capable workers need less supervision, allowing a wider span. Geographic dispersion, task complexity, and additional managerial responsibilities all tend to narrow the span of control.

QUESTION 12

A tall organisational structure is characterised by:

A. Few management levels and wide spans of control
B. Many management levels and narrow spans of control
C. No middle management
D. Decentralised decision-making

Correct answer: B — Many management levels and narrow spans of control

Explanation: Tall structures have many hierarchical levels with narrow spans of control. Flat structures have few levels with wide spans. Tall structures tend to centralise decisions at the top.

QUESTION 13

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

A. Slow communication between top and bottom
B. Wide span of control may stretch managers too thin
C. High overhead costs due to many managers
D. Rigid supervision blocking initiative

Correct answer: B — Wide span of control may stretch managers too thin

Explanation: A flat structure creates a wide span of control, which can overburden managers. Slow communication is a disadvantage of tall structures. High overhead from many managers is a tall structure issue.

QUESTION 14

Delayering refers to:

A. Adding more management layers to improve control
B. Removing layers of middle management to create a flatter structure
C. Outsourcing the entire management function
D. Moving operations to another country

Correct answer: B — Removing layers of middle management to create a flatter structure

Explanation: Delayering removes middle management layers, creating a flatter, more horizontal structure. It is not about adding layers, outsourcing, or relocating operations.

QUESTION 15

The scalar chain in an organisation is best defined as:

A. The number of employees per manager
B. An unbroken line of authority from the most senior to the most junior
C. The total number of employees in the organisation
D. The process of setting organisational objectives

Correct answer: B — An unbroken line of authority from the most senior to the most junior

Explanation: The scalar chain (chain of command) is the unbroken line of authority running from top to bottom of the organisation. It is not related to ratios of employees to managers or objective-setting.

QUESTION 16

In a modular organisational structure:

A. All functions are kept strictly in-house
B. The organisation can be separated and recombined for greater efficiency
C. Decision-making is highly centralised
D. The organisation has only one product line

Correct answer: B — The organisation can be separated and recombined for greater efficiency

Explanation: Modular structures allow the business to be broken apart and recombined to operate more efficiently. They are flexible, not rigidly centralised or restricted to one product.

QUESTION 17

Centralisation of decision-making means:

A. Decisions are made at every level of the organisation
B. Decision-making authority is concentrated at the top of the hierarchy
C. The organisation operates from one physical location
D. Power is delegated to front-line workers

Correct answer: B — Decision-making authority is concentrated at the top of the hierarchy

Explanation: Centralisation concentrates managerial and decision-making power at the top. Decentralisation delegates decisions downward. Centralisation is about authority, not physical location.

QUESTION 18

Which of the following is a benefit of decentralisation?

A. Greater consistency in decision-making across the organisation
B. Faster local decision-making and increased staff motivation
C. Easier to implement company-wide policies
D. Reduced risk of duplication of effort

Correct answer: B — Faster local decision-making and increased staff motivation

Explanation: Decentralisation enables faster local decisions and can motivate staff by giving them autonomy. Consistency and uniform policy implementation are benefits of centralisation.

QUESTION 19

Outsourcing refers to:

A. Moving operations to another country
B. Contracting work out to an external organisation
C. Hiring temporary workers directly
D. Buying another company

Correct answer: B — Contracting work out to an external organisation

Explanation: Outsourcing involves contracting specific work to an external provider. Offshoring involves moving operations to another country. Both are distinct concepts.

QUESTION 20

Which of the following best distinguishes offshoring from outsourcing?

A. Offshoring always involves external contractors; outsourcing does not
B. Offshoring means getting work done in another country; outsourcing means contracting to an external organisation
C. Outsourcing always reduces costs; offshoring never does
D. They are the same concept with different names

Correct answer: B — Offshoring means getting work done in another country; outsourcing means contracting to an external organisation

Explanation: Offshoring is location-based (work done in another country); outsourcing is about who does the work (an external party). A company can offshore without outsourcing by setting up its own overseas subsidiary.

QUESTION 21

A key risk of outsourcing is:

A. Reduced specialisation
B. Misaligned interests between the client and the vendor
C. Lower labour flexibility
D. Increased in-house operational costs

Correct answer: B — Misaligned interests between the client and the vendor

Explanation: A major outsourcing risk is that the vendor's interests may not align with the client's. Outsourcing typically increases specialisation and labour flexibility, and it often aims to reduce costs.

QUESTION 22

The Shamrock Organisation model, developed by Charles Handy, refers to:

A. An organisation with three types of workforce: core staff, contractors, and flexible workers
B. An organisation structured around three geographic regions
C. An organisation with three product divisions
D. An organisation with three layers of management

Correct answer: A — An organisation with three types of workforce: core staff, contractors, and flexible workers

Explanation: Handy's Shamrock Organisation has three leaves: a core of professional staff, contracted specialists, and a flexible labour force. It is not about geography, products, or management layers.

QUESTION 23

According to Robert Anthony's hierarchy, which management level is primarily responsible for day-to-day operational decisions?

A. Strategic level
B. Tactical level
C. Operational level
D. Board level

Correct answer: C — Operational level

Explanation: Anthony's hierarchy has three levels: strategic (long-term direction), tactical (medium-term planning), and operational (day-to-day execution). The board typically sits at or above the strategic level.

QUESTION 24

Which of the following statements about the technostructure, as defined by Mintzberg, is correct?

A. They perform the basic production work of the organisation
B. They serve as analysts who design and plan the work of others without doing it themselves
C. They provide external support services such as catering
D. They are the top-level directors setting organisational strategy

Correct answer: B — They serve as analysts who design and plan the work of others without doing it themselves

Explanation: The technostructure comprises analysts such as programmers and planners who design and improve work processes but do not perform the core work. The operating core does basic production. Support staff provide ancillary services. The strategic apex sets strategy.

QUESTION 25

Which of the following is a characteristic of a partnership?

A. Shares are traded on a stock exchange
B. Two or more people carry on a business together with shared responsibility and profits
C. It has a separate legal identity from its owners in all jurisdictions
D. Liability is always limited to the amount invested

Correct answer: B — Two or more people carry on a business together with shared responsibility and profits

Explanation: A partnership involves two or more individuals operating a business together, sharing profits and (in a general partnership) unlimited personal liability. Partnerships do not issue shares and may not have separate legal identity.

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