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TEST BANK
Chapter 9 Foundations of Planning
MULTIPLE-CHOICE QUESTIONS
For each of the following, choose the answer that most completely answers the question.
WHAT IS PLANNING?
28. Planning involves defining the organization’s goals, establishing an overall strategy for achieving those goals,
and developing a comprehensive set of plans _____________.
a. as to which shift will perform what work functions
b. to determine which manager will be over which department
c. to integrate and coordinate organizational work
d. to establish the quality and quantity of work to be accomplished
(c; difficult; P. 158)
29. Informal planning is _________.

a. performed at the lowest organizational level
b. general and lacks continuity
c. developed in informal meetings at a resort
d. specific and is developed by the middle managers for their department
(b; easy; p. 158)
30. In formal planning, _________.
a. specific goals covering a period of years are defined
b. specific goals are developed and not written
c. general goals are developed and not written
d. general goals covering an unspecified period of years are defined
(a; easy; p. 158)
31. Formal planning involves which of the following aspects?

a. developing general objectives
b. planning for up to one year
c. writing objectives
d. distributing the plan to all managerial employees
(c; moderate; p. 158)
32. In informal planning, __________ sharing of goals with others in the organization.
a. everything may be written down, but there is little or no
b. everything is written down, and there is
c. nothing is written down, and there is little or no
d. nothing is written down, therefore management does a lot of
(c; difficult; p. 158)
WHY DO MANAGERS PLAN?
33. Planning gives direction, reduces the impact of change, minimizes waste and redundancy, and __________.
a. establishes the workloads for each of the departments
b. sets the basis used for promotion of individuals within the organization
c. eliminates departments that are found to not be needed within the plan
d. sets the standards used in controlling
(d; moderate; p. 159)
34. Planning can’t eliminate change. Managers plan in order to ___________.

a. be prepared for when changes in management at the top occurs
b. anticipate changes and develop the most-effective response to changes
c. decide what needs to be done when a change in environments happen
d. have the appropriate materials available when the demand for them comes about
(b; moderate; p. 159)
35. The effect of planning on managers is that it forces them to do which of the following?
a. react to change
b. consider the impact of change
c. respond indiscriminately
d. develop bureaucratic response models
36. Generally speaking, which of the following factors least constrains high performance in planning organizations?
a. quality of planning
b. extent of planning
c. implementation of plans
d. environmental factors
(a; difficult; p. 159)
37. Studies of performance in organizations that plan have reached ___________.

a. somewhat negative conclusions regarding the benefits of planning
b. generally mixed conclusions regarding the benefits of planning
c. generally negative conclusions regarding the benefits of planning
d. generally positive conclusions regarding the benefits of planning
(d; difficult; p. 159)
38. The quality of the planning process and the appropriate implementation of the plans probably ___________.
a. don’t contribute to high performance nearly as much as the extent of planning
b. contribute more to high performance than does the extent of planning
c. contribute less to high performance than does the extent of planning
d. should be studied more to factually determine which contributes the most
(b; difficult; p. 159)
39. Governmental regulations, powerful labor unions, and other critical environmental forces constrain managers’
options and __________.
a. reduce the impact of planning on an organization’s performance
b. increase the impact of planning on an organization’s performance
c. neutralize the impact of planning on an organization’s performance
d. don’t affect the impact of planning on an organization’s performance
(a; moderate; p. 159)
40. In studies in which formal planning did not lead to higher performance, ____________.
a. the external environment often was the culprit
b. management execution of the plans was most often the reason for failure
c. employee implementation of the plans was the primary reason for failure
d. lack of communication was most often the reason for failure
HOW DO MANAGERS PLAN?
41. Planning is often called the primary management function because it ____________.
a offers some basis for future decision making
b. creates the vision for the organizational members to work toward
c. establishes the basis for all the other functions
d. sets the tone for the organizational culture
42. Planning involves two important elements: ___________.

a. goals and decisions
b. goals and plans
c. plans and decisions
d. goals and actions
43. Official statements of what an organization says and what it wants its various stakeholders to believe are referred
to as ___________.
a. real goals
b. stated goals
c. committed goals
d. comprehensive goals
44. Which of the following is true concerning an organization’s stated objectives?

a. They issue identical objectives to all constituents.
b. Organizations typically have internal and external sets of objectives.
c. They may issue different objectives to stockholders, customers, employees, and the public.
d. Stated objectives are usually in line with short-term actions.
45. What should a person do to understand what the real objectives of the organization are?
a. observe organizational member actions
b. attend a stockholders’ annual meeting
c. read their annual report
d. watch television news reports
46. When we categorize plans as being directional versus specific, we are categorizing them by ____________.
a. breadth
b. specificity
a. frequency of use
d. depth
(b; easy; p. 163)
47. When we categorize plans as being single use versus standing, we categorize them by ____________.
a. breadth
b. specificity
c. frequency of use
d. time frame
(c; easy; p. 163)
48. A state legislative plan that calls for a 2.45 percent increase in tobacco sales tax for the next 2 years would be
considered what type of plan?
a. strategic
b. operational
c. specific
d. directional
49. Directional plans do which of the following?

a. have clearly defined objectives
b. identify general guidelines
c. meet the needs of a unique situation
d. last for 3–5 years
50. Which of the following is true concerning standing plans?

a. They provide guidance for activities repeatedly performed in the organization.
b. They provide guidance for 1–3 years.
c. They specify general guidelines.
d. They are specifically designed to meet the needs of a unique situation.
51. A city’s policy concerning skateboarding on downtown sidewalks that provides guidance for police action would
be considered what type of plan?
a. standing
b. contingency
c. directional
d. single use
52. The most common ways to describe organizational plans are by their breadth, time frame, specificity and
___________.
a. quantifiability
b. flexibility
c. frequency of use
d. attainability
(c; easy; p. 162)
53. What happens to traditional goals as they make their way down from top management to lower levels?
a. they lose clarity and unity
b. they unite the workforce
c. lower-level managers must continually revise and correct them.
d. they purposely remain vague and nonspecific.
(a; moderate; P. 164)
54. Goals are objectives, __________.
a. and we use the two terms interchangeably
b. but goals are long-term and objectives are short-term
c. and goals are used by top management and objectives are used by first-level management
d. but goals are used in reference to profits, and objectives are used in reference to production output
(a; easy; p. 160)
55. Plans are documents that outline how goals are going to be met and ___________.
a. define which department has what responsibilities needed to accomplish the goals
b. tell what materials and processes are necessary to fulfill the goals
c. identify how much capital is required to complete the goals
d. describe resource allocations, schedules, and other necessary actions to accomplish the goals
56. Emphasis on one goal ___________.

a. assures that the one goal will be accomplished even above the established level
b. ignores other goals that must also be reached if long-term success is to achieved
c. make the goal easier to be accomplished by all the organizational members
d. denies the organizational members the opportunity to grow and develop
57. Using a single objective can result in unethical practices because managers ____________.
a. want to satisfy the stockholders of the organization
b. will manipulate the outcomes reported to assure that the one objective is achieved
c. will ignore other important parts of their jobs in order to look good on that one measure
d. will use overtime to accomplish that single objective without reporting it
58. Stated goals are official statements of what an organization says its goals are and ___________.
a. what it wants its various stakeholders to believe its goals are
b. are the goals that the organization actively works to achieve
c. what it wants its stockholders to believe its goals are
d. what it believes its goals are
59. The most popular ways to describe organizational plans are by their breadth, time frame, ____________.
a. depth, and urgency
b. frequency, and urgency
c. specificity, and frequency
d. depth, and specificity
60. Strategic plans are plans that apply to the entire organization, establish the organization’s overall goals, and
____________.
a. guide the organization toward maximizing organizational profits for the stockholders
b. attempt to satisfy all government regulations while maximizing profits
c. satisfy the organization’s stakeholders
d. seek to position the organization in terms of its environment
61. Operational plans specify the details of ___________.

a. what department performs which functional process to accomplish the goals
b. what materials are required for which product being produced
c. when each product model is to be produced
d. how the overall goals are to be achieved
62. Strategic plans tend to cover a longer period of time than operational goals and also _____________.
a. cover a more narrow view of the organization
b. cover the financial projections of the planning period
c. cover a broader view of the organization
d. include an estimate of the profits that the stockholder can anticipate as dividends
63. Specific plans are clearly defined and ____________.

a. allow managers to their interpretation for flexibility
b. leave no room for interpretation
c. give the managers authority to interpret the plans for their area of responsibility
d. keep the stakeholders inform of the organization’s objectives
64. Directional plans are ___________.

a. flexible plans that set out general guidelines
b. stringent plans that establish specific directions for manager to follow
c. formal plans that provide the directions of how to assemble the product
d. general plans that allow the workers to change the schedule of production
(a; easy; p. 163)
65. Standing plans are ongoing plans that provide ____________.

a. general directions of how to accomplish an identifiable task
b. stakeholders identifiable goals that the organization will always strive to achieve
c. the stockholders identifiable goals that the organization will always strive to achieve
d. guidance for activities performed repeatedly
66. Goals are often called ___________.

a. the basis for all the other functions
b. managements’ do or die objectives
c. a lot of other names by various organizations
d. the foundation of planning
67. __________ can evaluate whether an organization is successful.

a. A goal is the only measure that
b. No single measure
c. Plans are also a measure that
d. Stakeholders are the only groups that
68. The conflict in stated goals exists because organizations respond to a variety of _______________.
a. stakeholders
b. external environments
c. governmental regulations
d. stockholders
69. Strategic plans cover a broader view of the organization and include the formulation of goals, whereas
operational plans define ways to _____________.
a. maximize the organization’s profits
b. achieve the goals
c. minimize the number of employees that have to be laid off in hard times
d. provide the most efficient methods of production
70. The flexibility inherent in directional plans must be weighed against the _____________.
a. gain of a shorter planning period by specific plans
b. gain of a longer planning provided by specific plans
c. loss of clarity provided by specific plans
d. loss of a shorter planning period by specific plans
(c; easy; p. 163)
71. __________ is a one-time plan specifically designed to meet the needs of a unique situation.
a. Multipurpose plan
b. Strategic plan
c. Operational plan
d. Single-use plan
(d; easy; p. 163)
72. ____________ planning dominates managers’ planning efforts at lower levels of the organization.
a. Strategic
b. Tactical
c. Operational
d. Functional
(c; easy; p. 162)
ESTABLISHING GOALS AND DEVELOPING PLANS
73. With traditional goal setting, the goals are set at the top level of management and _____________.
a. then they become the responsibility of first-line management to achieve the goals
b. then they are broken down into subgoals for each level of the organizatio
c. all the efforts to achieve the goals are directed by top management to ensure that they are achieved
d. then they are delegated to the next lower level to be achieved
74. With traditional goal setting, employees’ work efforts at their respective levels and work areas are geared to meet
the goals ___________.
a. so that the top management will be retained in their position
b. so that their immediate supervisor will be retained in their position
c. that have been assigned in their specific areas of responsibility
d. within the shortest amount of time possible
75. Management by objectives is a management system in which the first steps are setting specific performance goals
that are _____________.
a. established that can be easily accomplished
b. jointly determined by employees and their managers
c. determined by top management with clarity so that the objective are clear to even the most incompetent
employee
d. developed in such a manner that the employees are self-directed and do not need supervision
76. Studies of actual MBO programs confirm that MBO __________ employee performance and
organizational performance.
a. depends on
b. is related to
c. decreases
d. increases
77. According to the textbook, one of the potential problems of MBO programs is that ____________.
a. there may be an overemphasis on the employee accomplishing their goals without regards to others in the
work unit
b. they may not be as effective in times of dynamic environmental change
c. employees do not take goal setting seriously enough
d. all of the above
78. In the MBO system, ___________.

a. objectives are determined by management
b. goals are only reviewed at the time of completion
c. goals are used as controls
d. progress is periodically reviewed
(d; moderate; P. 165)
79. A well-designed goal should be ____________.

a. short and very specific about expected outcomes
b. written in terms of outcomes rather than actions
c. identifiable to even the first-line supervisors
d. specific and within a manageable time frame
80. A well-designed goal should be measurable, have a specified time frame, and be ____________.
a. written down
b. nearly unattainable, so that even if the unit or employee misses their goal, performance is still very high
c. communicated to anyone who needs to know
d. both a and c
81. When organizational members are more actively involved in planning, they see that the plans ____________.
a. stated to stakeholders are the real plans that the organization desires to achieve
b. are not as important as management makes them out to be
c. are how the company is going to be judged by the stockholders
d. are more than just something written down on paper
82. When the hierarchy of organizational goals is clearly defined, it forms an integrated network of goals, or
____________.
a. hierarchical-link chain
b. means-ends chain
c. weakest-link chain
d. level-level chain
(b; easy; p. 164)
83. Three contingency factors that affect planning are level in the organization, degree of environmental uncertainty,
and ____________.
a. length of future commitments
b. quantity of future commitments
c. frequency of future commitments
d. enforceability of future commitments
84. The commitment concept means that plans should extend far enough to meet those commitments __________.
a. as quickly as possible
b. while the resources are available
c. with the stakeholders and make it appear that the organization is really committed
d. made when the plans were developed
85. Three contingency factors cited by your textbook that affect planning are level in the organization, length of
future commitments, and ____________.
a. risk aversion of management
b. employee satisfaction
c. level of productivity
d. degree of environmental uncertainty
86. How an organization plans can be best understood by looking at ____________.

a. the goals set out by the organization’s planners
b. who does the planning
c. the flexibility of the organization’s plans
d. none of the above
(a; easy; p. 169)
87. In the traditional approach to planning, planning was done entirely by top-level managers who were often
assisted by ____________.
a. business level managers

b. functional level managers
c. a mixture of managers from the line, functional, and business level
d. a group of planning specialists
(d; easy; p. 169)
88. Goals provide the direction for all management decisions and actions and form the _____________.
a. profit basis that the organizations will accomplish for stockholders
b. desired outcomes that the organizational members will achieve
c. basis for the sharing of profits with the employees at the end
d. criterion against which actual accomplishments are measured
CONTEMPORARY ISSUES IN PLANNING
89. According to your textbook, frequently cited criticisms of formal planning include, ____________.
a. “plan’s can’t be developed for a dynamic environment”
b. “formal planning is too time consuming, given the dyamism in modern business environments”
c. “formal planning creates extra, often redundant levels of hierarchy within the organization”
d. “formal planning works well only for large, diversified companies”
90. It is __________ formal planning efforts when the environment is highly uncertain.
a. not as important to continue
b. important to switch to directional planning and cease
c. necessary to cease
d. important to continue
91. A wireless networking technology called WiFi that links together information devices is __________.
a. threatening to revolutionize all kinds of industries
b. making organizational planning much easier
c. complicating the planning process, but will be improving communications
d. an integral component of planning for the Fortune 500 companies
92. According to your textbook, in an uncertain environment, managers want to develop _________ plans.
a. general and flexible
b. specific but flexible
c. formal
d. contingency
93. As organizational environments have become more uncertain, ____________.

a. organizations are having to make longer term plans
b. organizations have to resist the uncertainties to keep the plans moving toward the objectives
c. organizations have to request the government to pass more legislation restricting the amount of uncertainty
d. the definition of long term has changed
94. In an uncertain environment, managers want to develop plans that are ____________.
a. flexible but manageable
b. specific and long ranging
c. directional but flexible
d. specific but flexible
95. The organizational hierarchy becomes flattened as the responsibility for establishing goals and developing
plans is ____________.
a. moved to the middle organizational levels
b. shoved the lowest organizational levels
c. shifted to a formal planning department
d. more the work of the financial department
96. According to your textbook, in order to manage effectively in dynamic environment, managers must recognize
that planning is _____________.
a. an ongoing process
b. not renewable from one planning period to the next
c. best left to the formal planning department
d. best done at the beginning of a new year
(a; easy; p. 172)
Chapter 10 Strategic Management

1) A business model describes how a company is going to make money.
Answer: TRUE
Page Ref: 240
Learning Outcome: Identify the steps of the strategic management process and describe common organizational and
business strategies
AACSB: Reflective Thinking Skills
Ch. Objective: 1
Difficulty: Easy
Classification: Conceptual
2) The first step in the strategic management process is analyzing the external environment.
Answer: FALSE
Page Ref: 242
Learning Outcome: Describe the components of the management environment; Identify the steps of the strategic
management process and describe common organizational and business strategies
AACSB: Analytic Skills
Ch. Objective: 2
Difficulty: Easy
3) Evaluating an organization's intangible assets is part of conducting an internal analysis in the strategic management
process.
Answer: TRUE
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
4) Activities that an organization does well or resources that it has available are called capabilities.
Answer: FALSE
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
5) Exceptional or unique organizational resources are known as core capabilities.

Answer: FALSE
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
6) When conducting a SWOT analysis, threats are activities the organization doesn't do well or resources it needs but
doesn't possess.
Answer: FALSE
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
7) A SWOT analysis includes an analysis of an organization's environmental opportunities and threats.

Answer: TRUE
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
8) The final step in the strategic management process is implementing the objectives.
Answer: FALSE
Page Ref: 244
business strategies
Ch. Objective: 2
Difficulty: Easy
9) Corporate strategies determine what business a company is in or wants to be in, and what it wants to do with those
businesses.
Answer: TRUE
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
10) Diversification is an example of a corporate retrenchment strategy.

Answer: FALSE
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
11) If Burger King were to buy out Mom and Pop's Burgers, Burger King would be growing by vertical integration.
Answer: FALSE
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
Classification: Application
12) A trucking company that grows by purchasing a chain of gasoline stations is engaged in horizontal integration.
Answer: FALSE
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
13) A stability strategy is an organizational strategy in which an organization maintains the status quo.
Answer: TRUE
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
14) A retrenchment strategy is a short-run renewal strategy that helps an organization stabilize operations, revitalize
organizational resources and capabilities, and prepare to compete once again.
Answer: TRUE
Page Ref: 246-247
business strategies
Ch. Objective: 3
Difficulty: Easy
15) A turnaround strategy is a type of renewal strategy used when an organization is in serious trouble.
Answer: TRUE
Page Ref: 247
business strategies
Ch. Objective: 3
Difficulty: Easy
16) The BCG matrix evaluates an organization's various businesses to identify which ones offer high potential and
which ones drain organizational resources.
Answer: TRUE
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
17) Stars, one of the four business groups in the BCG matrix, are characterized by low growth and low market share.
Answer: FALSE
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
18) Within an organization, the single independent businesses that formulate their own competitive strategies are
known as strategic business units.
Answer: TRUE
Page Ref: 248
Ch. Objective: 4
Difficulty: Easy
19) A company that competes by offering unique products that are widely valued by customers is following a
differentiation strategy.
Answer: TRUE
Page Ref: 250
business strategies
Ch. Objective: 4
Difficulty: Easy
20) Managers using the strategic management process always achieve positive outcomes.
Answer: FALSE
Page Ref: 253
business strategies
Ch. Objective: 5
Difficulty: Easy
21) A ________ describes the rationale of how a company is going to make money.
A) functional strategy
B) business model
C) SWOT analysis
D) core competency
Answer: B
Page Ref: 240
business strategies
Ch. Objective: 1
Difficulty: Easy
22) The first four steps of the strategic management process describe the strategic ________ that must take place in an
organization.
A) evaluation
B) controlling
C) planning
D) implementation
Answer: C
Page Ref: 242
Learning Outcome: Discuss the processes and tools of developing different types of plans; Identify the steps of the
strategic management process and describe common organizational and business strategies
Ch. Objective: 2
Difficulty: Easy
23) Defining the organizational mission forces managers to identify ________.

A) what the labor supply is like in the locations where the organization operates
B) what the organization is in business to do
C) what the competitor is doing
D) what pending legislation will affect the organization
Answer: B
Page Ref: 242
business strategies
Ch. Objective: 2
Difficulty: Moderate
24) Managers do an external analysis so that they know about ________.
A) the firm's basic beliefs and ethical priorities
B) what the competition is doing
C) resources the firm does not possess
D) their organization's core competencies
Answer: B
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
25) When an organization is analyzing its labor supply, it is studying its ________.
A) organizational culture
B) internal environment
C) external environment
D) organizational mission
Answer: C
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
26) ________ are positive trends in the external environment.

A) Strengths
B) Threats
C) Weaknesses
D) Opportunities
Answer: D
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
27) Computer peripherals provider Ascent plans to enter a new market in another country. Which of the following
represents a threat for Ascent?
A) Ascent's profit margin in the previous year was its lowest on record and it will require long-term planning to
improve margins.
B) Ascent lacks the resources to enter the market on its own and has to find a partner in the new market.
C) Ascent will have to plan its entry carefully as the laws in the country do not favor foreign businesses.
D) Ascent needs to improve its service capabilities in the new country as this is an important source of revenue.
Answer: C
Page Ref: 243
Ch. Objective: 2
28) A study of the external environment allows a manager to understand the ________ and ________ for the
organization.
A) threats; weaknesses
B) strengths; weaknesses
C) strengths; opportunities
D) opportunities; threats
Answer: D
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
29) Helen, the owner of Crazy Cupcakes, is conducting a SWOT analysis of her company to find out where she can
improve her business and to identify possibilities for expansion. Which of the following represents an opportunity for
expansion?
A) There has been a trend toward personalized cupcakes for a variety of occasions.
B) The production process was found to be highly efficient and wastage was kept to a minimum.
C) In a taste test, Crazy Cupcakes products ranked higher than competitors in the taste and texture segments.
D) Crazy Cupcakes decorators are among the best in their field and design plays a major role in the popularity of the
products.
Answer: A
Page Ref: 243
Ch. Objective: 2
30) The third step in strategic management process is related to the analysis of the ________.
A) external environment
B) internal environment
C) threats and opportunities
D) competitive strategy
Answer: B
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
31) Bella Vista Clothing targets teenage girls with a range of affordable ready-to-wear clothing. The company is
opening two new outlets, as sales have been excellent. Which of the following represents a strength for the company?
A) The company's in-house designers have a knack for identifying and popularizing fashion trends.
B) Disposable income is rising and consumers will have more money to spend on clothes.
C) Overseas customers have shown an interest in buying Bella Vista clothes through the company's online store.
D) A long-time competitor recently went out of business and Bella Vista can cut down on its advertising budget.
Answer: A
Page Ref: 243
Ch. Objective: 2
32) If a bank estimates the capabilities of its employees who provide customer service prior to implementing a new
training program designed to change their method of providing customer service, it is ________.
A) conducting an external analysis
B) formulating its competitive strategies
C) doing an internal analysis
D) formulating its corporate strategies
Answer: C
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
33) An organization's financial, physical, human, and intangible assets are known as its ________.
A) resources
B) capabilities
C) opportunities
D) core competencies
Answer: A
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
34) The major value-creating capabilities of the organization are known as its ________.
A) strengths
B) opportunities
C) core competencies
D) resources
Answer: C
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
35) The combined external and internal analyses are called ________.
A) competitor analysis
B) industry analysis
C) market analysis
D) SWOT analysis
Answer: D
Page Ref: 243
Ch. Objective: 3
Difficulty: Easy
36) The final step in the strategic management process allows an organization to understand the ________.
A) effectiveness of the strategies used
B) implementation of the strategies
C) formulation of the strategies
D) resources and capabilities it possesses
Answer: A
Page Ref: 244
business strategies
Ch. Objective: 2
Difficulty: Easy
37) Top-level managers are responsible for ________ strategies.

A) differentiation
B) corporate
C) competitive
D) functional
Answer: B
Page Ref: 244
Learning Outcome: Describe the roles of managers and the skills they need to succeed within an organization; Identify
the steps of the strategic management process and describe common organizational and business strategies
Ch. Objective: 3
Difficulty: Easy
38) Lower-level managers are responsible for ________ strategies.

A) functional
B) stability
C) corporate
D) growth
Answer: A
Page Ref: 244
Learning Outcome: Describe the roles of managers and the skills they need to succeed within an organization; Identify
the steps of the strategic management process and describe common organizational and business strategies
Ch. Objective: 3
Difficulty: Easy
39) A ________ strategy determines what businesses a company is in or wants to be in, and what it wants to do with
those businesses.
A) competitive
B) functional
C) focus
D) corporate
Answer: D
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
40) What are the three main types of corporate strategies?

