Chapter_01_Understanding_the_Manager_apos_s_Job
1 _____ can be defined as a set of activities directed at an organization's resources, with the aim of achieving organizational goals in an efficient and
effective manner.
Economics
A theory
Management
Self-dealing
Divestment
2 Which of the following helps make the management process efficient?
Increasing overhead production costs
Using resources in a cost-effective manner
Making management decisions independently of the organization's external environment
Using the majority of resources for sales promotion activities
Using micromanagement techniques
3 A management process is considered to be effective when:
overhead production costs are increased.
the right decisions are made and implemented.
decisions are made independently of the organization's external environment.
the same amount of resources are allocated to all the functions of the organization.
the organization is highly centralized.
4 One of the titles found in the group of middle managers is
director.
vice president.
supervisor.
office manager.
plant manager.
5 Which of the following statements about top managers is true?
They are the largest group of managers in most organizations.
They officially represent their organization to the external environment.
They primarily oversee the day-to-day operations of an organization.
They supervise and coordinate the activities of first-line managers.
They supervise and coordinate the activities of operating employees.
6 Which of the following is the role of top managers in an organization?
Overseeing day-to-day operations
Performing routine administrative tasks
Implementing plans of first-line managers
Creating organizational goals and overall strategy
Coordinating the work of first-line managers
7 _____ make decisions about activities such as investing in research and development (R&D) and entering or abandoning various markets.
Division heads
Limited partners
First-line managers
Middle managers
Top managers
8 A common middle-management title is
chief executive officer (CEO).
division head.
supervisor.
office manager.
coordinator.
9 _____ are probably the largest group of managers in most organizations, and are primarily responsible for implementing the policies and plans of an
organization.
Middle managers
Top managers
The members of the board of directors
First-line managers
Floor supervisors
10 First-line managers
are primarily responsible for implementing the policies and plans developed by top managers.
make decisions about activities such as acquiring other companies and entering or abandoning various
markets.
officially represent their organization to the external environment.
create the organization's goals, overall strategy, and operating policies.
handle administrative duties.
11 Which of the following statements about first-line managers is true?
They are primarily responsible for implementing policies made by top managers.
They are typically involved in creating overall organizational strategies and goals.
They officially represent their organization to the external environment.
They typically spend a large proportion of their time supervising the work of their subordinates.
They make decisions about activities such as acquiring other companies and entering or abandoning various
markets.
12 _____ involves selecting a course of action from a set of alternatives.
Divesting
Controlling
Leading
Decision making
Organizing
13 One of the titles found in the group of first-line managers is
chief executive officer (CEO).
coordinator.
division head.
general manager.
plant superintendent.
14 Determining how a company's activities and resources are to be grouped is called
leading.
controlling.
divesting.
planning.
organizing.
15 Steve works with Beta Pharmaceuticals Inc. He is primarily responsible for overseeing production activities. Tyler is concerned with decisions such as
the number of product units that need to be manufactured, the overall functioning of the production plants, and the quality of products. Steve is most
likely to be a(n) _____ manager.
operations
marketing
human resources
sales
public relations
16 A typical responsibility of operations managers includes
inventory control.
sales promotion.
accounting.
employee development.
benefit systems development.
17 In its simplest form, _____ means setting an organization's goals and deciding how best to achieve them.
coordinating
leading
organizing
controlling
planning
18 Which of the following would be included in the management function of planning?
Selecting the course of action most likely to lead to success
Monitoring progress toward the achievement of goals
Motivating others to higher levels of achievement
Communicating company policies to subordinates
Organizing people and resources
19 _____ managers work in areas such as new product development, promotion, and distribution.
Human resources
Marketing
Plant
Operations
Finance
20 _____ managers are typically involved in recruiting and selecting employees, training and development, designing compensation and benefit systems,
formulating performance appraisal systems, and discharging low-performing and problem employees.
Operations
Human resources
Plant
Marketing
Finance
21 _____ managers work at getting consumers and clients to buy the organization's products or services.
Operations
Marketing
Regional
Financial
Human resources
22 _____ managers are concerned with creating and managing the systems that create an organization's products and services.
Marketing
Human resources
Financial
Operations
First-line
23 _____ are not associated with any particular management specialty.
Office managers
Floor supervisors
Public relations managers
Operations managers
Administrative managers
24 _____ is the set of processes used to get members of an organization to work together to further the interests of the organization.
Planning
Organizing
Controlling
Leading
Decision making
25 The final phase of the management process is _____ which involves monitoring the organization's progress toward its goals.
planning
organizing
leading
controlling
decision making
26 Which of the following positions would be considered a specialized management position?
Human resources manager
Public relations manager
Hospital administrator
Accountant
Marketing manager
27 The management at Loft Corp. has introduced new employment policies. The mangers are now tracking and monitoring the implementation of the new
policies. Which of the following management functions is illustrated in the scenario?
Decision making
Controlling
Organizing
Leading
Planning
28 The skills necessary to accomplish or understand the specific kind of work done in an organization are called _____ skills.
diagnostic
time management
conceptual
technical
decision-making
29 _____ skills refer to the abilities of managers to think in the abstract.
Time management
Technical
Conceptual
Interpersonal
Communication
30 Technical skills
are crucial for top managers more than any other managers.
are nonspecific and broad.
depend on a manager's ability to think in the abstract.
are especially important for first-line managers.
are used the most when making organizational policies.
31 When a manager answers a subordinate's question regarding the process of creating a report from raw data, he is relying on his _____ skills.
abstract
technical
time management
decision-making
interpersonal
32 The ability to motivate others is a(n) _____ skill.
conceptual
technical
communication
interpersonal
diagnostic
33 Lindsey is often intimidated and uncomfortable with her superiors. Lindsey needs to develop her _____ skills to be able to communicate easily with her
superiors.
time management
spatial
interpersonal
conceptual
diagnostic
34 Kelly, a manager, studied the performances of the various business units of her organization. After making an assessment, Maria came to the conclusion
that the overall costs of the organization can be reduced by integrating the functions of two of the business units. This scenario illustrates Kelly's _____
skills.
technical
time management
social
interpersonal
conceptual
35 _____ skills refer to the abilities of managers to visualize the most appropriate response to a situation.
Social
Interpersonal
Technical
Diagnostic
Communication
36 _____ skills refer to a manager's abilities to both effectively convey ideas and information to others and effectively receive ideas and information from
others.
Technical
Abstract
Communication
Diagnostic
Conceptual
37 When a manager writes an email to his employees that provides details about the upcoming annual company picnic, he is most likely to be using his
_____ skills.
conceptual
technical
communication
abstract
spatial
38 Sarah, a manager, has postponed the task of preparing a report as she has realized that she needs to meet a supplier immediately. This scenario illustrates
Sarah's _____ skills.
conceptual
spatial
time management
technical
abstract
39 Jordon, a manager, realizes that many employees are leaving the organization. He identifies inconvenient work timings and some of the new employment
policies as the causes. Jordon decides to introduce better policies and flexible work timings to reduce employee turnover. This scenario illustrates
Jordon's _____ skills.
mechanical
technical
diagnostic
spatial
time management
40 _____ skills refer to a manager's ability to prioritize work, to work efficiently, and to delegate work appropriately.
Diagnostic
Commanding
Decision-making
Time-management
Conceptual
41 A manager who uses the scientific approach to management when making decisions is most likely rely on
instincts.
stereotypes.
personal experience.
intuition.
logic.
42 A _____ is a conceptual framework for organizing knowledge and providing a blueprint for action.
strategy
mnemonic
prediction
theory
doctrine
43 When employees deliberately work at a slower pace than their capabilities, it is called
soldiering.
persevering.
controlling.
planning.
deceiving.
44 Scientific management focuses on
improving the performance of individual workers.
increasing employee turnover.
analyzing the external rather than the internal environment of an organization.
encouraging soldiering among employees.
increasing overhead costs.
45 Lillian Gilbreth was one of the earliest advocates of
the contingency perspective.
scientific management.
administrative management.
Theory X and Theory Y.
the Hawthorne studies.
46 The first person to identify the managerial functions of planning, organizing, leading, and controlling was
Elton Mayo.
Lillian Gilbreth.
Henri Fayol.
Hugo Munsterberg.
Mary Parker Follett.
47 Which of the following focuses on the management of the entire firm as opposed to the jobs of individual workers?
The Contingency perspective
Scientific management
Administrative management
Theory X
The behavioral management perspective
48 Which of the following statements about administrative management is true?
It deals with the jobs of individual employees.
It was first introduced by Frank and Lillian Gilbreth.
It focuses solely on combating soldiering.
It encompasses the concepts of planning, organizing, leading, and controlling.
It is generally concerned with helping the organization produce its products or services more efficiently.
49 The two distinct branches of the _____ perspective are scientific management and administrative management.
behavioral management
systems
classical management
quantitative management
contingency
50 Which of the following statements about the behavioral management perspective is true?
It was first introduced by Max Weber.
It viewed jobs and organizations from a mechanistic point of view.
It was influenced by the industrial psychology movement.
It essentially dealt with job specialization techniques.
It slighted the role of the individual in organizations.
51 The concept of _____, suggested by Weber, is based on a rational set of guidelines for structuring organizations in the most efficient manner.
adhocracy
bureaucracy
technocracy
meritocracy
scientocracy
52 Early advocates of the classical management perspective viewed organizations and jobs from an essentially _____ point of view.
mechanistic
behavioral
humanistic
systematic
contingent
53 _____ is recognized as the father of industrial psychology.
Douglas McGregor
Elton Mayo
Abraham Maslow
Hugo Munsterberg
Henri Fayol
54 The management pioneer who performed the Hawthorne studies at Western Electric was
Lillian Gilbreth.
Elton Mayo.
Henry Gantt.
Frank Gilbreth.
Frederick W. Taylor.
55 In the Hawthorne Studies, workers who overproduced were branded as
operators.
squealers.
rate busters.
chiselers.
producers.
56 Which of the following was one of the findings of the Hawthorne studies?
Workers tend to underperform when they are given special attention or supervision.
Higher pay and incentives are more important to workers than social acceptance.
All the workers in a group work toward achieving productivity targets set by supervisors.
Both individual and social processes play major roles in shaping worker behavior.
Workers in all groups tend to encourage and support members who are overproductive.
57 Which of the following is a Theory Y assumption?
Social processes do not influence the performance of workers.
People are not internally motivated to achieve their goals.
People do not naturally dislike work.
People prefer to be directed, to avoid responsibility, and to want security.
People perform better when they are threatened by the manager.
58 Which of the following assumptions is represented by Theory Y?
People prefer to be directed, to avoid responsibility, and to want security.
People are bright, but under most organizational conditions, their potential is underutilized.
People do not like work and try to avoid it.
The productivity of workers is not affected by social processes at the workplace.
Managers need to be coercive to get work done from their workers.
59 A difference between Theory X and Theory Y is that
Theory X makes positive assumptions.
Theory Y is consistent with the views of scientific management.
Theory Y assumes that people lack ambition.
Theory Y represents the assumptions made by human relations advocates.
Theory Y assumes that people naturally dislike work.
60 A Theory Y assumption is that
incentives rather than social processes influence workers.
managers have to control, direct, coerce, and threaten employees to get them to work toward
organizational goals.
people prefer to be directed, to avoid responsibility, and to want security; they have little ambition.
people are committed to goals to the degree that they receive personal rewards when they reach their
objectives.
people naturally dislike work and try to avoid it.
61 _____ proposed that workers respond primarily to the social context of the workplace, including social conditioning, group norms, and interpersonal
dynamics.
The classical management perspective
The human relations movement
The systems perspective
Management science
The contingency perspective
62 Which of the following is a Theory X assumption?
People will both seek and accept responsibility.
Managers are harsh on their employees.
People have little ambition.
People are internally motivated.
People do not naturally dislike work.
