ACCA BT · Chapter 1
Business organisation, structure and strategy MCQs with Answers
11 multiple-choice questions on Business organisation, structure and strategy for ACCA BT Business and Technology. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
Which of the following best describes the defining feature of an organisation?
- A) Any group of people who work in the same building at the same time
- B) A legal entity registered with a government authority in order to trade
- C) A collection of physical assets used to produce goods for sale
- D) A social arrangement that pursues collective goals, controls its own performance and has a boundary separating it from its environment
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Answer: D) A social arrangement that pursues collective goals, controls its own performance and has a boundary separating it from its environment
An organisation is a social arrangement for the controlled performance of collective goals, with a boundary separating it from its environment. People sharing a building are not necessarily pursuing shared goals. Legal registration and physical assets are features some organisations have, but neither defines an organisation.
Question 2
A charity providing free meals to homeless people measures its success mainly by the number of people it helps within its budget. Which type of organisation is this?
- A) A profit-seeking organisation
- B) A not-for-profit organisation
- C) A public sector organisation
- D) A co-operative
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Answer: B) A not-for-profit organisation
A not-for-profit organisation's main objective is to provide a service or meet a social need, not to make a profit for owners. A surplus may arise but it is reinvested in the cause. A public sector body is owned or controlled by government, and a co-operative is owned by and run for the benefit of its members.
Question 3
In the context of public sector performance, 'value for money' is often analysed using three Es. Which of the following correctly defines 'efficiency'?
- A) Obtaining inputs of the required quality at the lowest possible cost
- B) The relationship between the outputs produced and the resources used to produce them
- C) The extent to which the organisation achieves its stated objectives
- D) Ensuring that services are distributed fairly among the population
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Answer: B) The relationship between the outputs produced and the resources used to produce them
Efficiency compares outputs with inputs, i.e. getting the most output from a given level of resources. Economy concerns buying inputs of appropriate quality at the lowest cost. Effectiveness concerns whether objectives are achieved. Fairness of distribution (equity) is sometimes added as a fourth E but it is not efficiency.
Question 4
Henrik owns a small accountancy practice in partnership with two colleagues. Which of the following is a feature of an ordinary (unlimited) partnership compared with a limited company?
- A) The business has a separate legal personality from its owners
- B) Ownership can be transferred freely by selling shares
- C) The partners are personally liable for the debts of the business without limit
- D) The business must publish audited financial statements
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Answer: C) The partners are personally liable for the debts of the business without limit
In an ordinary partnership the partners have unlimited personal liability for the firm's debts. A limited company has separate legal personality, its shares can be transferred, and it must file accounts publicly, with an audit normally required above certain size thresholds. Those features do not apply to an ordinary partnership.
Question 5
Mintzberg identified several building blocks of organisational structure. Which building block consists of the analysts, such as work-study engineers and planners, who design systems and standardise the work of others?
- A) The strategic apex
- B) The support staff
- C) The operating core
- D) The technostructure
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Answer: D) The technostructure
The technostructure contains analysts who standardise work processes, outputs and skills, for example planners, accountants designing budgets and work-study specialists. The strategic apex is senior management, the support staff provide indirect services such as catering or legal advice, and the operating core performs the basic work of producing products or services.
Question 6
According to Mintzberg, which organisational configuration relies mainly on the standardisation of skills, with the operating core as its key part?
- A) Machine bureaucracy
- B) Professional bureaucracy
- C) Divisionalised form
- D) Adhocracy
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Answer: B) Professional bureaucracy
In a professional bureaucracy, such as a hospital or accountancy firm, coordination is achieved by standardising the skills of highly trained professionals in the operating core. A machine bureaucracy relies on standardisation of work processes via the technostructure, the divisionalised form relies on standardisation of outputs via the middle line, and an adhocracy relies on mutual adjustment.
Question 7
An organisation has a structure in which employees report both to a functional manager and to a project manager. What type of structure is this?
- A) Divisional structure
- B) Functional structure
- C) Matrix structure
- D) Entrepreneurial structure
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Answer: C) Matrix structure
A matrix structure overlays project or product lines of authority on functional departments, so staff have dual reporting lines. This breaks Fayol's principle of unity of command and can lead to conflict, but it improves coordination across functions. Divisional and functional structures have single lines of authority, and an entrepreneurial structure is centred on the owner.
Question 8
Which of the following is most likely to be a consequence of a wide span of control?
- A) Closer supervision of each subordinate by the manager
- B) Higher management overhead costs
- C) Slower communication between the top and bottom of the organisation
- D) A flatter organisation structure with fewer layers of management
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Answer: D) A flatter organisation structure with fewer layers of management
A wide span of control means each manager supervises many subordinates, so fewer management layers are needed and the structure is flat. This reduces overhead costs and speeds communication. Close supervision is associated with a narrow span of control and a taller structure.
Question 9
A company transfers its payroll, accounts payable and credit control activities from each of its regional subsidiaries into one central unit that provides these services to the whole group. What is this arrangement called?
- A) A shared services centre
- B) Outsourcing
- C) Decentralisation
- D) A hollow organisation
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Answer: A) A shared services centre
A shared services centre consolidates support activities from several parts of a group into a single internal unit. Outsourcing would involve a third-party provider, decentralisation pushes decision-making down rather than consolidating it, and a hollow organisation outsources most non-core processes externally.
Question 10
Johnson, Scholes and Whittington distinguish levels of strategy. A decision by a diversified group about which industries it should operate in is an example of which level?
- A) Business strategy
- B) Operational strategy
- C) Corporate strategy
- D) Functional strategy
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Answer: C) Corporate strategy
Corporate strategy concerns the overall scope of the organisation, such as which businesses or markets it should be in and how resources are allocated between them. Business (competitive) strategy concerns how a single business unit competes in its market, and operational or functional strategies concern how individual parts of the organisation deliver those strategies.
Question 11
In a SWOT analysis, which of the following would be classified as a weakness?
- A) A competitor is about to launch a cheaper rival product
- B) The organisation depends heavily on a small number of ageing machines
- C) New legislation is expected to increase compliance costs
- D) A growing market exists for products in a neighbouring country
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Answer: B) The organisation depends heavily on a small number of ageing machines
Strengths and weaknesses are internal to the organisation, whereas opportunities and threats arise in the external environment. Reliance on ageing machines is an internal weakness. A competitor's launch and new legislation are external threats, and a growing overseas market is an external opportunity.