MGT 500 Midterm Exam Solution

MGT 500 Midterm Exam Solution Week 5 – Perfect Score

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Chapter 1-8 Solutions

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MGT 500 Week 5 Midterm Exam Solved

 

Chapter 1—Innovative Management for a Changing World

 

TRUE/FALSE

 

  1. The nature of management is to control and dictate others in an organization.

 

ANS:                            2                      3-4

Motivation Concepts

 

  1. Managers need a new approach that relies less on command and control and more on communication and coordination, in the new world of work.

 

ANS:                            2                      4

AACSB Communication | Environmental Influence

 

  1. In today’s turbulent and hypercompetitive global environment, managers must help their companies innovate more than ever.

 

ANS:                            2                      4

Creation of Value

 

  1. The late famed management theorist Peter Drucker is often credited with creating the modern study of management.

 

ANS:                            2                      5

Leadership Principles

 

  1. Managers get things done by coordinating and motivating other people.

 

ANS:                            2                      6

Leadership Principles

 

  1. The attainment of organizational goals through planning, organizing, leading and controlling reflects the essence of the management process.

 

ANS:                            1                      6

Leadership Principles

 

  1. Where the organization wants to be in the future and how to get there defines controlling.

 

ANS:                            1                      7

Leadership Principles

 

  1. Organizing means defining goals for future organizational performance and deciding on the tasks and resources needed to attain them.

 

ANS:                            2                      7

Leadership Principles

 

 

 

 

  1. Leading is the use of influence to motivate employees to achieve organizational goals.

 

ANS:                            1                      8

Leadership Principles

 

  1. The use of influence to motivate employees to achieve organizational goals defines organizing.

 

ANS:                            1                      8

Leadership Principles

 

  1. How an organization goes about accomplishing a plan is a key part of the management function of controlling.

 

ANS:                            1                      8

Leadership Principles

 

  1. Using influence to motivate employees describes the management function of leading.

 

ANS:                            1                      8

Leadership Principles

 

  1. The use of influence to motivate employees to achieve the organization’s goals refers to controlling.

 

ANS:                            1                      8

Leadership Principles

 

  1. Organizing means creating a shared culture and values.

 

ANS:                            2                      8

Leadership Principles

 

  1. Controlling involves monitoring employee’s activities and taking corrective action as necessary.

 

ANS:                            1                      8

Leadership Principles

 

  1. An organization is a social entity that is goal directed and deliberately structured.

 

ANS:                            1                      9

Creation of Value

 

  1. In the definition of an organization, deliberately structured means being made up of two or more people and designed to achieve some outcomes.

 

ANS:                            1                      9

Creation of Value

 

 

 

 

  1. Efficiency refers to the degree to which the organization achieves a stated objective.

 

ANS:                            1                      9

Creation of Value

 

  1. Efficiency can be calculated as the amount of resources used to produce a product or service.

 

ANS:                            1                      9

Creation of Value

 

  1. To perform effectively, all managers must possess conceptual, human, and technical skills, though the degree of each skill necessary at different levels of an organization may vary.

 

ANS:                            2                      10

HRM

 

  1. All managers have to pay attention to costs and according to research, the best way to improve organizational effectiveness is by severe cost cutting.

 

ANS:                            2                      10

Strategy

 

  1. Human skill is the cognitive ability to see the organization as a whole system and the relationships among its parts.

 

ANS:                            2                      10

AACSB Reflective Thinking | Leadership Principles

 

  1. Only the top managers in organizations need conceptual skills since it involves planning.

 

ANS:                            2                      10

HRM

 

  1. A manager’s ability to work with and through other people and to work effectively as a group member is called human skills.

 

ANS:                            1                      11

HRM

 

  1. Technical skills are most important at lower organizational levels while human skills become more important as managers move up the organizational hierarchy.

 

ANS:                            2                      11

HRM

 

  1. Technical skills are utilized in the understanding and proficiency of general tasks.

 

ANS:                            1                      11

HRM

 

  1. One of the biggest mistakes during turbulent times is managers’ failure to comprehend and adapt to the rapid pace of change in the world around them.

 

ANS:                            2                      12

Leadership Principles

 

  1. Managers use conceptual, human, and technical skills to perform the four management functions of planning, organizing, leading, and controlling in all organizations.

 

ANS:                            2                      13

HRM

 

  1. First-line managers are responsible for setting organizational goals, defining strategies for achieving them, monitoring and interpreting the external environment, and making decisions that affect the entire organization.

 

ANS:                            2                      14

Strategy

 

  1. Middle managers are responsible for setting organizational goals, defining strategies for achieving them, and making decisions that affect the entire organization.

 

ANS:                            2                      14

Creation of Value

 

  1. Antonio is head of the advertising department at Terrific Tortillas, Inc. He can be described as a general manager.

 

ANS:                            3                      14

Creation of Value

 

  1. Juan, as a manager, is generally concerned with the near future and is expected to establish good relationships with peers around the organization, encourage teamwork, and resolve conflicts. Juan can be described as a middle manager.

 

ANS:                            3                      14

Creation of Value

 

  1. Given the significantly reduced importance of the middle manager’s jobs in today’s workplace, these levels have been eliminated in organizations.

 

ANS:                            2                      14

Creation of Value

 

  1. First line managers are the managers who have the responsibility for making the significant strategic policy decisions, often with staff managers assisting them in these decisions.

 

ANS:                            2                      14

Creation of Value

 

  1. Staff managers are responsible for the manufacturing and marketing departments that make or sell the products or services.

 

ANS:                            2                      15

Creation of Value

 

  1. According to research, managers most enjoy activities such as leading others, networking, and leading innovation.

 

ANS:                            1                      16

Leadership Principles

 

  1. Manager least enjoy activities such as controlling subordinates and managing time pressures.

 

ANS:                            2                      16

Leadership Principles

 

  1. A general manager is responsible for a self-contained division.

 

ANS:                            2                      15

Leadership Principles

 

  1. The individual performer is a generalist and coordinates a broad range of activities.

 

ANS:                            2                      17

Leadership Principles

 

  1. The manager is a specialist and a “doer.”

 

ANS:                            2                      17

Leadership Principles

 

  1. Becoming a successful manager means thinking in terms of building teams and networks, becoming a motivator and organizer within a highly interdependent system of people and work.

 

ANS:                            1                      17

HRM

 

  1. Manager’s Shoptalk in Chapter 1 asks you to consider issues such as the increased workload and the challenge of supervising former peers to help you decide if you really want to become a manager.

 

ANS:                            2                      18

Leadership Principles

 

  1. Managerial activity is often characterized by routine, continuity, and lengthy time-frame.

 

ANS:                            1                      19

HRM

 

 

  1. A manager forwards information to other organization members in the disseminator role.

 

ANS:                            1                      20-21

Leadership Principles

 

  1. In the spokesperson role, a manager forwards information to other organization members.

 

ANS:                            2                      21

Leadership Principles

 

  1. The interpersonal roles performed by managers include figurehead, leader, and liaison.

 

ANS:                            1                      21

Leadership Principles

 

  1. The informational roles that managers perform include monitor, disseminator, and spokesperson.

 

ANS:                            1                      21

Leadership Principles

 

  1. The monitor role involves the initiation of change.

 

ANS:                            2                      21

Leadership Principles

 

  1. In the figurehead role, the manager performs ceremonial and symbolic duties.

 

ANS:                            2                      21

Leadership Principles

 

  1. The disturbance handler role involves the initiation of change, thinking about the future and how to get there.

 

ANS:                            2                      21

Leadership Principles

 

  1. Fortunately for managers, the disseminator and spokesperson roles are identical.

 

ANS:                            1                      21

AACSB Reflective Thinking | HRM

 

  1. Managers in small businesses tend to emphasize roles different from those of managers in large corporations.

 

ANS:                            1                      23

HRM

 

 

 

  1. Not-for-profit organizations, such as The Red Cross and the Girl Scouts, represent a major application of management talent.

 

ANS:                            1                      23

HRM

 

  1. We might expect managers in nonprofit organizations to place more emphasis on the roles of spokesperson, leader, and resource allocator.

 

ANS:                            1                      24

Leadership Principles

 

  1. Managers in not-for-profit organizations, according to research, should place less emphasis on the roles of spokesperson, leader, and resource allocator.

 

ANS:                            2                      24

HRM

 

  1. One of the most striking changes affecting organizations and management is technology.

 

ANS:                            2                      24

Environmental Influence

 

  1. In the new workplace, the valued worker is one who learns quickly, shares knowledge, and is comfortable with risk, change, and ambiguity.

 

ANS:                            2                      26

HRM

 

  1. The primary characteristic of the new workplace is that it is centered on loyal and homogeneous employees.

 

ANS:                            2                      26

Environmental Influence

 

  1. The new workplace is organized around networks rather than rigid hierarchies, and work is often virtual.

 

ANS:                            2                      26

Environmental Influence

 

  1. Organizations are increasingly shifting significant chunks of what were once considered core functions to outsiders via outsourcing, joint ventures, and other complex alliances.

 

ANS:                            1                      24

Creation of Value

 

 

 

 

  1. In the new workplace, managers should focus on developing teamwork, collaboration, and teamwork.

 

ANS:                            1                      26

HRM

 

  1. Success in the new workplace depends on the strength and quality of independent employees.

 

ANS:                            1                      26

HRM

 

  1. Organizations are learning to value stability and efficiency over change and speed because of changes in technology, globalization, and diversity.

 

ANS:                            2                      24-25

AACSB Technology | Environmental Influence

 

  1. Companies can survive over the long run without innovation as long as they are successful imitators.

 

ANS:                            2                      4

Creation of Value

 

  1. Despite the need for companies to control costs in today’s economy, innovation has become the new imperative.

 

ANS:                            2                      5

Creation of Value

 

  1. Recognizing the value of employees involves the organizing role of management.

 

ANS:                            2                      6

Leadership Principles

 

  1. Resources such as efficiency and effectiveness are used by managers to attain organizational goals.

 

ANS:                            2                      7

Creation of Value

 

  1. Allocating resources across the organization is part of the organizing management function.

 

ANS:                            2                      7

Operations Management

 

  1. An important phase within the controlling function of management is making corrections when necessary.

 

ANS:                            2                      8

Operations Management

 

 

  1. When an organization is deliberately structured, it is designed to achieve some outcome, such as making a profit.

 

ANS:                            2                      9

Creation of Value

 

  1. By calculating the amount of resources used to produce a single automobile at a manufacturing plant, managers are determining organizational effectiveness.

 

ANS:                            2                      9

Creation of Value

 

  1. The ultimate responsibility of managers is to achieve high performance by balancing efficiency and effectiveness.

 

ANS:                            1                      10

Creation of Value

 

  1. The ability to motivate others is considered a technical management skill.

 

ANS:                            2                      11

Leadership Principles

 

  1. The majority of business failures are the result of poor human skills.

 

ANS:                            2                      12

Creation of Value

 

  1. Facilitating individual employee performance is an important role for top managers.

 

ANS:                            2                      13

Leadership Principles

 

  1. A human resource manager would be considered a staff manager.

 

ANS:                            2                      15

HRM

 

  1. A project manager is also considered a staff manager because he or she is charged with coordinating people across several departments to accomplish a specific project.

 

ANS:                            2                      13-15

Operations Management

 

  1. Most top executives routinely work at least 12 hours a day and spend 50 percent or more of their time traveling.

 

ANS:                            2                      19

Leadership Principles

 

MULTIPLE CHOICE

 

  1. The nature of management is to cope with ____ and far-reaching challenges.
  2. simple
  3. planned
  4. diverse
  5. organized
  6. controlled

 

 

ANS:                            2                      3-4

Leadership Principles

 

  1. Managers, in today’s work environment, rely less on ____ and more on ____ leadership.
  2. coordination and communication; control and command
  3. autocratic; empowering
  4. empowerment and innovation; productivity and efficiency
  5. effectiveness and efficiency; quality and profit
  6. ethics and social responsibility; profit and cost-savings

 

 

ANS:                            2                      25

Leadership Principles

 

  1. Without ____, no company can survive over the long run.
  2. cost-cutting
  3. outsourcing
  4. command-and-control approach
  5. total quality teamwork
  6. innovation

 

 

ANS:                            2                      4

Leadership Principles

 

  1. One of the important ideas in the text’s definition of management is
  2. the management functions of planning, organizing, leading, and controlling.
  3. the attainment of societal goals.
  4. effectiveness is more important than efficiency.
  5. management is unique to for-profit organizations.
  6. efficiency is more important than effectiveness.

 

 

ANS:                            1                      6

Leadership Principles

 

 

 

 

 

 

 

 

  1. When senior managers at Gap, Inc. decided to become the number one service-quality clothing company in the world, they were engaging in the management function of
  2. planning.
  3. organizing.
  4. leading.
  5. controlling.
  6. dreaming.

 

 

ANS:                            2                      7

Leadership Principles

 

  1. Selecting goals and ways to attain them refers to
  2. controlling.
  3. planning.
  4. organizing.
  5. staffing.
  6. leading.

 

 

ANS:                            1                      7

Leadership Principles

 

  1. Which of these can best describe organizing?
  2. Assigning responsibility for task accomplishment.
  3. Using influence to motivate employees.
  4. Monitoring activities and making corrections.
  5. Selecting goals and ways to attain them.
  6. None of these.

 

 

ANS:                            3                      7

Leadership Principles

 

  1. Which of the following is not a function of management?
  2. Plan
  3. Control
  4. Organize
  5. Lead
  6. Performance

 

 

ANS:                            1                      7

Leadership Principles

 

  1. How an organization goes about accomplishing a plan is a key part of the management function of
  2. planning.
  3. organizing.
  4. leading.
  5. controlling.
  6. motivating.

 

 

ANS:                            1                      7

Leadership Principles

 

  1. When Terry Doyle of CommuniCom, Inc. created smaller, more independent maintenance units, he was performing the function of
  2. controlling.
  3. human relations skills.
  4. leading.
  5. organizing.
  6. resourcing.

 

 

ANS:                            3                      7

Leadership Principles

 

  1. Using influence to motivate employees describes which of these functions?
  2. Controlling
  3. Planning
  4. Leading
  5. Monitoring
  6. Organizing

 

 

ANS:                            1                      8

Leadership Principles

 

  1. Which of these is the use of influence to motivate employees to achieve organizational goals?
  2. Leading
  3. Controlling
  4. Organizing
  5. Planning
  6. Staffing

 

 

ANS:                            1                      8

Leadership Principles

 

  1. Amanda Rowley, President of Autos-R-Us, recognizes the factory employees for their outstanding performance at the monthly awards banquet on the shop floor by presenting a plaque and a check for $100. She is engaging in the management function of
  2. bribery.
  3. organizing.
  4. technical skills.
  5. leading.
  6. controlling.

 

 

ANS:                            3                      8

Leadership Principles

 

  1. Monitoring activities and making corrections are part of
  2. organizing.
  3. planning.
  4. leading.
  5. staffing.
  6. controlling.

 

 

ANS:                            1                      8

Leadership Principles

 

  1. Tool Techies, Inc. uses phone surveys of customers to gather information about service and quality. This is an example of the management function of
  2. planning.
  3. technical skills.
  4. organizing.
  5. controlling.
  6. conceptual skills.

 

 

ANS:                            2                      8

Leadership Principles

 

  1. ____ is the management function concerned with monitoring employees’ activities, keeping the organization on track toward its goals, and making corrections as needed.
  2. Planning
  3. Resource allocation
  4. Controlling
  5. Organizing
  6. Efficiency

 

 

ANS:                            1                      8

Leadership Principles

 

  1. When Troy measures his employees’ performance and compares their performance against the goals he set for them, he is performing which of these functions?
  2. Staffing
  3. Leading
  4. Organizing
  5. Controlling
  6. Planning

 

 

ANS:                            2                      8

Leadership Principles

 

  1. A social entity that is goal directed and deliberately structured is referred to as a(n)
  2. organization.
  3. management.
  4. employee.
  5. student.
  6. task.

 

 

ANS:                            1                      9

Creation of Value

 

 

 

 

 

 

 

 

  1. The degree to which an organization achieves a stated goal refers to
  2. effectiveness.
  3. synergy.
  4. conceptual skill.
  5. efficiency.
  6. human skill.

 

 

ANS:                            2                      9

Creation of Value

 

  1. Which of the following refers to the amount of resources used to achieve an organization’s goal?
  2. Effectiveness
  3. Synergy
  4. Performance
  5. Efficiency
  6. Management

 

 

ANS:                            1                      9

Creation of Value

 

  1. For a widget manufacturing company, worker-hours per widget is a measure of
  2. organizational effectiveness.
  3. organizational performance.
  4. organizational efficiency.
  5. organizational structure.
  6. none of these.

 

 

ANS:                            2                      9

Creation of Value

 

  1. Conceptual, human, and technical skills are important to which managerial level?
  2. Top managers
  3. Middle managers
  4. First-line managers
  5. Non managers
  6. All of these

 

 

ANS:                            1                      10

HRM

 

  1. ____ skills is the cognitive ability to see the organization as a whole and the relationship among its parts.
  2. Human
  3. Resource allocation
  4. Conceptual
  5. Negotiation
  6. Technical

 

 

ANS:                            1                      10

HRM

 

  1. Juan Perez is the President of WV Railroad. His organization faces issues related to the environment, government regulation, and competition. He will need to rely primarily on his
  2. conceptual skills.
  3. technical skills.
  4. human skills.
  5. controlling skills.
  6. interpersonal skills.

 

 

ANS:                            3                      10

HRM

 

  1. ____ are most important at the top management level.
  2. Conceptual skills
  3. Human skills
  4. Technical skills
  5. Project skills
  6. All of these

 

 

ANS:                            1                      10

HRM

 

  1. A manager’s ____ skill is demonstrated in the way a manager relates to other people.
  2. conceptual
  3. human
  4. technical
  5. leading
  6. controlling

 

 

ANS:                            1                      11

HRM

 

  1. Which of the following skill is the manager’s ability to work with and through other people and to work effectively as a group member?
  2. Human
  3. Conceptual
  4. Technical
  5. Intellectual
  6. Planning

 

 

ANS:                            1                      11

HRM

 

  1. Which skills include specialized knowledge and analytical ability?
  2. Conceptual
  3. Human
  4. Technical
  5. Controlling
  6. Planning

 

 

ANS:                            1                      11

HRM

 

  1. 1Which of the following are most important at lower organizational levels?
  2. Planning skills
  3. Human skills
  4. Conceptual skills
  5. Technical skills
  6. None of these

 

 

ANS:                            2                      11

HRM

 

  1. Organizations often lose good employees because front-line managers fail to ____.
  2. give direction
  3. offer challenge
  4. show respect
  5. show recognition
  6. listen to new ideas

 

 

ANS:                            2                      11

HRM

 

  1. ____ is the understanding of and proficiency in the performance of specific tasks.
  2. Human skill
  3. Conceptual skill
  4. Interpersonal skill
  5. Technical skill
  6. Leadership skill

 

 

ANS:                            1                      11

HRM

 

  1. The biggest mistake that many manager’s make is the failure to ____.
  2. clarify direction
  3. communicate effectively
  4. display compassion to employees
  5. create employee recognition programs
  6. focus on productivity

 

 

ANS:                            3                      12

Leadership Principles

 

  1. Critical management missteps include:
  2. poor communication skills
  3. reactionary behavior
  4. inability to build a team
  5. failure to adapt
  6. all of these

 

 

ANS:                            2                      12

Leadership Principles

 

 

  1. According to the text, what are the skills used by managers when performing the four functions of management?
  2. Conceptual, interpersonal, and organizational
  3. Functional, problem-solving, and technical
  4. Analytical, interpersonal, and financial
  5. Conceptual, human, and technical
  6. Communication, strategic, and innovative

 

 

ANS:                            2                      13

HRM

 

  1. Which of the following are responsible for the entire organization?
  2. Top managers
  3. Middle managers
  4. First-line managers
  5. Controlling managers
  6. Organizing managers

 

 

ANS:                            1                      14

Leadership Principles

 

  1. What is the main concern of first-level managers?
  2. Monitoring the external environment and determining the best strategy to be competitive
  3. Putting top management plans into action across the organization
  4. Allocating resources and coordinating teams
  5. Linking groups of people
  6. Facilitating individual performance

 

 

ANS:                            2                      13

HRM

 

  1. The most important responsibilities for ____ managers include communicating a shared vision for the organization and shaping corporate culture.
  2. top
  3. middle
  4. first-line
  5. leading
  6. organizing

 

 

ANS:                            1                      14

Leadership Principles

 

  1. Marley is the executive director of the local Community for Critters. Her level in the management hierarchy is that of a(n)
  2. first-line manager.
  3. middle manager.
  4. top manager.
  5. consultant.
  6. operative.

 

 

ANS:                            2                      14

Creation of Value

 

  1. Consider the following three managers from Outrageous Outfitters, Inc. Tiffany Blanchard is the president, Timothy Thompson is the director of marketing, and Karen Baxter is a maintenance supervisor. Which of the following statements is true?
  2. Karen Baxter does more planning than Tiffany Blanchard.
  3. Timothy Thompson does more leading than Karen Baxter.
  4. Tiffany Blanchard does more controlling than Timothy Thompson.
  5. Tiffany Blanchard does more planning than Karen Baxter.
  6. None of these.

 

 

ANS:                            3                      13

Creation of Value

 

  1. Donna Hyde is the head of the finance department at Muumuu Manufacturing, Inc. Her level in the management hierarchy is that of a(n)
  2. first-line manager.
  3. middle manager.
  4. top manager.
  5. chief executive officer.
  6. operative.

 

 

ANS:                            2                      14

Creation of Value

 

  1. Patty Rohrer is the director of human resources at Pet Grooming, Inc. She can be best described as a
  2. top level manager.
  3. project manager.
  4. general manager.
  5. first-line manager.
  6. functional manager.

 

 

ANS:                            3                      15

Creation of Value

 

  1. ____ managers are responsible for departments that perform a single functional task and have employees with similar training and skills.
  2. Top
  3. Middle
  4. First-line
  5. Bottom
  6. Functional

 

 

ANS:                            2                      15

Creation of Value

 

 

 

 

 

 

  1. Today’s middle manager is responsible for creating a ____ rather than managing the flow of information up and down the hierarchy.
  2. vertical chain
  3. horizontal network
  4. diagonal system of communication
  5. spiral network
  6. chaos-based evaluation system

 

 

ANS:                            2                      14

Creation of Value

 

  1. Kyle Erckard, manager of the jewelry division of a major dept. store, coordinated the work of several people across several departments to accomplish a $500,000 fundraising for an animal shelter. He can best be described in his fundraising activities as a(n)
  2. top manager.
  3. middle manager.
  4. project manager.
  5. first-line manager.
  6. operative.

 

 

ANS:                            3                      14

Creation of Value

 

  1. Which of the following best describes Terrance’s position as a project manager?
  2. He is responsible for several departments that perform different functions.
  3. He is required to have significant human skills.
  4. He is responsible for self-contained division and all the departments within it.
  5. He supervises employees with similar training and skills.
  6. All of these.

 

 

ANS:                            3                      14

Creation of Value

 

  1. Temporary management professionals responsible for a temporary work project that involves the participation of people from various functions and levels of the organization are called ____.
  2. middle managers
  3. project managers
  4. interim managers
  5. first line managers
  6. functional managers

 

 

ANS:                            2                      14

Creation of Value

 

 

 

 

 

 

 

  1. Calvin Strine is the office manager of a local accounting firm. His level in the management hierarchy is that of a(n)
  2. first-line manager.
  3. middle manager.
  4. top manager.
  5. consultant.
  6. operative.

 

 

ANS:                            2                      15

Creation of Value

 

  1. Which of the following best describes Stacey’s position as a functional manager?
  2. She is responsible for several departments that perform different functions.
  3. She organizes people across departments to perform a specific task.
  4. She is responsible for a self-contained division and all the departments within it.
  5. She supervises employees with similar training and skills.
  6. None of these.

 

 

ANS:                            3                      15

Creation of Value

 

  1. Which of these managers are responsible for the manufacturing and marketing departments that make or sell the product or service?
  2. Top
  3. Line
  4. First-line
  5. Staff
  6. Project

 

 

ANS:                            2                      15

Creation of Value

 

  1. Which of these managers are in charge of departments such as finance and HR that support line departments?
  2. Line
  3. Project
  4. Top
  5. Operatives
  6. Staff

 

 

ANS:                            2                      15

Creation of Value

 

 

 

 

 

 

 

 

  1. ____ are responsible for departments that perform a single task and have employees with similar training skills.
  2. Top managers
  3. Middle managers
  4. General managers
  5. Functional managers
  6. First-Line managers

 

 

ANS:                            2                      14

Creation of Value

 

  1. Taylor Brittingham is a general manager. Which of the following best describes her position?
  2. She is responsible for several departments that perform different functions.
  3. She organizes people across departments to perform a specific task.
  4. She is responsible for one specific department (e.g., marketing).
  5. She supervises employees with similar training and skills.
  6. None of these

 

 

ANS:                            3                      15

Creation of Value

 

  1. One of the things managers enjoy doing the most is:
  2. financial planning
  3. controlling activities
  4. planning for future decisions
  5. leading others
  6. hiring new employees

 

 

ANS:                            2                      15

Leadership Principles

 

  1. Research shows that managers enjoy all of the following except:
  2. networking
  3. innovation
  4. leading others
  5. managing time
  6. all of these

 

 

ANS:                            2                      15

Leadership Principles

 

  1. Of all management duties, one of the things managers like the least is:
  2. financial planning
  3. controlling activities
  4. planning for future decisions
  5. handling paperwork
  6. networking

 

 

ANS:                            2                      15

Leadership Principles

 

 

  1. The individual performer is a(n) ____; whereas, the manager has to be a(n) ____.
  2. specialist; generalist
  3. “leader”; doer
  4. generalist; specialist
  5. producer; expert
  6. communicator; operator

 

 

ANS:                            2                      17

Leadership Principles

 

  1. The individual identity includes which of the following?
  2. Generalist, coordinates diverse tasks
  3. Gets things done through others
  4. Works relatively independently
  5. A network builder
  6. Works in highly interdependent manner

 

 

ANS:                            2                      17

Leadership Principles

 

  1. Which of the following includes the manager identity?
  2. Specialist, performs specific tasks
  3. Gets things done through own efforts
  4. An individual actor
  5. A network builder
  6. Works relatively independently

 

 

ANS:                            2                      17

Leadership Principles

 

  1. Being a successful manager means thinking in terms of all of the following, except:
  2. building teams.
  3. generating the most profit.
  4. becoming a motivator.
  5. becoming an organizer.
  6. establishing networks.

 

 

ANS:                            2                      17

Leadership Principles

 

  1. Manager’s Shoptalk in Chapter 1 outlines all of the following issues would-be managers should consider except:
  2. The increased workload
  3. The challenge of supervising former peers
  4. The headache of responsibility for other people
  5. Being caught in the middle
  6. The technical aspects of management

 

 

ANS:                            2                      19

Leadership Principles

 

  1. According to the Manager’s Shoptalk in Chapter 1, before becoming a manager, would-be managers should consider which of the following:
  2. time for the increased workload
  3. challenge of supervising former peers
  4. the responsibility of managing others
  5. being caught in the middle
  6. all of these

 

 

ANS:                            2                      19

Leadership Principles

 

  1. Managers shift gears quickly and therefore, the average time spent on any one activity is less than ____.
  2. nine minutes
  3. an hour
  4. one workday
  5. a half hour
  6. a half day

 

 

ANS:                            3                      19

AACSB Reflective Thinking | HRM

 

  1. Which of the following is not one of the conceptual categories of managerial roles Mintzberg defined?
  2. informational
  3. interpersonal
  4. decisional
  5. intrapersonal
  6. all of these are managerial roles defined by Mintzberg

 

 

ANS:                            2                      21

Leadership Principles

 

  1. Which of the following is an informational role, according to Mintzberg?
  2. Entrepreneur role
  3. Leader role
  4. Monitor role
  5. Disturbance handler role
  6. Figurehead role

 

 

ANS:                            2                      21

Leadership Principles

 

  1. Gail Griffith, manager of the finance division, distributes relevant information everyday to all her employees enabling them to make quality decisions. Gail is performing which of the following roles?
  2. Monitor role
  3. Disseminator role
  4. Spokesperson role
  5. Disturbance handler role
  6. Figurehead role

 

 

ANS:                            2                      21

Leadership Principles

 

  1. The president of Pepsi Company is the keynote speaker at a retirement dinner for a long time bottler. This is an example of which of the following roles?
  2. Liaison role
  3. Figurehead role
  4. Negotiator role
  5. Leader role
  6. Monitor role

 

 

ANS:                            3                      20

Leadership Principles

 

  1. According to Mintzberg, when Amanda attends a subordinate’s wedding she is performing which of these roles?
  2. Monitoring
  3. Figurehead
  4. Spokesperson
  5. Leader
  6. Liaison

 

 

ANS:                            3                      20

Leadership Principles

 

  1. If Bradley Hak is responsible for maintaining information links both inside and outside organizations by using mail, phone calls, and conducting meetings as daily activities, he would be considered a
  2. figurehead.
  3. liaison.
  4. negotiator.
  5. monitor.
  6. spokesperson.

 

 

ANS:                            2                      20

Leadership Principles

 

  1. Which of the following is not a decisional role?
  2. Entrepreneur
  3. Negotiator
  4. Resource allocator
  5. Disturbance handler
  6. Liaison

 

 

ANS:                            1                      21

Leadership Principles

 

 

 

 

 

 

 

  1. The ____ role involves resolving conflicts among subordinates between the managers department and other departments.
  2. resource allocator
  3. entrepreneur
  4. negotiator
  5. liaison
  6. disturbance handler

 

 

ANS:                            2                      21

Leadership Principles

 

  1. According to Mintzberg, which of these is an interpersonal role?
  2. Monitor
  3. Negotiator
  4. Liaison
  5. Disturbance handler
  6. Spokesperson

 

 

ANS:                            1                      21

Leadership Principles

 

  1. Maintaining information links are the activities consistent with the ____ role.
  2. leader
  3. spokesperson
  4. monitor
  5. liaison
  6. entrepreneur

 

 

ANS:                            2                      21

Leadership Principles

 

  1. Which of the following roles involve bargaining with others to meet the unit or departmental goals?
  2. Negotiator
  3. Resource allocator
  4. Figurehead
  5. Monitor
  6. Leader

 

 

ANS:                            2                      21

Leadership Principles

 

  1. If a manager finds a severe decline in employee morale and direction, they may need to spend more time in the ____ role.
  2. negotiator
  3. resource allocator
  4. figurehead
  5. monitor
  6. leader

 

 

ANS:                            2                      22

Leadership Principles

 

  1. What is the role of the liaison?
  2. The liaison role pertains to decisions about how to allocate people, time, equipment, money, and other resources to attain desired outcomes.
  3. The liaison role involves the initiation of change.
  4. The liaison role pertains to the development of information sources both inside and outside the organization.
  5. The liaison role involves handling ceremonial and symbolic activities for the department or organization.
  6. The liaison role involves formal negotiations and bargaining to attain outcomes for the manager’s unit of responsibility.

 

 

ANS:                            2                      21

Leadership Principles

 

  1. What is the role of the negotiator?
  2. The negotiator role involves formal negotiations and bargaining to attain outcomes for the manager’s unit of responsibility.
  3. The negotiator role involves seeking current information from many sources.
  4. The negotiator role involves the initiation of change.
  5. The negotiator role involves resolving conflicts among subordinates or between the manager’s department and other departments.
  6. The negotiator role pertains to the development of information sources both inside and outside the organization.

 

 

ANS:                            2                      21

Leadership Principles

 

  1. If a manager finds several new competitors on the horizon, they may need to spend more time in the which role?
  2. Negotiator
  3. Resource allocator
  4. Figurehead
  5. Monitor
  6. Leader

 

 

ANS:                            2                      22

Leadership Principles

 

  1. To meet the needs of the organization, all managers carry out the three major categories of roles. They are: ____, ____, and ____ roles.
  2. monitor, figurehead, and liaison
  3. leader, monitor, and spokesperson
  4. disseminator, entrepreneurial, disturbance handler
  5. decisional, spokesperson, and leader
  6. informational, interpersonal, and decisional

 

 

ANS:                            2                      20

Leadership Principles

 

 

  1. Since not-for-profit organizations do not have a conventional ____, managers may struggle with the question of what constitutes results and effectiveness.
  2. hierarchy
  3. bottom line
  4. information system
  5. decision-making process
  6. structure

 

 

ANS:                            2                      24

HRM

 

  1. A manager in for-profit business focuses primarily on ____, while a manager of a non-profit focuses on ____.
  2. the bottom-line, employee morale
  3. the bottom-line, social impact
  4. profitability, customer satisfaction
  5. market share, the bottom-line
  6. customer satisfaction, organization reputation

 

 

ANS:                            2                      23-24

Creation of Value

 

  1. One of the roles that a small business manager may emphasize over their counterpart in a large organization is ____.
  2. information processing
  3. spokesperson
  4. liaison
  5. resource allocator
  6. leader

 

 

ANS:                            2                      23

Leadership Principles

 

  1. In the new workplace, work is ____, in contrast to the old workplace where work was ____.
  2. flexible; diverse
  3. mechanical; flexible
  4. flexible; structured
  5. autocratic; structured
  6. calm; flexible

 

 

ANS:                            2                      25

Leadership Principles

 

  1. The benefits of using interim managers include:
  2. an organization’s use of specialist skills
  3. no long-term commitment for the organization
  4. the manager has some flexibility
  5. the manager faces new and interesting challenges
  6. all of these

 

 

ANS:                            1                      26

Creation of Value

 

  1. ____ is not a force affecting transition from the old workplace to the new workplace..
  2. Focus
  3. Insourcing
  4. Workforce
  5. Technology
  6. Pace

 

 

ANS:                            3                      25

Leadership Principles

 

  1. Success in the new workplace depends on the strength and quality of ____.
  2. individual workers
  3. independent teams
  4. followers
  5. collaborative relationships
  6. vendors

 

 

ANS:                            2                      26

HRM

 

  1. __________ has become the new imperative, despite the need for companies to control costs in today’s economy.
  2. Technology
  3. Outsourcing
  4. Innovation
  5. Communication
  6. Delegation

 

 

ANS:                            2                      5

Creation of Value

 

  1. With its “community of interest” in a pre-Facebook era, the Grateful Dead band’s ability to ________ is a principle factor for its success over several decades.
  2. innovate
  3. communicate
  4. generate revenue
  5. compete
  6. monitor

 

 

ANS:                            2                      5

Creation of Value

 

 

 

 

 

 

 

  1. Regina, owner and operator of a small restaurant, believes that her most important task as manager is establishing goals for the restaurant and deciding what must be done to achieve them. This involves which aspect of what managers do?
  2. Organizing
  3. Motivating and communicating
  4. Measuring
  5. Developing people
  6. Setting objectives

 

 

ANS:                            3                      6

Individual Dynamics

 

  1. Which of the following is a function of management?
  2. Human resources
  3. Raw materials
  4. Efficiency
  5. Planning
  6. Effectiveness

 

 

ANS:                            1                      7

Creation of Value

 

  1. Robert, a top-level manager at an advertising agency, spends a significant part of his work day identifying goals for future organizational performance and deciding how to use resources to attain these goals. This involves which management function?
  2. Controlling
  3. Leading
  4. Organizing
  5. Planning
  6. Delegating

 

 

ANS:                            3                      7

Individual Dynamics

 

  1. Problems within the finance industry in 2008 have been attributed to a breakdown in which managerial function?
  2. Controlling
  3. Leading
  4. Organizing
  5. Planning
  6. Delegating

 

 

ANS:                            2                      8

Creation of Value

 

 

 

 

 

 

  1. By definition, an organization is considered ___________ because it is made up of two or more people.
  2. efficient
  3. a social entity
  4. effective
  5. goal-directed
  6. deliberately structured

 

 

ANS:                            2                      9

Operations Management

 

  1. Jessica was recently praised by her supervisor for displaying superior customer service during an encounter with a problem customer. This is an example of organizational:
  2. information processing
  3. efficiency
  4. effectiveness
  5. structure
  6. goal-setting

 

 

ANS:                            3                      9

Operations Management

 

  1. Stefan, a supermarket cashier, recently received an award for having the highest scan rate among all cashiers. This is an example of organizational:
  2. performance
  3. efficiency
  4. effectiveness
  5. structure
  6. goal-setting

 

 

ANS:                            3                      9

Operations Management

 

  1. Within her role as a small business consultant, Alexa analyzes how organizations fit into their industries, the communities, and the broader social environment. This type of analysis involves which management skill?
  2. Organizing
  3. Technical
  4. Human
  5. Conceptual
  6. Delegation

 

 

ANS:                            3                      10

Individual Dynamics

 

 

 

 

 

 

  1. Sabrina recently helped her subordinates at work resolve an interpersonal conflict by listening to the problem and serving as a mediator. This is an example of use of which management skill?
  2. Human
  3. Strategic
  4. Technical
  5. Conceptual
  6. Analytical

 

 

ANS:                            3                      11

Individual Dynamics

 

  1. Sally is vice president of administration at a large non-profit charity for animals. She most likely falls within which management level?
  2. CEO
  3. Line employee
  4. Staff manager
  5. Top manager
  6. Middle manager

 

 

ANS:                            2                      13

Individual Dynamics

 

  1. Shyloh is a research analyst who gets things done mostly through her own efforts, relying on herself rather than others. Shyloh can best be described as a(n):
  2. First-line manager
  3. Middle manager
  4. Individual performer
  5. Top manager
  6. Functional manager

 

 

ANS:                            2                      17

Individual Dynamics

 

CASE

 

Scenario – Barry Miller

 

The promotion to first line manager took place just six weeks ago for Barry Miller. He was well qualified for the promotion, but the new job still required a lot of training. One of the challenges has been to coordinate the production of his team with the needs of the sales department and with the availability of raw materials from his suppliers. Setting priorities and developing schedules to accomplish the work is a part of Barry’s job that he has really enjoyed. The challenges to maintain high rapport and to build a strong team with his employees have already brought him a lot of satisfaction. In reflecting about the last six weeks, Barry concludes that he is very happy about his new job.

 

 

 

 

 

 

  1. In his job, Barry needs to
  2. plan.
  3. organize.
  4. lead.
  5. control.
  6. all of these.

 

 

ANS:

 

2                      6

Leadership Principles

 

 

  1. The managerial skill that is least important at Barry’s middle-level management position is
  2. conceptual.
  3. human.
  4. technical.
  5. all of these skills are vital.
  6. none of these skills are important.

 

 

ANS:

 

2                      11

Leadership Principles

 

 

  1. By maintaining information links, Barry Miller was exhibiting the interpersonal role of
  2. figurehead.
  3. leader.
  4. liaison.
  5. monitor.
  6. spokesperson.

 

 

ANS:

 

2                      21                   HRM

 

 

  1. With setting priorities and setting schedules, Barry was participating in the decisional role of
  2. entrepreneur.
  3. disturbance handler.
  4. disseminator.
  5. resource allocator.
  6. monitor.

 

 

ANS:

 

2                      21                   HRM

 

 

COMPLETION

 

  1. The nature of management is to cope with ____________________ and far-reaching challenges.

 

ANS:

 

  1. ____________________ is the attainment of organizational goals in an effective and efficient manner through planning, organizing, leading, and controlling organizational resources.

 

ANS:

 

  1. ____________________ is concerned with defining goals for future organizational performance.

 

ANS:

 

  1. ____________________ involves assigning tasks, grouping tasks into departments, delegating authority, and allocating resources across the organization.

 

ANS:

 

  1. The management function that involves the use of influence to motivate employees to achieve the organization’s goals is referred to as ____________________.

 

ANS:

 

  1. ____________________ is the management function concerned with monitoring employees’ activities, keeping the organization on track toward its goals, and making corrections as needed.

 

ANS:

 

  1. A social entity that is goal directed and deliberately structured is called a(n) ____________________.

 

ANS:

 

  1. The degree to which the organization achieves a stated goal is called ____________________.

 

ANS:

 

  1. Organizational ____________________ refers to the amount of resources used to achieve an organizational goal.

 

ANS:

 

  1. ____________________ skills refers to the cognitive ability to see the organization as a whole and the relationship among its parts.

 

ANS:

 

  1. Conceptual skills are especially important for ____________________ managers.

 

ANS:

 

  1. ____________________ skills refers to the manager’s ability to work with and through other people and to work effectively as a group member.

 

ANS:

 

 

 

 

 

  1. ____________________ skills refers to the understanding and proficiency in the performance of specific tasks.

 

ANS:

 

  1. Department heads and division managers are examples of ____________________ managers.

 

ANS:

 

  1. ____________________ managers are directly responsible for the production of goods and services.

 

ANS:

 

  1. A(n) ____________________ is responsible for a temporary work project that involves the participation of people from various functions and levels of the organization, and perhaps from outside the company as well.

 

ANS:

 

  1. ____________________ are responsible for departments that perform a single functional task and have employees with similar training and skills.

 

ANS:

 

  1. ____________________ are responsible for several departments that perform different functions.

 

ANS:

 

 

 

 

  1. The individual performer is a(n) ____________________; whereas, the manager has to be a(n) ____________________.

 

ANS:

 

  1. In the ____________________ role, managers seek and receive information, scan periodicals and reports, and maintain personal contacts.

 

ANS:

 

  1. In the ____________________ role, managers initiate improvement projects, identify new ideas, and delegate idea responsibility to others.

 

ANS:

 

  1. A(n) ____________________ would be responsible for performing ceremonial and symbolic duties such as greeting visitors and signing legal documents.

 

ANS:

 

  1. The ____________________ role involves deciding who gets what resources.

 

ANS:

 

  1. If a manager finds several new competitors on the horizon, he or she may need to spend more time in the ____________________ role.

 

ANS:

 

 

 

  1. One of the roles that a small business owner may emphasize over their counterpart in a large organization is that of a ____________________.

 

ANS:

 

SHORT ANSWER

 

  1. List five of Mintzberg’s ten managerial roles.

 

ANS:

 

  1. Identify the four functions of management.

 

ANS:

 

  1. List the three management skills necessary to perform effectively in organizations.

 

ANS:

 

ESSAY

 

  1. Define management and describe two important ideas expressed in the definition.

 

ANS:

 

  1. Describe the four management functions.

 

ANS:

 

2                      7

Leadership Principles

 

  1. Describe the skills necessary for performing a manager’s job. Provide examples of each.

 

ANS:

 

  1. Why are conceptual skills most important for top managers?

 

ANS:

 

  1. Briefly discuss the relationship between management skills and management level.

 

ANS:

 

 

 

 

 

 

 

 

 

 

  1. What are technical skills? At what level are they most important and why?

 

ANS:

 

  1. Describe the three categories of managerial roles and explain how do they differ.

 

ANS:

 

  1. How do small business managers emphasize different management roles in comparison to larger business managers?

 

ANS:

 

  1. Identify and explain the change that has affected organizations and management the most.

 

ANS:

 

 

 

 

Chapter 2—The Evolution of Management Thinking

 

TRUE/FALSE

 

  1. A historical perspective provides a narrower way of thinking, a way of searching for patterns and determining whether they recur across time periods.

 

ANS:                            1                      34

Creation of Value

 

  1. Studying history is a way to achieve strategic thinking, see the big picture, and improve conceptual skills.

 

ANS:                            2                      34

Strategy

 

  1. Social forces refer to those aspects of a culture that guide and influence relationships among people.

 

ANS:                            1                      34

Environmental Influence

 

  1. Political forces are aspects of a culture that guide and influence relationships among people.

 

ANS:                            1                      34

Environmental Influence

 

  1. Economic forces pertain to the availability, production, and distribution of resources in a society.

 

ANS:                            1                      34

Environmental Influence

 

  1. In the Manager’s Shoptalk of chapter 2, benchmarking and six sigma are the top two contemporary management tools.

 

ANS:                            2                      52

Operations Management

 

  1. The technology-driven workplace is the most current management perspective.

 

ANS:                            2                      35

Information Technologies

 

  1. The early study of management as we know it today began with what is now called the technology-driven workplace.

 

ANS:                            2                      35

AACSB Technology | Information Technologies

 

  1. The classical perspective on management emerged during the early eighteenth century.

 

ANS:                            2                      35

Leadership Principles

 

  1. A bar graph that measures planned and completed work along each stage of production by time elapsed is called a Gantt chart.

 

ANS:                            1                      36

Creation of Value

 

  1. The humanistic perspective contains three subfields: scientific management, bureaucratic organizations, and administrative principles.

 

ANS:                            2                      36

HRM

 

  1. One of the criticisms of scientific management is it did not acknowledge variance among individuals.

 

ANS:                            2                      37

HRM

 

  1. Frederick W. Taylor developed Scientific Management and emphasized the fourteen principles of management that should guide managerial behavior.

 

ANS:                            1                      37

Leadership Principles

 

  1. Taylor was awarded the title of “father of scientific management” since he was the sole contributor in the area of scientific management.

 

ANS:                            1                      36

Leadership Principles

 

  1. Standardization of work and wage incentives are characteristics of behavioral science.

 

ANS:                            2                      37

HRM

 

  1. Scientific management developed a standard method for performing each job.

 

ANS:                            1                      37

Leadership Principles

 

  1. With clear definitions of authority and responsibility, division of labor is one of the six characteristics of the ideal bureaucracy.

 

ANS:                            1                      38

Leadership Principles

 

  1. Administrative acts and decisions recorded in writing is one of the six characteristics of the ideal bureaucracy.

 

ANS:                            1                      38

Leadership Principles

 

  1. One of the important reasons for the success of UPS is the concept of bureaucracy.

 

ANS:                            2                      39

Leadership Principles

 

  1. Fayol’s unity of direction principle emphasizes that each subordinate receives orders from one, and only one superior.

 

ANS:                            2                      39

Leadership Principles

 

  1. Unity of direction principle proposes that similar activities in an organization should be grouped together under one manager.

 

ANS:                            1                      39

Leadership Principles

 

  1. The scalar chain is a hypothetical chain that provides horizontal links between unionized workers in different departments in an organization.