63 Which of the following draws from psychology, sociology, anthropology, economics, and medicine?
Organizational behavior
Scientific management
Administrative management
Systems perspective
Contingency perspective
64 When a manufacturing plant uses mathematical models to plan production and schedule equipment maintenance, it is drawing upon
scientific management.
administrative management.
management science.
the behavioral management perspective.
Theory X assumptions.
65 _____ and _____ are the two branches of the quantitative management perspective.
Scientific management; administrative management
The human relations movement; organizational behavior
Organizational behavior; operations management
Theory X; Theory Y
Management science; operations management
66 The _____ perspective focuses on decision making, cost-effectiveness, mathematical models, and the use of computers.
systems
behavioral management
classical management
contingency
quantitative management
67 Which of the following statements about management science is true?
It is part of the classical management perspective.
It relies on bureaucratic techniques proposed by Max Weber.
It focuses on mathematical representations of reality.
It is concerned with improving the performance of individual workers.
It introduced the piecework pay system.
68 Which of the following statements about operations management is true?
It is more statistically sophisticated than management science.
It exclusively focuses on improving employee attitudes and behavior.
It can be applied more directly to managerial situations than management science.
It relies more on mathematical models than management science.
It cannot be applied to inventory control and production operations of an organization.
69 _____ is considered to be a form of applied management science.
Scientific management
Lean manufacturing
Behavioral management
The human relations movement
Operations management
70 In the context of the systems perspective, an output would be
technological processes.
labor skills.
services.
raw materials.
human resources.
71 In the context of the systems perspective, an input would be
human resources.
losses.
feedback loops.
products.
services.
72 Relatively new management concepts such as supply chain management and new techniques such as enterprise resource planning evolved from the
_____ perspective.
quantitative management
systems
contingency
classical management
behavioral management
73 In the systems perspective, outputs include
raw materials.
controls.
funds.
human resources.
employee attitudes.
74 Which of the following is NOT one of the four basic elements of an organization when viewed as a system?
Feedback
Inputs
Outputs
Transformation processes
Controls
75 _____ is a normal process that leads to system decline.
Economy of scale
Synergy
Entropy
Contingency
Symbiosis
76 _____ suggests that organizational units (or subsystems) may often be more successful working together than working alone.
Chiseling
Operations management
Synergy
Entropy
Soldiering
77 Emilio says, "Employees and situations are unique. Sometimes I get good results by trying one approach, sometimes I decide to do something completely
different." Emilio's statement is best aligned with which of the following management views?
The classical management perspective
Administrative management
Scientific management
Theory X
The contingency perspective
78 The _____ perspective suggests that appropriate managerial behavior in a given situation depends on unique elements in that situation.
behavioral management
quantitative management
systems
contingency
universal
79 In the systems perspective, _____ emphasizes the importance of working together in a cooperative and coordinated fashion.
synergy
entropy
contingency
diversity
uniformity
80 A primary objective of management, from a systems perspective, is to continually reenergize the organization to avoid
reciprocity.
collaboration.
diversity.
entropy.
synergy.
81 _____ perspective states that effective managerial behavior in one situation cannot always be generalized to other situations.
The behavioral management
Scientific management
The contingency perspective
Administrative management
The systems perspective
82 Which of the following statements about the contingency perspective is true?
It states that the organizations that are not influenced by their external environments tend to be more
successful than others.
It states that effective managerial behavior in one situation cannot always be generalized to other
situations.
It states that all employees tend to perform better when they are promised higher incentives.
It states that the behavior of employees at work is not influenced by social processes.
It is a part of the classical perspective of management.
83 Which of the following statements best reflects contemporary management trends?
More and more organizations are using quality as a basis for competition.
The service sector of the economy has steadily declined.
Younger people entering the workforce over the past 20 to 30 years are more devoted to work and more
willing to adapt.
The emphasis on business ethics has declined.
The emphasis on management of diversity has declined.
84 Improving the quality of products and services tends to increase
inertia.
entropy.
latency.
productivity.
divestment.
85 The _____ perspective places emphasis on individual attitudes.
contingency
systems
quantitative management
classical management
behavioral management
86 A group of people working together in a structured and coordinated fashion to achieve a set of goals is called a(n) _____.
Answer:
organization
87 A(n) _____ is someone whose primary responsibility is to carry out the management process.
Answer:
manager
88 _____ depend on the manager's ability to think in the abstract.
Answer:
Conceptual skills
89 _____ is part of the planning process and involves selecting a course of action from a set of alternatives.
Answer:
Decision making, a part of the planning process, involves selecting a course of action from a set of alternatives.
90 _____ refer to the manager's abilities both to effectively convey ideas and information to others and to effectively receive ideas and information from
others.
Answer:
Communication skills
91 A(n) _____ is a conceptual framework for organizing knowledge and providing a blueprint for action.
Answer:
theory
92 _____ is a pessimistic and negative view of workers consistent with the views of scientific management.
Answer:
Management Science
93 _____ is concerned with helping the organization more efficiently produce its products or services.
Answer:
Operations management
94 _____ focuses on managing the total organization.
Answer:
Administrative management
95 A system that interacts with its environment is called a(n) _____.
Answer:
open system
96 Describe the four management functions.
Answer:
Regardless of level or area, management involves the four basic functions of planning and decision making, organizing, leading, and controlling.
Planning and Decision Making: In its simplest form, planning means setting an organization's goals and deciding how best to achieve them. Decision
making, a part of the planning process, involves selecting a course of action from a set of alternatives. Planning and decision making help managers
maintain their effectiveness by serving as guides for their future activities. In other words, the organization's goals and plans clearly help managers know
how to allocate their time and resources.
Organizing: Once a manager has set goals and developed a workable plan, his or her next management function is to organize people and the other
resources necessary to carry out the plan. Specifically, organizing involves determining how activities and resources are to be grouped.
Leading: The third basic managerial function is leading. Some people consider leading to be both the most important and the most challenging of all
managerial activities. Leading is the set of processes used to get members of the organization to work together to further the interests of the organization.
Controlling: The final phase of the management process is controlling, or monitoring the organization's progress toward its goals. As the organization
moves toward its goals, managers must monitor progress to ensure that it is performing in such a way as to arrive at its "destination" at the appointed
time.
97 Why do managers study management history and theory?
Answer:
In reality, both theory and history are important to all managers today.
A theory is simply a conceptual framework for organizing knowledge and providing a blueprint for action. Although some theories seem abstract and
irrelevant, others appear very simple and practical. Management theories, which are used to build organizations and guide them toward their goals, are
grounded in reality. Practically any organization that uses assembly lines is drawing on scientific management. Many organizations use the behavioral
perspective to improve employee satisfaction and motivation. And naming a large company that does not use one or more techniques from the
quantitative management perspective would be difficult.
Awareness and understanding of important historical developments are also important to contemporary managers. Understanding the historical context of
management provides a sense of heritage and can help managers avoid the mistakes of others. Most courses in U.S. history devote time to business and
economic developments in this country, including the Industrial Revolution, the early labor movement, and the Great Depression, and to captains of U.S.
industry such as Cornelius Vanderbilt (railroads), John D. Rockefeller (oil), and Andrew Carnegie (steel). The contributions of those and other
industrialists left a profound imprint on contemporary culture. Many managers are also realizing that they can benefit from a greater understanding of
history in general.
98 Discuss the Hawthorne studies in terms of how they were conducted and what the important results were to management practices.
Answer:
Although Hugo Munsterberg and Mary Parker Follett made major contributions to the development of the behavioral approach to management, its
primary catalyst was a series of studies conducted near Chicago at Western Electric's Hawthorne plant between 1927 and 1932. The research, originally
sponsored by General Electric, was conducted by Elton Mayo and his associates. Mayo was a faculty member and consultant at Harvard.
The first study involved manipulating illumination for one group of workers and comparing their subsequent productivity with the productivity of another
group whose illumination was not changed. Surprisingly, when illumination was increased for the experimental group, productivity went up in both
groups. Productivity continued to increase in both groups, even when the lighting for the experimental group was decreased. Not until the lighting was
reduced to the level of moonlight did productivity begin to decline. Another experiment established a piecework incentive pay plan for a group of nine
men assembling terminal banks for telephone exchanges. Mayo and his associates found that the group itself informally established an acceptable level
of output for its members. Workers who overproduced were branded rate busters, and underproducers were labeled chiselers. To be accepted by the
group, workers produced at the accepted level. As they approached this acceptable level of output, workers slacked off to avoid overproducing.
Other studies, including an interview program involving several thousand workers, led Mayo and his associates to conclude that human behavior was
much more important in the workplace than had been previously believed. In the lighting experiment, for example, the results were attributed to the fact
that both groups received special attention and sympathetic supervision for perhaps the first time. The incentive pay plans did not work because wage
incentives were less important to the individual workers than was social acceptance in determining output. In short, individual and social processes
played major roles in shaping worker attitudes and behavior.
99 Match the following numbered items with the most correct response letter.
A response may be used once, more than once, or not at all.
Skills needed to understand the overall workings of an organization and its environment
Conceptual skills
Skills necessary to accomplish or understand the specific kind of work done in an organization
Technical skills
Skills necessary to effectively convey ideas and information to others and to effectively receive ideas and information from others
Communication skills
Skills necessary to communicate with, understand, and motivate both individuals and groups
Interpersonal skills
Skills necessary to correctly recognize and define problems and opportunities and to then select an appropriate course of action to solve problems and
capitalize on opportunities
Decision-making skills
100 Match the following numbered items with the most correct response letter.
A response may be used once, more than once, or not at all.
Suggests that appropriate managerial behavior in a given situation depends on unique elements in that situation
Contingency perspective
Considers an organization to be an interrelated set of elements functioning as a whole
Systems perspective
Focuses on managing the total organization
Administrative management
Concerned with improving the performance of individual workers
Scientific management
Focuses specifically on the development of mathematical models
Management science

Chapter_02_The_Environment_of_Organizations_and_Managers
1 Which of the following is a part of an organization's external environment?
Board of directors
Physical work environment
Inflation
Organization's culture
Employees
2 In Asia, consumers have historically had an aversion to debt. However, in recent years credit card use has grown significantly, supported by aggressive
marketing to promote growth in the region. This example comprises the _____ dimension of an organization's general environment.
economic
technological
sociocultural
political-legal
task
3 A business manufactures top-of-the-line cabinets. The _____ dimension of its general environment includes computer-assisted design software that helps
to convert wood and people's idea into lovely, functional cabinets.
legal
sociocultural
technological
political
economic
4 Alex, one of the proprietors of Atlas Corp. is worried. The stock market was not doing well, unemployment was 10 percent, inflation was on the rise
again, and government debt was still increasing. These concerns of Alex are related to the _____ dimension of the general environment of Atlas Corp.
legal
sociocultural
technological
political
economic
5 The set of broad dimensions and forces in an organization's surroundings that determines its overall context is called the _____ environment.
task
general
physical work
regulatory
ethical
6 Which of the following is a concern of the technological dimension of an organization's general environment?
Organization's policies and practices
Inflation, interest rates, and unemployment
Tools, methods, and technology
Government regulations
Offices, production facilities, and cafeteria
7 A company would begin to do business in another country only if the trade relationships with that country are relatively well defined and stable. In the
context of general environment, which of the following does this point of view reflect?
Task
Economic
Technological
Political-legal
Competitive
8 The _____ dimension of the general environment consists of government regulation of business and the relationship between business and government.
technological
task
political-legal
competitive
socio-economic
9 Competitors, customers, suppliers, strategic partners, and regulators make up the _____ environment of an organization.
technological
general
economic
political-legal
task
10 Eastlawn Pharmacy is a local drugstore that has been serving the neighborhood for over 25 years. Recently, a national pharmacy chain opened one of its
stores two blocks from Eastlawn. Eastlawn is experiencing a change in its
task environment.
internal environment.
physical work environment.
government regulations.
organizational culture.
11 Which of the following is an accurate difference between the task environment and the general environment?
The general environment is quite complex, whereas the task environment is very simple.
The task environment provides useful information more readily than the general environment.
The task environment deals with more abstract dimensions than the general environment.