A) stability, focus, and turnaround
B) growth, stability, and renewal
C) growth, cost leadership, and differentiation
D) stability, differentiation, and focus
Answer: B
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
41) A ________ strategy is when an organization expands the number of markets served or the products offered.
A) growth
B) renewal
C) stability
D) retrenchment
Answer: A
Page Ref: 245
business strategies
Ch. Objective: 3
42) Organizations grow by using strategies of ________.
A) concentration, integration, or diversification
B) concentration, integration, or stabilization
C) integration, diversification, or differentiation
D) integration, diversification, or functionalization
Answer: A
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
43) An organization that grows using ________ focuses on its primary line of business and increases the number of
products offered or markets served in this primary business.
A) concentration
B) horizontal integration
C) vertical integration
D) diversification
Answer: A
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
44) In ________, the organization becomes its own supplier so it can control its inputs.
A) concentrated integration
B) backward vertical integration
C) forward vertical integration
D) horizontal integration
Answer: B
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
45) In ________, the organization gains control of its outputs by becoming its own distributor.
A) diversified integration
B) concentrated integration
C) backward vertical integration
D) forward vertical integration
Answer: D
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
46) Ronald's has been in the fast food business for five years. After struggling for two years, it finally broke even, and
the french fries it offers are its most popular product. However, during the past year, its business has suffered because
the farm that used to supply it with potatoes has increased its prices drastically. What should Ronald's do to control its
production costs?
A) Ronald's should reorganize its organizational hierarchy to increase efficiency.
B) Ronald's should buy out the farm and become its own supplier.
C) Ronald's should open more distribution outlets.
D) Ronald's should broaden its product range by introducing potato nuggets on its menu.
Answer: B
Page Ref: 245
business strategies
Ch. Objective: 3
47) In ________, a company grows by combining with competitors.

A) concentrated integration
D) diversified integration
Answer: B
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
48) When L'Oreal acquired The Body Shop, it carried out ________.
A) horizontal integration
B) forward horizontal integration
C) backward horizontal integration
D) diversified integration
Answer: A
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
49) An organization that is diversifying its product line is exhibiting what type of corporate strategy?
A) turnaround strategy
B) retrenchment strategy
C) growth strategy
D) stability strategy
Answer: C
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
50) ________ takes place when a company combines with other companies in different, but associated, industries.
A) Stabilized diversification
B) Horizontal integration
C) Vertical integration
D) Related diversification
Answer: D
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
51) When a company combines with firms in different and dissimilar industries, it indulges in ________.
A) unrelated diversification
D) stabilized diversification
Answer: A
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
52) Florance is a chain of flower shops in the Chicago area. The company recently acquired Knick-knacks, which owns
three gift shops. Which of the following is most similar to this acquisition?
A) Construction firm Donaldson acquired Fabrica Textiles as it seemed like a good investment.
B) Faced with mounting raw material costs, I&A Products took over its supplier, BR Corporation.
C) Dallas Shoes buys out RunTime Shoes and expands its distribution channels through RunTime outlets.
D) Toy World acquired Unicorn Children's Books and now retails both toys and books from co-branded outlets.
Answer: D
Page Ref: 246
business strategies
Ch. Objective: 3
53) When an organization continues serving the same clients by offering the same product or service, maintaining
market share, and sustaining the organization's current business operations, it is following a ________ strategy.
A) renewal
B) stability
C) retrenchment
D) turnaround
Answer: B
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
54) ________ strategies address declining performance through retrenchment and turnaround strategies.
A) Renewal
B) Stability
C) Growth
D) Functional
Answer: A
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
55) A ________ strategy is used to deal with minor performance problems. It helps an organization stabilize
operations, revitalize organizational resources and capabilities, and prepare to compete once again.
A) turnaround
B) stability
C) growth
D) retrenchment
Answer: D
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
56) Which of the following provides a framework for understanding diverse businesses and helps managers establish
priorities for allocating resources?
A) a differentiation strategy
B) vertical integration
C) a corporate portfolio matrix
D) a strategic business unit
Answer: C
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
57) In the Boston Consulting Group (BCG) matrix, a business unit that has a low anticipated growth rate but a high
market share is known as a ________.
A) cash cow
B) star
C) dog
D) question mark
Answer: A
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
58) In the BCG matrix, a business unit that has a high anticipated growth rate but a low market share is known as a
________.
A) star
B) dog
C) cash cow
D) question mark
Answer: D
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
59) In the BCG matrix, a ________ has a low anticipated growth rate and a low market share.
A) question mark
B) cash cow
C) dog
D) star
Answer: C
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
60) In the BCG matrix, a ________ enjoys a high anticipated growth rate and a high market share.
A) question mark
B) star
C) cash cow
D) dog
Answer: B
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
61) ________ should be sold off or liquidated as they have low market share and low growth potential.
A) Cash cows
B) Stars
C) Question marks
D) Dogs
Answer: D
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
62) Managers should "milk" cash cows for as much as they can, limit any new investment in them, and use the large
amounts of cash generated to invest in ________ and ________.
A) dogs; stars
B) cash cows; dogs
C) stars; question marks
D) question marks; dogs
Answer: C
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
63) Heavy investment in ________ will help take advantage of the market's growth and help maintain high market
share.
A) cash cows
B) stars
C) question marks
D) dogs
Answer: B
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
64) In an organization, the single independent businesses which formulate their own competitive strategies are known
as ________.
A) strategic growth units
B) strategic business units
C) focus units
D) service units
Answer: B
Page Ref: 248
Ch. Objective: 4
Difficulty: Easy
65) Kiva Systems, manufacturer of robots used in flexible automation systems, demonstrates the power of ________ by
"teaching" its robots to dispose of used cardboard and to assist in gift wrapping for e-commerce warehouse fulfillment.
A) design thinking
B) competitive advantage
C) strategic flexibility
D) e-business strategies
Answer: A
Page Ref: 248
business strategies
Ch. Objective: 4
66) Which of the following is a competitive force under the five forces model?
A) past rivalry with competitors
B) predictable changes in the market
D) threat of substitutes
Answer: D
Page Ref: 249
Ch. Objective: 4
Difficulty: Easy
67) A cost leadership strategy requires a firm to ________.

A) maintain the lowest cost structure
B) be unique in its product offering
C) aim at a cost advantage in a niche market
D) match its competition in terms of costs
Answer: A
Page Ref: 249
business strategies
Ch. Objective: 4
Difficulty: Easy
68) A company that competes by offering unique products that are widely valued by customers is following a
________.
A) leadership strategy
B) differentiation strategy
C) focus strategy
D) functional strategy
Answer: B
Page Ref: 250
business strategies
Ch. Objective: 4
Difficulty: Easy
69) Which of the following strategies involves a cost advantage or a differentiation advantage in a narrow segment?
A) flexibility strategy
B) focus strategy
C) functional strategy
D) leadership strategy
Answer: B
Page Ref: 250
business strategies
Ch. Objective: 4
Difficulty: Easy
70) A firm that is "stuck in the middle" cannot develop ________.

A) a cost or differentiation advantage
B) a functional strategy
C) a leadership strategy
D) a flexible strategy
Answer: A
Page Ref: 250
business strategies
Ch. Objective: 4
Difficulty: Easy
71) Functional-level strategy directly supports the ________.
A) corporate strategy
B) competitive strategy
C) growth strategy
D) concentration strategy
Answer: B
Page Ref: 250
business strategies
Ch. Objective: 4
Difficulty: Easy
72) ________ is the ability to anticipate, envision, maintain flexibility, think strategically, and work with others in the
organization to initiate changes that will create a viable and valuable future for the organization.
A) Strategic leadership
B) Scientific management
C) Strategic competence
D) Strategic flexibility
Answer: A
Page Ref: 252
business strategies
Ch. Objective: 5
Difficulty: Easy
73) How can an organization develop strategic flexibility?

A) It should commit resources only after thorough planning.
B) It should monitor and evaluate its past strategies.
C) It should depend on tried and tested perspectives from senior employees.
D) It should have multiple alternatives when making strategic decisions.
Answer: D
Page Ref: 253
business strategies
Ch. Objective: 5
Difficulty: Easy
74) ________ is the ability to recognize major external changes, to quickly commit resources, and to recognize when a
strategic decision is not working.
A) Strategic apprenticeship
B) Strategic flexibility
C) Strategic leadership
D) Strategic acceptability
Answer: B
Page Ref: 253
business strategies
Ch. Objective: 5
Difficulty: Easy
75) How can a cost leader use e-business to reduce costs?

A) It could automate purchasing and payment systems so that customers have detailed status reports.
B) It could provide rapid online responses to service requests.
C) It could use Internet-based knowledge systems to shorten customer response times.
D) It could use Web-based inventory control systems that reduce storage costs.
Answer: D
Page Ref: 253
business strategies
Ch. Objective: 5
Difficulty: Easy
76) An Internet-based knowledge management system that shortens customer response times would be an e-business
technique that contributes to the competitive advantage of a ________.
A) cost leader
B) differentiator
C) focuser
D) brick
Answer: B
Page Ref: 253
business strategies
Ch. Objective: 5
Difficulty: Easy
77) Who targets a narrow market segment with customized products?
A) a differentiator
B) an integrator
C) a focuser
D) a first mover
Answer: C
Page Ref: 254
business strategies
Ch. Objective: 5
Difficulty: Easy
78) A ________ firm uses both online and traditional stand-alone locations.
A) first mover
B) clicks-and-bricks
C) focuser
D) brick-and-mortar
Answer: B
Page Ref: 254
business strategies
Ch. Objective: 5
Difficulty: Easy
79) An organization that initially brings a product innovation to the market is known as the ________.
A) first mover
B) free rider
C) cash cow
D) question mark
Answer: A
Page Ref: 255
business strategies
Ch. Objective: 5
Difficulty: Easy
80) Which of the following is an advantage of being a first mover?
A) certainty over the direction of technology and market
B) low development costs
C) no financial or strategic risks
D) opportunity to begin building customer relationships
Answer: D
Page Ref: 255
business strategies
Ch. Objective: 5
Difficulty: Easy
81) What is a strategic disadvantage of being a first mover?

A) least opportunity to build customer loyalty
B) risk of competitors imitating innovations
C) no cost and learning benefit
D) no control over resources
Answer: B
Page Ref: 255
business strategies
Ch. Objective: 5
Difficulty: Easy
A New Business (Scenario)
Patrick majored in entrepreneurship and computer science in college. After graduation, he decided to start his own
business as an e-business entrepreneur, founding an online B2B reverse auction company called CompuSave.
82) After hiring several employees, Patrick requires that each person in this company be involved in studying trends
involving new technology, competitors, and customers. These employees are involved in ________.
A) external analysis
B) internal analysis
C) formulating strategies
D) implementing strategies
Answer: A
Page Ref: 242
Ch. Objective: 2
Difficulty: Easy
83) After completing an external analysis, Patrick will become aware of the ________ of the company.
A) threats and weaknesses
B) strengths and weaknesses
C) opportunities and threats
D) strengths and opportunities
Answer: C
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
84) An internal analysis will help Patrick identify the ________ of the company.
A) strengths and weaknesses
B) opportunities and threats
C) strengths and opportunities
D) threats and weaknesses
Answer: A
Page Ref: 243
Ch. Objective: 2
Difficulty: Easy
SWOT Analysis (Scenario)
As a process of self-examination during her senior year of college, Casey decides to develop a SWOT analysis of her
prospects relative to getting a job.
85) Casey majored in marketing and really enjoyed studying market research as a subject. Through research on the
Internet and in the university library, she discovers that this industry appears to have significant positive external
trends. She interprets this as a(n) ________.
A) weakness
B) threat
C) strength
D) opportunity
Answer: D
Page Ref: 243
Ch. Objective: 2
86) Casey realizes that she has a personal characteristic that suggests she is not comfortable interacting with strangers.
She interprets this as a(n) ________ if she is to get a job as a salesperson.
A) threat
B) strength
C) weakness
D) opportunity
Answer: C
Page Ref: 243
Ch. Objective: 2
Un Taco Pequeno (Scenario)
Imagine that you are the president of Taco Rocket, a new and successful chain of 100 Mexican fast-food restaurants in
the United States. The success you have experienced in the last five years has you thinking of what to do with the
business next. Should you expand the business at the current rate or open new and different restaurants?
87) Noting the growing popularity of South-East Asian food, you decide to open a new outlet called Rice Rocket.
Which of the following, if TRUE, could prove to be a threat to this plan?
A) You don't have the necessary expertise; you will have to recruit chefs and staff familiar with Asian food preparation.
B) A competitor, Pan Asia, has a similar product lineup and first mover advantage in the market.
C) Rice Rocket will necessitate a complete overhaul of your existing supply process.
D) A survey indicates that the Taco Rocket brand name evokes trust and consumer loyalty.
Answer: B
Page Ref: 243
Ch. Objective: 2
88) You decide to concentrate on Taco Rocket's primary business by only increasing the menu to include new items
such as enchiladas and rice bowls. This is an example of what type of growth strategy?
A) vertical integration
C) concentration
D) diversification
Answer: C
Page Ref: 245
business strategies
Ch. Objective: 3
Difficulty: Easy
89) Your oldest supplier, Zorro Distributors, is a family-owned firm. Recently, the firm's president, Diego De La Vega,
made the decision to retire. To his disappointment, none of his five children stepped forward to take his place at the
helm of the firm. Sr. De La Vega is concerned that if he sells his company to a larger distributor, many of his
employees will lose their jobs. You approach your old friend with a generous offer to buy Zorro and continue its
current operations. Should your offer be accepted, Taco Rocket would be undertaking ________.
A) horizontal integration
B) unrelated diversification
C) forward vertical integration
D) backward vertical integration
Answer: D
Page Ref: 245
Ch. Objective: 2
Difficulty: Easy
90) You decide to purchase a local five-store hardware chain because it was a good investment. This is an example of
________.
A) concentration growth strategy
B) stabilization strategy
C) related diversification
D) unrelated diversification
Answer: D
Page Ref: 246
business strategies
Ch. Objective: 2
Difficulty: Easy
91) Because of the good profits and a fear of growing too fast, you decide to keep Taco Rocket in the same business
and do not change the menu. You hope to retain the same market share and return-on-investment record. This is
considered a ________ strategy.
A) stability
B) renewal
C) retrenchment
D) turnaround
Answer: A
Page Ref: 246
Ch. Objective: 2
Difficulty: Easy
92) You decide to keep Taco Rocket in the same business and do not change the menu. Which of the following, if
TRUE, would strengthen the argument for this course of action?
A) A competitor, Tacos & Tamales, has begun selling similar products at much lower prices than Taco Rocket.
B) Taco Rocket's performance has declined significantly over the past four months.
C) Though new competitors have entered, Taco Rocket's market share has not been affected.
D) Demand for Mexican food has been increasing steadily in the U.S.
Answer: C
Page Ref: 246
Ch. Objective: 3
Powerballs (Scenario)
Colleen invested a dollar in the Powerball Lottery and won $60 million. Subsequently, she decides to start her own
business selling lawn mowers.
93) Colleen is successful after the first 3 years, and she is approached by a competitor who is nearing retirement age.
The competitor is interested in selling his business to Colleen. For Colleen, this would be a(n) ________ strategy.
D) retrenchment
Answer: B
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
94) A business broker hears that Colleen is interested in purchasing a business and approaches her with an offer to sell
her a company that owns a patent on a new roofing product and who installs this new roofing in the southwestern
United States. If she buys this firm, she will be using a(n) ________ strategy.
D) related diversification
Answer: A
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
95) No matter which business Colleen decides to buy, she intends that each company be a strategic business unit. This
means that ________.
A) each company will continue to do what it is currently doing
B) each business will be independent and will have its own competitive strategies
C) the companies will use concentration strategies that focus on their primary business lines
D) the companies will merge by means of vertical integration
Answer: B
Page Ref: 248
business strategies
Ch. Objective: 4
Difficulty: Easy
El Taco Grande (Scenario)
As the original owner of Taco Rocket, you have seen your business holdings grow substantially over the last 10 years.
The number of stores you own and franchise has grown by 200 percent and you own a number of companies in related
and unrelated areas.
96) Your oldest holding, Taco Rocket, has not grown much in recent years, but due to low debt, it generates a huge
amount of cash. According to BCG, Taco Rocket would be considered a ________.
A) cash cow
B) star
C) question mark
D) dog
Answer: A
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
97) Recently, you also purchased a company that manufactures a new satellite dish, allowing you to enter into the cable
television market. The business is profitable and growing, but the technological unknowns make it risky. BCG
considers it a ________.
A) cash cow
B) star
C) question mark
D) dog
Answer: C
Page Ref: 247
Ch. Objective: 3
Difficulty: Easy
Megabyte Center, S.A. (Scenario)
Your old friend, Ariel Eskenazi, is the owner and general manager of Megabyte Center, a computer reseller and
systems integrator located in Panama City, Panama. Since leaving IBM to start a business in his home country, Ariel's
company has steadily grown, due in large part to the business partnerships he has established over the years with large
foreign computer and software firms, such as Goldstar and Microsoft. These relationships have helped his company
win considerable market share in Panama, as well as in other parts of Latin America. However, since the 1999 turnover
of the Panama Canal to the Panamanian government, there has been a huge influx of foreign capital into Panama. For
example, several large Asian firms have made Panama a beachhead for their American operations. Tourism is on the
rise, with over a score of new hotels built in the metropolitan area alone over the past three years. As a result, demand
for Megabyte's products and services has increased markedly, but so has the level and diversity of its competition.
While Megabyte's customer base has remained fairly loyal, many longtime customers are beginning to demand price
concessions and enhanced service levels in return for their continued business. Additionally, Ariel has learned recently
that several of his former suppliers and business partners are considering establishing local sales offices of their own in
Panama City. Ariel knows you are very knowledgeable about competitive strategy and calls you asking for advice.
98) With all the changes occurring in the computer reseller market, you advise him to stay with his present course until
the market calms down. You are recommending that Ariel use a ________ strategy.
A) renewal
B) stability
C) growth
D) retrenchment
Answer: B
Page Ref: 246
business strategies
Ch. Objective: 3
Difficulty: Easy
99) Because his customers are demanding price concessions and enhanced service levels in return for their continued
business, Ariel decides that he wants to compete by offering unique products that are widely valued by customers.
What strategy is Ariel following?
A) focus
B) cost leadership
C) differentiation
D) stability
Answer: C
Page Ref: 250
business strategies
Ch. Objective: 4
Difficulty: Easy
100) Ariel is considering forgoing the retail side of his business entirely. Instead, he will redirect his resources toward
reselling hardware and software and providing systems integration services to the Latin American governmental and
industrial sectors. Such a move would be most representative of which one of the following strategies?
A) cost leadership
B) leadership
C) focus
D) functional
Answer: C
Page Ref: 250
business strategies
Ch. Objective: 4
Difficulty: Easy
101) In a short essay, explain strategic management and why it is important.
Answer: Strategic management is what managers do to develop the organization's strategies. It is an important task
involving all the basic management functions—planning, organizing, leading, and controlling.
There are three reasons as to why strategic management is important.
The most significant one is that it can make a difference in how well an organization performs. Generally, there is a
positive relationship between strategic planning and performance. Generally, organizations that use strategic
management have higher levels of performance.
Another reason it is important has to do with the fact that managers in organizations of all types and sizes face
continually changing situations. They cope with this uncertainty by using the strategic management process to examine
relevant factors and decide what actions to take.
Finally, strategic management is important because organizations are complex and diverse. Each part needs to work
together toward achieving the organization's goals; strategic management helps do this.
Today, strategic management has become so important that both business organizations and not-for-profit organizations
use it.
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AACSB: Reflective Thinking Skills; Communication Abilities
Ch. Objective: 1
102) Describe the strategic management process and identify the six stages in the process.
Answer: The strategic management process is a six-step process that encompasses strategy planning, implementation,
and evaluation. The first four steps describe the planning that must take place.
Step 1: Identifying the Organization's Current Mission, Goals, and Strategies - Every organization needs a mission—a
statement of its purpose. Defining the mission forces managers to identify what it's in business to do. These statements
provide clues to what these organizations see as their purpose.
Step 2: Doing an External Analysis: Managers do an external analysis so they know, for instance, what the competition
is doing, what pending legislation might affect the organization, or what the labor supply is like in locations where it
operates. In an external analysis, managers should examine the economic, demographic, political/legal, sociocultural,
technological, and global components to see the trends and changes. Once they have analyzed the environment,
managers need to pinpoint opportunities that the organization can exploit and threats that it must counteract or buffer
against. Opportunities are positive trends in the external environment; threats are negative trends.
Step 3: Doing an Internal Analysis - This provides important information about an organization's specific resources and
capabilities. After completing an internal analysis, managers should be able to identify organizational strengths and
weaknesses. Any activities the organization does well or any unique resources that it has are called strengths.
Weaknesses are activities the organization does not do well or resources it needs but does not possess.
The combined external and internal analyses are called the SWOT analysis, which is an analysis of the organization's
strengths, weaknesses, opportunities, and threats. After completing the SWOT analysis, managers are ready to
formulate appropriate strategies—that is, strategies that (1) exploit an organization's strengths and external
opportunities, (2) buffer or protect the organization from external threats, or (3) correct critical weaknesses.
Step 4: Formulating Strategies - As managers formulate strategies, they should consider the realities of the external
environment and their available resources and capabilities in order to design strategies that will help an organization
achieve its goals. The three main types of strategies managers will formulate include corporate, competitive, and
functional.
Step 5: Implementing Strategies - Once strategies are formulated, they must be implemented. No matter how
effectively an organization has planned its strategies, performance will suffer if the strategies are not implemented
properly.
Step 6: Evaluating Results - The final step in the strategic management process is evaluating results.
Page Ref: 242-244
AACSB: Communication Abilities; Analytic Skills
Ch. Objective: 2
103) List and discuss the three levels of strategy that a large organization must develop.
Answer:
a. Corporate Strategy - This strategy determines what businesses a company is in or wants to be in, and what it wants to
do with those businesses. It is based on the mission and goals of the organization and the roles each business unit of the
organization will play. It also helps top managers decide what to do with the businesses: grow them, keep them the
same, or renew them.
b. Competitive Strategy - This is a strategy for how an organization will compete in its businesses. For a small
organization in only one line of business or the large organization that has not diversified into different products or
markets, its competitive strategy describes how it will compete in its primary or main market. For organizations in
multiple businesses, however, each business will have its own competitive strategy that defines its competitive
advantage, the products or services it will offer, and the customers it wants to reach.
c. Functional Strategy - This is the strategy used by an organization's various functional departments to support the
competitive strategy.
Page Ref: 245-250
business strategies
Ch. Objective: 3; 4
104) List and discuss the different types of corporate strategies.

