M Management Thomas Bateman 6e - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below M: Management, 6e (Bateman) Chapter 5 Planning and Decision Making 1) In an organization, the process of planning moves in a linear fashion. Answer: FALSE Explanation: Planning moves …
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M Management Thomas Bateman 6e – Test Bank
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Sample Questions Are Posted Below
M: Management, 6e (Bateman)
Chapter 5 Planning and Decision Making
1) In an organization, the process of planning moves in a linear fashion.
Answer: FALSE
Explanation: Planning moves in a cycle. The outcomes of plans are evaluated and, if necessary, revised.
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
2) To be effective, goals should be measurable, specific, attainable, relevant, and time-bound.
Answer: TRUE
Explanation: To be effective, goals should have certain qualities, which are easy to remember with the acronym SMART: specific, measurable, attainable, relevant, and time-bound.
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
3) Standing plans are designed to achieve a set of short-term goals.
Answer: FALSE
Explanation: A standing plan is designed to achieve an enduring set of goals.
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
4) Making decisions about an organization’s short-term goals and tactics is known as strategic planning.
Answer: FALSE
Explanation: Strategic planning involves making decisions about an organization’s long-term goals and strategies.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
5) A strategic control system must encourage efficient operations while allowing flexibility to adapt to changing conditions.
Answer: TRUE
Explanation: A strategic control system is designed to support managers in evaluating the organization’s progress with its strategy and, when discrepancies exist, taking corrective action. The system must encourage efficient operations that are consistent with the plan while allowing flexibility to adapt to changing conditions.
Difficulty: 2 Medium
Topic: Control Systems
Learning Objective: 05-05 Identify the keys to effective strategy implementation.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
6) Individuals usually make higher-quality decisions when compared to groups, provided there is enough time.
Answer: FALSE
Explanation: If enough time is available, groups usually make higher-quality decisions than most individuals acting alone. However, groups often are inferior to the best individual.
Difficulty: 2 Medium
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
7) The step in the formal planning process known as ________ involves studying past events, examining current conditions, and forecasting future trends.
Answer: A
Explanation: Planning begins with a situational analysis. Within their time and resource constraints, planners should gather, interpret, and summarize all information relevant to the planning issue in question. They study past events, examine current conditions, and try to forecast future trends.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
8) The outcome of a situational analysis is the
Answer: C
Explanation: The outcome of a situational analysis is the identification and diagnosis of planning assumptions, issues, and problems.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
9) Situational analysis, as part of the formal planning process, focuses on
Answer: A
Explanation: The situational analysis focuses on the internal forces at work in an organization or work unit and, consistent with the open-systems approach, examines influences from the external environment.
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
10) In the context of the planning process, ________ are the targets or ends a manager wants to reach.
Answer: A
Explanation: Goals are the targets or ends a manager wants to reach.
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
11) Forge Right Inc., a manufacturing company, developed a strategic plan that assumed improved growth in its industry. Additionally, it generated several ________ for different economic settings. When a recession started, Forge Right Inc. quickly implemented the plan based on those conditions. As a consequence, it survived more easily than other firms in the industry.
Answer: E
Explanation: Sometimes, the alternative generation, evaluation, and selection steps reveal several different future scenarios. A different contingency plan is attached to each scenario. Managers pursue the goal and implement the plans associated with the most likely scenario. However, the manager should also be prepared to switch to another set of plans if the situation changes and another scenario becomes relevant. This approach helps the firm anticipate and manage crises and allows greater flexibility and responsiveness.
Difficulty: 3 Hard
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
12) Year in and year out, Coca-Cola outperforms in the soft drink industry. While this success is due in part to the quality of their products, it is also due to Coca-Cola’s consistently strong marketing campaigns. These campaigns represent Coca-Cola’s ongoing, or ________, plan to develop and execute a world-class marketing and promotion strategy.
Answer: C
Explanation: Standing plans are plans that focus on ongoing activities designed to achieve an enduring set of goals.
Difficulty: 3 Hard
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
13) A plan to integrate employees into a new payroll system, assuming that it is not likely to be repeated in the foreseeable future, is an example of a ________ plan.
Answer: B
Explanation: Single-use plans focus on achieving nonrepeating goals.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
14) According to the ________ plan of Xenon Inc., if expansion to new markets in Australia does not materialize, the company will strive for expansion in Asia.
Answer: C
Explanation: Contingency plans specify actions to take when a company’s initial plans fail or events in the external environment create sudden change. In this case, Xenon Inc. has made a contingency plan as it has decided that if expansion to new markets in Australia does not materialize, the company will strive for expansion in Asia.
Difficulty: 3 Hard
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
15) Which stage of the planning process is Miteron Corp. involved in if it is assessing how well alternative plans meet high-priority goals while considering the cost of each initiative and the likely investment return?
Answer: E
Explanation: In the third stage of the planning process, managers evaluate the advantages, disadvantages, and potential effects of each alternative goal and plan. They must prioritize the goals and even eliminate some of them. Also, managers consider how well alternative plans meet high-priority goals, considering the cost of each initiative and the likely investment return.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
16) During the ________ step of the planning process, managers identify the priorities and trade-offs among goals and plans.
Answer: B
Explanation: In step four of the planning process, once managers have assessed the goals and plans, they select the most appropriate and feasible alternative. The evaluation process identifies the priorities and trade-offs among the goals and plans.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
17) After Barb’s department performed poorly two years, she reviewed her plan and saw that the flaws in it were inadequate funding and unclear priorities. The next year she acquired sufficient funds and incentivized her top managers with bonuses for goals met. The results made Barb ecstatic, showing how the implementation of plans is successful when
Answer: C
Explanation: Proper implementation of plans is key to achieving goals. Managers and employees must understand the plan, have the resources to implement it, and be motivated to do so. Including employees in the previous steps of the planning process paves the way for the implementation phase. Employees usually are better informed, more committed, and more highly motivated when a goal or plan is one that they helped develop. Finally, linking the plan to other systems in the organization, particularly the budget and reward systems, helps ensure its successful implementation.