 

ANS:                            2                      39

Leadership Principles

 

  1. Scientific management focuses on employee competence, whereas administrative principles focus on work flow through the organization.

 

ANS:                            2                      39

Leadership Principles

 

  1. Follett and Barnard were early advocates of a more humanistic perspective on management that emphasized the importance of understanding human behavior, needs, and attitudes in the workplace as well as social interactions and group processes.

 

ANS:                            2                      40

Leadership Principles

 

  1. Unfortunately, Mary Parker Follett’s approach to leadership stressed the importance of engineering techniques rather than people.

 

ANS:                            2                      40

Leadership Principles

 

  1. A social group within an organization is part of the informal organization.

 

ANS:                            1                      41

Creation of Value

 

 

 

  1. Most early interpretations of the Hawthorne studies agreed that money was the cause of the increased output.

 

ANS:                            2                      42

Motivation Concepts

 

  1. The Hawthorne studies led to the early conclusion that positive human relations can lead to significantly higher performance.

 

ANS:                            1                      42

Motivation Concepts

 

  1. The scientific management perspective refers to the management thinking and practice that emphasizes satisfaction of employees’ basic needs as the key to increased worker productivity.

 

ANS:                            2                      45

HRM

 

  1. Maslow’s hierarchy of needs started with belongingness, progressed to safety, and finally led to esteem.

 

ANS:                            2                      44

Motivation Concepts

 

  1. According to Douglas McGregor, Theory X and Theory Y provide two opposing views of workers, where Theory X recognizes that workers enjoy achievement and responsibility, while Theory Y recognizes that workers will avoid work whenever possible.

 

ANS:                            1                      44

Motivation Concepts

 

  1. Maslow’s hierarchy of needs started with safety needs.

 

ANS:                            1                      44

HRM

 

  1. Theory Y proposes that organizations can take advantage of the imagination and intellect of all of their employees.

 

ANS:                            2                      44

Motivation Concepts

 

  1. Organization development is a specific set of management techniques based in the behavioral science approach.

 

ANS:                            1                      45

Creation of Value

 

 

 

  1. The behavioral science approach develops theories about human behavior based on scientific methods and study.

 

ANS:                            1                      44

Leadership Principles

 

  1. The field of management that specializes in the physical production of goods or services refers to operations management.

 

ANS:                            1                      46

Operations Management

 

  1. Operations management represents the field of management that specializes in the physical production of goods and services.

 

ANS:                            1                      46

Operations Management

 

  1. The management science perspective emerged after World War II to treat problems associated with improving manufacturing.

 

ANS:                            2                      46

Leadership Principles

 

  1. When the shop foreman receives and rewards valuable suggestions from its workers, and this leads to continual improvement of production, synergy has occurred.

 

ANS:                            2                      48

Creation of Value

 

  1. Contingency theory suggests that managers are more successful if they learn the best way to manage and motivate their employees, and then apply this knowledge in a universally consistent way.

 

ANS:                            2                      49

Leadership Principles

 

  1. A contingency view perceives every situation as unique.

 

ANS:                            2                      49

Strategy

 

  1. The inherent focus of TQM is on managing the total organization to deliver quality to the customer.

 

ANS:                            1                      49

Creation of Value

 

  1. Benchmarking involves finding out what the customer wants.

 

ANS:                            2                      49-50

Creation of Value

 

  1. The implementation of small, incremental improvements in all areas of the organization on an ongoing basis refers to continuous improvement.

 

ANS:                            1                      50

Creation of Value

 

  1. Supply chain management refers to the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers.

 

ANS:                            1                      50

Creation of Value

 

  1. The sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers refers to CRM.

 

ANS:                            2                      53

Creation of Value

 

  1. Customer relationship management systems collect and manage large amounts of data about customers and make them available to employees.

 

ANS:                            1                      53

AACSB Technology | Creation of Value

 

  1. A supply chain is a network of multiple businesses and individuals that are connected through the flow of products or services.

 

ANS:                            1                      54

Creation of Value

 

  1. Outsourcing refers to contracting out selected functions or activities to other organizations that can do the work more cost-efficiently.

 

ANS:                            1                      53

Creation of Value

 

  1. A process whereby companies find out how others do something better than they do and then try to imitate or improve on it refers to outsourcing.

 

ANS:                            1                      53

Creation of Value

 

  1. Kaizen refers to an innovation mindset, used widely by Indian companies, that strives to meet customers’ immediate needs quickly and inexpensively.

 

ANS:                            2                      33

Creation of Value

 

 

 

 

  1. The changing attitudes, ideas, and values of Generation Y employees is an example of a social force.

 

ANS:                            2                      34

Creation of Value

 

  1. Scientific management evolved with the use of precise procedures in place of tradition and rules of thumb.

 

ANS:                            2                      36

Operations Management

 

  1. A criticism of human relations management is that it ignores the social context and workers’ needs.

 

ANS:                            2                      37

Group Dynamics

 

  1. The acceptance theory of authority states that people have free will and can choose whether to follow management orders.

 

ANS:                            2                      41

Group Dynamics

 

  1. The Hawthorne studies resulted in the movement towards scientific management.

 

ANS:                            2                      41

Operations Management

 

  1. The human relations movement is also referred to as the dairy farm view of management, meaning that contented cows give more milk, and satisfied workers will give more work.

 

ANS:                            2                      42

Motivation Concepts

 

  1. An assumption of Theory Y is that the average human being has an inherent dislike of work and will avoid it if possible.

 

ANS:                            1                      45

Motivation Concepts

 

  1. The management science approach uses qualitative data in management decision making.

 

ANS:                            1                      46

Operations Management

 

  1. Information technology is the most recent subfield of the quantitative perspective.

 

ANS:                            2                      46

Information Technologies

 

  1. The term “quants” refers to financial managers and others who base their decisions on complex quantitative analysis, under assumption that using advanced mathematics and technology can accurately predict how the market works.

 

ANS:                            2                      47

Creation of Value

 

  1. Contingency thinking is the ability to see both the distinct elements of a system or situation and the complex and changing interaction among those elements.

 

ANS:                            2                      47

Operations Management

 

  1. Discerning circles of causality is an important element of systems thinking.

 

ANS:                            2                      48

Operations Management

 

  1. Although developed by a Japanese business manager, the quality movement is strongly associated with American companies.

 

ANS:                            2                      49

Operations Management

 

  1. Research shows that during difficult times in the business environment, managers are less likely to look for fresh ideas than they would during good times.

 

ANS:                            2                      51

Leadership Principles

 

MULTIPLE CHOICE

 

  1. A(n) ____ perspective provides a broader way of thinking, a way of searching for patterns and determining whether they recur across time periods.
  2. analytical
  3. futuristic
  4. systematic
  5. methodical
  6. historical

 

 

ANS:                            1                      34

Environmental Influence

 

 

 

 

 

 

 

 

 

  1. ____ forces refer to those aspects of a culture that guide and influence relationships among people.
  2. Social
  3. Political
  4. Economic
  5. Technological
  6. Legal

 

 

ANS:                            1                      34

Environmental Influence

 

  1. Which of these forces comprises unwritten, common rules and perceptions about relationships?
  2. Economic forces
  3. Political forces
  4. Social forces
  5. Legal forces
  6. Personal forces

 

 

ANS:                            1                      34

Environmental Influence

 

  1. Which of these forces pertain to the availability, production, and distribution of resources in a society?
  2. Social
  3. Political
  4. Economic
  5. Technological
  6. Legal

 

 

ANS:                            1                      34

Environmental Influence

 

  1. Strong anti-American sentiments in many parts of the world exemplify the effect of
  2. economic forces.
  3. political forces.
  4. demographic forces.
  5. technological forces.
  6. human relations forces.

 

 

ANS:                            3                      34

Environmental Influence

 

  1. According to the Manager’s Shoptalk of chapter 2, which of the following is not in the top five contemporary management tools?
  2. Collaborative innovation
  3. Mission and vision statements
  4. Benchmarking
  5. Strategic planning
  6. Customer relationship management

 

 

ANS:                            3                      52

HRM

 

 

  1. According to the Manager’s Shoptalk of chapter 2, Indian executives are more likely to use tools such as
  2. customer segmentation and business process reengineering.
  3. consumer ethnography and corporate blogs.
  4. strategic alliances and collaborative innovation.
  5. activity-based management and virtual teams.
  6. scenario planning and lean operations.

 

 

ANS:                            3                      52

Strategy

 

  1. ____ is the most current management perspective.
  2. Total quality management
  3. Contingency views
  4. Systems theory
  5. Open (collaborative) innovation
  6. Classical perspective

 

 

ANS:                            2                      35

Leadership Principles

 

  1. The nineteenth and early twentieth centuries saw the development of which management perspective?
  2. The human relations movement
  3. The behavioral sciences approach
  4. The classical perspective
  5. The quantitative management approach
  6. The TQM approach

 

 

ANS:                            2                      35

Leadership Principles

 

  1. Which of these perspectives emphasized a rational, scientific approach to the study of management and sought to make organizations efficient operating machines?
  2. The Humanistic Perspective
  3. The Behavioral Sciences Approach
  4. The Classical Perspective
  5. The TQM approach
  6. The Quantitative Management Approach

 

 

ANS:                            1                      35-36

Leadership Principles

 

  1. Which of these is a subfield of the classical management perspective that emphasized scientifically determined changes in management practices as the solution to improving labor productivity?
  2. The human relations movement
  3. The behavioral sciences approach
  4. The TQM approach
  5. The quantitative management approach
  6. The scientific management movement

 

 

ANS:                            1                      36

Leadership Principles

 

  1. Frank Gilbreth felt that efficiency equated with ____.
  2. one best way to do work
  3. leadership flows from the top down
  4. procedures and policies
  5. scientific management
  6. bureaucracy

 

 

ANS:                            2                      36

Leadership Principles

 

  1. Who is considered the “first lady of management?”
  2. Mary Parker Follett
  3. Lillian Gilbreth
  4. Carly Fiorona
  5. Maxine Weber
  6. Anne Adams

 

 

ANS:                            2                      36

Leadership Principles

 

  1. The three subfields of the classical perspective include
  2. quantitative management, behavioral science, and administrative management.
  3. bureaucratic organization, quantitative management, and the human relations movement.
  4. administrative management, bureaucratic organization, and scientific management.
  5. scientific management, quantitative management, and administrative management.
  6. none of these.

 

 

ANS:                            2                      36

Leadership Principles

 

  1. ____ is considered the “father of scientific management.”
  2. Frank B. Gilbreth
  3. Elton Mayo
  4. Henry Gantt
  5. Douglas McGregor
  6. Frederick W. Taylor

 

 

ANS:                            1                      36

Leadership Principles

 

  1. Which of the following is a bar graph that measures planned and completed work along each stage of production by time elapsed?
  2. Time and Work chart
  3. Gantt chart
  4. Time and Motion chart
  5. Production and Delivery chart
  6. Gilbreth chart

 

 

ANS:                            1                      36

Leadership Principles

 

 

 

  1. Frederick Taylor’s contributions were in the field of
  2. scientific management.
  3. human resource management.
  4. human relations.
  5. quantitative management.
  6. total quality management.

 

 

ANS:                            1                      36

Leadership Principles

 

  1. Which of the following is not a criticism of scientific management?
  2. It does not appreciate the social context of work.
  3. It does not appreciate the higher needs of workers.
  4. It does not appreciate the careful study of tasks and jobs.
  5. It does not acknowledge variance among individuals.
  6. It tends to regard workers as uninformed and ignored their ideas and suggestions.

 

 

ANS:                            2                      37

Leadership Principles

 

  1. Standardization of work and wage incentives are characteristics of
  2. bureaucratic organizations.
  3. scientific management.
  4. quantitative management.
  5. administrative management.
  6. behavioral science.

 

 

ANS:                            2                      37

Leadership Principles

 

  1. Which of these is a major criticism of scientific management?
  2. It ignored the social context of work.
  3. It ignored the impact of compensation on performance.
  4. It overemphasized individual differences.
  5. It overemphasized the intelligence of workers.
  6. It emphasized the social context of work.

 

 

ANS:                            2                      37

Leadership Principles

 

  1. The bureaucratic organizations approach is a subfield within the ____.
  2. classical perspective
  3. systems theory
  4. scientific management
  5. learning organization
  6. management science view

 

 

ANS:                            2                      37

Leadership Principles

 

 

 

 

  1. According to Weber’s ideas on bureaucracy, organizations should be based on which of these?
  2. Personal loyalty
  3. Personal references
  4. Rational authority
  5. Family ties
  6. Charismatic authority

 

 

ANS:                            2                      38

Leadership Principles

 

  1. Archies’ Antiques, Inc., is characterized by separation of management from ownership and by clearly defined lines of authority and responsibility. These characteristics are consistent with the principles of
  2. scientific management.
  3. bureaucratic organizations.
  4. administrative management theory.
  5. human resource management.
  6. all of these.

 

 

ANS:                            2                      38

Leadership Principles

 

  1. All of the following are characteristics of Weberian bureaucracy EXCEPT:
  2. Labor is divided with clear definitions of authority and responsibility that are legitimized as official duties.
  3. Positions are organized in a hierarchy of authority, with each position under the authority of a higher one.
  4. All personnel are selected and promoted based on technical qualifications.
  5. Administrative acts and decisions are recorded in writing.
  6. Management is the same as the ownership of the organization.

 

 

ANS:                            3                      38

Leadership Principles

 

  1. Max Weber felt selection of employees should be based on:
  2. education
  3. competence
  4. connections
  5. political skills
  6. efficient systems

 

 

ANS:                            2                      39

Leadership Principles

 

  1. Positions organized in a hierarchy of authority is an important characteristic of
  2. scientific management.
  3. bureaucratic organizations.
  4. quantitative management.
  5. the human relations movement.
  6. total quality management.

 

 

ANS:                            1                      39

Leadership Principles

 

  1. UPS is successful in the small package delivery market. One important reason for this success is the concept of
  2. globalization.
  3. employee flexibility.
  4. loose standards.
  5. bureaucracy.
  6. non-bureaucratic organizational system.

 

 

ANS:                            2                      39

Leadership Principles

 

  1. Whereas scientific management focused on ______ , administrative principles approach focused on the _______.
  2. individual productivity, total organization
  3. organization productivity, individual effort
  4. efficient procedures, management by principle
  5. employee ability, employee loyalty
  6. employee competence, work flow through the organization

 

 

ANS:                            2                      39

Leadership Principles

 

  1. Mary Parker Follett contributed to which field?
  2. Humanistic approach
  3. Scientific management approach
  4. Total quality management approach
  5. Quantitative approach to management
  6. Systems approach to management

 

 

ANS:                            1                      40

Leadership Principles

 

  1. The assembly line is most consistent with which of the following general principles of management?
  2. Unity of command
  3. Division of work
  4. Authority
  5. Scalar chain
  6. Quality management

 

 

ANS:                            3                      39

Leadership Principles

 

  1. The principle that similar activities in an organization should be grouped together under one manager is the essence of the classical perspective known as
  2. unity of command.
  3. division of work.
  4. unity of direction.
  5. scalar chain.
  6. quality management.

 

 

ANS:                            2                      39

Leadership Principles

 

  1. The use of specialization to produce more and better work with the same level of effort is consistent with the administrative management principle of
  2. unity of command.
  3. unity of direction.
  4. scalar chain.
  5. division of work.
  6. none of these

 

 

ANS:                            1                      39

Leadership Principles

 

  1. The ____ refers to a chain of authority extending from top to the bottom of the organization and including every employee.
  2. unity of command
  3. division of labor
  4. unity of direction
  5. scalar chain
  6. None of these

 

 

ANS:                            1                      39

Leadership Principles

 

  1. Mary Parker Follett thought of leadership as ____, rather than techniques.
  2. systems
  3. top managers
  4. people
  5. efficiencies
  6. floor managers

 

 

ANS:                            2                      40

Leadership Principles

 

  1. Chester Bernard felt that ____ could help a poorly managed organization.
  2. bureaucracy
  3. line managers
  4. efficiencies
  5. informal relations
  6. top/down flow of information

 

 

ANS:                            2                      41

Leadership Principles

 

  1. A social group within an organization is part of the
  2. formal organizational structure.
  3. informal organization.
  4. scalar chain.
  5. reorganization process.
  6. top management level.

 

 

ANS:                            1                      41

Leadership Principles

 

 

  1. A significant contribution of Chester Barnard was the concept of
  2. bureaucracy.
  3. the informal organization.
  4. total quality management.
  5. scientific management.
  6. traditional theory of authority.

 

 

ANS:                            1                      41

Leadership Principles

 

  1. The ____ emphasized the importance of understanding human behaviors, needs, and attitudes in the workplace as well as social interactions and group processes.
  2. humanistic perspective
  3. classical perspective
  4. scientific management
  5. bureaucratic organizations
  6. contingency perspective

 

 

ANS:                            1                      40

Leadership Principles

 

  1. Which of these refers to the management thinking and practice that emphasizes satisfaction of employees’ basic needs as the key to increased worker productivity?
  2. Scientific management perspective
  3. Human resource perspective
  4. Management science perspective
  5. Behavioral sciences approach
  6. Human relations movement

 

 

ANS:                            2                      45

Leadership Principles

 

  1. Most early interpretations of the Hawthorne studies argued that the factor that best explained increased output was
  2. money.
  3. days off.
  4. human relations.
  5. lighting.
  6. free food.

 

 

ANS:                            2                      42

Motivation Concepts

 

  1. The findings provided by the Hawthorne Studies provided the impetus for the ____, despite flawed methodology or inaccurate conclusions.
  2. classical perspective
  3. humanistic perspective
  4. scientific management
  5. bureaucratic organizations
  6. contingency perspective

 

 

ANS:                            2                      42

Motivation Concepts

 

  1. The human resources perspective of management links motivation theories with ____.
  2. top management
  3. employee tasks
  4. floor managers
  5. efficiencies
  6. profit maximization

 

 

ANS:                            2                      42

HRM

 

  1. A “dairy farm” view of management, i.e., contented cows give more milk, so satisfied workers will give more work was espoused by
  2. human relations management.
  3. human resource perspective.
  4. behavioral science approach.
  5. management science perspective.
  6. none of these.

 

 

ANS:                            2                      42

Leadership Principles

 

  1. Maslow’s hierarchy of needs started with which of these needs?
  2. Esteem
  3. Love
  4. Safety
  5. Physiological
  6. Belongingness

 

 

ANS:                            1                      44

Motivation Concepts

 

  1. Tommy believes his employees are responsible, creative, and able to work with minimal direction. He is a
  2. Theory X manager.
  3. Theory Y manager.
  4. Theory Z manager.
  5. Theory A manager.
  6. contingency theory manager.

 

 

ANS:                            2                      44

Motivation Concepts

 

  1. Beth Brant, production supervisor at Trustworthy Tools Mfg., Inc. believes that her employees dislike work, avoid responsibility, and therefore they need to be controlled and directed. Beth is a
  2. Theory X manager.
  3. Theory Y manager.
  4. realistic manager.
  5. Theory Z manager.
  6. Theory J manager.

 

 

ANS:                            3                      44

Motivation Concepts

 

  1. According to Douglas McGregor, the classical perspective on management is consistent with which of the following?
  2. Theory X manager
  3. Theory Y manager
  4. Theory Z manager
  5. Theory A manager
  6. None of these

 

 

ANS:                            2                      44

Motivation Concepts

 

  1. The behavioral sciences approach is based on which of the following disciplines?
  2. Anthropology
  3. Economics
  4. Sociology
  5. Psychology
  6. All of these

 

 

ANS:                            1                      44

Leadership Principles

 

  1. Organizational development is one specific set of management techniques based in the ____ approach.
  2. management science
  3. systems theory
  4. behavioral sciences
  5. scientific management
  6. quantitative

 

 

ANS:                            2                      45

Creation of Value

 

  1. The management science perspective emerged after World War II to treat problems associated with
  2. modern global warfare.
  3. environmental issues.
  4. employee involvement.
  5. Germany.
  6. improving manufacturing.

 

 

ANS:                            2                      46

Operations Management

 

  1. The management science perspective applies all of the following to managerial problems EXCEPT
  2. statistics.
  3. qualitative techniques.
  4. mathematics.
  5. quantitative techniques.
  6. all of these are correct.

 

 

ANS:                            2                      46

Operations Management

 

 

  1. Operations research grew out of World War II groups and is based on ____.
  2. group dynamics
  3. employees in crisis
  4. production in turbulent times
  5. mathematical equations
  6. a humanistic approach

 

 

ANS:                            2                      46

Operations Management

 

  1. The teamwork philosophy is based in part on the assumption that five people working together can produce more than five people working individually. This philosophy is consistent with the concept of
  2. transformation.
  3. entropy.
  4. synergy.
  5. feedback.
  6. quality.

 

 

ANS:                            3                      48

Creation of Value

 

  1. 10 + 10 = 25 reflects which of these?
  2. Entropy
  3. Synergy
  4. Open system
  5. Closed system
  6. Weberian math

 

 

ANS:                            3                      48

Creation of Value

 

  1. In ____ every situation is viewed as unique.
  2. a universalist view
  3. a contingency view
  4. a case view
  5. scientific management view
  6. None of these

 

 

ANS:                            2                      49

Leadership Principles

 

  1. It is often difficult to make decisions about subsystems, because they are ____.
  2. interdependent
  3. independent
  4. managed differently
  5. filled with employees
  6. organizationally based

 

 

ANS:                            2                      48

Creation of Value

 

  1. In order to determine how to deal with a problem employee, Sharon evaluated the employee, the problem, and the context in which the problem occurred. She is applying which of the following perspectives?
  2. Participative view
  3. Universalist view
  4. Autonomy view
  5. Contingency view
  6. Humanist view

 

 

ANS:                            3                      49

Leadership Principles

 

  1. A consultant who recommends the effectiveness of sensitivity training to every organization he serves is violating the basics of which of the following perspectives?
  2. Efficiency perspective
  3. Universalist perspective
  4. Contingency perspective
  5. Scientific management perspective
  6. Quantitative perspective

 

 

ANS:                            2                      49

Leadership Principles

 

  1. Which of the following is often considered the “father of the quality movement?”
  2. Weber
  3. Gilbreth
  4. Follett
  5. Deming
  6. Gehrke

 

 

ANS:                            2                      49

Leadership Principles

 

  1. ____ focuses on managing the whole organization to deliver quality to customers.
  2. Bureaucracy
  3. Theory Z
  4. Management-by-objective
  5. Total Quality Management
  6. Organization-customer relationship

 

 

ANS:                            1                      49

Leadership Principles

 

  1. Elements of TQM include
  2. employee detachment.
  3. focus on profits.
  4. benchmarking.
  5. accidental improvement.
  6. all of these.

 

 

ANS:                            1                      49

Leadership Principles

 

  1. ____ is a process whereby companies find out how others do something better than they do and then try to imitate or improve on it.
  2. TQM
  3. Continuous improvement
  4. Benchmarking
  5. Empowerment
  6. MBO

 

 

ANS:                            1                      49- 50

Leadership Principles

 

  1. The implementation of small incremental improvements in all areas of the organization on an ongoing basis is referred to as
  2. benchmarking.
  3. empowerment.
  4. systems theory.
  5. contingency perspective.
  6. continuous improvement.

 

 

ANS:                            1                      50

Creation of Value

 

  1. Which of the following refers to managing the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers?
  2. E-commerce
  3. E-business
  4. Supply chain management
  5. Knowledge management
  6. Customer relationship management

 

 

ANS:                            2                      53

AACSB Technology | Creation of Value

 

  1. Which of the following uses the latest information technology to keep in close touch with customers and to collect and manage large amounts of customer data?
  2. Supply Chain Management
  3. Learning Organizations
  4. Scientific Management
  5. Customer Relationship Management
  6. The Humanistic Approach

 

 

ANS:                            1                      53

Information Technologies

 

 

 

 

 

 

 

 

  1. An innovation mindset that strives to meet customers’ immediate needs quickly and inexpensively is referred to as:
  2. Kaizen
  3. Just-in-time control
  4. Total quality management
  5. Jugaad
  6. XY Theory

 

 

ANS:                            2                      33

Creation of Value

 

  1. Jessica is a recent college graduate who is seeking a job that includes telecommuting, shared jobs, flextime, and organization-sponsored sabbaticals. Based on this information, Jessica most likely belongs to which demographic group?
  2. Baby Boomer
  3. Generation X
  4. Generation Y
  5. Generation Z
  6. Tweener

 

 

ANS:                            3                      34

Individual Dynamics

 

  1. Time and motion studies that resulted in drastic reduction in the time patients spent on the operating table were pioneered by:
  2. Edward Deming
  3. Henry Gantt
  4. Max Weber
  5. Mary Parker Follett
  6. Frank Gilbreth

 

 

ANS:                            2                      36

Operations Management

 

  1. Genex Dynamics is a ballistics company that uses the unity of command, scalar chain, and division of work principles. These are part of which management philosophy?
  2. Administrative principles approach
  3. Bureaucratic approach
  4. Scientific management approach
  5. Humanistic approach
  6. Behavioral sciences approach

 

 

ANS:                            3                      39

Operations Management

 

 

 

 

 

 

  1. Matrix Dress Designs operates using the concept of empowerment, where employees act independently and with management facilitating rather than controlling workers. These qualities represent which management approach?
  2. Administrative principles approach
  3. Bureaucratic approach
  4. Scientific management approach
  5. Humanistic approach
  6. Behavioral sciences approach

 

 

ANS:                            3                      41

Group Dynamics

 

  1. A key finding in the Hawthorne studies was which of these?
  2. Stronger lighting increased productivity
  3. More money resulted in increased productivity
  4. Productivity declined in all experiments
  5. Higher temperatures reduced productivity
  6. Human relations increased productivity

 

 

ANS:                            2                      42

Operations Management

 

  1. Theory X and Theory Y was developed by:
  2. Douglas McGregor
  3. Henry Gantt
  4. Max Weber
  5. Mary Parker Follett
  6. Frank Gilbreth

 

 

ANS:                            2                      44

Operations Management

 

  1. The Forestville Freeze is regionally known for its employee training programs. Managers at the Freeze conduct research to determine the best candidate interviewing techniques. This involves use of which management approach?
  2. Administrative principles approach
  3. Bureaucratic approach
  4. Behavioral sciences approach
  5. Humanistic approach
  6. Scientific management approach

 

 

ANS:                            3                      44

Motivational Concepts

 

 

 

 

 

 

 

  1. Within his role as a financial accountant, Roger uses the capital asset pricing model and other mathematical tools to help clients keep track of their finances. Which perspective or approach does Roger apply most at his work?
  2. Quantitative perspective
  3. Qualitative perspective
  4. Humanistic approach
  5. Behavioral science approach
  6. Scientific management approach

 

 

ANS:                            3                      46

Individual Dynamics

 

  1. The most recent subfield of the quantitative perspective is _________, which is reflected in management information systems designed to provide relevant information to managers in a timely and cost-efficient manner.
  2. Operations research
  3. Operations management
  4. Information technology
  5. Systems thinking
  6. Infrastructure development

 

 

ANS:                            2                      46

Information Technologies

 

  1. Which of the following refers to financial managers and others who base their decisions on complex quantitative analysis, under assumption that using advanced mathematics and technology can accurately predict how the market works?
  2. Stems
  3. Yuppies
  4. Quals
  5. Quants
  6. Fins

 

 

ANS:                            2                      47

Information Technologies

 

  1. From the 1950s until today, which management perspective has remained the most prevalent?
  2. Systems
  3. Qualitative
  4. Scientific management
  5. Quantitative
  6. Humanistic

 

 

ANS:                            2                      47

Group Dynamics

 

 

 

 

  1. Georgia, an airline CEO, often looks for patterns of movement within the airline industry, focusing on the qualities of rhythm, flow, direction, shape, and networks of relationships. This type of activity, referred to as ________thinking, allows Georgia to see the structures that underlie complex situations within the industry and company.
  2. systems
  3. qualitative
  4. quantitative
  5. conceptual
  6. contingency

 

 

ANS:                            3                      48

Individual Dynamics

 

  1. After decades of being a manager, Jeffrey has learned that an organizational structure that is effective for one company is likely to be ineffective for a different company. This knowledge reflects which current management perspective?
  2. Systems thinking
  3. Contingency view
  4. Total quality management
  5. Benchmarking
  6. Scientific management view

 

 

ANS:                            2                      49

Individual Dynamics

 

  1. __________ specifies a goal of no more than 3.4 defects per million parts.
  2. Benchmarking
  3. Total quality management
  4. Six sigma
  5. Balanced scorecard
  6. Jugaad

 

 

ANS:                            2                      50

Operations Management

 

  1. Which of the following is identified as a recent trend that has staying power?
  2. Corporate takeovers
  3. Hedging
  4. Insourcing
  5. Relationship management
  6. Task management

 

 

ANS:                            2                      51

Environmental Influence

 

 

 

 

 

CASE

 

Scenario – Britney Marr

 

The opportunity to gain a foothold in the snack cracker industry had just been found. Britney Marr, an account executive manager for Baked Wheat Industries had developed an interest in wheat crackers two months ago when one of her newly hired account execs, Amy Bender, had convinced her about the high margins and promising future associated with that market. Marr had always believed that if you do your homework in hiring the best people then it only makes sense to listen to their recommendations and implement their suggestions.

 

Marr had given her approval to Bender to explore opportunities to move into this promising new market. This morning, Bender had reported that the Jackson Corporation had severed its contract with Feel Good Crackers Incorporated. Apparently, the Feel Good salesman had shared sensitive information about Jackson at a cocktail party. Bender had already established a good relationship with Feel Good buyers and so recognized this as an opportunity to expand her market into wheat crackers.

 

  1. Marr’s behavior provides an example of
  2. the use of scalar rope.
  3. division of organization.
  4. the principle of inversion.
  5. unity of direction.
  6. all of these.

 

 

ANS:

 

2                      39

Leadership Principles

 

 

  1. Marr’s management style reflects a belief in
  2. Theory Y.
  3. developing her employees through control.
  4. grieving theory.
  5. all of these.
  6. none of these.

 

 

ANS:

 

2                      44

Leadership Principles

 

 

 

 

 

 

 

 

 

 

  1. From a System’s theory perspective
  2. Marr should increase teamwork, leading to more entropy.
  3. Marr should listen to and reward her people well to increase synergy.
  4. the Jackson account was lost because Feel Good was too closed to its environment.
  5. all of these.
  6. none of these.

 

 

ANS:

 

2                      48

Leadership Principles

 

 

  1. Contingency theory recommends
  2. Marr should manage all of her employees the way she manages Bender.
  3. the goal of every manager should be high return on investment, so Marr should expand her market only if it increases ROI.
  4. Bender should focus on her expertise, recognizing the potential risk of failure with a new market.
  5. all of these.
  6. none of these.

 

 

ANS:

 

2                      49

Leadership Principles

 

 

COMPLETION

 

  1. A(n) ____________________ perspective provides a broader way of thinking, a way of searching for patterns and determining whether they recur across time periods.

 

ANS:

 

  1. ____________________ refer to the aspects of a culture that guide and influence relationships among people.

 

ANS:

 

 

 

 

  1. ____________________ refer to the influence of political and legal institutions on people and organizations.

 

ANS:

 

  1. ____________________ pertain to the availability, production, and distribution of resources in a society.

 

ANS:

 

  1. A management perspective that emerged during the nineteenth and early twentieth centuries that emphasized a rational, scientific approach to the study of management and sought to make organizations efficient operating machines is called ____________________.

 

ANS:

 

  1. ____________________ is considered the “father of scientific management.”

 

ANS:

 

  1. Weber’s vision of organizations that would be managed on an impersonal, rational basis is called a(n) ____________________.

 

ANS:

 

  1. A subfield of the classical management perspective that focused on the total organization rather than the individual worker, delineating the management functions of planning, organizing, commanding, coordinating, and controlling is called ____________________.

 

ANS:

 

 

  1. According to Fayol, similar activities in an organization should be grouped together under one manager. This administrative principle is known as ____________________.

 

ANS:

 

  1. A management perspective that emerged around the late nineteenth century that emphasized understanding human behavior, needs, and attitudes in the workplace is referred to as a(n) ____________________.

 

ANS:

 

  1. A management perspective that suggests jobs should be designed to meet higher-level needs by allowing workers to use their full potential is called a(n) ____________________.

 

ANS:

 

  1. Organizational development is one specific set of management techniques based in the ____________________ approach.

 

ANS:

 

  1. A management perspective that emerged after World War II, and applied mathematics, statistics, and other quantitative techniques to managerial problems is referred to as a(n) ____________________.

 

ANS:

 

  1. ____________________ refers to the field of management that specializes in the physical production of goods or services.

 

ANS:

 

 

 

  1. The concept that the whole is greater than the sum of its parts is known as ____________________.

 

ANS:

 

  1. The ____________________ view of management is an integration of the case and universalist viewpoints.

 

ANS:

 

  1. The process by which companies find out how others do something better than they do and then try to copy and/or improve it is known as ____________________.

 

ANS:

 

  1. ____________________ refers to the sequence of suppliers and purchasers, covering all stages of processing from obtaining raw materials to distributing finished goods to consumers.

 

ANS:

 

  1. ____________________ collect and manage large amounts of data about customers and make them available to employees, enabling better decision making and superior customer service.

 

ANS:

 

  1. ____________________ refers to contracting out selected functions or activities to other organizations that can do the work more cost-efficiently.

 

ANS:

 

 

SHORT ANSWER

 

  1. List three of the basic ideas of scientific management.

 

ANS:

 

  1. List the three assumptions associated with McGregor’s Theory X.

 

ANS:

 

ESSAY

 

  1. The writings of Fayol, Taylor, and Weber provide the foundation for modern management. Identify the school of thought associated with each writer and compare the focus that each writer takes in relation to the organization.

 

ANS:

 

2                      36-39

Creation of Value

 

  1. Discuss the advantages and disadvantages of Taylor’s Scientific Management.

 

ANS:

 

 

 

  1. Briefly describe what happened in the Hawthorne Studies and explain the results and conclusions of these studies.

 

ANS:

 

  1. Describe the assumptions behind McGregor’s Theory X and Theory Y. How do the theories relate to the classical perspective on management and early human relations ideas?

 

ANS:

 

  1. Briefly describe systems theory, including synergy.

 

ANS:

 

 

  1. Discuss the differences between the case view, the universalist view, and the contingency view.

 

ANS:

 

 

 

Chapter 3—The Environment and Corporate Culture

 

TRUE/FALSE

 

  1. While Blockbuster has closed hundreds of stores and is likely to file for bankruptcy, Netflix expanded its customer base to over 13 million.

 

ANS:                            2                      61

Environmental Influence

 

  1. Factors external to the organizations have been primarily the focus of management as a discipline.

 

ANS:                            2                      62

Environmental Influence

 

  1. The general environment and the task environment are the two layers of an organization’s external environment.

 

ANS:                            1                      62

Environmental Influence

 

  1. The outer layer, the general environment, is widely dispersed and affects organizations directly.

 

ANS:                            1                      62

Environmental Influence

 

  1. To be effective, managers must monitor and respond to the environment — a closed-systems view.

 

ANS:                            2                      62

Environmental Influence

 

  1. Customers and competitors are two important sectors of the economic dimension of a firm’s general environment.

 

ANS:                            2                      62

Environmental Influence

 

  1. Current employees, management, and especially corporate culture are part of an organization’s internal environment.

 

ANS:                            1                      62

Environmental Influence

 

  1. The international dimension of the external environment represents events originating in foreign countries as well as opportunities for U.S. companies in other countries.

 

ANS:                            1                      63

Environmental Influence

 

 

 

  1. In recent years, the most dramatic change in the international environment is the shift of economic power to Germany and France.

 

ANS:                            1                      63

Environmental Influence

 

  1. The technological dimension of the external environment includes scientific and technological advancements in a specific industry as well as in society at large.

 

ANS:                            1                      63

Environmental Influence

 

  1. The sociocultural dimension of the general environment includes societal norms and values.

 

ANS:                            1                      65

Environmental Influence

 

  1. The international dimension includes scientific and technological advancements in a specific industry as well as in society at large.

 

ANS:                            2                      63

Information Technologies

 

  1. According to Manager’s Shoptalk in Chapter 3, the Chinese concept of guanxi is a supportive, mutually beneficial connection between two people.

 

ANS:                            1                      64

Environmental Influence

 

  1. According to Manager’s Shoptalk in chapter 3, one of the rules of doing business in China is remembering that relationships are short-term.

 

ANS:                            1                      64

Environmental Influence

 

  1. Economic problems in other parts of the world have a tremendous impact on U.S. companies.

 

ANS:                            2                      65-66

Environmental Influence

 

  1. The economic dimension of the general environment represents the demographic characteristics.

 

ANS:                            2                      65

Environmental Influence

 

  1. The economic dimension of the general environment includes consumer purchasing power.

 

ANS:                            1                      65

Environmental Influence

 

  1. An example of part of the legal-political dimension of the general environment is a government’s report on the decline of unemployment rate.

 

ANS:                            3                      66

Environmental Influence

 

  1. President Clinton’s signing of the telecommunications bill in 1996 deregulating the industry is an example of the legal-political dimension of the general environment.

 

ANS:                            3                      66

Environmental Influence

 

  1. The task environmental dimension includes all elements that occur naturally on earth, including plants, animals, rocks, and natural resources such as air, water, and climate.

 

ANS:                            2                      67

Environmental Influence

 

  1. Customers are the people and organizations in the environment who acquire goods or services from the organization.

 

ANS:                            1                      68

Environmental Influence

 

  1. Recently, there has been strong concern about climate change such as global warming caused by greenhouse gases, most notably carbon dioxide.

 

ANS:                            2                      67

Environmental Influence

 

  1. McDonalds, Burger King, and Checkers are competitors since all three sell fast food to individuals.

 

ANS:                            2                      69

Environmental Influence

 

  1. The raw materials that organizations use to produce its outputs are provided by customers.

 

ANS:                            1                      69

Environmental Influence

 

  1. Other organizations in the same industry or type of business that provide goods or services to the same set of customers are referred to as suppliers.

 

ANS:                            1                      69

Environmental Influence

 

  1. The labor market is made up by people in the environment who can be hired to work for an organization.

 

ANS:                            1                      69

Environmental Influence

 

  1. If Johnson Lumber provides trees for Westvaco Paper Manufacturing, then Johnson Lumber is considered a supplier for Westvaco.

 

ANS:                            2                      69

Environmental Influence

 

  1. Organizations must manage environmental uncertainty to be effective.

 

ANS:                            1                      70

Environmental Influence

 

  1. An organization experiences high uncertainty when internal factors gradually change over time.

 

ANS:                            1                      70

Environmental Influence

 

  1. A merger is an effort to spot trends that enable managers to predict future events.

 

ANS:                            2                      72

Environmental Influence

 

  1. A sales executive for General Motors fills an essential boundary-spanning role.

 

ANS:                            3                      72

Environmental Influence

 

  1. Competitive intelligence professionals are really just in-house snoops who obtain information about other companies.

 

ANS:                            1                      73

Environmental Influence

 

  1. Competitive intelligence is an approach to boundary spanning which results from using sophisticated software to search through large amounts of internal and external data to spot patterns, trends, and relationships that might be significant.

 

ANS:                            2                      72

Information Technologies

 

  1. More organizations are requiring all employees to perform boundary-spanning because environmental shifts can happen quickly.

 

ANS:                            2                      72-73

Environmental Influence

 

  1. Given the increasing environmental uncertainty, managers in partnering organizations are shifting from a partnership orientation to an adversarial orientation.

 

ANS:                            2                      73

Environmental Influence

 

  1. A joint venture involves a strategic alliance or program by two or more organizations.

 

ANS:                            1                      74

Environmental Influence

 

  1. Due to the stable environment and lack of technological change, mergers and joint ventures rarely occur in the U.S.

 

ANS:                            1                      74

Environmental Influence

 

  1. The internal environment within which managers work includes corporate culture, sociocultural aspects, and customers.

 

ANS:                            2                      75

Group Dynamics

 

  1. Culture can be defined as the ability to speak different languages.

 

ANS:                            1                      75

Environmental Influence

 

  1. Physical symbols are associated with the surface level of organizational culture.

 

ANS:                            2                      75

Environmental Influence

 

  1. Symbols, stories, heroes, slogans, and ceremonies combine to create an organization’s culture.

 

ANS:                            2                      76

Group Dynamics

 

  1. The set of key values, beliefs, and norms, that are shared by members of an organization are combined to create the symbols of an organization.

 

ANS:                            2                      77

Group Dynamics

 

  1. A symbol is a figure that exemplifies the deeds, character, and attributes of a corporate culture.

 

ANS:                            2                      77

Group Dynamics

 

  1. A narrative based on rumors within the organization that can lead to destructive results if not carefully controlled by management is called an organizational story.

 

ANS:                            2                      77

Group Dynamics

 

 

  1. A phrase or sentence that succinctly expresses a key corporate value is called a story.

 

ANS:                            1                      77

Group Dynamics

 

  1. The mythical sales representative at Robinson Jewelers who delivered a wedding ring directly to the church because the ring had been ordered late is an example of a hero.

 

ANS:                            1                      77

Group Dynamics

 

  1. A slogan is a phrase or sentence that succinctly expresses a key corporate value.

 

ANS:                            2                      77

HRM

 

  1. A ceremony is a planned activity at a special event that is conducted for the benefit of an audience.

 

ANS:                            1                      77

Motivation Concepts

 

  1. In adaptive cultures, managers are concerned with customers and processes that bring about useful change.

 

ANS:                            2                      78

Environmental Influence

 

  1. The achievement culture emerges in an environment that requires fast response and high-risk decision-making.

 

ANS:                            2                      79

Environmental Influence

 

  1. An achievement culture is found in an environment that is dynamic and requires high-risk decision-making.

 

ANS:                            2                      79

Group Dynamics

 

  1. The involvement culture is suited to organizations that are concerned with serving specific customers in the external environment but without the intense need for flexibility and rapid change.

 

ANS:                            2                      79

Group Dynamics

 

  1. A results-oriented culture that values competitiveness, aggressiveness, personal initiative, and willingness to work long and hard to achieve results is called the achievement culture.

 

ANS:                            2                      79

Group Dynamics

 

  1. The bureaucratic culture has an external focus and a consistency orientation for a dynamic environment.

 

ANS:                            2                      79

Group Dynamics

 

  1. Corporate culture plays a key role in creating an organizational climate that enables learning and innovative responses to threats from the external environment, challenging new opportunities, or organizational crises.

 

ANS:                            2                      81-82

Environmental Influence

 

  1. When an organization pays little attention to either cultural values or business results, it is unlikely to survive for long.

 

ANS:                            1                      82

Group Dynamics

 

  1. When an organization pays little attention to cultural values and instead focuses on business results, success will be difficult to sustain in the long run.

 

ANS:                            1                      82

Group Dynamics

 

  1. Success will be difficult to sustain in the long run when an organization puts emphasis on both cultural values and business results.

 

ANS:                            1                      82

Group Dynamics

 

  1. In a high performance culture, organizations put high emphasis on both culture and solid business performance as drivers of organizational success.

 

ANS:                            1                      82

Group Dynamics

 

  1. A cultural leader defines and uses signals and symbols to influence corporate culture.

 

ANS:                            1                      84

Group Dynamics

 

  1. The cultural leader articulates a vision for the organizational culture that employees can believe in and that generates excitement.

 

ANS:                            1                      84

Group Dynamics

 

 

 

 

  1. Employees of an organization are considered part of the general environment.

 

ANS:                            2                      62

Environmental Influence

 

  1. In China, business tends to be more personal.

 

ANS:                            2                      64

Environmental Influence

 

  1. It is expected that the Hispanic population in the United States will shrink slightly over the next 30 years.

 

ANS:                            2                      65

Environmental Influence

 

  1. Over the last four years, the weakened U.S. economy has had a devastating impact on small business.

 

ANS:                            2                      66

Environmental Influence

 

  1. In 2010, Canada was the country with the highest environmental performance index score.

 

ANS:                            2                      67

Environmental Influence

 

  1. The most likely competitor for an automobile manufacturer would be a company in a different but related industry, such as a steel manufacturer.

 

ANS:                            2                      69

Environmental Influence

 

  1. Labor market forces affecting organizations right now include the growing need for computer-literate knowledge workers and the necessity for continuous investment in human resources through recruitment, education, and training.

 

ANS:                            2                      69

Information Technologies

 

  1. To be successful, companies should only involve top-level executives in boundary-spanning activities.

 

ANS:                            1                      73

Environmental Influence

 

  1. As managers are increasingly shifting to a partnering orientation as opposed to one that is adversarial in nature, the use of information sharing has increased.

 

ANS:                            1                      73

Environmental Influence

 

  1. Cultural values in organizations are rarely observed, but are rather deeply embedded to the extent that members are not consciously aware of them.

 

ANS:                            2                      75

Environmental Influence

 

  1. In determining what cultural values are important for the organization, managers should consider the external environment as well as the company’s strategy and goals.

 

ANS:                            2                      78

Environmental Influence

 

  1. In today’s business environment, most companies operate in a stable and rigid environment.

 

ANS:                            1                      80

Environmental Influence

 

  1. Quadrant C represents organizations that are focused primarily on bottom-line results and pay little attention to organizational values.

 

ANS:                            2                      82

Operations Management

 

  1. Companies in Quadrant D put high emphasis on both culture and solid business performance as drivers of organizational success.

 

ANS:                            2                      82

Operations Management

 

  1. Quadrant A organizations represent the high-performance culture, which is based on solid organizational mission and purpose, and adaptive values that guide decisions and business practices.