Answer: The three main types of corporate strategies are growth, stability, and renewal.
a. Growth - A growth strategy is when an organization expands the number of markets served or products offered,
either through its current business(es) or through new business(es). Because of its growth strategy, an organization may
increase revenues, number of employees, or market share. Organizations grow by using concentration, vertical
integration, horizontal integration, or diversification.
b. Stability - A stability strategy is a corporate strategy in which an organization continues to do what it is currently
doing. Examples of this strategy include continuing to serve the same clients by offering the same product or service,
maintaining market share, and sustaining the organization's current business operations. The organization does not
grow, but does not fall behind, either.
c. Renewal - When an organization is in trouble, something needs to be done. Managers need to
develop strategies, called renewal strategies, that address declining performance. The two
main types of renewal strategies are retrenchment and turnaround strategies.
Page Ref: 245-247
business strategies
Ch. Objective: 3
105) Discuss the methods by which an organization grows. Give relevant examples.
Answer: Organizations grow by using concentration, vertical integration, horizontal integration, or diversification.
An organization that grows using concentration focuses on its primary line of business and increases the number of
products offered or markets served in this primary business. For instance, Bose Corporation of Framingham,
Massachusetts, which focuses on developing innovative audio products has become one of the world's leading
manufacturers of speakers for home entertainment, automotive, and pro audio markets with sales of more than $2
billion by using this strategy.
A company also might choose to grow by vertical integration, either backward, forward, or both. In backward vertical
integration, the organization becomes its own supplier so it can control its inputs. For instance, eBay owns an online
payment business that helps it provide more secure transactions and control one of its most critical processes. In
forward vertical integration, the organization becomes its own distributor and is able to control its outputs. For
example, Apple has more than 287 retail stores worldwide to distribute its product.
In horizontal integration, a company grows by combining with competitors. For instance, French cosmetics giant
L'Oreal acquired The Body Shop.
Finally, an organization can grow through diversification, either related or unrelated. Related diversification happens
when a company combines with other companies in different, but related,
industries. For example, American Standard Cos., based in Piscataway, New Jersey, is in a variety of businesses
including bathroom fixtures, air conditioning and heating units, plumbing parts, and pneumatic brakes for trucks.
Although this mix of businesses seems odd, the company's "strategic fit" is the efficiency-oriented manufacturing
techniques developed in its primary business of bathroom fixtures, which it has transferred to all its other businesses.
Unrelated diversification is when a company combines with firms in different and unrelated industries. For instance,
the Tata Group of India has businesses in chemicals, communications and IT, consumer products, energy, engineering,
materials, and services. In this case, there is no strategic fit among the businesses.
Page Ref: 245-246
business strategies
Ch. Objective: 3
106) Discuss the corporate portfolio matrix and the Boston Consulting Group (BCG) matrix.
Answer: When an organization's corporate strategy encompasses a number of businesses, managers can manage this
collection, or portfolio, of businesses using a tool called a corporate portfolio matrix. This matrix provides a framework
for understanding diverse businesses and helps managers establish priorities for allocating resources.
The first portfolio matrix—the BCG matrix—was developed by the Boston Consulting Group and introduced the idea
that an organization's various businesses could be evaluated and plotted using a 2 × 2 matrix to identify which ones
offered high potential and which were a drain on organizational resources. The horizontal axis represents market share
(low or high) and the vertical axis indicates anticipated market growth (low or high). A business unit is evaluated using
a SWOT analysis and placed in one of the four categories: dogs, cash cows, stars, and question marks.
a. Dogs - They should be sold off or liquidated as they have low market share in markets with low growth potential.
b. Cash Cows - These have low anticipated growth rate but high market share. Managers should "milk" them for as
much as they can, limit any new investment in them, and use the large amounts of cash generated to invest in stars and
question marks with strong potential to improve market share.
c. Stars - These have high anticipated growth rate and high market share. Heavy investment in stars will help take
advantage of the market's growth and help maintain high market share. The stars eventually develop into cash cows as
their markets mature and sales growth slows.
d. Question Marks - These have high anticipated growth rate but low market share. The hardest decision for managers
relates to the question marks. After careful analysis, some will be sold off
and others strategically nurtured into stars.
Page Ref: 247
Ch. Objective: 3
107) Discuss the concept of competitive advantage and explain how quality is a competitive advantage.
Answer: In order to develop an effective competitive strategy, managers should understand their competitive
advantage, which is what sets their organization apart—that is, the organization's distinctive edge. The distinctive edge
can come from the organization's core competencies by doing something that others cannot do or by doing it better than
others. For example, Southwest Airlines has a competitive advantage because of its skills at giving passengers what
they want-convenient and inexpensive air passenger service. Or competitive advantage can come from the company's
resources because the organization has something that its competitors do not have. For instance, Walmart's state-of-the-
art information system allows it to monitor and control inventories and supplier relations more efficiently than its
competitors, which Walmart has turned into a cost advantage.
Quality as a competitive advantage: If implemented properly, quality can be a way for an organization to create a
sustainable competitive advantage. That is why many organizations apply quality management concepts in an attempt
to set themselves apart from competitors. If a business is able to continuously improve the quality and reliability of its
products, it may have a competitive advantage that cannot be taken away.
Page Ref: 248
Ch. Objective: 4
108) Discuss the five forces model and the various competitive strategies that an organization may use.
Answer: In any industry, five competitive forces dictate the rules of competition. Together, these five forces determine
industry attractiveness and profitability, which managers assess using these five factors:
1. Threat of new entrants. How likely is it that new competitors will come into the industry?
2. Threat of substitutes. How likely is it that other industries' products can be substituted for our industry's products?
3. Bargaining power of buyers. How much bargaining power do buyers (customers) have?
4. Bargaining power of suppliers. How much bargaining power do suppliers have?
5. Current rivalry. How intense is the rivalry among current industry competitors?
Once managers have assessed the five forces and done a SWOT analysis, they are ready to select an appropriate
competitive strategy—that is, one that fits the competitive strengths (resources and capabilities) of the organization and
the industry it's in. According to Porter, no firm can be successful by trying to be all things to all people. He proposed
that managers select a strategy that will give the organization a competitive advantage, either from having lower costs
than all other industry competitors or by being significantly different from competitors.
a. Cost Leadership Strategy - When an organization competes on the basis of having the lowest costs (costs or
expenses, not prices) in its industry, it's following a cost leadership strategy. A low-cost leader is highly efficient.
Overhead is kept to a minimum, and the firm does everything it can to cut costs.
b. Differentiation Strategy - A company that competes by offering unique products that are widely valued by customers
is following a differentiation strategy. Product differences might come from exceptionally high quality, extraordinary
service, innovative design, technological capability, or an unusually positive brand image.
c. Focus Strategy - This involves a cost advantage (cost focus) or a differentiation advantage (differentiation focus) in a
narrow segment or niche. Segments can be based on product variety, customer type, distribution channel, or
geographical location.
Page Ref: 249-250
Ch. Objective: 4
109) Discuss how managers can formulate e-business strategies that contribute to the development of a sustainable
competitive advantage in today's environment.
Answer: Managers use e-business strategies to develop a sustainable competitive advantage.
A cost leader can use e-business to reduce costs in a variety of ways. It might use online bidding and order processing
to eliminate the need for sales calls and to decrease sales force expenses; it could use Web-based inventory control
systems that reduce storage costs; or it might use online testing and evaluation of job applicants.
A differentiator needs to offer products or services that customers perceive and value as unique. For instance, a
business might use Internet-based knowledge systems to shorten customer response times, provide rapid online
responses to service requests, or automate purchasing and payment systems so that customers have detailed status
reports and purchasing histories.
Finally, because the focuser targets a narrow market segment with customized products, it might provide chat rooms or
discussion boards for customers to interact with others who have common interests; design niche Web sites that target
specific groups with specific interests, or use Web sites to perform standardized office functions such as payroll or
budgeting.
Page Ref: 253-254
business strategies
Ch. Objective: 5
110) Explain the term "first mover" and then list some of the advantages and disadvantages of being a first mover in the
market.
Answer: An organization that is first to bring a product innovation to the market or to use a new process innovation is
called a first mover.
Some of the advantages of being a first mover are:
a. Reputation for being innovative and industry leader
b. Cost and learning benefits
c. Control over scarce resources and keeping competitors from having access to them
d. Opportunity to begin building customer relationships and customer loyalty
Some of the disadvantages of being a first mover are:
a. Uncertainty over exact direction technology and market will go
b. Risk of competitors imitating innovations
c. Financial and strategic risks
d. High development costs
Page Ref: 255
business strategies
Ch. Objective: 5
Chapter 11 Designing Organizational - Structure Adaptive Design

1) Which of the following is an advantage of a team structure?
A) It empowers employees and makes them more involved.
B) It establishes a clear line of managerial authority.
C) It reduces the pressure on teams to perform.
D) It separates different functional groups.
Answer: A
Diff: 2
AACSB: Reflective thinking
Learning Obj.: LO 11.1: Describe contemporary organizational designs
Classification: Concept
2) In a ________ structure, no clear chain of command exists.

A) team
B) project
C) matrix
D) traditional
Answer: A
Diff: 2
3) Which of the following is a disadvantage of a matrix structure?

A) It increases the complexity of assigning people to projects.
B) It slows down the decision-making process.
C) It reduces organizational responsiveness.
D) It leads to lower morale among team members.
Answer: A
Diff: 3
4) In which of the following organizational designs is there a greater likelihood of task and personality conflicts?
A) simple structures
B) functional structures
C) project structures
D) team structures
Answer: C
Diff: 1
5) In which of the following organizational designs are employees most likely to experience communication
difficulties?
A) team structures
B) matrix structures
C) project structures
D) boundaryless structures
Answer: D
Diff: 1
6) Employee empowerment is a crucial aspect of which type of organizational design?

A) bureaucratic structures
B) simple structures
C) functional structures
D) team structures
Answer: D
Diff: 1
7) The ________ structure assigns specialists from different functional departments to work on projects being led by a
project manager.
A) team
B) learning
C) boundaryless
D) matrix
Answer: D
Diff: 2
8) A dual chain of command is the key characteristic of the ________ structure.

A) matrix
B) project
C) team
D) virtual
Answer: A
Diff: 1
9) A matrix structure violates which important element of organizational design?
A) unity of command
B) span of control
C) chain of command
D) decentralization
Answer: A
Diff: 3
10) Which of the following is a characteristic of a matrix organization?

A) It conforms to the unity of command principle.
B) It consists of outside specialists who are temporarily hired to work on projects.
C) It has formal departments to which employees return after completing a project.
D) It is free of both internal and external boundaries.
Answer: C
Diff: 2
11) Which of the following is a characteristic of a project structure?

A) It has no formal departments.
B) It creates a high level of team loyalty.
C) It has a rigid organizational hierarchy.
D) It has a very slow decision-making process.
Answer: A
Diff: 2
12) All work in project structures is performed by ________.

A) teams
B) functions
C) outside specialists
D) informal groups
Answer: A
Diff: 1
13) BarNone is an electronic engineer's dream job. There are no departments, no chain of command. Employees find a
team working on something they find interesting and to which they can contribute and stay with that team until the
work is done then they move on to another team. BarNone uses a ________ structure.
A) team
B) project
C) matrix
D) boundaryless
Answer: B
Diff: 3
AACSB: Application of knowledge
14) Which of the following organizational designs has no rigid and predefined structure?
A) matrix structures
B) boundaryless organizations
C) simple structures
D) functional organizations
Answer: B
Diff: 1
15) In terms of organizational design, external boundaries refer to the boundaries that separate ________.
A) an organization's permanent workforce from its contingent workforce
B) an organization's top-management from its middle- and lower-management
C) an organization from its customers, suppliers, and other stakeholders
D) an organization from its divisions in other countries
Answer: C
Diff: 2
16) The company is known for its auto insurance but its customers would be surprised to learn how few regular
employees the company has. Most work from home or from their own offices and only when the insurance company
has projects for them. This company is most likely a ________.
A) boundaryless organization
B) virtual organization
C) network organization
D) learning organization
Answer: B
Diff: 3
17) A virtual organization ________.

A) is structurally complex
B) has a fairly large full-time workforce
C) hires outside specialists on a project basis
D) has a high degree of departmentalization
Answer: C
Diff: 2
18) The management at Ranger Oil Corporation (ROC) decides to outsource functions such as accounting, payroll, and
human resources, thereby allowing ROC to focus on what they do best–oil exploration and distribution. The
management is aiming to turn ROC into a ________.
A) team organization
B) matrix organization
C) project organization
D) network organization
Answer: D
Diff: 2
19) A ________ organization is an organization that has developed the capacity to continuously acquire knowledge,
adapt, and change.
A) learning
B) boundaryless
C) virtual
D) organic
Answer: A
Diff: 2
20) Marvin's employer has created a database where all the engineers can post their problems and solutions. Product
developers can access the database as can production personnel. Marvin's employer typifies a ________ organization.
A) boundaryless
B) virtual
C) network
D) learning
Answer: D
Diff: 3
21) Which of the following is a characteristic of a learning organization?

A) contingent workforce
B) multiple structural and physical barriers
C) empowered work teams
D) several managerial roles to direct and control employees
Answer: C
Diff: 2
22) Dr. Miller teaches in a major university. For course-related issues, he reports to the Dean of the School of Business
and Economics. But he also reports to the Vice-Chancellor for Undergraduate Academic Affairs for student-specific
issues. This university uses a ________.
A) project structure
B) matrix structure
C) team structure
D) network structure
Answer: B
Diff: 2
23) Employee empowerment is crucial in organizations with team structures because no line of managerial authority
flows from top to bottom in such organizations.
Answer: TRUE
Diff: 1
24) In large organizations, the team structure complements what is typically a functional or divisional structure.
Answer: TRUE
Diff: 1
25) One benefit of the matrix structure is that it creates a dual chain of command.
Answer: FALSE
Diff: 2
26) Project structures tend to be rigid organizational designs, with the departmentalization and organizational hierarchy
slowing down the decision-making process.
Answer: FALSE
Diff: 2
27) The horizontal boundaries imposed by work specialization and departmentalization are a part of an organization's
external boundaries.
Answer: FALSE
Diff: 1
28) A virtual organization typically consists of a small core of full-time employees and outside specialists temporarily
hired as needed to work on projects.
Answer: TRUE
Diff: 1
29) A virtual organization consists of temporary workers who telecommute.

Answer: FALSE
Diff: 2
30) In a learning organization, employees continually acquire and share new knowledge and apply that knowledge in
making decisions or doing their work.
Answer: TRUE
Diff: 1
31) Describe matrix and project structures.
Answer: The matrix structure assigns specialists from different functional departments to work on projects being led
by a project manager. One unique aspect of this design is that it creates a dual chain of command because employees in
a matrix organization have two managers: their functional area manager and their product or project manager, who
share authority. The project manager has authority over the functional members who are part of his or her project team
in areas related to the project's goals. However, any decisions about promotions, salary recommendations, and annual
reviews typically remain the functional manager's responsibility. Many organizations use a project structure, in which
employees continuously work on projects. Unlike the matrix structure, a project structure has no formal departments
where employees return at the completion of a project. Instead, employees take their specific skills, abilities, and
experiences to other projects. Also, all work in project structures is performed by teams of employees. Employees
"join" project teams because they bring needed skills and abilities to that project. Once a project is completed, however,
they move on to the next one.
Diff: 3
AACSB: Reflective thinking; Written and oral communication
32) What is a boundaryless organization? What are the features of a virtual organization and a network organization?
Answer: A boundaryless organization is one whose design is not defined by, or limited to, the horizontal, vertical, or
external boundaries imposed by a predefined structure. A virtual organization typically consists of a small core of full-
time employees and outside specialists temporarily hired as needed to work on projects. By relying on these virtual
employees, the company enjoys a network of talent without all the unnecessary overhead and structural complexity.
A network organization uses its own employees to do some work activities and networks of outside suppliers to provide
other needed product components or work processes. This organizational form is sometimes called a modular
organization by manufacturing firms. Such an approach allows organizations to concentrate on what they do best by
contracting out other activities to companies that do those activities best.
Diff: 3
33) What is a learning organization? What structural characteristics do learning organizations need?
Answer: A learning organization is an organization that has developed the capacity to continuously learn, adapt, and
change. In a learning organization, employees continually acquire and share new knowledge and apply that knowledge
in making decisions or doing their work.
In terms of structural characteristics, employees throughout the entire organization—across different functional
specialties and even at different organizational levels—must share information and collaborate on work activities. Such
an environment requires minimal structural and physical barriers, which allows employees to work together in doing
the organization's work the best way they can and, in the process, learn from each other. Finally, empowered work
teams tend to be an important feature of a learning organization's structural design. These teams make decisions about
doing whatever work needs to be done or resolving issues. With empowered employees and teams, there's little need
for "bosses" to direct and control. Instead, managers serve as facilitators, supporters, and advocates.
Diff: 3
34) In order to succeed in today's world, organizations need to ________.

A) be more flexible in how work gets done
B) pace themselves when it comes to innovation
C) strictly follow the top-down decision-making approach
D) adopt narrowly-defined functional arrangements
Answer: A
Diff: 1
Learning Obj.: LO 11.2: Discuss how organizations organize for collaboration
35) Which of the following is TRUE regarding the benefits of collaborative work?
A) The participants have similar views and similar goals.
B) The logistics of coordination are easily achieved.
C) It increases communication among participants.
D) It minimizes interpersonal conflicts.
Answer: C
Diff: 2
36) Which of the following is a drawback of collaborative work?
A) It decreases communication and coordination among the participants.
B) It reduces the level of creativity and produces fewer ideas.
C) It can be effectively applied only to simple problems.
D) It is possible that participants may have opposing views and competing goals.
Answer: D
Diff: 2
37) Which of the following is a structural option that an organization should consider for internal collaboration?
A) joint ventures
B) communities of practice
C) open innovation
D) strategic partnerships
Answer: B
Diff: 1
38) Ohm Software prompts representatives from its software development team as well as its sales and marketing team
to review and monitor the performance of its product and service innovations. This is an example of a ________.
A) task force
B) community of practice
C) joint venture
D) cross-functional team
Answer: D
Diff: 1
AACSB: Analytical thinking
39) The employees of a firm's R&D wing and sales and marketing department were asked to form teams. Within these
teams, the members from R&D were required to explain the features of the new products in detail to the employees of
the sales and marketing department. This helped the sales and marketing team to promote the company's products
better. This an example of the use of ________.
A) cross-functional teams
B) task forces
C) communities of practice
D) cross-cultural teams
Answer: A
Diff: 2
40) A temporary committee formed to tackle a specific short-term problem affecting several departments is known as a
________.
A) task force
C) strategic partnership
D) joint venture
Answer: A
Diff: 1
41) The top management have instructed Adam to put together a temporary team which will develop new training
programs for the purpose of upgrading the existing skills of the firm's software engineers. Adam is being asked to put
together a ________.
A) task force
C) contingent workforce
D) cross-cultural team
Answer: A
Diff: 2
42) A task force is also called a(n) ________.
A) matrix structure
C) ad hoc committee
D) strategic partnership
Answer: C
Diff: 1
43) Which of the following is TRUE regarding task forces?

A) They have a longer life span than cross-functional teams.
B) Team members are not required to perform any other tasks while serving on the task force.
C) The team takes on newer issues or problems as older ones get resolved.
D) They tackle specific short-term problems affecting several departments.
Answer: D
Diff: 2
44) Consolidated Technology's largest customer has complained again about the quality of the parts it has received.
Consolidated has asked for volunteers to participate on a problem-solving team to find the cause and propose a solution
for this ongoing problem. Consolidated is forming a ________.
A) project team
B) team structure
C) standing committee
D) task force
Answer: D
Diff: 3
45) ________ refer to groups of people who share a concern, a set of problems, or a passion about a topic, and who
deepen their knowledge and expertise in that area by interacting on an ongoing basis.
A) Communities of practice
B) Project teams
C) Cross-functional communities
D) Task forces
Answer: A
Diff: 2
46) The management decides to set up an online forum which will allow its software developers to post queries and
share their ideas and best practices with their peers around the world. Such forms of collaboration are called ________.
A) strategic partnerships
B) communities of practice
C) task forces
D) cross-functional teams
Answer: B
Diff: 2
47) Several neurologists were confounded by a patient's lack of response to traditional treatment. One of them went to a
special Web site just for medical personnel to see if others had encountered this problem and whether there was a
different method to try. The neurologist was a member of ________.
A) a project team
B) a task force
C) a community of practice
D) a virtual team
Answer: C
Diff: 3
48) Which of the following will help in making communities of practice successful?
A) conducting face-to-face meetings, instead of online meetings
B) having clear accountability and managerial oversight
C) encouraging members to nurture competing goals
D) focusing on simple and routine issues, that can be easily tackled
Answer: B
Diff: 2
49) Searching for new ideas beyond an organization's boundaries and allowing changes to easily transfer inward and
outward is known as ________.
A) strategic partnering
B) knowledge management
C) customer relationship management
D) open innovation
Answer: D
Diff: 2
50) A cell phone maker has created a digital platform that allows it to directly interact with its customers. Customers
are allowed to post their ideas regarding the features they want in the phones that the company plans to launch. What is
this process of interaction between the company and its customers called?
A) open innovation
B) strategic partnership
C) joint venturing
D) customer relationship management
Answer: A
Diff: 3
51) ABC Corp. decides to enter the cell phone market. Before launching its new handset, it creates a digital platform
which allows the general public to post their ideas and opinions about the features they want in the new phone. In this
scenario, the company is ________.
A) forming a joint venture
B) creating a boundaryless organization
C) promoting open innovation
D) forming a strategic partnership
Answer: C
Diff: 3
52) Which of the following is an advantage of open innovation?

A) It can be implemented even if the organization follows a rigid structure.
B) It requires minimal support from top management.
C) It gives customers a voice and allows them to be heard.
D) It requires few, if any, changes in the way knowledge is shared.
Answer: C
Diff: 2
53) Which of the following is a drawback of open innovation?

A) It increases the level of risk associated with product development.
B) It diverts the organization's attention away from the marketplace.
C) It nurtures external relationships but not internal ones.
D) It requires extensive support.
Answer: D
Diff: 2
54) Collaborative relationships between two or more organizations in which they combine their resources and
capabilities for some business purpose are known as ________.
A) communities of practice
B) strategic partnerships
C) joint stock companies
D) organizational task forces
Answer: B
Diff: 2
55) A strategic partnership ________.

A) promotes efficiencies because of its flexible and informal arrangements
B) leads to dysfunctional conflict, as opposed to synergy, among the parties involved
C) entails a lot of paperwork when creating and disbanding projects
D) does not allow either firm to retain its brand identity
Answer: A
Diff: 2
56) The management is thinking of joining hands with its one time rival, CG-VAK Software, in order to gain access to
new markets and technologies. By doing this, the organization is nurturing a ________.
A) joint stock company
B) task force
C) community of practice
D) strategic partnership
Answer: D
Diff: 3
57) Which of the following is a characteristic of a strategic partnership?

A) It allows multiple parties to share the risks and expenses.
B) It is limited to five or fewer participants.
C) It provides access to new sources of financing.
D) It prevents rival firms from collaborating.
Answer: A
Diff: 3
58) Collaborative work increases communication and coordination among participants.

Answer: TRUE
Diff: 1
59) A cross-functional team has no artificial boundaries and thus, the team focuses on working together to achieve
organizational goals.
Answer: TRUE
Diff: 1
60) A task force is a permanent committee or team formed to tackle a long-term problem affecting several departments
of an organization.
Answer: FALSE
Diff: 1
61) Communities of practice refer to groups of people who share a concern, a set of problems, or a passion about a
topic, and who deepen their knowledge and expertise in that area by interacting on an ongoing basis.
Answer: TRUE
Diff: 1
62) In order to make communities of practice effective, it is important to remove any sort of managerial supervision.
Answer: FALSE
Diff: 1
63) Open innovation refers to opening up the search for new ideas beyond the organization's boundaries and allowing
innovations to easily transfer inward and outward.
Answer: TRUE
Diff: 1
64) Strategic partnerships are collaborative relationships between two or more organizations in which they combine
their resources and capabilities for some business purpose.
Answer: TRUE
Diff: 1
65) List some of the benefits and drawbacks of collaborative work.