Difficulty: 3 Hard
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
18) The ________ step in the formal planning process, monitoring and controlling performance, identifies the priorities and trade-offs among the goals and plans.
Answer: E
Explanation: Although it is sometimes ignored, the sixth step in the formal planning process—monitoring and controlling—is essential. Managers must continually monitor the actual performance of their work units against the unit’s goals and plans. They also need to develop control systems to measure that performance and allow them to take corrective action when plans are implemented improperly or the situation changes.
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
19) In the context of planning, if there is alternative generation, evaluation, and selection steps which reveal several different future scenarios, a different ________ plan is attached to each scenario.
Answer: C
Explanation: In some organizations, the alternative generation, evaluation, and selection steps generate planning scenarios. A different contingency plan is attached to each scenario.
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
20) The planning step known as monitoring and controlling performance
Answer: B
Explanation: Managers must continually monitor the actual performance of their work units against the unit’s goals and plans.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
21) Which level of manager is known as a tactical manager?
Answer: C
Explanation: Planning is used by managers at all four levels: top-level (strategic managers), middle-level (tactical managers), frontline (operational managers), and team leaders.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
22) Typical strategic goals involve
Answer: B
Explanation: Typical strategic goals include growing, increasing market share, improving profitability, boosting return on investment, fostering quantity and quality of outputs, increasing productivity, improving customer service, and contributing to society.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
23) Strategic goals
Answer: C
Explanation: Typical strategic goals include growing, increasing market share, improving profitability, boosting return on investment, fostering quantity and quality of outputs, increasing productivity, improving customer service, and contributing to society.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
24) Strategic goals are
Answer: A
Explanation: Strategic goals are major targets or end results that relate to the long-term survival, value, and growth of an organization.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
25) The level of planning involving the longest time horizon, usually ranging from three to seven years, is ________ planning.
Answer: E
Explanation: A strategic plan typically has a time horizon of three to seven years, but sometimes it spans decades.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
26) ________ planning involves a process of translating broad strategic goals and plans into specific goals and plans relevant to a particular portion of an organization.
Answer: C
Explanation: Tactical planning translates broad strategic goals and plans into specific goals and plans relevant to a particular portion of an organization, often a functional area such as marketing or human resources.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
27) ________ planning is the process of identifying the specific procedures and processes required at lower levels of an organization.
Answer: B
Explanation: Operational planning identifies the specific procedures and processes required at lower levels of an organization.
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
28) In ________ planning, frontline managers usually focus on routine tasks such as production runs, delivery schedules, and human resource requirements.
Answer: D
Explanation: Operational plans may cover just several months and usually focus on routine tasks such as production runs, delivery schedules, and human resource requirements.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
29) In the context of the levels of planning, the formal planning model is ________, with top-level strategies flowing down through the levels of the organization into more specific goals and plans.
Answer: B
Explanation: The formal planning model is hierarchical, with top-level strategies flowing down through the levels of the organization into more specific goals and plans and an ever-more-limited timetable.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
30) To be effective, an organization’s strategic plans should focus on goals that are
Answer: C
Explanation: To be fully effective, an organization’s strategic, tactical, and operational goals and plans must be aligned—that is, they must be consistent, mutually supportive, and focused on achieving the common purpose and direction.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
31) All managers throughout an organization may be involved in
Answer: A
Explanation: Managers throughout an organization may be involved in developing the strategic plan and contributing critical elements. Also, in practice, lower-level managers may make decisions that shape strategy, whether or not top executives realize it.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
32)
The formal planning model emphasizes a ________ approach.
Answer: B
Explanation: The formal planning model is hierarchical, with top-level strategies flowing down through the levels of the organization into more specific goals and plans and an ever-more-limited timetable.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
33) An organization’s mission statement describes all of the following EXCEPT
Answer: D
Explanation: The mission is a clear and concise expression of an organization’s basic purpose. It describes what the organization does, whom it does it for, its basic good or service, and its values.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
34) The senior managers of Acme Steel knew that a successful implementation of their business plan in the coming year was critical to the company’s survival in a competitive industry. Acme could not afford for different parts of the organization to “stray” from the plan; in fact, each organizational unit needed to perform in sync with the goals of the unit above it and the units below it. Thus, it was critical that the individual plans of the corporation, each division, each department, and each section be
Answer: A
Explanation: To be fully effective, an organization’s strategic, tactical, and operational goals and plans must be aligned—that is, they must be consistent, mutually supportive, and focused on achieving the common purpose and direction.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
35) The strategic vision of an organization
Answer: A
Explanation: The strategic vision points to the future; it provides a perspective on where the organization is headed and what it can become.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
36) The tangible assets of an organization include
Answer: B
Explanation: Tangible assets include real estate, production facilities, and raw materials. Intangible assets include company reputation, culture, technical knowledge, and patents, as well as accumulated learning and experience.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
37) Resources provide competitive advantage only under certain circumstances, including when they are
Answer: B
Explanation: Resources provide competitive advantage only under certain circumstances to include when they create customer value, are rare, are organized, and are difficult to imitate.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
38) EatWell Inc., a chain of sub shops, periodically compares the quality of its food and service with its competitors in order to continually improve its performance. This corporate strategy is known as
Answer: C
Explanation: Benchmarking is the process of assessing how well one company’s basic functions and skills compare with those of another company or set of companies. The goal of benchmarking is to thoroughly understand the “best practices” of other firms and to undertake actions to achieve better performance and lower costs. In this case, EatWell Inc. is engaging in benchmarking as it periodically compares the quality of its food and service with its competitors’ food and service in order to continually improve its performance.