 

ANS:                            2                      83

Leadership Principles

 

MULTIPLE CHOICE

 

  1. The environments in which businesses operate are increasingly ____, requiring managers to be ready to react and respond to even subtle environmental shifts.
  2. static
  3. universal
  4. constant
  5. dynamic
  6. traditional

 

 

ANS:                            2                      62

Environmental Influence

 

 

 

  1. ____ includes all elements existing outside the boundary of the organization that have the potential to affect the organization.
  2. Organizational environment
  3. Internal environment
  4. Task environment
  5. General environment
  6. Technological environment

 

 

ANS:                            2                      62

Environmental Influence

 

  1. ____ system draws resources from the external environment and releases goods and services back to it.
  2. Production
  3. Closed
  4. Open
  5. Information
  6. Management

 

 

ANS:                            2                      62

Creation of Value

 

  1. The ____ environment represents the outer layer of the environment and affects organizations ____.
  2. task; indirectly
  3. general; directly
  4. internal; directly
  5. internal; indirectly
  6. general; indirectly

 

 

ANS:                            2                      62

Environmental Influence

 

  1. All of these are a part of an organization’s task environment EXCEPT
  2. Customers
  3. Labor markets
  4. Competitors
  5. Employers
  6. Suppliers

 

 

ANS:                            2                      62

Environmental Influence

 

  1. Which of these is NOT a part of an organization’s general environment?
  2. Technological
  3. Economic
  4. Competitors
  5. Legal-political
  6. Sociocultural

 

 

ANS:                            1                      62

Environmental Influence

 

 

 

  1. ____ is a part of Ford’s, the U.S. auto manufacturer, task environment.
  2. Inflation rate
  3. Chrysler
  4. Securities and Exchange Commission (SEC), a government regulating agency
  5. Amazon.com, an online bookseller
  6. Ford’s corporate culture

 

 

ANS:                            2                      62

Environmental Influence

 

  1. ____ is a part of an organization’s internal environment.
  2. Its customers
  3. Its salespeople
  4. The consumer price index
  5. Its suppliers
  6. Its competitors

 

 

ANS:                            2                      62

Environmental Influence

 

  1. Molly Madison received “The Employee of the Month” Award at Internal Workings Remodeling Service in April. Molly would be considered a part of which of these for Internal Workings?
  2. General environment
  3. Task environment
  4. Economic environment
  5. Internal environment
  6. Political activity

 

 

ANS:                            2                      62

Environmental Influence

 

  1. The ____ of the external environment represents events originating in foreign countries as well as opportunities for American companies in other countries.
  2. National dimension
  3. Global dimension
  4. International dimension
  5. Japan’s dimension
  6. U.S. dimension

 

 

ANS:                            1                      63

Environmental Influence

 

  1. Scientific and technological advancements in a specific industry as well as in society at large are included in which general environment dimension?
  2. Sociocultural dimension
  3. Legal-political dimension
  4. Economic dimension
  5. Technological dimension
  6. Corporate culture dimension

 

 

ANS:                            1                      63

Environmental Influence

 

  1. Which dimension of the general environment represents the demographic characteristics, norms, customs, and values of the population within which the organization operates?
  2. Legal-political dimension
  3. Economic dimension
  4. Technological dimension
  5. Corporate culture dimension
  6. Sociocultural dimension

 

 

ANS:                            1                      65

Environmental Influence

 

  1. When Miami Herald launches a Spanish-language newspaper, El Nuevo Herald, with articles emphasizing Hispanic, Cuban, and Latin American news and sports, it is responding to changes in ____ environment.
  2. sociocultural
  3. technological
  4. economic
  5. competitors
  6. suppliers

 

 

ANS:                            2                      65

Environmental Influence

 

  1. ____ environment consists of demographic factors, such as population density.
  2. Technological
  3. Sociocultural
  4. Legal-political
  5. Internal
  6. Economic

 

 

ANS:                            2                      65

Environmental Influence

 

  1. Anyone considering doing business in China, according to Manager’s Shoptalk in Chapter 3, should keep in mind all of the following rules except:
  2. Business is always personal
  3. Don’t skip the small talk
  4. Remember that relationships are not short-term
  5. Be efficient with use of time
  6. Make contact frequently

 

 

ANS:                            1                      64

Environmental Influence

 

 

 

 

 

 

 

 

  1. Which of the following rules, according to Manager’s Shoptalk in Chapter 3, is about forging an emotional bond?
  2. Don’t skip the small talk
  3. Business is always personal
  4. Remember that relationships are not short-term
  5. Make contact frequently
  6. Be efficient with use of time

 

 

ANS:                            2                      64

Leadership Principles

 

  1. Lying at the heart of Chinese culture, ____ is a supportive, mutually beneficial connection between two people.
  2. kaizen
  3. ganqing
  4. renqing
  5. kansei
  6. guanxi

 

 

ANS:                            2                      64

Environmental Influence

 

  1. The general environment dimension that includes consumer purchasing power, the unemployment rate, and interest rates is called the
  2. legal-political dimension.
  3. sociocultural dimension.
  4. technological dimension.
  5. economic dimension.
  6. task dimension.

 

 

ANS:                            2                      65

Environmental Influence

 

  1. A government inspection has required your company to upgrade the safety equipment in the manufacturing process of ice creamery. What dimension of the external environment has influenced these upgrades?
  2. Technological
  3. Legal-political
  4. Task
  5. Sociocultural
  6. Economic

 

 

ANS:                            2                      66

Environmental Influence

 

 

 

 

 

 

 

  1. The ____ dimension of the general environment includes federal, state, and local government regulations.
  2. technological
  3. legal-political
  4. economic
  5. sociocultural
  6. international

 

 

ANS:                            1                      66

Environmental Influence

 

  1. An interest group that works within the legal-political framework to influence companies to behave in socially responsible ways is called a(n)
  2. pressure group.
  3. legal group.
  4. political influence group.
  5. social group.
  6. none of these.

 

 

ANS:                            1                      66

Environmental Influence

 

  1. Which of the following dimensions of the general environment includes all elements that occur naturally on earth?
  2. Sociocultural dimension
  3. Technological dimension
  4. Economic dimension
  5. Natural dimension
  6. Environmental dimension

 

 

ANS:                            2                      67

Environmental Influence

 

  1. The people and organizations in the environment who acquire goods or services from the organization are
  2. competitors.
  3. suppliers.
  4. customers.
  5. employees.
  6. potential employees.

 

 

ANS:                            1                      68

Environmental Influence

 

 

 

 

 

 

 

 

  1. Integrated Computers, Inc. wants to compile a profile of the customer it will target in its next promotional mailing. What environment would this be found in?
  2. Internal environment
  3. Task environment
  4. Work environment
  5. General environment
  6. None of these

 

 

ANS:                            2                      68

Environmental Influence

 

  1. For Southwest Airlines, all of the following can be suppliers EXCEPT
  2. Exxon (providing jet fuel).
  3. Citibank (providing finances).
  4. Delta Airlines (providing competition).
  5. Boeing (providing planes).
  6. All of these are suppliers for Southwest Airlines.

 

 

ANS:                            3                      69

Environmental Influence

 

  1. ____ is(are) included in an organization’s task environment.
  2. Suppliers
  3. Accounting procedures
  4. Technology
  5. Government
  6. Demographic characteristics

 

 

ANS:                            2                      69

Environmental Influence

 

  1. The ____ represents people in the environment who can be hired to work for the organization.
  2. competitors
  3. labor market
  4. suppliers
  5. customers
  6. government

 

 

ANS:                            1                      69

Environmental Influence

 

  1. Ally’s Applesauce is in the process of hiring sixty new workers. The personnel department has a large pool of unskilled labor to draw from due to the high unemployment rate in the local area. Which dimension of the external environment is involved here?
  2. Sociocultural
  3. Competitors
  4. Technological
  5. Labor market
  6. Legal-political

 

 

ANS:                            2                      69

Environmental Influence

 

  1. The internal environment within which managers work includes all of the following except
  2. corporate culture
  3. production technology
  4. organization structure
  5. physical facilities
  6. labor market

 

 

ANS:                            2                      75

Environmental Influence

 

  1. Which of the following roles are assumed by people and/or departments that link and coordinate the organization with key elements in the external environment?
  2. Figurehead
  3. Liaison
  4. Boundary-spanning
  5. Disturbance handler
  6. Leader

 

 

ANS:                            2                      72

Environmental Influence

 

  1. Which of the following is NOT a part of adapting the organization to changes in the environment for coping with high environmental uncertainty?
  2. Boundary-spanning roles
  3. Advertising/public relations
  4. Mergers/joint ventures
  5. Interorganizational partnerships
  6. All of these are a part of organizational response in adapting the organization to changes in the environment.

 

 

ANS:                            2                      72

Environmental Influence

 

  1. ____ is an approach to boundary spanning which results from using sophisticated software to search through large amounts of internal and external data to spot patterns, trends, and relationships that might be significant.
  2. Merger intelligence
  3. Business intelligence
  4. Competitive intelligence
  5. Partnership intelligence
  6. Environment intelligence

 

 

ANS:                            2                      72

Environmental Influence

 

 

 

 

 

 

 

  1. Kristen’s Jewelry Shop has just hired a comparative shopper to visit other local jewelry stores to gain product pricing information. What strategy is this describing?
  2. Boundary-spanning roles
  3. A flexible structure
  4. Unfair practice
  5. Increase planning and forecasting
  6. Joint venture

 

 

ANS:                            2                      73

Environmental Influence

 

  1. Based on the notion that organizations are dealing with a very turbulent and uncertain external environment, more organizations are requiring ____ to perform boundary-spanning activities.
  2. top leaders
  3. middle managers
  4. line managers
  5. all employees
  6. suppliers

 

 

ANS:                            2                      73

Environmental Influence

 

  1. Companies can reduce boundaries and increase collaboration with other organizations by creating
  2. flexible structures.
  3. interorganizational partnerships.
  4. new company cultures.
  5. new supplier connections.
  6. none of these.

 

 

ANS:                            1                      73

Environmental Influence

 

  1. Many organizations are adapting to the environment by developing more of a(n) ____ relationship rather than a(n) ____ relationship with competitors.
  2. adversarial, partnership
  3. partnership, adversarial
  4. strategic, competitive
  5. competitive, strategic
  6. none of these

 

 

ANS:                            2                      73

Environmental Influence

 

  1. When two or more organizations combine to become one, it is referred to as a
  2. joint venture.
  3. flexible structure.
  4. mechanistic structure.
  5. merger.
  6. inorganic venture.

 

 

ANS:                            1                      74

Environmental Influence

 

  1. In a joint venture between large and small businesses, large businesses can provide all of the following EXCEPT
  2. sales staff.
  3. research staff.
  4. financial resources.
  5. distribution channels.
  6. top level management.

 

 

ANS:                            2                      74

Environmental Influence

 

  1. Culture can be defined as
  2. the set of key values, beliefs, understandings, and norms shared by members of an organization
  3. the ability to speak different languages
  4. an object, act, or event that conveys meaning to others
  5. a narrative based on true events that is repeated frequently and shared by organizational employees
  6. none of these

 

 

ANS:                            1                      75

Group Dynamics

 

  1. The level of corporate culture which cannot be seen but can be discerned from how people explain and justify what they do is
  2. Invisible artifacts
  3. Expressed values and beliefs
  4. Slogans and ceremonies
  5. Dress and office layout
  6. None of these

 

 

ANS:                            1                      75

Group Dynamics

 

  1. The level of corporate culture in which values are so deeply embedded that members are no longer consciously aware of them is
  2. Invisible artifacts
  3. Expressed values and beliefs
  4. Underlying assumptions and deep beliefs
  5. Dress and office layout
  6. Slogans and ceremonies

 

 

ANS:                            1                      75

Group Dynamics

 

 

 

 

 

 

 

 

  1. ____ are associated with surface level of organizational culture.
  2. Values
  3. Norms
  4. Manners of dress
  5. Beliefs
  6. All of these

 

 

ANS:                            2                      75

Group Dynamics

 

  1. Which of the following would be considered a visual representation(s) of a company’s corporate culture?
  2. All department heads have an executive office.
  3. Each department has an award plaque for employee of the month.
  4. All employees are dressed in professional business attire.
  5. Top level executives drive company owned sports car.
  6. All of these.

 

 

ANS:                            2                      76

Group Dynamics

 

  1. An object, act, or event that conveys meaning to others is referred to as a
  2. symbol.
  3. slogan.
  4. story.
  5. hero.
  6. culture.

 

 

ANS:                            1                      77

Group Dynamics

 

  1. Symbols, stories, and heroes are important because they
  2. entertain executive level management.
  3. address the concerns of government.
  4. acquaint customers to the organization.
  5. communicate the significant values of an organization.
  6. give employees something to talk about.

 

 

ANS:                            1                      76

Group Dynamics

 

  1. ____ is a narrative based on true event that is repeated frequently and shared by organizational employees.
  2. Symbol
  3. Slogan
  4. Story
  5. Hero
  6. Culture

 

 

ANS:                            1                      77

Group Dynamics

 

 

  1. A figure who exemplifies the deeds, character, and attributes of a corporate culture is referred to as a
  2. symbol.
  3. stories.
  4. slogan.
  5. hero.
  6. culture.

 

 

ANS:                            1                      77

Group Dynamics

 

  1. Heroes are important to an organization due to the fact that they
  2. exemplify key values of the organization.
  3. exemplify a strong corporate culture.
  4. serve as examples to other employees.
  5. all of these.
  6. none of these.

 

 

ANS:                            2                      77

Group Dynamics

 

  1. A ____ represents a phrase or sentence that succinctly expresses a key corporate value.
  2. symbol
  3. stories
  4. culture
  5. hero
  6. slogan

 

 

ANS:                            1                      77

Group Dynamics

 

  1. McDonald’s “We Love to See You Smile” represents a
  2. ceremony.
  3. symbol.
  4. ritual.
  5. slogan.
  6. political activity.

 

 

ANS:                            2                      77

Group Dynamics

 

  1. “Chiquita. Perfect for Life.” was Chiquita’s
  2. ceremony.
  3. slogan.
  4. symbol.
  5. ritual.
  6. all of these.

 

 

ANS:                            2                      77

Group Dynamics

 

 

 

 

  1. If a company emphasizes that “no purchase is complete until the customer is satisfied,” then it’s
  2. utilizing a symbol.
  3. communicating its values to customers.
  4. using a slogan to present their values to customers and employees.
  5. utilizing a hero for the purpose of conveying values.
  6. using customers to harass the employees.

 

 

ANS:                            1                      77

Group Dynamics

 

  1. Culture tends to differ between ____, but appears similar within ____.
  2. organizations, industries
  3. people, organizations
  4. groups, industries
  5. organizations, groups
  6. industries, geographical regions

 

 

ANS:                            2                      78

Group Dynamics

 

  1. All of the following are types of corporate cultures except
  2. adaptability culture.
  3. clan culture.
  4. consistency culture.
  5. involvement culture.
  6. achievement culture.

 

 

ANS:                            2                      79

Group Dynamics

 

  1. The adaptability culture emerges in an environment that requires ____ response and ____ decision making.
  2. fast; high-risk
  3. fast; low-risk
  4. slow; high-risk
  5. slow; low-risk
  6. regulated; low-risk

 

 

ANS:                            3                      78

Group Dynamics

 

  1. Which of the following cultures is suited to organizations that are concerned with servicing specific customers in the external environment but without the intense need for flexibility and rapid change?
  2. Adaptability culture
  3. Clan culture
  4. Achievement culture
  5. Consistency culture
  6. None of these

 

 

ANS:                            2                      79

Group Dynamics

 

  1. The involvement culture has a(n) ____ focus on the involvement and participation of employees to rapidly meet changing needs from the environment.
  2. external
  3. internal
  4. structural
  5. competitive
  6. technological

 

 

ANS:                            1                      79

Group Dynamics

 

  1. The consistency culture has a(n) ____ focus and an orientation for a ____ environment.
  2. external; stable
  3. external; dynamic
  4. internal; stable
  5. internal; dynamic
  6. structural; dynamic

 

 

ANS:                            3                      79

Group Dynamics

 

  1. Which of the following cultures values and rewards a methodical, rational, orderly way of doing things?
  2. Achievement culture
  3. Involvement culture
  4. Accomplishment culture
  5. Consistency culture
  6. Adaptability culture

 

 

ANS:                            2                      80

Environmental Influence

 

  1. ____ plays a key role in creating an organizational climate that enables learning and innovative responses to threats from the external environment, challenging new opportunities, or organizational crises.
  2. Mission statement
  3. Vision statement
  4. Competitive intelligence
  5. Employee training
  6. Corporate culture

 

 

ANS:                            2                      81-82

Environmental Influence

 

 

 

 

 

 

 

 

  1. What is likely to happen to organizations that pay little attention to either cultural values or business results?
  2. Unlikely to survive for long
  3. No help for performance during hard times
  4. Profitable in short run but difficult to sustain over long term
  5. High performance
  6. none of these

 

 

ANS:                            2                      82

Group Dynamics

 

  1. What is likely to happen to organizations that pay little attention to cultural values and instead stress business results?
  2. Unlikely to survive for long
  3. No help for performance during hard times
  4. Profitable in short run but difficult to sustain over long term
  5. High performance
  6. none of these

 

 

ANS:                            2                      82

Group Dynamics

 

  1. A high-performance culture is based on all of the following except
  2. solid organizational mission
  3. shared adaptive values
  4. individual employee ownership of bottom-line results
  5. individual employee ownership of organization’s cultural backbone
  6. singular focus on business results

 

 

ANS:                            1                      83

Group Dynamics

 

  1. In a study by Kotter and Haskett evidence is provided to support the claim that ____ is important for performance.
  2. managing cultural values
  3. leading partnerships within an industry
  4. surveying the external environment
  5. managing client relationships as boundary spanners
  6. empowering employees

 

 

ANS:                            2                      83

Group Dynamics

 

  1. Blockbuster’s weakened performance in recent years stems from which of the following?
  2. Weak internal culture
  3. Inability to respond to the changing environment
  4. Inability to become environmentally sustainable
  5. Growth in competition from oversees
  6. Weak supply chain management

 

 

ANS:                            2                      62

Environmental Influence

 

  1. Executives at One World Advertising have learned that it is necessary to establish strong personal relationships and emotional bonds with Chinese business partners. This relates most closely to which dimension of the general business environment?
  2. Natural
  3. Sociocultural
  4. Legal/Political
  5. International
  6. Internal

 

 

ANS:                            3                      63

Environmental Influence

 

  1. Stan is the owner of a small marketing firm. He designs ad campaigns that specifically target demographic groups within U.S. markets. Which demographic category currently has the largest market size?
  2. Baby boomers
  3. Generation X
  4. Generation Y
  5. Tweeners
  6. In-betweeners

 

 

ANS:                            3                      65

Environmental Influence

 

  1. Animal-One is a campaign organization that drums up public awareness about the use of animals in cosmetic testing. The group condemns traditional cosmetic companies while promoting smaller, all-natural companies that do not test on animals. Animal-One can best be described as a(n):
  2. Whistle-blower
  3. Government organization
  4. Pressure group
  5. Sustainable organization
  6. Small business

 

 

ANS:                            3                      66

Ethical Responsibilities

 

  1. In response to pressure from environmental advocates, organizations have become increasingly sensitive to diminishing:
  2. Natural resources
  3. Economic resources
  4. Financial resources
  5. Human resources
  6. Technology resources

 

 

ANS:                            2                      66

Ethical Responsibilities

 

 

 

 

  1. SweetTooth Candies is a U.S.-based company that manufactures and distributes candy bars and snack foods globally. The company sources most of its cocoa and sugar from South American companies. This business relationship highlights which dimension of the task environment?
  2. Customers
  3. Competitors
  4. Labor market
  5. Culture
  6. Suppliers

 

 

ANS:                            3                      69

Environmental Influence

 

  1. _________ means that managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes.
  2. Adaptation
  3. Risk
  4. Uncertainty
  5. Knowledge
  6. Education

 

 

ANS:                            2                      70

Environmental Influence

 

  1. Roberta is a top-level executive at a banking institution. She spends a significant part of her day meeting with local government officials, every day consumers, and federal banking officials to address key issues in the banking industry. Roberta’s role can best be described as:
  2. Boundary-spanning
  3. Adaptive
  4. Interorganizational
  5. External
  6. Internal

 

 

ANS:                            3                      72

Individual Dynamics

 

  1. Three large electronics companies have recently collaborated to develop an innovative new cell phone. This is an example of which managerial trend?
  2. Outsourcing
  3. Interorganizational partnership
  4. Adversarial orientation
  5. Merger
  6. Boundary spanning

 

 

ANS:                            3                      73

Information Technologies

 

 

 

 

 

 

 

  1. In the current external business environment, which of the following is true?
  2. Corporate culture defines success
  3. The business environment is static
  4. Companies are more adversarial than ever before
  5. Mergers are declining
  6. Joint ventures are on the rise

 

 

ANS:                            2                      74

Environmental Influence

 

  1. Jefferson and Squire is an advertising firm that is viewed as having a fast-paced and posh corporate culture. The company uses bold coloring with expensive accents in all office décor. This exemplifies which level of corporate culture?
  2. Visible artifacts
  3. Underlying assumptions
  4. Expressed values
  5. Heroes
  6. Ceremonies

 

 

ANS:                            3                      75

Environmental Influence

 

  1. Roadtec Tire Company has a corporate culture that emphasizes an internal focus on the involvement and participation of employees, placing high value on meeting the needs of employees. The company is known for its caring, family-like atmosphere. Which type of corporate culture does Roadtec possess?
  2. Adaptability culture
  3. Achievement culture
  4. Consistency culture
  5. Involvement culture
  6. Matrix culture

 

 

ANS:                            3                      79

Environmental Influence

 

  1. Research indicates that the one factor that increases a company’s value the most is:
  2. Investment in research and development
  3. People and how they are treated
  4. Technology investment
  5. A centralized organizational structure
  6. Attention to values

 

 

ANS:                            2                      81

Environmental Influence

 

 

 

 

 

  1. Terry manages a food distribution company that is highly focused on creating a strong cohesive culture, but the company does not tie organizational values directly to goals and desired business results. Terry’s company most likely falls in which quadrant of organizational performance and culture?
  2. Quadrant A
  3. Quadrant B
  4. Quadrant C
  5. Quadrant D
  6. Quadrant E

 

 

ANS:                            3                      82

Environmental Influence

 

  1. James, a casino manager, defines and uses signals and symbols to influence corporate culture by communicating central values to employees. As such, James can be described as what type of leader?
  2. Egalitarian leader
  3. Totalitarian leader
  4. Cultural leader
  5. Servant leader
  6. Transitional leader

 

 

ANS:                            2                      84

Leadership Principles

 

CASE

 

Scenario – Nikki Williams

 

Nikki Williams was working as the sales manager for Industrial Instruments. Some of the sales executives were showing signs of burnout. They were losing interest in their jobs and were no longer motivated to gain new accounts. The reward system focused on old reliable accounts, but Nikki was now under pressure to expand the customer base. Nikki had recently been to a seminar on corporate value systems. She recognized that the company’s CEO wanted to change the way employees thought about the firm and the way they related to one another. She further recognized that a lasting solution to her problem required a fundamental shift in perception.

 

  1. To affect the value system, Nikki will be working primarily with
  2. the legal-political dimension.
  3. the sociocultural dimension.
  4. the internal cultural dimension.
  5. the economic dimension.
  6. the external dimension.

 

 

ANS:

 

1                      62

Group Dynamics

 

 

 

 

  1. Nikki could use the following to affect the corporate culture:
  2. structured symbolic logic.
  3. stories about political heroes.
  4. stories about company officers, stressing a value.
  5. stories about economic depression.
  6. all of these.

 

 

ANS:

 

2                      76-77

Group Dynamics

 

 

  1. Nikki could hold _______, which are planned activities at special events to provide examples of company values.
  2. ceremonies
  3. slogans
  4. symbols
  5. pictures of heroes
  6. none of these

 

 

ANS:

 

1                      78

Group Dynamics

 

 

  1. Industrial Instruments operates in an environment that requires fast response and high-risk decision making. Which type of culture may be appropriate here?
  2. Consistency
  3. Adaptability
  4. Clan
  5. Achievement
  6. Involvement

 

 

ANS:

 

1                      78

Group Dynamics

 

 

 

 

 

 

 

 

 

 

 

 

Scenario – Melissa Hill

 

Melissa Hill, sales manager for One-Hit-Wonder Record Company, was trying to create a new strategy to turn around the declining record sales the company was facing. Melissa needed to find a way to find out what the customers really wanted, since One-Hit-Wonder didn’t have accurate information like the competitors did. It was imperative that she find the correct strategy and information because the company was in financial trouble. The company’s President wanted all employees to help find information and work as a team to develop better relationships that might help the company. He also stated that he wanted the company to remain an independent company. Melissa realized that through hard work and team efforts, the company could get back on its feet as soon as they got reliable information.

 

  1. Melissa will be working primarily with
  2. the legal-political dimension.
  3. the labor market.
  4. the internal cultural dimension.
  5. pressure groups.
  6. the sociocultural dimension

 

 

ANS:

 

1                      65

Environmental Influence

 

 

  1. The problem Melissa faced was
  2. culture gap.
  3. structural instability.
  4. environmental uncertainty.
  5. company transformation.
  6. legal problems.

 

 

ANS:

 

1                      70

Environmental Influence

 

 

  1. Which of the following would be the best way for One-Hit-Wonder to decrease its uncertainty?
  2. To create boundary-spanning roles
  3. To eliminate interorganizational partnerships
  4. To merge with another company
  5. To create a joint venture
  6. None of these

 

 

ANS:

 

1                      72

Environmental Influence

 

 

  1. Which of the following best describes One-Hit-Wonder’s culture?
  2. Clan culture
  3. Achievement culture
  4. Consistency culture
  5. Adaptability culture
  6. None of these

 

 

ANS:

 

1                      78

Group Dynamics

 

 

COMPLETION

 

  1. The external ____________________ includes all elements existing outside the boundary of the organization that have the potential to affect the organization.

 

ANS:    organization

 

  1. The ____________________ is the outer layer that is widely dispersed and affects organizations indirectly.

 

ANS:

 

  1. A(n) ____________________ includes the elements within the organization’s boundaries.

 

ANS:

 

  1. The ____________________ environment includes the sectors that conduct day-to-day transactions within the organization.

 

ANS:

 

 

 

 

  1. An example of ____________________ dimension is that Dixon Ticonderoga Co. is in trouble because of increased competition especially from low-cost pencil companies in China.

 

ANS:

 

  1. The ____________________ environment represents an ever-changing and uneven playing field compared with domestic environment.

 

ANS:

 

  1. The ____________________ dimension of the general environment includes scientific and technological advancements in a specific industry and in society.

 

ANS:

 

  1. The ____________________ dimension of the general environment represents the demographic characteristics as well as the norms, customs, and values of the general population.

 

ANS:    socioc

 

  1. Lying at the heart of Chinese culture, ____________________ is a supportive, mutually beneficial connection between two people.

 

ANS:    gua

 

  1. The general economic health of the country or region in which the organization operates is represented by the ____________________ dimension.

 

ANS:

 

 

 

  1. The ____________________ dimension includes government regulations at the local, state, and federal levels.

 

ANS:

 

  1. An interest group that works within the legal-political framework to influence companies to behave in socially responsible ways, is called a(n) ____________________.

 

ANS:

 

  1. Included in a(n) ____________________ environment are sectors that have a direct working relationships with the organization, among customers, competitors, suppliers, and the labor market.

 

ANS:

 

  1. The ____________________ of the general environment includes all elements that occur naturally on earth.

 

ANS:

 

  1. Managers today are concerned because technologically speaking, the ____________________ has given more power to customers and enabled them to directly impact an organization.

 

ANS:

 

  1. ____________________ are organizations in the same industry that provide goods or services to the same set of customers.

 

ANS:

 

  1. People and organizations that provide raw materials the organization uses to produce its output are called ____________________.

 

ANS:

 

  1. The ____________________ represents people in the environment who can be hired to work for the organization.

 

ANS:

 

  1. Not having sufficient information about environmental factors to understand and predict environmental needs and changes is called ____________________.

 

ANS:

 

  1. When environmental factors change rapidly, the organization experiences ____________________ uncertainty.

 

ANS:

 

  1. ____________________, ____________________, and ____________________ are three types of strategies that organizations can use to adapt to environmental changes.

 

ANS:

 

  1. Roles assumed by people that link the organization with the external environment are called ____________________ roles.

 

ANS:

 

  1. Interorganizational partnerships allow companies to join together to become ____________________ and share ____________________.

 

ANS:    mor

 

  1. A(n) ____________________ is when two or more organizations combine to make one organization.

 

ANS:    me

 

  1. A(n) ____________________ involves a strategic alliance or program by two or more organizations.

 

ANS:

 

  1. ____________________ are becoming more popular as organizations strive to keep up with technological advancements and compete in the global economy.

 

ANS:

 

  1. ____________________ can be defined as the set of key values, beliefs, understandings, and norms shared by members of an organization.

 

ANS:

 

  1. An object, act, or event that conveys meaning to others is known as a(n) ____________________.

 

ANS:

 

 

 

  1. A(n) ____________________ is a narrative based on true events that is repeated frequently and shared among organizational employees.

 

ANS:

 

  1. The deeds of ____________________ are extraordinary, but not so extraordinary that other employees cannot perform the same deeds.

 

ANS:

 

  1. A slogan is a phrase or a sentence that concisely communicates a key corporate ____________________.

 

ANS:

 

  1. Adaptability culture emerges in an environment that requires ____________________ response and ____________________ decision making.

 

ANS:

 

  1. A culture that is a results-oriented that values competitiveness, aggressiveness, personal initiative, and willingness to work long and hard to achieve results is called ____________________.

 

ANS:

 

  1. The ____________________ culture places high value on HR, and the organization may be characterized by a caring, family-like atmosphere.

 

ANS:

 

 

 

  1. Organizations with internal focuses and consistency orientations for a stable environment should create a(n) ____________________ culture.

 

ANS:

 

  1. ____________________ plays a key role in creating an organizational climate that enables learning and innovative responses to threats from the external environment, challenging new opportunities, or organizational crises.

 

ANS:

 

  1. A primary way in which managers shape cultural norms and values to build a high-performance culture is through ____________________.

 

ANS:

 

  1. A(n) ____________________ defines and uses signals and symbols to influence corporate culture.

 

ANS:

 

SHORT ANSWER

 

  1. List the five dimensions of the general environment.

 

ANS:

 

  1. List three visible artifacts of an organization’s culture.

 

ANS:

 

  1. List two reasons why ceremonies are held in an organization.

 

ANS:

 

  1. Name one of the two dimensions that the categories of culture are based on.

 

ANS:

 

  1. Name one of the two dimensions that organizations with high-performance cultures emphasize.

 

ANS:

 

ESSAY

 

  1. Define the organizational task environment. List the four things this environment includes that could influence an organization.

 

ANS:

 

 

 

 

  1. Name the five dimensions of the general environment and describe each dimension.

 

ANS:

 

  1. Briefly describe the task environment and its four primary sectors

 

ANS:

 

  1. What are the three basic strategies for dealing with increased uncertainty with respect to customers, competitors, suppliers, or government regulations?

 

ANS:

 

  1. Based on the model in the text, discuss the relationship between external environmental characteristics and uncertainty.

 

ANS:

 

 

  1. Discuss the different levels of culture.

 

ANS:

 

  1. List the four categories of culture and describe what kind of environments each fit best in.

 

ANS:

 

  1. Briefly discuss the two key areas that cultural leaders influence culture.

 

ANS:

 

 

 

Chapter 4—Managing in a Global Environment

 

TRUE/FALSE

 

  1. In today’s world, every manager needs to think locally.

 

ANS:                            2                      90

Environmental Influence

 

  1. Business has become a unified, global field as trade barriers fall, communication becomes faster and cheaper, and consumer tastes converge.

 

ANS:                            2                      90

Environmental Influence

 

  1. ABC Manufacturing is in the domestic stage. It has its market potential open to the countries that border its home country.

 

ANS:                            2                      91

Environmental Influence

 

  1. To deal with the marketing of products in several countries individually, a company in the international stage often uses an international division.

 

ANS:                            1                      92

Environmental Influence

 

  1. The second stage in the process of globalization is the international stage, where the company usually adopts a multidomestic approach.

 

ANS:                            2                      92

Environmental Influence

 

  1. The multinational stage of corporate international development transcends any single home country. The ownership, control, and top management tend to be dispersed among several nationalities.

 

ANS:                            1                      92

Environmental Influence

 

  1. An example of global outsourcing is seen when Gap, Inc uses low-cost Caribbean labor to cheaply produce its clothing, and then finishes off and sells its clothing in the United States.

 

ANS:                            2                      94

Environmental Influence

 

  1. With exporting, the corporation transfers its products for sale and its production facilities in foreign countries.

 

ANS:                            2                      93

Environmental Influence

 

 

  1. Seeking cheaper sources of materials or labor offshore is called offshoring.

 

ANS:                            2                      94

Environmental Influence

 

  1. Countertrade is the barter of products for products rather than the sale of products for currency.

 

ANS:                            1                      93

Environmental Influence

 

  1. An estimated 55 percent of world trade is countertrade.

 

ANS:                            2                      93

Environmental Influence

 

  1. When Harbor Trades, a Korean-based company, makes resources including technology, managerial skills, and patent and trademark rights available to Nano Technologies, a Russian company whereby allowing Nano to make products similar to CBA, it is engaging in a countertrade agreement.

 

ANS:                            2                      93

Environmental Influence

 

  1. A form of direct investment is franchising.

 

ANS:                            1                      94

Environmental Influence

 

  1. Joint venture is the most risky type of direct investment.

 

ANS:                            2                      94

Environmental Influence

 

  1. When a company builds a subsidiary from scratch in a foreign country it is called a greenfield venture.

 

ANS:                            1                      95

Environmental Influence

 

  1. The least costly and least risky direct investment is called a greenfield venture.

 

ANS:                            2                      95

Strategy

 

  1. Direct investing means that the company is involved in managing the productive assets, which distinguishes it from other entry strategies that permit less managerial control.

 

ANS:                            2                      94

Strategy

 

 

 

 

  1. Outsourcing is perhaps the most widespread approach to international involvement in China and India.

 

ANS:                            2                      96

Environmental Influence

 

  1. Infrastructure management is the management of business operations conducted in more than one country.

 

ANS:                            2                      98

Environmental Influence

 

  1. The basic management functions of planning, organizing, leading, and controlling are the same whether a company operates domestically or internationally.

 

ANS:                            2                      98

Environmental Influence

 

  1. The sub-divisions of the international environment are the economic, the sociocultural, and the legal-political environments.

 

ANS:                            2                      98

Environmental Influence

 

  1. Some economic environments of business include resource and product markets, language, religion, and per capita income.

 

ANS:                            1                      99

Environmental Influence

 

  1. A country’s physical facilities that support economic activities make up its infrastructure.

 

ANS:                            2                      100

Environmental Influence

 

  1. The criterion traditionally used to classify countries as developed or developing is per capita income.

 

ANS:                            2                      99

Environmental Influence

 

  1. LDC’s are less developed countries and tend to be found in the Southern Hemisphere including Africa, Asia and South America.

 

ANS:                            2                      99

Environmental Influence

 

  1. Because of cheap labor, most international business firms are headquartered in the less developed countries of Asia and South America.

 

ANS:                            2                      99

Environmental Influence

 

  1. Market risk is defined as the risk of loss of assets, earning power, or managerial control due to politically based events or actions by host governments.

 

ANS:                            2                      102

Environmental Influence

 

  1. The countries experiencing political stability face the greatest threat of violence.

 

ANS:                            1                      102

Environmental Influence

 

  1. A company’s political risk includes riots, revolutions, civil disorders, and frequent changes in government.

 

ANS:                            3                      102

Environmental Influence

 

  1. Unfortunately, many U.S. managers fail to realize that the values and behaviors that typically govern how business is done in the United States do not translate to the rest of the world.

 

ANS:                            2                      103

Environmental Influence

 

  1. Countries that value high power distances normally have cities that are geographically separated and so have the need to transport electrical energy over large distances.

 

ANS:                            2                      103

Environmental Influence

 

  1. The social value of uncertainty avoidance is evident in countries like Japan which support beliefs that provide stability and conformity among its citizenry.

 

ANS:                            1                      105

Environmental Influence

 

  1. In countries with strong masculine social values including Austria and Japan, both men and women subscribe to the dominant masculine value.

 

ANS:                            1                      106

Environmental Influence

 

  1. Collectivism means a preference for a tightly knit social framework in which individuals look after one another and organizations protect their members’ interests.

 

ANS:                            1                      105

Environmental Influence

 

 

 

 

  1. The fifth dimension of Hofstede’s social values is preliminary-term orientation and extended-term orientation.

 

ANS:                            2                      106

Environmental Influence

 

  1. According to the GLOBE Project, a society with a high performance orientation places high emphasis on performance and rewards people for performance improvements and excellence.

 

ANS:                            1                      106

Environmental Influence

 

  1. According to the GLOBE Project, gender differentiation refers to the extent to which a society maximizes gender role differences.

 

ANS:                            1                      106

Environmental Influence

 

  1. According to Manager’s Shoptalk in Chapter 4, the polite way to give your business card to a Japanese business person is when first meeting, presenting your card with both hands.

 

ANS:                            1                      105

Environmental Influence

 

  1. According to Manager’s Shoptalk in Chapter 4, being on-time for appointments is very important in Brazil.

 

ANS:                            2                      104

Environmental Influence

 

  1. Social values greatly influence organizational functioning and management styles.

 

ANS:                            2                      106

Environmental Influence

 

  1. According to the GLOBE Value Dimensions, Japan and Russia both have very high performance orientation.

 

ANS:                            2                      107

Environmental Influence

 

  1. A low-context culture is a culture in which communication is used to enhance personal relationships.

 

ANS:                            2                      108

Environmental Influence

 

  1. Linguistic pluralism occurs in countries like India where more than one language exist.

 

ANS:                            2                      108

Environmental Influence

 

  1. A high-context interaction requires more time because a relationship has to be developed, and trust and friendship must be established.

 

ANS:                            2                      108

Environmental Influence

 

  1. German, Swiss, and North American cultures are among the high-context cultures.

 

ANS:                            2                      108

Environmental Influence

 

  1. When an organization has an instrumental attitude toward people it treats employees as a resource to be used.

 

ANS:                            2                      109

Environmental Influence

 

  1. When an organization has a humanistic attitude, it values employees as an end in themselves.

 

ANS:                            2                      109

Environmental Influence

 

  1. Ethnocentrism refers to a natural tendency of people to regard their own culture as superior and to downgrade or dismiss other cultural values.

 

ANS:                            1                      109

Environmental Influence

 

  1. Ethnocentrism refers to a natural tendency of people to regard their own culture as inferior to other cultures.

 

ANS:                            1                      109

Environmental Influence

 

  1. A tendency to regard their own culture as superior and to downgrade other cultures reflects an attitude called geocentric.

 

ANS:                            1                      109

Environmental Influence

 

  1. The goal of the European Union is to create a powerful single market system for Europe’s millions of consumers.

 

ANS:                            3                      112

Environmental Influence

 

  1. An organization developed for the purpose of eliminating tariffs in trading between Japan and the United States is called The North American Freedom of Tariffs Administration (NAFTA).

 

ANS:                            2                      112

Environmental Influence

 

  1. Fifteen member states of the EU have adopted the rupee, as a single European currency.

 

ANS:                            2                      112

Environmental Influence

 

  1. Large international firms typically are called multinational corporations.

 

ANS:                            1                      114

Environmental Influence

 

  1. A multinational corporation typically receives more than 25 percent of its total sales revenues from operations inside the parent’s home country.

 

ANS:                            2                      114

Environmental Influence

 

  1. An MNC is managed as an integrated worldwide business system.

 

ANS:                            1                      114

Environmental Influence

 

  1. The primary emphasis of polycentric companies is on their home countries.

 

ANS:                            2                      114

Environmental Influence

 

  1. Geocentric companies are truly world-oriented and favor no specific country.

 

ANS:                            2                      114

Environmental Influence

 

  1. Culture shock refers to a person’s ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioral responses.

 

ANS:                            2                      109

Environmental Influence

 

  1. Cultural intelligence refers to a person’s ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioral responses.

 

ANS:                            2                      109

Environmental Influence

 

  1. Culture shock refers to the frustration and anxiety that result from constantly being subjected to strange and unfamiliar cues about what to do and how to do it.

 

ANS:                            1                      110

Environmental Influence

 

 

  1. There are three components to cultural intelligence: cognitive, emotional, and physical.

 

ANS:                            2                      109

Environmental Influence

 

  1. A manager’s reality is that isolation from international forces is entirely possible.

 

ANS:                            2                      90

Environmental Influence

 

  1. Globalization reached its peak in the 1970s, and is decreasing at a gradual rate.

 

ANS:                            2                      90

Environmental Influence

 

  1. The global stage of corporate international development is also referred to as the stateless stage.

 

ANS:                            2                      92

Environmental Influence

 

  1. Licensing means engaging in the international division of labor so that work activities can be done in countries with the cheapest sources of labor and supplies.

 

ANS:                            2                      94

Environmental Influence

 

  1. One advantage to acquiring a wholly owned foreign affiliate is that the company that acquires it would then have complete control.

 

ANS:                            2                      95

Environmental Influence

 

  1. The United States has the largest mobile phone market in the world.

 

ANS:                            2                      96

Information Technologies

 

  1. Whereas China is strong in software services, India is a rising power in manufacturing.

 

ANS:                            2                      96

Information Technologies

 

  1. Brazil is known to have a young, vibrant population and a rapidly growing middle class that is eager to experience the finer things in life.

 

ANS:                            2                      97

Environmental Influence

 

 

 

  1. The estimated 2010 misery index figures suggest significantly less misery for almost every country as compared to figures at the beginning of the century.

 

ANS:                            2                      101

Environmental Influence

 

  1. In India, it is not uncommon for social media companies such as Facebook and Twitter to be required by law to comply with requests to take down content considered incendiary by government entities.

 

ANS:                            2                      103

Environmental Influence

 

  1. A high performance orientation means that a society encourages toughness, assertiveness, and competitiveness.

 

ANS:                            2                      106

Environmental Influence

 

  1. High-context cultures include Asian and Arab countries, whereas low-context cultures tend to be American and Northern European.

 

ANS:                            2                      108

Environmental Influence

 

  1. High cultural intelligence requires that a manager be open and receptive to new ideas and approaches.

 

ANS:                            2                      111

Environmental Influence

 

  1. In a recent Fortune magazine poll, 68 percent of Americans say other countries benefit the most from free trade.

 

ANS:                            2                      114

Creation of Value

 

  1. The term top of the pyramid refers to the more than four billion people who earn the least, as defined by per capita income.

 

ANS:                            2                      115

Creation of Value

 

 

 

 

 

 

 

MULTIPLE CHOICE

 

  1. Today’s companies compete in a ____.
  2. growingly domestic
  3. low-context culture
  4. high-context culture
  5. Greenfield economy
  6. borderless world

 

 

ANS:                            2                      90

Environmental Influence

 

  1. Companies that think ____ have a competitive edge.
  2. globally
  3. regionally
  4. nationally
  5. strategically
  6. “customers first”

 

 

ANS:                            2                      90

Environmental Influence

 

  1. In which stage, market potential is limited to home country, with all production and marketing facilities located at home?
  2. Domestic
  3. International
  4. Global
  5. Multinational
  6. Stateless

 

 

ANS:                            1                      91

Environmental Influence

 

  1. In the ____ stage a company usually adopts a multidomestic approach.
  2. Global
  3. Multinational
  4. Stateless
  5. International
  6. Domestic

 

 

ANS:                            2                      92

Environmental Influence

 

 

 

 

 

 

 

 

  1. Global Dandelion, with marketing and production facilities located in many countries, is participating at what stage in the international arena?
  2. International stage
  3. Global stage
  4. Domestic stage
  5. Multinational stage
  6. Interdomestic stage

 

 

ANS:                            2                      92

Environmental Influence

 

  1. Quality-cast Telecom with an international division would be participating in what stage of the international arena?
  2. Domestic stage
  3. International stage
  4. Multinational stage
  5. Global stage
  6. Binational stage

 

 

ANS:                            2                      92

Environmental Influence

 

  1. The process of globalization typically passes through all of the following stages EXCEPT
  2. domestic stage.
  3. global stage.
  4. international stage.
  5. interdomestic stage.
  6. multinational stage.

 

 

ANS:                            1                      92

Environmental Influence

 

  1. Stateless stage is also referred to as the ____ stage.
  2. multinational
  3. global
  4. multidomestic
  5. international
  6. domestic

 

 

ANS:                            1                      92

Environmental Influence

 

  1. Color Copiers operates in a true global fashion, making sales and acquiring resources in whatever country offers the best opportunities and lowest cost, what stage of international development is it in?
  2. Stateless stage
  3. Multinational stage
  4. International stage
  5. Domestic stage
  6. Multidomestic stage

 

 

ANS:                            3                      92

Environmental Influence

 

  1. Which of the following refers to engaging in the international division of labor so as to obtain the cheapest sources of labor and supplies regardless of country?
  2. Franchising
  3. Licensing
  4. Market entry strategy
  5. Outsourcing
  6. Activity

 

 

ANS:                            1                      93

Environmental Influence

 

  1. The Maquiladora industry along the Texas-Mexico border on the Mexico side uses cheap labor for assembling products. This lowers the price for U.S. consumers and is an example of
  2. licensing.
  3. joint venture.
  4. outsourcing.
  5. franchising.
  6. none of these.

 

 

ANS:                            3                      93

Environmental Influence

 

  1. Most firms begin with which strategy to enter foreign markets?
  2. Exporting
  3. Greenfield venture
  4. Joint venture
  5. Acquisition
  6. Direct investment

 

 

ANS:                            1                      93

Environmental Influence

 

  1. Which of the following is an entry strategy in which the organization maintains its production facilities within its home country and transfers its products for sale in foreign markets?
  2. Franchising
  3. Licensing
  4. Exporting
  5. Greenfield venture
  6. Joint venture

 

 

ANS:                            1                      93

Environmental Influence

 

  1. What is exporting?
  2. Countertrade
  3. The barter of products for products, often used in developing nations
  4. Items produced in the home country for sale in foreign markets
  5. All of these
  6. None of these

 

 

ANS:                            2                      93

Environmental Influence

 

  1. A form of exporting to less-developed countries is called
  2. licensing.
  3. franchising.
  4. greenfield venture.
  5. joint venture.
  6. countertrade.