Answer: Some of the benefits of collaborative work are:
• It increases communication and coordination.
• It results in greater innovative output.
• It enhances the ability to address complex problems.
• It promotes sharing of information and best practices.
Some of the drawbacks of collaborative work are:
• It gives rise to interpersonal conflicts.
• It gives rise to different views and competing goals.
• It is difficult to coordinate.
Diff: 3
66) Briefly describe the characteristics of cross-functional teams and task forces.
Answer: When managers believe that collaboration among employees is needed for more coordinated and integrated
work efforts, they can use several different structural options. Some of the more popular include cross-functional teams
and task forces. Cross-functional teams are work teams composed of individuals from various functional specialties.
When a cross-functional team is formed, team members are brought together to collaborate on resolving mutual
problems that affect the respective functional areas. Ideally, the artificial boundaries that separate functions disappear
and the team focuses on working together to achieve organizational goals.
A task force, also called an ad hoc committee, is a temporary committee or team formed to tackle a specific short-term
problem affecting several departments. The temporary nature of a task force is what differentiates it from a cross-
functional team. Task force members usually perform many of their normal work tasks while serving on the task force.
However, the members of a task force must collaborate to resolve the issue that's been assigned to them. When the
issue or problem is solved, the task force is no longer needed and members return to their regular assignments.
Diff: 3
67) What are communities of practice? What can organizations do to make such communities successful?
Answer: Communities of practice are groups of people who share a concern, a set of problems, or a passion about a
topic, and who deepen their knowledge and expertise in that area by interacting on an ongoing basis. For communities
of practice to work successfully:
• top management support and clear expectations is essential.
• an environment that will attract people and make them want to return for advice, conversation, and knowledge
sharing should be created.
• regular meetings of the community, whether in person or online should be encouraged.
• regular communication among community members should be established.
• real problems and issues important to the organization should be focused on.
• clear accountability and managerial oversight is essential.
Diff: 3
68) Explain the concept of open innovation and highlight some of its benefits and drawbacks.
Answer: Open innovation refers to the process of opening up the search for new ideas beyond the organization's
boundaries and allowing innovations to easily transfer inward and outward. Some of the benefits associated with open
innovation are:
• It gives customers what they want — a voice.
• It allows organizations to respond to complex problems.
• It nurtures internal and external relationships.
• It brings the focus back to the marketplace.
• It provides a way to cope with rising costs and uncertainties of product development.
Some of the drawbacks of open innovation are:
• There is a high demand of managing the process.
• It requires extensive support.
• It poses cultural challenges.
• Greater need for flexibility arises.
• Crucial changes are required in how knowledge is controlled and shared.
Diff: 3
69) Explain the concept of strategic partnerships and highlight some of their advantages.
Answer: Strategic partnerships: These are collaborative relationships between two or more organizations in which they
combine their resources and capabilities for some business purpose.
Some of the advantages of such partnerships are:
• The flexibility and informality of arrangements promote efficiencies.
• It provides access to new markets and technologies, and entails less paperwork when creating and disbanding
projects.
• It results in risks and expenses being shared by multiple parties.
• It maintains an independent brand identification that can be exploited.
• Working with partners possessing multiple skills can create major synergies.
• Rivals can often work together harmoniously.
• The partnerships can take on varied forms from simple to complex.
• It can accommodate dozens of participants in partnership arrangements.
• The antitrust laws can protect R&D activities.
Diff: 3
70) ________ is a work arrangement in which employees work at home and are linked to the workplace by computer.
A) Outsourcing
B) Coworking
C) Telecommuting
D) Hot desking
Answer: C
Diff: 1
Learning Obj.: LO 11.3: Explain flexible work arrangements used by organizations
71) Cheryl's company wants to grow without incurring costs for a new office building, equipment, or parking lots.
Which would be the best option for the company?
A) It can give its employees the option of telecommuting.
B) It can adopt the open innovation approach.
C) It can enter into a strategic partnership.
D) It can compress the workweek of its employees.
Answer: A
Diff: 2
72) Which of the following is the best option for a qualified, female employee with a baby wishing to work from
home?
A) telecommuting
B) job sharing
C) flextime
D) compressed workweeks
Answer: A
Diff: 2
73) Carl has been working from home several days per month. At first everything was fine but the appeal is beginning
to wear off. Carl is finding that ________.
A) his household expenses have increased
B) the line between work and home becomes even more blurred
C) his relationship with his co-workers has improved
D) he is working longer hours per day but fewer days per week
Answer: B
Diff: 2
74) Which among the following is the best way to convince employees to become remote workers?
A) By telling them that telecommuting eventually blurs the line between work and home.
B) By pointing to the pay "increase" employees would receive from money saved through telecommuting.
C) By telling them that they are unlikely to miss the camaraderie and social exchanges of the workplace.
D) By offering free high-speed Internet access and office furniture.
Answer: B
Diff: 2
75) When Carl offered to work from home several days each month, his manager feared that ________.
A) she would not be able to provide adequate supervision when he would not see Carl regularly
B) she would miss the camaraderie of having Carl in the office every day
C) Carl would ask for an increase in pay
D) Carl would not be able to handle working alone
Answer: A
Diff: 3
76) A compressed workweek is one wherein ________.

A) employees work longer hours per day but fewer days per week
B) employees work the same number of hours per week but do more work
C) employees work fewer days per week but also do lesser work
D) employees work for a lesser number of hours per day in the week
Answer: A
Diff: 2
77) The most common arrangement in a compressed workweek is ________.

A) four 10-hour days
B) three 12-hour days followed by one 4-hour day
C) five 8-hour days
D) four 9-hour days followed by one 4-hour day
Answer: A
Diff: 2
78) A ________ schedule typically designates certain common core hours when all employees are required to be on the
job, but allows starting, ending, and lunch-hour times to vary.
A) telecomputing
B) flextime
C) job sharing
D) compressed workweek
Answer: B
Diff: 1
79) Brent works in the accounts department at a small firm. All employees at his firm are expected to clock-in 40 hours
of work per week. After five years in the work force, Brent decides to go back to school but on a part-time basis while
continuing to work his full 40 hours each week. The classes he is taking are currently scheduled for three days in a
week, between 3 to 6 pm. Which of the following work arrangements is most suitable for Brent's situation?
A) flextime
B) telecommuting full time
C) job sharing
D) compressed workweek
Answer: A
Diff: 2
80) The practice of having two or more people split a full-time job is known as ________.
A) moonlighting
B) job rotation
C) job sharing
D) temping
Answer: C
Diff: 1
81) Margaret works mornings from 8 to 12:30. Her twin Marjorie comes in at noon and works until 4:30. They share a
desk and job responsibilities. The twins are ________.
A) using flextime
B) contingent workers
C) temporary employees
D) job-sharing
Answer: A
Diff: 3
82) Telecommuting is a work arrangement in which employees work at home and are linked to the workplace by
telephone.
Answer: FALSE
Diff: 1
83) A compressed workweek is a workweek where employees work longer hours per day but fewer days per week.
Answer: TRUE
Diff: 1
84) What are some of the different types of flexible work arrangements?
Answer: Telecommuting is a work arrangement in which employees work at home and are linked to the workplace by
computer.
A compressed workweek is a workweek where employees work longer hours per day but fewer days per week. The
most common arrangement is the four 10-hour days (a 4-40 program). Flextime is also known as flexible work hours. It
is a scheduling system in which employees are required to work a specific number of hours a week but are free to vary
those hours within certain limits. A flextime schedule typically designates certain common core hours when all
employees are required to be on the job, but allows starting, ending, and lunch-hour times to be flexible. Job sharing is
the practice of having two or more people split a full-time job.
Diff: 3
85) Temporary, freelance, or contract workers are known as ________.

A) communities of practice
B) contingent workers
C) passive labor
D) virtual employees
Answer: B
Diff: 2
Learning Obj.: LO 11.4: Discuss organizing issues associated with a contingent workforce
86) Contingent workers on a movie set are an example of workers in a ________ organization.
A) learning
B) virtual
C) network
D) project
Answer: D
Diff: 3
87) Which of the following is one of the main issues businesses face with their contingent workers?
A) classifying who actually qualifies as a contingent worker
B) deciding the remuneration for contingent workers
C) allocating work resources to contingent workers
D) providing the option of a compressed workweek to contingent workers
Answer: A
Diff: 2
88) Identify the correct statement regarding contingent workers.

A) The more control a company has over a worker, the more likely that the individual is a contingent worker rather
than an employee.
B) Companies are required to pay Social Security, Medicare, and unemployment insurance taxes on workers classified
as independent contractors.
C) Managers should have a method of establishing goals, schedules, and deadlines for the contingent employees.
D) Monitoring the work performance of contingent workers is not mandatory, especially if the contingent employee is
working off-site.
Answer: C
Diff: 2
89) An organization finds it very easy to differentiate between independent and non-independent contractors.
Answer: FALSE
Diff: 1
90) Companies have to pay Social Security, Medicare, and unemployment insurance taxes for workers classified as
independent contractors.
Answer: FALSE
Diff: 2
91) Discuss the organizing issues associated with a contingent workforce.
Answer: Contingent workers are temporary, freelance, or contract workers whose employment is contingent upon
demand for their services. One of the main issues businesses face with their contingent workers, especially those who
are independent contractors or freelancers, is classifying who actually qualifies as one. This decision is important
because companies do not have to pay Social Security, Medicare, or unemployment insurance taxes on workers
classified as independent contractors. These individuals also aren't covered by most workplace laws. The federal
government is also looking at increased power to penalize employers that misclassify workers. So, there is an incentive
to be totally above-board in classifying who is and is not an independent contractor.
Another issue with contingent workers is the process for recruiting, screening, and placing these contingent workers
where their work skills and efforts are needed. Any organization that wants to minimize potential problems with its
contingent workers needs to pay attention to hiring.
The final issue is the importance of a contingent employee's performance. It's important that managers have a method
of establishing goals, schedules, and deadlines with the contingent employees. Additionally, mechanisms should be in
place to monitor work performance and goal achievement, especially if the contingent employee is working off-site.
Diff: 3
92) Which of the following is a major characteristic of today's organizations?

A) constant managerial supervision
B) loyal employees
C) full-time, permanent jobs
D) mobile employees
Answer: D
Diff: 2
AACSB: Reflective thinking; Information technology
Learning Obj.: LO 11.5: Describe today's organizational design challenges
93) Which of the following is the biggest issue faced by organizations employing widely dispersed, mobile employees
who do work anywhere and at anytime?
A) employee remuneration
B) security
C) lawsuits
D) attrition
Answer: B
Diff: 1
94) A major structural design challenge for managers today is to find a way to offer flexibility and at the same time
keep widely dispersed and mobile employees connected to the organization.
Answer: TRUE
Diff: 1
95) Researchers have concluded that the structures and strategies of organizations worldwide are vastly different from
one another.
Answer: FALSE
Diff: 1
96) What are the major challenges for managers seeking organizational designs that will best support and facilitate
employee efficiency and effectiveness in today's business environment?
Answer: Keeping employees connected - requires a way to offer flexibility while keeping widely dispersed and mobile
employees connected to the organization.
Managing global structural issues - requires consideration of cultural implications that impact design decisions.
Diff: 3
Chapter 11 Designing Organizational Structure - Basic Designs

Learning Obj.: LO 10.1: Describe six key elements in organizational design
1) _____ is the formal arrangement of jobs within an organization.
A) Departmentalization C) Organizational structure
B) Organizational design D) Work specialization
2) Organizational design is a process that involves decisions about ________.

A) work specialization and cost-leadership C) centralization and differentiation
B) chain of command and span of control D) departmentalization and diversification
3) Michelle is very concerned about the formal framework by which job tasks are divided, grouped, and coordinated
within her unit. This implies that she is concerned about ________.
A) the chain of command C) the organizational design
B) the organizational structure D) decentralization
4) The process of dividing work activities into separate job tasks is known as ________.
A) work specialization B) organizational design C) differentiation D) span of control
5) Which of the following statements accurately defines work specialization?

A) It is the basis of grouping jobs together.
B) Individual employees specialize in doing part of an activity rather than the entire activity.
C) It is the line of authority extending from upper organizational levels to the lower levels.
D) It clarifies who reports to whom.
6) In the early 20th century, automobiles were made one at a time by craftsmen who could perform every operation
necessary to build the car. Henry Ford decided to limit the number of tasks each worker performed so each person
could become expert in his position. With this practice, Ford introduced ________.
A) departmentalization B) work specialization C) centralization D) formalization
7) The process of grouping jobs together is known as ________.

A) departmentalization B) centralization C) formalization D) organizational design
8) Work teams composed of individuals from various functional specialties are known as ________ teams.
A) cross-control B) cross-training C) cross-functional D) cross-department
9) Marcus was asked to represent the cardiac unit as part of a Total Quality Management (TQM) initiative that is aimed
at improving the overall quality of care at his hospital. Other departments, such as orthopedics, neurology, oncology,
and pediatrics also have representatives on this team. This TQM team is an example of ________.
A) a multi-cultural team C) process integration
B) a cross-functional team D) an interdepartmental team
10) Eric works with a team that includes production workers as well as marketing specialists to design the latest
products the company was planning to offer. This implies ________.
A) the company is becoming more centralized C) the company is becoming more mechanistic
B) that Eric's job responsibilities have been reduced D) that Eric is a part of a cross-functional team
11) The line of authority that extends from upper organizational levels to lower levels, clarifying who reports to whom,
is known as the ________.
A) employee power distance C) span of control
B) unity of command D) chain of command
12) In the case of functional departmentalization, jobs are grouped according to ________.
A) tasks B) territories C) product lines D) customer flow
13) Departmentalization based on ________ groups jobs on the basis of territory or physical location.
A) customer B) product C) geography D) process
14) ________ departmentalization is based on the product or customer flow through the organization.
A) Product B) Functional C) Process D) Customer
15) What kind of departmentalization would be in place in a government organization where different public service
responsibilities are divided into activities for employees, children, and the disabled?
A) product departmentalization C) process departmentalization
B) geographic departmentalization D) customer departmentalization
16) A disadvantage of ________ departmentalization is poor communication across the different groups.
A) geographic B) functional C) process D) customer
17) ____ refers to the rights inherent in a managerial position to tell people what to do and to expect them to do it.
A) Responsibility B) Liability C) Bureaucracy D) Authority
18) Wilson is offered a chance to help direct the efforts of some employees assigned to his work group. This is a
chance for Wilson to experience ________.
A) responsibility B) leadership C) command D) authority
19) When Bryan is offered a chance to help direct the efforts of some employees assigned to his work group, he sees
this new assignment as a(n) ________.
A) decrease in authority C) increase in his responsibility
B) increase in departmentalization D) decrease in work specialization
20) Melanie has noticed that everyone is very concerned about the line of authority within the hospital. This implies
that the employees at the hospital are worried about the ________.
A) unity of command B) chain of command C) span of control D) departmentalization
21) According to the acceptance theory of authority, ________.

A) employees will accept orders only if certain conditions are met
B) employees have the authority to negotiate conditions with their employers
C) managers must accept responsibility for the actions of their subordinates
D) managers must accept the authority delegated to them before they can expect their subordinates to comply with their
orders
22) Bill manages the quality department. His people check parts made by the production departments to assure all
specifications are met. Bill is ________.
A) a non-manager B) a middle manager C) a staff manager D) a line manager
23) ________ is the obligation or expectation to perform a duty.

A) Responsibility B) Authority C) Commitment D) Duty
24) Which one of Fayol's 14 principles of management states that a person should report to only one manager?
A) unity of direction C) division of work
B) unity of command D) division of authority
25) Willard has been assigned to a project development team in addition to his regular duties as a quality engineer.
During this assignment he will report to both the project manager and his quality department manager. This situation
________.
A) violates span of control C) violates chain of command
B) violates unity of command D) violates the acceptance theory of authority
26) According to the traditional view, managers could not – and should not – directly supervise more than _____
subordinates.
A) four or five B) five or six C) ten or eleven D) fifteen or sixteen
27) The ________ determines the number of levels and managers in an organization.
A) delegation of authority B) unity of command C) chain of command D) span of control
28) All other things being equal, the wider or larger the span of control, the more ________ an organization is.
A) ambitious B) rigid C) mechanistic D) cost efficient
29) ________ is the degree to which decision making takes place at upper levels of the organization.
A) Centralization B) Decentralization C) Formalization D) Departmentalization
30) If top managers make key decisions with little input from below, then the organization is ________.
A) less mechanistic B) more decentralized C) less formalized D) more centralized
31) Which of the following factors calls for a more centralized organizational structure?
A) when the decisions to be taken are significant C) when the organization is facing a crisis
B) when the company is geographically dispersed D) when the environment is complex
32) The fact that Monica's signature is required on all documents and her word is the last word on all decisions relating
to her department suggests that ________.
A) her employer has a centralized structure C) her employer has a simple structure
B) her employer has a decentralized structure D) her employer has an organic structure
33) After extensive job cuts to reduce costs, upper level managers are spending significant amounts of time solving
problems in the production units. Lower level managers are resentful that they cannot make decisions for their own
units. What recommendation would you make for this firm?
A) Reorganize; departmentalize around customers instead of products.
B) Formalize; write explicit job descriptions, rules, and procedures so the upper managers won't have to decide each
case individually.
C) Centralize; create a department that does nothing but make decisions.

D) Decentralize; give authority to the lower level managers regarding events in their own units.
34) Which of the following factors would require a more decentralized organizational structure?
A) when the lower-level managers want a voice in decisions
B) when the lower-level managers are not capable of making decisions
C) when the decisions to be made are not significant
D) when the company is large
35) As organizations become more flexible and responsive to environmental trends, there is a distinct shift toward
________ decision making.
A) centralized B) decentralized C) concentrated D) departmentalized
36) ________ refers to how standardized an organization's jobs are and the extent to which employee behavior is
guided by rules and procedures.
A) Specialization B) Centralization C) Decentralization D) Formalization
37) Bob works in a mid-sized organization with other skilled workers who all pitch in to do what needs to be done to
satisfy the customer. It is likely Bob works in a ________ organization.
A) formalized B) decentralized C) departmentalized D) cross-functional
38) In highly ________ organizations, there are explicit job descriptions, numerous organizational rules, and clearly
defined procedures covering work processes.
A) formalized B) decentralized C) departmentalized D) specialized
39) Organizational structure is the formal chain of command of jobs within an organization. FALSE
40) Organizational design is the degree to which standardized procedures are in place in an organization. FALSE
41) Work specialization is also known as division of labor. TRUE
42) Managers today continue to see work specialization as important because it helps employees be more efficient.
TRUE
43) Customer departmentalization works well because it emphasizes interdepartmental communication regarding
customer's needs. FALSE
44) The chain of command is a principle that states that a person should report to only one boss. FALSE
45) All other things unchanged, the narrower the span of control, the more efficient the organization is. FALSE
46) Given other things unchanged, managers with well-trained and experienced employees can function well with a
wider span of control than those with a less talented workforce. TRUE
47) The more the decision-making power of lower-level employees, the more decentralized the organization is. TRUE
48) At one end of the spectrum, organizations can be absolutely centralized, while at the other end, they can be
completely decentralized. FALSE
49) Employee empowerment gives employees more authority to delegate responsibility. FALSE
50) In highly formalized organizations, employees have more discretion in how they do their work. FALSE
51) Today's organizations mostly rely on strict rules and standardization to guide and regulate employee behavior.
FALSE
52) Define the process of organizing and explain how it helps an organization.
Organizing is defined as arranging and structuring work to accomplish organizational goals. It is an important
process during which managers design an organization's structure.
Some of the purposes of organizing are the following.

a. It helps in dividing the work to be done into specific jobs and departments.
b. It helps in assigning tasks and responsibilities associated with individual jobs.
c. It helps in coordinating diverse organizational tasks.
d. It helps in clustering jobs into units.
e. It helps in establishing relationships among individuals, groups, and departments.
f. It helps in establishing formal lines of authority.
g. It helps in allocating and deploying organizational resources.
53) Write a short essay on work specialization. How does specialization affect productivity? How does it affect a
firm's cost structure?
Work specialization, also known as division of labor, is the process of dividing work activities into separate job
tasks. Individual employees "specialize" in doing part of an activity rather than the entire activity in order to increase
work output. It makes efficient use of the diverse skills that workers have.
In most organizations, some tasks require highly developed skills; others can be performed by employees with lower
skill levels. If all workers were engaged in all the tasks, all would need the skills necessary to perform both the most
and the least demanding jobs. Thus, except when performing the most highly skilled or highly sophisticated tasks,
employees would be working below their skill levels. In addition, skilled workers are paid more than unskilled workers,
and, because wages tend to reflect the highest level of skill, all workers would be paid at highly skilled rates to do easy
tasks – an inefficient use of resources.
Early proponents of work specialization believed that it could lead to great increases in productivity. At the
beginning of the twentieth century, that generalization was reasonable. Because specialization was not widely
practiced, its introduction almost always generated higher productivity. But, at some point, the human diseconomies
from division of labor – boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, and high
turnover – exceed the economic advantages.
Today, most managers continue to see work specialization as important because it helps employees be more
efficient. However, managers should remember that, at some point, work specialization no longer leads to productivity.
Thus, they should plan and organize accordingly.
54) What is meant by departmentalization? In a short essay, list and discuss the five common forms of
departmentalization, their advantages and disadvantages.
Departmentalization is the basis by which jobs are grouped together.

There are five common forms:
a. Functional - Jobs are grouped by the functions (i.e., marketing, finance, human resources) performed, leading to
increased efficiency because people with similar specialties, common skills, knowledge, and orientations are put
together. It also leads to an increased coordination within functional areas. On the flip side, it gives a limited view of
the organizational goals.
b. Product - Jobs are grouped by product line. This allows the managers to specialize in particular products and
services and helps managers to become experts in their industry. On the other hand, it leads to duplication of functions
and gives a limited view of organizational goals.
c. Geographical - Jobs are grouped on the basis of a geographic region. This helps in more effective and efficient
handling of specific regional issues that arise and in serving the needs of unique geographic markets. On the flip side, it
leads to duplication of functions.
d. Process — Jobs are grouped on the basis of product or customer flow. This approach efficiently manages the flow
of work activities. Unfortunately it can only be used with certain types of products.
e. Customer - Jobs are grouped on the basis of specific and unique customers who have common needs, allowing
specialists to handle customers' needs and problems. But this also leads to duplication of functions and causes
departments to have a limited view of organizational goals.
Most large organizations continue to use combinations of most or all of these types of departmentalization.
Currently, a popular departmentalization trend is the increasing use of customer departmentalization. Because getting
and keeping customers is essential for success, this approach works well because it emphasizes monitoring and
responding to changes in customers' needs.
55) In a short essay, explain authority and responsibility
Authority was a major concept discussed by the early management writers; they viewed it as the glue that held an
organization together. Authority refers to the rights inherent in a managerial position to tell people what to do and to
expect them to do it. Managers in the chain of command had authority to do their job of coordinating and overseeing
the work of others. Authority could be delegated downward to lower-level managers, giving them certain rights while
also prescribing certain limits within which to operate. These writers emphasized that authority was related to one's
position within an organization and had nothing to do with the personal characteristics of an individual manager.
Chester Barnard, an early management writer, proposed the acceptance theory of authority. According to this theory,
authority comes from the willingness of subordinates to accept it. If an employee did not accept a manager's order,
there was no authority.
As organizations get larger and more complex, line managers find that they do not have the time, expertise, or
resources to get their jobs done effectively. In response, they create staff authority functions to support, assist, advise,
and generally reduce some of their informational burdens.
Responsibility - When managers use their authority to assign work to employees, those employees take on an
obligation to perform those assigned duties. This obligation or expectation to perform is known as responsibility.
Assigning work authority without responsibility and accountability can create opportunities for abuse. Likewise, no one
should be held responsible or accountable for work tasks over which he or she has no authority to complete those tasks.
Unity of command - The unity of command principle which is one of Fayol's 14 management principles states that a
person should report to only one manager. Without unity of command, conflicting demands from multiple bosses may
create problems.
56) Discuss the differences between line and staff authority.

The early management writers also distinguished between two forms of authority: line authority and staff authority.
Line authority entitles a manager to direct the work of an employee. It is the employer-employee authority
relationship that extends from the top of the organization to the lowest echelon, according to the chain of command. As
a link in the chain of command, a manager with line authority has the right to direct the work of employees and to make
certain decisions without consulting anyone. In the chain of command, every manager is also subject to the authority or
direction of his or her superior.
57) Explain the traditional view of span of control.

How many employees can a manager efficiently and effectively manage? That is what span of control is all about.
The traditional view was that managers could not – and should not – directly supervise more than five or six
subordinates. Determining the span of control is important because to a large degree, it determines the number of levels
and managers in an organization – an important consideration in how efficient an organization will be. All other things
being equal, the wider or larger the span, the more efficient an organization is.
58) Explain the contemporary view of span of control.
The contemporary view of span of control recognizes that there is no magic number of people for a manager to
supervise. Many factors influence the number of employees that a manager can efficiently and effectively manage.
These factors include the skills and abilities of the manager and the employees, and the characteristics of the work
being done. For instance, managers with well-trained and experienced employees can function well with a wider span.
Other contingency variables that determine the appropriate span include similarity and complexity of employee tasks,
the physical proximity of subordinates, the degree to which standardized procedures are in place, the sophistication of
the organization's information system, the strength of the organization's culture, and the preferred style of the manager.
The trend in recent years has been toward larger spans of control, which is consistent with managers' efforts to speed up
decision making, increase flexibility, get closer to customers, empower employees, and reduce costs. Managers are
beginning to recognize that they can handle a wider span when employees know their jobs well and when those
employees understand organizational processes.
59) List a few factors that influence the amount of centralization or decentralization in an organization.
An organization requires more centralization if the:

1. environment is stable.
2. lower-level managers are not as capable or experienced at making decisions as upper-level managers.
3. lower-level managers do not want to have a say in decisions.
4. decisions to be taken are relatively minor.
5. organization is facing a crisis or the risk of company failure.
6. company is large.
7. effective implementation of company strategies depends on managers' retaining a say over what happens.
An organization requires more decentralization if the:

1. environment is complex and uncertain.
2. lower-level managers are capable and experienced at making decisions.
3. lower-level managers want a voice in decisions.
4. decisions to be made are relatively significant.
5. corporate culture is open to allowing managers to have a say in what happens.
6. company is geographically dispersed.
7. effective implementation of company strategies depends on managers' having involvement and flexibility to make
decisions.
60) Explain centralization, decentralization. How do these relate to employee empowerment?
Centralization is the degree to which decision making takes place at upper levels of the organization. If top managers
make key decisions with little input from below, then the organization is more centralized. On the other hand, the more
that lower-level employees provide input or actually make decisions, the more decentralization there is.
Centralization-decentralization is not an either-or concept. The decision is relative, not absolute – that is, an
organization is never completely centralized or decentralized. The goal is the optimum and efficient use of employees.
Traditional organizations were structured in a pyramid, with power and authority concentrated near the top of the
organization. But organizations today have become more complex and responsive to dynamic changes in their
environments. As such, many managers believe that decisions need to be made by those individuals closest to the
problems, regardless of their organizational level. In fact, the trend over the past several decades – at least in U.S. and
Canadian organizations – has been a movement toward more decentralization in organizations.
Today, managers often choose the amount of centralization or decentralization that will allow them to best implement
their decisions and achieve organizational goals. What works in one organization, however, won't necessarily work in
another, so managers must determine the appropriate amount of decentralization for each organization and work units
within it.
As organizations have become more flexible and responsive to environmental trends, there has been a distinct shift
toward decentralized decision making. This trend, also known as employee empowerment, gives employees more
authority (power) to make decisions. In large companies especially, lower-level managers are "closer to the action" and
typically have more detailed knowledge about problems and how best to solve them than do top managers.
Learning Obj.: LO 10.2: Contrast mechanistic and organic structures
61) A(n) ________ organization is highly specialized and rigidly departmentalized.