Difficulty: 3 Hard
Topic: Benchmarking
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
39) Jim’s manager and mentor, Naomi, helped Jim develop his first business plan. Naomi said, “Jim, one of the most powerful tools that you can use in developing a strategic plan for your division is to analyze the external environment and your internal resources. I will help you formulate this strategy by using a technique called
Answer: B
Explanation: A SWOT analysis is an assessment of an organization’s strengths, weaknesses, opportunities, and threats. SWOT analysis helps managers summarize the relevant, important facts from their external and internal analyses.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
40) A ________ strategy identifies the set of businesses, markets, or industries in which the organization competes and the distribution of resources among those businesses.
Answer: E
Explanation: A corporate strategy identifies the set of businesses, markets, or industries in which the organization competes and the distribution of resources among those businesses.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
41) In order to reduce production costs, Tryon Inc., an automobile manufacturer, decided to buy out a glass plant and begin manufacturing the glass for the windows of cars on its own. The corporate strategy adopted by the company is known as
Answer: B
Explanation: Vertical integration is a corporate strategy to expand the organization’s domain into supply channels or to distributors, generally to eliminate uncertainties and reduce costs associated with suppliers or distributors. In this case, Tryon Inc., an automobile manufacturer, adopted vertical integration as it decided to buy out a glass plant and begin manufacturing the glass for the windows of cars on its own.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
42) Sip Well Corp. had focused only on alcoholic beverages for the last two decades. Now, as part of a(n) ________ strategy, the company is considering entering the soft drink market.
Answer: B
Explanation: Related diversification is a corporate strategy to move into new businesses related to the company’s original core business. Sip Well Corp. engaged in related diversification as it had focused only on alcoholic beverages and now was considering entering the soft drink market.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
43) The ________ matrix is not a substitute for management judgment; it helps managers of businesses evaluate their strategy alternatives.
Answer: A
Explanation: The BCG matrix is not a substitute for management judgment, creativity, insight, or leadership. But along with other techniques, it can help managers evaluate their strategy alternatives.
Difficulty: 1 Easy
Topic: BCG Matrix
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
44) Karina viewed her staff as a competitive advantage. They had the necessary academic degrees, the necessary experience, and competitive salaries. Jean, her division manager, said, “Karina, until you have staff with rare and valuable academic research experience and corresponding degrees, and with talents that are world-class and in extremely high demand by your clients, such that they are willing to pay top dollar for that talent, your staff do not represent a competitive advantage. Your staff are too ________ by your competitors.”
Answer: D
Explanation: Resources are a source of competitive advantage only under all of the following circumstances: the resources are instrumental for creating customer value—that is, they increase the benefits customers derive from a good or service relative to the costs they incur; the resources are rare and not equally available to all competitors; the resources are difficult to imitate; and the resources are well organized.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
45) The goal of ________ is to thoroughly understand the “best practices” of other firms and to undertake actions to achieve better performance and lower costs.
Answer: B
Explanation: The goal of benchmarking is to thoroughly understand the “best practices” of other firms and to undertake actions to achieve better performance and lower costs.
Difficulty: 1 Easy
Topic: Benchmarking
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
46) The corporate strategy of ________ involves expanding the domain of an organization into supply channels and to distributors.
Answer: C
Explanation: The corporate strategy of vertical integration involves expanding the domain of an organization into supply channels and to distributors.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
47) Pettigrew Inc. recently decided to expand from its original base in real estate to several wide-ranging industries such as trucking, lawn mower manufacturing, and catering. Pettigrew is using the ________ corporate strategy.
Answer: B
Explanation: Unrelated diversification is a corporate strategy to expand into unrelated businesses, typically to minimize risks due to market fluctuations in one industry. In this case, Pettigrew Inc. was applying unrelated diversification as it decided to expand from its original base in real estate to several wide-ranging industries such as trucking, lawn mower manufacturing, and catering.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
48) Rothan Corp. is evaluating the purchase of a small firm, Lemm Inc., which manufactures products involving advanced technology. These products are expected to revolutionize the home construction industry. Lemm has only a minor share of this growing market, but the market is expected to grow rapidly. Substantial investment will be required. In the BCG matrix, Lemm Inc. would be placed in the ________ category.
Answer: D
Explanation: Question marks are high-growth, weak-competitive position businesses that require substantial investment to improve their position, or else they should be divested. In this case, Lemm Inc. is a question mark as it has only a minor share of the growing market of ornamental gadgets, but the market is expected to grow rapidly. It requires substantial investment by Rothan Corp. to improve its position.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
49) In the context of the strategic planning process, a critical task in environmental analysis is ________ future trends.
Answer: B
Explanation: One critical task in environmental analysis is forecasting future trends. Forecasting techniques range from simple judgment to complex mathematical models that examine systematic relationships among many variables.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
50) All of the following are considered stakeholders EXCEPT those groups and individuals who
Answer: A
Explanation: Stakeholders are groups and individuals who affect and are affected by achievement of the organization’s mission, goals, and strategies. They include buyers, suppliers, competitors, government and regulatory agencies, unions and employee groups, the financial community, owners and shareholders, and trade associations.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
51) If an organization’s mission statement describes the organization as it currently operates then its strategic vision points to the
Answer: C
Explanation: An organization’s mission statement describes the organization as it currently operates while its strategic vision points to the future.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
52) In the BCG matrix, a star represents a company
Answer: A
Explanation: Stars are businesses with high growth and a strong competitive position that require heavy investment, but their strong position lets them generate the needed revenues.
Difficulty: 2 Medium
Topic: BCG Matrix
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
53) Functional strategies are implemented
Answer: B
Explanation: Functional strategies are implemented by each functional area of an organization to support the business strategy.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
54) Businesses using a ________ strategy try to be efficient and offer a standard, no-frills product.
Answer: B
Explanation: Businesses using a low-cost strategy try to be efficient and offer a standard, no-frills product.