 

 

ANS:                            1                      93

Environmental Influence

 

  1. Heineken begins by exporting its product into new markets, and then ____ to a local brewer to establish its position in the market.
  2. countertrades
  3. licenses
  4. exports
  5. franchises
  6. markets

 

 

ANS:                            1                      94

Environmental Influence

 

  1. Which of the following is a form of franchising?
  2. Direct investing
  3. Licensing
  4. Exporting
  5. Countertrade
  6. Barter trade

 

 

ANS:                            1                      94

Environmental Influence

 

  1. Your company is interested in producing and marketing a line of coffee that will penetrate the Chinese market. Your firm is willing to supply the equipment, products, product ingredients, trademark, and standardized operating system. What type of strategy are you going to use?
  2. Wholly owned foreign affiliate
  3. A greenfield venture agreement
  4. A franchise
  5. An export agreement
  6. Barter trade

 

 

ANS:                            2                      94

Environmental Influence

 

  1. Which of the following pairs of alternatives closely resemble each other in the amount of ownership, control and risk obtained in operating international businesses?
  2. Direct investment/franchising
  3. Wholly owned foreign affiliate/countertrade
  4. Exporting/licensing
  5. Franchising/licensing
  6. All of these

 

 

ANS:                            3                      94

Environmental Influence

 

  1. A foreign subsidiary over which an organization has complete control is called a
  2. joint venture.
  3. licensing agreement.
  4. franchise.
  5. wholly owned foreign affiliate.
  6. foreign venture.

 

 

ANS:                            2                      95

Environmental Influence

 

  1. The Write Pens, Inc. wants to reduce transferring costs by producing closer to the consumer in a foreign country. This will also help in reducing transportation and storage costs. Which strategy would be the best to use given the circumstances?
  2. Franchising
  3. Exporting
  4. Direct investing
  5. Barter agreement
  6. Licensing

 

 

ANS:                            2                      94

Environmental Influence

 

  1. Go RVing, a U.S. company, built a subsidiary from scratch in England. This is an example of
  2. franchising.
  3. greenfield venture.
  4. joint venture.
  5. exporting.
  6. licensing.

 

 

ANS:                            2                      95

Environmental Influence

 

  1. The Nissan plant in Mississippi is an example of a ____.
  2. greenfield venture
  3. joint venture
  4. direct investment
  5. foreign affiliate
  6. direct acquisition

 

 

ANS:                            2                      95

Environmental Influence

 

  1. As a first step into international business, which two countries are most companies going to today?
  2. Russia and Japan
  3. Sweden and Germany
  4. China and India
  5. Brazil and Philippines
  6. Indonesia and Brazil

 

 

ANS:                            2                      96

Environmental Influence

 

  1. ____ is the most widespread approach to international involvement in China and India.
  2. Importing
  3. Exporting
  4. Manufacturing
  5. Outsourcing
  6. Greenfield venture

 

 

ANS:                            1                      94

Environmental Influence

 

  1. The management of business operations conducted in more than one country is called
  2. global management.
  3. international management.
  4. outsourcing management.
  5. planning management.
  6. domestic management.

 

 

ANS:                            2                      98

Environmental Influence

 

  1. ____ aspects of management do not change when doing business internationally.
  2. Planning
  3. Organizing
  4. Controlling
  5. Leading
  6. All of these

 

 

ANS:                            1                      98

Environmental Influence

 

  1. Language, values, religion, and education all describe which dimension in the international environment?
  2. Economic
  3. Legal
  4. Political
  5. Sociocultural
  6. Technological

 

 

ANS:                            1                      98

Environmental Influence

 

  1. In international operations, the economic environment represents all of the following factors EXCEPT
  2. infrastructure.
  3. resource and product markets.
  4. laws and regulations.
  5. inflation.
  6. exchange rates.

 

 

ANS:                            2                      98

Environmental Influence

 

 

  1. Resource development, infrastructure, and exchange rates all describe which dimension in the international environment?
  2. Economic
  3. Legal
  4. Political
  5. Sociocultural
  6. Technological

 

 

ANS:                            1                      98

Environmental Influence

 

  1. In international operations, the economic environment includes
  2. shared knowledge, beliefs and values.
  3. political risks.
  4. social organizations.
  5. infrastructure.
  6. tariffs, quotas, and taxes.

 

 

ANS:                            2                      98

Environmental Influence

 

  1. Which of the following is a sociocultural factor in the international environment?
  2. Language
  3. Exchange rates
  4. Tariffs, taxes, and quotas
  5. Per capita income
  6. Infrastructure

 

 

ANS:                            2                      98

Environmental Influence

 

  1. ____ is normally used to classify countries as developed or developing.
  2. Exchange rates
  3. Interest rates
  4. Gross national product
  5. Per capita income
  6. Inflation rates

 

 

ANS:                            2                      99

Environmental Influence

 

  1. ____ generally are located in Asia, Africa and South America.
  2. MNCs
  3. EUs
  4. LDCs
  5. WTOs
  6. MFNs

 

 

ANS:                            2                      99

Environmental Influence

 

 

 

  1. A country’s physical facilities that support economic activities make up its ____.
  2. resource markets
  3. infrastructure
  4. physical markets
  5. product markets
  6. plants and equipment

 

 

ANS:                            1                      100

Environmental Influence

 

  1. If you built a computer company in Africa and then found that your product was having difficulty being distributed to customers because of the road system, your problem would be related to
  2. an inadequate infrastructure.
  3. an economy incapable of supporting growth.
  4. a poor resource market.
  5. a poor product market.
  6. none of these.

 

 

ANS:                            2                      100

Environmental Influence

 

  1. Your grocery store in India is having trouble getting the local farmers to supply you with the proper produce. This is a problem with India’s
  2. product market.
  3. resource market.
  4. infrastructure.
  5. economy.
  6. power distance.

 

 

ANS:                            2                      100

Environmental Influence

 

  1. Exchange rates are included in which of the following international environments?
  2. The legal-political sector
  3. The economic environment
  4. The sociocultural environment
  5. The barter system environment
  6. The government sector

 

 

ANS:                            2                      98

Environmental Influence

 

  1. The legal-political environment, in international operations, includes which of the following?
  2. Shared knowledge, beliefs and values
  3. Political risks
  4. Social organizations
  5. Infrastructure
  6. None of these

 

 

ANS:                            2                      102

Environmental Influence

 

  1. Political risk is defined as an organization’s risk of ____ due to politically based events or actions by host governments.
  2. loss of assets
  3. managerial control
  4. earning power
  5. all of these
  6. managerial control and earning power only

 

 

ANS:                            2                      102

Environmental Influence

 

  1. A company’s risk of loss of assets, earning power, or managerial control due to politically based events or action by host government is referred to as
  2. MFN.
  3. political risk.
  4. tariffs.
  5. political instability.
  6. terrorism.

 

 

ANS:                            1                      102

Environmental Influence

 

  1. Rooftop International, Inc. buys insurance against host government takeover when investing in foreign countries. This is an example of which sector of the international environment?
  2. Legal-political
  3. Sociocultural
  4. Technological
  5. Economic
  6. Infrastructure

 

 

ANS:                            2                      102-103

Environmental Influence

 

  1. Which of the following is NOT a legal-political factor in the international environment?
  2. Laws and regulations
  3. Language
  4. Tariffs, quotas, taxes
  5. Political risk
  6. Government takeovers

 

 

ANS:                            2                      98

Environmental Influence

 

  1. A foreign terrorist kidnaps your firm’s marketing VP while the VP is in the host country. This is a harsh example of
  2. economic development.
  3. infrastructure.
  4. political risk.
  5. international law.
  6. social risk.

 

 

ANS:                            2                      102

Environmental Influence

 

  1. A nation’s ____ includes the shared knowledge, beliefs and values, as well as the common modes of behavior and ways of thinking, among members of a society.
  2. power distance
  3. culture
  4. masculinity
  5. individualism
  6. uncertainty avoidance

 

 

ANS:                            1                      103

Environmental Influence

 

  1. Cultural factors in foreign countries are ____ the political and economic factors.
  2. easier than
  3. similar to
  4. more perplexing than
  5. less important than
  6. none of these

 

 

ANS:                            2                      103

Environmental Influence

 

  1. ____ refers to the degree to which people accept inequality in power among institutions, organizations, and people.
  2. Power distance
  3. Uncertainty avoidance
  4. Individualism
  5. Collectivism
  6. Masculinity

 

 

ANS:                            1                      103

Environmental Influence

 

  1. Countries whose social values reflect low power distance
  2. are highly democratic.
  3. accept inequality in power among institutions, organizations and people.
  4. expect equality in power.
  5. avoid uncertainty.
  6. none of these.

 

 

ANS:                            2                      103

Environmental Influence

 

  1. A loosely knit social framework in which individuals are expected to take care of themselves is called
  2. culture.
  3. individualism.
  4. ethnocentrism.
  5. masculinity.
  6. power distance.

 

 

ANS:                            2                      105

Environmental Influence

 

  1. Collectivist values are represented in the social framework of which of these?
  2. The United States
  3. Australia
  4. Ecuador
  5. Great Britain
  6. All of these

 

 

ANS:                            2                      105

Environmental Influence

 

  1. Austria’s cultural preference is for achievement, heroism, assertiveness, and material success. This would be considered
  2. power distance.
  3. individualism.
  4. masculinity.
  5. ethnocentrism.
  6. collectivism.

 

 

ANS:                            2                      106

Environmental Influence

 

  1. ____ refers to a value characterized by people’s intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity.
  2. Power distance
  3. Uncertainty avoidance
  4. Certainty avoidance
  5. Conformity seekers
  6. None of these

 

 

ANS:                            1                      105

Environmental Influence

 

  1. Which of these reflects a cultural preference for cooperation, group decision making, and quality of life?
  2. Individualism
  3. Collectivism
  4. Masculinity
  5. Femininity
  6. Power distance

 

 

ANS:                            1                      106

Environmental Influence

 

  1. One of Hofstede’s social values that was developed later is
  2. power distance.
  3. uncertainty avoidance.
  4. masculinity.
  5. collectivism.
  6. long-term orientation.

 

 

ANS:                            2                      106

Environmental Influence

 

  1. Recent research by the GLOBE project has extended ____ research and offered new insights for managers.
  2. Hofstede’s
  3. Walton’s
  4. Weber’s
  5. Fayol’s
  6. Gilbreth’s

 

 

ANS:                            2                      106

Environmental Influence

 

  1. All of the following are cultural dimensions as defined by the GLOBE Project, except:
  2. assertiveness
  3. gender differentiation
  4. social collectivism
  5. humane orientation
  6. masculinity

 

 

ANS:                            2                      106

Environmental Influence

 

  1. In countries where women are often in positions of high status, the Globe Project would describe that culture as high in ____.
  2. assertiveness
  3. uncertainty avoidance
  4. gender differentiation
  5. societal collectivism
  6. performance orientation

 

 

ANS:                            2                      106

Environmental Influence

 

  1. A country that places emphasis on fairness and values kindness would be described by the Globe Project as high in ____.
  2. assertiveness
  3. uncertainty avoidance
  4. gender differentiation
  5. humane orientation
  6. societal collectivism

 

 

ANS:                            2                      106

Environmental Influence

 

  1. According to Manager’s Shoptalk in Chapter 4, what does the gesture of scratching one’s head usually mean in Russia?
  2. “You’re crazy.”
  3. “I am listening carefully.”
  4. “I want to get to know you better.”
  5. “I’m confused or skeptical.”
  6. “No.”

 

 

ANS:                            2                      104

Environmental Influence

 

  1. According to Manager’s Shoptalk in Chapter 4, one of the most universal gestures is:
  2. Arm up, shaking back and forth (waving)
  3. Scratching your chin (thinking)
  4. A smile (happiness or politeness)
  5. Closing your eyes (boredom)
  6. A pat on the back (congratulations)

 

 

ANS:                            2                      104

Environmental Influence

 

  1. Which of the following is defined as a culture in which communication is used to enhance personal relationships?
  2. Interpersonal culture
  3. High-context culture
  4. Power culture
  5. Low-context culture
  6. Family-oriented culture

 

 

ANS:                            2                      108

Environmental Influence

 

  1. Which of the following countries possesses a high degree of assertiveness?
  2. Spain
  3. Sweden
  4. Japan
  5. Iceland
  6. Switzerland

 

 

ANS:                            2                      107

Environmental Influence

 

  1. Which of the following countries possesses a low degree of gender differentiation?
  2. China
  3. Brazil
  4. Italy
  5. South Korea
  6. Denmark

 

 

ANS:                            2                      107

Environmental Influence

 

  1. Which of the following countries possesses a high performance orientation?
  2. Israel
  3. Sweden
  4. Taiwan
  5. Russia
  6. Venezuela

 

 

ANS:                            2                      107

Environmental Influence

 

 

  1. Countries that use several languages
  2. are ethnocentric.
  3. are geocentric.
  4. are likely to have high uncertainty avoidance.
  5. have linguistic pluralism.
  6. are polycentric.

 

 

ANS:                            1                      108

Environmental Influence

 

  1. In a(n) ____, people use communication primarily to exchange facts and information.
  2. power culture
  3. informational culture
  4. high-context culture
  5. mid-context culture
  6. low-context culture

 

 

ANS:                            2                      108

Environmental Influence

 

  1. A ____ interaction requires more time because a relationship has to be developed, and trust and friendship must be established.
  2. high-context
  3. sales
  4. business
  5. low-context
  6. personal

 

 

ANS:                            2                      108

Environmental Influence

 

  1. A cultural attitude marked by the tendency to regard one’s own culture as superior to others is called
  2. ethnocentrism.
  3. polycentrism.
  4. geocentrism
  5. technocentrism.
  6. none of these.

 

 

ANS:                            2                      109

Environmental Influence

 

  1. When organization managers have a(n) ____ attitude, they value employees as an end in themselves.
  2. ethnocentric
  3. humanistic
  4. instrumental
  5. pluralistic
  6. performance

 

 

ANS:                            2                      109

Environmental Influence

 

 

 

  1. When organization managers have a(n) ____ attitude, they treat employees as resources to be used.
  2. ethnocentric
  3. humanistic
  4. instrumental
  5. pluralistic
  6. performance

 

 

ANS:                            2                      109

Environmental Influence

 

  1. How many nations signed on for negotiation when GATT was created in 1947?
  2. 15
  3. 23
  4. 28
  5. 40
  6. 57

 

 

ANS:                            3                      111

Environmental Influence

 

  1. The European Union has expanded to a ____-nation alliance
  2. 14
  3. 12
  4. 27
  5. 16
  6. 21

 

 

ANS:                            1                      112

Environmental Influence

 

  1. Which of the following has a goal to guide the nations of the world toward free trade and open markets?
  2. GATT
  3. WTO
  4. GLOBE
  5. EU
  6. NAFTA

 

 

ANS:                            2                      111

Environmental Influence

 

  1. The ____ is a single European currency that replaced 12 national currencies and unify a huge marketplace.
  2. Mark
  3. Franc
  4. MFN
  5. Euro
  6. Pound

 

 

ANS:                            1                      112

Environmental Influence

 

 

  1. Which organization originated and supports the idea of small businesses operating on a global level?
  2. GLOBE
  3. EU
  4. NAFTA
  5. ASEAN
  6. GATT

 

 

ANS:                            2                      113

Environmental Influence

 

  1. Carrie’s Car Care receives more than 25% of its total sales revenues from operations outside of the United States. Carrie’s would be considered a
  2. foreign national.
  3. wealth company.
  4. multinational corporation.
  5. globalization corporation.
  6. None of these.

 

 

ANS:                            2                      114

Environmental Influence

 

  1. Which of the following characteristics distinguish a multinational corporation?
  2. Top management is expected to take a global perspective.
  3. The corporation is controlled by a single management authority.
  4. It is managed as an integrated worldwide business system.
  5. All of these
  6. Top management is expected to take a global perspective and The corporation is controlled by a single management authority only.

 

 

ANS:                            1                      114

Environmental Influence

 

  1. Which of the following companies place an emphasis on their home countries?
  2. Polycentric
  3. Geocentric
  4. Ethnocentric
  5. Global
  6. Regiocentric

 

 

ANS:                            2                      114

Environmental Influence

 

  1. ____ places an emphasis on a worldwide perspective.
  2. Polycentric companies
  3. Geocentric companies
  4. Ethnocentric companies
  5. Regiocentric companies
  6. Domestic companies

 

 

ANS:                            2                      114

Environmental Influence

 

 

  1. All of the following are components of cultural intelligence, EXCEPT:
  2. Physical
  3. Cognitive
  4. Emotional
  5. Analytical
  6. All of these

 

 

ANS:                            2                      109

Environmental Influence

 

  1. Which of the following refers to the frustration and anxiety that result from constantly being subjected to strange and unfamiliar cues about what to do and how to do it?
  2. Societal chaos
  3. Civilization distress
  4. Culture confusion
  5. Societal disorder
  6. Culture shock

 

 

ANS:                            2                      110

Environmental Influence

 

  1. Which of these is a low-context culture?
  2. German
  3. Chinese
  4. Korean
  5. Arab
  6. Japanese

 

 

ANS:                            2                      107

Environmental Influence

 

  1. All of the following are considered emerging economies EXCEPT:
  2. Brazil
  3. Russia
  4. India
  5. China
  6. Canada

 

 

ANS:                            2                      89

Environmental Influence

 

  1. The extent to which trade and investments, information, social and cultural ideas, and political cooperation flow between countries is called:
  2. Standardization
  3. Industrialization
  4. Globalization
  5. Internationalism
  6. Linguistic pluralism

 

 

ANS:                            2                      90

Environmental Influence

 

  1. Creative Coverings is a small interior design company owned and managed by Lisa Smith. Since the company was established seven years ago, Lisa has only worked with clients near her hometown in Maryland. Creative Coverings fits into which stage of globalization?
  2. Domestic
  3. Regional
  4. International
  5. Multinational
  6. Global

 

 

ANS:                            3                      91

Environmental Influence

 

  1. Exporting, licensing, and direct investing are called __________ strategies because they represent alternative ways to sell products and services in foreign markets.
  2. globalized
  3. expansion
  4. retrenchment
  5. market entry
  6. concentrated business

 

 

ANS:                            2                      93

Environmental Influence

 

  1. CRL, a European plastics manufacturer, is considering forming an alliance with a U.S. military goods manufacturer to develop a new type of polymer that can be used for international industrial and military applications. Such a partnership represents what type of direct investment?
  2. Franchising
  3. Joint Venture
  4. Wholly owned affiliate
  5. Greenfield venture
  6. Outsourcing

 

 

ANS:                            3                      94

Environmental Influence

 

  1. For the past several years, foreign companies have invested more in business in ________ than in any other place in the world.
  2. Brazil
  3. India
  4. China
  5. United States
  6. Russia

 

 

ANS:                            2                      96

Environmental Influence

 

 

 

 

 

 

  1. With its large English-speaking population, _______ has numerous companies offering services such as call-center operations, data-processing, computer programming, and technical support.
  2. Greenland
  3. Russia
  4. China
  5. Mexico
  6. India

 

 

ANS:                            2                      97

Information Technologies

 

  1. When the 2008 financial crisis began in the United States, it resulted in the collapse of the housing market and the failure of several large financial institutions. This crisis spread rapidly to the rest of the world. This example demonstrates which trend in the global economic environment?
  2. Economic development differs widely among countries of the world
  3. Market demands differ for products and services throughout the world
  4. Political instability is the primary result of economic failure
  5. World markets are economically interconnected
  6. Cultural factors have a greater impact on world markets than do economic factors

 

 

ANS:                            3                      100

Environmental Influence

 

  1. A.R.C. is a large non-profit humanitarian aid organization that has been forced to pull out of several African markets in recent years due to civil wars and large-scale violence. This demonstrates which frequently cited problem for international companies?
  2. Political instability
  3. Communist governments
  4. Economic instability
  5. Political risk
  6. Financial risk

 

 

ANS:                            3                      102

Environmental Influence

 

  1. Jana has a high tolerance for the unstructured, the unclear, and the unpredictable. She can best be described as having:
  2. High uncertainty avoidance
  3. Low uncertainty avoidance
  4. High degree of individualism
  5. Low degree of individualism
  6. Low level of power distance

 

 

ANS:                            3                      105

Individual Dynamics

 

 

 

 

 

  1. Kim, a Japanese expatriate working in Denmark, tends to use communication primarily to build personal social relationships. She feels that relationships and trust are more important than business. Kim is surprised that her business associates in Denmark do not share the same views. Based on this information, Kim most likely grew up in what type of culture?
  2. Human-oriented
  3. Passive
  4. Assertive
  5. Low-context
  6. High-context

 

 

ANS:                            3                      108

Individual Dynamics

 

  1. Sam is known by his colleagues as a great communicator, with an uncanny ability to shift speech patterns, expressions, and body language to be in tune with people from different cultures. Based on this example, Sam is strong in which component of cultural intelligence?
  2. Cognitive
  3. Emotional
  4. Physical
  5. Tangible
  6. Intangible

 

 

ANS:                            3                      111

Individual Dynamics

 

  1. In 2010, which of the following countries formed a free trade area with the ten countries that make up the Association of Southeast Asian Nations (ASEAN)?
  2. Laos
  3. United States
  4. Mexico
  5. China
  6. Japan

 

 

ANS:                            2                      113

Environmental Influence

 

  1. ________ is a concept that proposes that corporations can alleviate poverty and other social ills by selling to the world’s poorest people.
  2. Cream of the crop
  3. Skimming the barrel
  4. Bottom of the pyramid
  5. Top of the peak
  6. Base hierarchy

 

 

ANS:                            2                      115

Creation of Value

 

 

 

 

  1. The Digitec company has recently decided to design and manufacture a laptop that retails for under $50, in an effort to make information technology available to people in places like rural Africa and rural India. This is known as what type of strategy?
  2. Bottom of the pyramid strategy
  3. Skimming the barrel strategy
  4. Cream of the crop strategy
  5. Top of the peak strategy
  6. Base price strategy

 

 

ANS:                            3                      115

Information Technologies

 

CASE

 

Scenario – Sharon Cannon

 

Sharon Cannon was an MBA student in Detroit, Michigan, with a managerial position at the Ford Motor Company plant. She was invited to join a company that had entered into a joint venture with a German firm to manage a Volkswagen plant. Sharon would be under contract for one year, with an option to renew for a total of three years. Her salary would be 350% more than she was currently earning, and she would be given two all-expenses paid vacations each year. The money and the benefits sounded very nice, but Sharon wasn’t sure what the best choice would be.

 

  1. The degree of international involvement for the joint venture is an example of
  2. outscoring.
  3. exporting.
  4. licensing.
  5. direct investing.
  6. greenfield venture.

 

 

ANS:

 

2                      94

Environmental Influence

 

 

  1. The American firm joining in the joint venture
  2. faces lower risk than if it were using a wholly-owned foreign affiliate.
  3. enjoys greater control than is it were using the wholly-owned affiliate.
  4. can anticipate a lower cost than a company that uses global outscoring.
  5. all of these.
  6. none of these.

 

 

ANS:

 

2                      94

Environmental Influence

 

 

 

  1. If she should decide to take the job, she will be most successful in a foreign assignment if she has
  2. culture shock
  3. cultural intelligence
  4. linguistic pluralism
  5. ethnocentrism
  6. geocentrism

 

 

ANS:

 

2                      109

Environmental Influence

 

 

COMPLETION

 

  1. In the ____________________ stage, exports increase, and the company usually adopts a multidomestic approach, probably using an international division to deal with the marketing of products in several countries individually.

 

ANS:

 

  1. In the ____________________ stage, the company has marketing and production facilities located in many countries and more than one-third of annual sales come from outside the home country.

 

ANS:

 

  1. ____________________ means engaging in the international division of labor so that manufacturing can be done in countries with the cheapest sources of labor and supplies.

 

ANS:

 

  1. ____________________ is the barter of products for products rather than the sale of products for currency.

 

ANS:

 

 

  1. Whereby a company builds a subsidiary from scratch in a foreign country, is referred to as a(n) ____________________, and is the most risky type of direct investment.

 

ANS:

 

  1. ____________________ is the management of business operations conducted in more than one country.

 

ANS:

 

  1. When it comes to economic development, a currently developing country is also called a(n) ____________________.

 

ANS:

 

  1. ____________________ is the criterion traditionally used to classify countries as developed or developing.

 

ANS:

 

  1. A country’s physical facilities that support economic activities make up its ____________________.

 

ANS:

 

  1. ____________________ (objects, taboos, holidays) is a sociocultural factor in the international environment.

 

ANS:

 

 

  1. The risk of loss due to actions by host country governments is known as ____________________.

 

ANS:

 

  1. Riots, revolutions, civil disorders, and frequent changes in government that affect the operations of an international company shows ____________________ in a country.

 

ANS:

 

  1. Companies need to be cautious of ____________________ and ____________________ when going international because they differ from country to country.

 

ANS:

 

  1. A nation’s ____________________ includes the shared knowledge, beliefs, and values, as well as the common modes of behavior and ways of thinking, among members of a society.

 

ANS:

 

  1. The degree to which people accept inequality in power among institutions, organizations, and people is called ____________________.

 

ANS:

 

  1. A value characterized by people’s intolerance for uncertainty and ambiguity and resulting support for beliefs that promise certainty and conformity refers to ____________________.

 

ANS:

 

 

  1. A preference for a loosely knit social framework in which individuals are expected to take care of themselves is called ____________________.

 

ANS:

 

  1. A preference for a tightly knit social framework in which individuals look after one another and organizations protect their members’ interests refers to ____________________.

 

ANS:

 

  1. ____________________ stands for preference for achievement, heroism, assertiveness, work centrality (with resultant high stress), and material success.

 

ANS:

 

  1. ____________________ reflects the values of relationships, cooperation, group decision making, and quality of life.

 

ANS:

 

  1. In countries where women are often in positions of high status, the Globe Project would describe that culture as high in ____________________.

 

ANS:

 

  1. A country that places emphasis on fairness and values kindness would be described by the Globe Project as high in ____________________.

 

ANS:

 

 

 

  1. In a(n) ____________________, people use communication primarily to exchange facts and information.

 

ANS:

 

  1. ____________________ means that people have a tendency to regard their own culture as superior to other cultures.

 

ANS:

 

  1. An alliance begun in 1957 to improve economic and social conditions among its members,

it has evolved into the 27-nation __________.

 

ANS:

 

  1. The ____________________ is the single European currency that has replaced 12 national currencies.

 

ANS:

 

  1. ____________________ went into effect in early 1994, effectively creating a megamarket among the U.S., Canada, and Mexico.

 

ANS:

 

  1. A multinational corporation typically receives at least ____________________% of its total sales revenues from outside the parent’s home country.

 

ANS:

 

  1. MNCs that are oriented toward the markets of individual foreign host countries are considered ____________________.

 

ANS:

 

  1. MNCs that are truly world-oriented and favor no specific country are considered ____________________.

 

ANS:

 

  1. ____________________ refers to a person’s ability to use reasoning and observation skills to interpret unfamiliar gestures and situations and devise appropriate behavioral responses.

 

ANS:

 

  1. ____________________ refers to the frustration and anxiety that result from constantly being subjected to strange and unfamiliar cues about what to do and how to do it.

 

ANS:

 

  1. The frustration and anxiety that results from constantly being subjected to strange and unfamiliar cues about what to do and how to do it is called ____________________.

 

ANS:

 

SHORT ANSWER

 

  1. List the four stages of globalization.

 

ANS:

 

  1. List the three examples of direct investing mentioned in your text.

 

ANS:

 

  1. List three examples of a country’s infrastructure.

 

ANS:

 

  1. List the four dimensions of national value systems identified by Hofstede.

 

ANS:

 

  1. List five of the countries that make up the European Union (EU).

 

ANS:

 

  1. List the three components of cultural intelligence.

 

ANS:

 

 

 

 

 

 

ESSAY

 

  1. Describe the four stages of globalization with specific reference to strategic orientation, stage of development, cultural sensitivity, and manager assumptions.

 

ANS:

 

  1. What is global outsourcing? Identify a unique variation of global outsourcing.

 

ANS:

 

  1. Direct investing means that the company is involved in managing the productive assets in a foreign country. There are three options for direct investing. Name and compare these three options.

 

ANS:

 

  1. Identify and briefly explain at least two key factors in economic, sociocultural and political-legal environments that affect an organization.

 

ANS:

 

 

 

  1. Briefly explain the difference between high power distance and low power distance.

 

ANS:

 

  1. Describe GATT and the World Trade Organization.

 

ANS:

 

  1. Explain NAFTA.

 

ANS:

 

  1. Briefly describe the social characteristic of ethnocentrism and explain how this can have an impact on the success of an international manager.

 

ANS:

 

 

 

  1. Briefly describe two personal challenges for global managers.

 

ANS:

 

 

 

 

Chapter 5—Managing Ethics and Social Responsibility

 

TRUE/FALSE

 

  1. A public poll finds that 79 percent of respondent believe cheating in business is more common today than it was ten years ago.

 

ANS:                            2                      123

Ethical Responsibilities

 

  1. The domain of codified law pertains to behavior about which the law has no say and for which an individual or organization enjoys complete freedom.

 

ANS:                            1                      122

AACSB Ethics | Ethical Responsibilities

 

  1. Ethics, found between the domains of law and free choice, is the code of moral principles that governs any individual or groups.

 

ANS:                            1                      123

AACSB Ethics | Ethical Responsibilities

 

  1. Free choice lies between the domains of codified law and ethics.

 

ANS:                            2                      122

AACSB Ethics | Ethical Responsibilities

 

  1. If something is ethical, it must not be illegal.

 

ANS:                            1                      123

AACSB Ethics | Ethical Responsibilities

 

  1. An ethical dilemma arises in a situation when each alternative choice or behavior is undesirable because of potentially harmful ethical consequences.

 

ANS:                            2                      125

AACSB Ethics | Ethical Responsibilities

 

  1. The moral agent is an individual who must make an ethical choice in an organization.

 

ANS:                            1                      125

AACSB Ethics | Ethical Responsibilities

 

  1. Utilitarian, individualism, moral-rights, and objective dualism are the four approaches that guide ethical decision-making.

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

 

 

  1. The basis for the recent trend among companies to police employee personal habits such as alcohol and tobacco consumption on the job is called the utilitarian ethic.

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Monitoring the Internet to maintain the company’s ethical climate and workplace productivity could be considered part of an individualistic approach.

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. The ethical concept that acts are moral when they promote the individual’s best long term interests, which ultimately leads to the greater good, is known as the moral rights approach.

 

ANS:                            1                      127

AACSB Ethics | Ethical Responsibilities

 

  1. The ethical concept that argues that moral behaviors produce the greatest good for the greatest number of people is objective dualism.

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. In the individualism approach, the right of free speech must be considered.

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Individualism is popular in the highly organized society of today because it supports immediate self-gain.

 

ANS:                            3                      127

AACSB Ethics | Ethical Responsibilities

 

  1. The right of free consent, the right to privacy, and the right of freedom of conscience are rights that should be considered in the moral rights approach.

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Procedural justice requires that different treatment of people not be based on arbitrary characteristics.

 

ANS:                            1                      128

AACSB Ethics | Ethical Responsibilities

 

  1. The justice approach is closest to the thinking underlying the domain of free choice.

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Procedural justice requires that rules be stated clearly, consistently and impartially enforced, and administered fairly.

 

ANS:                            2                      128

AACSB Ethics | Ethical Responsibilities

 

  1. The Preconventional level of Personal Moral Development lives up to expectations of others, upholds laws, and fulfills duties and obligations of the social system.

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. Level 3 of the Personal Moral Development model is Conventional.

 

ANS:                            1                      129

AACSB Ethics | Ethical Responsibilities

 

  1. Most of the laws guiding human resource management are based on the individualism approach.

 

ANS:                            3                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Individuals, at the preconventional level, are concerned with external rewards and punishments and obey authority to avoid detrimental personal consequences.

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. Individuals are concerned with external rewards and punishments at the principled level.

 

ANS:                            1                      129

AACSB Ethics | Ethical Responsibilities

 

  1. An individual at the postconventional level lives up to expectations of others, fulfills duties and obligations of social systems, and upholds law.

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. Principled level of moral development is also referred to as the postconventional level.

 

ANS:                            1                      129

AACSB Ethics | Ethical Responsibilities

 

  1. The majority of managers operate at the preconventional level of personal moral development.

 

ANS:                            2                      130

AACSB Ethics | Ethical Responsibilities

 

 

  1. Approximately 20% of American adults, according to your text, ever reach the postconventional level of moral development.

 

ANS:                            3                      130

AACSB Ethics | Ethical Responsibilities

 

  1. The great majority of managers operate at level two, the conventional level.

 

ANS:                            2                      130

AACSB Ethics | Ethical Responsibilities

 

  1. MANAGER’S SHOPTALK in Chapter 5 recommends that when challenging your boss on ethical issues you do not demand a resolution on the spot.

 

ANS:                            2                      131

AACSB Ethics | Ethical Responsibilities

 

  1. The NEW MANAGER SELF-TEST in Chapter 5 suggests that orienting new people, even though it is not required, often reflects a person’s level of moral development.

 

ANS:                            2                      132

AACSB Ethics | Ethical Responsibilities

 

  1. Social responsibility is management’s obligation to make choices and take actions that will contribute to the welfare and interests of society as well as the organization.

 

ANS:                            1                      132

AACSB Ethics | Ethical Responsibilities

 

  1. Social responsibility covers a narrow range of issues, many of which are unambiguous with respect to right or wrong.

 

ANS:                            2                      133

AACSB Ethics | Ethical Responsibilities

 

  1. Important stakeholders in corporations include the government and the community.

 

ANS:                            1                      133

AACSB Ethics | Ethical Responsibilities

 

  1. A stakeholder is any group within or outside the organization that has a stake in the organization’s performance.

 

ANS:                            1                      133

AACSB Ethics | Ethical Responsibilities

 

  1. All stakeholders of an organization are its stockholders but not all stockholders are its stakeholders.

 

ANS:                            3                      133

AACSB Ethics | Ethical Responsibilities

 

  1. Special interest groups include trade associations, political action committees and consumerists.

 

ANS:                            1                      133

AACSB Ethics | Ethical Responsibilities

 

  1. Economic development that generates wealth and meets the needs of the current population while preserving the environment for the needs of future generations refers to sustainability.

 

ANS:                            1                      135

AACSB Ethics | Ethical Responsibilities

 

  1. One study found that MBA students would forgo an average of $13,700 in compensation to work for a sustainable company.

 

ANS:                            3                      135

AACSB Ethics | Ethical Responsibilities

 

  1. Economic, legal, ethical, and discretionary responsibilities are the four areas of social responsibility which can be used to evaluate corporate social performance.

 

ANS:                            2                      136

AACSB Ethics | Ethical Responsibilities

 

  1. Economic responsibility defines what society deems as important with respect to appropriate corporate behavior.

 

ANS:                            2                      136

AACSB Ethics | Ethical Responsibilities

 

  1. Ethical responsibility includes behaviors that are not necessarily codified into law and may not serve the corporation’s direct economic interests.

 

ANS:                            1                      137

AACSB Ethics | Ethical Responsibilities

 

  1. Ethical behavior occurs when decisions enable an individual or company to gain at the expense of society.

 

ANS:                            1                      137

AACSB Ethics | Ethical Responsibilities

 

  1. Unfortunately, discretionary responsibility is involuntary and is mandated by economics, law, or ethics.

 

ANS:                            2                      137

AACSB Ethics | Ethical Responsibilities

 

 

 

 

  1. A formal statement of the organization’s values regarding moral principles and governing its response to social values is called a code of ethics.

 

ANS:                            1                      139

AACSB Ethics | Ethical Responsibilities

 

  1. Managers who are essentially ethical individuals make up the first pillar of an ethical organization.

 

ANS:                            1                      139

AACSB Ethics | Ethical Responsibilities

 

  1. Principle-based statements define fundamental values and contain general language about company responsibilities, quality of products, and treatment of employees.

 

ANS:                            2                      139

AACSB Ethics | Ethical Responsibilities

 

  1. Policy-based statements generally outline the procedure to be used in specific ethical situations.

 

ANS:                            2                      139

AACSB Ethics | Ethical Responsibilities

 

  1. One of the newest positions in organizations is the chief operating officer, a response to widespread financial wrongdoing in recent years.

 

ANS:                            2                      140

AACSB Ethics | Ethical Responsibilities

 

  1. A group of executives appointed to oversee company ethics is an ethics committee.

 

ANS:                            2                      140

AACSB Ethics | Ethical Responsibilities

 

  1. A chief ethics officer is a company executive who oversees all aspects of ethics and legal compliance.

 

ANS:                            2                      140

AACSB Ethics | Ethical Responsibilities

 

  1. Ethics training programs are not an important supplement as long as a well-written code of ethics exists.

 

ANS:                            2                      140

AACSB Ethics | Ethical Responsibilities

 

  1. The disclosure by an employee of illegal, immoral, or illegitimate practices by the organization is called whistle-blowing.

 

ANS:                            1                      141

AACSB Ethics | Ethical Responsibilities

 

 

  1. Managers are often concerned good citizenship will hurt performance.

 

ANS:                            1                      141

AACSB Ethics | Ethical Responsibilities

 

  1. Courage does not play a role in the development of unethical or even illegal behavior.

 

ANS:                            1                      121

AACSB Ethics | Ethical Responsibilities

 

  1. Managers carry a tremendous responsibility for setting the ethical climate in an organization and can act as role models for others.

 

ANS:                            1                      124

AACSB Ethics | Ethical Responsibilities

 

  1. Most ethical dilemmas in business involve a conflict between stakeholders and shareholders.

 

ANS:                            2                      126

AACSB Ethics | Ethical Responsibilities

 

  1. The virtue ethics approach to ethical decision making sidesteps debates about what is right, good, or just and bases decisions on prevailing standards of the profession and the larger society, taking the interests of all stakeholders into account.

 

ANS:                            3                      128

AACSB Ethics | Ethical Responsibilities

 

  1. The virtue ethics approach to ethical decision making says that moral behavior stems from personal virtues.

 

ANS:                            3                      128

AACSB Ethics | Ethical Responsibilities

 

  1. A survey of 6,000 global consumers in the fall of 2008 found that 87 percent believe it is their “duty” to contribute to a better environment.

 

ANS:                            2                      135

AACSB Ethics | Ethical Responsibilities

 

  1. Economic responsibility, carried to the extreme, is called the profit-maximizing view.

 

ANS:                            2                      136

AACSB Ethics | Ethical Responsibilities

 

  1. Although public confidence in business managers is at an all-time low, politics, sports, and non-profit organizations have not been affected.

 

ANS:                            1                      123

AACSB Ethics | Ethical Responsibilities

 

MULTIPLE CHOICE

 

  1. Which of the following refers to the code of moral principles and values that govern behaviors with respect to what is right and wrong?
  2. Social responsibility
  3. Free domain
  4. Ethics
  5. Codified law
  6. Discretionary responsibility

 

 

ANS:                            1                      122

Ethical Responsibilities

 

  1. An organization’s decision to produce a new product is in the
  2. domain of codified law.
  3. domain of free choice.
  4. domain of ethics.
  5. domain of compensatory justice.
  6. domain of social responsibility.

 

 

ANS:                            2                      123

AACSB Ethics | Ethical Responsibilities

 

  1. A new drug has not been approved by the FDA to sell in the U.S. because further testing is needed. The company has a chance to sell its product in another country immediately to start recovering the costs of R & D and production three years ahead of time. This example places the decision in which of the categories from the text?
  2. The ethical domain
  3. The domain of free choice
  4. The legal domain
  5. The obstructive category
  6. The protective domain

 

 

ANS:                            3                      123

AACSB Ethics | Ethical Responsibilities

 

  1. Which of the following is a(n) is the individual who must make an ethical choice in an organization?
  2. The symbolic leader
  3. An obstructive manager
  4. The defensive individual
  5. The moral agent
  6. An authoritarian manager

 

 

ANS:                            1                      125

AACSB Ethics | Ethical Responsibilities

 

 

 

 

  1. Sharon is a manager at Softest Tissue Corporation. She is faced with an interesting problem. One of her employees has been cheating the company out of expense money. Sharon must decide whether or not to fire this employee. In this role, Sharon is acting as
  2. a moral agent.
  3. an ethical theorist.
  4. a symbolic leader.
  5. an authoritarian leader.
  6. an obstructive manager.

 

 

ANS:                            2                      125

AACSB Ethics | Ethical Responsibilities

 

  1. The assumption that “If it’s not illegal, it must be ethical,” ignores which of the following?
  2. Domain of codified law
  3. Domain of ethics
  4. Domain of free choice
  5. Discretionary responsibility
  6. Domain of symbolism

 

 

ANS:                            2                      123

AACSB Ethics | Ethical Responsibilities

 

  1. A situation that arises when all alternative choices or behaviors have been deemed undesirable because of the potentially negative ethical consequences, making it difficult to distinguish right from wrong, is considered
  2. a moral agent.
  3. a social responsibility.
  4. an ethical dilemma.
  5. an ethical standard.
  6. discretionary responsibility.

 

 

ANS:                            2                      125

AACSB Ethics | Ethical Responsibilities

 

  1. A normative approach to ethical decision making
  2. reduces ethical dilemmas to easy-to-understand formulas.
  3. uses various approaches to describe guiding values for decisions.
  4. states that everyone must use their employer’s value system at work.
  5. dictates only one way to choose to resolve dilemmas.
  6. none of these.

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

 

 

 

 

 

 

 

  1. Which approach is the ethical concept that moral behaviors produce the greatest good for the greatest number?
  2. Defensive
  3. Justice
  4. Utilitarian
  5. Individualism
  6. Moral-rights

 

 

ANS:                            1                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Robbie’s Robots decided to continue operations at one plant while shutting down another. The decision was justified on the basis of what was best for the total corporation. This is an example of the
  2. utilitarian approach.
  3. individualism approach.
  4. moral-justice approach.
  5. justice approach.
  6. illegal approach.

 

 

ANS:                            3                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Caleb is a manager at Computer-Care Company. He is expected to consider the effort of each decision alternative on all parties and select the one that optimizes the satisfaction for the greatest number of people. This is an example of the
  2. utilitarian approach.
  3. individualism approach.
  4. moral-justice approach.
  5. justice approach.
  6. soft-line managerial approach.

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Which ethical approach are companies citing to justify their policing of employee’s personal habits on and off the job, such as alcohol and tobacco consumption?
  2. Justice approach
  3. Utilitarian approach
  4. Individualism approach
  5. Moral-justice approach
  6. Discretionary responsibility

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

 

 

 

 

 

 

  1. The ____ ethic was the basis for the state of Oregon’s decision to extend Medicaid to 400,000 previously ineligible recipients by refusing to pay for high-cost, high-risk procedures.
  2. justice
  3. moral-rights
  4. obstructive
  5. individualism
  6. utilitarian

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. When everyone is pursuing self-direction, the greater good is ultimately served because people learn to accommodate each other in their own long-term interest is an example of ____.
  2. utilitarian approach
  3. individualism approach
  4. moral-justice approach
  5. justice approach
  6. social responsibility

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Which of the following is NOT a normative ethics approach?
  2. Utilitarian approach
  3. Individualism approach
  4. Social responsibility approach
  5. Moral-rights approach
  6. All of these are normative approaches as described in the text.

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. The golden rule “do unto others as they would do unto you” is
  2. an example of the utilitarian approach to ethical behavior.
  3. representative of the moral-justice approach to moral decision making.
  4. an example of the values that guide the individualism approach to ethical behavior.
  5. silly and outdated.
  6. an example of the justice approach to ethical behavior.

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Human beings have fundamental rights and liberties that cannot be taken away by another individual’s decision. This ethical decision making approach is known as the
  2. utilitarian approach.
  3. individualism approach.
  4. moral-rights approach.
  5. dualism approach.
  6. None of these.

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. The ____ refers to the ethical concept that moral decisions are those that best maintain the rights of those people affected by them.
  2. individualism approach
  3. justice approach
  4. utilitarian approach
  5. moral-rights approach
  6. discretionary responsibility approach

 

 

ANS:                            1                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Which of the following is NOT one of the moral rights that could be considered during decision-making?
  2. The right to free consent
  3. The right to invade privacy
  4. The right to free speech
  5. The right of freedom of conscience
  6. The right to life and safety

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. ____ refers to the concept that different treatment of people should not be based on arbitrary characteristics.
  2. Procedural justice
  3. Compensatory justice
  4. Distributive justice
  5. Organizational justice
  6. Moral-justice

 

 

ANS:                            1                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Individualism is most closely related to
  2. social responsibility.
  3. free choice.
  4. economic responsibility.
  5. codified law.
  6. togetherness.

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. ____ to ethical decision-making is consistent with due process, free consent, privacy, freedom of conscience and free speech.
  2. Moral-rights approach
  3. Individualism approach
  4. Utilitarian approach
  5. Justice approach
  6. Dual-economic approach

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Sexual harassment is unethical because it violates an important part of which approach to ethical behavior?
  2. The utilitarian approach
  3. The individualism approach
  4. The justice approach
  5. The moral-rights approach
  6. The defensive approach

 

 

ANS:                            3                      127

AACSB Ethics | Ethical Responsibilities

 

  1. The ethical decision approach that requires persons to be guided by standards of equity, fairness and impartiality is the
  2. moral-rights approach.
  3. individualism approach.
  4. utilitarian approach.
  5. justice approach.
  6. discretionary responsibility.

 

 

ANS:                            1                      127

AACSB Ethics | Ethical Responsibilities

 

  1. The moral rights approach that deals with performing experimental treatment on unconscience trauma patient is the
  2. right of free consent.
  3. right to privacy.
  4. right of freedom of conscience.
  5. right of free speech.
  6. right of due process.

 

 

ANS:                            2                      127

AACSB Ethics | Ethical Responsibilities

 

  1. Which of the following is not a concern to managers under the justice approach?
  2. Compensatory justice
  3. Distributive justice
  4. Procedural justice
  5. Obstructive justice
  6. All of these

 

 

ANS:                            1                      127-128

AACSB Ethics | Ethical Responsibilities

 

 

 

 

 

 

 

  1. Disk Replacement Services has just completed a procedure manual to handle employee grievances. One of the main criteria is to make it clear to employees that rules will be administered fairly and consistently. Disk Replacement operates on
  2. the procedural justice approach.
  3. the utilitarian approach.
  4. the individual approach.
  5. the defensive approach.
  6. the free-choice approach.

