MIDTERM MGMB223

NUR ADDNIN BINTI MOHD NOOR (HR099607)

1) List and discuss FIVE (5) reasons for the existence of organizations. [15 Marks]

There are 5 reasons why organization, these five factors help explain why more value
can be created when people work together, coordinating their actions in an organized setting,
than when they work alone.

The first reasons are to allow specialization to increase specialization and the division
of labor, this allows individuals to become experts at their jobs. This also resulted in
producing high-quality goods and services.

While the second reasons are the use large scale-technology. There are two types of
large scale- technology which is economies of scale that allows organization to have cost
saving when goods and services are produced in large volume on automated production lines
and economies of scope that enable organization to have cost-saving when organization is
able to use underutilized resources more effectively because they can be shared across
different products or tasks.

The third reason are to manage the organizational environment, where the
organization’s environment is the sources of its valuable input and the marketplace is which
where the output is release. It is the source of economic, social and political pressures will
affect the organization how the organization will obtain these resources.

The fourth reasons are to economize on transaction costs, which associated with
negotiating, monitoring, and governing exchanges between people

The fifth reasons are to exert power and control. The organizations can exert great
pressure on individuals to conform to task and production requirements in order to increase
production efficiency.
2) List and discuss THREE (3) approaches to evaluating effectiveness. [9 marks]

There are three approaches to measuring organizational effectiveness. The first

approaches are to evaluate external resources approaches. This approach evaluates the
organization’s ability to secure, manage and control scarce and valued skills and resources.
The goals are of this approach is to obtain lower cost of inputs, increase market share and to
increase the stock price.

The second approaches are internal system approach. This evaluates organization’s
ability to be innovative and function quickly and responsively. The goals for this approach
are to reduce conflict, reduce time to market and increase the coordination and motivation of
employees.

The third approach are technical approach which evaluates organization ability to
converts skills and resources into goods and services efficiently. The goals for this approach
are to increase product quality, reduce the production cost and improve the customer service.

3) Identify FOUR (4) challenges of organizational design. [8 marks]

There are four challenges of organizational design. The first challenges are
determining the level of differentiation. The process by which an organization allocates
people and resources to organizational tasks and establishes the task and authority
relationships that allow the organization to achieve its goals. This resulted in division of labor
which is the process of establishing and controlling the degree of specialization in the
organization.

Second challenges are deciding how to coordinate activities. This also refer on how
balancing differentiation and integration. Differentiation is supposed to enable people to
specialize and become more productive. While integration the process of coordinating
various tasks, functions, and divisions so that they work together and not at cross-purposes
 The third challenges are determining who will make decisions which means how the
power hierarchy are distributed on centralization and decentralization. Establishing a
hierarchy of authority is supposed to improve the way an organization functions because
people can be held accountable for their actions.

The fourth challenges are deciding how tightly the organization will control employee
activities. This also calls on how balancing standardization which is defined by rules and
norms and mutual adjustment horizontal which people use their current best judgment of
events rather than standardized rules. Written rules and standard operating procedures (SOPs)
and unwritten values and norms are important forms of behavior control in organizations.
They specify how employees are to perform their organizational roles and they set forth the
tasks and responsibilities associated with each role

4) List and explain SEVEN (7) types of Integrating Mechanisms. Please provide one example

for each points. [21 Marks]

I. Hierarchy of authority which is the ranking of employment by specifying on whom

report to whom. For example, the Johnson & Johnson’s company the salesperson will
report directly to the manager of the sales department.

II. Direct contact, where managers meet face to face to coordinates activities. For
example, the Johnson & Johnson’s company the managers in charge of sales and
manufacturing meetup to set their schedule.

III. Liaison role, which is the need for coordination between subunits increase, integration
can be improved by assigning a person in each subunit to coordinate with another
subunit. For example, the Johnson & Johnson’s company a person from department of
marketing, research and development departments are given a responsibility on
coordinating with other departments.

IV. Task force where managers meet in temporary committees to coordinate cross-
functional activities. For example, the Johnson & Johnson’s company formed a team
on dealing unused diapers that can be recycled.
 V. Team, where the managers meet regularly in permanent committees to coordinate
activities. For example, the Johnson & Johnson’s company formed a team to promote
new diaper launch.

VI. Integrating role, where the new role is established to coordinate the activities of two
or more functions or divisions. For example, the Johnson & Johnson’s company two
department of different items come up with a collaboration plan for marketing.

VII. Integrating department which is a new department is created to coordinate the

activities of functions or divisions For example, the Johnson & Johnson’s company a
team of managers are formed to centralized a program that allows skills and resources
to be shared.

5) Distinguish between centralization and decentralization. Provide an example to support

your answer. [7 marks]

Centralized organization are a setup in which the authority to make important

decisions is retained by managers at the top of the. Authority is concentrated at the top and
very little decision-making authority is delegated to lower levels.

Example, in the banking industry, authority to make routine car loans is given to all
loan managers, while the authority to make high-risk loans such as for a large residential
development maybe restricted to upper-level loan officers

While decentralized organization which the authority to make important decisions

about organizational resources and to initiate new projects is delegated to managers at all
levels in the hierarchy. Authority is delegated as far down the chain of command as possible
and delegating authority to lower levels of managers may increase the organization’s
productivity.
6) List and describe FIVE (5) principal ways on how the CEO can influence organizational

effectiveness and decision making. [10 Marks]

I. The CEO is responsible for setting organizational goals and designing its structure
II. The CEO selects key executives to occupy the topmost levels of the managerial
hierarchy
III. The CEO determines top management’s rewards and incentives
IV. The CEO controls the allocation of scarce resources such as money and decision-
making power among the organization’s functional areas or business divisions
V. The CEO’s actions and reputation have a major impact on inside and outside
stakeholders’ views of the organization and affect the organization’s ability to attract
resources from its environment

7) Identify SIX (6) Weber’s principles of bureaucracy distribute responsibilities and authority

to maximize a company’s effectiveness. [18 Marks]

I. Principle One where a bureaucracy is founded on the concept of rational-legal

authority, a person’s authority is due to position in the organization.
II. Principle Two is where the organizational roles are determined by technical
competence, not social status, kinship, or heredity
III. Principle Three where a role’s task responsibility and decision-making authority and
its relationship to other roles in the organization should be clearly specified
IV. Principle Four is which the organization of roles in a bureaucracy is such that each
lower office in the hierarchy is under the control and supervision of a higher office.
V. Principle Five where the rules, standard operating procedures, and norms should be
used to control the behavior and the relationship between roles in an organization
VI. Principle Six which the administrative acts, decisions, and rules should be formulated
and put in writing. When written down, rules become official guidelines that can be
used even when people leave. Written documents ensure that people can be held
accountable
8) Describe Management by Objectives (MBO) and discuss THREE (3) steps involve in

Management by Objectives (MBO). [12 marks]

There are 3 steps involve in Management by Objectives (MBO) which Step 1 Specific
goals and objectives are established at each level of the organization, determine or revise
organizational objectives for the entire company. This broad overview should be derived
from the firm's mission and vision.

Second step 2 in which managers and their subordinates together determine the
subordinates’ goals. The organization should translate the organizational objectives to
employees by using specific, measurable, acceptable, realistic, time-bound) to express the
concept.

While the third step 3 is managers and their subordinates periodically review the
subordinates’ progress toward meeting goals which by monitoring the progress of employees.
In step two, a key component of the objectives was that they are measurable in order for
employees and managers to determine how well they are met. And evaluate and reward
employee progress. This step includes honest feedback on what was achieved and not
achieved for each employee.