Difficulty: 1 Easy
Topic: Strategic Planning
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
55)
The most effective strategy that can be adopted by strategy managers is one that
Answer: B
Explanation: Whatever strategy managers adopt, the most effective strategy is one that competitors are unwilling or unable to imitate. If the organization’s strategic plan is one that could easily be adopted by industry competitors, it may not be sufficiently distinctive or, in the long run, contribute significantly to the organization’s competitiveness.
Difficulty: 2 Medium
Topic: Strategy
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
56) The first step in strategy implementation involves articulating in simple language what a particular business must do to create or sustain a competitive advantage. This step involves
Answer: C
Explanation: In general, strategy implementation involves four related steps, the first of which is defining strategic tasks. This involves articulating in simple language what a particular business must do to create or sustain a competitive advantage and to help employees understand how they contribute to the organization.
Difficulty: 2 Medium
Topic: Strategy
Learning Objective: 05-05 Identify the keys to effective strategy implementation.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
57) When a problem is frequent, repetitive, and routine, with much certainty regarding cause-and-effect relationships, a ________ decision may be taken.
Answer: B
Explanation: With programmed decisions, the problem is frequent, repetitive, and routine, with much certainty regarding cause-and-effect relationships.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
58) At Susan’s retirement party, she reflected upon her long career in starting up successful companies. She said, “I salute my long-time mentor, Milton, who counseled me early in my career about risk. He told me, ‘Susan, when you are confronted with risk when making management decisions, you should
Answer: C
Explanation: Risk as a quality of managerial decision making differs from taking a risk. Although it sometimes seems as though risk takers are admired and that entrepreneurs and investors thrive on taking risks, good decision makers prefer to manage risk. Knowing that their decisions entail risk, they anticipate the risk, minimize it, and control it.
Difficulty: 3 Hard
Topic: Control Systems
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
59) Management decisions typically
Answer: A
Explanation: Lack of structure is typical of managerial decisions. Usually, there is no automatic procedure to follow. Problems are novel and unstructured, leaving the decision maker uncertain about how to proceed. In other words, a manager’s decisions most often have the characteristics of nonprogrammed decisions.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
60) Larner Corp., an American company, is trying to decide whether to open its first international branch in Europe or Asia. The managers of the company are operating under a condition of
Answer: D
Explanation: More often managers face uncertainty, meaning they have insufficient information to know the consequences of different actions. In this case, Larner Corp. is operating under a condition of uncertainty as it is trying to decide whether to open its first international branch in Europe or Asia.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
61) In managerial decision making, when one can estimate the likelihood of various consequences but still does not know with certainty what will happen, he or she is facing
Answer: C
Explanation: When one can estimate the likelihood of various consequences but still does not know with certainty what will happen, he or she is facing risk.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
62) In managerial decision making, the state that exists when decision makers have insufficient information is known as
Answer: B
Explanation: More often managers face uncertainty, meaning they have insufficient information to know the consequences of different actions.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
63) ________ is one of the six stages of formal decision making.
Answer: D
Explanation: The ideal decision-making process moves through six stages: identifying and diagnosing the problem, generating alternative solutions, evaluating alternatives, making the choice, implementing the decision, and evaluating the decision.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
64) The first step in an ideal decision-making process is to
Answer: E
Explanation: The ideal decision-making process moves through six stages: identifying and diagnosing the problem, generating alternative solutions, evaluating alternatives, making the choice, implementing the decision, and evaluating the decision.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
65) The manager of a restaurant noticed that the number of customers in the evening was decreasing. She promptly ordered the chef to revise the evening menu. Later, customer feedback indicated that the problem was not the menu but poor service from the waitstaff. The manager’s decision to have the menu revised suggests that she failed to
Answer: A
Explanation: Recognizing that a problem or opportunity exists is only the beginning of the first stage of formal decision making. The decision maker also must want to do something about it and must believe that the resources and abilities necessary for solving the problem exist. Then the decision maker must dig in deeper and attempt to diagnose the true cause of the situation. In this case, the manager of the restaurant failed to identify and diagnose the problem for the decrease in the number of customers. She revised the menu when the actual problem was poor service from the waitstaff.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
66) When generating alternative solutions during the decision-making process, ________ solutions must be designed for specific problems.
Answer: E
Explanation: Custom-made solutions must be designed for specific problems. This technique often combines ideas into new, creative solutions. Potentially, custom-made solutions can be devised for any challenge.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
67) Leona is evaluating a new customer relationship management software solution for her business. She knows several business owners and managers who have implemented the software in their organizations. Instead of conducting a trial in her own company, she asks them for their advice. Leona is most likely searching for a(n) ________ solution to her problem.
Answer: C
Explanation: Decision makers who search for ready-made solutions use ideas they have tried before or follow the advice of others who have faced similar problems. In this case, Leona is searching for a ready-made solution to her problem as she asks for advice from business owners and managers she knows about implementing software in organizations.
Difficulty: 3 Hard
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
68) When making a choice, ________ requires searching thoroughly for a complete range of alternatives, carefully assessing each alternative, comparing one to another, and then choosing or creating the very best.
Answer: B
Explanation: Maximizing results is the greatest benefit at the lowest cost, with the largest expected total return. Maximizing requires searching thoroughly for a complete range of alternatives, carefully assessing each alternative, comparing one to another, and then choosing or creating the very best.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
69) Belinda has to select the right paper clips to purchase for her office. She looks at the office supply catalog and picks the first one that is priced reasonably. Belinda is using the ________ method of decision making.
Answer: C
Explanation: Satisficing is choosing the first option that is minimally acceptable or adequate; the choice appears to meet a targeted goal or criterion. In this case, Belinda applies satisficing as she picks clips that are priced reasonably.
Difficulty: 3 Hard
Topic: Satisficing
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
70) For the decision-making process in an organization, those who ________ a decision must understand the choice and must be committed to its successful implementation.