The general environment's impact is short term, whereas that of the task environment is long term.
The general environment includes competitors and regulators, whereas that of the task environment
includes customers, suppliers, and strategic partners.
12 Laney's and MarketPlace are both grocery stores. They stock similar products, and customers switch between the stores based on convenience, sale items,
and other promotions. Laney's and MarketPlace are
strategic allies.
competitors.
associates.
regulators.
suppliers.
13 Nonstop is a free instant messaging and voice chat service that allows users to communicate with each other, using a microphone and/or a webcam, over
the Internet. Its popularity is increasing and, as a result, the number of people using Chatterbox, another instant texting service, has decreased. Nonstop is
a _____ to Chatterbox.
competitor
supplier
customer
strategic partner
regulator
14 Organizations that provide resources to other organizations are known as:
suppliers.
competitors.
regulators.
interest groups.
importers.
15 For a private college, parents of students may be considered part of the _____ dimension of the task environment.
supplier
competitor
regulator
strategic partner
customer
16 Two or more companies that work together in joint ventures or other partnerships are called what?
Strategic partners
Competitors
Customers
Suppliers
Regulators
17 _____ are elements of the task environment that have the potential to control, legislate, or otherwise influence an organization's policies and practices.
Board members
Owners
Strategic partners
Employees
Regulators
18 Ralph Corp. and Swan Inc. have entered into an arrangement in which Ralph sells Swan's merchandise in its stores, and Swan promotes Ralph stores in
its advertisements. In this context, which of the following best describes the relationship between Ralph Corp. and Swan Inc.?
They are competitors.
Ralph is Swan's supplier.
Swan is Ralph's supplier.
They are strategic partners.
They are each customers of the other.
19 A diner received many warnings from the local Board of Health regarding the quality of its food. The Board of Health objected to the trans-fats used for
frying and the freshness of bread and meat used at the diner. The Board is playing the role of a(n) _____ in the restaurant's environment.
competitor
customer
supplier
regulator
investor
20 Canyon LLC, a television manufacturing company, is about to launch its smart TV. The television will come with a built-in web browser by a company
called Wayfarer Inc. to access Internet. Canyon is Wayfarer's _____.
strategic partner
business rival
franchisee
supplier
owner
21 Which of the following would supply capital to a business?
Employment agencies
Regulators
Banks
Board of directors
Employees
22 A group organized by its members to attempt to influence organizations is known as a(n)
interest group.
board of directors.
strategic ally.
competitor.
ethics committee.
23 _____ are created by the government to protect the public from certain business practices or to protect organizations from one another.
Interest groups
Boards of directors
Strategic partner
Economic councils
Regulatory agencies
24 A person who purchases stock in a company becomes a(n) _____ of the company.
member of the board of directors
customer
strategic partner
owner
regulator
25 In a business, which of the following people have legal property rights to that business?
Employees
Suppliers
Customers
Owners
Regulators
26 A corporate _____ that is relatively passive performs a general oversight function without getting actively involved in how the company is run.
council of strategic partners
board of directors
regulators directorate
whistle-blowing committee
economic community
27 _____ are hired for short periods of time and provide greater flexibility, earn lower wages, and often do not participate in benefits programs.
Temporary workers
Regulatory agencies
Interest groups
Strategic allies
Suppliers
28 Which of the following is an element of an organization's internal environment?
Government regulations
Competitors
Facilities
Strategic allies
Technology suppliers
29 Which of the following accurately describes the responsibility of a corporate board of directors?
Exerting considerable influence by using the media to call attention to their positions
Helping the company get the expertise they lack from other companies
Ensuring the firm is run to best serve the stockholders' interests
Gaining legal property rights to the business by buying stock
Protecting the public from certain business practices or to protect organizations from one another
30 The term _____ refers to an individual's personal beliefs about whether a behavior, action, or decision is right or wrong.
justice
culture
ethics
aesthetics
regulations
31 Which of the following is true of ethics or ethical behavior?
Ethics is the same for all individuals.
Organizations define ethics in the context of the individual.
Organizations themselves have ethics.
Ethical behavior is controlled and directed according to rules made by federal agencies.
Ethical behavior is behavior that conforms to generally accepted social norms.
32 The management of a company prevents its employees from meeting in groups of three or more. Which of the following would best describe these
restrictions imposed by the management?
Legal
Unethical
Illegal
Ethical
Racist
33 A(n) _____ occurs when an employee's decision potentially benefits the individual to the possible detriment of the organization.
loss of confidence
security breach
conflict of interest
violation of organizational culture
act of incitement
34 Which of the following terms represents a formal, written statement of the values and ethical standards that guide a firm's action?
Codes of ethics
Business plan
Standard operating procedures
Strategic plan
Licensing agreement
35 Myrtle Wines, a chain of wine retailers, has prepared guidelines that clearly specify how employees should interact with suppliers, customers,
competitors, and other people associated with their business. These guidelines are documented and distributed at all Myrtle outlets. The guidelines
prepared by Myrtle forms its
business plan.
code of ethics.
strategic plan.
fair trade standards.
licensing agreement.
36 Ethical issues in corporate governance are primarily the responsibility of
interest groups.
employees.
strategic partners.
the board of directors.
federal regulatory agencies.
37 _____ is a law that requires CEOs and CFOs to vouch personally for the truthfulness and fairness of their firms' financial disclosures and imposes tough
new measures to deter and punish corporate and accounting fraud and corruption.
Sarbanes-Oxley Act of 2002
Glass-Steagall Act of 1933
Gramm-Leach-Bliley Act of 1999
Commodity Futures Modernization Act of 2000
Investment Company Act of 1940
38 When organizations relate to their environments in ways that involve ethical dilemmas and decisions, these situations are said to fall within the context of
the organization's _____ responsibility.
legal
ethical
social
cultural
financial
39 Some people who argue in favor of social responsibility for businesses claim that
the purpose of business in U.S. society is to generate profit for owners.
involvement in social programs gives businesses too much power.
businesses do not create problems and should not therefore help solve them.
businesses often have the resources necessary to solve problems.
there is potential for conflicts of interest among businesses.
40 Which of the following is an accurate argument against social responsibility for organizations?
Business is not a partner in our society, unlike the government and the general population.
Corporations are citizens in our society.
Profit generation, for the owners, is the purpose of business in U.S. society.
Business does not create problems and should therefore not try to solve them.
Business lacks the resources needed to solve social programs.
41 _____ is the extent to which the organization conforms to local, state, federal, and international laws.
Technological compliance
Philanthropic giving
Ethical compliance
Legal compliance
Risk management
42 Which of the following actions represents an attempt to manage social responsibility through ethical compliance?
Requiring top financial managers to ensure compliance with securities and banking regulations
Donating money to fund the performing arts
Creating a committee to review policies concerning selection of new hires and promotion of employees
Consulting the legal department regarding the requirements of a particular law
Making human resource managers responsible for complying with the Equal Employment Opportunity
Commission (EEOC) standards
43 Which of the following about the ethical compliance of an organization is true?
It is a formal dimension of managing social responsibility.
It cannot be enhanced by providing training.
It includes awarding of funds or gifts to charities or other worthy causes.
It is used to circumvent their legal obligations.
It cannot be imposed by developing guidelines and codes of conduct.
44 Development of guidelines and codes of conduct is one of the most common ways through which an organization ensures
risk management.
technological specification.
philanthropic giving.
ethical compliance.
export restraint agreements.
45 Which of the following is an informal organizational dimension of managing social responsibility?
Licensing
Philanthropic giving
Legal compliance
Ethical compliance
Organizational culture
46 Soft Bites, a factory that makes breads, has asked all its retailers to return the loaves that have not been sold till the last date of expiry. It then donates all
these loaves to shelters for the poor and the homeless. This act of Soft Bites can be termed as
corporate gifting.
legal compliance.
ethical compliance.
philanthropic giving.
apprentice sponsoring.
47 _____ is an employee's disclosure of illegal or unethical conduct by others within the organization.
Lobbying
Influence peddling
Whistleblowing
Source criticizing
Reconnaissance
48 Which of the following is an advantage of licensing as an approach to internationalization?
Lack of competition
Extended profitability
Lesser uncertainty
Flexibility
Shared ownership
49 A(n) _____ strategy requires small cash outlay, is heavily regulated by government, and does not require modification to products for local conditions.
importing
licensing
joint venture
direct investment
offshoring
50 Atlantia is a German company that manufactures dishwashers in Germany. Its products are sold in the United States. Which of the following statements is
most accurate?
Atlantia is exporting its products to the United States.
Atlantia has a license agreement with the United States.
Atlantia is importing its products from the United States.
Atlantia wholly owns subsidiaries of the firm in the United States.
Atlantia is outsourcing to the United States.
51 A potential disadvantage of licensing agreements is
decreased profits.
limited profitability.
inflexibility.
home production costs.
excessive transportation costs.
52 Which of the following is true of a quota in trade?
It is used most commonly to restrict trade.
It is used to encourage strategic alliance.
It is used to increase domestic competition.
It is the tax breaks given by the host government.
It is a form of tax collected on imported goods.
53 An advantage of importing and exporting is
shared ownership.
the lack of government restrictions.
low transportation costs.
the lack of tariffs and taxes.
small cash outlay.
54 Making a product in the firm's domestic marketplace and selling it in another country is known as
direct investment.
exporting.
joint venture.
competing.
franchising.
55 Once a licensing agreement is agreed to, the licensee pays a(n) _____ in return.
interest
royalty
remuneration
tariff
reward
56 Which of the following is an advantage of direct investment?
New infrastructure
Simplicity
Enhanced control
Greater political support
Greater certainty
57 Which of the following approaches to internationalization of business has the disadvantage of shared ownership?
Importing
Licensing
Exporting
Joint ventures
Direct investment
58 What are maquiladoras?
Strategic alliances between U.S. and Mexican companies
Licensing agreements made between U.S. and Mexican companies
Light assembly plants built in northern Mexico close to the U.S. border
Convenience stores in northern Mexico to serve the workers in the area
Light assembly plants in the U.S. near the Mexican border where day workers come for daily work
59 Basco Electric Inc., is an American company. It built two factories in Mexico, which are wholly owned subsidies of Basco. Basco chose to build in
Mexico to get special concessions from the Mexican government for providing employment to the local population. The factories are an example of
licensing agreements.
franchises.
leases.
mergers.
direct investments.
60 Sam's Big Bites, an American chain of burger stands, operates on all military bases in the United States. The agreement between Sam's Big Bites and the
Department of Defense is a(n)
maquiladora.
licensing agreement.
exporting agreement.
importing agreement.
strategic alliance.
61 In a(n) _____, two or more firms jointly cooperate for mutual gain.
direct investment
technology transfer
strategic alliance
interest group
economic community
62 Greater economic and political risks are among the disadvantages associated with
importing.
exporting.
licensing.
direct investment.
joint ventures.
63 The _____ environment of an organization includes all the values, symbols, beliefs, and language that guide behavior.
task
general
physical work
regulatory
cultural
64 Which of the following statements about cultural environment is true?
An employee's cultural environment is personal, therefore, does not affect his profession.
In international business, cultural factors always cause problems for managers.
Cultural differences between countries can have a direct impact on business practice.
Difficulties can arise when there is complete overlap between a manager's home culture and the culture of
the country in which business is to be conducted.
Subtle cultural differences between countries do not have a major impact on business activities.
65 The French government charges a 25 percent tax on all American fruits and vegetables that are sold in France. This tax collected by French authorities is
a(n)
direct investment.
license.
export tariff.
import tariff.
strategic alliance.