 

 

ANS:                            2                      128

AACSB Ethics | Ethical Responsibilities

 

  1. Which of these refers to procedural justice?
  2. The concept that different treatment of people should not be based on arbitrary characteristics
  3. The concept that rules should be clearly stated and consistently and impartially enforced
  4. The concept that individuals should be compensated for the cost of their injuries by the party responsible
  5. The concept that people should be treated differently
  6. None of these

 

 

ANS:                            1                      128

AACSB Ethics | Ethical Responsibilities

 

  1. The concept that the party responsible should compensate individuals for the cost of their injuries is referred to as
  2. distributive justice.
  3. injury justice.
  4. procedural justice.
  5. organizational justice.
  6. compensatory justice.

 

 

ANS:                            1                      128

AACSB Ethics | Ethical Responsibilities

 

  1. The thinking underlying the domain of ____ is the closest to the justice approach.
  2. social responsibility
  3. free choice
  4. law
  5. discretionary responsibility
  6. ethics

 

 

ANS:                            2                      128

AACSB Ethics | Ethical Responsibilities

 

 

 

 

 

 

 

 

  1. Most of the laws guiding human resource management are based on the
  2. utilitarian approach.
  3. moral-rights approach.
  4. individualism approach.
  5. justice approach.
  6. collectivism approach.

 

 

ANS:                            3                      127

AACSB Ethics | Ethical Responsibilities

 

  1. ____ is NOT included in the model of personal moral development described in your text.
  2. Preconventional level
  3. Conventional level
  4. Principled level
  5. Postconventional level
  6. All of these are included in the model

 

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. In what stage of personal moral development is a person mostly concerned with external rewards and personal consequences of an action?
  2. Preconventional
  3. Conventional
  4. Principled
  5. Discretionary
  6. None of these

 

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. Most people have learned to conform to expectations of good behavior expected by colleagues, family, friends, and society. They are in what stage of moral development?
  2. Preconventional
  3. Conventional
  4. Discretionary
  5. Principled
  6. Traditional

 

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. Which of these best illustrates the preconventional stage of moral development?
  2. Everybody else is doing it, so it must be okay.
  3. What would my boss think if I did this?
  4. I know this is not right, and I will not do it, even if everyone else is.
  5. What am I going to get from making this decision?
  6. All of these

 

 

ANS:                            3                      129

AACSB Ethics | Ethical Responsibilities

 

 

  1. The conventional stage of moral development is best described by which of the following statements?
  2. I won’t do that because the boss will be upset with me.
  3. Everybody else is doing it, so it must be okay.
  4. I know this is not right, and I will not do it, even if everyone else is.
  5. What am I going to get from making this decision?
  6. All of these

 

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. The ____ leadership style matches with the preconventional level of personal moral development.
  2. autocratic
  3. team oriented
  4. servant leadership
  5. guiding/encouraging
  6. transforming

 

 

ANS:                            3                      129

AACSB Ethics | Ethical Responsibilities

 

  1. ____ matches with the preconventional level of personal moral development.
  2. Work group collaboration
  3. Task accomplishment
  4. Empowered employees
  5. Full participation
  6. Transforming

 

 

ANS:                            3                      130

AACSB Ethics | Ethical Responsibilities

 

  1. Which of these employee behaviors matches with the conventional level of personal moral development?
  2. Task accomplishment
  3. Empowered employees
  4. Work group collaboration
  5. Full participation
  6. Act in own interest

 

 

ANS:                            3                      130

AACSB Ethics | Ethical Responsibilities

 

  1. Which of the following stages is the stage of personal moral development in which an individual develops an internal set of standards and values?
  2. Preconventional
  3. Conventional
  4. Principled
  5. Discretionary
  6. Social

 

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. People making decisions based on an internal set of beliefs that has more meaning to them than the expectations of others
  2. are in the preconventional level of moral development.
  3. are in the conventional level of moral development.
  4. are in the principled level of moral development.
  5. do not care what people think of them.
  6. none of these.

 

 

ANS:                            2                      129-130

AACSB Ethics | Ethical Responsibilities

 

  1. ____ matches with the postconventional level of personal moral development.
  2. Team oriented
  3. Autocratic
  4. Guiding/encouraging
  5. Coercive
  6. Servant leadership

 

 

ANS:                            3                      130

AACSB Ethics | Ethical Responsibilities

 

  1. Which of these employee behaviors matches with the postconventional level of personal moral development?
  2. Empowered employees, full participation
  3. Task accomplishment
  4. Act in own interest
  5. Work group collaboration
  6. Autocratic

 

 

ANS:                            3                      130

AACSB Ethics | Ethical Responsibilities

 

  1. The great majority of managers operate at the
  2. preconventional level.
  3. principled level.
  4. conventional level.
  5. postconventional level.
  6. autocratic level.

 

 

ANS:                            2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. Only about ____ percent of American adults reach the level-three stage of moral development.
  2. two
  3. four
  4. eleven
  5. fifteen
  6. twenty

 

 

ANS:                            3                      130

AACSB Ethics | Ethical Responsibilities

 

  1. Regarding the levels of personal moral development, the majority of managers operate at the ____ level.
  2. preconventional
  3. autocratic
  4. postconventional
  5. conventional
  6. transformative

 

 

ANS:                            2                      130

AACSB Ethics | Ethical Responsibilities

 

  1. MANAGER’S SHOPTALK in Chapter 5 suggests all of the following when challenging the boss on ethical issues EXCEPT:
  2. do your research
  3. begin the meeting by taking the floor
  4. pay attention to your word choice and demeanor
  5. take care how you suggest your alternative solution
  6. be patient

 

 

ANS:                            1                      131

AACSB Ethics | Ethical Responsibilities

 

  1. The obligation of organization management to make decisions and take actions that will enhance the welfare and interests of society as well as the organization is referred to as
  2. organizational responsibility.
  3. social responsibility.
  4. discretionary responsibility.
  5. economic responsibility.
  6. none of these.

 

 

ANS:                            1                      132

AACSB Ethics | Ethical Responsibilities

 

  1. Which of these is true about the policy a bank adopts toward its investing of depositor’s money?
  2. It is an expression of its philosophy of social responsibility.
  3. It is important only to the community.
  4. It has no ethical implications.
  5. It would represent its personal state of moral development.
  6. All of these.

 

 

ANS:                            2                      133

AACSB Ethics | Ethical Responsibilities

 

  1. Any group within or outside the organization that has a stake in the organization’s performance is called
  2. a supplier.
  3. an international customer.
  4. a stakeholder.
  5. OPEC.
  6. a trade association.

 

 

ANS:                            1                      133

AACSB Ethics | Ethical Responsibilities

 

  1. Primary stakeholders of an organization include
  2. employees.
  3. customers.
  4. investors and shareholders.
  5. suppliers.
  6. all of these.

 

 

ANS:                            1                      133

AACSB Ethics | Ethical Responsibilities

 

  1. All of the following are examples of special interest groups EXCEPT
  2. professional associations.
  3. trade associations.
  4. political action committees.
  5. courts.
  6. consumerists.

 

 

ANS:                            2                      133

AACSB Ethics | Ethical Responsibilities

 

  1. What type of a stakeholder would a nature conservation group be for a paper manufacturing company?
  2. Supplier
  3. Competitor
  4. Employee
  5. Special interest group
  6. None of these

 

 

ANS:                            2                      133

AACSB Ethics | Ethical Responsibilities

 

  1. With a philosophy of ____, managers weave environmental and social concerns into every strategic decision, revise policies and procedures to support these efforts and goals.
  2. sustainability
  3. conservation
  4. ethics
  5. preservation
  6. human concerns

 

 

ANS:                            2                      135

AACSB Ethics | Ethical Responsibilities

 

  1. ____ is economic development that generates wealth and meets the needs of their current generation while focusing on future generations.
  2. Ethical management
  3. Activist strategy
  4. Sustainability
  5. Market strategy
  6. Future management

 

 

ANS:                            2                      135

AACSB Ethics | Ethical Responsibilities

 

  1. Which of the following concepts argues that organizations can find innovative ways to create wealth at the same time they are preserving natural resources?
  2. Preservation
  3. Conservation
  4. Environmentalism
  5. Protectionism
  6. Sustainability

 

 

ANS:                            2                      135

AACSB Ethics | Ethical Responsibilities

 

  1. According to the book’s model for judging corporate social performance, social responsibility is divided into what into four sections?
  2. Ethical, legal, technical, and rational
  3. Mandatory, technical, discretionary, and economic
  4. Legal, mandatory, economic, and ethical
  5. Discretionary, legal, economic, and ethical
  6. None of these

 

 

ANS:                            2                      136

AACSB Ethics | Ethical Responsibilities

 

  1. ____ is considered a decision that enables an individual or company to benefit at society’s expense.
  2. A legal behavior
  3. An unethical behavior
  4. An economic responsibility
  5. A discretionary responsibility
  6. A responsible behavior

 

 

ANS:                            2                      137

AACSB Ethics | Ethical Responsibilities

 

  1. ____ includes behavior that is not always written down and may actually not serve an organization’s bottom-line.
  2. Legal responsibility
  3. Economic responsibility
  4. Ethical responsibility
  5. Discretionary responsibility
  6. None of these

 

 

ANS:                            2                      137

AACSB Ethics | Ethical Responsibilities

 

  1. With respect to appropriate corporate behavior, what society deems ____ as important.
  2. ethical responsibility
  3. discretionary responsibility
  4. economic responsibility
  5. legal responsibility
  6. moral responsibility

 

 

ANS:                            2                      136

AACSB Ethics | Ethical Responsibilities

 

  1. Which of the following responsibilities is purely voluntary and is guided by a company’s desire to make social contributions not mandated by economics, law, or ethics?
  2. Ethical
  3. Economic
  4. Legal
  5. Discretionary
  6. Stakeholder

 

 

ANS:                            1                      137

AACSB Ethics | Ethical Responsibilities

 

  1. ____ is the responsibility that goes beyond societal expectations to contribute to the community welfare.
  2. Ethical responsibility
  3. Discretionary responsibility
  4. Economic responsibility
  5. Legal responsibility
  6. Technical responsibility

 

 

ANS:                            2                      138

AACSB Ethics | Ethical Responsibilities

 

  1. ____ means that managers are honest and trustworthy, fair in their dealings with employees and customers, and behave ethically in both their personal and professional lives.
  2. Ethical leadership
  3. Followership
  4. Corporate espionage
  5. Command-and-control approach
  6. Concern for production leadership

 

 

ANS:                            1                      138

AACSB Ethics | Ethical Responsibilities

 

  1. A code of ____ is a formal statement of the company’s values concerning ethics and social issues.
  2. integrity
  3. trust
  4. citizenship
  5. ethics
  6. honesty

 

 

ANS:                            1                      139

AACSB Ethics | Ethical Responsibilities

 

  1. Statements that define fundamental values and reference organizational responsibilities, products and employees are often called ____.
  2. principle-based
  3. policy-based
  4. ethically-based
  5. codified
  6. codes of organizational integrity

 

 

ANS:                            1                      139

AACSB Ethics | Ethical Responsibilities

 

  1. An example of an ethical structure is
  2. chief ethics officer.
  3. a formal statement of company values.
  4. an equal opportunity policy.
  5. whistle-blowing.
  6. corporate speech.

 

 

ANS:                            2                      140

AACSB Ethics | Ethical Responsibilities

 

  1. When an official is given the responsibility of overseeing all aspects of ethics and legal compliance. S/he is referred to as
  2. a whistle-blower.
  3. a chief ethics officer.
  4. vice-president of human resource management.
  5. a yes-man.
  6. a political play.

 

 

ANS:                            1                      140

AACSB Ethics | Ethical Responsibilities

 

  1. Which of these is the disclosure by an employee of an illegal activity?
  2. Tattling
  3. Whistle-blowing
  4. Organizational communication
  5. The filing of a disclosure statement
  6. Snooping

 

 

ANS:                            1                      141

AACSB Ethics | Ethical Responsibilities

 

  1. ____ is not part of the structures and systems pillar of an ethical organization.
  2. Corporate culture
  3. Code of ethics
  4. Ethics committee
  5. Whistle-blowing mechanisms
  6. Rewarding ethical behavior

 

 

ANS:                            2                      139

AACSB Ethics | Ethical Responsibilities

 

  1. The relationship between social responsibility and financial performance has been shown to be ____.
  2. non-existent
  3. positive
  4. negative
  5. not important
  6. a reflection of top leadership

 

 

ANS:                            2                      141

AACSB Ethics | Ethical Responsibilities

 

  1. Anne Chinoda, top executive at Florida Blood Centers, is under pressure to resign because she took a $71,000 pay increase just months before she laid off 42 employees. Chinoda’s decision lies in the
  2. domain of codified law. d.         domain of social responsibility.
  3. domain of free choice. e.         none of these.
  4. domain of ethics.

 

 

ANS:                            3                      123

AACSB Ethics | Ethical Responsibilities

 

  1. A recent poll found that ________ percent of people surveyed say corporate America’s moral compass is pointing in the wrong direction.
  2. 10 d.         76
  3. 29 e.         98
  4. 52

 

 

ANS:                            2                      124

AACSB Ethics | Ethical Responsibilities

 

  1. When the USS Indianapolis sank after being torpedoed, one Navy pilot disobeyed orders and risked is life to save men who were being picked off by land sharks. The Navy pilot was operating from the ________ level of moral development.
  2. preconventional d.         lowest
  3. conventional e.         conservative
  4. postconventional

 

 

ANS:                            3                      130

AACSB Ethics | Ethical Responsibilities

 

  1. The profit-maximizing view of economic responsibility is advocated by ________.
  2. Milton Friedman d.         Warren Buffett
  3. Arthur Anderson e.         Steve Jobs
  4. Donald Trump

 

 

ANS:                            2                      136

AACSB Ethics | Ethical Responsibilities

 

  1. Of the following, which may whistle-blowers suffer?
  2. Job loss d.         Hostile work environment
  3. Ostracism by coworkers e.         All of the above
  4. Transfer to lower-level position

 

 

ANS:                            2                      141

AACSB Ethics | Ethical Responsibilities

 

  1. Examples of unethical behavior toward ________ include a hostile work environment and violations of health and safety rules.
  2. customers d.         suppliers
  3. financiers e.         employees
  4. society

 

 

ANS:                            1                      124

AACSB Ethics | Ethical Responsibilities

 

  1. The decision by ABC International to downsize and reduce its labor force is in the
  2. domain of codified law. d.         social responsibility.
  3. domain of free choice. e.         none of these.
  4. domain of ethics.

 

 

ANS:                            2                      122-123

AACSB Ethics | Ethical Responsibilities

 

CASE

 

Scenario – Larry Campbell

 

The pressure was on again. Larry Campbell, the Vice President at ToolTime Hardware, Inc., was receiving requests from men and women inside the firm and outside the firm, asking him to review the company’s promotion policies. Of the 52 middle and high level executives, only three were women. The pressure was to review the policies that had led to this perceived imbalance and, if appropriate, take the steps necessary for correction.

 

  1. The decision to recruit, hire, train and promote both men and women equally is based on the ethical approach of
  2. utilitarian approach.
  3. individualism approach.
  4. moral rights approach.
  5. all of these provide the basis.
  6. none of these.

 

 

ANS:

 

2                      127

AACSB Ethics | Ethical Responsibilities

 

 

  1. Using the justice approach for ethical decision-making, the logic of promoting qualified men and women would be supported by
  2. equal rights justice.
  3. distributive justice.
  4. procedural justice.
  5. compensatory justice.
  6. all of these.

 

 

ANS:

 

2                      128

AACSB Ethics | Ethical Responsibilities

 

 

 

 

 

 

  1. A(n) _______ would outline the procedures Larry should use in this and other ethical situations.
  2. principle-based statement
  3. code of ethics
  4. corporate credo
  5. policy-based statement
  6. ethics committee

 

 

ANS:

 

2                      139

AACSB Ethics | Ethical Responsibilities

 

 

COMPLETION

 

  1. __________ is the code of moral principles and values that govern the behaviors of a person or group with respect to what is right or wrong.

 

ANS:

 

  1. When values and standards are written into the legal system, it is referred to as ______.

 

ANS:

 

  1. A(n) ________ arises in a situation when each alternative choice or behavior is undesirable because of potentially harmful ethical consequences.

 

ANS:

 

  1. The ________ is an individual responsible for making an ethical choice.

 

ANS:

 

 

 

 

 

  1. The ethical concept that moral behaviors produce the greatest good for the greatest number is referred to as ________ approach.

 

ANS:

 

  1. The _________ approach contends that acts are moral when they promote the individual’s best long-term interests.

 

ANS:

 

  1. The _________ approach assets that human beings have fundamental rights and liberties that cannot be taken away by an individual’s decision.

 

ANS:

 

  1. The ________ approach holds that moral decisions must be based on standards of equity, fairness, and impartiality.

 

ANS:

 

  1. __________ justice requires that different treatment of people not be based on arbitrary characteristics.

 

ANS:

 

  1. ________ justice requires that rules should be clearly stated and consistently and impartially enforced.

 

ANS:

 

 

 

  1. ________ justice argues that individuals should be compensated for the cost of their injuries by the party responsible.

 

ANS:

 

  1. At the _________ level of personal moral development, individuals are most concerned with external rewards and punishments.

 

ANS:

 

  1. People learn to conform to the expectations of good behavior that are set by peers and society at the _________ level.

 

ANS:

 

  1. Individuals at the __________ level are guided by an internal set of values and standards and will even disobey rules or laws that violate these principles.

 

ANS:

 

  1. Most managers operate at the _________ level.

 

ANS:

 

  1. Management’s obligation to make choices that will contribute to the well being of both the organization and society is known as __________.

 

ANS:

 

 

  1. A(n) _________ is any group within or outside the organization that has a stake in the organization’s performance.

 

ANS:

 

  1. Organizations that are ________ responsible consider the effects of their actions on all stakeholder groups and may invest in a number of philanthropic causes that benefit stakeholders.

 

ANS:

 

  1. __________ refers to interacting with the community in which a company does business in a way that makes money for the company but also improves the long-term well-being of the community.

 

ANS:

F

 

  1. When a company does just what is necessary to satisfy legal requirements, it falls under the _________ approach in shades of green.

 

ANS:

 

  1. ___________ responsibility is purely voluntary and guided by a company’s desire to make social contributions not mandated by economics, law, or ethics.

 

ANS:

 

  1. A(n) __________ is a formal statement of the company’s values concerning ethics and social issues; it communicates to employees what the company stands for.

 

ANS:

 

 

 

  1. __________ generally outline the procedures to be used in specific ethical situations, such as marketing practice, conflicts of interest, and observance of laws.

 

ANS:

 

  1. A group of executives assigned to oversee the organization’s ethics by ruling on questionable issues and disciplining violators is referred to as a(n) _________.

 

ANS:

 

  1. __________ programs help employees deal with ethical questions and translate the values stated in a code of ethics into everyday behavior.

 

ANS:

 

  1. Employee disclosure of illegal organization activities is known as ________.

 

ANS:

 

  1. The relationship between social responsibility and financial performance has been shown to be __________.

 

ANS:

 

  1. A decision to monitor employees’ nonwork activities violates the right to ________.

 

ANS:

 

 

 

 

  1. The ________ approach to ethical decision making sidesteps debates about what is right, good, or just and bases decisions on prevailing standards of the profession and the larger society, taking the interests of all stakeholders into account.

 

ANS:

 

  1. The ________ approach to ethical decision making says that moral behavior stems from personal virtues.

 

ANS:    vir

 

  1. The ________ approach to economic responsibility means that economic gain is the only social responsibility and can lead companies into trouble.

 

ANS:

 

SHORT ANSWER

 

  1. List the four criteria for ethical decision-making described in the book.

 

ANS:

 

  1. List three of the six moral rights that should be considered during decision making.

 

ANS:

 

 

 

 

 

 

  1. List three examples of primary stakeholders.

 

ANS:

 

  1. List the four responsibilities of corporate social performance.

 

ANS:

 

ESSAY

 

  1. Define ethics and explain how the domain of ethics relates to law and free choice.

 

ANS:

 

  1. List the four approaches that are used to describe values for guiding ethical decision making. Briefly describe each.

 

ANS:

 

  1. Briefly explain the justice approach to ethics and then explain the three types of justice.

 

ANS:

 

  1. List and define the stages of moral development.

 

ANS:

 

2                      129

AACSB Ethics | Ethical Responsibilities

 

  1. What is social responsibility? Why is it considered a difficult concept to grasp?

 

ANS:

 

  1. Explain the concept of a stakeholder and list five common stakeholders.

 

ANS:

 

  1. List and define the criteria of corporate social responsibility.

 

ANS:

 

  1. Explain the differences between principle-based statements and policy-based statement in an organization’s code of ethics.

 

ANS:

 

 

 

 

 

Chapter 6—Managing Small Business Start-Ups

 

TRUE/FALSE

 

  1. Sole proprietorships are the fastest growing segment of small business in both the U.S. and Canada.

 

ANS:                            1                      147

Creation of Value

 

  1. The fastest growing segment of small business in both the U.S. and Canada is partnerships.

 

ANS:                            1                      147

Creation of Value

 

  1. The process of initiating a business venture, gathering and organizing the appropriate resources, and assuming the associated risks and rewards refers to Entrepreneurship.

 

ANS:                            1                      148

Creation of Value

 

  1. Sole proprietorships are the fastest growing segment of small business.

 

ANS:                            1                      147

Strategy

 

  1. Entrepreneurs in the sustainer category are rewarded by the personal satisfaction of being business owners.

 

ANS:                            2                      148

Creation of Value

 

  1. Entrepreneurs in the sustainer category alike the chance to balance work and personal life and often don’t want the business to grow too large.

 

ANS:                            2                      148

Creation of Value

 

  1. Entrepreneurs in the optimizer category are rewarded by the personal satisfaction of being business owners.

 

ANS:                            2                      148

Creation of Value

 

  1. Optimizers are rewarded by chance to work on something new and creative.

 

ANS:                            3                      148

Creation of Value

 

 

 

 

  1. Small businesses represent 68 percent of all firms and employ about three quarters of all private sector employees.

 

ANS:                            3                      150

Creation of Value

 

  1. The primary focus of most entrepreneurs is retail, manufacturing and/or service type of businesses.

 

ANS:                            1                      151

Creation of Value

 

  1. Hong Kong is the most entrepreneurial country, with 47.4 percent of individuals age 18 to 64 starting a new business.

 

ANS:                            3                      150

Creation of Value

 

  1. Small businesses, according to the Small Business Administration, employ more than 90 percent of the private workforce in the United States and are responsible for 85 percent of all business innovations.

 

ANS:                            3                      151-152

Creation of Value

 

  1. Entrepreneurship and small business in the United States is an engine for job creation and innovation.

 

ANS:                            1                      151

Creation of Value

 

  1. Women and minorities who have found their opportunities limited in the corporate world are seeing intrapreneurship as the only way to go.

 

ANS:                            2                      153

Individual Dynamics

 

  1. Immigrants are more likely to start small businesses than native-born Americans.

 

ANS:                            1                      152

Creation of Value

 

  1. Entrepreneurs are in more control of their environment, generally speaking, and can be expected to have an external locus of control.

 

ANS:                            2                      154

Creation of Value

 

  1. People who have high achievement needs like to set their own goals, which are moderately difficult.

 

ANS:                            2                      155

Creation of Value

 

  1. Every time Tina Faye does poorly on an exam and blames some outside factor, she can be described as having an external locus of control.

 

ANS:                            2                      154

Individual Dynamics

 

  1. The psychological characteristic that allows a person to be untroubled by disorder and uncertainty is called tolerance for ambiguity.

 

ANS:                            1                      155

Individual Dynamics

 

  1. A tolerance for ambiguity is a psychological characteristic that enables a person to accept the threat of competition and potential risk.

 

ANS:                            2                      155

Individual Dynamics

 

  1. Entrepreneurs are able to deal easily with delays and exhibit high levels of patience, knowing that the results will be worth the wait.

 

ANS:                            2                      155

Individual Dynamics

 

  1. Social entrepreneurs have a primary goal of improving society rather than maximizing profits.

 

ANS:                            2                      157

Ethical Responsibilities

 

  1. Social entrepreneurship combines the creativity, business smarts, passion, and hard work of the traditional entrepreneur with a mission to change the world for the better.

 

ANS:                            2                      156

Ethical Responsibilities

 

  1. A document specifying the business details prepared by an entrepreneur prior to opening a new business is known as a business plan.

 

ANS:                            1                      159

Creation of Value

 

  1. Since a corporation is a legal structure reserved for large firms, small businesses have two basic choices for legal structure of their company: proprietorship and partnership.

 

ANS:                            2                      160

Creation of Value

 

  1. Forty-one percent of people start a business to fulfill a dream.

 

ANS:                            3                      159

Creation of Value

 

  1. A proprietorship is an unincorporated business owned by two or more people.

 

ANS:                            1                      160

Creation of Value

 

  1. The drawbacks of proprietorship include unlimited liability and difficulty in obtaining financing.

 

ANS:                            2                      160

Creation of Value

 

  1. Two principle advantages of forming a corporation are continuity and limits on the owners’ liability.

 

ANS:                            2                      160

Creation of Value

 

  1. Borrowing money that has to be repaid at a later date in order to start a business is equity financing.

 

ANS:                            2                      163

Creation of Value

 

  1. Borrowing from family and friends is a common source of debt financing for a start-up business.

 

ANS:                            1                      162

Creation of Value

 

  1. Equity financing is when funds are invested in exchange for ownership in the company.

 

ANS:                            1                      163

Creation of Value

 

  1. A venture capital firm is a group of companies or individuals that invests money in new or expanding businesses for ownership and potential profits.

 

ANS:                            2                      163

Creation of Value

 

  1. A business opportunity that provides shared office space, shared secretarial assistance, management support services, and management advice to entrepreneurs is a franchise.

 

ANS:                            1                      164

Creation of Value

 

  1. The advantage of buying an existing business is the ability to develop and design the business in the entrepreneur’s own way.

 

ANS:                            1                      164

Creation of Value

 

 

  1. A business incubator is an independent company producing a product or service similar to that produced by the entrepreneur’s former employer.

 

ANS:                            1                      165

Creation of Value

 

  1. An attractive innovation for entrepreneurs who want to start a business from scratch is to join a business incubator.

 

ANS:                            2                      165

Creation of Value

 

  1. To succeed in the competitive online market, aspiring entrepreneurs need to identify a market niche that isn’t being served by other companies.

 

ANS:                            1                      167

Creation of Value

 

  1. The first stage of growth for an entrepreneurial company is the investment stage.

 

ANS:                            1                      168

Creation of Value

 

  1. The main problems are producing the product or service and obtaining customers in the survival stage of growth.

 

ANS:                            2                      168

Creation of Value

 

  1. A domain name gives a company an address on the Web and a unique identity.

 

ANS:                            1                      167

Creation of Value

 

  1. The takeoff stage is the last of the five stages of growth for an entrepreneurial company.

 

ANS:                            2                      169

Creation of Value

 

  1. In the start-up stage of an entrepreneurial business, formal planning tends to be nonexistent except for the business plan.

 

ANS:                            2                      169

Creation of Value

 

  1. At the success stage, the company’s substantial financial gains may come at the cost of losing its advantages of small size.

 

ANS:                            1                      169

Creation of Value

 

  1. At Stage 3 of growth for an entrepreneurial firm, managers often are hired to take over duties performed by the owner.

 

ANS:                            2                      170

Creation of Value

 

  1. The owner should start implementing more structured control systems by Stage 3 of growth for an entrepreneurial firm.

 

ANS:                            2                      169

Creation of Value

 

  1. The failure rate for high-tech business is lower than the failure rate for conventional businesses.

 

ANS:                            2                      148

Creation of Value

 

  1. During turbulent times, small business formation is the primary process by which an economy recreates and reinvents itself.

 

ANS:                            2                      148

Creation of Value

 

  1. The economic recession of the late 2000s has had minimal effect on small businesses.

 

ANS:                            2                      151

Environmental Influence

 

  1. Owning 40 percent of the private businesses in the United States, women create about 50 percent of the venture-backed technology start-ups.

 

ANS:                            2                      153

Environmental Influence

 

  1. Minorities show a high rate of entrepreneurship in the United States, owning 5.8 million firms in 2007 that generated $1 trillion in revenues.

 

ANS:                            2                      153

Creation of Value

 

  1. Particularly in a turbulent environment, the three most important traits of successful entrepreneurs are realism, flexibility, and passion.

 

ANS:                            2                      156

Individual Dynamics

 

  1. Social entrepreneurs are leaders who are committed to both good business and ensuring high profitability.

 

ANS:                            2                      156

Individual Dynamics

 

  1. The first step in pursuing an entrepreneurial dream is to come up with a viable idea.

 

ANS:                            2                      158

Strategy

 

  1. The most common source of new business ideas comes from in-depth understanding of an industry or profession.

 

ANS:                            2                      159

Strategy

 

  1. A business plan should be detailed, encompassing at least 100 pages.

 

ANS:                            2                      160

Strategy

 

  1. Setting standards too high is a common pitfall for keeping a small business running successfully.

 

ANS:                            2                      161

Strategy

 

  1. The Small Business Administration (SBA) can provide loan financing for small business start-up.

 

ANS:                            2                      162

Creation of Value

 

  1. The sluggish economic market of the late 2000s has made the franchise real estate market a seller’s market.

 

ANS:                            2                      165

Environmental Influence

 

  1. Professional Web sites should be easy to navigate and intuitive, and should avoid common mistakes such as typos, excessively large files, too much information, and sensory overload.

 

ANS:                            1                      167

Information Technologies

 

  1. At the success stage of growth, a company’s substantial financial gains may come at the cost of losing its advantages of small size, including flexibility and the entrepreneurial spirit.

 

ANS:                            2                      169

Creation of Value

 

 

 

 

MULTIPLE CHOICE

 

  1. Which of the following is the process of starting a business venture, organizing the resources, and taking the risks?
  2. Intrapreneurship
  3. Entrepreneurship
  4. Small business administration
  5. Venture capital
  6. Equity financing

 

 

ANS:                            1                      148

Creation of Value

 

  1. A(n) ____ is someone who recognizes a viable idea for a business product or service and carries it out.
  2. intrapreneur
  3. entrepreneur
  4. manager
  5. leader
  6. introvert

 

 

ANS:                            1                      148

Creation of Value

 

  1. Being interested in computers, Jose Cohata came up with an idea of personalizing the screen saver programs with family pictures. After trying a couple of programs, Jose started marketing this service to neighbors and area businesses. Jose’s activities can be described as a(n)
  2. entrepreneurship.
  3. intrapreneurship.
  4. useless idea.
  5. large business.
  6. partnership.

 

 

ANS:                            2                      148

Creation of Value

 

  1. An entrepreneur
  2. assumes the risks of the business.
  3. reaps the rewards of the business.
  4. assumes the financial and legal risks of ownership.
  5. recognizes a viable idea for a business product or service and carries it out.
  6. all of these.

 

 

ANS:                            1                      148

Creation of Value

 

 

 

 

 

 

  1. Tracy’s Trikes believes that each employee should enjoy the idea of working on something that is new, creative, or personally meaningful. Tracy’s Trikes exemplifies which of the categories of small business owners?
  2. Optimizers
  3. Idealists
  4. Hard workers
  5. Sustainers
  6. Jugglers

 

 

ANS:                            2                      148

Creation of Value

 

  1. If a small business owner enjoys the chance to balance work and personal life, he would be considered a(n)
  2. idealist.
  3. optimizer.
  4. hard worker.
  5. juggler.
  6. sustainer.

 

 

ANS:                            2                      148

Creation of Value

 

  1. Which of the following are high-energy people who enjoy handling every detail of their own businesses?
  2. Jugglers
  3. Idealists
  4. Sustainers
  5. Optimizers
  6. Hard workers

 

 

ANS:                            2                      149

Creation of Value

 

  1. Small businesses represent ____ percent of all firms and employ about half of all private sector employees.
  2. 86.3
  3. 21.9
  4. 99.7
  5. 54.2
  6. 72.8

 

 

ANS:                            3                      150

Creation of Value

 

 

 

 

 

 

 

 

  1. Which of the following is the type of business that most entrepreneurs start?
  2. Retail
  3. Manufacturing
  4. Service
  5. All of these
  6. Retail and manufacturing only

 

 

ANS:                            2                      151

Creation of Value

 

  1. According to the Small Business Administration, which of these defines a small business?
  2. It has fewer than 500 employees.
  3. It has sales less than $5 million a year.
  4. It has fewer than $100 million in assets.
  5. The SBA’s definition of small business is one that is independently owned and operated and not dominant in its field of action.
  6. It has fewer than 50 employees and $1 million in sales.

 

 

ANS:                            2                      150

Creation of Value

 

  1. Today, inspired by the growth of companies such as Amazon.com, entrepreneurs are flocking to the ____ to start new businesses.
  2. Small Business Administration
  3. Internet
  4. bookstore
  5. mall
  6. Internal Revenue Service

 

 

ANS:                            1                      151

Creation of Value

 

  1. Small firms that file for patents typically produce ____ more patents per employee than large patenting firms.
  2. twice
  3. 3 to 4 times
  4. 6 to 7 times
  5. 9 to 10 times
  6. 13 to 14 times

 

 

ANS:                            3                      152

Creation of Value

 

  1. Which of the following demographic factors distinguish entrepreneurs from others?
  2. They are likely the youngest child in their family.
  3. Most entrepreneurs launch their businesses between the ages of 35 and 55.
  4. Their parents likely worked for large companies.
  5. They are likely the children of immigrants.
  6. All of these.

 

 

ANS:                            2                      152

Individual Dynamics

 

  1. In the United States, minorities own ____ firms.
  2. 5.8 million
  3. 1.3 billion
  4. 872,000
  5. 8.9 million
  6. 2.9 million

 

 

ANS:                            3                      153

Creation of Value

 

  1. ____ refers to the belief by individuals that their future is within their control and that external forces will have little influence.
  2. Awareness of passing time
  3. Tolerance for ambiguity
  4. Internal locus of control
  5. External locus of control
  6. Deferred locus of control

 

 

ANS:                            1                      154

Individual Dynamics

 

  1. Lauren Dean strongly believes in her abilities and feels that she controls her own destiny. She can be described as having a(n)
  2. tolerance for ambiguity.
  3. internal locus of control.
  4. external locus of control.
  5. low energy level.
  6. awareness of passing time.

 

 

ANS:                            2                      154

Individual Dynamics

 

  1. Which of these characteristics is associated with entrepreneurship?
  2. A high need for power
  3. A high need for affiliation
  4. An internal locus of control
  5. An external locus of control
  6. Low energy level

 

 

ANS:                            2                      154

Individual Dynamics

 

  1. The belief by individuals that their future is not within their control, but rather is influenced by some external force is considered
  2. an external locus of control.
  3. an internal locus of control.
  4. a result of a need to achieve.
  5. a tolerance for ambiguity.
  6. a result of a boost of self-confidence.

 

 

ANS:                            1                      154

Individual Dynamics

 

  1. Which of the following is the belief by individuals that their future is not within their control but rather is influenced by external forces?
  2. Awareness of passing time
  3. Tolerance for ambiguity
  4. Internal locus of control
  5. External locus of control
  6. Deferred locus of control

 

 

ANS:                            1                      154

Individual Dynamics

 

  1. All of these are entrepreneurial characteristics EXCEPT
  2. self-confidence.
  3. tolerance for ambiguity.
  4. external locus of control.
  5. high energy level.
  6. awareness of passing time.

 

 

ANS:                            2                      154

Individual Dynamics

 

  1. Which of these means that people are motivated to excel and pick situations in which success is likely?
  2. External locus of control
  3. Tolerance for Ambiguity
  4. Awareness of passing time
  5. Internal locus of control
  6. Need to achieve

 

 

ANS:                            1                      155

Individual Dynamics

 

  1. Ami believes that such things as luck or chance will determine her future success. Ami has
  2. an internal locus of control.
  3. a high need for achievement.
  4. a tolerance for ambiguity.
  5. an external locus of control.
  6. high level of self-confidence.

 

 

ANS:                            2                      154

Individual Dynamics

 

  1. Ginger likes to set her own goals, which have an intermediate level of difficulty. Which of the entrepreneurial characteristics does she probably possess?
  2. A high need for achievement
  3. A high need for power
  4. An external locus of control
  5. An inability to deal with uncertainty
  6. Intolerance for ambiguity

 

 

ANS:                            2                      155

Individual Dynamics

 

  1. Melissa is a very good middle manager. However, she has long wanted to open her own business. Which of Melissa’s characteristics is not consistent with entrepreneurship?
  2. Taryn has high self-confidence.
  3. Taryn tends to put things off till later.
  4. She is untroubled by uncertainty.
  5. She has a high energy level.
  6. She has high need to achieve.

 

 

ANS:                            2                      154

Individual Dynamics

 

  1. Which of the following is the psychological characteristic that allows a person to be untroubled by disorder and uncertainty?
  2. Tolerance for ambiguity
  3. External locus of control
  4. Need to achieve
  5. Awareness of passing time
  6. Internal locus of control

 

 

ANS:                            1                      155

Individual Dynamics

 

  1. Entrepreneurs tend to
  2. need clear instructions.
  3. like specific instructions.
  4. be impatient.
  5. lack self-confidence.
  6. have low energy level.

 

 

ANS:                            2                      155

Individual Dynamics

 

  1. What is the primary goal of the social entrepreneur?
  2. maximizing profits
  3. improving society
  4. reaching social circles
  5. finding funding
  6. writing grants

 

 

ANS:                            2                      157

Ethical Responsibilities

 

  1. ____ combines creativity, business smarts, passion, and hard work of the traditional entrepreneur with a mission to change the world for better.
  2. Contemporary entrepreneurship
  3. Traditional entrepreneurship
  4. Modern-day entrepreneurship
  5. Social entrepreneurship
  6. Conventional entrepreneurship

 

 

ANS:                            2                      156

Creation of Value

 

  1. One of the first characteristics or points of a successful business plan is
  2. a profile of potential customers and market needs.
  3. demonstrate a clear, compelling vision that creates an air of excitement.
  4. the key ingredient of the business that will attract million of customers.
  5. the entrepreneur’s background and role in the company.
  6. essential information about funding received so far.

 

 

ANS:                            2                      159

Individual Dynamics

 

  1. Which of the following is the most cited source of new business ideas?
  2. Brainstorming
  3. In-depth understanding of industry/profession
  4. A hobby
  5. Copying someone else
  6. None of these

 

 

ANS:                            2                      159

Creation of Value

 

  1. Before opening his own business, Kareem was writing a report that details the specifics of his ideas and future business operations. This document is known as
  2. a SWOT analysis.
  3. a business portfolio.
  4. a business plan.
  5. a competitive analysis.
  6. a mission statement.

 

 

ANS:                            2                      159

Creation of Value

 

  1. Which of these refers to an unincorporated business owned by an individual for profit?
  2. Partnership
  3. Sole proprietorship
  4. Corporation
  5. Association
  6. Trade alliance

 

 

ANS:                            2                      160

Creation of Value

 

  1. Which of the following is NOT an appropriate legal structure for an entrepreneurial company?
  2. Proprietorship
  3. Corporation
  4. Partnership
  5. Trade alliance
  6. All of these are appropriate legal structures for an entrepreneurial company.

 

 

ANS:                            1                      160

Creation of Value

 

 

  1. Which of the following is a popular small business form because it is easy to start and has few legal requirements?
  2. A partnership
  3. A proprietorship
  4. A corporation
  5. An association
  6. A trade alliance

 

 

ANS:                            1                      160

Creation of Value

 

  1. Vaughn Hager started his one-man consulting business under the name Hager Associates. The legal structure for the company can best be described as a(n)
  2. proprietorship.
  3. partnership.
  4. trade alliance.
  5. corporation.
  6. one man operation.

 

 

ANS:                            2                      160

Creation of Value

 

  1. A(n) ____ has a legal life of its own.
  2. partnership
  3. proprietorship
  4. corporation
  5. association
  6. trade alliance

 

 

ANS:                            1                      160

Creation of Value

 

  1. The drawback(s) of proprietorship include
  2. the unlimited liability of the partners.
  3. conflicts with partners.
  4. existence regardless of whether the owners live or dies.
  5. difficulty in obtaining financing.
  6. complexity and cost.

 

 

ANS:                            1                      160

Creation of Value

 

  1. Blake, Madison and Sean started selling computer software on college campuses under the name Student Software Company. Each person contributed $1500 toward start-up costs and agreed on dividing costs and profits equally. The legal structure for the company can best be described as a
  2. proprietorship.
  3. partnership.
  4. trade alliance.
  5. corporation.
  6. None of these.

 

 

ANS:                            2                      160

Creation of Value

 

  1. Which of the following is an unincorporated business owned by two or more?
  2. A partnership
  3. A proprietorship
  4. A corporation
  5. An association
  6. A trade alliance

 

 

ANS:                            1                      160

Creation of Value

 

  1. An artificial entity created by the state and existing apart from its owners is known as
  2. a partnership.
  3. a proprietorship.
  4. a corporation.
  5. an association.
  6. a trade alliance.

 

 

ANS:                            1                      160

Creation of Value

 

  1. What are the two principal advantages of forming a corporation?
  2. Unlimited liability and potential conflicts with partners
  3. Freedom from debt and relatively simple structure
  4. Continuity and limits on owner’s liability
  5. Unlimited liability and continuity
  6. Continuity and non-tax structure

 

 

ANS:                            1                      160

Creation of Value

 

  1. ____ refers to borrowing money that has to be repaid in order to start a business.
  2. Venture capital
  3. Debt financing
  4. Equity financing
  5. Franchising
  6. Licensing

 

 

ANS:                            1                      162

Creation of Value

 

  1. A group of companies or individuals that invests money in new or expanding businesses for ownership and potential profits is known as
  2. an equity financing firm.
  3. franchising.
  4. a venture capital firm.
  5. a corporation.
  6. a trade alliance.

 

 

ANS:                            1                      163

Creation of Value

 

 

  1. A venture capital firm wants to invest in businesses with a high rate of return. In return, they will
  2. invest large amounts of money.
  3. provide necessary assistance and advice.
  4. provide information to help the entrepreneur prosper.
  5. all of these.
  6. provide necessary assistance and advice and provide information to help the entrepreneur prosper only.

 

 

ANS:                            2                      163

Creation of Value

 

  1. Which of these refers to the financing that consists of funds that are invested in exchange for ownership in the company?
  2. Venture-debt
  3. Debt financing
  4. Equity financing
  5. Franchising
  6. Licensing

 

 

ANS:                            1                      163

Creation of Value

 

  1. Which of these offers the advantage that the entrepreneur has the ability to develop and design the business in the entrepreneur’s own way?
  2. Participate in a business incubator
  3. Start a new business
  4. Buy a franchise
  5. Buy an existing business
  6. All of these

 

 

ANS:                            2                      164

Creation of Value

 

  1. An advantage of which of these tactics is that there is a shorter start-up time and an existing track record?
  2. Participate in a business incubator
  3. Start a new business
  4. Buy a franchise
  5. Buy an existing business
  6. Debt financing

 

 

ANS:                            2                      164

Creation of Value

 

 

 

 

 

 

 

 

  1. ____ refers to an arrangement by which the owner of a product or service allows others to purchase the right to distribute the product or service with help from the owner.
  2. Franchising
  3. Business incubation
  4. Spinning-off
  5. Globalization
  6. Right offerings

 

 

ANS:                            2                      164

Creation of Value

 

  1. Which of these is true about the business incubator?
  2. It gives up control since every business is run the same way.
  3. It provides shared office space, management support services, and management advice.
  4. It develops an international business.
  5. It provides an established name and advertising.
  6. All of these.

 

 

ANS:                            2                      165

Creation of Value

 

  1. ____ was one of the top 10 fastest-growing franchises in 2008.
  2. Arby’s
  3. Krispy Kreme
  4. Subway
  5. Wendy’s
  6. Dairy Queen

 

 

ANS:                            2                      165

Creation of Value

 

  1. The majority of the incubators are operated by
  2. large corporations.
  3. non-profit organizations.
  4. small businesses.
  5. international businesses.
  6. college drop-outs.

 

 

ANS:                            2                      166

Creation of Value

 

  1. Entrepreneurs who aspire to start online businesses implement all the following steps EXCEPT:
  2. create a professional Web site.
  3. choose a domain name.
  4. build online relationships
  5. determine physical location.
  6. identify a profitable market niche.

 

 

ANS:                            1                      167

Creation of Value

 

 

 

  1. Managers must tailor their planning, organizing, leading, and controlling to fit
  2. the current stage of growth.
  3. financial needs.
  4. inventory levels.
  5. the number of orders to be filled.
  6. their comfort level.

 

 

ANS:                            2                      168

Creation of Value

 

  1. Marion is an entrepreneur. At this stage of his company’s growth, his main concerns are do we have enough customers and money. What stage of growth is Marion’s company in?
  2. Start-up
  3. Survival
  4. Takeoff
  5. Resource maturity
  6. Success

 

 

ANS:                            2                      168

Creation of Value

 

  1. Samuel Rohrer is providing consumers with a new, unique business. The stage of the growth where his business has demonstrated that it is a workable business entity is considered the
  2. start-up stage.
  3. survival stage.
  4. success stage.
  5. takeoff stage.
  6. resource maturity stage.