Answer: C
Explanation: The decision-making process does not end once a choice is made. Those who implement the decision should understand the choice and why it was made. They also must be committed to its successful implementation.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
71) With managerial decision making, decision evaluation is useful
Answer: C
Explanation: Decision evaluation is useful whether the conclusion is positive or negative.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
72) Decision makers who search for ________ solutions use ideas they have tried before or follow the advice of others who have faced similar problems.
Answer: A
Explanation: Decision makers who search for ready-made solutions use ideas they have tried before or follow the advice of others who have faced similar problems.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
73) Managers who use the method of optimizing to make their decisions will attempt to choose
Answer: E
Explanation: Optimizing means achieving the best possible balance among several goals.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
74) In the context of formal decision making, negative feedback indicates that
Answer: B
Explanation: Negative feedback means one of two things: implementation will require more time, resources, effort, or thought, and the decision was not a good one.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
75) ________ is a psychological bias that applies to students who do not spend sufficient time studying.
Answer: C
Explanation: Discounting the future, in evaluating alternatives, is weighing short-term costs and benefits more heavily than longer-term costs and benefits. This bias applies to students who don’t study.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
76) The psychological bias known as illusion of control refers to a
Answer: B
Explanation: Illusion of control refers to a belief that you can influence events even when you have no control over what will happen. Such overconfidence can lead to failure because you ignore risks and fail to evaluate the odds of success objectively.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
77) Illusion of control, discounting the future, and framing effects are examples of
Answer: B
Explanation: Decisions are influenced by subjective psychological biases, time pressures, and social realities. A few of the many documented subjective biases are illusion of control, framing effects, and discounting the future.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
78) ________ refer(s) to a decision bias influenced by the way in which a problem or decision alternative is phrased or presented.
Answer: A
Explanation: Framing effects refer to a decision bias influenced by the way in which a problem or decision alternative is phrased or presented.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
79) Discounting the future refers to
Answer: D
Explanation: Discounting the future refers to a bias weighting short-term costs and benefits more heavily than longer-term costs and benefits.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
80) A company recently made changes to its organizational structure. While deciding upon the changes to be implemented, the company invited many employees to discuss the issue with the senior management. This enabled the employees to hear the relevant arguments both for the chosen alternative and against the rejected alternatives. An advantage of using employees in this group discussion was that
Answer: E
Explanation: Using groups to make a decision offers several potential advantages. One is increased understanding for those involved. People who participate in a group discussion are more likely to understand why the decision was made. They will have heard the relevant arguments both for the chosen alternative and against the rejected alternatives.
Difficulty: 3 Hard
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
81) An advantage in using a group for decision making is that it
Answer: A
Explanation: Group discussion typically leads to a higher level of commitment to a decision. Buying into the proposed solution translates into high motivation to ensure that it is executed well.
Difficulty: 2 Medium
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
82) Carl wanted the advantage that comes with the collective wisdom of a management team participating in a decision. Carl’s division had to decide if solar panel, wind turbine blade, or battery power research would be its next major investment. He brought together his managers in a meeting; however, Shinichi, used his strength of character and oratory skills to push for solar panel research. Unfortunately, the other managers were quiet, and Shinichi managed to overpower them with his views. Given the dynamics of the meeting and its outcome, ________ had prevented Carl’s meeting from achieving what he had hoped it would.
Answer: C
Explanation: Sometimes one group member dominates a discussion. When this occurs—as when a strong leader makes his or her preferences clear—the result is the same as it would have been if the dominant individual had made the decision alone. However, the dominant person does not necessarily have the most valid opinions, and even if that person leads the group to a good decision, the process will have wasted everyone else’s time.
Difficulty: 3 Hard
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
83) ________ is the phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus.
Answer: D
Explanation: Groupthink is a phenomenon that occurs in decision making when group members avoid disagreement as they strive for consensus.
Difficulty: 1 Easy
Topic: Groupthink
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
84) When decision making is done in groups, the job of a devil’s advocate is to create
Answer: B
Explanation: The role of devil’s advocate is assigned to someone who has the job of criticizing ideas within the group to increase the likelihood of constructive conflict.
Difficulty: 1 Easy
Topic: Devil’s Advocate
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
85) Five executives attended a meeting that was being held at the company. A decision needed to be made about the following year’s marketing campaign. Sam, an outspoken and aggressive person, insisted that his ideas be followed because there could not be a better alternative. No one else contributed to the discussion, and Sam’s views were accepted. This group discussion suffered from
Answer: B
Explanation: Sometimes one group member dominates a discussion. When this occurs—as when a strong leader makes his or her preferences clear—the result is the same as it would have been if the dominant individual had made the decision alone. However, the dominant person does not necessarily have the most valid opinions, and even if that person leads the group to a good decision, the process will have wasted everyone else’s time. In this case, the group discussion suffered from domination as Sam insisted that his ideas be followed since there could not be a better alternative. Nobody else contributed to the discussion, and Sam’s views were accepted.
Difficulty: 3 Hard
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
86) In brainstorming, group members generate
Answer: A
Explanation: In brainstorming, group members generate as many ideas about a problem as they can.
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
87) When a group accepts an alternative in order to end a meeting, the group has reached a(n) ________ decision.
Answer: C
Explanation: Satisficing is more likely with groups. Most people don’t like meetings and will do what they can to end them. This may include criticizing members who want to continue exploring new and better alternatives. The result is a satisficing, not an optimizing or maximizing, decision.
Difficulty: 2 Medium
Topic: Groups and Teams; Satisficing
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
88) ________ is a condition that occurs when a decision-making group loses sight of its original purpose and a new, less important aim emerges.
Answer: A
Explanation: Group members’ goals should be to come up with the best possible solution. With goal displacement, new goals emerge to replace the original ones. When group members have different opinions, attempts at rational persuasion might become a heated disagreement, and then winning the argument becomes the new goal.
