In Bureaucracies, Bigger Is Not Always Better

question 59

Multiple Choice

In bureaucracies, bigger is not always better. Which of the following statements helps to explain why?

• A) Too many people needing supervision means sometimes people are unproductive.
• B) The infrastructure of a large organization goes to maintaining itself, not to production.
• C) The possibility arises to form more dyadic relationships and cliques.
• D) Sometimes the dollars spent on the organization greatly outweigh the profits.

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Definitions:

Present Value

The contemporary valuation of a future sum of money or sequence of cash inflows, considering a certain rate of return.

Cost of Capital

The required return necessary to make a capital budgeting project, such as building a new factory, worthwhile.

Net Investment

The total amount spent on purchasing new capital assets minus depreciation on existing assets, indicating the actual increase in a company's capital stock.

Cash Operating Costs

Expenses directly related to the daily operational activities of a business, excluding financing costs and taxes.