66 Accords reached by governments in which countries voluntarily limit the volume or value of goods they export to or import from one another are known
as _____ agreements.
service-level
licensing
export restraint
strategic alliance
operational-level
67 Almonds United Inc., a company that produces almonds, is based in California, United States. Almonds United ensures that most of its produce is sold in
the local market and not more than 20 percent is sold in the Indian markets each year. This is in accordance with the U.S. government's voluntary limit on
trade with India. Almonds United is following the _____ exercised by the U.S. government.
franchising agreement
direct investment
strategic alliance
licensing agreement
export restraint agreement
68 The government of Westeria has made it mandatory that all local publishers must use paper made in Westeria itself. This restriction imposed by Westeria
on its publishers is a form of
"ban maquiladoras" policy.
import tariff.
export restraint agreement.
"go global" strategy.
"buy national" legislation.
69 Which of the following statements about organizational culture is true?
Organizational culture shapes the behavior of employees, and thus impacts organizational effectiveness.
Organizational culture of an overseas franchisee is always the same as the culture of the nation in which the
organization's headquarters are located.
Organizational culture will necessarily be the same throughout an organization's subunits.
Organizational culture refers to the cultural and artistic charities that an organization supports.
Organizational culture is frequently and easily changed by most organizations.
70 An American company is in a joint venture with an overseas Middle East company. The U.S. managers are particular about time management and
appointments for conference calls and meetings. However, their overseas Middle Eastern counterparts are not conditioned the same way and don't
necessarily adhere to schedules. This variation in time management is an aspect of their _____ environment.
legal
cultural
technological
political
economic
71 A(n) _____ is a limit on the number or value of goods that can be traded.
royalty
tariff
quota
threshold
allowance
72 A(n) _____ is a tax collected on goods shipped across national boundaries.
quota
tariff
allowance
remuneration
commission
73 In international trade, the _____ amount is typically designed to ensure that domestic competitors will be able to maintain a certain market share.
benefaction
royalty
tariff
quota
minimum hourly wage
74 _____ are, in effect, export quotas.
Export restraint agreements
Export licensing agreements
Service-level agreements
Export tariffs
Strategic alliance agreements
75 _____ gives preference to domestic producers through content or price restrictions.
"Buy national" legislation
"Go local" strategy
Federal acquisition regulation
Trade agreements legislation
"Ban maquiladoras" policy
76 Which of the following statements about the European Union is true?
It dictates the internal organizational culture.
It is a union of observer countries that monitor the open markets to ensure that WTO rules are followed.
It is the strategic alliance between a European company and an American company.
It a form of labor union across Europe.
It is an economic community.
77 Which of the following is an agreement among the United States, Canada, and Mexico to promote trade with one another?
North American Free Trade Agreement
North Atlantic Treaty Organization
General Agreement on Tariffs and Trade
Transatlantic Free Trade Agreement
World Trade Organization
78 An international _____ is a set of countries that agree to markedly reduce or eliminate trade barriers among member nations.
commonwealth
trade bloc
economic community
customs union
free trade area
79 Which of the following is a determinate of an organization's culture?
The extended benefits provided by an organization
Corporate success and shared experiences
The regulations for work performance set by an organization
The strategic partners of an organization
The products and services available for the functioning of an organization
80 Unicorn designs Inc., a software company, requires its employees to wear a specific color every day of the week. The colors for the weekdays are
presently orange, red, green, yellow, and blue, respectively. The colors are changed from time to time and the employees are informed about it. The
colors should be visible and could be on anything, like scarves, bags, ties, or socks. According to the management, the color coding system makes the
company a vibrant and fun place to work. This decision of the management affects the
company's economic dimension.
task environment.
technological dimension.
organizational culture.
political-legal atmosphere.
81 The _____ is a trade agreement intended to promote international trade by reducing trade barriers and making it easier for all nations to compete in
international markets.
Agreement on the Application of Sanitary and Phytosanitary Measures (SPS)
Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
North American Free Trade Agreement (NAFTA)
General Agreement on Tariffs and Trade (GATT)
Agreement on Technical Barriers to Trade (TBT)
82 The _____ replaced the General Agreement on Tariffs and Trade (GATT) and absorbed its mission in 1995.
European Union (EU)
International Trade Centre (ITC)
World Trade Organization (WTO)
United Nations Conference on Trade and Development (UNCTAD)
Global System of Trade Preferences among Developing Countries (GSTP)
83 Where does an organization's culture originate?
Societal norms and expectations
Pressure applied through mergers
With the organization's founder
Resolution of disputes between rival factions
Government regulation of the specific industry
84 Which of the following is true of the World Trade Organization (WTO)?
The WTO establishes impartial procedures for resolving trade disputes among its members.
The WTO requires members to limit their markets in international trade.
The WTO replaced the GATT and dismissed its mission.
The WTO focuses too narrowly on human rights and the environment.
The WTO promotes trade flows by encouraging nations to adopt preferential and flexible trade policies.
85 Which of the following is true of organizational culture?
Managers are advised to maintain an organization's culture even if it has become dysfunctional.
Corporate success and shared experiences have limited effect on organizational culture.
Organizational culture is always consistent throughout each of the divisions of an organization.
An organization's culture is not necessarily affected by the growth of rival factions within the organization.
Organizational culture can be maintained by rewarding people whose behaviors are consistent with the
existing culture.
86 The _____ dimension of the general environment is concerned with factors such as inflation, interest rates, and unemployment.
Answer:
economic
87 An organization's _____ are everyone who pay money to acquire the organization's products or services.
Answer:
customers
88 The term _____ refers to behavior that does not conform to generally accepted social norms.
Answer:
unethical behavior
89 Standards of behavior that guide individual managers in their work are called _____.
Answer:
managerial ethics
90 The awarding of funds or gifts to charities or other worthy causes is called _____ giving.
Answer:
philanthropic
91 _____ is an organization's set of social obligations to protect and enhance the social context in which it operates.
Answer:
Social responsibility
92 _____ is the extent to which the organization's members follow basic ethical (and legal) standards of behavior.
Answer:
Ethical compliance
93 _____ is an arrangement whereby a firm allows another company to use its brand name, trademark, technology, patent, copyright, or other assets.
Answer:
Licensing
94 Enhanced control and the ability to use an existing infrastructure are reasons why a firm approaching internationalization might choose _____.
Answer:
direct investment
95 _____ is the set of values, beliefs, behaviors, customs, and attitudes that helps the organization's members understand what it stands for, how it does
things, and what it considers important.
Answer:
Organizational cultural
96 Define the internal environment of an organization, and describe its four major elements.
Answer:
An organization's internal environment consists of conditions and forces within the organization. It consists of an organization's owners, board of
directors, employees, and physical work environment.
Owners: The owners of a business are, of course, the people who have legal property rights to that business. Owners can be a single individual who
establishes and runs a small business, partners who jointly own the business, individual investors who buy stock in a corporation, or other organizations.
Board of Directors: A corporate board of directors is a governing body that is elected by the stockholders and charged with overseeing a firm's general
management to ensure that it is run to best serve the stockholders' interests. Some boards are relatively passive: They perform a general oversight
function but seldom get actively involved in how the company is really run. But this trend is changing as more and more boards carefully scrutinize the
firms they oversee and exert more influence over how they are being managed.
Employees: An organization's employees are also a major element of its internal environment. Of particular interest to managers today is the changing
nature of the workforce, which is becoming increasingly more diverse in terms of gender, ethnicity, age, and other dimensions. Workers are also calling
for more job ownership-either partial ownership in the company or at least more say in how they perform their jobs. Another trend in many firms is
increased reliance on temporary workers-individuals hired for short periods of time with no expectation of permanent employment.
Physical Work Environment: A final part of the internal environment is the organization's actual physical environment and the work that people do. Some
firms have their facilities in downtown skyscrapers, usually spread across several floors. Others locate in suburban or rural settings and may have
facilities more closely resembling a college campus. Some facilities have long halls lined with traditional offices. Others have modular cubicles with
partial walls and no doors.
97 Discuss the arguments for and against social responsibility on the part of organizations.
Answer:
People who argue in favor of social responsibility claim that-because organizations create many of the problems that need to be addressed, such as air and
water pollution and resource depletion-organizations should play a major role in solving them. They also argue that, because corporations are legally
defined entities with most of the same privileges as private citizens, businesses should not try to avoid their obligations as citizens. Advocates of social
responsibility point out that, whereas governmental organizations have stretched their budgets to the limit, many large businesses often have surplus
revenues that could be used to help solve social problems.
Some people argue that widening the interpretation of social responsibility will undermine the U.S. economy by detracting from the basic mission of
business: to earn profits for owners.
Another objection to increasing the social responsibility of businesses reflects the position that corporations already wield enormous power and that
involvement in social programs gives them even more power. Still another argument against social responsibility focuses on the potential for conflicts of
interest.
Finally, critics argue that organizations lack the expertise to understand how to assess and make decisions about worthy social programs. How can a
company truly know which cause or program is most deserving of its support or how money might best be spent?
98 What is organizational culture? Discuss the importance, determinants, and management of organization culture.
Answer:
Organizational culture is the set of values, beliefs, behaviors, customs, and attitudes that helps the organization's members understand what it stands for,
how it does things, and what it considers important.
The Importance of Organizational Culture:
Culture determines the organization's "feel." A strong and clear culture can play an important role in the competitiveness of a business. At the same time,
though, there is no universal culture that will help all organizations. The same culture is not necessarily found throughout an entire organization. For
example, the sales and marketing department may have a culture quite different from that of the operations and manufacturing department. Regardless of
its nature, however, culture is a powerful force in organizations, one that can shape the firm's overall effectiveness and long-term success. Companies that
can develop and maintain a strong culture tend to be more effective than companies that have trouble developing and maintaining a strong culture.
Determinants of Organizational Culture:
Typically, organizational culture develops and blossoms over a long period of time. Its starting point is often the organization's founder. As an
organization grows, its culture is modified, shaped, and refined by symbols, stories, heroes, slogans, and ceremonies. Corporate success and shared
experiences also shape culture.
Management of Organizational Culture:
Essentially, the manager must understand the current culture and then decide whether it should be maintained or changed. By understanding the
organization's current culture, managers can take appropriate actions. Culture can also be maintained by rewarding and promoting people whose
behaviors are consistent with the existing culture and by articulating the culture through slogans, ceremonies, and so forth. Managers must walk a fine
line, however, between maintaining a culture that still works effectively and changing a culture that has become dysfunctional. Culture problems
sometimes arise from mergers or the growth of rival factions within an organization. To change culture, managers must have a clear idea of what they
want to create.
99 Match the following numbered items with the most accurate response letter.
A response may be used once, more than once, or not at all.
Political-legal trends
General environment
Owners
Internal environment
Employees
Internal environment
Competitors
Task environment
Customers
Task environment
100 Match the following numbered items with the most accurate response letter, regarding the disadvantages of approaches to internationalization.
A response may be used once, more than once, or not at all.
Tariffs and taxes
Importing or exporting
Competition
Licensing
Limits on control and profits
Strategic alliances
Greater uncertainty
Direct Investment

Chapter_03_Planning_and_Strategic_Management
1 An organization's _____ is a statement of its fundamental, unique purpose that sets a business apart from other firms of its type and identifies the scope of
the business's operations in product and market terms.
mission
statement of qualification
article of incorporation
operational goal
tactical plan
2 Nutrimax Inc. identifies its purpose as "to produce the finest cookies in the world while upholding our principles of promoting good health and
maintaining environmental sustainability." This purpose is most likely to be the _____ of Nutrimax.
strategic goal
distinctive competence
mission statement
operational goal
tactical goal
3 Which of the following statements is true about strategic goals?
They are set by an organization's middle managers.
They are set by first-line managers.
They provide plans for the day-to-day operations of an organization.
They focus on broad and general issues.
Their focus is on short-term issues.
4 Strategic goals are set by
first-line managers.
middle managers.
top managers.
stockholders.
consumers.
5 Goals set for and by line-managers are called _____ goals.
strategic
tactical
developmental
organizational
operational
6 Samantha is responsible for building the day-to-day work schedules for her subordinates. She assigns specific tasks to her subordinates and designs
activities according to the objectives that she receives from her seniors. Samantha works on _____ goals.
operational
organizational
strategic
divestiture
tactical
7 Which of the following statements is true about tactical goals?
Their focus is on how to operationalize actions necessary to achieve strategic goals.