Difficulty: 1 Easy
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
89) Leaders of decision-making groups who want to encourage constructive conflict should
Answer: D
Explanation: Managers can increase the likelihood of constructive conflict by assembling teams of different types of people, creating frequent interactions and active debates, and encouraging multiple alternatives from a variety of perspectives.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
90) In an effort to combat groupthink and an overall lack of creativity, the group leader assigned Lucy the job of criticizing ideas, for the sake of argument, throughout the meeting. Lucy is playing the role of a
Answer: B
Explanation: Devil’s advocate refers to a person who has the job of criticizing ideas to ensure that their downsides are fully explored. In this case, Lucy plays the role of a devil’s advocate as she has been assigned the job of criticizing ideas, for the sake of argument, throughout the meeting.
Difficulty: 3 Hard
Topic: Devil’s Advocate
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
91) In an attempt to make a conflict between two employees less personal and emotional, their manager instructs them to approach the same problem from a different viewpoint. They have a structured debate and come to a conclusion that suits both employees. This is an example of using the ________ approach.
Answer: D
Explanation: A leader may use a process called dialectic, a structured debate between two conflicting courses of action. Structured debates between plans and counterplans can be useful before making a strategic decision—one team might present the case for acquiring a firm while another team advocates not making the acquisition.
Difficulty: 3 Hard
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
92) In brainstorming,
Answer: A
Explanation: A common technique for eliciting creative ideas is brainstorming. Group members generate as many ideas about a problem as they can, and they are encouraged to say anything that comes to mind, except for criticizing other people.
Difficulty: 2 Medium
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
93) The senior management of Jupiter Corporation has conducted a strategic planning meeting. Based upon the discussion, decisions were made regarding
Answer: E
Explanation: Strategic planning involves making decisions about the organization’s long-term goals and strategies. Effective strategic planning answers questions such as: Where will the firm be active? How will the firm get there (by increasing sales or acquiring another company)? How will the firm win in the marketplace (by keeping prices low or offering the best service)? How fast will the firm move, and in what sequence will it make changes? How will the firm obtain financial returns (low costs or premium prices)?
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
94) Bret Nunnelly, lab manager, devised a schedule so that the lab chemists could run the experiments over the next two weeks. This decision is part of operational planning because it
Answer: C
Explanation: Operational planning identifies the specific procedures and processes required at lower levels of the organization. Frontline managers usually focus on routine tasks such as production runs, delivery schedules, and human resource requirements.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
95) As part of a strategic planning process, Midwest Power’s senior executives determined positive findings from their SWOT analysis: (1) New regulations will provide tax credits for renewable (“green”) power sources. (2) Their customers will pay higher prices for green power. (3) A competing power utility that owns renewable power sources is struggling and might be a target to be acquired by Midwest Power. (4) As compared to their competitors, Midwest Power’s management team is one of the best in the industry. A strength of Midwest Power, per the SWOT analysis, is that
Answer: E
Explanation: Strengths and weaknesses refer to internal resources. An organization’s strengths might include skilled management, positive cash flow, and well-known and highly regarded brands.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
96) Barbara Meyer, CEO of Luxury Living Corporation, said, “I like what I heard from our SWOT analysis. It found: (1) We have an excellent sales staff. (2) Our management team is one of the best in the industry. (3) Demand for our products in the underserved overseas market is projected to soar. (4) Our factories use the latest and most efficient equipment. (5) And our cost control system is world class.” An opportunity for Luxury Living, per the SWOT analysis, is that
Answer: C
Explanation: Opportunities and threats arise in the macroenvironment and competitive environment. Examples of opportunities are a new technology that could make the supply chain more efficient and a market niche that is currently underserved.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
97) Don Jefferson, owner of Don’s Fine Foods, a family-owned grocery store, said to his management team following their SWOT analysis, “We’re in trouble. We have been the leading grocer in this geographical area, but Mega Box Store Groceries is opening a superstore a mile away. Our refrigeration system is 15 years old and needs replacing. Our store manager and produce manager are retiring this year. And our employee benefits package is not competitive.” A threat to Don’s Fine Foods, per the SWOT analysis, is that
Answer: B
Explanation: Opportunities and threats arise in the macroenvironment and competitive environment. Threats might include the possibility that competitors will enter the underserved niche once it has been shown to be profitable.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
98) “Our business needs a steady supply of raw milk,” said Beatrice Gomez, CEO of Bea’s Ice Cream, “But Holly Dairy Farms is unable to deliver with certainty, and they keep raising prices. This year, I want us to expand our business by buying our own dairy farm.” Beatrice is advocating a(n) ________ strategy.
Answer: B
Explanation: Vertical integration is the acquisition or development of new businesses that produce parts or components of the organization’s product. Vertical integration expands the organization’s domain into supply channels or to distributors, to eliminate uncertainties and reduce costs associated with suppliers or distributors.
Difficulty: 2 Medium
Topic: Vertical Integration
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
99) “I am pleased to announce that we have acquired Halley’s Fruit Juices, a premier producer of natural beverages,” said Trent Lamb, CEO of Granddad’s Root Beer. “This will allow us to take advantage of our strengths by applying them in a new business that is similar to our core business.” Trent is speaking of a(n) ________ strategy.
Answer: C
Explanation: Related diversification is a strategy used to add new businesses that produce related products or are involved in related markets and activities.
Difficulty: 3 Hard
Topic: Related Diversification
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
100) “The last three years of severe drought conditions have been brutal to our lawn care business. We survived, but our business is too concentrated,” said Rocco Camanetti, owner of Camanetti & Sons. “I propose that we expand in new areas—trucking, catering, and dry cleaning—to minimize our risks due to market fluctuations in one industry.” Rocco is advocating a(n) ________ strategy.
Answer: D
Explanation: Unrelated diversification is a strategy used to add new businesses that produce unrelated products or are involved in unrelated markets and activities. Expansion into unrelated businesses is typically done to minimize risks due to market fluctuations in one industry.
