1
1 Define ‘delegation’.
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[Total: 2]
2 Define ‘span of control’.
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[Total: 2]
2
3 AHG is an established business as it has been operating for a long time. It sells garden products including
plants and flowers. AHG uses competitive pricing. The business has 4 managers and 30 other employees.
All AHG’s managers use delegation. The Finance Manager is analysing AHG’s statement of financial position
as she is interested in its liquidity. An extract is shown in the table below.
Extract from AHG’s statement of financial position at 30 March 2022 ($000)
Non-current assets 800
Current assets 660
Current liabilities 600
Explain two advantages to AHG of its managers using delegation.
Advantage 1: ............................................................................................................................................
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Explanation: ............................................................................................................................................
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Advantage 2: ............................................................................................................................................
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Explanation: ............................................................................................................................................
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[Total: 6]
3
4 GHT is a public limited company. It produces steel products including gates and garage doors. GHT has a
flat organisational structure and a short chain of command. GHT has many stakeholder groups including 600
employees. The Managing Director is considering introducing job rotation to improve employee motivation.
He has also been analysing some financial data. An extract is shown in the Table.
Outline two advantages to GHT of having a short chain of command.
Advantage 1:.............................................................................................................................................
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Advantage 2:.............................................................................................................................................
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[Total: 4]
4
5 SRB is a bank which provides loans to business customers. SRB plans to make 100 managers’ jobs redundant
from its 80 branches. This would remove one level of hierarchy. This is part of its
plan to save $1m in costs over the next 2 years. The Managing Director said: ‘SRB is working with the trade
union about this plan. SRB will make more use of delegation. The bank has to respond to increased competition
from online banks. SRB could either advertise more or develop new products and services.’
Outline two advantages of SRB using delegation.
Advantage 1: ............................................................................................................................................
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Advantage 2: ............................................................................................................................................
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[Total: 4]
6 GDC is a transport delivery business in country Z. It operates in a competitive market. GDC has 5000
employees and 1000 delivery vehicles. GDC’s organisational structure has many levels of hierarchy with a
long chain of command. The managers use an autocratic leadership style. Last year GDC delivered 2 billion
parcels for businesses. The Managing Director said: ‘Having a good reputation is important. We have also
benefited from economies of scale’. GDC wants to expand its operations to another country, but cannot decide
the best way to do this.
Identify and explain one advantage and one disadvantage of GDC’s organisational structure.
Advantage:................................................................................................................................................
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Explanation:.............................................................................................................................................
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Disadvantage:...........................................................................................................................................
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Explanation:.............................................................................................................................................
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[Total: 4]