A) organic B) complex C) learning D) mechanistic
62) A(n) ________ organization is highly formalized and centralized.

A) organic B) mechanistic C) complex D) learning
63) Which of the following is a characteristic of a mechanistic organization?

A) cross-functional teams B) free flow of information C) wide spans of control D) clear chain of command
64) A(n) ________ organization is highly adaptive, loose, and flexible.
A) organic B) centralized C) customer-oriented D) mechanistic
65) GlaxoSmithKline would become more ________ if it starts allowing its lab scientists to set the priorities and
allocate the resources.
A) profitable B) mechanistic C) diversified D) organic
66) Which of the following is a characteristic of an organic organization?

A) high specialization C) rigid departmentalization
B) cross-functional teams D) narrow span of controls
67) Paul Abdul Oil Corporation (PAOC) began as a relatively small oil company. As PAOC has grown, the company
has gained a highly trained group of managers and analysts at the corporate headquarters. This group is highly adaptive
in its structure. Members of this group do not have standardized jobs, but are empowered to handle diverse job
activities and problems. PAOC seems to have a(n) ________ structure.
A) mechanistic B) divisional C) functional D) organic
68) If a firm wants to become more adaptive and flexible, which of the following organizational structures is it likely to
prefer?
A) formalized B) mechanistic C) organic D) centralized
69) Many of Custom Leather's employees are experienced artisans. The jobs most of them perform are not highly
standardized. They take great pride in their craft and require few formal rules and little direct supervision. These traits
are most typical of a(n) ________ organization.
A) departmentalized B) mechanistic C) organic D) formalized
70) An organic organization strictly adheres to the chain-of-command principle and has a wide span of control. FALSE
71) An organic organization is low in centralization. TRUE
72) Explain the concepts of mechanistic and organic structures.

The mechanistic organization (or bureaucracy) was the natural result of combining work specialization,
departmentalization, chain of command, span of control, centralization and decentralization, and formalization.
Adhering to the chain-of-command principle ensured the existence of a formal hierarchy of authority, with each person
controlled and supervised by one superior. Keeping the span of control small at increasingly higher levels in the
organization created tall, impersonal structures. As the distance between the top and the bottom of the organization
expanded, top management would increasingly impose rules and regulations.
Because top managers could not control lower-level activities through direct observation and ensure the use of standard
practices, they substituted rules and regulations. The belief in a high degree of work specialization created jobs that
were simple, routine, and standardized. Further specialization through the use of departmentalization increased
impersonality and the need for multiple layers of management to coordinate the specialized departments. This created a
mechanistic organization with high specialization, rigid departmentalization, a clear chain of command, narrow spans
of control, centralization, and high formalization
The organic organization is a highly adaptive form that is as loose and flexible as the mechanistic organization is
rigid and stable. The organic organization's loose structure allows it to change rapidly as required. It has division of
labor, but the jobs people do are not standardized. Employees tend to be professionals who are technically proficient
and trained to handle diverse problems. They need few formal rules and little direct supervision because their training
has instilled in them standards of professional conduct. Thus, an organic organization has cross-functional teams, cross-
hierarchical teams, free flow of information, wide spans of control, decentralization, and low formalization.
Learning Obj.: LO 10.3: Discuss the contingency factors that favor either the mechanistic model or the organic
model of organizational design
73) What are the four contingency variables that an organization's structure depends on?
A) strategy, size, technology, and equity
B) management, technology, equity, and degree of environmental uncertainty
C) management, funding, technology, and degree of environmental uncertainty
D) strategy, size, technology, and environmental uncertainty
74) Large organizations tend to have more ________ than smaller organizations.
A) specialization B) departmentalization C) centralization D) rules and regulations
75) Large organizations are more ________.

A) mechanistic B) organic C) disorganized D) decentralized
76) Joan Woodward divided firms into three distinct technologies that had increasing levels of complexity and
sophistication: unit production, mass production, and ________.
A) continuous production C) product production
B) repetitive flow production D) process production
77) ________ is a type of technology that centers on small-batch production.

A) Unit production B) Mass production C) Process production D) Flow production
78) The building of a bridge would be a type of ________.

A) unit production B) mass production C) process production D) flow production
79) ________ is a type of technology that centers on large-batch production and requires moderate levels of complexity
and sophistication.
A) Unit production B) Mass production C) Process production D) Service production
80) The type of assembly line typically found in automobile manufacturing is an example of ________.
A) unit production B) mass production C) process production D) continuous production
81) In Joan Woodward's study of the relationship between technology and structure, the structure that was the most
technically complex was ________.
A) unit production B) mass production C) process production D) continuous production
82) Lacey believes that Joan Woodward's work will be particularly pertinent in considering Custom Leather's
organizational structure, since Woodward believed that the effectiveness of the organization was related to the fit
between the firm's structure and ________.
A) culture B) technology C) accounting D) operations
83) A refinery that transforms crude oil into gasoline, kerosene, and diesel fuel would be an example of ________.
A) mass production B) continuous production C) process production D) unit production
84) According to Woodward's studies, what type of production technology is best suited for a mechanistic structure?
A) unit B) process C) product D) mass
85) In stable and simple environments, ________.

A) organic designs are most effective C) low formalization is necessary
B) mechanistic designs are most effective D) decentralization is necessary
86) Ben operates a farmer's market. Every year he offers the same vegetables to the same customers and faces the same
rivalry from other truck farmers. A(n) ________ would best fit Ben's situation.
A) formalized design B) mechanistic design C) centralized design D) organic design
87) Custom Leather CEO Standish is considering doubling the size of his workforce in conjunction with expanding the
number of retail outlets that carry Custom Leather products. He should expect the organization to become ________ as
a result of this change.
A) more mechanistic B) more decentralized C) more organic D) less formalized
88) The greater the environmental uncertainty, the more an organization needs to become ________.
A) organic B) mechanistic C) specialized D) departmentalized
89) Worldwide economic downturn, global competition, accelerated product innovation by competitors, and increased
demands from customers for high quality and faster deliveries encourage organizations to become more ________.
A) organic B) mechanistic C) centralized D) formalized
90) Which of these statements is an argument in favor of creating a hierarchical structure in an organization?
A) Organizations function better when there's a hierarchy in place.
B) Someone must monitor crowdsourcing efforts.
C) Managers need to control how employees use technology.
D) Employees are more likely to engage in unethical behavior in the absence of a hierarchy.
91) Innovators need the efficiency, stability, and tight controls of the mechanistic structure. FALSE
92) Once an organization grows past a certain size, the impact of size on organization structure strengthens. FALSE
93) List and discuss the four contingency variables that should be considered while designing an appropriate
organizational structure.
a. Strategy and structure - An organization's structure should facilitate the achievement of goals. Since goals are
influenced by the organization's strategies, it is logical that strategy and structure should be closely linked. The
flexibility and free-flowing information of the organic structure works well when an organization is pursuing
meaningful and unique innovations. The mechanistic organization with its efficiency, stability, and tight controls works
best for companies wanting to tightly control costs.
b. Size and structure - There is considerable evidence that an organization's size significantly affects its structure.
Large organizations-typically considered to be those with 2,000 employees – tend to have more specialization,
departmentalization, centralization, and rules and regulations than do small organizations. However, once an
organization grows past a certain size, size has less influence on structure.
c. Technology and structure - Every organization uses some form of technology to convert its inputs into outputs.
The processes or methods that transform an organization's inputs into outputs differ by their degree of routineness. In
general, organizations adapt their structures to their technology depending on how routine their technology is for
transforming inputs into outputs. In general, the more routine the technology, the more mechanistic the structure can
be, and organizations with more non-routine technology are more likely to have organic structures.
d. Environmental uncertainty and structure - Some organizations face stable and simple environments with little
uncertainty; others face dynamic and complex environments with a lot of uncertainty. Managers try to minimize
environmental uncertainty by adjusting the organization's structure. In stable and simple environments, mechanistic
designs can be more effective. On the other hand, the greater the uncertainty, the more an organization needs the
flexibility of an organic design.
Learning Obj.: LO 10.4: Describe traditional organizational designs

94) What are the different structures that traditional organizations can have?
A) simple, functional, and corporate structures C) functional, strategic, and business unit structures
B) simple, functional, and business unit structures D) simple, functional, and divisional structures
95) A company with low departmentalization, wide spans of control, centralized authority, and little formalization
possesses a ________ structure.
A) simple B) functional C) divisional D) matrix
96) Tom's Welding is in its third year of operation. Tom now has a sales person and several production employees. It is
most likely Tom has a ________ structure.
A) simple B) functional C) divisional D) matrix
97) As the number of employees in an organization grows, structure tends to become more ________.
A) specialized B) informal C) centralized D) relaxed
98) In the beginning, all employees at Tom's Welding performed whatever task was needed. Now the employees have
gravitated to specific sets of tasks. Some use only stick welders; some weld only on aluminum. We can infer that as
his business has grown, it has become more ________.
A) specialized B) formal C) centralized D) organic
99) Which of the following is a strength of simple structures?

A) Employees are grouped with others who have similar tasks.
B) It focuses on results.
C) It is inexpensive to maintain.
D) It remains appropriate even as the organization changes as it grows.
100) Which of the following is a weakness of the simple structure?

A) Duplication of activities and resources increases costs and reduces efficiency.
B) Specialists become insulated and have little understanding of what other units are doing.
C) Pursuit of functional goals causes managers to lose sight of what is best for the overall organization.
D) It relies too much on one person which is very risky.
101) Which of the following traditional organizational designs focuses on results by holding division managers
responsible for what happens to their products and services?
A) simple structure B) functional structure C) divisional structure D) matrix structure
102) In which of the following traditional organizational designs does duplication of activities and resources lead to an
increase in costs and reduced efficiency?
A) divisional structure B) team structure C) matrix structure D) project structure
103) A ________ is an organizational design that groups similar or related occupational specialties together.
A) matrix structure B) functional structure C) divisional structure D) simple structure
104) The ___ is an organizational structure made up of separate business units with each unit having limited autonomy.
A) bureaucratic structure B) simple structure C) functional structure D) divisional structure
105) In a ________ structure the parent corporation typically acts as an external overseer to coordinate and control the
various divisions and provide financial, legal, or other such support services.
A) divisional D) matrix
B) simple
C) functional
106) A simple structure is characterized by low spans of controls and high formalization. FALSE
107) The strength of the functional structure is that it focuses on results because managers are responsible
for what happens to their products and services. FALSE
108) In divisional structures, the parent corporation typically acts as an external overseer to coordinate and
control the various divisions of the organization. TRUE
109) Discuss the three traditional organizational designs and highlight the strengths and weaknesses of each.
The three traditional organizational designs are: the simple structure, functional structure, and divisional
structure. These structures tend to be more mechanistic in nature.
a. Simple structure displays low departmentalization, wide spans of control, authority centralized in a
single person, and little formalization. These structures are fast, flexible, and inexpensive to maintain.
However, these structures are not appropriate when the organization starts growing and the reliance on one
person is risky.
As employees are added, the structure tends to become more specialized and formalized. Rules and
regulations are introduced, work becomes specialized, departments are created, levels of management are
added, and the organization becomes increasingly bureaucratic. At this point managers might choose a
functional or divisional structure.
b. A functional structure groups similar or related occupational specialties together. This structure enjoys
cost-saving advantages from specialization. However, the constant pursuit of functional goals can cause
managers to lose sight of what is best for the overall organization. Moreover, the functional specialists
become insulated and have little understanding of what other units are doing.
c. The divisional structure is made up of separate business units or divisions with limited autonomy, with
a division manager who has authority over his or her unit and is responsible for performance. In divisional
structures the parent corporation typically acts as an external overseer to coordinate and control the various
divisions, and often provides support services such as financial and legal. The major strength of this
structure is that it focuses on results by holding division managers responsible for what happens to their
products and services. But the duplication of activities and resources encountered in such structures
increases the cost and reduces the efficiency of the organization.
Management, 12e (Robbins/Coulter)

Chapter 12 Managers and Communication
1) If a manager clearly and articulately verbalizes instructions to a subordinate, communication is said to
have taken place.
Answer: FALSE
Page Ref: 480
Learning Outcome: Describe communication skills and the factors affecting communication within an
organization
Ch. Objective: 1
Difficulty: Easy
2) Communication does not only serve to inform; it can also act to control behavior.
Answer: TRUE
Page Ref: 481
organization
Ch. Objective: 1
Difficulty: Easy
3) Formal communication can control behavior, but informal communication cannot.

Answer: FALSE
Page Ref: 481
organization
Ch. Objective: 1
Difficulty: Easy
4) The communication process is susceptible to noise.

Answer: TRUE
Page Ref: 481
organization
Ch. Objective: 2
Difficulty: Easy
5) Illegible print is an example of noise.
Answer: TRUE
Page Ref: 481
organization
Ch. Objective: 2
Difficulty: Easy
6) A sender initiates a message by encoding a thought.

Answer: TRUE
Page Ref: 481-482
organization
Ch. Objective: 2
Difficulty: Easy
7) In communication, the process of decoding is performed by the receiver.

Answer: TRUE
Page Ref: 481-482
organization
Ch. Objective: 2
Difficulty: Easy
8) Intonation refers to gestures, facial expressions, and other body movements that convey meaning.
Answer: FALSE
Page Ref: 484
organization
Ch. Objective: 2
Difficulty: Easy
9) Verbal intonation refers to the emphasis someone gives to words or phrases that conveys meaning.
Answer: TRUE
Page Ref: 484
organization
Ch. Objective: 2
Difficulty: Easy
10) Filtering takes place when information exceeds the receiver's processing capacity.
Answer: FALSE
Page Ref: 484
organization
Ch. Objective: 3
Difficulty: Easy
11) E-mail increases filtering because electronic communication is faster.

Answer: FALSE
Page Ref: 484
organization
AACSB: Reflective Thinking Skills; Communication Abilities; Use of Information Technology
Ch. Objective: 3
Difficulty: Easy
12) Active listeners avoid asking questions and making eye contact so that they don't distract the speaker.
Answer: FALSE
Page Ref: 486
organization
Ch. Objective: 3
Difficulty: Easy
13) Informal communication is organizational communication not defined by the organization's structural
hierarchy.
Answer: TRUE
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
14) Downward communication is communication that flows from a manager to employees.

Answer: TRUE
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
15) Upward communication is used to inform, direct, coordinate, and evaluate employees.
Answer: FALSE
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
16) Communication that takes place among employees on the same organizational level is called lateral
communication.
Answer: TRUE
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
17) In the wheel network, the leader serves as the hub through which all communication passes.
Answer: TRUE
Page Ref: 489
organization
Ch. Objective: 4
Difficulty: Easy
18) The informal organizational communication network is known as the grapevine.

Answer: TRUE
Page Ref: 490
organization
Ch. Objective: 4
Difficulty: Easy
19) IT has significantly improved a manager's ability to monitor individual and team performance.
Answer: TRUE
Page Ref: 492
organization
Ch. Objective: 5
Difficulty: Easy
20) All electronic information is inadmissible in court.

Answer: FALSE
Page Ref: 494
organization
Ch. Objective: 6
Difficulty: Easy
21) Good communication occurs only when the recipient ________.
A) agrees with the sender's message
B) does what the speaker asks
C) understands the speaker's meaning
D) makes eye contact with the speaker
Answer: C
Page Ref: 480
organization
Ch. Objective: 1
Difficulty: Easy
22) For communication to be successful, meaning must be imparted and ________.

A) received by the other person
B) force action from the receiver
C) feedback must be established
D) understood by the receiver
Answer: D
Page Ref: 480
organization
Ch. Objective: 1
Difficulty: Easy
23) In which of the following cases has communication occurred?

A) Gary updates his blog regularly, even though no one reads it.
B) Brian attends all the Algebra lectures, but is unable to understand the subject.
C) Jen has sent an urgent e-mail to her Japanese colleague, but a translator is not yet available.
D) Ana tells her manager that she needs a new computer, but he says that the company can't afford it.
Answer: D
Page Ref: 480
organization
Ch. Objective: 1
24) ________ consists of all the patterns, networks, and systems of communication within an organization.
A) The grapevine
B) Interpersonal communication
C) Organizational communication
D) Formal communication
Answer: C
Page Ref: 480
organization
Ch. Objective: 1
Difficulty: Easy
25) George prepares a memorandum explaining the objectives of a newly created work team that he is
expected to manage, and makes sure it reaches each team member. He is involved in ________.
A) deciphering the message
B) organizational communication
C) lateral communication
D) decoding the message
Answer: B
Page Ref: 480
organization
Ch. Objective: 1
Difficulty: Easy
26) When a communication requires employees to follow their job description, or to comply with company
policies, communication is being used to ________.
A) control
B) motivate
C) provide a release for emotional expression
D) persuade
Answer: A
Page Ref: 481
organization
Ch. Objective: 1
Difficulty: Easy
27) Alec is hired as a senior analyst at Tech Research Institute and is assigned to a project with four other
researchers. He soon realizes that two of his teammates do not see eye-to-eye on many issues. Far from
being solved, the situation escalates over the next couple of months. This bothers Alec a great deal because
he is expected to coordinate his work with them. He decides to speak to his manager about the problem and
seek his advice. In this example, communication is being used ________.
A) informally
B) to control
C) to motivate
D) to inform
Answer: B
Page Ref: 481
organization
Ch. Objective: 1
28) In which of the following cases is communication used to control employee behavior?
A) Sandy tells Mitch that she's happy with the progress he's making.
B) Glenn lets Ann know that the deadline for her project has been postponed.
C) Jan informs Sara that she must follow the dress code at work.
D) Chris gives Jason tips on how to improve his performance.
Answer: C
Page Ref: 481
organization
Ch. Objective: 1
Difficulty: Easy
29) Pat manages the customer care department of her firm. She is very happy with her team of 15 customer
care executives who've all been consistently performing well. Customer feedback was impressive and Pat is
planning to give them good bonuses this time around. As a manager, Pat believes it is important to let your
subordinates know when you are happy with their work. She does so, and also calls a meeting to discuss
what they can do to improve further. Pat is using communication for ________.
A) decision making
B) negotiation
C) motivation
D) expressing emotion
Answer: C
Page Ref: 481
organization
Ch. Objective: 1
Difficulty: Easy
30) During the communication process, the message is converted to a symbolic form. This process is called
________.
A) decoding
B) encoding
C) deciphering
D) expanding
Answer: B
Page Ref: 481
organization
Ch. Objective: 2
Difficulty: Easy
31) The process through which the symbols of a message are translated by the receiver into a form that he or
she can understand is called ________.
A) decoding
B) encoding
C) reinstating
D) expanding
Answer: A
Page Ref: 481
organization
Ch. Objective: 2
Difficulty: Easy
32) Disturbances that interfere with the transmission, receipt, or feedback of a message are called ________.
A) screens
B) filters
C) echoes
D) noise
Answer: D
Page Ref: 481
organization
Ch. Objective: 2
Difficulty: Easy
33) Which of the following is an example of noise?

A) sending unsolicited sales messages to prospects
B) adding your contact information at the end of an e-mail message
C) leaving a message on the answering machine when you cannot reach someone
D) thinking about the party you attended last night while sitting in a lecture
Answer: D
Page Ref: 481
organization
Ch. Objective: 2
34) Which of the following is TRUE for the communication process?
A) The decoding process takes place within the channel.
B) Noise cannot affect the encoding of the message.
C) Encoding takes place before the message reaches the medium.
D) The sender decodes the message and then transmits it.
Answer: C
Page Ref: 481-482
organization
Ch. Objective: 2
Difficulty: Easy
35) Adam has to tell the members of his department that the office timings have changed from flexible
timings to a strict nine-to-five day. He calls a meeting to explain the change. Participants begin arguing and
asking multiple questions about the new timing policy. The next day, Adam realizes that most people still
do not have a clear idea about the change, as a result of the confusion at the meeting. Which of the
following explains why the message was not understood?
A) The sender did not decode the message appropriately.
B) The recipients did not encode the message correctly.
C) The noise in the process interfered with the transmission of the message.
D) The channel was not appropriate for the delivery of this message.
Answer: C
Page Ref: 481-482
organization
Ch. Objective: 2
36) Laura sent a text message to Betty telling her that she would come by to pick her up after work so they
could go shopping. Betty, however, made other plans for the evening thinking Laura was talking about
going shopping the next day. Which of the following best explains what went wrong with the
communication?
A) Laura used a wrong channel of communication.
B) Scanability of the message was poor.
C) Betty decoded the message incorrectly.
D) The complexity capacity of text messaging is poor.
Answer: C
Page Ref: 481-482
organization
Ch. Objective: 2
Difficulty: Easy
37) The final link in the communication process is ________.

A) encoding
B) decoding
C) receiving
D) feedback
Answer: D
Page Ref: 482
organization
Ch. Objective: 2
Difficulty: Easy
38) Complexity capacity refers to the degree to which the communication method ________.
A) offers a reasonable assurance of confidentiality
B) makes a simple message seem more complex
C) effectively processes complicated messages
D) offers quick and accurate feedback
Answer: C
Page Ref: 482
organization
Ch. Objective: 2
Difficulty: Easy
39) Which of the following describes the number of different messages that can be transmitted using a
particular method of communication?
A) complexity capacity
B) breadth potential
C) scanability
D) encoding ease
Answer: B
Page Ref: 482
organization
Ch. Objective: 2
Difficulty: Easy
40) Which of the following attributes of a communication method will be the most important for a scientist
who has to send large amounts of data to a colleague?
A) complexity capacity
B) feedback
C) formality
D) interpersonal warmth
Answer: A
Page Ref: 482
organization
Ch. Objective: 2
Difficulty: Easy
41) When a sender evaluates a communication method to judge scanability, he is checking if ________.
A) the method can easily transmit a large number of messages
B) the method allows recipients to process complex messages effectively
C) the method adequately conveys personal warmth
D) the recipient can easily browse the message for relevant information
Answer: D
Page Ref: 482
organization
Ch. Objective: 2
Difficulty: Easy
42) CISCO's Unified Personal Communicator allows fast and easy access to voice, video, instant
messaging, web conferencing, voicemail, and presence capabilities through a single, multimedia interface
on your PC or Mac. Which of the following aspects of communication problems does this personal
communicator address?
A) security concerns arising from the use of the Internet
B) time-space constraint
C) decoding errors
D) encoding errors
Answer: B
Page Ref: 482
organization
AACSB: Communication Abilities; Analytic Skills; Use of Information Technology
Ch. Objective: 2; 5
43) Which of the following is TRUE of nonverbal communication?

