26. A conglomerate runs a garment division, a food division and a real-estate division, each led by a manager who is accountable for the division's profit and has authority over local pricing and hiring. Which structure is this, and what is the main risk?

A) A matrix structure, whose main risk is that each employee reports to two managers at the same time and receives conflicting instructions
B) A functional structure, whose main risk is that no manager can be held accountable for the profit of a particular product line
C) A divisional structure, whose main risk is duplication of functions and divisions pursuing their own goals at the expense of the group
D) A simple structure, whose main risk is that all decisions depend on one owner who cannot cope with the diversity of the group

Correct: C complex Divisional structure

Divisions organised around products or markets with profit responsibility form a divisional structure. This provides focus and accountability but can duplicate functions and cause suboptimal goal pursuit. A matrix has dual reporting, and a functional structure groups by activity.

27. A Bangladeshi restaurant brand is considering expanding by franchising its outlets instead of opening company-owned branches. Which statement best compares the two options?

A) Franchising gives the brand full control over staff and quality in every outlet, but it needs the largest possible capital investment from the brand itself, and the brand would keep all of the profit generated by every outlet in the network
B) Franchising transfers all risk of failure to the franchisees, so the brand can lower standards without any effect on its own reputation
C) Franchising lets the brand expand with less capital and gives local owners incentive to succeed, but it reduces direct control over quality and shares profits with franchisees
D) Franchising avoids the need for any contract, since the franchisee can use the name and system without payment or agreed rules

Correct: C complex Franchising

A franchisor receives fees and royalties while the franchisee invests capital, so expansion is faster and cheaper. Control depends on the contract and monitoring, and poor outlets still damage the brand.

28. A technology start-up operates in a fast-changing market with flat reporting lines, informal communication and flexible job roles. A government department has fixed procedures, detailed job descriptions and a clear hierarchy. According to Burns and Stalker, which description is correct?

A) The start-up is mechanistic, suited to unstable conditions, and the department is organic, suited to stable and predictable conditions
B) The start-up is organic, suited to unstable conditions, and the department is mechanistic, suited to stable and predictable conditions
C) Both are mechanistic, because Burns and Stalker argued that every successful organisation must adopt a rigid hierarchy
D) Both are organic, because any organisation that employs professional staff has to use flexible roles and informal communication

Correct: B complex Mechanistic and organic

Organic structures with flexibility and lateral communication suit change; mechanistic structures with rules and hierarchy suit stable conditions.

29. A manager's span of control rises from 5 to 15 direct reports after a restructuring that removes a layer of management. Which consequence is most likely?

A) A taller structure with slower communication, because each added report increases the number of management layers in the hierarchy
B) A flatter structure with faster communication and more delegation, but less supervision time for each subordinate
C) A matrix structure, because additional reports always mean that each employee is accountable to two managers
D) A more centralised structure, because wider spans always require decisions to be taken by senior management

Correct: B difficult Span of control

A wider span reduces layers, so the structure is flatter. Communication can be faster, but managers cannot supervise closely, so more delegation is required.

30. A bank outsources its payroll processing to a specialist provider under a three-year contract. Which risk is most directly increased by this decision?

A) Dependence on the provider's performance and confidentiality controls, which the bank must manage through service-level agreements and monitoring
B) Loss of the right to be accountable for payroll errors, because accountability transfers to the provider upon signing the contract
C) An increase in the bank's fixed costs, because outsourcing always requires the bank to purchase the provider's computer equipment
D) A reduction in the provider's incentive to perform, because the contract removes any need to meet quality targets, so the bank can safely rely on the provider without any monitoring or reporting arrangements being agreed

Correct: A complex Outsourcing

Outsourcing creates reliance on a third party and potential data confidentiality risk. The organisation remains accountable to employees and regulators and must monitor the provider. Outsourcing typically converts fixed into variable costs.