Their focus is on broad and long-term issues such as increasing the profitability of the organization over a
period of time.
They are set for and by top managers.
They are set for and by the board of directors.
They are broad and nonspecific.
8 The top managers at Redd Inc. are developing a plan to reduce the production costs of the company. By reducing costs, Redd wants to gain a competitive
advantage of cost leadership. The plan being developed in this scenario is a(n) _____ plan.
strategic
tactical
operational
contingency
recovery
9 A(n) ____ goal for a waste management plant could be to "identify barriers to recycling as well as means to overcome those barriers; determine recycling
rates by neighborhood and find correlations, if any, between barriers and neighborhoods." It would develop naturally out of a strategic goal "to increase
recycling by 10% everywhere."
strategic
departmental
functional
divestiture
tactical
10 The top managers of Dietizza, a large low-fat pizza chain, plan to increase the profitability of all its outlets by 15 percent in a period of two years. This is
a(n) _____ goal.
tactical
operational
nonspecific
divestiture
strategic
11 A(n) _____ plan is a general plan outlining decisions about resource allocation, priorities, and action steps necessary to reach the goals set by the top
managers.
recovery
contingency
operational
tactical
strategic
12 Strategic plans
focus on how to operationalize actions necessary to achieve goals.
are concerned more with actually getting things done than with deciding what to do.
have a short-term focus and are relatively narrow in scope, dealing with a fairly small set of activities.
typically involve upper and middle management and have a somewhat shorter time horizon and a more
specific and concrete focus.
generally have an extended time horizon, and address questions of scope, resource deployment,
competitive advantage, and synergy.
13 Venus Corp. is a large corporation with several divisions. Venus has a goal to increase the profitability of the corporation by 15 percent over the next five
years, with the understanding that this is an overall corporate goal, and that there will be variance in growth among the divisions. The top managers and
board of directors are discussing resource allocation, priorities, and the action steps needed to meet this goal. The plan that these managers create would
be a(n) _____ plan.
strategic
tactical
operational
contingency
recovery
14 A difference between tactical and strategic plans is that
tactical plans have a more concrete focus.
tactical plans are set for and by the board of directors.
tactical plans have broader time horizons.
strategic plans are developed by first-line managers.
strategic plans deal with the day-to-day operations of an organization.
15 _____ plans have a short-term focus and are relatively narrow in scope.
Corporate
Tactical
Operational
Contingency
Strategic
16 Tactical goals are set by
first-line managers.
middle managers.
assembly-line managers.
stockholders.
investors.
17 Operational goals are concerned with
shorter-term issues associated with the tactical goals.
longer-term issues associated with the tactical goals.
shorter-term issues associated with the strategic plan.
longer-term issues associated with the strategic plan.
longer-term issues associated with the operational plan.
18 The _____ is the component of a strategy that specifies the range of markets in which an organization will compete.
divestiture
competency
scope
resource deployment
deskilling
19 Gadgetbug Inc. is known for its extremely efficient after-purchase service. None of Gadgetbug's competitors provide the same kind of customer service.
Gadgetbug's _____ is described in the scenario.
scope
divestiture strategy
strategic limitation
process loss
distinctive competence
20 _____ is a way of approaching business opportunities and challenges.
Supply-chain management
Value migration
Self-dealing
Strategic management
Greenwashing
21 Zing Inc. is a large fashion brand that manufactures clothing and shoes. The top managers of Zing have decided to use the profits from its clothing outlets
to invest in the shoes business. This scenario illustrates the _____ component of a strategy.
resource deployment
scope
distinctive competence
process loss
divestiture
22 A strategy that promotes a superior alignment between the organization and its environment and the achievement of strategic goals is a(n)
distinctive strategy.
competent strategy.
effective strategy.
tactical competence.
distinctive competence.
23 Business-level strategy is
the set of decisions an organization makes about how it will distribute its resources.
the set of strategic alternatives from which an organization chooses as it manages its operations
simultaneously across several industries and several markets.
the set of processes involved in creating or determining an organization's strategies.
the set of strategic alternatives that helps an organization focus its competitive efforts for each industry or
market in a targeted and focused manner.
the methods by which strategies are operationalized or executed within the organization.
24 Alba Motorbikes is known for its heavyweight motorcycles. The company places emphasis on the quality of the bikes and after-sale service. The brand
also enjoys customer loyalty. This scenario described Alba Motorbikes'
distinctive competence.
scope.
process gain.
competitive disadvantage.
related diversification.
25 The choices a firm makes as to where and how much to invest reflect issues of
value migration.
distinctive competencies.
resource deployment.
deskilling.
industrial symbiosis.
26 Which of the following questions that companies consider is most closely related to the scope component of a strategy?
How much money should we invest in each of our divisions?
What are the markets in which we want to compete?
What feedback have we received from customers about our product?
What are the strengths and weaknesses of our competitors?
How can we improve our customer service after the sale?
27 _____ strategy is the set of strategic alternatives from which an organization chooses as it manages its operations simultaneously across several industries
and several markets.
Corporate-level
Business-level
Operational-level
Divestiture
Anti-competitive
28 _____ is an organizational strength that is possessed by only a small number of competing firms.
Distinctive competence
Distinctive scope
Strategic advantage
Effective strategy
Resource deployment
29 Strategy formulation is the
set of decisions an organization makes about how it will distribute its resources.
method by which strategies are operationalized or executed.
set of processes for determining the strategies that will be used by an organization.
process of evaluating an organizations strengths and weaknesses.
set of decisions an organization makes to neutralize threats and avoid weaknesses.
30 _____ refers to the methods by which strategies are operationalized or executed within the organization; it focuses on the processes through which
strategies are achieved.
Strategy implementation
Strategy mapping
Strategy formulation
Strategy visualization
Strategy conceptualization
31 The starting point in formulating strategies is usually
SWOT analysis.
resource deployment.
divesting.
deskilling.
contingency analysis.
32 In the context of SWOT analysis, which of the following would be considered as an organization's strength?
Exiting competitors
High overhead costs
Favorable government policies
Motivated employees
High employee turnover rate
33 Which of the following will be considered as an organizational weakness in the context of SWOT analysis?
Insufficient cash reserves
Government policies
Surplus capital
Motivated employees
High import tariffs
34 _____ are skills and capabilities that enable an organization to create and implement its strategies.
Market opportunities
Organizational opportunities
Market strengths
Environmental strengths
Organizational strengths
35 Which of the following is an organizational strength?
High employee turnover
High production costs
Well-established distribution channels
High purchasing power of customers
New competitors
36 A(n) _____ is an internal skill or capability that does not enable a company to choose and implement strategies that support its mission.
organizational weakness
organizational threat
market threat
process gain
economic downswing
37 A(n) _____ is an area in an organization's environment that, if exploited, may generate higher performance.
organizational opportunity
economic downswing
organizational strength
process gain
process loss
38 Hydraliscious is a juice brand that sells a wide range of fruit juices that only uses organic ingredients, which is its uniqueness when compared with other
brands. Even though Hydraliscious juices are highly priced, a lot of customers buy them because of the quality of the juices. Hydraliscious is most likely
to be using a(n) _____ strategy.
differentiation
cost-leadership
divesting
bundle pricing
anti-competitive
39 An organization that pursues a(n) _____ strategy seeks to stand out among competitors through the quality (broadly defined) of its products or services.
differentiation
divesting
anti-competitive
focus
cost-leadership
40 Which of the following statements is true about the differentiation strategy?
It enables a firm to sell products at lower prices and still make profits.
It enables a firm to charge more for its products.
It is aimed at reducing production costs by using inexpensive raw materials.
It involves making simple, low-priced products for the mass market.
It cannot be used by companies that offer services only.
41 Which of the following is most closely associated with an overall cost leadership strategy?
Manufacturing highly-customized products
Manufacturing products in bulk
Providing highly efficient customer service that is better than any other competitor
Selling products at high prices
Using expensive raw materials
42 Alpha Inc. is a large shoe manufacturer that caters to a large customer base. In addition to the high volume of shoes it manufactures, the company sells
simple-designed sneakers for low prices. Many customers buy Alpha shoes because they are durable and inexpensive. Which of the following strategies
is illustrated in the scenario?
Overall cost leadership strategy
Market diversification strategy
Differentiation strategy
Divesting strategy
Market development strategy
43 SuperWheels is a large firm that manufactures bicycles. The company sells a line of mountain bikes targeted at experienced off-road bikers. SuperWheels
has introduced several innovations to set its bikes off from those of its competitors. Which of the following strategies is illustrated in the scenario?
Overall cost leadership strategy
Differentiation strategy
Focus strategy with differentiation focus
Focus strategy with cost leadership focus
Cost leadership strategy with differentiation focus
44 A firm pursuing a(n) _____ strategy concentrates on a specific regional market, product line, or group of buyers.
overall cost leadership
divesting
restraint of trade
anti-competitive
focus
45 Supertech Inc. is a large firm that manufactures gadgets and mobile phones. The company sells a line of inexpensive mobile phones exclusively targeted
at youth and teenagers in Selenasia. Which of the following strategies is illustrated in the scenario?
Differentiation strategy
Focus strategy
Restraint of trade strategy
Anti-competitive strategy
Divesting strategy
46 During the introduction phase of the product life cycle
companies must sacrifice product quality.
most companies tend to downsize.
demand may be very high.
competition is at its peak.
sales volume is the highest.
47 During the growth stage of the product life cycle,
most companies downsize.
the demand is the lowest.
competitors start exiting the industry.
more firms begin producing the product.
sales rapidly decline.
48 During the maturity stage of the product life cycle,
most companies start hiring more employees.
managers need to focus their efforts on "getting product the out the door" without sacrificing quality.
the sales volume is the highest.
more competitors enter the industry.
the overall demand growth for a product begins to slow down.
49 WexAll Industries has seen demand for its RB37 start to slow down. In addition, the number of other companies producing a similar product has started
to go down as well, and there have not been any new entrants into this market. The RB37 is most likely in the _____ stage of the product life cycle.
growth
post-prime
introduction
maturity
decline
50 During the decline stage of the product life cycle,
demand peaks.
new competitors enter the industry.
sales drop.
managers need to focus their efforts on "getting the product out the door" without sacrificing quality.
managers must increase production costs.
51 Which of the following strategies can help companies survive during the decline stage of the product life cycle?
Increasing production costs
Manufacturing the products frequently and in smaller quantities
Avoiding differentiation strategies
Developing new products or services
Focusing on strategies to slow the entry of competitors
52 Which of the following strategies can help companies during the maturity stage of a product life cycle?
Manufacturing products in small quantities intermittently than in bulk
Drastically increasing product prices
Focusing on keeping costs low
Sacrificing the quality of products
Focusing more on strategies to slow the entry of competitors
53 Strategies to slow the entry of competitors are important if an organization is entering an industry during the _____ stage of the product life cycle.
growth
introduction
decline
maturity
recovery
54 Which of the following strategies will help companies succeed during the growth stage of a product cycle?
Increasing overhead costs
Focusing on developing new products or services
Sacrificing product quality
Focusing on creating product differentiation
Increasing product prices significantly
55 SuperWheels is a large firm that manufactures bicycles. The company sells a line of basic children's bikes targeted at a specific market segment. Because
of its economies of scale, the amount SuperWheels spends per unit in production is extremely low, and it is able to price these bikes lower than the
competition. Which of the following strategies is illustrated in the scenario?
Focus strategy with cost leadership focus
Cost leadership strategy with differentiation focus
Focus strategy with differentiation focus
Differentiation strategy
Overall cost leadership strategy
56 WexAll Industries has seen demand for its RB37 decrease. In addition, both the number of other companies producing a similar product and total sales of
the RB37 have dropped. The RB37 is most likely in the _____ stage of the product life cycle.
growth
post-prime
introduction
maturity
decline
57 _____ describes the number of different businesses that an organization is engaged in and the extent to which these businesses are related to one another.