A) It is synonymous with body language.
B) It carries greater impact than verbal communication.
C) It is absent in spoken communication.
D) It is involuntary; it cannot be used deliberately.
Answer: B
Page Ref: 482
organization
Ch. Objective: 2
Difficulty: Easy
44) Which of the following methods of communication should be used when the sender requires quick and
accurate feedback?
A) publications
B) face-to-face
C) postal mail
D) fax
Answer: B
Page Ref: 483
organization
Ch. Objective: 2
Difficulty: Easy
45) Which of the following methods of communication offers high scanability?
A) publications
B) face-to-face communication
C) meetings
D) voice mail
Answer: A
Page Ref: 483
organization
Ch. Objective: 2
Difficulty: Easy
46) ________ is the deliberate manipulation of information to make it appear more favorable to the
receiver.
A) Lateral communication
B) Encoding
C) Diagonal communication
D) Filtering
Answer: D
Page Ref: 484
organization
Ch. Objective: 3
Difficulty: Easy
47) When a person tells his or her manager what the manager wants to hear, which of the following barriers
to effective interpersonal communication is the person using?
A) filtering
B) selective perception
C) feedback
D) defensiveness
Answer: A
Page Ref: 484
organization
Ch. Objective: 3
Difficulty: Easy
48) Which of the following is TRUE of filtering?
A) Filtering aids effective communication by making a message more favorable to a receiver.
B) The more vertical levels in an organization, the more opportunities there are for filtering.
C) Filtering occurs at the individual level; the organization cannot encourage or discourage it.
D) The use of e-mail increases filtering because communication is more direct.
Answer: B
Page Ref: 484
organization
Ch. Objective: 3
49) All of the following are barriers to effective interpersonal communication, EXCEPT ________.
A) filtering
C) feedback
D) defensiveness
Answer: C
Page Ref: 484-485
organization
Ch. Objective: 3
Difficulty: Easy
50) Sarah needs funding to research the efficacy of a certain drug for the treatment of cancer. Though her
initial trials have been inconclusive, Sarah is sure that the drug will prove to be effective. However, the
organizations she plans to approach for funding will not be very impressed with the results of the previous
trials and may withhold funding. Sarah has to structure her proposal in such a way that she emphasizes the
positives about the drug and minimizes the negative information. Which of the following best describes
Sarah's technique of writing her proposal?
A) diagonal communication
B) filtering
C) defensiveness
D) jargon
Answer: B
Page Ref: 484-485
organization
Ch. Objective: 3
Difficulty: Easy
51) A(n) ________ occurs when the amount of data provided exceeds the recipient's processing capacity.
A) perceptual barrier
B) information overload
C) conceptual block
D) physical barrier
Answer: B
Page Ref: 485
organization
Ch. Objective: 3
Difficulty: Easy
52) Jargon is ________.
A) the capacity of a communication method to process complex messages
B) a technique for deliberate manipulation of information to make it appear more favorable to the receiver
C) specialized terminology that members of a group use to communicate among themselves
D) a technique that increases the breadth potential of a communication method
Answer: C
Page Ref: 485
organization
Ch. Objective: 3
Difficulty: Easy
53) Which of the following is a way for managers to overcome the barriers to communication?
A) feedback
B) decoding
C) encoding
D) filtering
Answer: A
Page Ref: 485-486
organization
Ch. Objective: 3
Difficulty: Easy
54) Listening is an active search for meaning, whereas ________ is passive.

A) speaking
B) encoding
C) decoding
D) hearing
Answer: D
Page Ref: 486
organization
Ch. Objective: 3
Difficulty: Easy
55) Listening for full meaning without making premature judgments or interpretations is called ________.
A) passive hearing
B) lateral communication
C) active listening
D) decoding
Answer: C
Page Ref: 486
organization
Ch. Objective: 3
Difficulty: Easy
56) Which of the following is TRUE for active listeners?

A) They should avoid making eye contact and nodding as this will distract the speaker.
B) They should not interrupt the speaker, but should feel free to ask questions about the topic.
C) They should listen for full meaning and avoid paraphrasing what the speaker is saying.
D) Developing empathy for the speaker is not advised as it proves an emotional barrier to listening.
Answer: B
Page Ref: 486
organization
Ch. Objective: 3
57) Which of the following helps an individual to understand the actual content of a message?
A) antipathy
B) empathy
C) apathy
D) empowerment
Answer: B
Page Ref: 486
organization
Ch. Objective: 3
58) When a manager asks an employee to complete a task, he or she is using ________ communication.
A) upward
B) lateral
C) informal
D) formal
Answer: D
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
59) Organizational communication that is not defined by the organization's structural hierarchy is known as
________ communication.
A) external
B) passive
C) informal
D) controlled
Answer: C
Page Ref: 488
organization
Ch. Objective: 4
60) The ________ communication system within an organization permits employees to satisfy their need for
social interaction with their peers.
A) informal
B) upward
C) formal
D) downward
Answer: A
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
61) Downward communication is used ________.
A) by employees to give managers progress reports
B) to coordinate and evaluate employees
C) between employees at the same organizational level
D) between people of different departments and organizational levels
Answer: B
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
62) ________ communication is communication that flows from a manager to employees.

A) Lateral
B) Upward
C) Downward
D) Horizontal
Answer: C
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
63) Jon is the manager of the Finance department. He has to inform the employees in the department about
the introduction of a new analytical software and the resultant changes in procedures. Which of the
following types of communication does he use?
A) upward
B) downward
C) lateral
D) diagonal
Answer: B
Page Ref: 488
organization
Ch. Objective: 4
64) In an effort to improve communication within the Accounts department of a large organization, the
department head puts a suggestion box at the door and invites employees to communicate their thoughts,
ideas, concerns, or grievances to the managers in the department. Which of the following methods of
communication is he encouraging?
A) upward
B) diagonal
C) downward
D) lateral
Answer: A
Page Ref: 488
organization
Ch. Objective: 4
65) ________ communication keeps managers aware of how employees feel about their jobs, their
coworkers, and the organization in general.
A) Downward
B) Horizontal
C) Lateral
D) Upward
Answer: D
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
66) Which of the following management styles will most likely encourage upward communication?
A) dictatorial
B) paternalistic
C) participative
D) authoritarian
Answer: C
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
67) Which of the following is an example of lateral communication?

A) George informs his superior about the progress of the new project.
B) Brian talks to his teammate about a change in project specifications.
C) Richard penalizes John for not following the company dress code.
D) Paul tells the CEO about the low morale in his department.
Answer: B
Page Ref: 488-489
organization
Ch. Objective: 4
Difficulty: Easy
68) Cross-functional teams rely heavily on ________ communication, which can be problematic if their
managers are not kept informed about the decisions.
A) downward
B) upward
C) vertical
D) lateral
Answer: D
Page Ref: 489
Learning Outcome: Describe the best practices of groups and teams; Describe communication skills and the
factors affecting communication within an organization
Ch. Objective: 4
Difficulty: Easy
69) When an organization has an interest in increasing the efficiency and speed of communication between
managers at different levels and in different departments, then ________.
A) upward communication works best
B) diagonal communication should be used
C) lateral communication is ideal
D) upward communication works the fastest
Answer: B
Page Ref: 489
organization
Ch. Objective: 4
Difficulty: Easy
70) In the ________ communication network, communication flows according to the formal organizational
hierarchy, both downward and upward.
A) chain
B) all-channel
C) wheel
D) horizontal
Answer: A
Page Ref: 489
organization
Ch. Objective: 4
Difficulty: Easy
71) In a(n) ________ communication network, all communication passes through a clearly identifiable
leader to the others in a team and upward from team members to the leader.
A) wheel
B) all-channel
C) chain
D) circular
Answer: A
Page Ref: 489
Ch. Objective: 4
Difficulty: Easy
72) In the all-channel network, communication flows ________.

A) downward from a strong leader to his subordinates in the work group
B) in a parallel fashion until all of the members of a work group have been informed
C) freely among all members of a formal work team
D) among the managers of a functional area of an organization
Answer: C
Page Ref: 489
Ch. Objective: 4
Difficulty: Easy
73) If a company is concerned with achieving high member satisfaction for all the participants in a network,
which of the following communication networks is best?
A) chain network
B) horizontal network
C) wheel network
D) all-channel network
Answer: D
Page Ref: 489
organization
Ch. Objective: 4
Difficulty: Easy
74) Over the years, managers at Wilson's Retail have discovered that the sales staff in the retail areas have
the best insights into what customers want and how they shop. Wilson's uses these insights to design its
retail spaces and decide which products to stock. To make the sharing of information easier, Wilson's
encourages an open communication network, where information flows freely between and among staff and
managers. Which of the following communication networks does Wilson's use?
A) chain
B) wheel
C) all-channel
D) downward
Answer: C
Page Ref: 489
organization
Ch. Objective: 4
75) An organization's grapevine works as ________.

A) a method for managers to communicate official policy
B) a method for management to control the dissemination of information
C) both a formal and an informal communication method
D) a filter and a feedback mechanism for managers
Answer: D
Page Ref: 490
organization
Ch. Objective: 4
Difficulty: Easy
76) Because rumors that flow along the grapevine can never be eliminated entirely, managers can minimize
the negative consequences of rumors by ________.
A) ignoring them completely
B) communicating openly and honestly with employees
C) encouraging an all-channel communication network
D) using filtering wherever possible
Answer: B
Page Ref: 490
organization
Ch. Objective: 4
77) Which of the following is TRUE for organizational communication?

A) It uses formal but not informal communication techniques.
B) It includes informal communication via the grapevine.
C) Information flows according to the organization's chain of command.
D) It does not include interpersonal communication.
Answer: B
Page Ref: 480; 490
organization
Ch. Objective: 1; 4
Difficulty: Easy
78) In order to increase face-to-face communication among employees, the workplace design should
________.
A) maximize visibility and density
B) maximize visibility and minimize density
C) minimize visibility and density
D) minimize visibility and maximize density
Answer: A
Page Ref: 491
organization
Ch. Objective: 4
Difficulty: Easy
79) Selenius Inc. develops and tests software products. The work calls for a lot of collaboration among
employees, who frequently brainstorm and bounce ideas off each other. Which of the following workplace
designs will best suit Selenius' requirements?
A) an open workplace
B) closed cubicles
C) high partitions
D) individual offices
Answer: A
Page Ref: 491
organization
Ch. Objective: 4
80) A(n) ________ is a location where Internet users can gain wireless access to the Internet.
A) extranet
B) LAN
C) intranet
D) wi-fi hot spot
Answer: D
Page Ref: 493
organization
Ch. Objective: 5
Difficulty: Easy
81) Which of the following is a disadvantage of using IT in organizational communication?

A) economic drawbacks
B) geographic constraints
C) psychological costs
D) time constraints
Answer: C
Page Ref: 493
organization
Ch. Objective: 5
Difficulty: Easy
82) Though IT has improved organizational communications in recent years, ________ remains a major
concern.
A) timeliness
B) security
C) cost
D) breadth potential
Answer: B
Page Ref: 494
Learning Outcome: Describe the components of the management environment; Describe communication
skills and the factors affecting communication within an organization
Ch. Objective: 6
Difficulty: Easy
The Memorandum (Scenario)
George Wilberson is a qualified engineer and manages a work team that consists of two engineers, four
production workers, an accountant, and a purchasing manager. They are about to embark on a new project
for their company. George has prepared a memorandum explaining the objectives of the work team.
83) Some of the production workers have come to see George and ask for clarification about the
memorandum. This represents the ________ aspect of the communication process.
A) encoding
B) channeling
C) filtering
D) feedback
Answer: D
Page Ref: 481-482
organization
Ch. Objective: 2
Difficulty: Easy
84) The purchasing manager assigned to this team had already worked with George in the past. However, a
difference of opinion had soured their relationship. As a result, the purchasing manager was unable to
objectively evaluate and appreciate the various aspects of the current project described in the memorandum.
This is an example of ________.
A) noise
B) channeling
C) feedback
D) encoding
Answer: A
Page Ref: 481-482
organization
Ch. Objective: 2
Difficulty: Easy
85) The accountant, in particular, told George that he had difficulty understanding some of the technical
terms used in the memorandum. These technical terms are commonly known as ________.
A) encoding
B) echoes
C) noise
D) jargon
Answer: D
Page Ref: 481-482; 485
organization
Ch. Objective: 3
Difficulty: Easy
The Sword and the Millstone (Scenario)
Sandra Millstone, the CEO of Excalibur Manufacturing Company, had concluded that the company would
have to reduce its employee group by 10 percent as the industry was severely hit by the ongoing economic
recession. She spent over 30 hours preparing charts, tables, graphs, diagrams, and other forms of visual aids
for her presentation to the employees about the upcoming reduction in force so that they could understand
the reason and plan their next move.
86) During the presentation Sarah explained that the reason for downsizing was the recession which was
hitting the company badly. However, the fact of the matter was that the company had not yet experienced
any loss of revenues but were anticipating bad days ahead, which could eventually lead to mass layoffs.
This is an example of the ________ aspect of the communication process.
A) channeling
B) filtering
C) selective perception
D) poor decoding
Answer: B
Page Ref: 484
organization
Ch. Objective: 3
87) By the time that Sandra had finished the presentation to the employees, she had spoken for one and one-
half hours, shown 14 visual aids, and no one asked a question. The employees were probably dealing with
which of the following barriers to effective communication?
A) information overload
C) knowledge management
D) cultural constraints
Answer: A
Page Ref: 485
organization
Ch. Objective: 3
88) As the employees began to leave the meeting room, some were overheard grumbling that those at the
top were just profit-rakers, that it didn't make any difference to Sandra if employees lost their jobs. Which
barrier to effective communications do these statements represent?
A) selective perception
B) information overload
C) defensiveness
D) downward communication
Answer: C
Page Ref: 485
organization
Ch. Objective: 3
Difficulty: Easy
"Flo" of Communication (Scenario)
Recently the employees of Chatterbox Enterprises, Inc., received a letter from the vice president of
operations explaining that a new production facility would be built in Chatland City, AL. It was also stated
that about one-fourth of the employees from the current Chatland City facility would be transferred to the
new facility and if employees wanted to volunteer for the transfer, they could do so by meeting the human
resource manager and filling out a request form. Sam, a production supervisor, first went to Florence, the
purchasing manager, who had already volunteered to transfer, to discuss with her the possibility of
becoming her inventory control supervisor at the new facility. Florence told Sam that Ruth, the current
inventory control supervisor, would not be transferring and that she would consider his request.
89) The letter from the vice president to the employees is an example of which type of organizational
communication?
A) horizontal
B) formal
C) lateral
D) informal
Answer: B
Page Ref: 488
organization
Ch. Objective: 4
90) When Sam went to the human resource manager and applied for transfer to the new facility, he was
participating in which type of organizational communication?
A) formal
B) downward
C) horizontal
D) lateral
Answer: A
Page Ref: 488
organization
Ch. Objective: 4
91) If Sam had talked with his co-supervisors before going to speak to Florence, he would have been
involved in which type of organizational communication?
A) vertical
B) internal
C) lateral
D) downward
Answer: C
Page Ref: 488
organization
Ch. Objective: 4
92) When Sam spoke to Florence, he was involved in which type of organizational communication?
A) diagonal
B) upward
C) horizontal
D) lateral
Answer: A
Page Ref: 489
organization
Ch. Objective: 4
Types of Communication Networks (Scenario)
Rick Smith is a regional sales manager for a health care information technology firm called MediFax, based
in Nashville, TN. Rick is responsible for overseeing 15 salespeople covering over 20 states spanning the
mid-South to the Northeast. When the company was smaller and there were fewer salespeople,
communication flowed freely from the field back into all areas of the home office—customer service,
development, accounting and finance, and top management. However, as the company has grown, its
structure has become more mechanistic. Communications to and from the field now flows according to the
formal chain of command. As a result, the firm has been slower to recognize shifts in the market and
respond to important market-based information delivered by the sales force. This has reduced the
motivation of the sales team who are now reluctant to forward information to the home office because they
perceive that it won't be acted upon anyway. The management has asked Rick to review this issue and
provide recommendations for improving the situation.
93) Formerly, information flowed freely from the sales force to all areas of the home office. This most
closely represents the ________.
A) wheel network
B) chain network
C) all-channel network
D) informal network
Answer: C
Page Ref: 489
organization
Ch. Objective: 4
94) Once the company grew and became more mechanistic, the management insisted that information flow
vertically along the line of authority. This is most representative of the ________ communications network.
A) wheel
B) chain
C) all-channel
D) circular
Answer: B
Page Ref: 489
organization
Ch. Objective: 4
95) Rick believes that it might be more effective if incoming market-based information and outgoing
response and direction were to flow through a central figure, the regional sales manager for each region. He,
therefore, prefers ________ network for communication.
A) wheel
B) chain
C) all-channel
D) informal
Answer: A
Page Ref: 489
organization
Ch. Objective: 4
96) Explain why communication is important to managers and organizations. What four functions does it
serve?
Answer: Communication serves four major functions: control, motivation, emotional expression, and
information. Communication acts to control employee behavior in several ways. Organizations have
authority hierarchies and formal guidelines that employees are expected to follow. For instance, when
employees are required to communicate any job-related grievance first to their immediate manager, to
follow their job description, or to comply with company policies, communication is being used to control.
But informal communication also controls behavior. When work groups tease a member who's working too
hard or producing too much (making the rest of the group look bad), they're informally controlling the
member's behavior. Communication encourages motivation by clarifying to employees what is to be done,
how well they're doing, and what can be done to improve performance if it's not up to par. As employees set
specific goals, work toward those goals, and receive feedback on progress toward goals, communication is
required. For many employees, their work group is a primary source of social interaction. The
communication that takes place within the group is a fundamental mechanism by which members share
frustrations and feelings of satisfaction. Communication, therefore, provides a release for emotional
expression of feelings and for fulfillment of social needs. Finally, individuals and groups need information
to get things done in organizations. Communication provides that information. None of these four functions
is more important than the others. For groups to work effectively, they need to maintain some form of
control over members, motivate members to perform, provide a means for emotional expression, and make
decisions. You can assume that almost every communication interaction that takes place in a group or
organization is fulfilling one or more of these four functions.
Page Ref: 481
organization
Ch. Objective: 1
Difficulty: Easy
97) List the seven elements of the communication process and explain the process of interpersonal
communication.
Answer: The seven elements of the communication process are: (1) the communication source, (2) the
message, (3) encoding, (4) the channel, (5) decoding, (6) the receiver, and (7) feedback. Before
communication can take place, a purpose, expressed as a message to be conveyed, must exist. It passes
between a source (the sender) and a receiver. The message is converted to a symbolic form (called
encoding) and passed by way of some medium (channel) to the receiver, who retranslates the sender's
message (called decoding). The result is the transfer of meaning from one person to another. The entire
process is susceptible to noise—disturbances that interfere with the transmission, receipt, or feedback of a
message. Typical examples of noise include illegible print, phone static, inattention by the receiver, or
background sounds of machinery or coworkers. Anything that interferes with understanding can be noise,
and noise can create distortion at any point in the communication process.
Page Ref: 481-482
organization
Ch. Objective: 2
Difficulty: Easy
98) Discuss the two best-known types of nonverbal communication. Include a specific example of each type
of nonverbal communication to support your answer.
Answer: An important part of interpersonal communication is nonverbal communication—that is,
communication transmitted without words. Body language refers to gestures, facial expressions, and other
body movements that convey meaning. A person frowning "says" something different from one who's
smiling. Hand motions, facial expressions, and other gestures can communicate emotions or temperaments
such as aggression, fear, shyness, arrogance, joy, and anger. Verbal intonation refers to the emphasis
someone gives to words or phrases that conveys meaning. To illustrate how intonations can change the
meaning of a message, consider the student who asks the instructor a question. The instructor replies, "What
do you mean by that?" The student's reaction will vary, depending on the tone of the instructor's response. A
soft, smooth vocal tone conveys interest and creates a different meaning from one that is abrasive and puts a
strong emphasis on saying the last word.
Page Ref: 482; 484
organization
Ch. Objective: 2
Difficulty: Easy
99) List and discuss the barriers to effective communication that managers face. Include a specific example
of each barrier to support your answer.
Answer:
a. Filtering—This is the deliberate manipulation of information to make it appear more favorable to the
receiver. For example, when a person tells his or her manager what the manager wants to hear, that
individual is filtering information. The extent of filtering tends to be a function of the number of vertical
levels in the organization and the organizational culture. The more vertical levels there are in an
organization, the more opportunities there are for filtering.
b. Emotions—How a receiver feels when a message is received influences how he or she interprets it.
Extreme emotions are most likely to hinder effective communication. In such instances, people often
disregard rational and objective thinking processes and substitute emotional judgments.
c. Information overload—This occurs when the amount of information a person is required to work with
exceeds that individual's processing capacity. What happens when individuals have more information than
they can sort or use? They tend to select out, ignore, pass over, or forget information. Or, they may put off
further processing until the overload situation is over.
d. Defensiveness—When people feel that they're being threatened, they tend to react in ways that reduce
their ability to achieve mutual understanding. That is, they become defensive–engaging in behaviors such as
verbally attacking others, making sarcastic remarks, being overly judgmental, and questioning others'
motives.
e. Language—Words mean different things to different people. Age, education, and cultural background
are three of the more obvious variables that influence the language a person uses and the definitions he or
she gives to words. People may speak the same language, but use of that language is far from uniform.
Senders tend to assume that the words and phrases they use mean the same to the receiver as they do to
them. This is incorrect and creates communication barriers.
f. National culture—Interpersonal communication isn't conducted in the same way around the world. In
the United States, communication patterns tend to be individually oriented and clearly spelled out. U.S.
managers rely heavily on memoranda, announcements, position papers, and other formal forms of
communication to state their positions on issues. In collectivist countries, such as Japan, there's more
interaction for its own sake and a more informal manner of interpersonal contact.
Page Ref: 484-485
Learning Outcome: Identify the fundamental concepts and issues of international business and
management; Describe communication skills and the factors affecting communication within an
organization
Ch. Objective: 3
100) Explain formal and informal communication within an organization.
Answer: Communication within an organization is described as formal or informal. Formal
communication refers to communication that takes place within prescribed organizational work
arrangements. For example, when a manager asks an employee to complete a task, that's formal
communication. Another example of formal communication occurs when an employee communicates a
problem to his or her manager.
Informal communication is organizational communication not defined by the organization's structural
hierarchy. When employees talk with each other in the lunch room, as they pass in hallways, or as they're
working out at the company wellness facility, they engage in informal communication. Employees form
friendships and communicate with each other. The informal communication system fulfills two purposes in
organizations: (1) it permits employees to satisfy
their need for social interaction, and (2) it can improve an organization's performance by creating
alternative, and frequently faster and more efficient, channels of communication.
Page Ref: 488
organization
Ch. Objective: 4
Difficulty: Easy
101) How are town hall meetings used by organizations to communicate with employees?
Answer: Town hall meetings are increasingly popular informal public meetings where top executives relay
information, discuss issues, or bring employees together to celebrate accomplishments. They are a form of
downward communication, but also facilitate the multilateral sharing of information and solicitation of
input.
Page Ref: 488; 496
organization
Ch. Objective: 4; 6
102) Describe and explain the different directions of communication flow within an organization.
Answer: Organizational communication can flow downward, upward, laterally, or diagonally.
Downward communication - Downward communication is communication that flows from a manager to
employees. It's used to inform, direct, coordinate, and evaluate employees. When managers assign goals to
their employees, they're using downward communication. They're also using downward communication
when providing employees with job descriptions, informing them of organizational policies and procedures,
pointing out problems that need attention, or evaluating their performance.
Upward communication - Managers rely on their employees for information. For instance, reports are given
to managers to inform them of progress toward goals or to report any problems. Upward communication is
communication that flows from employees to managers. It keeps managers aware of how employees feel
about their jobs, their coworkers, and the organization in general. Managers also rely on upward
communication for ideas on how things can be improved. Some examples of upward communication
include performance reports prepared by employees, suggestion boxes, employee attitude surveys,
grievance procedures, manager-employee discussions, and informal group sessions in which employees
have the opportunity to discuss problems with their manager or representatives of top-level management.
Lateral communication - Communication that takes place among employees on the same organizational
level is called lateral communication. In today's dynamic environment, horizontal communications are
frequently needed to save time and facilitate coordination. Cross-functional teams, for instance, rely heavily
on this form of communication interaction. However, conflicts can arise if employees don't keep their
managers informed about decisions they've made or actions they've taken.
Diagonal communication - Diagonal communication is communication that crosses both work areas and
organizational levels. Because of its efficiency and speed, diagonal communication can be beneficial.
Increased e-mail use facilitates diagonal communication. In many organizations, any employee can
communicate by e-mail with any other employee, regardless of organizational work area or level, even with
upper-level managers. However, diagonal communication also has
the potential to create problems if employees don't keep their immediate managers informed.
Page Ref: 488-489
organization
Ch. Objective: 4
103) Briefly describe three common communication networks, or patterns of communication, that emerge in
organizations. Is any one network preferable to others? If so, why? If not, what factors decide which
network is best for a particular situation?
Answer: The vertical and horizontal flows of organizational communication can be combined into a variety
of patterns called communication networks.
a. Chain network—Communication flows according to the formal chain of command, both downward and
upward. If accuracy is important, the chain network works well.
b. Wheel network—Communication flows between a clearly identifiable and strong leader and others in a
work group or team. The leader serves as a hub through which communication passes. If having a strong,
identifiable leader is important to the organization or work unit, the wheel network is the best
communication network. Accuracy is also very high with the wheel network.
c. All-channel network—Communication flows freely among all members of a work team. If high member
satisfaction is a concern, the all-channel network is preferable.
Page Ref: 489
organization
Ch. Objective: 4
Difficulty: Easy
104) What is the role of the informal communication network in organizations? How can managers ensure
that this network is beneficial to the organization?
Answer: The informal organizational communication network in organizations is known as the grapevine.
The grapevine is active in almost every organization. It is an important source of information for employees,
many of whom hear about important matters first through rumors or gossip on the grapevine. Acting as both
a filter and a feedback mechanism, it pinpoints those bewildering issues that employees consider important.
More importantly, from a managerial point of view, it is possible to analyze what is happening on the
grapevine—what information is being passed, how information seems to flow, and what individuals seem to
be key information conduits. By staying aware of the grapevine's flow and patterns, managers can identify
issues that concern employees, and, in turn, use the grapevine to disseminate important information.
Because the grapevine can't be eliminated, managers should "manage" it as an important information
network.
Rumors that flow along the grapevine also can never be eliminated entirely. However, managers can
minimize the negative consequences of rumors by communicating openly, fully, and honestly with
employees, particularly in situations where employees may not like proposed or actual managerial
decisions.
Page Ref: 490
organization
Ch. Objective: 4
Difficulty: Easy
105) "The grapevine is detrimental to effective organizational communication and must be eliminated if the
organization is to effectively engage its employees." Do you agree with this statement? Explain your
answer.
Answer: Student answers may vary. However, it is a fact that the grapevine, an informal organizational
network is part of every organization. In fact, it is an important source of information for the company. This
makes it imperative for companies to try to understand its dynamics. Acting as both a filter and a feedback
mechanism, it pinpoints those bewildering issues that employees consider important. More importantly,
from a managerial point of view, it is possible to analyze what is happening on the grapevine—what
information is being passed, how information seems to flow, and what individuals seem to be key
information conduits. By staying aware of the grapevine's flow and patterns, managers can identify issues
that concern employees, and, in turn, use the grapevine to disseminate important information. Because the
grapevine can't be eliminated, managers should "manage" it as an important information network. However,
managers can minimize the negative consequences of rumors. They can do so by communicating openly,
fully, and honestly with employees, particularly in situations where employees may not like proposed or
actual managerial decisions. Studies show that this is likely to be effective in engaging employees.
Page Ref: 490
organization
Ch. Objective: 4
106) In a short essay, explain two main communication challenges that new technology has created.
Answer: Managers are learning that new technology has created special communication challenges. The
two main ones are (1) legal and security issues and (2) lack of personal interaction. Although e-mail is a
quick and easy way to communicate, managers need to be aware of potential legal problems from
inappropriate e-mail usage. Electronic information is potentially admissible in court. Security concerns are
another issue managers face. Managers need to ensure that confidential information is kept confidential.
Employee e-mails and blogs should not communicate—inadvertently or purposely—proprietary
information. Corporate computer and e-mail systems should be protected against hackers (people who try to
gain unauthorized access to computer systems) and spam (electronic junk mail). These are serious issues
that managers and organizations must address if the benefits that communication technology offers are to be
realized. Another communication challenge posed by the Internet age is the lack of personal interaction.
Even when two people are communicating face-to-face, understanding is not always achieved. However,
when communication takes place in a virtual environment, it can be really hard to achieve understanding
and collaborate on getting work done. Some companies have gone so far as to ban e-mail on certain days of
the week. Others have simply encouraged employees to collaborate more in person. Yet, there are situations
and times when personal interaction isn't physically possible—when employees are spread across the
continent or even across the globe. In those instances, real-time collaboration software (such as private
workplace wikis, blogs, instant messengers, and other types of groupware) may be a better communication
choice than sending an e-mail and waiting for a response.
Page Ref: 494
Learning Outcome: Describe the components of the management environment; Describe communication
skills and the factors affecting communication within an organization
Ch. Objective: 6
107) Explain how communication can have an impact on customer satisfaction and what managers can do to
improve communication.
Answer: What communication takes place and how it takes place can have a significant impact on a
customer's satisfaction with the service and the likelihood of being a repeat customer. Managers in service
organizations need to make sure that employees who interact with customers are communicating
appropriately and effectively with those customers.
Managers must first recognize the three components in any service delivery process: the customer, the
service organization, and the individual service provider. Each plays a role in whether communication is
working. Obviously, managers don't have a lot of control over what or how the customer communicates, but
they can influence the other two.
An organization with a strong service culture already values taking care of customers—finding out what
their needs are, meeting those needs, and following up to make sure that their needs were met satisfactorily.
Each of these activities involves communication, whether face-to-face, by phone or e-mail, or through other
channels.
Communication also is important to the individual service provider or contact employee. The quality of the
interpersonal interaction between the customer and that contact employee does influence customer
satisfaction, especially when the service encounter isn't up to expectations. People on the front line involved
with those "critical service encounters" are often the first to hear about or notice service failures or
breakdowns. They must decide how and what to communicate during these instances. Their ability to listen
actively and communicate appropriately with the customer goes a long way in whether the situation is
resolved to the customer's satisfaction or spirals out of control. Another important communication concern
for the individual service provider is making sure that he or she has the information needed to deal with
customers efficiently and effectively. If the service provider doesn't personally have the information, some
way needs to be devised to get the information easily and promptly.
Page Ref: 495-496
organization
Ch. Objective: 6
Difficulty: Easy
108) How does unethical communication impact business? What are some ways that companies
communicate unethically?
Answer: Unethical communication distorts the truth, manipulates audiences, or fails to include all relevant
information to avoid deception of any type. Companies can communicate unethically by omitting essential
information. For instance, not telling employees that an impending merger is going to mean some of them
will lose their jobs is unethical. It's unethical to plagiarize, which is presenting someone else's words or
other creative product as your own. It would also be unethical communication to selectively misquote,
misrepresent numbers, distort visuals, and fail to respect privacy or information security needs. For instance,
although British Petroleum attempted to communicate openly and truthfully about the Gulf Coast oil spill in
the summer of 2010, the public still felt that much of the company's communication contained some
unethical elements.
Page Ref: 497
Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe
communication skills and the factors affecting communication within an organization
AACSB: Ethical Understanding and Reasoning Abilities; Communication Abilities
Ch. Objective: 6
Chapter 13 Managing Human Resources
TRUEFALSE
1. Labor relations is the set of organizational activities directed at attracting, developing, and
maintaining an effective workforce.
(A) TRUE
(B) False
Answer : (B)
2. The effectiveness of the HR function does not have a substantial impact on the bottom-line
performance of a firm.
(A) TRUE
(B) False
Answer : (B)
3. Responsibility for HR activities is shared between the HR department and line managers.
(A) TRUE
(B) False
Answer : (A)
4. Union activities and management's behavior toward unions is heavily regulated.

