1B

Because the entrepreneurial structure is run by one person who makes all the decisions, this

powerful individual will have strong control over the organisation and its strategic direction,

leading to better goal congruence.

2D

Function managers may make decisions to increase their own power, or in the interests of

their own function, rather than in the interests of the company overall. Economies of scale,

standardisation and specialists feeling comfortable are advantages of a functional structure.

3C

The features given suggest that this is an example of a machine bureaucracy – large numbers

of rules and procedures and significant standardisation.

4A

If H wants to manage each product separately, it will need to adopt either a matrix or

divisional approach, asthese would allow the creation ofseparate divisionsfor each product.

However, H wishesto keep its administrative costs aslow as possible. As the matrix structure

has high admin costs due to high numbers of managers, A should adopt a divisional approach.

5A

The junior accountants actually undertake the main work of the firm, suggesting that they

are part of P’s operating core. Note that if P was in a different industry (such as construction)

accountants would be likely classified as part of the technostructure, as in this type of

organisation they would provide technical support and aid standardisation.

6D

The granting of authority over each geographic area to geographic bosses results in a

potential loss of control over key operating decisions. This weakness is also present in the

Product/Division/Department structure.

8D

Centralisation involves most decisions being made centrally within the organisation (i.e. at

head office level). This means less training for more junior/local staff as well as better goal
congruence as all decisions within the organisation are made by the same, senior group of

managers. Options (ii) and (iii) are advantages of decentralisation.

9 A – VIRTUAL

Virtual organisations exist as a network of contracts with third party suppliers and will

outsource all major functions. Hollow organisations only outsource non‐core functions.

10 D

The description best matches a modular structure, where some parts of a product are

manufactured by external companies rather than by the manufacturer itself.

11 B – FALSE

Offshoring typically involves the transfer of a function to an overseas location to reduce

running costs. It would not normally involve transferring existing staff members to the other

country.

12 B – FALSE

‘Shared services’ typically involves streamlining operations in order to reduce costs. It will

also involve improving consistency over the way the service is undertaken and often leads to

the service charging the other parts of the business to use its resources (i.e. it is run like a

business).

13 B

Strategic planning involves making plans for the whole business, such as which locations to

open, which markets to enter or exit and whether to raise cash from investors. As such,

Stark’s decision would fall into this category.

14 A

Operational planning involves practical, day‐to‐day strategies. As such, junior management

would be best placed to undertake this level of planning.

15 C

This would normally be the function of the marketing department.

16 A – TRUE

‘Place’ involves where the business sells its goods. For a high‐street retailer this would be

their stores. For an online retailer, it is more likely to be their website.

17 B

Thisis a philosophy of businessthat permeates all areas, focusing attention on the customer.

A = a sales orientation.
18 B

The basic mix tends to be used by organisations selling a tangible product (as opposed to a

service).

19 D

While the 4Ps are product, place, promotion and price, don’t forget that there are other

elements that have subsequently been added to the marketing mix. These are people,

processes and physical evidence.

20

21 D

This would be a classic example of price discrimination – selling the same product at different

prices to different markets/sections of the market.

22 C

The first product is cheap to attract customers but the second is expensive.

23 D

Segmentation would occur at the strategic choice stage as this enables the organisation to

target attractive sections of the market.

24 A

Promotion follows the mnemonic ‘AIDA’ – awareness, interest, desire, action.