31. Charles Handy's 'task culture' is best illustrated by which of the following?

A) A government office in which every employee follows written procedures and promotion depends on seniority within a formal structure
B) A family-owned shop where all decisions are taken by the owner and staff act according to the owner's personal preferences
C) A consultancy that forms project teams with the right mix of expertise, giving each team the resources and authority to complete a client assignment
D) A firm of artists whose members each do their own work, sharing facilities but accepting no common direction or management

Correct: C difficult Organisational culture

A task culture is team-based and job-oriented, with flexible teams assembled for projects. The shop describes a power culture, the office a role culture, and the artists a person culture.

32. Which TWO statements about legal forms of business in Bangladesh are correct? (Select TWO.)

Multiple response
A) A sole trader has limited liability for business debts, so personal assets are always safe
B) The shareholders of a limited company generally risk only the amount unpaid on their shares
C) A company registered with the RJSC is a separate legal person from its shareholders
D) A private company may offer its shares to the general public through a stock exchange without any change of status
E) A partnership has a separate legal personality which exempts partners from all liability

Correct: B, C difficult Legal forms

Registration creates a separate legal person, and shareholders' liability is limited to unpaid share capital. Sole traders and partners are personally liable, and a private company cannot offer shares to the public.

33. Which THREE are typical features or disadvantages of a matrix structure? (Select THREE.)

Multiple response
A) Employees may report to both a functional manager and a project manager
B) It can improve coordination across functions on complex projects
C) It removes the possibility of conflict between managers because roles are clearly separated
D) It always reduces the cost of management because there are fewer managers
E) It can cause confusion over authority and priorities

Correct: A, B, E difficult Matrix structure

Dual reporting, cross-functional coordination and role ambiguity are characteristic. Conflict is likely, and a matrix often increases management cost.

34. Which TWO factors favour a more decentralised structure? (Select TWO.)

Multiple response
A) The need for tight, uniform control of the brand worldwide
B) Availability of capable local managers who understand their markets
C) Strict regulatory requirements that need one consistent approach
D) Wide geographical spread with different local conditions
E) A crisis requiring rapid, consistent action from head office

Correct: B, D difficult Centralisation

Local variety and capable local managers favour decentralisation. Brand uniformity, crisis action and common regulation favour centralisation.

35. Which THREE are common reasons for forming a joint venture or strategic alliance? (Select THREE.)

Multiple response
A) To share the cost and risk of a large project
B) To avoid any need for negotiation or agreement on control
C) To combine complementary skills or technology
D) To gain access to a partner's local market knowledge
E) To keep all profits entirely within one company

Correct: A, C, D difficult Strategic alliances

Alliances share costs and risks, provide market access and combine skills. They require negotiation, and profits are shared.

36. Consider the features of a limited company. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Ownership and management can be separated.   Yes

2. Private companies in Bangladesh can freely invite the public to subscribe for their shares.   No

3. A company continues to exist despite changes in shareholders.   Yes

4. A company can own property in its own name.   Yes

5. Shareholders are liable for all company debts without limit.   No

Correct: Y, N, Y, Y, N difficult Company features

(1) Yes. (2) No: only public companies may. (3) Yes: perpetual succession. (4) Yes. (5) No: liability is limited.

37. Consider partnerships. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Partnership property cannot be used as security for loans.   No

2. Each partner can bind the firm in the ordinary course of its business.   Yes

3. Partners' liability is always limited to their capital contributions.   No

4. A partnership has no separate legal existence in many jurisdictions.   Yes

5. Partners in a general partnership share profits according to the partnership agreement.   Yes

Correct: N, Y, N, Y, Y difficult Partnership

(1) No: partnership assets can be used as security. (2) Yes. (3) No: limited liability needs a specific form. (4) Yes. (5) Yes.