(A) TRUE
(B) False
Answer : (A)
5. Executive orders require all organizations to actively pursue affirmative action.
(A) TRUE
(B) False
Answer : (B)
6. The Labor-Management Relations Act prohibits the President of the United States from
preventing or ending a strike, even if it endangers national security.
(A) TRUE
(B) False
Answer : (B)
7. The Americans with Disabilities Act applies to alcoholics, drug addicts, and AIDS patients.
(A) TRUE
(B) False
Answer : (A)
8. Although employment-at-will has legal implications, its emergence as an issue is socially and
politically driven.
(A) TRUE
(B) False
Answer : (A)
9. Job descriptions contain duties, working conditions, tools, materials, and equipment used to
perform the job.
(A) TRUE
(B) False
Answer : (A)
10. Enterprise resource planning (ERP) systems generally include capabilities for measuring and
managing the internal supply of labor in ways that best fit the needs of the organization.
(A) TRUE
(B) False
Answer : (A)
11. One advantage of internal recruiting is its ripple effect because more people get promoted.
(A) TRUE
(B) False
Answer : (B)
12. Assessment center procedures for selecting employees typically demonstrate low-content
validity.
(A) TRUE
(B) False
Answer : (B)
13. Predictive validation uses logic and job analysis data to establish that the selection device
measures the exact skills needed for successful job performance.
(A) TRUE
(B) False
Answer : (B)
14. Drug tests are becomingly increasingly popular as a selection technique.
(A) TRUE
(B) False
Answer : (A)
15. Most organizations provide regular training and development programs for managers and
employees.
(A) TRUE
(B) False
Answer : (A)
16. As training programs are being developed, the manager should set specific and measurable
goals specifying what participants are to learn.
(A) TRUE
(B) False
Answer : (A)
17. Ranking differs from rating in that it compares each employee with a fixed standard rather than
comparison with other employees.
(A) TRUE
(B) False
Answer : (B)
18. Miguel recently gave a great presentation. As his boss completes his annual performance
evaluation, she keeps thinking about the presentation. She is committing recency error.
(A) TRUE
(B) False
Answer : (A)
19. When managers decide to pay the firm's administrative assistants above-average wages for the
city in which the firm is located, they have made a wage-structure decision.
(A) TRUE
(B) False
Answer : (B)
20. Salaries represent special compensation opportunities that are usually tied to performance.
(A) TRUE
(B) False
Answer : (B)
21. A good compensation system can stimulate high performance at a cost reasonable for one's
industry.
(A) TRUE
(B) False
Answer : (A)
22. Fifty percent of the firm's employees must sign authorization cards before the National Labor
Relations Board will conduct a union certification election.
(A) TRUE
(B) False
Answer : (B)
23. A union can represent wage earners, but not salaried employees.
(A) TRUE
(B) False
Answer : (B)
24. The best way to avoid having your employees vote to have a union is to treat them so that they
do not feel the need for one.
(A) TRUE
(B) False
Answer : (A)
25. The purpose of grievance procedures is to administer and enforce the labor agreement reached
during collective bargaining.
(A) TRUE
(B) False
Answer : (A)
26. The increasing use of knowledge workers has made human resources even more important.
(A) TRUE
(B) False
Answer : (A)
27. Traditionally, employees added value to organizations because of what they knew.
(A) TRUE
(B) False
Answer : (B)
28. Ed contracts with various engineering companies to work on specific jobs. When the jobs are
concluded, he may begin work for another company or for the same company on a different job. Ed
is an example of a contingent worker.
(A) TRUE
(B) False
Answer : (A)
MULTICHOICE
29. Those activities directed at attracting, developing, and maintaining an effective workforce are
called
(A) recruiting.
(B) selection.
(C) employee relations.
(D) labor relations.
(E) human resource management.
Answer : (E)
30. Given the environment in which organizations must function today, which of the following
statements about human resource management (HRM) is FALSE?
(A) HRM should have an important place because of the complex legal environment.
(B) HRM should be a part of the strategic planning process.
(C) HRM should be left to line managers because they know their people best.
(D) HRM should be viewed as a means of significantly increasing productivity.
(E) Human capital reflects the organization's investment in attracting, retaining, and motivating an
effective workforce.
Answer : (C)
31. Which of the following labor regulations could have potentially prevented a 2006 mine accident
in West Virginia that killed 11 miners?
(A) National Labor Relations Act
(B) Fair Labor Standards Act
(C) Labor-Management Relations Act
(D) Occupational Safety and Health Act
(E) Civil Rights Act of 1991
Answer : (D)
32. A law proposed in Maine planned to deny the minimum wage to welfare recipients in jobs that
they take as part of their work requirements. This proposal was in defiance of the
(A) National Labor Relations Act.
(B) Fair Labor Standards Act.
(C) Labor-Management Relations Act.
(D) Occupational Safety and Health Act.
(E) Civil Rights Act of 1991.
Answer : (B)
33. Title VII of the 1964 Civil Rights Act did NOT prohibit discrimination on the basis of . A later
act prohibited it.
(A) age
(B) race
(C) gender
(D) color
(E) national origin
Answer : (A)
34. Which of the following federal laws does NOT have a direct impact on human resource
management?
(A) Americans with Disabilities Act
(B) Trademark Law Revision Act of 1988
(C) Fair Labor Standards Act
(D) Civil Rights Act of 1991
(E) Labor-Management Relations Act
Answer : (B)
35. Title VII of the 1964 Civil Rights Act is enforced by
(A) the executive branch.
(B) the judicial branch.
(C) the Equal Employment Opportunity Commission.

(D) the press.
(E) the National Labor Relations Board.
Answer : (C)
36. An employment test is judged to have a(n) on minority applicants if the pass rate for the
minority group is less than about 80 percent of the pass rate for the majority group members.
(A) adverse impact
(B) negative action
(C) negative disconfirmation
(D) contradictory result
(E) affirmative action
Answer : (A)
37. Employment tests that have been determined to have an adverse impact can be used as selection
devices ONLY if they
(A) have been specifically approved by the Equal Employment Opportunity Commission.
(B) have been shown to predict success on the job.
(C) are protected by a grandfather clause that grants them an exemption.
(D) are covered by presidential executive order.
(E) continue to result in discriminatory hiring practices.
Answer : (B)
38. The Age Discrimination in Employment Act
(A) prohibits discrimination against workers 18 to 40 years of age.
(B) is part of the 1964 Civil Rights Act.
(C) requires employers to have affirmative action plans.
(D) allows forced retirement of employees after age 65.
(E) outlaws discrimination against workers older than 40.
Answer : (E)
39. Passive nondiscrimination requires employers to

(A) meet hiring quotas.
(B) give all job applicants equal opportunity to be hired.
(C) try to make the composition of their labor force the same as the relevant labor market.
(D) give preference to minorities and women.
(E) have an affirmative action plan.
Answer : (B)
40. Organizations holding federal contracts exceeding a certain dollar value must have affirmative
action plans according to
(A) Title VII of the 1964 Civil Rights Act.
(B) the Labor-Management Relations Act (Taft-Hartley Act).
(C) the Fair Labor Standards Act.
(D) executive orders.
(E) ERISA.
Answer : (D)
41. An African American surgeon on a Chicago hospital staff was admitted to the internship program
because of his race, even though he had lower grades and test scores than other applicants. This
acceptance, which was mandated by the government, indicates that the hospital used
(A) adverse impact.
(B) negative action.
(C) negative disconfirmation.
(D) contradictory result.
(E) affirmative action.
Answer : (E)
42. Legislation that places constraints on the selection of employees includes
(A) the Fair Labor Standards Act.
(B) Title VII of the Civil Rights Act.
(C) the Age Discrimination Act.
(D) Title VII of the Civil Rights Act and the Age Discrimination Act.
(E) All of these choices
Answer : (D)
43. If you are required by the courts or other directives to have an affirmative action plan, which of
the following actions must you take?
(A) Abide by the requirements of passive nondiscrimination in all hiring practices
(B) Actively recruit minorities so your labor force will eventually be the same as the relevant labor
market
(C) Discharge current employees and hire minorities to create the required balance in your
workforce
(D) Just ensure that everyone who applies for a job is given equal opportunity to be hired
(E) Discharge any employee who does not join the union within the prescribed time period
Answer : (B)
44. The requires payment of overtime to employees who work more than 40 hours per week.
(A) Equal Pay Act
(B) Workmen's Compensation Act
(D) National Labor Relations Act (Wagner Act)
(E) Labor-Management Relations Act (Taft-Hartley Act)
Answer : (C)
45. Which of the following actions would violate the intent of the Equal Pay Act?
(A) Refusing to hire women
(B) Paying a man more than a woman doing the same job because he had worked for the company
longer than she
(C) Paying a man more than a woman doing the same work simply because he has qualifications she
does not have
(D) Paying a woman less than a man doing the same work because she is the second wage earner in
a dual-career family
(E) Using performance differences as justification for pay differences between men and women
doing the same job
Answer : (D)
46. Marty works at a call center. Last week he worked 48 hours. According to the , he should
receive overtime for the time he worked in addition to his regular 40-hour shift.
(A) National Labor Relations Act
(B) Fair Labor Standards Act
(C) Labor-Management Relations Act
(E) Civil Rights Act of 1991
Answer : (B)
47. Harriet has a drinking problem. After a drinking-related incident at work, she sought treatment.
Courts are increasingly ruling that her condition is covered under the
(A) Equal Pay Act.
(B) Civil Rights Act.
(C) National Labor Relations Act.
(D) Americans with Disabilities Act.
(E) Female Discrimination Act.
Answer : (D)
48. Darin, the human resources manager of a local firm, makes sure that the firm is paying men and
women the same if they are doing the same job. The legal constraint that he is abiding by is the
(A) Equal Pay Act.
(B) Affirmative Action Act.
(C) National Labor Relations Act.
(D) various executive orders issued by the president.
(E) Female Discrimination Act.
Answer : (A)
49. Howard has a six month old son. Howard is thankful for the every time he pushes a stroller
down a ramp or has more space in a store. The act has helped a broad range of people.
(A) Occupational Safety and Health Act
(B) Civil Rights Act
(D) National Labor Relations Act
(E) Americans with Disabilities Act
Answer : (E)
50. On which basis does current employment law permit an employer to pay different amounts to
workers on the same job?
(A) Age
(B) Certain forms of handicap
(C) Nationality
(D) Performance
(E) Religious preference
Answer : (D)
51. Eduardo developed brain cancer. His wife accompanied him to Boston where he received
experimental surgery. The ability to leave her job and know that it would be hers when she returned
was made possible by the
(A) Fair Labor Standards Act.
(B) National Labor Relations Act (Wagner Act).
(C) Family and Medical Leave Act of 1993.
(D) Labor Practices Act.
(E) Equal Pay Act.
Answer : (C)
52. Which of the following labor laws increases management's rights during union organizing
campaigns?
(A) Fair Labor Standards Act
(B) National Labor Relations Act (Wagner Act)
(C) Labor-Management Relations Act (Taft-Hartley Act)

(D) Labor Practices Act
(E) Equal Pay Act
Answer : (C)
53. Which of the following laws gives the President of the United States the authority to seek a court
injunction to force striking unions to go back to work for 80 days when, in the president's opinion,
the strike endangers the health and safety of the nation?
(A) National Labor Relations Act (Wagner Act)
(B) Labor-Management Relations Act (Taft-Hartley Act)
(C) Presidential executive order
(E) National Defense Act
Answer : (B)
54. Which of the following laws requires management to bargain in good faith with the designated
employee representatives?
(A) Management Practices Act
(B) Labor-Management Relations Act (Taft-Hartley Act)
(C) National Labor Relations Act (Wagner Act)
(D) Employee Security Act
(E) Sherman Antitrust Act
Answer : (C)
55. While some employers are upset by regulations that set the legal limit on how far apart the
risers on a ladder can be, OSHA safety standards are intended to
(A) prevent long-term health hazards for employees.
(B) provide uniform equipment for employee protection from excessive noise, air contaminants, and
so on.
(C) prevent on-the-job accidents.
(D) collect data for determining hazardous or nonhazardous job classifications.
(E) gather data on a broad range of employee complaints concerning excessive dust, radiation, and
so on.
Answer : (C)
56. A company that requires everyone working on a computer to use a gel hand rest would be in
accordance with the
(A) National Labor Relations Act.
(B) Fair Labor Standards Act.
(C) Labor-Management Relations Act.
(D) Occupational Safety and Health Act.
(E) Civil Rights Act of 1991.
Answer : (D)
57. A beer company used to fire an employee for drinking a competitor's beer in public. Courts
are increasingly ruling against such a justification for firing an employee.
(A) employment-at-will
(B) affirmative action
(C) affirmative disconfirmation
(D) reactionary reinforcement
(E) progenitor laws
Answer : (A)
58. You are reading a document with the following information: "Workers will work in an office
environment using a computer. Some lifting will be involved but will not exceed five pounds." You
are reading part of a job
(A) analysis.
(B) description.
(C) specification.
(D) design.
(E) requirement.
Answer : (B)
59. The systematic collection and recording of information about jobs in the organization is known
as
(A) job evaluation.
(B) job analysis.
(C) job specification.
(D) staffing.
(E) the selection process.
Answer : (B)
60. Which of the following information is included in a job description?
(A) Qualifications required of the job incumbent
(B) Conditions under which the work is done
(C) Lists of skills
(D) Lists of abilities
(E) Required credentials
Answer : (B)
61. You are reading a document that says that a job applicant must have a valid driver's license, be a
citizen of the United States, and be available evenings and weekends. You are reading a
(A) classified ad.
(B) job analysis.
(C) job description.
(D) recruiting statement.
(E) job specification.
Answer : (E)
62. All of the following are steps in human resource planning EXCEPT
(A) job analysis.
(B) job evaluation.
(C) forecasting human resource supply.
(D) forecasting human resource demand.
(E) creating a plan for dealing with predicted shortfalls or overstaffing.

Answer : (B)
63. A commonly used technique for planning specific human resource requirements in higher-level
positions is the
(A) labor regression analysis.
(B) skills inventory.
(C) performance appraisal system.
(D) replacement chart.
(E) career opportunity roster.
Answer : (D)
64. Sprint maintains a computerized spreadsheet of education, skills, experience, and career
aspirations of its current employees. This is a
(A) labor regression analysis.
(B) skills inventory.
(C) performance appraisal system.
(D) replacement chart.
(E) career opportunity roster.
Answer : (B)
65. Cole, Inc. has determined that its forecast demand for middle managers is greater than its
forecast supply. All of the following would be appropriate actions EXCEPT
(A) recruiting.
(B) extending the retirement date.
(C) attrition.
(D) promotion.
(E) cross-training.
Answer : (C)
66. If overstaffing is expected, the main options are all EXCEPT which of the following?
(A) To transfer employees

(B) To not replace people who quit
(C) To encourage early retirement
(D) To limit production
(E) To lay people off
Answer : (D)
67. Which of the following is a potential area of concern for managers when they use internal
sources to fill a vacant position?
(A) A drop in morale
(B) An increase in turnover
(C) The ripple effect
(D) Complaints from the union
(E) The loss of highly qualified employees
Answer : (C)
68. Apple co-founder Steve Jobs resigned as CEO for health reasons. Tim Cook took over. Cook had
been with Apple for 13 years. This promotion resulted in
(A) a drop in morale.
(B) an increase in turnover.
(C) the ripple effect.
(D) complaints from the union.
(E) the loss of highly qualified employees.
Answer : (C)
69. In unionized firms, internal recruitment methods are
(A) required by the National Labor Relations Act (Wagner Act).
(B) usually required in the labor agreement.
(C) strictly a management prerogative.
(D) part of the labor contract only when seniority is not the basis for promotion.
(E) rarely, if ever, used.

Answer : (B)
70. Identifying current employees who would like to change jobs is accomplished by
(A) job posting.
(B) job analysis.
(C) internal recruiting.
(D) job evaluation.
(E) performance evaluation.
Answer : (C)
71. The Hewlett Packard board discussed replacing the CEO with a board member. This is an
example of
(A) internal recruiting.
(B) external recruiting.
(C) internal and external recruiting.
(D) want ads.
(E) forecasting demand.
Answer : (A)
72. An advantage of is that they reach a wide audience and this allows minorities equal
opportunity.
(A) private employment agencies
(B) executive search firms
(C) newspaper ads
(D) campus interviews
(E) gate hires
Answer : (C)
73. Recruiters need to keep in mind the employment decision goes both ways, and the perspective
employee is selecting a job. One of the best tools for getting a good match between the job and the
person filling the job is to
(A) provide a realistic job description.
(B) conduct a realistic job preview.
(C) conduct an extensive preemployment testing program.
(D) do extensive work on validating selection devices.
(E) hire professional personnel interviewers.
Answer : (B)
74. Many college students work as interns over the summers. Some are offered employment upon
graduation. Internships can be a(n)
(A) realistic job preview.
(B) gate-hire.
(C) job analysis.
(D) job content validation.
(E) assessment center.
Answer : (A)
75. Once the firm has developed a pool of applicants, the next step is
(A) tests.
(B) selection.
(C) revision of the skills inventory.
(D) interviews.
(E) validation.
Answer : (E)
76. The two basic approaches to validation are
(A) internal and external.
(B) integrated and differentiated.
(C) controlled and direct.
(D) centralized and decentralized.
(E) predictive and content.