 

 

ANS:                            2                      168

Creation of Value

 

  1. At which stage of growth is the company if it is solidly based and profitable?
  2. Resource maturity
  3. Takeoff
  4. Survival
  5. Success
  6. Existence

 

 

ANS:                            1                      169

Creation of Value

 

 

 

 

 

 

 

 

  1. Janelle is very innovative and attentive to detail. As she starts her own company, she leads her employees and ensures that every detail is attended to. As her company grows, she finds it more difficult to deal with and motivate her employees. She is more interested in the product. What stage of growth is Janelle’s company going through?
  2. Resource maturity
  3. Takeoff
  4. Survival
  5. Success
  6. Existence

 

 

ANS:                            2                      169

Creation of Value

 

  1. Formal planning, such as a strategic plan, is usually instituted during which stage?
  2. Start-up
  3. Survival
  4. Takeoff
  5. Success
  6. Resource maturity

 

 

ANS:                            2                      169

Creation of Value

 

  1. The key problem, at the ____ stage of growth, is how to grow rapidly and finance that growth.
  2. existence
  3. survival
  4. takeoff
  5. resource maturity
  6. success

 

 

ANS:                            1                      169

Creation of Value

 

  1. ABC company has made substantial financial gains, but may start to lose the advantages of small size. Which stage of growth is this company experiencing?
  2. Resource maturity
  3. Takeoff
  4. Survival
  5. Success
  6. Existence

 

 

ANS:                            1                      169

Creation of Value

 

 

 

 

 

 

 

 

  1. The Swingset Company is at the stage where if financing is available and it is properly managed, rapid growth can occur. What stage is the Swingset Company experiencing?
  2. Resource maturity
  3. Takeoff
  4. Survival
  5. Success
  6. Start-up

 

 

ANS:                            2                      169

Creation of Value

 

  1. During the latter stages of entrepreneurial growth, the manager
  2. must learn to delegate and decentralize authority.
  3. must institute greater use of rules and procedures.
  4. must hire sufficient management to handle the growth.
  5. all of these.
  6. none of these.

 

 

ANS:                            2                      170

Creation of Value

 

  1. The ____ is the driving force during the early stages of development of a business.
  2. financial support
  3. leader’s vision
  4. leader’s personality
  5. competitive threat
  6. government pressure

 

 

ANS:                            2                      170

Creation of Value

 

  1. During the ____ stage, the company will need to make greater use of budgets, standard cost systems, and statistical reports.
  2. existence
  3. survival
  4. takeoff
  5. success
  6. maturity

 

 

ANS:                            2                      170

Creation of Value

 

  1. Alfred is interested in opening his own business, so he pays a visit to the local Small Business Administration (SBA) to learn more about the potential risks. He learns that about _____ percent of all small businesses fail within two years of opening.
  2. 10
  3. 20
  4. 30
  5. 50
  6. 70

 

 

ANS:                            3                      148

Creation of Value

 

  1. Connie, a single mother and home-business entrepreneur, enjoys running her own business. However, because she is busy balancing work and family, she does not foresee her home business growing significantly in the near future. Connie can best be described as what type of entrepreneur?
  2. Idealist
  3. Sustainer
  4. Optimizer
  5. Juggler
  6. Hard worker

 

 

ANS:                            3                      148

Individual Dynamics

 

  1. In 2008, which country had the largest percentage of individuals age 18 to 64 that were active in starting or managing a business?
  2. Bolivia
  3. Peru
  4. Columbia
  5. Angola
  6. Dominican Republic

 

 

ANS:                            3                      150

Environmental Influence

 

  1. The Small Business Association (SBA) reports that small businesses create at least _______ percent of America’s new jobs.
  2. 30
  3. 32
  4. 46
  5. 64
  6. 82

 

 

ANS:                            3                      151

Creation of Value

 

  1. What percentage of women entrepreneurs have employees?
  2. Five
  3. Ten
  4. Twenty
  5. Fifty
  6. Eighty

 

 

ANS:                            2                      153

Creation of Value

 

 

 

 

 

 

  1. Celine has an unwavering belief in her new start-up company. She possesses intense focus and takes unconventional risks to make her new company successful. These examples most closely relate to which personality trait of entrepreneurs?
  2. Need to achieve
  3. Patience
  4. Tolerance for ambiguity
  5. High energy level
  6. Self-confidence

 

 

ANS:                            3                      154

Individual Dynamics

 

  1. Andrew, a young entrepreneur, feels sure about his ability to win customers through his people skills. He is comfortable with his ability to handle technical details and feels that he is able to keep his business moving. This most closely relates to which personality trait of entrepreneurs?
  2. Need to achieve
  3. Impatience
  4. Tolerance for ambiguity
  5. High energy level
  6. Self-confidence

 

 

ANS:                            3                      155

Individual Dynamics

 

  1. Social entrepreneurs are committed to both good business and:
  2. Swaying political opinion of consumers
  3. Improving the natural environment
  4. Positive social change
  5. Non-profit goals
  6. Big profits

 

 

ANS:                            2                      156

Environmental Influence

 

  1. Jamila is a successful artist and entrepreneur who makes all of her work out of recycled goods because she believes in sustainability. She can be described as a social entrepreneur that is committed to:
  2. International human rights
  3. Environmental protection
  4. Children’s rights
  5. Industrial protectionism
  6. Consumerism

 

 

ANS:                            3                      157

Environmental Influence

 

 

 

 

 

 

 

 

  1. The most common reason for becoming an entrepreneur is:
  2. Joining the family business
  3. To control one’s future
  4. To be one’s own boss
  5. To fulfill a dream
  6. The result of being laid off

 

 

ANS:                            2                      159

Individual Dynamics

 

  1. All of the following are common reasons why small business ventures fail EXCEPT:
  2. Sloppy accounting
  3. Naive hiring
  4. Lack of controls
  5. Long-term focus
  6. Unrealistic focus

 

 

ANS:                            2                      161

Strategy

 

  1. What is the most common way that entrepreneurs finance the start-up of a new business?
  2. Self-financing from savings or credit cards
  3. Loans from friends, family, or business associates
  4. Bank loans
  5. Lines of credit
  6. Venture capital

 

 

ANS:                            2                      162

Creation of Value

 

  1. Wendy enjoys making crafts and giving these away as gifts to friends and family. One day, she decided to quit her job and make crafts full-time, selling them on her new company Web site. Which tactic of becoming a business owner did Wendy use?
  2. Equity financing
  3. New business start-up
  4. Buying an existing business
  5. Buying a franchise
  6. Merger and acquisition

 

 

ANS:                            3                      164

Strategy

 

  1. Max is the Web site manager for a local florist. The company’s owner would like Max to redesign the Web site so that customers can connect directly with florist employees on a daily basis about products and specials. This relates to which step in establishing an online business?
  2. Finding a niche market
  3. Creating a professional Web site
  4. Choosing a target market
  5. Choosing a domain name
  6. Building online relationships

 

 

ANS:                            3                      167

Information Technologies

 

  1. Dawn, the finance manager of a sporting goods manufacturing company, uses accounting records to track monthly operational budgets to ensure that the company’s financial targets are being met. This is an important task in which stage of the managerial process?
  2. Delegating
  3. Planning
  4. Controlling
  5. Leading
  6. Organizing

 

 

ANS:                            3                      170

Strategy

 

CASE

 

Scenario – Holly and Trent

 

While many others dreamed about owning their own business, Holly Gabrel decided to do something about it. Holly knew that being self-employed required long hours and hard work, but with the help of her husband, Trent, Holly was positive that the hours and the work would be rewarded. First, she and Trent developed a new concept in sunglasses that could be used by athletes better than the sunglasses now on the market. Holly and Trent obtained a patent on their invention, and began production and marketing.

 

  1. With the entrepreneurial personality, Holly can be expected to have all of the following traits EXCEPT
  2. internal locus of control.
  3. tolerance for ambiguity.
  4. high need to achieve.
  5. patience.
  6. all of these.

 

 

ANS:

 

2                      154

Individual Dynamics

 

 

  1. After fully developing their new business idea, Holly and Trent recognize the need to develop a business plan. Typical business plans will include all of the following, EXCEPT
  2. mission or vision of the company.
  3. information about the suppliers.
  4. policy for extending credit to customers.
  5. analysis of critical risks that threaten success.
  6. all of these should be included.

 

 

ANS:

 

2                      159-160

Creation of Value

 

 

  1. If the business is legally Holly’s, then the business form would be
  2. proprietorship.
  3. partnership.
  4. corporation.
  5. chapter S42.5.
  6. None of these.

 

 

ANS:

 

2                      160

Creation of Value

 

 

COMPLETION

 

  1. Entrepreneurs in the ____________________ category like the idea of working on something that is new, creative, or personally meaningful.

 

ANS:

 

  1. The process of initiating a business venture, organizing it, and assuming its risks is known as ____________________.

 

ANS:

 

  1. A(n) ____________________ recognizes a viable idea for a business product or service and carries it out.

 

ANS:

 

  1. Entrepreneurship and small business in the United States is an engine for ____________________ and ____________________.

 

ANS:

 

  1. In the next decade, ____________________ and ____________________ businesses could end up being the emerging growth companies.

 

ANS:

 

  1. A(n) ____________________ locus of control is the belief by individuals that their future is within their control.

 

ANS:

 

  1. A(n) ____________________ locus of control is the belief by individuals that their future is not within their control but rather is influenced by external forces.

 

ANS:

 

  1. A human quality linked to entrepreneurship in which people are motivated to excel and pick situations in which success is likely is called the ____________________.

 

ANS:

 

  1. ____________________ entrepreneurs are committed to both good business and changing the world for the better.

 

ANS:

 

  1. ____________________ is the psychological characteristic that allows a person to be untroubled by disorder and uncertainty.

 

ANS:

 

  1. A(n) ____________________ is a document specifying the business details prepared by an entrepreneur in preparation for opening a new business.

 

ANS:

 

  1. An unincorporated business owned by an individual for profit is known as a(n) ____________________.

 

ANS:

 

  1. A(n) ____________________ is an unincorporated business owned by two or more people.

 

ANS:

 

  1. A(n) ____________________ is an artificial entity created by the state and existing apart from its owners.

 

ANS:

 

  1. Borrowing money that has to be repaid at a later date in order to start a business is ____________________.

 

ANS:

 

  1. ____________________ financing consists of funds that are invested in exchange for ownership in the company.

 

ANS:

 

 

 

 

  1. A(n) ____________________ is a group of companies or individuals that invests money in new or expanding businesses for ownership and potential profits.

 

ANS:

 

  1. ____________________ firms are groups of companies or individuals that invest money in exchange for a stake in the company.

 

ANS:

 

  1. By ____________________, an entrepreneur has the advantage to develop and design the business in his/her own way.

 

ANS:

 

  1. ____________________ is an arrangement by which the owner of a product or service allows others to purchase the right to distribute the product or service with help from the owner.

 

ANS:

 

  1. The ____________________ provides shared office space, management support services, and management advice to entrepreneurs.

 

ANS:

 

  1. The majority of the incubators are operated by ____________________.

 

ANS:

 

 

 

 

  1. In the ____________________ stage, the main problems for entrepreneurial firms are producing the product or service and obtaining customers.

 

ANS:

 

  1. The key problem, at the ____________________ stage of growth, is how to grow rapidly and finance that growth.

 

ANS:

 

SHORT ANSWER

 

  1. List five of the six characteristics of entrepreneurs.

 

ANS:

 

  1. Name three of the four ways entrepreneurs can become business owners.

 

ANS:

 

  1. List the five stages of growth for an entrepreneurial company.

 

ANS:

 

 

 

 

 

 

 

ESSAY

 

  1. Name and describe the five different categories of small business owners.

 

ANS:

 

  1. What is tolerance for ambiguity? Why is it an important trait?

 

ANS:

 

  1. Name five of the ten characteristics of a successful business plan.

 

ANS:

 

  1. Define a corporation and briefly discuss the primary advantages and disadvantages of forming a corporation.

 

ANS:

 

  1. What is the fundamental difference between the suppliers of debt and equity financing?

 

ANS:

 

  1. What is a business incubator? How can it help a business?

 

ANS:

 

  1. List and briefly describe the stages of growth for an entrepreneurial company.

 

ANS:

 

 

 

 

 

Chapter 7—Managerial Planning and Goal Setting

 

TRUE/FALSE

 

  1. Because everything else stems from leading, of the four management functions, leading is considered the most fundamental.

 

ANS:                            2                      178

Leadership Principles

 

  1. Managers must understand no plan is perfect, but should grow and change to meet new conditions.

 

ANS:                            2                      178

Leadership Principles

 

  1. A desired future state that the individual or organization attempts to realize is a goal.

 

ANS:                            1                      178

Strategy

 

  1. Goals specify today’s means; plans specify future ends.

 

ANS:                            2                      178

Strategy

 

  1. Goal setting is the act of determining the organization goals and the means for achieving them.

 

ANS:                            1                      178

Strategy

 

  1. The mission is the basis for the strategic level of goals and plans, which in turn shapes the tactical and operational level.

 

ANS:                            1                      179

Strategy

 

  1. Tactical goals and plans are the responsibility of front-line managers and supervisors.

 

ANS:                            1                      179

Strategy

 

  1. Tactical goals and plans are the responsibility of middle managers.

 

ANS:                            1                      179

Strategy

 

  1. A broad definition of the organization’s values, aspiration and reason for being, along with a recognition of the scope and operations that distinguishes the organization refers to a Business Strategic Statement.

 

ANS:                            2                      181

Strategy

 

  1. A plan tells “why” to achieve the goal.

 

ANS:                            2                      178

Strategy

 

  1. Goals help managers decide where they need to allocate resources.

 

ANS:                            1                      190

Leadership Principles

 

  1. Goals and plans provide a sense of direction and focus on specific targets and direct employee efforts toward important outcomes.

 

ANS:                            2                      190

Leadership Principles

 

  1. Step 1 in Management by Objectives is to review progress

 

ANS:                            1                      187

Operations Management

 

  1. Plans provide a standard of assessment.

 

ANS:                            2                      190

Strategy

 

  1. In step 1 of Management By Objectives, overall performance is appraised

 

ANS:                            2                      187

Operations Management

 

  1. An organization’s mission describes its reason for existence.

 

ANS:                            2                      181

Strategy

 

  1. Strategic plans and goals are those that focus on where the organization wants to be in the future and pertain to the organization as a whole.

 

ANS:                            1                      182

Strategy

 

  1. A broad statement of where the organization wants to be in the future refers to a mission statement.

 

ANS:                            1                      181

Strategy

 

 

 

  1. Operational plans and goals are those that focus on the outcomes that major divisions and departments must achieve in order for the organization to reach its overall goals.

 

ANS:                            2                      184

Strategy

 

  1. Tactical plans are designed to help execute the major strategic plans and to accomplish a specific part of the company’s strategy.

 

ANS:                            2                      183

Operations Management

 

  1. Tactical goals are specific, measurable results expected from departments, work groups, and individuals within the organization.

 

ANS:                            2                      183

Operations Management

 

  1. Top managers make the broad strategic plan and identify specific tactical plans.

 

ANS:                            2                      179

Operations Management

 

  1. The department manager’s tool for daily and weekly operations is called the operational plan.

 

ANS:                            1                      184

Strategy

 

  1. Operational planning specifies plans for department managers, supervisors, and individual employees.

 

ANS:                            2                      179

Operations Management

 

  1. A visual representation of the key drivers of an organization’s success and shows how specific goals and plans in each area are linked is called an operations map.

 

ANS:                            2                      184

Strategy

 

  1. Building good relationships with suppliers and partners would be considered customer service goals.

 

ANS:                            2                      185

Strategy

 

  1. Management by objectives, single-use plans, and standing plans are all management planning approaches.

 

ANS:                            2                      186

Strategy

 

 

  1. Specific and measurable goal characteristics apply only to the lower-level goals.

 

ANS:                            2                      186

Strategy

 

  1. Goals are most effective when they are specific, measurable, challenging and linked to rewards.

 

ANS:                            2                      186

Strategy

 

  1. Goals must be set for every aspect of employee behavior or organizational performance to be effective.

 

ANS:                            2                      186

Strategy

 

  1. The goals should be easy, for employees to feel motivated, so that they can achieve them easily which in turn increases their motivation level.

 

ANS:                            2                      186

Motivation Concepts

 

  1. MBO refers to managing by opportunity.

 

ANS:                            1                      186

Strategy

 

  1. The final step in the MBO process is to review progress.

 

ANS:                            1                      187

Strategy

 

  1. An action plan defines the course of action needed to achieve the stated goals.

 

ANS:                            1                      187

Strategy

 

  1. The most difficult step in an MBO process is reviewing progress.

 

ANS:                            2                      187

Strategy

 

  1. Managers believe they are better oriented toward goal achievement when MBO is used.

 

ANS:                            2                      187

Strategy

 

  1. Standing plans define company responses to specific situations such as natural emergencies or competitive setbacks.

 

ANS:                            1                      188

Strategy

 

  1. Single-use plans are ongoing plans that are used to provide guidance for tasks performed repeatedly within the organization.

 

ANS:                            2                      188

Strategy

 

  1. Three critical planning methods are contingency planning, building scenarios, and crisis planning.

 

ANS:                            1                      191

Strategy

 

  1. Crisis plans define company responses to be taken in the case of emergencies, setbacks, or unexpected conditions.

 

ANS:                            2                      191

Strategy

 

  1. If Renae, manager at Leak Free Roofing, wanted to develop a contingency plan for Leak Free, she would need to look at factors such as new equipment, the economy, and the company workers’ compensation cases.

 

ANS:                            3                      191

Strategy

 

  1. Contingency plans can also be considered as scenarios.

 

ANS:                            1                      191

Strategy

 

  1. Trend management is looking at trends and discontinuities and imagining possible alternative futures.

 

ANS:                            2                      191

Leadership Principles

 

  1. Some firms engage in crisis planning to enable them to cope with unexpected events that are so sudden and devastating that they have the potential to destroy the organization.

 

ANS:                            2                      192

Strategy

 

  1. The first stage in crisis prevention includes setting up effective communication system.

 

ANS:                            2                      193

Environmental Influence

 

  1. Prevention and preparation are the two stages of crisis management.

 

ANS:                            1                      193

Strategy

 

  1. The ABC Corporation should create a crisis management group that is not cross-functional, but does work together well under pressure.

 

ANS:                            2                      193

Group Dynamics

 

  1. The CEO of Andre’s Autos, Inc. must do all of the planning for the company because that is the way to do things in today’s workplace.

 

ANS:                            2                      194

Strategy

 

  1. Turtle Terrace should use traditional planning since that is the type of planning every company uses.

 

ANS:                            2                      194

Strategy

 

  1. In a complex and competitive business world, traditional planning done by a select few is the only planning that works.

 

ANS:                            2                      194

Environmental Influence

 

  1. Managers work with planning experts to develop their own goals and plans in decentralized planning.

 

ANS:                            1                      194

Strategy

 

  1. In centralized planning, managers work with planning experts to develop their own goals and plans.

 

ANS:                            1                      194

Strategy

 

  1. Planning cannot tame a turbulent environment.

 

ANS:                            2                      178

Strategy

 

  1. Defining operational goals and plans occurs in the plan development phase of the organizational planning process.

 

ANS:                            2                      181

Strategy

 

  1. Strategic planning tends to be long term and may define organizational action steps from two to five years in the future.

 

ANS:                            2                      182

Strategy

 

 

  1. Goals are typically stated in quantitative terms.

 

ANS:                            2                      184

Strategy

 

  1. Providing innovative solutions to customer needs is a goal that would be placed in the internal business process category on a strategy map.

 

ANS:                            2                      185

Strategy

 

  1. Managers use strategic goals to direct employees and resources toward achieving specific outcomes that enable the organization to perform efficiently and effectively.

 

ANS:                            2                      186

Strategy

 

  1. In order for goals to be effective, they should be challenging but realistic.

 

ANS:                            2                      186

Strategy

 

  1. A key benefit of management by objectives is that it aligns individual and departmental goals with company goals.

 

ANS:                            2                      188

Strategy

 

  1. A major difference between rules and policies is that rules are broad in scope whereas policies are narrow in scope.

 

ANS:                            2                      188

Strategy

 

  1. One of the biggest benefits of planning is that, in turbulent environments, plans create greater organizational flexibility.

 

ANS:                            2                      190

Strategy

 

  1. Crisis planning forces managers to mentally rehearse what they would do if their best laid plans collapse.

 

ANS:                            2                      192

Strategy

 

  1. When detecting signals from the external environment as a part of crisis planning, managers are in the preparation stage.

 

ANS:                            2                      193

Strategy

 

  1. Stretch goals are typically so far beyond the current levels that people have to be innovative to find ways to reach them.

 

ANS:                            2                      193

Strategy

 

  1. Sales in relation to targets is an example of a balanced scorecard metric.

 

ANS:                            2                      195

Strategy

 

  1. Intelligence teams are useful when an organization confronts a major intelligence challenge.

 

ANS:                            2                      196

Creation of Value

 

  1. Goals and plans are valuable to an organization because they provide rationale for decisions, a guide to action, and an increase in motivation and commitment.

 

ANS:                            1                      190

Motivation Concepts

 

  1. When a company faces rapid change, problems with planning can occur.

 

ANS:                            2                      190

Strategy

 

MULTIPLE CHOICE

 

  1. ____ refers to a desired future state that an organization attempts to realize.
  2. Plan
  3. Vision statement
  4. Goal
  5. Mission statement
  6. Idea

 

 

ANS:                            2                      178

Strategy

 

  1. ____ specify future ends and ____ specify today’s means.
  2. Goals, plans
  3. Plans, goals
  4. Planning, organizing
  5. Ideas, behaviors
  6. Mission, vision

 

 

ANS:                            2                      178

Strategy

 

  1. A blueprint specifying the resource allocations schedules, and other actions necessary for attaining goals is referred to as a(n)
  2. goal.
  3. plan.
  4. mission.
  5. vision.
  6. objective.

 

 

ANS:                            1                      178

Strategy

 

  1. ____ is the act of determining the organization’s goals and the means for achieving them.
  2. Brainstorming
  3. Organizing
  4. Planning
  5. Developing a mission
  6. A blueprint

 

 

ANS:                            1                      178

Strategy

 

  1. The planning process begins with which of these?
  2. The development of operational goals
  3. The development of a mission statement
  4. Communication of goals to the rest of the organization
  5. A company-wide meeting
  6. Brainstorming

 

 

ANS:                            2                      181

Strategy

 

  1. The ____ is the basis for the strategic level of goals and plans which in turn shapes the ____ and ____ level.
  2. goal, mission, tactical
  3. objective, operational, mission
  4. operational goal, mission and tactical
  5. mission, tactical, operational
  6. tactical plan, operational, mission

 

 

ANS:                            2                      179

Strategy

 

  1. ____ is primarily responsible for strategic goals/plans.
  2. Middle management
  3. Board of directors
  4. Consultants
  5. Top management
  6. Lower management

 

 

ANS:                            1                      179

Strategy

 

 

  1. ____ is primarily responsible for operational goals/plans.
  2. Middle management
  3. Board of directors
  4. Consultants
  5. Top management
  6. Lower management

 

 

ANS:                            1                      179

Strategy

 

  1. Which of these is(are) primarily concerned with tactical goals/plans?
  2. Middle management
  3. Board of directors
  4. Consultants
  5. Senior management
  6. Lower management

 

 

ANS:                            1                      179

Strategy

 

  1. Sherry is a first-line supervisor at Rooftop Corporation. She is most concerned with which level of goals?
  2. Operational goals
  3. Tactical plans
  4. Strategic goals
  5. Mission statement
  6. Vision

 

 

ANS:                            2                      184

Strategy

 

  1. Which of the following symbolizes the legitimacy of the organization to external audiences?
  2. Operational goals
  3. Tactical plans
  4. Strategic goals
  5. Mission statement
  6. Tactical goals

 

 

ANS:                            2                      181

Strategy

 

  1. Roxanne is a manager at Geronimo Gaming. She recently attended a seminar on goal setting. She wishes to use goals to provide a sense of direction to her staff. She is using goals as
  2. a way to legitimize her department.
  3. a source of motivation.
  4. a standard of performance.
  5. a guide to action.
  6. impress others.

 

 

ANS:                            2                      190

Strategy

 

 

  1. Which of the following is not a reason why planning positively affects a company’s performance?
  2. Goals and plans provide legitimacy for customers
  3. Goals and plans set a standard of performance
  4. Goals and plans guide resource allocation
  5. Goals and plans are a guide to action
  6. Goals and plans are a source of motivation and commitment

 

 

ANS:                            2                      190

Strategy

 

  1. Which of the following is not a step in the organizational planning process?
  2. Monitor and learn
  3. Plan operations
  4. Translate the plan
  5. Develop the plan
  6. Plan marketing tactics

 

 

ANS:                            2                      181

Strategy

 

  1. Which of the following is NOT a tool for executing a plan?
  2. Management by objectives
  3. Operations map
  4. Performance dashboards
  5. Single use plans
  6. Decentralized responsibility

 

 

ANS:                            2                      184

Strategy

 

  1. A statement that identifies distinguishing characteristics of an organization is known as
  2. a goals statement.
  3. a values statement.
  4. an income statement.
  5. a mission statement.
  6. a competitive-edge statement.

 

 

ANS:                            1                      181

Strategy

 

  1. Which of these are described by mission statements?
  2. Corporate values
  3. Product quality
  4. Location of facilities
  5. All of these
  6. None of these

 

 

ANS:                            1                      181

Strategy

 

 

 

 

  1. The organization’s reason for existence is known as
  2. the organization’s value.
  3. the organization’s vision.
  4. the organization’s mission.
  5. the organization’s goal.
  6. the organization’s service.

 

 

ANS:                            2                      181

Strategy

 

  1. “We respect our employees and value their diversity” is an example of a statement you are most likely to find in the organization’s
  2. mission.
  3. strategic goals.
  4. tactical goals.
  5. strategic plans.
  6. tactical plans.

 

 

ANS:                            3                      181

Strategy

 

  1. “We seek to become the premier business school in the west” is an example of a statement you are most likely to find in the organization’s
  2. tactical goals.
  3. operational goals.
  4. mission.
  5. tactical plans.
  6. operational plans.

 

 

ANS:                            3                      181

Strategy

 

  1. ____ refers to a broadly stated definition of the organization’s basic business scope and operations that distinguishes it from similar types of organizations.
  2. Mission statement
  3. Goal statement
  4. Management by objective
  5. Goal setting
  6. Corporate competitive-value statement

 

 

ANS:                            1                      181

Strategy

 

  1. At the top of the goal hierarchy is the
  2. strategic goals.
  3. tactical goals.
  4. operational goals.
  5. mission.
  6. employee goals.

 

 

ANS:                            2                      181

Strategy

 

  1. ____ are the broad statements of where the organization wants to be in the future.
  2. Operational goals
  3. Tactical goals
  4. Strategic goals
  5. Operational goals
  6. Tactical plans

 

 

ANS:                            1                      182

Strategy

 

  1. The official goals of the organization are best represented by the ____.
  2. strategic goals
  3. tactical goals
  4. operational goals
  5. competitive goals
  6. none of these

 

 

ANS:                            2                      182

Strategy

 

  1. A long-term time frame is most closely associated with
  2. operational plans.
  3. tactical plans.
  4. strategic plans.
  5. mission plans.
  6. tactical goals.

 

 

ANS:                            2                      182

Strategy

 

  1. ____ are called the action steps by which an organization intends to attain its strategic goals.
  2. Tactical goals
  3. Operational goals
  4. Tactical plans
  5. Operational plans
  6. Strategic plans

 

 

ANS:                            1                      182

Strategy

 

  1. ____ goals lead to the attainment of ____ goals, which in turn lead to the attainment of ____ goals.
  2. Operational, strategic, tactical
  3. Tactical, operational, strategic
  4. Strategic, tactical, operational
  5. Operational, tactical, strategic
  6. None of these.

 

 

ANS:                            3                      182-184

Strategy

 

 

 

  1. Goals that define the outcomes that major divisions and departments must achieve in order for the organization to reach its overall goals is called
  2. strategic goals.
  3. tactical goals.
  4. operational goals.
  5. a mission.
  6. a plan.

 

 

ANS:                            1                      183

Strategy

 

  1. Sarah is a middle manager at Stylin’ Sneakers Corporation. She is most likely responsible for the achievement of ____ goals.
  2. operational
  3. tactical
  4. strategic
  5. lower-level
  6. top-level

 

 

ANS:                            2                      179

Strategy

 

  1. Which of the following refer to specific results expected from individuals?
  2. Operational goals
  3. Tactical goals
  4. Strategic goals
  5. Operational plans
  6. Mission statements

 

 

ANS:                            2                      184

Strategy

 

  1. Which of the following represent plans developed at the organization’s lower levels that specify action steps toward achieving operational goals and that support tactical planning activities?
  2. Tactical plans
  3. Strategic plans
  4. Operational plans
  5. Supervisory plans
  6. Organizational plans

 

 

ANS:                            1                      184

Strategy

 

  1. The ____ is the department manager’s tool for daily and weekly operations.
  2. conventional goal
  3. strategic goal
  4. strategic plan
  5. operational plan
  6. targeted plan

 

 

ANS:                            2                      184

Operations Management

 

  1. Which of the following is a visual representation of the key drivers of an organization’s success, showing the cause-and-effect relationships among goals and plans?
  2. Operational plan
  3. Gantt chart
  4. Strategy map
  5. SWOT analysis
  6. Strategic plan

 

 

ANS:                            2                      184

Strategy

 

  1. According to the strategy map described in chapter 7, which of the following is NOT a type of goal?
  2. Financial performance goals
  3. Customer service goals
  4. Internal business process goals
  5. Learning and growth goals
  6. External business process goals

 

 

ANS:                            1                      185

Strategy

 

  1. Managers use ____ to direct employees and resources toward achieving specific outcomes that enable the organization to perform efficiently and effectively.
  2. strategic goals
  3. operational goals
  4. growth goals
  5. financial results
  6. internal business process goals

 

 

ANS:                            2                      184

Operations Management

 

  1. Which of these is lacking in the goal “profits should be increased in the coming year?”
  2. Specific and measurable
  3. Challenging but realistic
  4. Covers key result areas
  5. Defined time period
  6. None of these

 

 

ANS:                            2                      186

Strategy

 

  1. Kate is a salesperson at a large retail chain. She was assigned a goal of $265,000 in sales for the current quarter. She is unhappy because she knows that the most any salesperson has sold in one quarter in the past is $150,000. Her goal of $265,000 is probably
  2. not specific and measurable.
  3. not realistic.
  4. irrelevant.
  5. lacking a specific time period.
  6. does not cover key result area.

 

 

ANS:                            3                      186

Strategy

 

  1. You are violating which of these goal characteristics when you attempt to create goals for every aspect of employee behavior?
  2. Specific and measurable
  3. Linked to rewards
  4. Defined time period
  5. Cover key result areas
  6. Challenging but realistic

 

 

ANS:                            2                      186

Strategy

 

  1. Darren set goals for each of his employees. Each employee ended up with at least twenty-five goals. This process violates which of the following criteria for effective goals?
  2. Specific and measurable
  3. Challenging but realistic
  4. Covers key result areas
  5. Defined time period
  6. Linked to rewards

 

 

ANS:                            2                      186

Strategy

 

  1. All of the following are characteristics of effective goal setting EXCEPT
  2. goals should be challenging but not unreasonably difficult.
  3. goals should be set for every aspect of employee behavior.
  4. specific and measurable.
  5. cover key results area.
  6. linked to rewards.

 

 

ANS:                            2                      186

Strategy

 

  1. The ultimate impact of goals depended on the extent to which goal achievement is linked to
  2. rewards.
  3. salary increases.
  4. promotions.
  5. all of these.
  6. salary increases and promotions.

 

 

ANS:                            2                      186

Strategy

 

  1. ____ is the first step in the MBO process.
  2. Setting goals
  3. Developing action plans
  4. Appraising overall performance
  5. Reviewing progress
  6. None of these

 

 

ANS:                            1                      187

Strategy

 

  1. Which of these is a method of management whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance?
  2. Organizational planning
  3. Management by objectives
  4. Goal setting
  5. Mission development
  6. Vision development

 

 

ANS:                            1                      186-187

Strategy

 

  1. High Fence Corporation is currently implementing an MBO program. Managers and employees jointly set objectives and develop action plans, and goal achievement is evaluated on an annual basis. High Fence is missing which major activity that must occur in order for MBO to be successful?
  2. Developing a mission statement
  3. Developing tactical goals
  4. Reviewing progress
  5. Reviewing operational plans
  6. None of these

 

 

ANS:                            2                      187

Strategy

 

  1. In using MBO, objectives should be set
  2. by the supervisor.
  3. by the employee.
  4. jointly by the supervisor and the employee.
  5. by the accounting department.
  6. by top management.

 

 

ANS:                            2                      187

Strategy

 

  1. Frostburg Fireplaces has used MBO for the past year. Top management just finished evaluating overall performance. The next step in the MBO process should be
  2. to develop new action plans.
  3. to develop new objectives based on the review of last year’s performance.
  4. to begin a new MBO “cycle”, using the same objectives as last year.
  5. to wait several months to allow information to be digested.
  6. none of these.

 

 

ANS:                            2                      187

Strategy

 

  1. ____ is the final step in the MBO process.
  2. Appraise overall performance
  3. Develop an action plan
  4. Review progress
  5. Set goals
  6. Conduct periodic checkups

 

 

ANS:                            1                      187

Strategy

 

  1. Which of the following is NOT one of the benefits of MBO?
  2. Performance can be improved at all company levels.
  3. Employees are motivated.
  4. Efforts are focused on activities that will lead to goal attainment.
  5. Operational goals are able to displace strategic goals.
  6. Individual and department goals are aligned with company goals.

 

 

ANS:                            2                      188

Strategy

 

  1. Which of these is true about single-use plans?
  2. They are developed to achieve a set of goals that are unlikely to be repeated in the future.
  3. They are used to provide guidance for tasks performed repeatedly within the organization.
  4. They define plans that define company responses to specific situations, such as emergencies or setbacks.
  5. They are most important in the organizations.
  6. None of these.

 

 

ANS:                            2                      188

Strategy

 

  1. Standing plans are
  2. developed to achieve a set of goals that are unlikely to be repeated in the future.
  3. used to provide guidance for tasks performed repeatedly within the organization.
  4. define company responses to specific situations, such as emergencies or setbacks.
  5. the most important in the organizations.
  6. none of these.

 

 

ANS:                            1                      188

Strategy

 

  1. A project is an example of a
  2. policy.
  3. standing plan.
  4. procedure.
  5. single-use plan.
  6. rule.

 

 

ANS:                            1                      188

Strategy

 

  1. Cheyenne Creamery requires that all absent employees bring a note from their doctor when returning to work. This is an example of a
  2. single-plan use.
  3. standing plan.
  4. program.
  5. procedure.
  6. project.

 

 

ANS:                            2                      188

Strategy

 

  1. Numerous ____ are likely to be part of an overall ____.
  2. programs, project
  3. policies, project
  4. standing plans, program
  5. projects, program
  6. programs, rule

 

 

ANS:                            2                      188

Strategy

 

  1. ____ define boundaries within which to make a decision.
  2. Programs
  3. Policies
  4. Rules
  5. Procedures
  6. Project

 

 

ANS:                            2                      188

Strategy

 

  1. An example of a ____ is a statement supporting the organization’s efforts in the area of sexual harassment.
  2. procedure
  3. rule
  4. policy
  5. single-use plan
  6. program

 

 

ANS:                            2                      188

Strategy

 

  1. “No food and/or drinks in the classroom” is an example of a
  2. procedure.
  3. rule.
  4. policy.
  5. single-use plan.
  6. project.

 

 

ANS:                            2                      188

Strategy

 

  1. Which of these are true about contingency plans?
  2. They are developed to achieve a set of goals that are unlikely to be repeated in the future.
  3. They are used to provide guidance for tasks performed repeatedly within the organization.
  4. They define company responses to specific situations, such as emergencies or setbacks.
  5. They are most important in the organizations.
  6. None of these.

 

 

ANS:                            1                      191

Strategy

 

 

 

  1. Contingency plans are also referred to as
  2. standing plans.
  3. rules.
  4. scenarios.
  5. procedures.
  6. operationally tactical plans.

 

 

ANS:                            1                      191

Strategy

 

  1. ____ involves looking at trends and discontinuities and imagining possible alternative future to build a framework within which unexpected future events can be managed.
  2. Scenario building
  3. Crisis planning
  4. Contingency planning
  5. Trend management
  6. Caution planning

 

 

ANS:                            2                      191

Strategy

 

  1. ____ enables firms to cope with unexpected events that are so sudden and devastating that they have the potential to destroy the organization if managers aren’t prepared with a quick and appropriate response.
  2. Incident planning
  3. Contingency planning
  4. Strategic planning
  5. Crisis planning
  6. Emergency planning

 

 

ANS:                            2                      192

Strategy

 

  1. The crisis management plan should be a ____ that specifies the actions to be taken, and by whom, if a crisis occurs.
  2. vague, verbal plan
  3. detailed, verbal plan
  4. long, difficult to read plan
  5. vague, written plan
  6. detailed, written plan

 

 

ANS:                            1                      194

Strategy

 

  1. Which of the following is NOT involved in the stages of crisis planning?
  2. Setting up effective communication systems
  3. Creating detailed crisis management plans
  4. Investigating all stakeholders
  5. Designating a crisis management team and spokesperson
  6. Building relationships

 

 

ANS:                            2                      193

Strategy

 

  1. Traditionally, if Stephanie, CEO of Butterfly Pillows, needed to conduct corporate planning, it would be performed by all of the following EXCEPT
  2. central planning departments.
  3. decentralized planning groups.
  4. top executives.
  5. consulting groups.
  6. the president of the company.

 

 

ANS:                            2                      194

Group Dynamics

 

  1. The traditional approach to corporate planning was to
  2. have a decentralized planning staff.
  3. have a centralized planning department.
  4. set up a planning task force.
  5. set up planning committees.
  6. use TQM approach.

 

 

ANS:                            1                      194

Strategy

 

  1. Alabama Airlines has three planning specialists who help division managers develop their own division plans. Serving as consultants to the divisions, the planning specialists give advice about strengths, weaknesses, opportunities, and threats. Alabama Airlines is utilizing what approach to the planning function?
  2. Centralized planning department
  3. Decentralized planning staff
  4. Planning task force
  5. Centralized planning committee
  6. TQM

 

 

ANS:                            2                      194

Strategy

 

  1. Of the strategic management functions, which is considered the most fundamental?
  2. Executing
  3. Analyzing
  4. Controlling
  5. Planning
  6. Leading

 

 

ANS:                            2                      178

Strategy

 

 

 

 

 

 

 

 

  1. The planning process starts with:
  2. A formal mission that defines the organization’s purpose
  3. Tactical planning
  4. Strategic planning
  5. Operational planning
  6. Controlling performance

 

 

ANS:                            2                      179

Strategy

 

  1. Silver Star Automobiles holds monthly planning and operational reviews to ensure that it is on track for meeting organizational goals. This involves which stage of the organizational planning process?
  2. Developing the plan
  3. Translating the plan
  4. Plan operations
  5. Executing the plan
  6. Monitoring and learning

 

 

ANS:                            3                      181

Strategy

 

  1. Which type of plan helps managers implement the overall strategic plan?
  2. Operational
  3. Contingency
  4. Tactical
  5. Crisis
  6. Corporate-level

 

 

ANS:                            2                      183

Strategy

 

  1. In developing a strategy map for her interior design business, Carla has decided to promote employee development by providing online training tools. This involves goals in which strategy map category?
  2. Financial performance goals
  3. Learning and growth goals
  4. Internal business process goals
  5. Customer service goals
  6. Supply chain goals

 

 

ANS:                            3                      185

Strategy

 

  1. Focusing manager and employee efforts on activities that will lead to goal attainment is a benefit of what management method?
  2. Tactical planning
  3. Contingency planning
  4. Single-use planning
  5. Management by objectives
  6. Management by walking around

 

 

ANS:                            2                      188

Strategy

 

  1. Eugene, a human resource manager of a medium-sized technology business, has learned that employees are wasting valuable work time by visiting Facebook and other social media Web sites. As a result, Eugene’s plans to establish a new company policy that limits use of social media to only those tasks that are company related. This would be considered what type of plan?
  2. Project plan
  3. Single-use plan
  4. Tactical plan
  5. Operational plan
  6. Strategic plan

 

 

ANS:                            3                      188

Strategy

 

  1. Which of the following is a commonly-cited limitation of planning?
  2. Plans limit employee motivation and commitment
  3. Plans make resource allocation more difficult
  4. Plans make it more difficult to measure standards of performance
  5. Plans boost intuition and creativity
  6. Plans can create a false sense of security

 

 

ANS:                            2                      190

Strategy

 

  1. Jerrica, a finance manager at LRV industries, is asked by her boss to develop a plan in the event that company sales drop by 20 percent or more. This type of plan is known as a(n):
  2. Contingency planning
  3. Financial planning
  4. Crisis planning
  5. Consumer protection
  6. Environmental planning

 

 

ANS:                            3                      191

Strategy

 

  1. The two stages of crisis planning include:
  2. Prevention and control
  3. Planning and leading
  4. Prevention and preparation
  5. Preparation and control
  6. Leading and organizing

 

 

ANS:                            2                      192

Strategy

 

 

 

 

 

 

 

  1. Jeff is a top manager at a textile factory. He is developing a crisis plan in the event that the company has a toxic spill or accident. Which of the following should Jeff undertake to prepare for such a crisis?
  2. Building relationships with neighboring businesses
  3. Detecting signals from the natural environment
  4. Polling employees on the likelihood of an environmental disaster
  5. Designating a crisis management team in the event of an environmental disaster
  6. Dismantling the company’s ties to the external media

 

 

ANS:                            3                      193

Strategy

 

  1. ___________ are reasonable yet highly ambitious goals that are so clear, compelling, and imaginative that they fire up employees and engender excellence.
  2. Operational goals
  3. Stretch goals
  4. Strategic goals
  5. Tactical goals
  6. Bottom-up goals

 

 

ANS:                            2                      194

Strategy

 

  1. Sam is in charge of strategy control at Lanser’s, a large clothing retailer. He regularly tracks sales in relation to targets, number of products on back order, and percentage of customer service calls resolved within specified time periods. These metrics are known as:
  2. Financial indicators
  3. Tactical goals
  4. Performance dashboards
  5. Balanced scoreboards
  6. Operational standards

 

 

ANS:                            3                      195

Strategy

 

  1. A(n) _________ is a cross-functional group of managers and employees who work together to gain a deep understanding of a specific business issues, with the aim of presenting insights related to that issue.
  2. Espionage team
  3. Functional team
  4. Task force
  5. Project team
  6. Intelligence team

 

 

ANS:                            2                      196

Strategy

 

 

 

  1. At Save-tech, Sophia, director of marketing, is a member of a cross-functional group of managers and employees. The purpose of the group is to gain a deep understanding company’s competitive environment and periodically present these findings to top management. Sophia is involved in what type of team?
  2. Intelligence team
  3. Functional team
  4. Task force
  5. Project team
  6. Espionage team

 

 

ANS:                            3                      196

Strategy

 

  1. One major limitation of goals and plans is:
  2. Goals and plans guide resource allocation
  3. Goals and plans may cause rigidity in a turbulent environment
  4. Goals and plans decrease employee motivation
  5. Goals and plans decrease employee commitment
  6. None of the above

 

 

ANS:                            2                      190

Strategy

 

CASE

 

Scenario – Katelynn Kareem

 

Managers at WXYZ just announced that the new management program would be focused around MBO concepts. Katelynn Kareem had been a manager at WXYZ for ten years and she was not certain if this new MBO approach was going to fit her department. She had strong commitment to achieving the company’s objectives, but she also knew her employees well enough to know that some didn’t share the same commitment.

 

  1. Katelynn can anticipate enjoying the advantages of MBO which include
  2. increased orientation toward goal achievement.
  3. performance can improve at all company levels.
  4. employees are more motivated.
  5. increased orientation toward goal achievement and motivation.
  6. all of these.

 

 

ANS:

 

2                      188

Motivation Concepts

 

 

  1. What can Katelynn expect to be doing during the final step of the MBO process?
  2. Setting goals
  3. Reviewing progress
  4. Appraising overall performance
  5. Defining mission
  6. Developing action plans

 

 

ANS:

 

2                      187                 Strategy

 

 

  1. In the MBO process, after the first step of setting objectives is accomplished, the next step that Katelynn should expect is
  2. reviewing progress toward company goals.
  3. appraising overall performance.
  4. developing action plans.
  5. having a company party to celebrate.
  6. none of these.

 

 

ANS:

 

2                      187                 Strategy

 

 

COMPLETION

 

  1. A(n) ____________________ is a desired future state that the organization attempts to realize.

 

ANS:

 

  1. A(n) ____________________ is a blueprint for goal achievement and specifies the necessary resource allocations, schedules, tasks, and other actions.

 

ANS:

 

  1. The act of determining the organization’s goals and the means for achieving them is referred to as ____________________.

 

ANS:

 

  1. ____________________ and plans are the responsibilities of middle managers.

 

ANS:

 

 

 

 

  1. Operational plans that focus on specific tasks and processes that help to meet tactical and strategic goals are developed by ____________________ managers and supervisors.

 

ANS: r

 

  1. ____________________ describes the organization’s reason for existence.

 

ANS:

 

  1. A(n) ____________________ is a broadly stated definition of basic business scope and operations that distinguishes the organization from others of a similar type.

 

ANS:

 

  1. Broad statements describing where the organization wants to be in the future are called ____________________.

 

ANS:

 

  1. ____________________ define the action steps by which an organization intends to attain its strategic goals.

 

ANS:

 

  1. Goals that define the outcomes that major departments must achieve in order for the organization to reach its overall goals are known as ____________________ goals.

 

ANS:

 

 

 

 

  1. ____________________ are designed to help execute major strategic plans and to accomplish a specific part of the company’s strategy.

 

ANS:

 

  1. The specific results expected from departments, work groups, and individuals are the ____________________ goals.

 

ANS:

 

  1. ____________________ plans are developed at the lower levels of the organization to specify action steps toward achieving operational goals and to support tactical plans.

 

ANS:

 

  1. ____________________ is a method whereby managers and employees define goals for every department, project, and person and use them to monitor subsequent performance.

 

ANS:

 

  1. Managers believe that they are better oriented toward goal achievement when ____________________ is used.

 

ANS:

 

  1. ____________________ plans are used to provide guidance for work-related tasks that are performed repeatedly within the organization.