38. Consider organisational structure. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. A tall structure has many levels and narrow spans of control.   Yes

2. A functional structure groups employees by specialist activity.   Yes

3. Decentralisation delegates decision-making authority to lower levels.   Yes

4. A flat structure typically has slower communication than a tall structure.   No

5. Matrix structures are used where no employee needs to coordinate across functions.   No

Correct: Y, Y, Y, N, N difficult Structure

(1) Yes. (2) Yes. (3) Yes. (4) No: flat structures usually communicate faster. (5) No: matrix structures exist to coordinate across functions.

39. Consider features of Mintzberg's structural configurations. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. A simple structure has a large technostructure.   No

2. A divisionalised form is based on standardising the skills of professionals.   No

3. A machine bureaucracy relies on standardisation of work processes.   Yes

4. The strategic apex is the top management of the organisation.   Yes

5. An adhocracy uses flexible project teams in a dynamic environment.   Yes

Correct: N, N, Y, Y, Y difficult Mintzberg

(1) No: the simple structure has little technostructure. (2) No: divisionalised form standardises outputs. (3) Yes. (4) Yes. (5) Yes.

40. Consider remote working and outsourcing. For each statement, select Yes if it is correct and No if it is not.

Yes/No grid

1. Remote working may increase information security risks.   Yes

2. Outsourcing may give access to specialist expertise.   Yes

3. Remote working removes the need for managers to set performance targets.   No

4. Remote working can widen the pool of potential recruits.   Yes

5. Outsourcing a function transfers legal accountability to regulators for any resulting failure.   No

Correct: Y, Y, N, Y, N difficult Working practices

(1) Yes. (2) Yes. (3) No: targets and monitoring remain necessary. (4) Yes. (5) No: the organisation remains accountable.

41. A Dhaka printing company with paid-up capital of Tk 5m has unpaid supplier debts of Tk 40m on liquidation. Its two shareholders have paid for their shares in full. What is their liability, and how does this differ from a partnership?

A) Their liability is the same as partners',
B) Their liability is limited to unpaid share capital, which is nil
C) Their liability is Tk 40m shared equally,
D) Their liability is Tk 5m each, because the amount of share capital is the maximum that each shareholder must contribute to settle debts

Correct: B complex Limited liability scenario

Shareholders of a limited company risk only the amount unpaid on their shares. Partners in an ordinary partnership are jointly and severally liable. Directors may face liability for wrongful or fraudulent trading, but that is separate.

42. A conglomerate's food division earns Tk 90m profit on Tk 600m capital, and its real-estate division earns Tk 60m on Tk 300m capital. Using return on capital, which division performs better, and what structural issue should the group consider?

A) Real estate, at 20% against 15%, and the group should consider whether divisional targets encourage managers to act in the group's interest
B) Food, at 90m against 60m, and the group should consider that return on capital is irrelevant to divisional comparison
C) Food, at 15% against 20%, and the group should consider that food has the larger absolute profit and so must have the better return
D) Both divisions perform equally, at 15%, and the group should consider the divisional structure irrelevant to performance, because the same absolute profit is earned by each division once the capital employed is ignored

Correct: A complex Divisional performance

Food: 90/600 = 15%. Real estate: 60/300 = 20%. Absolute profit does not allow comparison for different capital. Divisional measures can encourage dysfunctional behaviour.

43. A Bangladeshi pharmaceutical firm forms a joint venture with a foreign company to make generic drugs, each holding 50%. Which risk is particularly associated with such a 50:50 arrangement?

A) Unlimited liability for both partners for each other's separate businesses, because the joint venture is always a partnership
B) Inability to enter the local market, because foreign partners are never permitted to hold interests in Bangladeshi companies
C) Automatic loss of control over the brand by both partners, because a joint venture can only be created by transferring all assets to a trustee
D) Deadlock in decision-making and disagreement over objectives, which should be addressed in the shareholders' agreement through dispute resolution procedures

Correct: D complex Strategic alliance risk

Equal ownership can cause deadlock. Agreements set voting, exit and dispute procedures.