Difficulty: 3 Hard
Topic: Unrelated Diversification
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
101) The management team of True Care Medical Center is deciding whether to include more advanced, and substantially more costly, technologies. This is a nonprogrammed decision, because the underlying problem
Answer: B
Explanation: With nonprogrammed decisions, the problem is novel and unstructured, with much uncertainty regarding cause-and-effect relationships. Decision making needs creativity, intuition, tolerance for ambiguity, and creative problem solving.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
102) Jim Starnes, finance manager, told his boss, “Ben, just like last month, I have determined appropriate revenue recognition for each of the 55 projects this month, based upon company policy and our standard procedures. Each of the projects has routine revenue accrual. I have prepared financial affidavits for each of these 55 projects, and I recommend that you approve the revenues by signing the affidavits.” Ben’s decision to approve the revenues is an example of a programmed decision because the underlying problem
Answer: A
Explanation: Programmed decisions involve problems that are frequent, repetitive, and routine, with much certainty regarding cause-and-effect relationships. Programmed decision making typically depends on policies, rules, and definite procedures.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
103) “We have 125 qualified candidates for the quarterly training program but only 25 slots,” said Bill Robbins, production manager. “In that case, randomly select 25, and we will train the other candidates later this year during the next rounds of training,” said Jill Stern, division manager. By selecting the first 25 qualified candidates at random rather than examining each candidate’s file to determine if more qualified candidates should be selected first, the managers are engaging in
Answer: B
Explanation: Satisficing is choosing the first option that is minimally acceptable or adequate; the choice appears to meet a targeted goal or criterion.
Difficulty: 3 Hard
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
104) During a managers’ meeting, there is difficulty reaching a conclusion on which project to fund in the upcoming year. In arguing for funding for her project, Vivian states that she has experience in making all projects succeed. She even states that she is immune to failure. Vivian is displaying
Answer: A
Explanation: Illusion of control is a belief that one can influence events even when one has no control over what will happen. Such overconfidence can lead to failure because decision makers ignore risks and fail to evaluate the odds of success objectively. They may believe they can do no wrong, or that they are immune to risk and failure.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
105) “Karen, we must jump into this new business area now, or we will fall behind,” argued Steven. “Let’s price our product well below our competitors’ prices, even if we don’t make money at first. We will figure out how to make money later.” Steven is displaying
Answer: C
Explanation: Discounting the future means, in evaluating alternatives, weighing short-term costs and benefits more heavily than longer-term costs and benefits.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
106) “Boss, you know that my plan will make us an absolutely unheard amount of money, and it’s by far the best plan offered this week!” JB Lynfield exclaimed excitedly. Mateo Garcia, division manager, replied, “Yes, your statement is technically true. However, your plan has no data or facts, and the other two plans specified gains of 15 and 22 percent, respectively, and, as you know, they were submitted last week.” JB was displaying ________ to sell his position.
Answer: B
Explanation: Framing effects are the phrasing or presenting problems or decision alternatives in a way that lets subjective influences override objective facts.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
107) New CEO Tony Sparks told his executive team, “Every two years, on a rolling basis, we will develop a new plan that will address our high-level mission, objectives, and approaches to conduct business for the next five years. The plan will guide decision making that is consistent with our long-term goals and strategies.” The five-year plan is an example of a ________ plan.
Answer: A
Explanation: A strategic plan is a guide for making decisions about an organization’s long-term goals and strategies.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
108) “Roger, the operator’s manual has a purpose—to allow the equipment to meet its performance goals and endure for a long time,” said Chuck Nolan, plant manager. “You didn’t perform scheduled maintenance on the equipment as specified in the manual, and now the equipment is ruined.” The operator’s manual is an example of a ________ plan.
Answer: C
Explanation: A standing plan is designed to accomplish an enduring set of goals.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
109) “The dam is on the verge of failing, and the downstream residents are in danger!” cried the on-scene reporter. Tamara Johnson, the power plant manager, replied, “Stay calm. We implemented the emergency protocol over 24 hours ago, and we have evacuated all potentially affected residents.” The emergency protocol is an example of a ________ plan.
Answer: D
Explanation: A contingency plan specifies actions when initial plans fail or events in the external environment create sudden change.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
110) To be effective, goals should have certain qualities, which can be recalled through the use of the acronym SMART. List and describe each of these qualities.
Answer: Goals are the targets or ends a manager wants to reach. To be effective, goals should have certain qualities, which are easy to remember with the acronym SMART:
Difficulty: 1 Easy
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
111) Compare and contrast strategic, tactical, and operational planning.
Answer: Planning is used by managers at all four levels: top-level (strategic managers), middle-level (tactical managers), frontline (operational managers), and team leaders. Strategic planning involves making decisions about the organization’s long-term goals and strategies. Strategic plans have a strong external orientation and cover major portions of the organization. Senior executives are responsible for the development and execution of the strategic plan, although they usually do not formulate or implement the entire plan personally. Tactical planning translates broad strategic goals and plans into specific goals and plans relevant to a particular portion of the organization, often a functional area such as marketing or human resources. Tactical plans focus on the major actions a unit must take to fulfill its part of the strategic plan. Operational planning identifies the specific procedures and processes required at lower levels of the organization. Frontline managers usually focus on routine tasks such as production runs, delivery schedules, and human resource requirements.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
112) In the context of a SWOT analysis, describe at least five elements of an environmental analysis.
Answer: The environmental analysis includes many elements:
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
113) The two broad categories of resources typically considered during planning and SWOT analysis are tangible assets and intangible assets. List two examples of tangible assets and two examples of intangible assets available to or used by an organization. Describe under what circumstances resources can be a source of competitive advantage.
Answer: Resources can take many forms, but they tend to fall into two broad categories:
Resources are a source of competitive advantage only under all of the following circumstances:
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
114) Describe low-cost and differentiation strategies, and how a business can achieve competitive advantage with either of them.