Entropy
Diversification
Divestiture
Competency
Economy of scale
58 An organization that pursues a single-product strategy
clusters related products in a single strategic business unit.
manufactures a range of products that are related to each other in some way.
uses a single marketing strategy for all its products.
operates in a single geographic market.
creates a separate business unit for each product it sells.
59 What type of plan focuses primarily on people and action?
Tactical
Strategic
Diversified
Corporate-level
Business-level
60 Aries Inc. manufactures dairy products and detergents. This is an example of _____ diversification.
horizontal
unrelated
single-product
concentric
related
61 _____ techniques are methods that diversified organizations use to determine in which businesses to engage and how to manage these businesses to
maximize corporate performance.
Divestiture
Portfolio management
Process gain
Deskilling
Entropy
62 In a Boston Consulting Group (BCG) matrix, _____ are businesses that have only a small share of a quickly growing market.
stars
question marks
entropies
dogs
cash cows
63 In a BCG matrix, _____ are businesses that have a very small share of a market that is not expected to grow.
question marks
cows
stars
dogs
rate busters
64 In the context of the BCG matrix, _____ are businesses that have the largest share of a rapidly growing market.
question marks
stars
cows
dogs
entropies
65 In a BCG matrix, _____ are businesses that have a large share of a market that is not expected to grow substantially.
stars
cash cows
entropies
question marks
dogs
66 The _____ is a portfolio management technique that considers industry attractiveness and competitive position rather than focusing solely on market
growth and market share.
Black-Litterman model
modern portfolio theory
growth-share matrix
BCG matrix
GE Business Screen
67 What label is used by BOTH the BCG Matrix and the GE Business Screen to identify a classification of businesses?
Losers
Winners
Profit producers
Question marks
Cash cows
68 In the GE Business Screen matrix, which of the following is a determinant of industry attractiveness?
Market share
Market size
Product quality
Operating costs
Service network
69 What is an advantage associated with unrelated diversification over related diversification?
Reduced overhead costs
Lower economic risk
The ability to achieve stable performance over time
Ability to exploit strengths in multiple businesses
Reduced dependence on a single business activity
70 In the context of the GE Business Screen, a determinant of an organization's competitive position is:
capital requirements.
market growth.
government policies.
market size.
product quality.
71 Pursuing a strategy of _____ reduces an organization's dependence on any one of its business activities and thus reduces economic risk.
single-product
single-service
divestiture
related diversification
trade restraint
72 Firms that implement a strategy of _____ operate multiple businesses that are not logically associated with one another.
single-business unit
unrelated diversification
entropy
nondiversification
synergy
73 According to the GE Business Screen, a business with a service network and low operating costs is likely to be
in a favorable competitive position.
more attractive.
a cash cow.
a star.
more diversified.
74 According to the BCG matrix, what should a company do with the cash that is generated by cash cows?
Return it to shareholders.
Invest it in question marks.
Invest it in stars.
Use it to incentivize employees.
Apply it to R&D for new products.
75 According to the BCG matrix, what should a company do with a question mark?
Invest in it aggressively.
Invest the cash it generates into stars.
Hold it but stop investing in it.
Divest it.
Invest in it carefully.
76 In contrast to strategic plans, tactical plans must
specify resources and time frames.
be developed independently of the internal business environment.
be developed independently of the external business environment.
be more general and broadly based.
focus on resources, environment, and mission.
77 Which of the following statements is true about a tactical plan?
It is an organized sequence of steps designed to execute strategic plans.
It is exclusively developed by the board of directors.
It is more broad and nonspecific when compared to a strategic plan.
It is developed independently of the external business environment.
It does not specify time frames and resources.
78 A(n) _____ is a single-use plan for a large set of activities. It might consist of identifying procedures for introducing a new product line, opening a new
facility, or changing the organization's mission.
policy
entropy
regulation
project
program
79 A(n) _____ is an operational plan that is developed to carry out a course of action that is not likely to be repeated in the future.
policy
standing plan
SOP
single-use plan
rule or regulation
80 A _____ is the most general form of standing plan that specifies the organization's general response to a designated problem or situation.
project
standard operating procedure
policy
program
single-use plan
81 A _____ may be part of a broader program, or it may be a self-contained single-use plan.
standard operating procedure
rule
project
regulation
contingency plan
82 Venus Corp. prohibits its employees from smoking in its premises. This is an example of a(n)
standard operating procedure.
rule.
program.
entropy.
project.
83 Relish has a chain of outlets that sells baked products. Relish requires all its employees to complete a month's training before they could work in the
kitchen. This is an example of a
standard operating procedure.
contingency plan.
regulation
policy.
standing plan.
84 Libra Travels LLC. has a few back-up buses at key locations where the business operates. This is to be prepared in case any of its day-tour buses break
down. This is an example of a
project.
program.
regulation.
single-use plan.
contingency plan.
85 An organization's fundamental purpose is stated in the organization's _____.
Answer:
mission statement
86 The plans developed by middle managers to aid the organization in achieving its strategic goals by focusing on getting things done are called _____
plans.
Answer:
tactical
87 A(n) _____ is a comprehensive plan for accomplishing an organization's goals.
Answer:
strategy
88 How an organization distributes its resources across the areas in which it competes is called _____.
Answer:
resource deployment
89 A standing plan that outlines the steps to be followed in a particular circumstance is called a(n)
standard operating procedure.
single-use plan.
program.
contingency plan.
project.
90 A(n) _____ strategy helps the organization focus on its operations simultaneously across several industries and several markets.
Answer:
corporate-level
91 Understanding the stages in the _____ helps managers recognize that strategies need to evolve over time.
Answer:
product life cycle
92 Trump Corporation owns hotels and casinos, the Miss Universe Pageant, and bottled water. It is engaged in _____ diversification.
Answer:
unrelated
93 The _____ provides a framework for evaluating the performance of businesses according to the growth rate of a particular market and the organization's
share of that market.
Answer:
BCG Matrix
94 Pilots have a check list they use to pre-flight an aircraft. This is an example of a(n) _____.
Answer:
SOP
95 If an organization is facing an unexpected disruption or if its current plans are rendered inappropriate by surprising events, then it can still maintain some
control by implementing its _____ plans.
Answer:
contingency
96 Describe each of Porter's three generic business-level strategies.
Answer:
According to Michael Porter, organizations may pursue a differentiation, overall cost leadership, or focus strategy at the business level.
An organization that pursues a differentiation strategy seeks to distinguish itself from competitors through the quality (broadly defined) of its products or
services. Firms that successfully implement a differentiation strategy are able to charge more than competitors because customers are willing to pay more
to obtain the extra value they perceive.
An organization implementing an overall cost leadership strategy attempts to gain a competitive advantage by reducing its costs below the costs of
competing firms. By keeping costs low, the organization is able to sell its products at low prices and still make a profit.
A firm pursuing a focus strategy concentrates on a specific regional market, product line, or group of buyers. This strategy may have either a
differentiation focus, whereby the firm differentiates its products in the focus market, or an overall cost leadership focus, whereby the firm manufactures
and sells its products at low cost in the focus market.
97 Describe how the concept of product life cycle could be used as a framework for plotting different strategies over the life of a product.
Answer:
The product life cycle is a model that shows how sales volume changes over the life of products. Understanding the four stages in the product life cycle
helps managers recognize that strategies need to evolve over time.
In the introduction stage, demand may be very high and sometimes outpaces the firm's ability to supply the product. At this stage, managers need to focus
their efforts on "getting product out the door" without sacrificing quality. Managing growth by hiring new employees and managing inventories and cash
flow are also concerns during this stage.
During the growth stage, more firms begin producing the product, and sales continue to grow. Important management issues include ensuring quality and
delivery and beginning to differentiate an organization's product from competitors' products. Entry into the industry during the growth stage may threaten
an organization's competitive advantage; thus, strategies to slow the entry of competitors are important.
After a period of growth, products enter a third phase. During this maturity stage, overall demand growth for a product begins to slow down, and the
number of new firms producing the product begins to decline. The number of established firms producing the product may also begin to decline. This
period of maturity is essential if an organization is going to survive in the long run. Product differentiation concerns are still important during this stage,
but keeping costs low and beginning the search for new products or services are also important strategic considerations.
In the decline stage, demand for the product or technology decreases, the number of organizations producing the product drops, and total sales drop.
Demand often declines because all those who were interested in purchasing a particular product have already done so. Organizations that fail to anticipate
the decline stage in earlier stages of the life cycle may go out of business. Those that differentiate their product, keep their costs low, or develop new
products or services may do well during this stage.
98 Discuss the advantages and disadvantages of unrelated diversification strategy.
Answer:
Firms that implement a strategy of unrelated diversification operate multiple businesses that are not logically associated with one another.
In theory, unrelated diversification has two advantages.
First, a business that uses this strategy should be able to achieve stable performance over time. During any given period, some businesses owned by the
organization are in a cycle of decline, whereas others may be in a cycle of growth.
Second, unrelated diversification is also thought to have resource allocation advantages. Every year, when a corporation allocates capital, people, and
other resources among its various businesses, it must evaluate information about the future of those businesses so that it can place its resources where
they have the highest potential for return. Given that it owns the businesses in question and thus has full access to information about the future of those
businesses, a firm implementing unrelated diversification should be able to allocate capital to maximize corporate performance.
Despite these presumed advantages, research suggests that unrelated diversification usually does not lead to high performance.
First, corporate-level managers in such a company usually do not know enough about the unrelated businesses to provide helpful strategic guidance or to
allocate capital appropriately. To make strategic decisions, managers must have complete and subtle understanding of a business and its environment.
Because corporate managers often have difficulty fully evaluating the economic importance of investments for all the businesses under their wing, they
tend to concentrate only on a business's current performance. This narrow attention at the expense of
broader planning eventually hobbles the entire organization.
Second, because organizations that implement unrelated diversification fail to exploit important synergies, they are at a competitive disadvantage
compared to organizations that use related diversification.
99 Match the following numbered items with the most correct response letter.
A response may be used once, more than once, or not at all.
You are contemplating opening a dry cleaning business in a commuter town. Assess the following information using SWOT analysis.
Something the organization is very good at doing
Distinctive competence
How the organization uses its people and money
Resource deployment
How the organization distributes its resources across various areas
Resource deployment
Range of markets in which the organization competes
Scope
When a company's combined economic value of its businesses is greater than the sum of their separate economic value
Synergy
100 Match the following numbered items with the most correct response letter.
A response may be used once, more than once, or not at all.
McDonald's owns and franchises fast-food restaurants.
Single-product strategy
Jinx Entertainment produces children's movies, makes dolls of the characters and clothing featuring its characters and runs two theme parks.
Related diversification
USAA provides insurance, financial services, mortgages, and relocation assistance.
Related diversification
The TBD Enterprises organization owns real estate, a brewery, a chain of sporting goods stores, and a furniture manufacturer, among other things.
Unrelated diversification

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Chapter_04_Managing_Decision_Making
1 The process of choosing one alternative from among a set of alternatives is called
rational ignorance.
altruism.
bounded rationality.
decision making.
groupthink.
2 Which of the following statements is true about the decision-making process?
It exclusively applies to problem situations.
It requires that the nature of a particular situation be defined.
It seldom applies to situations that are positive.
It typically involves only one individual and seldom applies to groups.
It results in the generation of only one alternative.
3 Ryan, the production manager at the Tan Shoes Company, chose the cheapest leather-cutting machine from a set of five machines from different
manufacturers. Ryan was engaged in
decision making.
optimizing.
rationalizing.
brainstorming.
social loafing.
4 Which of the following statements is true about the process of decision making?
It ends when the decision situation has been defined.
It includes putting the chosen alternative to practice.
The first step in the process is to identify alternatives to a problem.
The process is said to be complete when a set of alternatives to a problem has been created.
In a business scenario, the decision-making process is always aimed at finding a way to increase profits.
