Business Studies Test - 39

A tall structure of organisation is the one that has multiple levels of hierarchy. A tall structure of organisation has narrow span of management. That is, under such a structure a manager has charge of only a few subordinates.

Rumours are a result of informal organisation. They can have adverse effect on the working environment. It may result in arguments or conflicts among the people of the organisation. For example, a rumour about the boss may pop up during a communication among a group of employees, which may affect the superior-subordinate relationship.

Functional Organisation involves grouping of the functions of similar nature. Each group forms a separate department that report to one head. For example, departments may be divided on the basis of functions such as production, human resources, etc. that report to the managing director of the organisation.

Informal Organisation is not an element of delegation. Delegation means designating or transferring of authority to subordinates or another person. For example assigning work by a manager to a subordinate to execute certain activities. It is the most important concept of management leadership.

Scalar chain is one of the principle given by halenry fayol.This principle says that communication would be done in a chain way means in a formal and disciplined way. So,under informal organization there is not the maintainance of any formal rules.So,scalar chain is not followed under informal organization.

Centralisation refers to the retention of decision making authority. Centralisation implies a situation where the decision making power is retained by the top level management. Under such a system, other levels of management do not have a right to intervene in policy making. The power and the authority, in such a system, remains concentrated in a few hands.

Span of control is the term now used more commonly in business management, particularly human resource management. Span of control refers to the number of subordinates a supervisor has.

Sometimes an organisation has more than one product line. Under such a scenario the organisation groups the activities on the basis of the product line. Such a grouping of activities on the basis of product line is known as divisional organisation. Each division further has its own sub-departments such as production, finance, etc.

The correct matching is as follows:

• A. Financial Risk (III): It refers to the risk that a company may default on its fixed financial payment obligations (such as interest payments and repayment of debt).

• B. Dividend Decision (II): It involves deciding the proportion of profit earned by the company that is to be distributed to the shareholders as dividends versus what is retained in the business.

• C. Financial Leverage (IV): It refers to the proportion of debt in the overall capital structure of a company.

• D. Fixed Capital Decision (I): Also known as capital budgeting, it involves allocating funds to long-term assets or projects, which affects the long-run profitability and growth of the firm.

This corresponds to A-III, B-II, C-IV, D-I.

Interview is a procedure designed to obtain information from a person through oral responses to oral inquiries.

An interview is the way of face to face conversation between the interviewer and the interviewee, where the interviewer seeks replies from the interviewee for choosing a potential human resource.