44. A bank head office requires approval for every loan over Tk 100,000. Branch managers complain that customers go to competitors while waiting. Which change addresses the issue while maintaining control?

A) Raising branch authority limits for low-risk loans within a policy framework
B) Abolishing all lending limits so branches can lend any amount without reference to head office or any credit policy
C) Closing the branches that complain and routing all customers through a single centralised processing centre
D) Requiring every loan to be approved by the board of directors to ensure that credit risk is considered at the highest level

Correct: A complex Centralisation scenario

Delegation within limits balances responsiveness with control.

45. A traditional family firm adopts a flat project-team structure, but long-serving managers keep issuing instructions through the old hierarchy and teams make little progress. Which explanation is most plausible?

A) The managers are correct because culture has no effect on how a structure operates in practice
B) A mismatch between the new structure and the existing role/power culture, which means change management must address behaviours and incentives and not only reporting lines
C) The structure is wrong because flat structures cannot work in any firm that has more than ten employees
D) The teams should be disbanded because projects never succeed in organisations that have a family owner

Correct: B complex Organisational culture and change

Structure and culture interact. Changing charts without addressing culture, incentives and power often fails.

46. A retailer pays Tk 18m a year for an in-house IT help desk. A provider offers the service for Tk 14m a year plus a Tk 2m annual contract-management cost and a one-off transition cost of Tk 3m. Over a three-year contract, ignoring discounting, what is the saving, and which non-financial matter is most important?

A) Tk 3m over three years, and the retailer should also weigh service quality
B) A net cost of Tk 3m over three years, and the retailer should reject any outsourcing arrangement as a matter of principle because it must increase costs
C) Tk 9m over three years, and the retailer should disregard confidentiality because outsourced staff do not normally have access to the retailer's data
D) Tk 12m over three years, and the retailer should disregard service quality since a lower annual price always indicates the better decision for the business

Correct: A complex Outsourcing decision

In-house: 18 × 3 = 54. Outsourced: (14 + 2) × 3 + 3 = 51. Saving = 3. Ignoring contract management and transition gives 12; ignoring contract management only gives 9.

47. A growing company reviews its structure. Which TWO statements are correct? (Select TWO.)

Multiple response
A) A functional structure groups staff by specialist activity and can give economies of scale
B) A simple structure is typical of very large multinational groups
C) A matrix structure avoids any conflict over authority
D) A divisional structure gives each division profit responsibility but may duplicate functions

Correct: A, D difficult Structural forms

Functional and divisional features are described correctly. Matrix structures create dual reporting conflicts, and simple structures suit small firms.

48. A restaurant brand is preparing franchise agreements. Which THREE terms are typically included? (Select THREE.)

Multiple response
A) Transfer of ownership of the brand to the franchisee after one year
B) Quality standards and the right of the franchisor to inspect
C) Restrictions on territory and use of the brand
D) Initial franchise fee and continuing royalty
E) Right of the franchisee to alter the product and brand freely

Correct: B, C, D difficult Franchise agreements

Fees, quality control and territory are core. Franchisees cannot alter brand freely or acquire ownership.

49. A founder is deciding between forms of business in Bangladesh. Which TWO statements are correct? (Select TWO.)

Multiple response
A) A public company may offer shares to the public, subject to regulation
B) A private company restricts the right to transfer shares
C) A sole trader has a legal personality separate from the owner
D) Shareholders of a limited company have unlimited liability

Correct: A, B difficult Company types

Public companies can raise capital from the public; private companies restrict transfer. Sole traders have no separate personality, and limited companies provide limited liability.

50. A bank adopts hybrid working. Which TWO are valid risks to be managed? (Select TWO.)

Multiple response
A) Information security risks from home networks and personal devices
B) Difficulty in supervising and developing junior staff
C) Elimination of the need for performance measurement
D) Automatic removal of all legal duties for health and safety

Correct: A, B difficult Working arrangements

Security and supervision are real risks. Employer duties and performance measurement remain.