Answer: Businesses using a low-cost strategy try to be efficient and offer a standard, no-frills product. Companies that succeed with a low-cost strategy often are large and take advantage of economies of scale—reductions in unit cost from large purchases or manufacturing runs—in production or distribution. Their scale may allow them to buy and sell goods and services at a lower price, which leads to higher market share, volume, and ultimately profits. To succeed, an organization using this strategy generally must be the cost leader in its industry or market segment. However, even a cost leader must offer a product that is acceptable to customers. With a differentiation strategy, a company tries to be unique in its industry or market segment along dimensions that customers value. This unique or differentiated position within the industry often is based on high product quality, excellent marketing and distribution, or superior service.
Difficulty: 2 Medium
Topic: Competitive Advantage
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
115) Differentiate between programmed and nonprogrammed decisions. Which type is more typical for managerial decisions?
Answer: With programmed decisions, the problem is frequent, repetitive, and routine, with much certainty regarding cause-and-effect relationships. The decision procedure depends on policies, rules, and definite procedures. With nonprogrammed decisions, the problem is novel and unstructured, with much uncertainty regarding cause-and-effect relationships. The decision procedure needs creativity, intuition, tolerance for ambiguity, and creative problem solving. Lack of structure is typical of managerial decisions. Usually there is no automatic procedure to follow. Problems are novel and unstructured, leaving the decision maker uncertain about how to proceed. In other words, a manager’s decisions most often have the characteristics of nonprogrammed decisions.
Difficulty: 2 Medium
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
116) List and describe the six steps of a formal decision-making process.
Answer: The ideal decision-making process moves through six stages:
Difficulty: 1 Easy
Topic: Decision-Making Process
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Bloom’s: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
117) Explain the advantages and disadvantages of using a group to make decisions.
Answer: Things can go wrong when groups make decisions. Most of the potential problems concern the process through which group members interact with one another:
Difficulty: 2 Medium
Topic: Groups and Teams
Learning Objective: 05-08 Summarize principles for group decision making.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
118) Situational analysis is the first step in the formal planning process. Next, a manager should generate alternative goals and plans based upon the findings of the situational analysis. Describe the benefits of generating these alternatives.
Answer: Answers will vary. Generating alternatives will: help managers develop skills in thinking creatively and “outside the box”; define “boundary conditions,” for example, worst-case, best-case, and likely scenarios; give managers confidence that they have thought and planned broadly; allow for development of a broad range of SMART goals; and allow for development of plans to achieve those SMART goals.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
119) Bob’s division posted sales of $10 million in the previous fiscal year, falling short of the budgeted $11 million. The shortfall was due to a variety of factors, including staffing turnover, client-directed work scope reductions, increased competition from new entrants to the marketplace, and an unfavorable economy. In Bob’s annual performance review, Bob’s manager directed Bob to develop two SMART goals for the coming year—one to address division sales, and one to address staffing turnover. Provide a hypothetical example of each.
Answer: Answers will vary, but they should address each component of a SMART goal. Examples are:
Difficulty: 3 Hard
Topic: Planning
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Bloom’s: Apply
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
1
20) In working with her management team to develop a business plan for her 15-person department for the next fiscal year, Jennifer notes that the corporate strategies for next year include: (1) expand into international markets; (2) broaden scope of services with key clients; and (3) leverage new technologies to increase sales. The corporation employing Jennifer and her team is large, employing over 20,000 staff. How do Jennifer and her management team use the corporate strategies in developing a business plan for their small department?
Answer: Answers will vary, but they should focus on the concept and necessity of alignment. That means that Jennifer’s department goals must be consistent with, supportive of, and focused on achieving results in line with the corporate purpose and direction.
Difficulty: 3 Hard
Topic: Planning
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
121) Business strategy based upon technology leadership has advantages and disadvantages. List three examples of each.
Answer: Answers will vary. Advantages may include first-mover advantage, little or no competition, greater efficiency, higher profit margins, sustainable advantage, reputation for innovation, establishment of entry barriers, occupation of best market niches, and opportunities to learn. Disadvantages may include greater risk, cost of technology development, costs of market development and customer education, infrastructure costs, costs of learning and eliminating defects, and possible cannibalization of existing products.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
122) The four related steps involved in strategy implementation are: (1) define strategic tasks; (2) assess organization capabilities; (3) develop an implementation agenda; and (4) create an implementation plan. Implementing the strategy using these steps requires communication, involvement, training/coaching, and monitoring. What are some difficult situations that may develop in implementing strategy, and how would a manager address them?
Answer: Answers will vary. Managers may find themselves having to spend more time in strategy implementation than anticipated. Communications may suffer, requiring restatement or reinforcement. Coordination may suffer, with groups working in isolation or at cross-purposes, requiring management intervention. Managers who lack leadership skills to implement the strategy may need to be replaced.
Difficulty: 3 Hard
Topic: Strategic Planning
Learning Objective: 05-05 Identify the keys to effective strategy implementation.
Bloom’s: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
123) List and explain the components of a strategic control system.
Answer: A strategic control system includes an evaluation of the organization’s progress, a corrective action plan, if needed, and a budget to monitor and control major financial expenditures.
Difficulty: 2 Medium
Topic: Strategic Planning
Learning Objective: 05-05 Identify the keys to effective strategy implementation.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
124) Explain how managers make decisions under time pressure that are timely and of high quality.
Answer: Decisions can focus on real-time information, current information obtained with little or no time delay. They can involve people more effectively and efficiently in the decision-making process. They can take a realistic view of conflict, by valuing opinions, but managers know that if disagreements are not resolved, the top executive must make the final choice in the end.
Difficulty: 2 Medium
Topic: Planning
Learning Objective: 05-07 Describe some personal obstacles to rational decision making.
Bloom’s: Understand
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