5 A(n) _____ decision is a decision that is relatively structured or recurs with some frequency (or both).
custom-made
novel
unstructured
intuitive
programmed
6 Decisions regarding standard organizational transactions are most likely to be _____ decisions.
unstructured
infrequent
programmed
intuitive
irrational
7 Nutrimax Inc. sponsors a football championship in Oriel in August every year. The championship is organized by the Oriel Football Association (OFA) to
encourage new talent, and Nutrimax bears all the expenses incurred during the championship. The Oriel regional manager of Nutrimax sends across a
check to the OFA in July of each year in order for them to prepare for the championship. The regional manager's decision about when to send the check to
OFA is a(n) _____ decision.
programmed
unstructured
intuitive
contingency
satisficing
8 When the low-indicator light turns red on the frozen drink machine, Karen follows an established set of procedures to refill and reset the machine. In
doing so, she's making a(n) _____ decision.
programmed
unstructured
intuitive
irrational
strategic
9 A nonprogrammed decision
is relatively more frequent than programmed decisions.
is highly structured.
requires more time and resources than programmed decisions.
is typically regarding daily organizational transactions.
typically applies to basic operating systems and procedures.
10 Decisions made by top managers involving strategy, such as signing mergers or making acquisitions, are examples of _____ decisions.
frequent
nonprogrammed
structured
operational
programmed
11 Nonprogrammed decisions
tend to be about basic operating systems and procedures.
generally deal with standard organizational transactions.
are less structured than programmed decisions.
occur more frequently than programmed decisions.
are typically made by shareholders.
12 R&D at Venus Electronics Inc. has created an innovative new device. Management now needs to decide if Venus should launch this device as its next
new product. This is an example of a(n) _____ decision.
structured
nonprogrammed
standard
programmed
operational
13 Venus Electronics has been negotiating with the owner of a new piece of property to move some of its operations. When the property owner submitted his
most recent counter offer, he said that it was a final offer. The negotiator from Venus needs to decide whether to accept or reject this offer. If it is a bluff,
Venus may get the property at a better price. If it is not a bluff, Venus will need to resume its search for a new site. The negotiator is making this decision
in a condition of
risk.
certainty.
ambiguity.
pressure.
uncertainty.
14 Which of the following statements is true in the context of decision making under a state of risk?
The decision maker clearly knows the alternatives.
The decision maker uses probability estimates to assess alternatives.
The decision maker is least likely to choose a bad alternative.
The decision maker has an accurate understanding of payoffs of all the alternatives.
The decision maker seldom considers his or her past experience while making the decision.
15 In decision making, a condition of _____ exists when a decision maker knows what the alternatives are and what conditions are associated with each
alternative.
risk
uncertainty
certainty
imperfect information
ambivalence
16 When Irene wants to buy new laptops for her marketing executives and she has to pick them up from a single brand that is preinstalled with the
marketing software that her company needs, she's making a decision under a condition of
imperfect information.
ambiguity.
risk.
certainty.
unclear alternatives.
17 When decision makers do not know all the risks associated with each alternative or the likely consequences of each one, they are making decisions in a
condition of
uncertainty.
certainty.
ambiguity.
risk.
programming.
18 Which of the following statements is true in the context of decision making under a condition of uncertainty?
A decision maker greatly relies on intuition, judgment, and experience.
A decision maker clearly knows all the risks associated with alternatives to a problem.
A decision maker puts in least effort and uses a pre-determined structure for decision making.
A decision maker is able to estimate the payoffs and risks associated with alternatives.
A decision maker identifies only two alternatives to the decision situation.
19 Professor Campbell needs to recommend a biology textbook for his senior class. Only two well-known publishers, Educate and WordTree, publish
biology textbooks in the state, and both publishers are known for the clarity and extensiveness of their content. When Campbell chooses a textbook from
one of the two publishers, he is making a decision in a state of
certainty.
irrationality.
risk.
imperfect information.
ambiguity.
20 Managers are most prone to error in a condition of
certainty.
uncertainty.
risk.
rationality.
perfect information.
21 R&D at Venus Electronics Inc. has created an innovative new device. Management now needs to decide if Venus should launch this device as its next
new product now or wait for the next one. Venus can estimate the costs to develop, produce, and market this device as well as forecast sales. But there are
many unknowns in both the new product development and market conditions that Venus cannot accurately predict. Therefore, Venus is making this
decision under a condition of
risk.
certainty.
uncertainty.
ambiguity.
security.
22 The classical decision model is a prescriptive approach, meaning that it
provides managers with alternatives.
tells managers how they should make decisions.
assumes all decisions are made subjectively.
allows no room for flexibility.
describes how decisions often are actually made.
23 According to the classical decision model, decision makers
have complete information about the decision situation.
are not able to eliminate uncertainty.
choose solutions that are in their personal best interests.
never make errors even under uncertain conditions.
are prone to error even in seemingly certain conditions.
24 The first step in rational decision making is
identifying alternatives.
implementing an alternative.
selecting the best alternative.
recognizing and defining the decision situation.
evaluating alternatives.
25 Tina works at a coffee shop. One of the four coffee machines at the coffee shop has not been functioning well; the same machine has broken down thrice
in two weeks. Now, Tina is looking at the machine and trying to decide if the problem is a bad machine or if people are just using the machine wrong.
Tina is currently
implementing an alternative.
evaluating the results of a chosen alternative.
consulting with other decision makers.
recognizing and defining the decision situation.
eliminating feasible alternatives.
26 It was recently announced that Libra Inc. settled a lawsuit for $75 million. In the context of the rational decision-making model, when executives of the
company announced that the settlement proved to be "typical and fair" as compared to similar cases, they were
developing a set of rational alternatives.
evaluating the possible alternatives.
consulting with other decision makers.
recognizing and defining the decision situation.
following up and evaluating the results of a chosen alternative.
27 After being laid off from his job, Joe recognized three options he could choose from before he could secure a new job: to spend less, to use savings, or to
use credit. He went over every aspect of his budget, and could not find any area where he could make a cut. Therefore, the option to spend less was
immediately eliminated because
it was not satisfactory.
it had negative consequences.
it was not feasible.
it was not bounded in reality.
it was not rational.
28 In general, while identifying alternatives, the more important the decision,
the more alternatives should be generated.
the less the time needed to make the decision.
the less the chances of managers making the right decision.
the more the tendency of managers to ignore intuitions.
the less the chances of managers using expert opinion to make the decision.
29 Christine, a teacher, notices that the performances of her students on class tests have been declining. While attempting to find a solution to the problem,
she thinks of three choices: rewarding students who get good grades, holding class tests more often, or punishing students when they perform poorly in
the tests. Which step of the rational decision-making process is Christine in?
Identifying alternatives
Implementing an alternative
Defining the decision situation
Selecting the best alternative
Evaluating the decision effectiveness
30 EBM suggests treating the organization as an unfinished prototype, which means what?
Face the hard facts.
Encourage experimentation and learning by doing.
Build a culture in which people tell the truth.
Get the best evidence and use it to guide actions.
Avoid decisions based on untested beliefs.
31 Delta Corp. introduced a new set of policies, giving its employees more flexibility in work timings. This decision was made in response to complaints
from employees about fatigue. Which step of the rational decision-making process is illustrated in the scenario?
Defining the situation
Evaluating the possible alternatives
Selecting the alternative
Implementing an alternative
Evaluating decision effectiveness
32 When the prices of oil came down, the demand for sport utility vehicles (SUVs) increased. Automakers chose to increase production of full-size SUVs as
the profit from large vehicles is greater than that from small vehicles. Which step in the rational decision-making model is illustrated in the scenario?
Developing a set of rational alternatives
Evaluating the possible alternatives
Selecting the best alternative and implementing it
Recognizing and defining the decision situation
Evaluating decision effectiveness
33 In which step of the rational decision-making model does the decision maker test the feasibility and satisfactoriness of alternatives before choosing one?
Identifying alternatives
Implementing the chosen alternative
Defining the situation
Following up the implementation
Evaluating alternatives
34 Peter was looking for alternatives to double his plant's production capacity, and he considered acquiring the production plant of a rival company. The
engineers in Peter's company advised him against it because acquiring the new plant would only increase their company's production by 15 percent.
Therefore, Peter's idea failed the test for _____ in the context of the rational decision-making process.
feasibility
satisfactoriness
bounded rationality
satisficing
escalation of commitment
35 In the rational decision-making model, once the alternatives have been evaluated, the next step is to
select the best alternative.
implement the chosen alternative.
evaluate the results of the chosen alternative.
identify the available alternatives.
define the decision situation.
36 _____ is a commitment to finding and using the best theory and data available at the time to make a decision.
Rational decision making
Classical decision making
Rational management
Evidence-based management
Bounded rationality
37 Which of the following statements is true in the context of selecting the best alternative?
The decision maker should prioritize satisfactoriness over both feasibility and consequences.
The decision maker can develop subjective estimates and weights for choosing an alternative.
The decision maker must choose the alternative that involves the most costs.
The decision maker must only stick to completely rational, mathematical analysis while selecting an
alternative.
The decision maker can choose an alternative that does not pass the consequence, satisfactoriness, and
feasibility test.
38 In the rational decision-making process, optimization means
identifying obvious, standard alternatives.
choosing the alternative with the best overall expected outcomes.
gathering the most complete information before making the decision.
developing the maximum number of creative, innovative alternatives.
choosing an alternative that is feasible even if it is not satisfactory or has undesirable consequences.
39 What is one of the five principles of EBM?
Look for risks and drawbacks in recommendations.
Avoid unpleasant truths.
Discourage learning by doing.
Use uncritical benchmarking of what winners do to make decisions.
Make decisions based on strongly held beliefs.
40 A plant manager had taken a few measures to try to reduce worker turnover. For four months he monitored the implementation of the measures. He now
finds that the turnover rate is reduced by 10 percent. Which step of the rational decision-making model is illustrated in the scenario?
Evaluating the results
Identifying alternatives
Recognizing the decision situation
Selecting the best alternative
Developing a set of alternatives
41 _____ is one of the factors that makes an alternative infeasible.
Decrease in expenditure
Increase in production capacity
Low costs
Increased satisfactoriness
Legal barriers
42 According to the evidence-based management approach, managers must
discourage employees from telling the unpleasant truth.
be committed to fact-based decision making.
avoid experimentation.
completely rely on the recommendations made by others.
base decisions on untested but strongly held beliefs.
43 Which of the following statements is true about the administrative model of decision making?
It suggests that most managers make decisions rationally and logically.
It suggests that decisions that are based on instincts are better than the ones based on logic.
It suggests that managers tend to satisfice when making decisions.
It suggests that managers have the most accurate information about decision situations.
It suggests that managers should not make decisions based on mathematical analysis.
44 By recognizing the _____ aspect of decision making, the administrative model better reflects subjective considerations.
rational
groupthink
classical
behavioral
sequential
45 _____ was one of the first experts to develop the administrative model of decision making.
Elton Mayo
George Bennett
Martin Johnson
Jack Welch
Herbert Simon
46 Rather than prescribing how decisions should be made, the _____ model describes how they are made.
classical
rational
administrative
realistic
practical
47 According to the administrative model, decision makers
use incomplete and imperfect information.
are never constrained by bounded rationality.
tend to avoid satisficing when making decisions.
are not limited by their values and unconscious reflexes while making decisions.
always act in the best interests of their organizations.
48 _____ is a concept suggesting that decision makers are limited by their values and unconscious reflexes, skills, and habits.
Satisficing
Escalation of commitment
Risk propensity
Groupthink
Bounded rationality
49 Bounded rationality is assumed in the _____ model of decision making.
administrative
rational
classical
groupthink
irrational
50 Which of the following statements is true about the administrative model of decision making?
It suggests that political forces do not exist in business scenarios.
It suggests that managers may not always make decisions that best serve the interests of their
organizations.
It suggests that managers use a blend of subjective knowledge and analysis to choose the best alternative.
It suggests that decisions should only be made individually and not in groups.
It suggests that decisions made by groups are better than decisions made by individuals.