Answer : (E)
77. A preemployment test that requires applicants to perform the same kinds of tasks as they will
actually do on the job will have high
(A) administrative intensity.
(B) nominal validity.
(C) content validity.
(D) predictive validity.
(E) related validity.
Answer : (C)
78. If you give a paper-and-pencil test to job applicants in your organization and then later do a
correlation analysis to determine the relationship between success on the testing device and success
on some measure of performance, you are determining
(A) content validity.
(B) affirmative action results.
(C) predictive validity.
(D) the adverse impact of the hire.
(E) test reliability.
Answer : (C)
79. Which of the following is a selection technique?
(A) Tests
(B) Interviews
(C) Assessment centers
(D) Application blanks
Answer : (E)
80. A recent survey found false or inflated information in which of the following?
(A) Job applications

(B) Interviews
(C) Skills tests
(D) Assessment centers
(E) Drug tests
Answer : (A)
81. Interviews are sometimes poor predictors of success because of
(A) stress.
(B) structure.
(C) less structure.
(D) personality assessment.
(E) personal biases.
Answer : (E)
82. Selecting managerial employees sometimes involves a specially designed technique called
(A) a weighted application blank.
(B) an assessment center.
(C) an aptitude test.
(D) a job posting.
(E) management by objectives.
Answer : (B)
83. The California Highway Patrol Academy has all of its candidates for promotion attend a multiple-
day evaluation session during which they undergo a battery of tests, interviews, and simulated work
experiences. This is an example of
(A) an assessment center.
(B) a structured orientation process.
(C) a job analysis.
(D) external recruiting.
(E) attrition.
Answer : (A)
84. Which of the following would probably have the highest content validity?
(A) Assessment center exercise
(B) Personality test
(C) IQ test
(D) Achievement test
(E) Interview
Answer : (A)
85. Perhaps the most important consideration in developing a training plan is to
(A) select who will be trained.
(B) select the method of training to be used.
(C) determine the training budget.
(D) hire the trainer.
(E) select the content.
Answer : (E)
86. The most appropriate training technique for PepsiCo to teach its employees to make ethical
decisions would be
(A) web-based training.
(B) case discussion groups.
(C) on-the-job training.
(D) assigned readings.
(E) programmed instruction.
Answer : (B)
87. When a swimmer does kicking drills to focus on a specific technique, rather than on the overall
swimming speed, it is similar to training, which allows employees to focus on safety rather than
productivity.
(A) simulation
(B) behavior
(C) lecture
(D) vestibule
(E) programmed
Answer : (D)
88. Ken is a newly hired police officer. He has been assigned to ride along with a more experienced
officer to learn about paperwork, how to handle accident scenes, how to deal with domestic
disputes, and about other duties that he will be expected to perform. The police department that
hired Ken is using training.
(A) simulation
(B) behavior modeling
(C) lecture
(D) on-the-job
(E) programmed instructional
Answer : (D)
89. Total sales, budget expenditure, and the number of claims processed are all examples of
(A) training methods.
(B) predictive validation methods.
(C) content validation methods.
(D) objective performance appraisal criteria.
(E) judgmental performance appraisal criteria.
Answer : (D)
90. Steve sells traffic signs and tape to municipalities. In his region he has a few affluent
communities that order the best items. Carla has even more communities in her region that are
affluent, and she sells even more items. If their supervisor does not use some adjustment factor to
account for the differences in regions when evaluating the performance of the two workers, the
evaluations will exhibit
(A) adverse impact.
(B) halo effect.

(C) recency effect.
(D) opportunity bias.
(E) global bias.
Answer : (D)
91. Which of the following is NOT an objective measure of performance appraisal?
(A) Number of sales dollars generated
(B) Number of units produced
(C) Ranking of coworkers by their superior
(D) Quality index based on the number of rejects
(E) Number of sales calls made
Answer : (C)
92. GE requires managers to fire the bottom 10% of employees each year. GE is using
(A) a judgmental method of performance appraisal.
(B) an objective measure of performance appraisal.
(C) a ranking system of performance appraisal.
(D) management by objectives.
(E) role-playing and case discussion groups.
Answer : (C)
93. Performance appraisals are a formal assessment of employees that should be conducted
regularly because they
(A) validate selection methods.
(B) establish a basis for rewards.
(C) provide feedback to help employees improve performance.
(D) help determine training and development needs.
Answer : (E)
94. One of the major disadvantages associated with the so-called special performance test is that it
(A) is a poor measure of worker ability.
(B) fails to measure the employees' work motivation.
(C) fails to provide standard evaluation conditions for the workers.
(D) is subject to recency effect.
(E) is prone to opportunity bias.
Answer : (B)
95. One of the major disadvantages of ranking as an appraisal method is that it
(A) cannot be used to compare people in different work groups.
(B) does not measure the employees' motivation to use their ability on a daily basis.
(C) has opportunity bias.
(D) compares employees to a fixed standard.
(E) creates excessive competition among employees.
Answer : (A)
96. Your company uses a performance evaluation device that contains an item that looks like Table
1. What kind of evaluation device is this?
(A) Behaviorally-anchored rating scale
(B) Ranking scale
(C) Graphic rating scale
(D) Equal interval rating scale
(E) Special test scale
Answer : (C)
97.Table 2 is one item out of your performance evaluation. What kind of evaluation device does
your company use?
(A) Behaviorally-anchored rating scale
(B) Ranking scale
(C) Graphic rating scale
(D) Equal interval rating scale
(E) Special test scale
Answer : (A)
98.Jan is an average salesperson. She tends to make her sales quota four out of every five months.
Last month she closed the largest sale that her company has ever made in its history. Even though
there is no indication that she is now an exceptional salesperson, her supervisor ranked her as one.
This is an example of how a error can influence a performance appraisal.
(A) halo
(B) leniency
(C) recency
(D) frequency
(E) vestibule
Answer : (C)
99.George is an average cook in the Marine Corps. However, when his unit deploys, food becomes
especially important. At the end of deployment, George is rated above marines in other specialties.
George benefits from
(A) leniency.
(B) a central tendency error.
(C) a halo error.
(D) a recency error.
(E) a ranking error.

Answer : (C)
100.Often the most difficult part of performance appraisal is
(A) feedback.
(B) compensation.
(C) rating actual performance.
(D) job evaluation.
(E) management by objectives.
Answer : (A)
101.In human resource management terminology, the bonus that a manager may receive is
referred to as
(A) benefits.
(B) compensation.
(C) the wage and benefit package.
(D) perquisites.
(E) remuneration.
Answer : (B)
102.A 360 degree feedback appraisal gets input from the
(A) boss, subordinates, and peers.
(B) boss and peers.
(C) suppliers and customers.
(D) suppliers, workers, and customers.
(E) top, middle, and line managers.
Answer : (A)
103.A(n) decision is based on the comparison of a company's wages with those of other
companies.
(A) wage-structure
(B) wage-incentive
(C) wage-level
(D) equitable compensation
(E) compensation-valence
Answer : (C)
104.Wegmans has a reputation for paying higher than the prevailing wages in its industry. This is
an example of a(n) decision by its management.
(A) wage-structure
(B) wage-level
(C) wage-evaluation
(D) incentive
(E) benefits
Answer : (B)
105.Federal employees have fifteen pay grades, and within each grade they have ten steps. This is
an example of
(A) prevailing wages.
(B) wage level.
(C) individual wages.
(D) wage structure.
(E) equitable compensation.
Answer : (D)
106. is used to determine the relative importance of jobs within the organization.
(A) Job analysis
(B) Job evaluation
(C) The wage-level decision
(D) The individual wage decision
(E) Performance evaluation
Answer : (B)
107.The process for determining compensation requires employers to go through which process?
(A) Job evaluation, job analysis, and performance appraisal
(B) Wage-level, wage structure, and individual wage
(C) Wage-level, wage structure, individual wage and benefits level
(D) Job evaluation and job analysis
(E) Job evaluation, job analysis, and benefit level
Answer : (B)
108.Which of the following is NOT a factor that affects the wage-level decision?
(A) Industry averages
(B) Law of supply and demand
(C) What other employers in the area are paying
(D) Job evaluation
(E) Ability to pay
Answer : (D)
109.When staff and line managers together determine what aspects of a job they want to reward
and how much those factors are worth, they are in the process of making a(n) decision.
(A) wage-level
(B) wage-structure
(C) individual wage
(D) benefit level
(E) perquisite
Answer : (B)
110.Employers are required by law to provide their employees with , a benefit.
(A) employer-funded pension funds
(B) workers' compensation
(C) health insurance
(D) retraining for laid-off workers

(E) life insurance
Answer : (B)
111. created an insurance program to provide income for workers while they recover from on-
the-job injuries.
(A) The Employee Income Security Act
(B) The Fair Labor Standards Act
(C) The Equal Pay Act
(D) Workers' compensation
(E) The Occupational Safety and Health Act
Answer : (D)
112.Nika asked questions about the company's retirement plan during her job interview. She is
discussing
(A) incentives.
(B) compensation.
(C) pay.
(D) benefits.
(E) wages.
Answer : (D)
113.Some employers have instituted a(n) . This allows employees, within limits, to choose
a benefit package that best suits their own needs.
(A) incentive pay system
(B) performance appraisal system
(C) all-salary compensation system
(D) select plan
(E) cafeteria benefits plan
Answer : (E)
114.Allison and William both started working at the newspaper on the same day. Allison is single.
William is married with six children. Allison's benefit package includes extra vacation time and stock
options. William takes the minimum vacation time. His benefit package includes dental and medical
coverage as well as tuition reimbursements. The newspaper for which Allison and William work
obviously offers its employees a(n)
(A) open pay system.
(B) performance appraisal system.
(C) all-salary compensation system.
(D) control system.
(E) cafeteria benefits plan.
Answer : (E)
115.Who is responsible for overseeing the process of forming a local union?
(A) The management of the organization being unionized
(B) The Department of Labor
(C) The National Labor Relations Board
(D) The national union(s) involved
(E) Employees
Answer : (C)
116.Mentors within an organization can help map out what areas the individual is most interested
in and help the person see what opportunities are available within the organization. This is part of
.
(A) assessment centers
(B) performance appraisal synchronization
(C) job analyses
(D) career planning
(E) replacement charts
Answer : (D)
117.What must happen first before employees can form a new local union?
(A) Employees must become interested in having a union.

(B) The NLRB must set up a vote.
(C) The Teamsters must make speeches.
(D) The employer must become interested in having a union.
(E) Thirty percent of employees must sign authorization cards.
Answer : (A)
118.The National Labor Relations Board will conduct a union certification election if
(A) 50 percent of the firm's employees sign authorization cards.
(B) 30 percent of the firm's employees sign authorization cards.
(C) 30 percent of the potential bargaining unit sign authorization cards.
(D) 30 percent of those voting support a union.
(E) 60 percent of the firm's employees sign authorization cards.
Answer : (C)
119. is a discussion process between union and management that focuses on agreeing to a
written contract that will cover all relevant aspects of their relationship.
(A) Negotiation
(B) The grievance procedure
(C) Collective bargaining
(D) Certification
(E) Arbitration
Answer : (C)
120.Guidelines for are generally NOT contained in a labor agreement.
(A) wages
(B) grievance procedures
(C) benefits
(D) management's salary
(E) hours
Answer : (D)
121.During the term of a labor contract, disputes are resolved by
(A) the union, which goes on strike.
(B) the union members, who vote on the issues.
(C) the National Labor Relations Board.
(D) the grievance procedure.
(E) management.
Answer : (D)
122.A labor agreement is enforced by the
(A) grievance procedure.
(B) union rights clause.
(C) management rights clause.
(D) union security clause.
(E) strike/lockout clause.
Answer : (A)
123.When labor disputes go to final and binding arbitration, arbitrators
(A) evaluate the management point of view to determine if it is correct.
(B) listen to both sides of the case.
(C) listen to the union point of view to decide if they agree with it.
(D) are selected by the union.
(E) are selected by management.
Answer : (B)
124.Germany's biggest labor union, the I.G. Metall labor union, threatened to call a strike of
industrial and electrical workers in the province of Baden-Wurttemberg, the heart of Germany's
automotive and high-tech industries. A binding arbitrator, Hans-Jochen Vogel, was called in to settle
the dispute. Like in the United States, this arbitrator
(A) would have been paid for by the government.
(B) rendered a decision that both parties had to obey.
(C) could suggest possible compromise but could do nothing to thwart the strike.
(D) would have been paid for by the employers.
(E) would have been selected by a majority of the union members.
Answer : (B)
125.GM and the United Auto Workers announced a tentative labor contract that gives workers
$5,000 signing bonuses, a $3 an hour raise for entry-level workers, a buyout of highly paid skilled
workers, and denies a cost-of-living adjustment. This was the conclusion of
(A) labor relations.
(B) grievance procedure.
(C) collective bargaining.
(D) certification.
(E) arbitration.
Answer : (C)
126.San Antonio employees in a multitude of occupations are fearful of losing their jobs due to the
recent spate of corporate merger, acquisition, and consolidation activity in the region. Employees
also are concerned that they are not being paid as highly as their counterparts in other cities. They
are interested in joining a union to protect themselves. The next step is to
(A) hire a binding arbitrator to settle grievances.
(B) hold certification elections.
(C) hold a decertification election.
(D) engage in collective bargaining.
(E) collect employee signatures on authorization cards.
Answer : (E)
127.Teachers are represented by the American Federation of Teachers. It is an example of a(n)
(A) bargaining unit.
(B) decertified union group.
(C) subunion.
(D) employee coalition.
(E) labor alliance.

Answer : (A)
128.Augustus is a chemical engineer. Recognition of his work by the American Chemical Society is
more important to him than a performance appraisal from his boss. He is a
(A) technical worker.
(B) knowledge worker.
(C) contributory employee.
(D) task-oriented employee.
(E) consultant.
Answer : (B)
129.Advantages of contingent workers include all EXCEPT
(A) flexibility.
(B) wage reduction.
(C) benefit reduction.
(D) performance improvement.
(E) reduced need for career planning.
Answer : (D)
130.Top managers at GE are highly regarded by other companies. They are frequently approached
by executive search firms with information about openings at other companies. The managers are
examples of
(A) emergent workers.
(B) knowledge workers.
(C) contributory employees.
(D) task-oriented employees.
(E) job-oriented workers.
Answer : (B)
131.Spouses of military members used to complain they could not find jobs because they
moved every three years with the military. But with the increased demand for , some
organizations value the ability to make a relatively short-term commitment by hiring military
spouses.
(A) temporary workers
(B) emergent workers
(C) task-oriented employees
(D) job-specific employees
(E) knowledge workers
Answer : (A)
132.When organizations rely on contingent workers, they need to be careful of all EXCEPT which of
the following?
(A) They manage the flexibility carefully.
(B) They understand advantages and disadvantages of contingent workers.
(C) They document the real cost of contingent workers.
(D) They integrate contingent workers into their overall strategy.
(E) They pay above-average wage-level.
Answer : (E)
SHORTANSWER
133. was once relegated to second-class status in many organizations, but its
importance has grown dramatically in the last two decades.Answer : Human resource management
Answer : Personnel
134. reflects the organization's investment in attracting, retaining,

and motivating an effective workforce.Answer : Human capital
135.The establishes minimum wage and mandated overtime pay for work in
excess of 40 hours per week.Answer : Fair Labor Standards Act
136.The spells out procedures by which employees can establish labor unions
and requires organizations to bargain collectively with legally formed unions.Answer : National
Labor Relations Act
Answer : Wagner Act
137. is intentionally seeking and hiring employees from groups that are
underrepresented in the organization.Answer : Affirmative action
138.A(n) is made up of two parts. The job description lists the duties of a job,
the job's working conditions, and the tools, materials, and equipment used to perform it. The job
specification lists the skills, abilities, and other credentials needed to do the job.Answer : job
analysis
139.A(n) is usually computerized and contains information on each employee's

education, skills, work experience, and career aspirations.Answer : employee information system
Answer : skills inventory
140. is the process of attracting people to apply for jobs in an

organization.Answer : Recruiting
141.Considering current employees as applicants for higher-level jobs in the organization is

.Answer : internal recruiting
142.A(n) provides the applicant with a real picture of what performing the job
that the organization is trying to fill would be like.Answer : realistic job preview
143.When a test measures knowledge, skills, or activities used in a job, the test will have
validity for that job.Answer : content
144.When you use statistical procedures to determine the validity of a selection device, you are
determining validity.Answer : predictive
145. tests were once popular, but the use of them is now declining.Answer :
Polygraph
146.In human resource management terminology, presenting a group of managers with a course on
leadership would be called .Answer : development
147. is a formal assessment of how well employees are doing their jobsAnswer :
Performance appraisal
148. is allowing the assessment of an employee on one dimension to "spread" to

ratings of that employee on other dimensions.Answer : Halo error
149.A performance appraisal system in which managers are evaluated by everyone around
them⎯their boss, their peers, and their subordinates⎯is called .Answer :
360- degree feedback
150. is the financial remuneration given by the organization to its employees in

exchange for their work.Answer : Compensation
151.The decision is made through job evaluation.Answer : wage-structure
152.Sick days and insurance are .Answer : benefits
153.When employees are provided a basic benefit package and then allowed, within certain cost
limits, to structure the rest of the package to suit their individual needs, the company is using a(n)
benefit plan.Answer : cafeteria
154.Most people associate unions with the sector, but they are beginning to
show up in newer industries as sell.Answer : manufacturing
155.A major challenge of managing workers is that they soon leave to accept
sign-on bonuses with competitors.Answer : knowledge
156.A(n) is a person who works for an organization on something other than a

permanent or full-time basis.Answer : contingent
157. are employees whose contributions to an organization are based on what

they know.Answer : Knowledge workers
ESSAY
158.Briefly define and describe human resource management. Include trends over the past 20 to 25
years and some of the reasons for those trends.
Graders Info :
Answer not provided.
159.List and briefly describe the provisions of the federal laws or directives dealing with equal
employment that were covered in the text.
Graders Info :
160.Describe an example of a company or industry where human resource capital is very important
and one where it is not so important.
Graders Info :
161.List the federal laws dealing with compensation and benefits, and briefly describe the
provisions of each of them.
Graders Info :
162.Compare and contrast the Wagner Act and the Taft-Harley Act.
Graders Info :
163.The Equal Employment Opportunity Commission protects many groups. Who are they?
Graders Info :
164.Briefly describe the purposes of job analysis and the two documents that often result from it.
Graders Info :
165.List the steps in the human resource planning process. You need not go into detail; the broad
steps are sufficient. You may want to use a diagram to clarify your answer.
Graders Info :
166.What is your dream job? What attracts you to the job? How will a recruiter know you are
qualified for that job?
Graders Info :
167.Recruiters check applicant's Facebook pages. If you were a recruiter, what would you look for
on Facebook that would support or diminish an applicant?
Graders Info :
168.Discuss the performance appraisal process and include a description of two specific
performance appraisal techniques.
Graders Info :

169.What is the difference between training and developing? What are some methods companies
use to teach employees?
Graders Info :
170.Briefly explain what is meant by objective and judgmental performance evaluation. Discuss two
methods of judgmental evaluation. Give the pros and cons of each method.
Graders Info :
171.Do you want to work as a manager in an organization that used a 360-degree evaluation or one
that allows only the boss to evaluate you? Why?
Graders Info :
172.Managers typically work more than forty hours per week. Would you rather be paid a wage or
salary? Why?
Graders Info :
173.Why do some executives receive more than 50% of their compensation in bonuses? Would you
like that?
Graders Info :
174.Describe how unions are formed.
Graders Info :
175.Imagine you have been hired to teach one semester as an adjunct professor at your college or
university. You have the choice to join the adjunct professor's union. Would you join? Why or why
not?
Graders Info :
176.An employee represented by the Teamsters Union feels that she has been unfairly disciplined
based on the labor agreement her union has with her employer. Explain the steps she can take to get
this situation resolved. If the union and management fail to resolve the issue, describe the procedure
to be followed.
Graders Info :
177.Comment on the following statement by Peter Drucker: "In the case of knowledge workers, the
employer no longer owns the tools of production. Today it is the employee that owns them."
Graders Info :
Students should realize that especially for Internet companies, the product is only as good as what
the knowledge workers can manufacture from their knowledge, previous experiences, and talents in
thinking "outside the box."
178.List four techniques that managers can use to make the most effective use of contingent and
temporary workers.
Graders Info :
MATCH
179.Match the following statements about temporary workers and employers with the term that
best identifies the action. You may use a response once, more than once, or not at all.
MATCH
180.Match the following. You may use a response once, more than once, or not at all.
MATCH
181.Special Exercises
Match the following statements about the Service Employees International Union, SEIU and
home healthcare workers. You may use a response once, more than once, or not at all.
MATCH
182.Match the following. You may use a response once, more than once, or not at all.

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TEST BANK

Chapter 9 Foundations of Planning

29. Informal planning is _________.

31. Formal planning involves which of the following aspects?

WHY DO MANAGERS PLAN?

34. Planning can’t eliminate change. Managers plan in order to ___________.

37. Studies of performance in organizations that plan have reached ___________.

HOW DO MANAGERS PLAN?

42. Planning involves two important elements: ___________.

44. Which of the following is true concerning an organization’s stated objectives?

49. Directional plans do which of the following?

50. Which of the following is true concerning standing plans?

56. Emphasis on one goal ___________.

61. Operational plans specify the details of ___________.

63. Specific plans are clearly defined and ____________.

64. Directional plans are ___________.

65. Standing plans are ongoing plans that provide ____________.

66. Goals are often called ___________.

67. __________ can evaluate whether an organization is successful.

ESTABLISHING GOALS AND DEVELOPING PLANS

78. In the MBO system, ___________.

79. A well-designed goal should be ____________.

86. How an organization plans can be best understood by looking at ____________.

a. business level managers

CONTEMPORARY ISSUES IN PLANNING

93. As organizational environments have become more uncertain, ____________.

Chapter 10 Strategic Management

5) Exceptional or unique organizational resources are known as core capabilities.

7) A SWOT analysis includes an analysis of an organization's environmental opportunities and threats.

10) Diversification is an example of a corporate retrenchment strategy.

23) Defining the organizational mission forces managers to identify ________.

26) ________ are positive trends in the external environment.

37) Top-level managers are responsible for ________ strategies.

38) Lower-level managers are responsible for ________ strategies.

40) What are the three main types of corporate strategies?

47) In ________, a company grows by combining with competitors.

67) A cost leadership strategy requires a firm to ________.

70) A firm that is "stuck in the middle" cannot develop ________.

73) How can an organization develop strategic flexibility?

75) How can a cost leader use e-business to reduce costs?

81) What is a strategic disadvantage of being a first mover?

SWOT Analysis (Scenario)

Un Taco Pequeno (Scenario)

104) List and discuss the different types of corporate strategies.

Chapter 11 Designing Organizational - Structure Adaptive Design

2) In a ________ structure, no clear chain of command exists.

3) Which of the following is a disadvantage of a matrix structure?

6) Employee empowerment is a crucial aspect of which type of organizational design?

8) A dual chain of command is the key characteristic of the ________ structure.

10) Which of the following is a characteristic of a matrix organization?

11) Which of the following is a characteristic of a project structure?

12) All work in project structures is performed by ________.

17) A virtual organization ________.

21) Which of the following is a characteristic of a learning organization?

29) A virtual organization consists of temporary workers who telecommute.

34) In order to succeed in today's world, organizations need to ________.

43) Which of the following is TRUE regarding task forces?

52) Which of the following is an advantage of open innovation?

53) Which of the following is a drawback of open innovation?

55) A strategic partnership ________.

57) Which of the following is a characteristic of a strategic partnership?

58) Collaborative work increases communication and coordination among participants.

65) List some of the benefits and drawbacks of collaborative work.

76) A compressed workweek is one wherein ________.