 

ANS:

 

 

 

  1. ____________________ plans are developed to achieve a set of goals that are not likely to be repeated in the future.

 

ANS:

 

  1. ____________________ are ongoing plans that are used to provide guidance for tasks performed repeatedly within the organization.

 

ANS:

 

  1. Plans that define company responses to specific situations, such as emergencies, setbacks, or unexpected conditions are called ____________________ plans.

 

ANS: o

 

 

  1. A special type of contingency plan that is used when events are sudden and devastating and require immediate response is called ____________________.

 

ANS:

 

2                      192                 Strategy

 

 

  1. The crisis management plan should be a(n) ____________________ that specifies the actions to be taken, and by whom, if a crisis occurs.

 

ANS:

 

  1. A group of planning specialists assigned to major departments and divisions to help managers develop their own strategic plans is called ____________________.

 

SHORT ANSWER

 

  1. List four reasons why planning generally positively affects a company’s performance?

 

ANS:

 

  1. List the five characteristics of effective goals.

 

ANS:

 

  1. List the four major activities that must occur in order for MBO to succeed.

 

ANS:

 

  1. What are the two stages of crisis management?

 

ANS:

 

ESSAY

 

  1. In what ways do plans and goals benefit an organization?

 

ANS:

 

 

  1. Compare the four levels of goals and plans.

 

ANS:

 

  1. Briefly define the characteristics of an effective goal.

 

ANS:

 

 

  1. List and define the four major activities that must occur in order for management by objectives (MBO) to succeed.

 

ANS:

 

 

  1. List three innovative approaches to planning.

 

ANS:

 

 

 

 

Chapter 8—Strategy Formulation and Execution

 

TRUE/FALSE

 

  1. Strategic management largely determines which organizations succeed and which ones struggle.

 

ANS:                            1                      203

Strategy

 

  1. Front-line managers have the final responsibility for strategic planning.

 

ANS:                            2                      204

Strategy

 

  1. Top managers and chief executives have the final responsibility for strategic planning.

 

ANS:                            2                      204

Strategy

 

  1. Research has shown that strategic thinking and planning positively affect a firm’s performance and financial success.

 

ANS:                            1                      203

Strategy

 

  1. Better-Than-The-Rest, Inc.’s ability to market its products better than its competitors is an example of its core competence.

 

ANS:                            2                      204-205

Strategy

 

  1. Core competence is the plan of action that prescribes resource allocation and other activities for dealing with the environment.

 

ANS:                            2                      204

Strategy

 

  1. The essence of formulating strategy is choosing how the organization will be identical to its key competitors in the industry.

 

ANS:                            2                      204

Strategy

 

  1. Competitive advantage refers to the set of decisions and actions used to formulate and implement strategies.

 

ANS:                            2                      204

Strategy

 

 

 

  1. The interaction of Production and Sales working together to produce profit greater than the total of both working separately is an example of synergy.

 

ANS:                            3                      205

Strategy

 

  1. The combination of benefits received and costs paid by the customer refers to value.

 

ANS:                            1                      205

Strategy

 

  1. Value occurs when the organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone.

 

ANS:                            2                      205

Strategy

 

  1. Corporate-level strategy pertains to the organization as a whole.

 

ANS:                            1                      206

Strategy

 

  1. The “How do we compete?” question concerns functional-level strategy.

 

ANS:                            2                      206

Strategy

 

  1. Strategic decisions at the business level concern amount of advertising, direction and extent of R & D, product changes, new product development, equipment and facilities, and expansion or contraction of product lines.

 

ANS:                            2                      207

Strategy

 

  1. The three levels of strategy are business, corporate, and global.

 

ANS:                            2                      206

Strategy

 

  1. Strategy implementation involves the planning and decision making that lead to the establishment of the firm’s goals.

 

ANS:                            1                      208

Strategy

 

  1. The administration and implementation of the strategic plan is strategy execution.

 

ANS:                            2                      208

Strategy

 

 

  1. SWOT analysis includes a review of the internal threats and opportunities.

 

ANS:                            1                      209

Strategy

 

  1. Executives acquire information about external opportunities and strengths from a variety of reports, including budgets, financial ratios, profit and loss statements, and surveys of employee attitudes and satisfaction.

 

ANS:                            1                      209

Strategy

 

  1. Internal analysis examines overall organization structure, management competence and quality, and human resource characteristics.

 

ANS:                            2                      209

Strategy

 

  1. Threats are characteristics of the internal environment that may prevent the organization from achieving its strategic goals.

 

ANS:                            2                      209

Strategy

 

  1. The task environment sectors are the most relevant to strategic behavior and include the behavior of competitors, customers, suppliers, and the labor supply.

 

ANS:                            3                      210

Strategy

 

  1. The mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage for the corporation pertains to portfolio strategy.

 

ANS:                            1                      211

Strategy

 

  1. The BCG (Boston Consulting Group) matrix evaluates SBUs with respect to their business growth rate and geographical location.

 

ANS:                            1                      212

Strategy

 

  1. The question mark exists in a new, rapidly growing industry but has only a small market share, according to the BCG Matrix.

 

ANS:                            1                      212

Strategy

 

 

 

  1. In BCG Matrix, the circle size represents the relative profit made by each business in the company’s portfolio.

 

ANS:                            2                      213

Strategy

 

  1. According to the BCG Matrix, the cash cow has a large market share in a rapidly growing industry.

 

ANS:                            2                      212

Strategy

 

  1. The dog, according to the BCG Matrix, is a poor performer.

 

ANS:                            2                      212

Strategy

 

  1. Diversification is a strategy of moving into new lines of business.

 

ANS:                            1                      213

Strategy

 

  1. The bargaining power of customers is one of Porter’s five competitive forces.

 

ANS:                            1                      215

Strategy

 

  1. According to Porter, the bargaining power of the government is one of the five competitive forces affecting an organization’s competitive environment.

 

ANS:                            1                      215

Strategy

 

  1. Vertical integration means a firm expands into businesses that either produce the supplies needed to make products or that distribute and sell those products to customers.

 

ANS:                            2                      213

Strategy

 

  1. The Internet tends to lower the bargaining power of suppliers.

 

ANS:                            1                      215

Strategy

 

  1. With the leveling force of the Internet and information technology, it has become easier for many companies to find ways to distinguish themselves from their competitors.

 

ANS:                            2                      216

Strategy

 

 

 

  1. Differentiation, cost leadership, and focus are three of Porter’s competitive strategies.

 

ANS:                            2                      216

Strategy

 

  1. Cost leadership is a type of competitive strategy with which the organization seeks to distinguish its products or services from that of competitors.

 

ANS:                            2                      216

Strategy

 

  1. A differentiation strategy can increase rivalry with competitors if buyers are loyal to a company’s brand.

 

ANS:                            2                      216

Strategy

 

  1. Organization’s with a focus strategy concentrate on a specific regional market or buyer group.

 

ANS:                            1                      217

Strategy

 

  1. Strategic partnerships are the current trend, rather than mergers and acquisitions.

 

ANS:                            2                      219

Strategy

 

  1. The world-wide standardization of product design and advertising refers to globalization.

 

ANS:                            1                      220

Strategy

 

  1. The export strategy treats the world as a single global market.

 

ANS:                            2                      221

Strategy

 

  1. The transnational strategy handles markets independently for each country.

 

ANS:                            2                      221-222

Strategy

 

  1. With a multidomestic strategy, a company will achieve the globalization or standardization of marketing and production approaches.

 

ANS:                            2                      221

Strategy

 

 

 

 

  1. A multidomestic strategy standardizes global products/advertising strategies.

 

ANS:                            2                      221

Strategy

 

  1. A transnational strategy seeks to achieve both global integration and national responsiveness.

 

ANS:                            1                      222

Strategy

 

  1. Human resources, in strategy implementation, are the ability to influence people to adopt the new behaviors need.

 

ANS:                            1                      225

Strategy

 

  1. In strategy implementation, leadership is the ability to influence people to adopt the new behaviors needed.

 

ANS:                            1                      224

Strategy

 

  1. Effective implementation is not a necessity if the strategies are truly creative.

 

ANS:                            2                      223

Strategy

 

  1. For successful execution, alignment of everyone in the organization must occur.

 

ANS:                            1                      223-224

Strategy

 

  1. Communication is one of the most important methods for effective strategy execution.

 

ANS:                            1                      225

Strategy

 

  1. A firms’ leadership is responsible for recruiting, selecting, training, transferring, promoting, and laying off employees.

 

ANS:                            2                      225

Strategy

 

  1. Strategic thinking is more important -profit businesses than for non-profit organizations.

 

ANS:                            2                      202

Strategy

 

 

 

 

  1. A director of finance would most likely be interested in executing functional level strategies.

 

ANS:                            2                      202

Strategy

 

  1. Business-level strategies include all of the major functions, including finance, research and development, marketing, and manufacturing.

 

ANS:                            2                      207

Strategy

 

  1. The final stage of the strategic management process is execution of the new strategy.

 

ANS:                            2                      208

Strategy

 

  1. Some companies hire competitive intelligence professionals to scan the external environment and provide data and research on relevant domestic and global trends.

 

ANS:                            2                      209

Strategy

 

  1. Opportunities are characteristics of the internal environment that have the potential to help the organization achieve or exceed its strategic goals.

 

ANS:                            2                      210

Strategy

 

  1. An SBU stands for Star Business Unit.

 

ANS:                            2                      212

Strategy

 

  1. Unrelated diversification occurs when an organization expands into a totally new line of business.

 

ANS:                            2                      213

Strategy

 

  1. As a result of the growth of the Internet, barriers to entry into new markets are now much higher than ever before.

 

ANS:                            2                      215

Information Technologies

 

  1. The concentration of suppliers and the availability of substitute suppliers are significant factors in determining supplier power.

 

ANS:                            2                      215

Strategy

 

  1. Cost leadership firms are more likely to reward employee innovation than differentiation firms or focus firms.

 

ANS:                            2                      215

Strategy

 

  1. In a turbulent business climate, managers should focus on strategic stability rather than flexibility.

 

ANS:                            2                      219

Strategy

 

  1. A transnational strategy combines degrees of both global standardization and national responsiveness.

 

ANS:                            2                      220

Strategy

 

  1. A multidomestic strategy helps an organization reap efficiencies by standardizing product design and manufacturing, using common suppliers, and eliminating overlapping facilities.

 

ANS:                            2                      221

Strategy

 

  1. A top-down management style has been identified as a silent killer of strategy.

 

ANS:                            2                      224

Strategy

 

  1. For the social networking site Facebook, technological know-how and an aggressive and innovative culture are significant strengths to include in its SWOT analysis.

 

ANS:                            3                      210

Strategy

 

MULTIPLE CHOICE

 

  1. The set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals is known as
  2. strategy formulation.
  3. strategic planning.
  4. strategic management.
  5. strategy implementation.
  6. strategy evaluation.

 

 

ANS:                            1                      204

Strategy

 

 

 

  1. The plan of action that prescribes resource allocation and other activities for dealing with the environment and helping the organization attain its goals is known as a(n)
  2. goal.
  3. objective.
  4. mission.
  5. vision.
  6. strategy.

 

 

ANS:                            2                      204

Strategy

 

  1. Which of the following is a business activity that an organization does especially well relative to its competition?
  2. Strategy
  3. Synergy
  4. Cash cow
  5. Core competence
  6. Multidomestic

 

 

ANS:                            1                      204

Strategy

 

  1. The condition that exists when the organization’s parts interact to produce a joint effect that is greater than the sum of the parts acting alone is known as
  2. core competence.
  3. synergy.
  4. value creation.
  5. business-level strategy.
  6. multidomestic strategy.

 

 

ANS:                            1                      205

Strategy

 

  1. ____ can be defined as the combination of benefits received and costs paid by the customer.
  2. Organizational benefits
  3. Value
  4. Cost-benefit diversity
  5. Synergy
  6. Core competence

 

 

ANS:                            1                      205

Strategy

 

  1. When properly managed, ____ can create additional value with existing resources, providing a big boost to the bottom line.
  2. synergy
  3. competitors
  4. government contacts
  5. command structure
  6. cooperation among customers

 

 

ANS:                            2                      205

Strategy

 

  1. When AT&T decided to buy Media One, a cable company, it was pursuing a
  2. functional-level strategy.
  3. internal growth strategy.
  4. multi-domestic strategy.
  5. corporate-level strategy.
  6. business-level strategy.

 

 

ANS:                            3                      206

Strategy

 

  1. When Philip-Morris, the tobacco giant, bought Kraft, Inc., it was pursuing a
  2. corporate-level strategy.
  3. business-level strategy.
  4. functional-level strategy.
  5. multidomestic strategy.
  6. retrenchment strategy.

 

 

ANS:                            2                      206

Strategy

 

  1. Which of the following pertains to the organization as a whole?
  2. Business-level strategy
  3. Functional-level strategy
  4. Corporate-level strategy
  5. Operational-level strategy
  6. Competitive-level strategy

 

 

ANS:                            1                      206

Strategy

 

  1. Sears’ decision to sell off much of its financial services division is an example of a
  2. corporate-level strategy.
  3. business-level strategy.
  4. functional-level strategy.
  5. growth strategy.
  6. stability strategy.

 

 

ANS:                            2                      206

Strategy

 

  1. A corporate-level strategy is concerned with the question
  2. what business are we in?
  3. how do we compete?
  4. how do we support our chosen strategy?
  5. where do we market our products?
  6. should we promote from within?

 

 

ANS:                            2                      206

Strategy

 

 

 

  1. When Coca-Cola introduced Surge, a new citrus soft-drink, what type of strategy was being pursued?
  2. Functional-level strategy
  3. Multi-domestic strategy
  4. Corporate-level strategy
  5. Retrenchment strategy
  6. Business-level strategy

 

 

ANS:                            3                      207

Strategy

 

  1. Ford’s decision to completely redesign its Ford Taurus can be classified as a
  2. corporate level strategy.
  3. business level strategy.
  4. functional level strategy.
  5. retrenchment strategy.
  6. stability strategy.

 

 

ANS:                            2                      207

Strategy

 

  1. Decisions regarding the proper amount of advertising for a particular good or service are related to
  2. corporate-level strategies.
  3. functional-level strategies.
  4. tactical-level strategies.
  5. business-level strategies.
  6. retrenchment strategies.

 

 

ANS:                            2                      207

Strategy

 

  1. Which of these questions is central to a functional-level strategy?
  2. What business are we in?
  3. How do we compete?
  4. How do we support our chosen strategy?
  5. What business do we buy?
  6. Where to market our products?

 

 

ANS:                            1                      206

Strategy

 

  1. ____ refers to the use of managerial tools to direct resources toward the achievement of strategic goals.
  2. Strategy formulation
  3. Strategy coordination
  4. Strategy execution
  5. Strategy control
  6. Strategy planning

 

 

ANS:                            2                      208

Strategy

 

 

 

  1. Which of the following refers to the planning and decision making that lead to the establishment of the organization’s goals and of a specific strategic plan?
  2. Strategy formulation
  3. Strategy implementation
  4. Strategy coordination
  5. Strategy control
  6. SWOT

 

 

ANS:                            2                      208

Strategy

 

  1. Fred has been assigned to conduct a SWOT analysis for his organization, Flintstones, Inc. As part of this assignment, Fred will
  2. conduct an external wage survey.
  3. search for the strengths, weaknesses, opportunities, and threats that impact his firm.
  4. choose a grand strategy for his firm.
  5. do a cost/benefit analysis.
  6. develop a mission.

 

 

ANS:                            2                      209

Strategy

 

  1. Techniques used to monitor external environments include
  2. hiring scanning organizations.
  3. hiring the competitive intelligence professionals.
  4. government reports.
  5. professional journals.
  6. all of these.

 

 

ANS:                            2                      209

Strategy

 

  1. Classy Clay has extremely creative employees who, in the opinion of the organization, keep the company ahead of the competition. The creativity of these employees would be classified as
  2. an internal weakness.
  3. an external opportunity.
  4. an external strength.
  5. an internal strength.
  6. a neutral factor.

 

 

ANS:                            2                      209

Strategy

 

  1. Where does the information about opportunities and threats comes from?
  2. An analysis of the organization’s internal environment
  3. A department by department study of the organization
  4. Scanning the external environments
  5. Employee grievances
  6. Financial ratios of the organization

 

 

ANS:                            2                      210

Strategy

 

  1. Flush Away, Inc. is particularly concerned about pending legislation in Congress that would further regulate their organization. This legislation would be classified as
  2. an external opportunity.
  3. an internal strength.
  4. an external threat.
  5. an external weakness.
  6. a congressional chaos.

 

 

ANS:                            2                      209

Strategy

 

  1. Which of the following is NOT a strength of the social network company, Facebook?
  2. A new legislation that opens the international markets
  3. Technological know-how
  4. An aggressive and innovative culture
  5. A partnership with Microsoft
  6. Work networks are exploding and older generations prefer Facebook

 

 

ANS:                            2                      210

Strategy

 

  1. How business units and product lines fit together in a logical way is the essence of
  2. business-level strategy.
  3. portfolio strategy.
  4. competitive strategy.
  5. financial strategy.
  6. functional strategy.

 

 

ANS:                            2                      211

Strategy

 

  1. The BCG matrix organizes along which of the following dimensions?
  2. Market share and profit
  3. Sales and market share
  4. Business growth rate and market share
  5. Business growth rate and profit
  6. Sales and profits

 

 

ANS:                            2                      212

Strategy

 

  1. Double Click, Inc. has a number of strategic business units. Their hand-held computer unit has a large market share in this rapidly growing industry. Their hand-held computer business would be classified as
  2. a dog.
  3. a star.
  4. a question mark.
  5. a cash cow.
  6. stuck in the middle.

 

 

ANS:                            2                      212

Strategy

 

  1. Which of these is true about the cash cow?
  2. It generates tremendous profits in a rapidly growing industry.
  3. It has a small market share in a rapidly growing industry.
  4. It has a small market share in a slow growth industry.
  5. It has a large market share in a slow growth industry.
  6. It is generally a dead business that should be divested.

 

 

ANS:                            2                      212

Strategy

 

  1. The star has a
  2. large market share in a rapidly growing industry.
  3. large market share in a slow growth industry.
  4. small market share in a rapidly growing industry.
  5. small share of a slow growth market.
  6. moderate market share in a slow growth industry.

 

 

ANS:                            2                      212

Strategy

 

  1. Which of the following portfolio categories is made up of poor performers who command only a small share of a slow growth market?
  2. Star
  3. Cash cow
  4. Question mark
  5. Dog
  6. Cat

 

 

ANS:                            1                      212

Strategy

 

  1. The question mark has a
  2. large market share in a rapidly growing industry.
  3. large market share in a slow growth industry.
  4. small market share in a rapidly growing industry.
  5. small share of a slow growth market.
  6. moderate market share in a slow growth industry.

 

 

ANS:                            2                      212

Strategy

 

  1. Which of these is true about the dog division?
  2. It has a large market share in a rapidly growing industry.
  3. It has a large market share in a slow growth industry.
  4. It has a small market share in a rapidly growing industry.
  5. It has a small share of a slow growth market.
  6. It has a moderate market share in a rapidly growing industry.

 

 

ANS:                            2                      212

Strategy

 

 

  1. Gillette operates numerous strategic business units. Most of its units in the personal care division have low market share but high business growth. These units are classified as _____.
  2. dogs
  3. question marks
  4. stars
  5. cash cows
  6. none of these

 

 

ANS:                            2                      212

Strategy

 

  1. The purpose of ________ is to expand the firm’s business operations to produce new kinds of valuable products and services?
  2. retrenchment.
  3. diversification.
  4. liquidation.
  5. cash cow.
  6. internal growth.

 

 

ANS:                            2                      213

Strategy

 

  1. Which of the following strategies refers to moving into a new business that is related to the company’s existing business activities?
  2. Horizontal integration
  3. Vertical integration
  4. Unrelated diversification
  5. Related diversification
  6. Strategic partnership

 

 

ANS:                            2                      213

Strategy

 

  1. According to the BCG Matrix, which of the following exists in a mature, slow-growth industry, but is a dominant business in the industry, with a large market share?
  2. Question mark
  3. Asterisk
  4. Dog
  5. Star
  6. Cash cow

 

 

ANS:                            2                      212

Strategy

 

  1. Barriers to entry are related to which competitive force?
  2. Rivalry among competitors
  3. Potential new entrants
  4. Threat of substitute products
  5. Bargaining power of buyers
  6. Bargaining power of suppliers

 

 

ANS:                            2                      215

Strategy

 

  1. All of the following are Porter’s competitive forces EXCEPT
  2. differentiation.
  3. bargaining power of buyers.
  4. bargaining power of suppliers.
  5. threat of substitute products.
  6. potential new entrants.

 

 

ANS:                            2                      215

Strategy

 

  1. Which of the following is NOT one of Porter’s competitive forces?
  2. Potential new entrants
  3. Bargaining power of suppliers
  4. Bargaining power of stockholders
  5. Bargaining power of customers
  6. Rivalry among competitors

 

 

ANS:                            2                      215

Strategy

 

  1. Which of Porter’s five forces is influenced by all of the other four?
  2. Threat of substitute products
  3. Rivalry among competitors
  4. Bargaining power of buyers
  5. Potential new entrants
  6. Bargaining power of suppliers

 

 

ANS:                            2                      216

Strategy

 

  1. Which of the following strategies involve an attempt to distinguish the firm’s products or services from others in the industry?
  2. Cost leadership
  3. Differentiation
  4. Focus
  5. Internal growth
  6. Liquidation

 

 

ANS:                            2                      216

Strategy

 

  1. Which strategy can be profitable for an organization when customers are loyal and willing to pay high prices?
  2. Focus
  3. Globalization
  4. Overall cost leadership
  5. Differentiation
  6. Liquidation

 

 

ANS:                            2                      216

Strategy

 

  1. The ____ strategy involves seeking efficient facilities, cutting costs and using tight cost controls to be more efficient than competitors.
  2. cost leadership
  3. differentiation
  4. focus
  5. internal growth
  6. liquidation

 

 

ANS:                            2                      216

Strategy

 

  1. The human resource department at Paula’s Powerwheels is implementing a number of functional level strategies. These strategies include focusing on ways to retain and develop a stable work force and ways to improve efficiency in the organization. These functional-level strategies are consistent with which of the following strategies?
  2. Overall cost leadership
  3. Differentiation
  4. New product development
  5. New market development
  6. Divestiture

 

 

ANS:                            2                      216

Strategy

 

  1. With a(n) ____ strategy, the organization concentrates on a specific regional market or buyer group.
  2. cost leadership
  3. differentiation
  4. focus
  5. internal growth
  6. liquidation

 

 

ANS:                            2                      217

Strategy

 

  1. Mingles, Inc. concentrates its efforts on its target market of 18 to 25 year olds. It is using a(n) ____ strategy.
  2. focus
  3. differentiation
  4. overall cost leadership
  5. multidomestic
  6. universal strategy

 

 

ANS:                            2                      217

Strategy

 

 

 

 

 

 

 

 

  1. If ABC International has standardized its product line throughout the world it is pursuing a
  2. multidomestic strategy.
  3. retrenchment strategy.
  4. diversity strategy.
  5. globalization strategy.
  6. liquidation strategy.

 

 

ANS:                            2                      220

Strategy

 

  1. The assumption that a single global market exists would lead to a
  2. globalization strategy.
  3. multidomestic strategy.
  4. diversity strategy.
  5. domestic strategy.
  6. liquidation strategy.

 

 

ANS:                            2                      220

Strategy

 

  1. Which of the following strategies would be appropriate when the need for both national responsiveness and global integration is low?
  2. Globalization
  3. Multidomestic
  4. Export
  5. Transnational
  6. Import

 

 

ANS:                            2                      220

Strategy

 

  1. ____ refers to the modification of product design and advertising strategies to suit the specific needs of individual countries.
  2. Domestic strategy
  3. Global strategy
  4. Transnational strategy
  5. Multidomestic strategy
  6. Market design strategy

 

 

ANS:                            1                      221

Strategy

 

  1. Which of the following refers to a strategy that combines global coordination to attain efficiency with flexibility to meet specific needs in various countries?
  2. Domestic strategy
  3. Global strategy
  4. Transnational strategy
  5. Multidomestic strategy
  6. Region design strategy

 

 

ANS:                            1                      222

Strategy

 

  1. Some people argue that ____ is the most difficult and most important part of strategic management.
  2. SWOT analysis
  3. strategic formation
  4. strategic execution
  5. strategic analysis
  6. strategy evaluation

 

 

ANS:                            2                      223

Strategy

 

  1. Persuasion, motivation, and changes in cultures and values are examples of which of the dimensions used to implement strategy?
  2. Leadership
  3. Structural design
  4. Human resources
  5. Information and control systems
  6. Compensation

 

 

ANS:                            1                      224

Strategy

 

  1. Which of the following is NOT one of the tools used for putting strategy into action?
  2. Visible leadership
  3. Diversification
  4. Human Resources
  5. Communication
  6. Clear roles and accountability

 

 

ANS:                            2                      225

Strategy

 

  1. The ____ function recruits selects, trains, transfers, promotes, and lays off employees to achieve strategic goals.
  2. production
  3. leadership
  4. information and control systems
  5. structural design
  6. human resource

 

 

ANS:                            2                      225

Strategy

 

  1. To remain competitive, companies should develop strategies that focus on core competencies, providing synergy, and creating value for:
  2. Customers
  3. Suppliers
  4. Stockholders
  5. Employees
  6. Board members

 

 

ANS:                            2                      204

Strategy

 

  1. After Sunshine Systems merged with RTD Enterprises, company executives noticed that due to increased employee collaboration between the two units, costs were down and revenues increased within both areas. This is an example of what business phenomenon?
  2. Strategy execution
  3. Portfolio strategy
  4. Core competency
  5. Synergy
  6. Delivering value

 

 

ANS:                            3                      206

Strategy

 

  1. Janessa is the CEO of a privately-held software company. In defining corporate-level strategies, which of the following questions would she most likely be concerned with?
  2. How do we compete?
  3. What business are we in?
  4. How does marketing support the business?
  5. How can we maximize profits?
  6. How can we make manufacturing processes more efficient?

 

 

ANS:                            3                      206

Strategy

 

  1. ________-level strategy pertains to the major functional departments within the business unit.
  2. Operational
  3. Corporate
  4. National
  5. Business
  6. Functional

 

 

ANS:                            1                      207

Strategy

 

  1. Which of the following lists the strategic management process in proper order?
  2. Formulate strategy; Evaluate strategy; Perform SWOT analysis; Define new mission/goals; Execute strategy; Control strategy
  3. Perform SWOT analysis; Evaluate current mission/goals; Formulate strategy; Execute strategy; Define new mission/goals
  4. Evaluate current mission/goals; Define new mission/goals; Formulate strategy; Execute strategy; Perform SWOT analysis
  5. Evaluate current mission/goals; Perform SWOT analysis; Define new mission/goals; Formulate strategy; Execute strategy
  6. Define new mission/goals; Execute strategy; Formulate strategy; Evaluate new mission/goals; Perform SWOT analysis

 

 

ANS:                            3                      208

Strategy

 

  1. Sherri has been asked to participate on a cross-functional task force that is charged with performing an audit checklist for her advertising firm. The task force will analyze organizational strengths and weaknesses as they apply to the firm. Sherri’s task is to analyze management quality, staff quality, degree of centralization, and organizational charts. This level of analysis pertains to which area of the audit?
  2. Management and organization
  3. Marketing
  4. Human resources
  5. Research and development
  6. Production

 

 

ANS:                            3                      209

Strategy

 

  1. What type of organizational unit has a unique business mission, product line, competitors, and markets relative to other units in the same corporation?
  2. Product unit
  3. Functional unit
  4. Strategic business unit
  5. Operational unit
  6. Business consulting group unit

 

 

ANS:                            2                      211

Strategy

 

  1. Gatekeep Utilities is a subsidiary of GW Enterprises. Gatekeep has a mission and product line that is unique from GW. Gatekeep’s competitors are also very different from those of its parent, and the subsidiary markets to a very different group of customers. As such, Gatekeep can be described as a(n):
  2. Product unit
  3. Functional unit
  4. Operational unit
  5. Strategic business unit
  6. Boston consulting group unit

 

 

ANS:                            3                      211

Strategy

 

  1. When an organization expands into a totally new line of business, it is implementing a strategy of:
  2. Related diversification
  3. Unrelated diversification
  4. Cross-functional diversification
  5. Product line diversification
  6. Industry diversification

 

 

ANS:                            2                      213

Strategy

 

 

 

 

  1. Semway, a regional bank, recently announced that it would soon begin offering financial planning services. This is an example of which of these?
  2. Related diversification
  3. Unrelated diversification
  4. Cross-functional diversification
  5. Product line diversification
  6. Industry diversification

 

 

ANS:                            3                      213

Strategy

 

  1. Which of the following is true regarding the impact of the Internet on Porter’s Five Forces affecting industry competition?
  2. Internet increases barriers to entry
  3. Internet decreases bargaining power of suppliers
  4. Internet shifts power away from end customers
  5. Internet cuts down on substitute product threats
  6. Internet blurs differences among competitors

 

 

ANS:                            2                      215

Strategy

 

  1. Sugar manufacturers have been steadily losing business as a result of increasing use of high-fructose corn syrup in processed foods. However, sugar sales are beginning to increase again in recent months. This example most closely demonstrates which of Porter’s Five Forces?
  2. Bargaining power of suppliers
  3. Bargaining power of consumers
  4. Rivalry among competitors
  5. Threat of new entrants
  6. Threat of new substitutes

 

 

ANS:                            3                      216

Strategy

 

  1. General Products Inc. is a small clothing designer and manufacturer located in the United States. A vast majority of the company’s revenues comes from U.S. sales, although about ten percent of the company’s revenue come from sales to Canada. General Products Inc. can best be described as using which global corporate strategy?
  2. Globalization strategy
  3. Multidomestic strategy
  4. Export strategy
  5. Transnational strategy
  6. Domestic strategy

 

 

ANS:                            3                      221

Strategy

 

 

 

  1. FLY Industries is a global conglomerate company headquartered in the United States that does business in over fifty countries. The company seeks to balance global efficiencies and local responsiveness by hiring locally as well as from home. It can best be described as using which global corporate strategy?
  2. Globalization strategy
  3. Multidomestic strategy
  4. Export strategy
  5. Transnational strategy
  6. Domestic strategy

 

 

ANS:                            3                      221

Strategy

 

  1. People need to understand how their individual actions can contribute to achieving an organizational strategy. This can be accomplished by delegating authority, creating teams, and defining roles. These actions are part of which tool for putting strategy into action?
  2. Visible leadership
  3. Candid communication
  4. Human resources
  5. Clear roles and accountability
  6. Bargaining power of employees

 

 

ANS:                            2                      225

Strategy

 

CASE

 

Scenario – Theresa Teutul

 

Theresa Teutul was an executive with Digital Industries, a leading manufacturer of color televisions. She recognized that the color television market in the late 1970’s was facing significant challenges. After two decades of highly successful development and marketing, the sales of color televisions had slowed and replacing older color television sets largely created her market.

 

  1. Using the logic of the BCG grid, Theresa should recognize that her strategic business unit was in which quadrant?
  2. Star
  3. Cash Cow
  4. Question Mark
  5. Dog
  6. None of these

 

 

ANS:

 

2                      212                 Strategy

 

 

 

 

 

 

 

 

 

 

 

  1. The strategy that the BCG matrix suggests that Theresa should take for this SBU is
  2. invest and grow.
  3. liquidate while still profitable.
  4. ask her astrologer for advice.
  5. keep the SBU healthy and use its excess earnings to invest in other SBU’s.
  6. divestiture.

 

 

ANS:

 

2                      212                 Strategy

 

 

  1. Which one of the following is not one of the competitive forces that Porter recommends that Theresa should recognize?
  2. Potential new entrants
  3. Bargaining power of buyers
  4. Threat of substitute products
  5. Bargaining power of suppliers
  6. All of these are competitive forces.

 

 

ANS:

 

2                      215-216                     Strategy

 

 

Scenario – SS.com

 

Faced with rapidly growing business, Swift Stocks, Inc., a global brokerage company with the largest market share, recently announced that it has established an on-line stock investment and trading subsidiary, SS.com, where investors can trade stocks at the lowest rates in the industry. The .com subsidiary has less than one percent market share but it faces a very high business growth rate. In the brokerage industry the competition is fierce and all players are cutting their on-line commission rates.

 

  1. Swift Stock’s traditional brokerage business could be classified as a
  2. cash cow.
  3. dog.
  4. star.
  5. question mark.
  6. stuck in the middle business.

 

 

ANS:

 

2                      212                 Strategy

 

 

 

 

 

 

 

 

  1. SS.com subsidiary for Swift Stocks can be classified as a
  2. cash cow.
  3. dog.
  4. star.
  5. question mark.
  6. stuck in the middle business.

 

 

ANS:

 

2                      212                 Strategy

 

 

  1. If Swift Stock’s traditional brokerage business were to face a declining business growth, it may need to be reclassified as a
  2. cash cow.
  3. dog.
  4. star.
  5. question mark.
  6. dead business.

 

 

ANS:

 

2                      212                 Strategy

 

 

  1. Swift Stock is following which strategy, according to Porter, through the .com subsidiary?
  2. Stability
  3. Cost leadership
  4. Focus
  5. Differentiation
  6. Retrenchment

 

 

ANS:

 

2                      216                 Strategy

 

 

COMPLETION

 

  1. ____________________ is the set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals.

 

ANS:

 

2                      204                 Strategy

 

 

 

  1. The plan of action that prescribes resource allocation and other activities for dealing with the environment and helping the organization attain its goals is called a(n) ____________________.

 

ANS:

 

2                      204                 Strategy

 

 

  1. A business activity that an organization does particularly well relative to its competition is known as a(n) ____________________.

 

ANS:

 

2                      204                 Strategy

 

 

  1. When organizational parts interact to produce a joint effect that is greater than the sum of the parts acting alone, ____________________ occurs.

 

ANS:

 

2                      205                 Strategy

 

 

  1. The question What business are we in? concerns ____________________ strategy.

 

ANS:

 

2                      206                 Strategy

 

 

  1. The question How do we compete? concerns ____________________ strategy.

 

ANS:

 

2                      206                 Strategy

 

 

  1. The question How do we support the business-level competitive strategy? concerns ____________________ strategy.

 

ANS:

 

2                      206                 Strategy

 

 

 

 

 

 

  1. ____________________ includes the planning and decision making that lead to the establishment of the firm’s goals and the development of a specific strategic plan.

 

ANS:

 

2                      208                 Strategy

 

 

  1. The use of managerial and organizational tools to direct resources toward accomplishing strategic results is known as ____________________.

 

ANS:

 

2                      208                 Strategy

 

 

  1. ____________________ is a type of corporate-level strategy that pertains to the organization’s mix of strategic business units.

 

ANS:

 

2                      211                 Strategy

 

 

  1. In the BCG matrix, the dog has ____________________ market share and ____________________ business growth rate.

 

ANS:

 

2                      212                 Strategy

 

 

  1. The acquisition of a business that is related to current product lines or that takes the corporation into new areas is called ____________________.

 

ANS:

 

2                      213                 Strategy

 

 

  1. In the BCG matrix, the star has a(n) ____________________ market share in a rapidly growing industry.

 

ANS:

 

2                      212                 Strategy

 

 

 

 

  1. The ____________________ strategy involves an attempt to distinguish the firm’s products or services from others in the industry.

 

ANS:

 

2                      216                 Strategy

 

 

  1. With a(n) ____________________ strategy, the organization aggressively seeks efficient facilities, pursues cost reductions, and uses tight cost controls to produce products more efficiently than competitors.

 

ANS:

 

2                      216                 Strategy

 

 

  1. With a(n) ____________________ strategy, the organization concentrates on a specific regional market or buyer group.

 

ANS:

 

2                      217                 Strategy

 

 

  1. The ____________________ is driving and supporting the move toward partnership thinking.

 

ANS:

 

2                      220                 Strategy

 

 

  1. The standardization of product design and advertising strategies throughout the world is called ____________________.

 

ANS:

 

2                      220                 Strategy

 

 

  1. When an organization chooses a(n) ____________________ strategy, it means that business decisions such as product design are made on a country-by-country basis.

 

ANS:

 

2                      221                 Strategy

 

 

 

 

  1. A(n) ____________________ strategy seeks to achieve both global integration and national responsiveness.

 

ANS:

 

2                      222                 Strategy

 

 

  1. The ability to influence people to adopt the new behaviors needed for strategy implementation is called ____________________.

 

ANS:

 

2                      224                 Strategy

 

 

  1. It is argued that ____________________ is the most difficult and most important part of strategic management.

 

ANS:

 

2                      223                 Strategy

 

 

SHORT ANSWER

 

  1. List the three global corporate strategies.

 

ANS:

 

  1. List the four components of a SWOT analysis.

 

ANS:

 

  1. List Porter’s competitive forces.

 

ANS:

 

ESSAY

 

  1. Name and describe the three types of global strategies.

 

ANS:

 

  1. Compare and contrast the three levels of strategy in an organization.

 

ANS:

 

 

  1. In order for companies to remain competitive, their strategies must focus on three things. Describe these three focuses.

 

ANS:

 

  1. Differentiate between strategy formulation and strategy implementation.

 

ANS:

 

  1. Briefly describe the Boston Consulting Group matrix, including its dimensions, quadrants, and strategic recommendations.

 

ANS:

 

 

 

  1. Briefly describe the five competitive forces identified by Michael E. Porter.

 

ANS:

 

  1. Briefly discuss Porter’s three competitive strategies.

 

ANS:

 

 

 

  1. Briefly describe the tools for putting strategy into action.

 

ANS:

 

 

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Mat 540 Week 2 Homework Problems – Chapter 1 and Chapter 11

 

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Complete the following problems from Chapter 1:

 

Problems 2, 4, 12, 14, 20, 22

 

Complete the following problems from Chapter 11:

 

Problems 18, 20, 26, 28, 30

 

 

 

Chapter 1:

 

2) The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is

$60,000. The variable cost of recapping a tire is $9. The company charges $25 to recap a tire.

 

  1. For an annual volume of 12,000 tires, determine the total cost, total revenue, and profit.
  2. Determine the annual break-even volume for the Retread Tire Company operation.

 

4) Evergreen Fertilizer Company produces fertilizer. The company’s fixed monthly cost is $25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for $0.40 per pound. Determine the monthly break-even volume for the company.

 

12) If Evergreen Fertilizer Company in Problem 4 changes the price of its fertilizer from $0.40 per pound to $0.60 per pound, what effect will the change have on the break-even volume?

 

14) If Evergreen Fertilizer Company increases its advertising expenditures by $14,000 per year, what effect will the increase have on the break-even volume computed in Problem 13?

 

20) Annie McCoy, a student at Tech, plans to open a hot dog stand inside Tech’s football stadium during home games. There are seven home games scheduled for the upcoming season. She must pay the Tech athletic department a vendor’s fee of $3,000 for the season. Her stand and other equipment will cost her $4,500 for the season. She estimates that each hot dog she sells will cost her $0.35. She has talked to friends at other universities who sell hot dogs at games. Based on their information and the athletic department’s forecast that each game will sell out, she anticipates that she will sell approximately 2,000 hot dogs during each game.

 

  1. What price should she charge for a hot dog in order to break even?
  2. What factors might occur during the season that would alter the volume sold and thus the

break-even price Annie might charge?

  1. What price would you suggest that Annie charge for a hot dog to provide her with a

reasonable profit while remaining competitive with other food vendors?

 

22) The College of Business at Tech is planning to begin an online MBA program. The initial start-up cost for computing equipment, facilities, course development, and staff recruitment and development is $350,000. The college plans to charge tuition of $18,000 per student per year. However, the university administration will charge the college $12,000 per student for the first 100 students enrolled each year for administrative costs and its share of the tuition payments.

 

  1. How many students does the college need to enroll in the first year to break even?
  2. If the college can enroll 75 students the first year, how much profit will it make?
  3. The college believes it can increase tuition to $24,000, but doing so would reduce enrollment to 35. Should the college consider doing this?

 

Chapter 11

18) The following probabilities for grades in management science have been determined based on past records:

Grade                        Probability

A                     .10

B                     .30

C                     .40

D                     .10

F                     .10

1.00

The grades are assigned on a 4.0 scale, where an A is a 4.0, a B a 3.0, and so on. Determine the expected grade and variance for the course.

 

20) An investment firm is considering two alternative investments, A and B, under possible future sets of economic conditions, good and poor. There is a .60 probability of good economic conditions occurring and a .40 probability of poor economic conditions occurring. The expected gains and losses under each economic type of conditions are shown in the following table:

 

Economic Conditions
Investment Good Poor
A $900,000 -$800,000
B 120,000 70,000

 

Using the expected value of each investment alternative, determine which should be selected.

 

26) The weight of bags of fertilizer is normally distributed, with a mean of 50 pounds and a standard deviation of 6 pounds. What is the probability that a bag of fertilizer will weigh between 45 and 55 pounds.

 

28) The polo Development Firm is building a shopping center. It has informed renters that their rental space will be ready for occupancy in 19 months. If the expected time until the shopping center is completed is estimated to be 14 months with a standard deviation of 4 months, what is the probability that the renters will not be able to occupy in 19 months?

 

30) The manager of the local national Video Store sells videocassette recorders at discount prices. If the store does not have a video recorder in stock when a customer wants to buy one, it will lose the sale because the customer will purchase a recorder from one of the many local competitors. The problem is that the cost of renting warehouse space to keep enough recorders in inventory to meet all demand is excessively high. The manager has determined that if 90% of customers demand for recorders can be met, then the combined cost of lost sales and inventory will be minimized. The manager has estimated that monthly demand for recorders is normally distributed, with a mean of 180 recorders and a standard deviation of 60. Determine the number of recorders the manager should order each month to meet 92% of customer demand.

 

 

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Mat 540 Problems Chapter 12 Homework

Complete the following problems from Chapter 12:

  • Problems 8, 16, 24, 32, 36

Refer to the tree diagram below to complete problem 36:

See email for diagram.

8) A local real estate investor in Orlando is considering three alternative investments: a model, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourists; profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment:

Gasoline Availability
Investment Shortage Stable Supply Surplus
Morel $-8,000 $15,000 $20,000
Restaurant 2,000 8,000 6,000
Theater 6,000 6,000 5,000

Determine the best investment, using the following decision criteria:

  1. Maximax
  2. Maximin
  3. Minimax regret
  4. Hurwicz (α = .4)
  5. Equal likelihood

16) A concession manager at the Tech versus A&M football game must decide whether to have the vendors sell sun visors or umbrellas. There is a 30% chance of rain, a 15% chance of overcast skies, and a 55% chance of sunshine, according to the weather forecast in College Junction, where the game is to be held. The manager estimates that the following profits will result from each decision, given each set of weather conditions;

Weather Conditions
Decision Rain
.30
Overcast
.15
Sunshine
.55
Sun visors $-500 $-200 $1,500
Umbrellas 2,000 0 -900

 

  1. Compute the expected value for each decision and select the best one.
  2. Develop the opportunity loss table and compute the expected opportunity loss for each decision.

24) In problem 13 the Place-Plus real estate development firm has hired an economist to assign a probability for each direction interest rates may take over the next 5 years. The economist has determined that there is a .50 probability that interest rates will decline during the next 5 years is .40, the probability that rates will remain stable, and a .10 probability that rates will increase.

  1. Using the expected value, determine the best project.
  2. Determine the expected value of perfect information.

 

32) The director of career advising at Orange Community College wants to use decision analysis to provide information to help students decide which 2-year degree program they should pursue. The director has set up the following payoff table for six of the most popular and success degree programs at OCC that shows the estimated 5-year gross income ($) from each degree for four future economic conditions:

Economic Conditions
Degree Program Recession Average Good Robust
Graphic design 145,000 175,000 220,000 260,000
Nursing 150,000 180,000 205,000 215,000
Real estate 115,000 165,000 220,000 320,000
Medical Technology 130,000 180,000 210,000 280,000
Culinary Technology 115,000 145,000 235,000 305,000
Computer Information Technology 125,000 150,000 190,000 250,000

 

36) Construct a decision tree for the decision situation described in Problem 25 and indicate the best decision.

 

25) Fenton and Farrah Friendly, husband-and-wife car dealers, are soon going to open a new dealership. They have three offers from a foreign compact car company, from a U.S.-producer of full-sized cars, and from a truck company. The success of each type of dealership will depend on how much gasoline is going to be available during the next few years. The profit from each type of dealership, given the availability of gas, is shown in the following payoff table:

Gasoline Availability
Dealership Shortage

.6

Surplus

.4

Compact cars $300,000 $150,000
Full-sized cars -100,000 600,00
Trucks 120,000 170,000

 

Determine which type of dealership the couple should purchase.

 

 

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MAT 540 Chapter 14 Homework Problems

 

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  1. The Hoylake Rescue Squad receives an emergency call every 1, 2, 3, 4, 5, or 6 hours, according to the following probability distribution. The squad is on duty 24 hours per day, 7 days per week:

Time Between Emergency Calls (hr.)

Probability

1 .05 2 .10 3 .30 4 .30 5 .20 6 .05

1.00

  1. Simulatetheemergencycallsfor3days(notethatthiswillrequirea“running,”or cumulative, hourly clock), using the random number table.
  2. Computetheaveragetimebetweencallsandcomparethisvaluewiththeexpected value of the time between calls from the probability distribution. Why are the results different?
  3. Howmanycallsweremadeduringthe3-dayperiod?Canyoulogicallyassumethatthisis an average number of calls per 3-day period? If not, how could you simulate to determine such an average?

 

 

  1. The time between arrivals of cars at the Petroco Service Station is defined by the following proba- bility distribution:

Time Between Arrivals (min.)

Probability

1 .15 2 .30 3 .40 4 .15

1.00

  1. Simulatethearrivalofcarsattheservicestationfor20arrivalsandcomputetheaverage time between arrivals.
  2. Simulatethearrivalofcarsattheservicestationfor1hour,usingadifferentstreamof random numbers from those used in (a) and compute the average time between arrivals.
  3. Comparetheresultsobtainedin(a)and(b).