51 The administrative model of decision making
tells managers how they should make decisions.
describes how decisions are actually made.
predicts what decisions managers will make.
assumes decision makers use logic and reason.
is committed to fact-based decision making.
52 _____ is the tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency.
Satisficing
Groupthink
Optimization
Bounded rationality
Escalation of commitment
53 Lucy needs to buy a new laptop for her business, and she buys a particular brand even though it does not support the software that is required for her
business. She does this because all her family members have used computers of the same brand all their lives. This is an example of how decision makers
are constrained by _____.
political forces
bounded rationality
Lucy's high risk propensity
logic
organizational strategies
54 Tim is the production manager at a steel factory. One of the steel processing machines in the factory has broken down and has to be replaced. Tim decides
to buy a new machine from a company that he has read reviews of in industry magazines, even though there are other companies offering a discount on
machines with better functionality. This is an example of how managers are constrained by _____.
bounded rationality
escalation of commitment
risk propensity
groupthink
political forces
55 Mike is in a hurry to appoint a personal assistant to help him with scheduling his meetings with clients. He posts an advertisement on a job website, and
picks the first person who sends in her resume for the job. He only checks for the candidate's qualification and does not consider her work experience.
This is an example of _____.
rational decision making
classical decision making
satisficing
evidence-based management
optimizing
56 Keisha is the vice president of accounting, and she has to decide which computer software to purchase for her department. She has looked at all of the
possible alternatives and is leaning toward the system with which she is most familiar. This is an example of _____.
optimizing
bounded rationality
satisficing
synergy
escalation of commitment
57 _____ is one major element of organizational politics that is especially relevant to decision making.
Coalitions
Intuition
Escalation of commitment
Satisficing
Risk propensity
58 Chelsea has been contemplating buying a red car. When she visits the used cars dealership, she looks at a red Ford Hatchback and buys it even before
checking for its technical specifications. Chelsea's decision is an example of _____.
optimization
escalation of commitment
an evidence-based decision
satisficing
a decision under uncertainty
59 _____ is an innate belief about something without conscious consideration.
Optimization
Intuition
Logic
Ethics
Risk propensity
60 A marketing manager decides to launch a new product because it is the first product that came to his mind, even if there are several better products to be
explored. Which of the following is illustrated in the scenario?
Escalation of commitment
Rational decision making
Bounded rationality
Satisficing
Optimization
61 Eric is a manager who recently introduced a new process for screening potential employees. Eric has noticed that the new screening process is not very
efficient and is not helping recruiters find the best candidates. However, Eric continues to use the same process because it was so expensive to set up the
initial system. Which of the following concepts is illustrated in the scenario?
Evidence-based decision making
Escalation of commitment
Rational decision making
Optimization
Satisficing
62 Ryan Tools Company just acquired Coney Tools. The purchase came about because the employees in both the research and development and the
production departments at Ryan Tools joined forces to lobby for the purchase of Coney Tools as opposed to other companies. Both departments wanted
Coney Tools because of its state-of-the-art research and production facilities. This is an example of _____.
satisficing
intuitive decision making
a dissection
escalation of commitment
a coalition
63 William had invested in an initial public offering. He kept incurring losses due to unfavorable market conditions. However, he decided to keep the
investment because he had spent so much money on it. This scenario best exemplifies _____.
evidence-based management
rational decision making
escalation of commitment
rationality
satisficing
64 _____ is a behavioral process in which a decision maker stays with a decision even when it appears to be wrong.
Bounded optimization
Escalation of commitment
Risk propensity
Strategic maximization
Intuitive rationality
65 Managers sometimes decide to do something because it feels right or they have a hunch. This is an example of using _____ in decision making.
satisficing
rationality
intuition
optimization
logic
66 _____ is the extent to which a decision maker is willing to gamble when making a decision.
Risk propensity
Intuition
Optimization
Satisficing
Bounded rationality
67 Managers with higher levels of risk propensity are more likely than their conservative counterparts to:
adhere to the rational model and be extremely cautious about their decisions.
avoid mistakes and infrequently make decisions that lead to big losses.
rely heavily on intuition and gamble big investments on their decisions.
reach decisions slowly after a great amount of analysis.
display no aggression in decision making.
68 A manager who has a high level of risk propensity is likely to:
make decisions quickly.
avoid risks.
spend a lot of time evaluating alternatives.
be wary of making a wrong choice.
rely heavily on mathematical analysis.
69 The nominal group decision-making technique:
involves maximum interaction among group members.
is used to generate creative and innovative ideas.
is a technique in which members are not brought together in a face-to-face setting.
always results in groupthink.
is a technique in which the manager lacks the authority to reject an alternative.
70 The Delphi group technique is a group decision-making technique in which:
the members are involved in extensive discussions with each other.
the opinions of group member are combined and averaged.
the daily operational problems of an organization are addressed.
the members are most likely to indulge in groupthink.
the members are most likely to be first-line employees belonging to the same department.
71 One advantage of group decision making is:
groupthink.
saved time.
more acceptance of the final decision.
lowered cost of decision making.
elimination of political forces.
72 A disadvantage of using interacting groups to make decisions is that:
it fosters political forces.
it discourages creativity.
it generates very few alternatives.
it involves more costs than all other group decision techniques.
it does not foster understanding between members.
73 Which of the following is true of interacting groups?
They are the least common decision-making groups.
They effectively eliminate the possibility of groupthink.
They can be regular work teams.
They provide little scope for new ideas.
They do not involve political forces.
74 A(n) _____ is a form of group decision making in which a group arrives at a consensus of expert opinion.
interacting group
Delphi group
inactive group
unconventional group
unstructured group
75 Macy Computers Inc. faced a major software error that brought all work in the company to a standstill. Roger, the CEO, arranged for a panel of well-
known engineers in the state to estimate the time that it would take for the error to be set right. Each engineer made an estimate and sent it to the group's
leader, Dr. Rajesh. Dr. Rajesh averaged the estimates and sent the average back out to the group. People who had submitted unusual estimates were asked
to say why those estimates were chosen. Roger used a(n) _____to help his company get rid of the software crisis.
interacting group
Delphi group
standing committee
work group
unstructured group
76 When managers want to be sure to get innovative and creative ideas, they will often create a(n) ____ group.
judge-advisor system
coalition
advocacy group
nominal group
political group
77 A disadvantage of group decision making is that:
groupthink may occur.
generation of different opinions does not occur.
communication may be curbed.
knowledge available is always limited.
only a few alternatives are likely to be generated.
78 _____ is a situation that occurs when a group or team's desire for consensus and cohesiveness overwhelms its desire to reach the best possible decision.
Groupthink
Groupshift
Brainstorming
Condorcet's paradox
Group polarization
79 Which of the following is true of nominal groups?
Innovative ideas are not generated in nominal groups.
Members of nominal groups are brought together in a face-to-face setting.
Members of nominal groups talk freely among themselves, argue, agree, form internal coalitions, and so
forth.
Only one individual dominates a nominal group.
Nominal groups are most often used for forecasting technological breakthroughs.
80 Which of the following disadvantages of group decisions typically results from the group being very cohesive?
Disagreement
Groupthink
Lower acceptance of the final decision
Minimal participation of members
Conflicts
81 Omega Inc., a large appliances company, went bankrupt because of a series of poor managerial decisions and a downturn in the economy. In retrospect, it
would seem that there was too much emphasis on the group reaching a consensus decision whenever the managers were involved in decision making. As
a result, many decisions by the managers at Omega were made to avoid conflict. What disadvantage of group decision making does this scenario
represent?
Domination
Groupthink
Irrationality
Satisficing
Coalitions
82 Which of the following is an advantage of group decision making when compared to individual decision making?
The group process is less expensive.
Groupthink is avoided.
Less time is consumed.
More alternatives are likely to be generated.
Political forces are completely eliminated.
83 Groupthink:
results in more conflicts.
is most likely to occur in non-cohesive groups.
often leads to choosing a wrong alternative.
results in extensive brainstorming.
results in polarization.
84 One disadvantage of group decision making is that:
very little information and knowledge are available.
one person may dominate the group.
fewer alternatives are generated.
it reduces the chances of acceptance of the final decision.
it prevents groupthink from developing.
85 Which of the following helps a manager avoid groupthink during group decision making?
Assigning one person to act as devil's advocate
Making his or her preferences known to the group as early as possible
Instructing members to avoid expressing divergent viewpoints
Giving the group as much time as they need to make a decision, without enforcing a deadline
Encouraging group cohesiveness
86 Recognizing and defining the nature of a decision situation, identifying alternatives, choosing the best alternative, implementing it, and evaluating the
results constitute the _____ process.
Answer:
decision-making
87 U.S. Steel and the United Steelworkers announced an agreement for a 3-year contract. The agreement is an example of a(n) _____ decision.
Answer:
nonprogrammed
88 Sandra places orders for supplies for her bakery every month. This is an example of a(n) _____ decision.
Answer:
programmed
89 _____ decisions deal with unique situations that have never occurred before.
Answer:
Nonprogrammed
90 When managers are aware of all the alternatives in a decision-making situation and the conditions associated with each alternative, they are said to be
making the decision under a state of _____.
Answer:
certainty
91 The model of decision making that is prescriptive and assumes that managers make rational and logical decisions is called the _____ model.
Answer:
classical
92 Behavioral aspects of decision making include political forces, _____, escalation of commitment, risk propensity, and ethics.
Answer:
intuition
93 A(n) _____ is an informal alliance formed to achieve a common goal.
Answer:
coalition
94 _____ is the extent to which a decision maker is willing to gamble when making a decision.
Answer:
Risk propensity
95 A _____ is a form of group decision making in which a group arrives at a consensus of expert opinion.
Answer:
Delphi group
96 A(n) _____ is a decision-making group or team in which members openly discuss, argue about, and agree on the best alternative.
Answer:
interacting group
97 Contrast programmed and nonprogrammed decisions.
Answer:
A programmed decision is a decision that is relatively structured or recurs with some frequency (or both). A nonprogrammed decision, on the other hand,
is a decision that is relatively unstructured and occurs less frequently than a programmed decision.
98 Define decision making, and discuss programmed and nonprogrammed decisions.
Answer:
Decision making is the act of choosing one alternative from among a set of alternatives. Programmed decisions are relatively structured or
recur with some frequency (or both). Nonprogrammed decisions, on the other hand, are relatively unstructured and occur
less frequently than programmed decisions.
99 In evaluating a decision alternative, the decision maker should apply three criteria. Describe the three criteria that an ideal alternative should satisfy.
Answer:
The third step in the decision-making process is evaluating each of the alternatives. Each alternative is evaluated in terms of its feasibility,
satisfactoriness, and consequences. The first question to ask is whether an alternative is feasible. Is it within the realm of probability and practicality?
When an alternative has passed the test of feasibility, it must next be examined to see how well it satisfies the conditions of the decision situation. Finally,
when an alternative has proven both feasible and satisfactory, its probable consequences must still be assessed.
100 Define interacting groups. State one advantage and disadvantage of using these groups in decision making.
Answer:
An interacting group is a decision-making group or team in which members openly discuss, argue about, and agree on the best alternative.
An advantage of this method is that the interaction among people often sparks new ideas and promotes understanding.
A major disadvantage of interacting groups is that political processes can play too big a role.
101 Match the following numbered items with the most accurate options.
A response may be used once, more than once, or not at all.
?Office politics
Coalition
A gut feeling
Intuition
A Ponzi pyramid scheme that requires more and more investment to pay earlier investors
Escalation of commitment
Roll the dice
Risk propensity
?An alternative with minimum standard of sufficiency
Satisficing
102 Match the following numbered items with the most correct response letter.
A response may be used once, more than once, or not at all.
In a fast-paced world, decisions are made quickly
Advantage of individual decision making
Less knowledge and information are available
Disadvantage of individual decision making
More alternatives are generated
Advantage of group decision making
Groupthink
Disadvantage of group decision making
Undesirable compromises
Disadvantage of group decision making
?

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