 

 

  1. The Dynaco Manufacturing Company produces a product in a process consisting of operations of five machines. The probability distribution of the number of machines that will break down in a week follows:

0 .10 1 .10 2 .20 3 .25 4 .30 5 .05

1.00

  1. Simulatethemachinebreakdownsperweekfor20weeks.
  2. Compute the average number of machines that will break down per week.

 

 

  1. Simulate the decision situation described in Problem 16(a) at the end of Chapter 12 for 20 weeks, and recommend the best decision.

 

 

 

  1. Every time a machine breaks down at the Dynaco Manufacturing Company (Problem 3), either 1, 2, or 3 hours are required to fix it, according to the following probability distribution:

Repair Time (hr.)

Probability

1 .30 2 .50 3 .20

1.00

  1. Simulate the repair time for 20 weeks and then compute the average weekly repair time.

 

 

 

 

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MAT 540 Homework Problems Week 4 Chapter 15

 

Chapter 15

  1.   The manager of the Carpet City outlet needs to make an accurate forecast of the demand for Soft Shag carpet (its biggest seller).  If the manager does not order enough carpet from the carpet mill, customers will buy their carpet from one of Carpet City’s many competitors. The manager has collected the following demand data for the past 8 months:
Month Demand for Soft Shag Carpet (1,000 yd.)
1   8
2 12
3   7
4   9
5 15
6 11
7 10
8 12

 

  1. Compute a 3-month moving average forecast for months 4 through 9.
  2. Compute a weighted 3-month moving average forecast for months 4 through 9. Assign weights of 0.55, 0.33, and 0.12 to the months in sequence, starting with the most recent month.
  3. Compare the two forecasts by using MAD.  Which forecast appears to be more accurate?
  1.   The manager of the Petroco Service Station wants to forecast the demand for unleaded gasoline next month so that the proper number of gallons can be ordered from the distributor. The owner has accumulated the following data on demand for unleaded gasoline from sales during the past 10 months:
Month Gasoline Demanded (gal.)
October     800
November     725
December     630
January     500
February     645
March     690
April     730
May     810
June 1,200
July    980

 

  1. Compute an exponentially smoothed forecast, using an α value of 0.30.
  2. Compute the MAPD.
  1.   Emily Andrews has invested in a science and technology mutual fund.  Now she is considering liquidating and investing in another fund.  She would like to forecast the price of the science and technology fund for the next month before making a decision.  She has collected the following data on the average price of the fund during the past 20 months:
Month Fund Price
1 $63 1/4
2   60 1/8
3   61 3/4
4   64 1/4
5   59 3/8
6   57 7/8
7   62 1/4
8   65 1/8
9   68 1/4
10   65 1/2
11   68 1/8
12   63 1/4
13   64 3/8
14   68 5/8
15   70 1/8
16   72 3/4
17   74 1/8
18   71 3/4
19   75 1/2
20   76 3/4

 

  1. Using a 3-month average, forecast the fund price for month 21.
  2. Using a 3-month weighted average with the most recent month weighted 0.60, the next most recent month weighted 0.30, and the third month weighted 0.10, forecast the fund price for month 21.
  3. Compute an exponentially smoothed forecast, using α=0 .40, and forecast the fund price for month 21.
  4. Compare the forecasts in (a), (b), and (c), using MAD, and indicate the most accurate.

 

  1.       Carpet City wants to develop a means to forecast its carpet sales. The store manager believes that the store’s sales are directly related to the number of new housing starts in town. The manager has gathered data from county records on monthly house construction permits and from store records on monthly sales. These data are as follows:
Monthly Carpet Sales (1,000 yd.) Monthly Construction Permits
  5 21
10 35
  4 10
  3 12
  8 16
  2   9
12 41
11 15
  9 18
14 26

 

  1. Develop a linear regression model for these data and forecast carpet sales if 30 construction permits for new homes are filed.
  2. Determine the strength of the causal relationship between monthly sales and new home construction by using correlation.
  1.       The manager of Gilley’s Ice Cream Parlor needs an accurate forecast of the demand for ice cream. The store orders ice cream from a distributor a week ahead; if the store orders too little, it loses business, and if it orders too much, the extra must be thrown away. The manager believes that a major determinant of ice cream sales is temperature (i.e., the hotter the weather, the more ice cream people buy). Using an almanac, the manager has determined the average daytime temperature for 10 weeks, selected at random, and from store records he has determined the ice cream consumption for the same 10 weeks. These data are summarized as follows:
Week Average Temperature

(degrees)

Ice Cream Sold

(gal.)

  1 73 110
  2 65   95
  3 81 135
  4 90 160
  5 75   97
  6 77 105
  7 82 120
  8 93 175
  9 86 140
10 79 121

 

  1. Develop a linear regression model for these data and forecast the ice cream consumption if the average weekly daytime temperature is expected to be 85 degrees.
  2. Determine the strength of the linear relationship between temperature and ice cream consumption by using correlation.
  1. Compute the coefficient of determination for the data in Problem 27 and explain its meaning.

 

 

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MAT 540 Homework Chapter 15 Problems

 

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MAT 540 Homework Problems Week 4 Chapter 15

 

Chapter 15

  1.   The manager of the Carpet City outlet needs to make an accurate forecast of the demand for Soft Shag carpet (its biggest seller).  If the manager does not order enough carpet from the carpet mill, customers will buy their carpet from one of Carpet City’s many competitors. The manager has collected the following demand data for the past 8 months:
Month Demand for Soft Shag Carpet (1,000 yd.)
1   8
2 12
3   7
4   9
5 15
6 11
7 10
8 12

 

  1. Compute a 3-month moving average forecast for months 4 through 9.
  2. Compute a weighted 3-month moving average forecast for months 4 through 9. Assign weights of 0.55, 0.33, and 0.12 to the months in sequence, starting with the most recent month.
  3. Compare the two forecasts by using MAD.  Which forecast appears to be more accurate?
  1.   The manager of the Petroco Service Station wants to forecast the demand for unleaded gasoline next month so that the proper number of gallons can be ordered from the distributor. The owner has accumulated the following data on demand for unleaded gasoline from sales during the past 10 months:
Month Gasoline Demanded (gal.)
October     800
November     725
December     630
January     500
February     645
March     690
April     730
May     810
June 1,200
July    980

 

  1. Compute an exponentially smoothed forecast, using an α value of 0.30.
  2. Compute the MAPD.
  1.   Emily Andrews has invested in a science and technology mutual fund.  Now she is considering liquidating and investing in another fund.  She would like to forecast the price of the science and technology fund for the next month before making a decision.  She has collected the following data on the average price of the fund during the past 20 months:
Month Fund Price
1 $63 1/4
2   60 1/8
3   61 3/4
4   64 1/4
5   59 3/8
6   57 7/8
7   62 1/4
8   65 1/8
9   68 1/4
10   65 1/2
11   68 1/8
12   63 1/4
13   64 3/8
14   68 5/8
15   70 1/8
16   72 3/4
17   74 1/8
18   71 3/4
19   75 1/2
20   76 3/4

 

  1. Using a 3-month average, forecast the fund price for month 21.
  2. Using a 3-month weighted average with the most recent month weighted 0.60, the next most recent month weighted 0.30, and the third month weighted 0.10, forecast the fund price for month 21.
  3. Compute an exponentially smoothed forecast, using α=0 .40, and forecast the fund price for month 21.
  4. Compare the forecasts in (a), (b), and (c), using MAD, and indicate the most accurate.

 

  1.       Carpet City wants to develop a means to forecast its carpet sales. The store manager believes that the store’s sales are directly related to the number of new housing starts in town. The manager has gathered data from county records on monthly house construction permits and from store records on monthly sales. These data are as follows:
Monthly Carpet Sales (1,000 yd.) Monthly Construction Permits
  5 21
10 35
  4 10
  3 12
  8 16
  2   9
12 41
11 15
  9 18
14 26

 

  1. Develop a linear regression model for these data and forecast carpet sales if 30 construction permits for new homes are filed.
  2. Determine the strength of the causal relationship between monthly sales and new home construction by using correlation.
  1.       The manager of Gilley’s Ice Cream Parlor needs an accurate forecast of the demand for ice cream. The store orders ice cream from a distributor a week ahead; if the store orders too little, it loses business, and if it orders too much, the extra must be thrown away. The manager believes that a major determinant of ice cream sales is temperature (i.e., the hotter the weather, the more ice cream people buy). Using an almanac, the manager has determined the average daytime temperature for 10 weeks, selected at random, and from store records he has determined the ice cream consumption for the same 10 weeks. These data are summarized as follows:
Week Average Temperature

(degrees)

Ice Cream Sold

(gal.)

  1 73 110
  2 65   95
  3 81 135
  4 90 160
  5 75   97
  6 77 105
  7 82 120
  8 93 175
  9 86 140
10 79 121

 

  1. Develop a linear regression model for these data and forecast the ice cream consumption if the average weekly daytime temperature is expected to be 85 degrees.
  2. Determine the strength of the linear relationship between temperature and ice cream consumption by using correlation.
  1. Compute the coefficient of determination for the data in Problem 27 and explain its meaning.

 

 

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MAT 540 Chapter 14 Homework Problems

 

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  1. The Hoylake Rescue Squad receives an emergency call every 1, 2, 3, 4, 5, or 6 hours, according to the following probability distribution. The squad is on duty 24 hours per day, 7 days per week:

Time Between Emergency Calls (hr.)

Probability

1 .05 2 .10 3 .30 4 .30 5 .20 6 .05

1.00

  1. Simulatetheemergencycallsfor3days(notethatthiswillrequirea“running,”or cumulative, hourly clock), using the random number table.
  2. Computetheaveragetimebetweencallsandcomparethisvaluewiththeexpected value of the time between calls from the probability distribution. Why are the results different?
  3. Howmanycallsweremadeduringthe3-dayperiod?Canyoulogicallyassumethatthisis an average number of calls per 3-day period? If not, how could you simulate to determine such an average?

 

 

  1. The time between arrivals of cars at the Petroco Service Station is defined by the following proba- bility distribution:

Time Between Arrivals (min.)

Probability

1 .15 2 .30 3 .40 4 .15

1.00

  1. Simulatethearrivalofcarsattheservicestationfor20arrivalsandcomputetheaverage time between arrivals.
  2. Simulatethearrivalofcarsattheservicestationfor1hour,usingadifferentstreamof random numbers from those used in (a) and compute the average time between arrivals.
  3. Comparetheresultsobtainedin(a)and(b).

 

 

  1. The Dynaco Manufacturing Company produces a product in a process consisting of operations of five machines. The probability distribution of the number of machines that will break down in a week follows:

0 .10 1 .10 2 .20 3 .25 4 .30 5 .05

1.00

  1. Simulatethemachinebreakdownsperweekfor20weeks.
  2. Compute the average number of machines that will break down per week.

 

 

  1. Simulate the decision situation described in Problem 16(a) at the end of Chapter 12 for 20 weeks, and recommend the best decision.

 

 

 

  1. Every time a machine breaks down at the Dynaco Manufacturing Company (Problem 3), either 1, 2, or 3 hours are required to fix it, according to the following probability distribution:

Repair Time (hr.)

Probability

1 .30 2 .50 3 .20

1.00

  1. Simulate the repair time for 20 weeks and then compute the average weekly repair time.

 

 

 

 

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Mat 540 Problems Chapter 12 Homework

Complete the following problems from Chapter 12:

  • Problems 8, 16, 24, 32, 36

Refer to the tree diagram below to complete problem 36:

See email for diagram.

8) A local real estate investor in Orlando is considering three alternative investments: a model, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourists; profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment:

Gasoline Availability
Investment Shortage Stable Supply Surplus
Morel $-8,000 $15,000 $20,000
Restaurant 2,000 8,000 6,000
Theater 6,000 6,000 5,000

Determine the best investment, using the following decision criteria:

  1. Maximax
  2. Maximin
  3. Minimax regret
  4. Hurwicz (α = .4)
  5. Equal likelihood

16) A concession manager at the Tech versus A&M football game must decide whether to have the vendors sell sun visors or umbrellas. There is a 30% chance of rain, a 15% chance of overcast skies, and a 55% chance of sunshine, according to the weather forecast in College Junction, where the game is to be held. The manager estimates that the following profits will result from each decision, given each set of weather conditions;

Weather Conditions
Decision Rain
.30
Overcast
.15
Sunshine
.55
Sun visors $-500 $-200 $1,500
Umbrellas 2,000 0 -900

 

  1. Compute the expected value for each decision and select the best one.
  2. Develop the opportunity loss table and compute the expected opportunity loss for each decision.

24) In problem 13 the Place-Plus real estate development firm has hired an economist to assign a probability for each direction interest rates may take over the next 5 years. The economist has determined that there is a .50 probability that interest rates will decline during the next 5 years is .40, the probability that rates will remain stable, and a .10 probability that rates will increase.

  1. Using the expected value, determine the best project.
  2. Determine the expected value of perfect information.

 

32) The director of career advising at Orange Community College wants to use decision analysis to provide information to help students decide which 2-year degree program they should pursue. The director has set up the following payoff table for six of the most popular and success degree programs at OCC that shows the estimated 5-year gross income ($) from each degree for four future economic conditions:

Economic Conditions
Degree Program Recession Average Good Robust
Graphic design 145,000 175,000 220,000 260,000
Nursing 150,000 180,000 205,000 215,000
Real estate 115,000 165,000 220,000 320,000
Medical Technology 130,000 180,000 210,000 280,000
Culinary Technology 115,000 145,000 235,000 305,000
Computer Information Technology 125,000 150,000 190,000 250,000

 

36) Construct a decision tree for the decision situation described in Problem 25 and indicate the best decision.

 

25) Fenton and Farrah Friendly, husband-and-wife car dealers, are soon going to open a new dealership. They have three offers from a foreign compact car company, from a U.S.-producer of full-sized cars, and from a truck company. The success of each type of dealership will depend on how much gasoline is going to be available during the next few years. The profit from each type of dealership, given the availability of gas, is shown in the following payoff table:

Gasoline Availability
Dealership Shortage

.6

Surplus

.4

Compact cars $300,000 $150,000
Full-sized cars -100,000 600,00
Trucks 120,000 170,000

 

Determine which type of dealership the couple should purchase.

MAT 540 Week 1 Homework Problems

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Mat 540 Week 2 Homework Problems – Chapter 1 and Chapter 11

 

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Complete the following problems from Chapter 1:

 

Problems 2, 4, 12, 14, 20, 22

 

Complete the following problems from Chapter 11:

 

Problems 18, 20, 26, 28, 30

 

 

 

Chapter 1:

 

2) The Retread Tire Company recaps tires. The fixed annual cost of the recapping operation is

$60,000. The variable cost of recapping a tire is $9. The company charges $25 to recap a tire.

 

  1. For an annual volume of 12,000 tires, determine the total cost, total revenue, and profit.
  2. Determine the annual break-even volume for the Retread Tire Company operation.

 

4) Evergreen Fertilizer Company produces fertilizer. The company’s fixed monthly cost is $25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for $0.40 per pound. Determine the monthly break-even volume for the company.

 

12) If Evergreen Fertilizer Company in Problem 4 changes the price of its fertilizer from $0.40 per pound to $0.60 per pound, what effect will the change have on the break-even volume?

 

14) If Evergreen Fertilizer Company increases its advertising expenditures by $14,000 per year, what effect will the increase have on the break-even volume computed in Problem 13?

 

20) Annie McCoy, a student at Tech, plans to open a hot dog stand inside Tech’s football stadium during home games. There are seven home games scheduled for the upcoming season. She must pay the Tech athletic department a vendor’s fee of $3,000 for the season. Her stand and other equipment will cost her $4,500 for the season. She estimates that each hot dog she sells will cost her $0.35. She has talked to friends at other universities who sell hot dogs at games. Based on their information and the athletic department’s forecast that each game will sell out, she anticipates that she will sell approximately 2,000 hot dogs during each game.

 

  1. What price should she charge for a hot dog in order to break even?
  2. What factors might occur during the season that would alter the volume sold and thus the

break-even price Annie might charge?

  1. What price would you suggest that Annie charge for a hot dog to provide her with a

reasonable profit while remaining competitive with other food vendors?

 

22) The College of Business at Tech is planning to begin an online MBA program. The initial start-up cost for computing equipment, facilities, course development, and staff recruitment and development is $350,000. The college plans to charge tuition of $18,000 per student per year. However, the university administration will charge the college $12,000 per student for the first 100 students enrolled each year for administrative costs and its share of the tuition payments.

 

  1. How many students does the college need to enroll in the first year to break even?
  2. If the college can enroll 75 students the first year, how much profit will it make?
  3. The college believes it can increase tuition to $24,000, but doing so would reduce enrollment to 35. Should the college consider doing this?

 

Chapter 11

18) The following probabilities for grades in management science have been determined based on past records:

Grade                        Probability

A                     .10

B                     .30

C                      .40

D                     .10

F                      .10

1.00

The grades are assigned on a 4.0 scale, where an A is a 4.0, a B a 3.0, and so on. Determine the expected grade and variance for the course.

 

20) An investment firm is considering two alternative investments, A and B, under possible future sets of economic conditions, good and poor. There is a .60 probability of good economic conditions occurring and a .40 probability of poor economic conditions occurring. The expected gains and losses under each economic type of conditions are shown in the following table:

 

Economic Conditions
Investment Good Poor
A $900,000 -$800,000
B 120,000 70,000

 

Using the expected value of each investment alternative, determine which should be selected.

 

26) The weight of bags of fertilizer is normally distributed, with a mean of 50 pounds and a standard deviation of 6 pounds. What is the probability that a bag of fertilizer will weigh between 45 and 55 pounds.

 

28) The polo Development Firm is building a shopping center. It has informed renters that their rental space will be ready for occupancy in 19 months. If the expected time until the shopping center is completed is estimated to be 14 months with a standard deviation of 4 months, what is the probability that the renters will not be able to occupy in 19 months?

 

30) The manager of the local national Video Store sells videocassette recorders at discount prices. If the store does not have a video recorder in stock when a customer wants to buy one, it will lose the sale because the customer will purchase a recorder from one of the many local competitors. The problem is that the cost of renting warehouse space to keep enough recorders in inventory to meet all demand is excessively high. The manager has determined that if 90% of customers demand for recorders can be met, then the combined cost of lost sales and inventory will be minimized. The manager has estimated that monthly demand for recorders is normally distributed, with a mean of 180 recorders and a standard deviation of 60. Determine the number of recorders the manager should order each month to meet 92% of customer demand.

 

 

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ACC 557 Discussion Questions Week 1-11

ACC 557 Discussion Questions Week 1-11 (A Graded)

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Week 1

 

DQ 1

“Improper or Illegal Methods” Please respond to the following:

 

From the e-Activity, identify the company, the accounting impropriety or illegality, how it was detected, the outcome, and propose a strategy that might have prevented the situation. Indicate how the strategy should be implemented.

Assess the impact to the company’s financial performance based on the impropriety and the resulting effect to stakeholder confidence in management, recommending how the company can minimize the resulting impact to the business.

 

DQ 2

“General Accounting Principles” Please respond to the following:

 

“Bookkeeping and accounting are the same.” In terms of your role in the provision of financial services, present data to support the accuracy of this statement and support your position.

Analyze the accounting equation as a concept that underpins the work of professional accountants and how an understanding of the equation can impact business decision making.

 

Week 2

DQ 1

“Sarbanes-Oxley Act (SOX)” Please respond to the following:

 

From the e-Activity, recommend how the SOX framework can ensure reliable and complete financial information and how accounting professionals have benefitted from its use. Provide support for your response.

Evaluate how the SOX has reinforced investors’ and creditors’ confidence in companies and how these individuals can take steps to verify the accuracy of the financial statements of potential investments or loans. Provide support for your rationale.

 

DQ 2

“Accounting for a Specific Circumstance” Please respond to the following:

 

From the e-Activity research you gathered, analyze how you, as the Chief Financial Officer (CFO) of a “big box store” that has potential pollution, environmental-disposal, or demolition problems, would handle these costs in your financial statements and communicate this proposed plan to your colleagues on the management team. Indicate how any resistance would be overcome. Support your stance with the information that you obtained through your research.

Recommend the advantages and disadvantages of recording the above-referenced costs in the financial statements and how this might alter the company’s public image.

 

Week 3

DQ 1

“Researching Financial Information” Please respond to the following:

 

From the e-Activity, analyze one company’s financial position and determine whether or not the stock potential will rise, remain stable, or decrease in value. Determine whether you would invest in it or not at this time. Provide a rationale for your response.

Assess how profitable the company has been over the past 5 years and determine how you would advise the company about its future profitability potential.

 

DQ 2

Most people are familiar with cash as a form of compensation to employees. To conserve cash, companies have devised creative methods (gift cards, barter,stock options, bonuses, free meals, etc) to pay employees and independent contractors. Using the Internet, analyze non-cash forms of compensation to employees and/or independent contractors.

As a CFO of a new company, analyze non-traditional compensation (or fringe benefits) to conserve cash.

Discuss the advantages and disadvantages to using this type of benefit. For instance, assess the impact to employee morale, fraud, etc.

 

Week 4

DQ 1

“Accounting Methods” Please respond to the following:

 

Analyze the risks to merchandising that a business may experience and how they might be minimized. Determine if automation of accounting has had a positive or negative impact on business, in general, and how you arrived at that conclusion.

Create a corporate policy designed to minimize inventory shrinkage related to theft, stocking errors, shipping errors, etc., indicating how the policy will be enforced and procedures that may need to be implemented.

 

DQ 2

“Inventories” Please respond to the following:

 

Imagine you are accountable for a franchise fast-food restaurant. Evaluate the best method of inventory costing and make a recommendation to the company’s leaders about why it is best suited for your franchise fast-food restaurant to reduce the possibility of employee theft of product or other shrinkage concerns.

Inventory control requires constant attention. Propose a set of guidelines that reflect the necessary monitoring controls for three distinct types of business (e.g., a shoe retailer, a physician’s office, and a food vending truck) to minimize loss and waste. Indicate how each control will minimize risk of inventory loss.

 

Week 5

DQ 1

“Internal Controls” Please respond to the following:

 

From the e-Activity, analyze the situation from the company you selected and the internal controls that may have been compromised to allow the problem to occur and the resulting financial impact to the business. Propose a plan to prevent this type of situation in the future.

Match the situation with the primary components of the fraud triangle factor (opportunity, financial pressure, or rationalization) that best describes it and specifically create strategies to address this component of the triangle to prevent recurrence for the above-mentioned company.

 

DQ 2

“Receivables” Please respond to the following:

 

Assess the external and internal factors that influence credit policy and decision making within a company that extends credit to its customer when providing a good or service on account. Indicate the factor of most significance in today’s business environment. Provide support for your rationale.

Assuming that a certain percentage of customers will be deemed high risk, recommend a strategy to minimize a company’s bad debt exposure. Indicate how the company would implement the strategy. Provide support for your recommendation.

 

Week 6

DQ 1

“Information Protection and Privacy” Please respond to the following:

 

Based on the e-Activity, evaluate the circumstances that contributed to the privacy violation, the consequence to the company to the breach, and management’s response to the breach, indicating the appropriateness of the response. Suggest how the company may have presented the breach and / or responded differently once the breach was discovered. Provide support for your rationale.

Assess the ethical considerations for information privacy, indicating how these considerations should be addressed with a corporate policy. Provide support for your rationale.

 

DQ 2

“Debt Covenants” Please respond to the following:

 

Based on your research conducted in the e-Activity, assess the key components of the loan covenant typically used in business loans. Indicate the necessity of each covenant and the likelihood that default will be prevented. Suggest whether or not you agree or disagree with lenders using the covenant approach for protection. Provide a rationale for your position.

Create an alternative strategy for lenders to use to protect themselves for loan default. Indicate how this approach would be more desirable than debt covenants. Provide support for your strategy.

 

Week 7

DQ 1

“Effects of a Merger” Please respond to the following:

 

Based on the company you researched in the e-Activity, assess the key drivers of the merger. Indicate how the merger will most likely create more value for the company stakeholders, indicating whether or not you believe the value will be realized. Provide support for your rationale.

Assess the accounting complexities related to mergers and acquisition, indicating how management accounted for these complexities in the merger you researched. Suggest whether or not you agree or disagree with the accounting approach used in the merger. Provide support for your position.

 

DQ 2

“Retained Earnings” Please respond to the following:

 

The items contained in the Retained Earnings section of a balance sheet are often complex and confusing. Suggest an improvement for the reporting on this information that will help the users of the statement to have a better understanding of the activity. Provide support for your suggestion.

Evaluate what a cumulative loss in the retained earnings section of a company’s balance sheet might indicate about the financial performance in the future, indicating how this may influence decisions made about the company. Provide support for your answer.

 

Week 8

DQ 1

“Venture Capital” Please respond to the following:

 

Based on your research conducted in the e-Activity, evaluate the business decision to use a venture capitalist to raise funds, indicating whether or not you believe the company will benefit from this decision in the long run. Provide support for your position.

Assess the challenges for businesses using the resources of a venture capitalist, given that significant returns on the investment are likely to be impacted by the firm. Indicate how a business can manage these expectations. Provide support for your rationale.

 

DQ 2

“Investment Valuation” Please respond to the following:

 

While US GAAP requires assets to be valued at the lower of cost or market, there is a belief that assets with value fluctuations should be valued at market and adjusted on a regular basis. Create an argument supporting the use of market value for investment valuation. Provide support for your argument.

Assess the potential abuses of companies using a market value approach to investment valuation and how it may impact decisions made by the public relying on the information.

 

Week 9

DQ 1

“Cash Flow Reporting” Please respond to the following:

Given the complexities related to preparing and interpreting the statement of cash flow, evaluate the current requirement under GAAP and IFRS, indicating improvements that you would make to each method’s requirement to better serve the users of the information. Provide a rationale for your changes.

Analyze the impact of erroneous classifications in the Operating Activities section of the statement of cash flows, detailing how the distortion can impact the decisions made by financial statement users. Suggest how these errors may be minimized.

 

DQ 2

“Use of Cash Flows Statements” Please respond to the following:

 

Assess what information may be revealed about the sustainability of a company by review and analysis of a company’s statement of cash flows that may not be revealed in the balance sheet or income statement. Provide support for your rationale.

Create an argument indicating that the statement of cash flows contains the most valuable information related to a company’s performance for users of financial statement information. Provide support for your argument.

 

Week 10

DQ 1

“Financial Analyst Skills” Please respond to the following:

Based on the information presented in the e-Activity, recommend the skills that are required to be a successful Financial Analyst, indicating how the role of a Financial Analyst adds value to a company. Provide support for your answer.

Assess the key ratios used by Financial Analyst to evaluate the financial performance of company, indicating the ratio that you believe to be most indicative of future performance. Provide support for your rationale.

 

DQ 2

“Financial Analysis” Please respond to the following:

Determine three key ratios that should be used when evaluating the financial performance of a company, indicating what information this will reveal to an analyst and the impact to decisions made about the company.

Given that financial analysis is reactive based on events that have already occurred, suggest how financial analysis may obtain information to be proactive to the decision-making process. Provide support for your rationale.

 

Week 11

DQ 1

“Course Wrap-Up” Please respond to the following:

Explain two concepts in this course that provided the most value to you.

Indicate how these two new areas of knowledge will benefit you in your current job or future career / endeavors.

 

DQ 2

“Financial Accounting” Please respond to the following:

Predict one major change in financial accounting that may likely occur within the next 10 years.

As a CFO, recommend how you would integrate these changes into your business.

 

FIN 534 Discussion Questions Week 1-11 Latest

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FIN 534 Week 1-11 Discussion Questions Solved

 

Week 1 DQ 1

Discussion 1: An Overview of Financial Management.

  1. In your judgment, what were the principal causes of the recent financial crisis and Great Recession?  Would you include Government policies that encouraged housing purchases for those who could not afford them, artificially low interest rates implemented by the Federal Reserve, banks and mortgage brokers who were greedy, the failure of Government regulators to provide proper oversight to the banks and other financial institutions, individuals who borrowed and spent more than they should have, or some other causes?

.

  1. From the e-Activity, examine ethical behavior within firms in relation to financial management.  Provide at least two (2) recent(in the last 5 years) examples (other than Enron, WorldCom, and Bernie Madoff) of companies that have been guilty of ethics-based malfeasance related to financial management.  What were the specific sanctions that were imposed and explain why the sanctions and penalties were appropriate?

.

 

  1. From the scenario (Scenario Topic: The primary objective of the corporation is value maximization), what are at least two (2) actions that Trevose Fitness Center (TFC) could take in order to raise capital that will, in turn, enable it to achieve its expansion goals?  How can you defend your response?  Support your observations with at least two (2) recent and real-world examples of implementations of these same actions?

 

 

 

Week 2 DQ 1

The annual report is agood place to for managers to start in the assessment of the companys future and future oopertions.  The annual reports usuallly includes the income statement, balance sheet, statement of cash flow and statement of strockholder equity.  The actual data shows what happened to the company from a financial standpoint.  The interpretion of the the financial data can show why the things happened they way it did.  Combining the written and quantitative data will give the people in charge insight as to which moves to carry out next.  Analysis of financial data is an art so not everyone’s picture of the company’s health will match exactly. The read of the staements must be accurate enough to give the right impression to the stakeholders.

Brgham, E. and Ehrhardt, M. (2014).  Financial Management 14th edition.

Question 2

One Partnerships are nadvantage of a partnership as opposed to a corporation is that partnerships themselves are not taxed. Partneships are know as pass through entities.  The taxes owed are incorporated into the owner’s personal income taxes.   taxes for corporationscan be very complicated since the corp. is an entity all its own subject to the rules of the particular state of origin so filing taxes can become a monumental task.  In addition to having a favorable edge in simplicity, the taxes are less for partneships because corporations are taxed twice. The corportion itself is taxed on the income generated.   The profits earned by the corporation are divided among stockholders as dividends who are taxed again on their personal income taxes.

SBA.gov

 

 

 

Week 3 DQ 1

Discussion 1: Time Value of Money and Bond Valuation

.

  1. Please respond to the following:

Starting with your current situation, what must you do to ensure an annual retirement income of $60,000 starting at age 65?  Make sure that you submit calculations that support the conclusions (you may use the Excel retirement calculators that are provided, online retirement calculators, or develop you own Excel solution).

.

  1. What are the advantages and disadvantages of a call provision from the viewpoints of both a firm and its bondholders?  If you were the CEO of a firm, would you recommend a call provision for a new bond issue?  Why or why not?  Can you identify a recent bond issue that has a call provision fund?

.

  1. From the Scenario and e-Activity, recommend two (2) bonds that you believe TFC should invest in, and provide rationale for your recommendations?  Make sure that you identify the issuers of the bonds, the coupon rates, the maturity dates, the yields to maturity, the present prices of the bonds, etc.?

 

 1 Intro TVM Retirement Calculators 0713.docx 

2 Basic Retirement Estimator 012012.xlsx 

3 Retirement Estimator PB 012012.xlsx 

4 Basic Retirement Estimator Inflation 012713.xlsx 

 

 

Week 4 DQ 1

  1. Assume that you own a sizeable investment portfolio that is invested exclusively in a broad-based stock market index fund.  Assume also that you contemplate adding a sizeable investment in the stock of the company that you have elected to use for Assignment 1 (which is due at the end of Week 9).  What will happen to the overall riskiness of the portfolio, and why, with the addition of the new investment?  What specific indicators support your conclusion?  Should you make the additional investment – why or why not?

.

 

  1. Using the company that you have selected for Assignment No. 1 Financial Research Project (due at the end of Week 9), value a share of the company’s stock using both the (1) constant growth dividend discount model, and (2) a discounted free cash flow model, and compare those values to the current trading price of a share of the stock?  Is the stock undervalued or overvalued?  Carefully explain the assumptions used in the valuations and the rationale for your response? (You may usehttp://www.valuepro.netfor the discounted free cash flow valuation model.)

 

 

Week 5 DQ 1

  1. What are several ways to use stocks and options to create a risk-free hedged portfolio?  Support your answer by providing examples of specific stocks and options that are used to create the portfolio (i.e., what specific instruments are used)?

 

Obtaining Information About Specific Options

 

The Discussion 1 this week requires using specific stocks and specific options to create hedged portfolios.  This information may help you to obtain the necessary information:

 

The CBOE (Chicago Board Options Exchange) is a convenient source of information about stock options.  It is very easy to obtain the “option chain” (listing of all options on a particular stock) by entering the “Ticker Symbol” of the underlying stock.

 

The information about options can be obtained at:

 

http://www.cboe.com/delayedquote/quotetable.aspx

 

 

 

  1. From the scenario, create an estimate of TFC’s weighted average cost of capital (WACC) and its required rate of return?  Should the company expand or not expand; how do you defend your position including specific information from TFC’s financial statements?

 

 

Week 6 DQ 1

  1. Describe a capital budgeting project (i.e., an investment in fixed assets) that might be undertaken by the company that you have selected for Assignment 1.  Make sure that the project has an initial investment in Year 0, followed by a series of annual cash flows for at least seven (7) years.  In addition, determine the discount rate, or hurdle rate, that is appropriate for this project and explain the determination of that rate.

 

Develop your own Excel spreadsheet model that can be used to determine the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI)?

 

The Excel spreadsheet that you develop must use Excel’s automated financial functions for determining the NPV, IRR and MIRR.

 

Following the completion of the spreadsheet analysis, explain whether, or not, the project should be implemented?  Also, discuss what the various indicators (i.e., NPV, IRR, MIRR and PR) mean?

 

For this question, it is necessary to develop your own Excel spreadsheet.  .

.

 

  1. From the scenario, suggest whether TFC should expand to the West Coast first.  Provide a rationale (reasons) for your response in which you cite at least two (2) capital budgeting techniques (e.g., NPV, IRR, MIRR, Payback Period, etc.) that caused you to arrive at your decision.

WK 6 Student Scenario Capital Budget Analysis.xlsx

 

 

Week 7 DQ 1

  1. From the scenario, cite your forecasting conclusions (financial data from TFC’s financial statements and forecasted statements) that support TFC’s to expand to the West Coast market.  Note: the response has to include specific operational, financial, and forecasted data that support the conclusions.

 

Speculate as to whether or not the agency conflicts discussed in the scenario could become a roadblock to your conclusions.  What are the reasons for  your response?

 

 

  1. What are two (two) desired characteristics of a board of directors?  Provide support for your response by explaining how these characteristics usually lead to effective corporate governance.

 

 

 

Week 8 DQ 1

Discussion 1: Distributions to Shareholders and Capital Structure Decisions

  1. Examining the company you selected for Assignment 1, how should it should use its free cash flow for dividend distributions to shareholders or repurchasing of stock?

What theories and policies seem to best explain the shareholder distributions being implemented by the company?  What actual financial data support this observation?

PRINCIPAL DIVIDEND THEORIES

Remember the key question – Does dividend policy affect stock price?

Dividend Irrelevance (Miller and Modigliani)

  1. Investors are concerned about total return, and therefore don’t care if returns come from dividends or stock price appreciation.
  2. Investors have the choice of “Homemade Dividends” or cash from selling shares; or, the investor could reinvest a dividend in more shares.  Either strategy confounds the dividend decisions.

Dividend Relevance

Bird-In-Hand Theory (Gordon and Lintner) –

  1. Presumes that investors believe that dividends are more certain than capital gains – management can control dividends, but can’t directly control a stock’s price.
  2. Assumes that investors value a dollar of dividends more highly than a dollar of capital gains since discount rate for stock paying dividends is lower (less risky).

Tax Differential Theory –

  1. The after-tax return to investors is what matters and this is maximized if tax payments can be lowered or deferred.
  2. The tax changes in 2003 reduced the tax rate for dividends through 2010 (extended for two more years), so that advantage is nullified as it is the same as the long-term capital gains rate, 15%.

Other Perspectives

Residual Dividend Theory –

  1. Flotation costs eliminate the indifference between financing new projects with internally generated funds compared to new external financing (that has flotation costs).
  2. Suggests that dividends are paid only if profits are not used entirely for investment purposes – that is, when there are “residual earnings” after financing new projects.

Clientele Effect –

  1. Due to transaction costs, investors may not want to create “homemade dividends” or buy additional stock.
  2. Investors sort themselves out by their preferences for dividends or capital gains.
  3. That is, firms draw a clientele which has a preference for the firm’s existing or stated dividend policy.

Information Effect –

  1. Investors may use a change in dividend policy as a “signal” about the firm’s financial condition.
  2. A larger than expected dividend could signal the likelihood of improved earnings; a lower than expected dividend may be a signal that earnings may decline.

Agency Costs –

  1. Stock price of a firm controlled by investors who are separate from management may be lower than the stock price of a closely-held firm; this difference in price is the result of agency costs.
  2. Dividend policy may be a tool to reduce agency costs; if dividends are paid, management has to replace the capital with new equity, which will result in closer monitoring by financial markets, auditors, regulators, etc.

Expectations Theory –

  1. Investors form expectations about the amount of forthcoming dividend payments.
  2. Then, investors compare actual dividend to their expected dividend; if there is a difference, investors will use the difference as a clue about future earnings and there will be either an increase, or decrease, in the stock price.

 

  1. Analyze the approaches to capital structure decisions and determine which theory is the most applicable across the widest number of firms. Explain your rationale.

 

Explain which theory of optimal capital structure seems to best explain how the company that you selected for the Writing Assignment maintains its capital structure?  How do actual financial data support your conclusions?

Note: The traditional capital structure theories that are examined in your textbook include: (1) Static Tradeoff Theory, (2) Signaling Theory, (3) Reserve Borrowing Capacity, (4) Pecking Order Theory, (5) Using Debt to Constrain Managers, and (6) Windows of Opportunity.

 

  1. From the scenario, examine the dividend rate that TFC is paying in order to determine if the company should implement a rate adjustment. Suggest whether TFC’s dividends should either (1) stay the same; (2) be increased; (3) or go down. Provide a rationale for your response by providing specific financial information about TFC?

 

 

Week 9 DQ 1

  1. Why might a business not want to hold too much or too little working capital?  (Remember, working capital is current assets, not working capital minus current assets.)

 

Explain if the company that you selected for Assignment 1 has too much, too little, or just the right amount of working capital?  How did you make this determination?

 

 

  1. What are two (2) practical actions that the firm you selected for Assignment 1 can take to shorten its cash conversion cycle?  Does the company need to shorten its cash conversion cycle and how do you know that (calculate the cash conversion cycle using the attached model)?

 

 

  1. What working capital financing strategy is used by the company that you selected for Assignment 1.  What actual financial data support the conclusion?  Make sure that you complete the analysis using the attached Excel model that examines a firm’s working capital financing strategy.

CashConversionCycle0509.xls

2 Examining Working Capital Financing 0814.xlsx

 

 

Week 10 DQ 1

“Multinational Financial Management” Please respond to the following:

  1. Using the company that you have selected for Assignment 1, review its Form 10K report and identify risks that it considers to be associated with its international operations?Which three risks, in your judgment, are the most important and what should the company do about them?  (Note:  If the company you selected does not have international operations, select another company that does have international operations for this analysis.)
  2. From the scenario, select two (2) potential international markets in which TFC may wish to do business.Examine the reasons why TFC might want to consider international expansion and the reasons why it might not want to expand internationally?

 

 

Week 11 DQ 1

  1. Rate the three (3) most important concepts that you learned in this course in order of importance (one (1) being the most important; three (3), the least). Explain the reasons for your ratings.

 

 

  1. What are two (2) applications of knowledge that you have learned in this course that apply to your current position or a future position?

 

 

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FIN 534 Homework Set 2 Solution

FIN 534 Week 4 Homework Set 2 Solution

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FIN 534 Homework Problem Set 2

 

 

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FIN 534 – Homework Set #2

 

Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

 

Use the following information for Questions 1 through 5:

 

Assume that you are nearing graduation and have applied for a job with a local bank. The bank’s evaluation process requires you to take an examination that covers several financial analysis techniques. The first section of the test asks you to address these discounted cash flow analysis problems:

 

  1. What is the present value of the following uneven cash flow stream −$50, $100, $75, and $50 at the end of Years 0 through 3? The appropriate interest rate is 10%, compounded annually.

 

  1. We sometimes need to find out how long it will take a sum of money (or something else, such as earnings, population, or prices) to grow to some specified amount. For example, if a company’s sales are growing at a rate of 20% per year, how long will it take sales to double?

 

  1. Will the future value be larger or smaller if we compound an initial amount more often than annually— for example, every 6 months, or semiannually—holding the stated interest rate constant? Why?

 

  1. What is the effective annual rate (EAR or EFF%) for a nominal rate of 12%, compounded semiannually? Compounded quarterly? Compounded monthly? Compounded daily?

 

  1. Suppose that on January 1 you deposit $100 in an account that pays a nominal (or quoted) interest rate of 11.33463%, with interest added (compounded) daily. How much will you have in your account on October 1, or 9 months later?

 

Use the following information for Questions 6 and 7:

 

A firm issues a 10-year, $1,000 par value bond with a 10% annual coupon and a required rate of return is 10%.

 

  1. What would be the value of the bond described above if, just after it had been issued, the expected inflation rate rose by 3 percentage points, causing investors to require a 13% return? Would we now have a discount or a premium bond?

 

  1. What would happen to the bond’s value if inflation fell and rd declined to 7%? Would we now have a premium or a discount bond?

 

  1. What is the yield to maturity on a 10-year, 9% annual coupon, $1,000 par value bond that sells for $887.00? That sells for $1,134.20? What does a bond selling at a discount or at a premium tell you about the relationship between rd and the bond’s coupon rate?

 

  1. What are the total return, the current yield, and the capital gains yield for the discount bond in Question #8 at $887.00? At $1,134.20? (Assume the bond is held to maturity and the company does not default on the bond.)

 

 

 

 

 

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FIN 534 Homework Set #2                                                                                                                Page 1 of 1

 

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FIN 534 Week 2 Homework Set 1 Solution

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FIN 534 Homework Set 1 – Strayer

Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

Use the following information for Questions 1 through 8:

Assume that you recently graduated and have just reported to work as an investment advisor at the one of the firms on Wall Street. You have been presented and asked to review the following Income

Statement and Balance Sheets of one of the firm’s clients. Your boss has developed the following set of questions you must answer.

Income Statements and Balance Sheet

Balance Sheet 2012 2013 2014

Cash $9,000 $7,282 $14,000

Short-term investments 48,600 20,000 71,632

Accounts receivable 351,200 632,160 878,000

Inventories 715,200 1,287,360 1,716,480

Total current assets $1,124,000 $1,946,802 $2,680,112

Gross fixed assets 491,000 1,202,950 1,220,000

Less: Accumulated depreciation 146,200 263,160 383,160

Net fixed assets $344,800 $939,790 $836,840

Total assets $1,468,800 $2,886,592 $3,516,952

Liabilities and Equity

Accounts payable $145,600 $324,000 $359,800

Notes payable 200,000 720,000 300,000

Accruals 136,000 284,960 380,000

Total current liabilities $481,600 $1,328,960 $1,039,800

Long-term debt 323,432 1,000,000 500,000

Common stock (100,000 460,000 460,000 1,680,936
shares)

Retained earnings 203,768 97,632 296,216

Total equity $663,768 $557,632 $1,977,152

Total liabilities and equity $1,468,800 $2,886,592 $3,516,952

FIN 534 – Homework Set #1

Income Statements 2012 2013 2014

Sales $3,432,000 $5,834,400 $7,035,600

Cost of goods sold except depr. 2,864,000 4,980,000 5,800,000

Depreciation and amortization 18,900 116,960 120,000

Other expenses 340,000 720,000 612,960

Total operating costs $3,222,900 $5,816,960 $6,532,960

EBIT $209,100 $17,440 $502,640

Interest expense 62,500 176,000 80,000

EBT $146,600 ($158,560) $422,640

Taxes (40%) 58,640 -63,424 169,056

Net income $87,960 ($95,136) $253,584

Other Data 2012 2013 2014

Stock price $8.50 $6.00 $12.17

Shares outstanding 100,000 100,000 250,000

EPS $0.88 ($0.95) $1.104

DPS $0.22 0.11 0.22

Tax rate 40% 40% 40%

Book value per share $6.64 $5.58 $7.909

Lease payments $40,000 $40,000 $40,000

FIN 534 – Homework Set #1

Ratio Analysis 2012 2013 Industry
Average

Current 2.3 1.5 2.7

Quick 0.8 0.5 1.0

Inventory turnover 4 4 6.1

Days sales outstanding 37.3 39.6 32.0

Fixed assets turnover 10 6.2 7.0

Total assets turnover 2.3 2 2.5

Debt ratio 35.60% 59.60% 32.0%

Liabilities-to-assets ratio 54.80% 80.70% 50.0%

TIE 3.3 0.1 6.2

EBITDA coverage 2.6 0.8 8.0

Profit margin 2.60% −1.6% 3.6%

Basic earning power 14.20% 0.60% 17.8%

ROA 6.00% −3.3% 9.0%

ROE 13.30% −17.1% 17.9%

Price/Earnings (P/E) 9.7 −6.3 16.2

Price/Cash flow 8 27.5 7.6

Market/Book 1.3 1.1 2.9

1. What is the free cash flow for 2014?

2. Suppose Congress changed the tax laws so that Berndt’s depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow?

3. Calculate the 2014 current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company’s liquidity position in 2013?

4. Calculate the 2014 inventory turnover, days sales outstanding (DSO), fixed assets turnover, and total assets turnover.

5. Calculate the 2014 debt ratio, liabilities-to-assets ratio, times-interest-earned, and EBITDA coverage ratios. What can you conclude from these ratios?

6. Calculate the 2014 profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). What can you say about these ratios?

7. Calculate the 2014 price / earnings ratio, price / cash flow ratio, and market / book ratio.

8. Use the extended DuPont equation to provide a summary and overview of company’s financial condition as projected for 2014. What are the firm’s major strengths and weaknesses?

Strayer FIN 534 Week 2 Homework Problems Set 1

FIN 534 Problems Set 1 Week 2