M Management 3rd Edition by Bateman – Test Bank

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5
Student: ___________________________________________________________________________
1. In an organization, the process of planning moves in a linear fashion.
True False
2. Situational analysis, as part of the formal planning process, focuses on internal forces at work within the
organization and examines influences from the external environment.
True False
3. To be effective, goals should be measurable, specific, attainable, relevant, and time-bound.
True False
4. Standing plans are designed to achieve a set of goals that are not likely to be repeated in the future.
True False
5. In the context of planning scenarios, a different contingency plan is attached to each scenario.
True False
6. The final step in the formal planning process, monitoring and controlling performance, identifies the
priorities and trade-offs among the goals and plans.
True False
7. Making decisions about the organization’s short-term goals and tactics is known as strategic planning.
True False
8. An organization’s operational plans serve as the foundation for its strategic plans and tactical plans.
True False
9. The formal planning model emphasizes a bottom-up approach.
True False
10. Managers throughout an organization may be involved in developing the strategic plan and contributing
critical elements.
True False
11. To be effective, the organization’s strategic plans should focus on goals that are different from those of its
tactical plans and operational plans.
True False
12. An organization’s mission statement describes the company’s basic purpose and scope of operations.
True False
13. An organization’s mission statement focuses on long-term goals while its strategic vision focuses on
short-term plans.
True False
14. Stakeholders are only those groups and individuals who have a financial stake in the company.
True False
15. In the context of the strategic planning process, a critical task in environmental analysis is forecasting
future trends.
True False
16. Resources are a source of competitive advantage only when they are valuable, rare, difficult to imitate,
and organized.
True False
17. The goal of satisficing is to thoroughly understand the “best practices” of other firms and to undertake
actions to achieve better performance and lower costs.
True False
18. The corporate strategy of concentration involves expanding the domain of the organization into supply
channels and to distributors.
True False
19. The BCG matrix is not a substitute for management judgment; it helps managers of businesses evaluate
their strategy alternatives.
True False
20. Businesses using a low-cost strategy try to be efficient and offer a standard, no-frills product.
True False
21. Functional strategies are implemented only at the top levels of management.
True False
22. A strategic control system must encourage efficient operations while allowing flexibility to adapt to
changing conditions.
True False
23. Managers usually face novel and unstructured problems, leaving them uncertain about how to
proceed.
True False
24. Decision makers who search for custom-made solutions use ideas they have tried before or follow the
advice of others who have faced similar problems.
True False
25. In the context of the decision-making process in an organization, those who implement a decision must
understand the choice and must be committed to its successful implementation.
True False
26. In the context of managerial decision making, decision evaluation is useful only if the negative feedback
has been received.
True False
27. Discounting the future is a psychological bias that applies to students who do not study.
True False
28. Individuals usually make higher-quality decisions when compared to groups, provided there is enough
time.
True False
29. In today’s complex business environment, some experts advise that significant problems should never be
tackled by groups.
True False
30. An advantage of using a group for decision making is that disagreement is unlikely to happen, and this
phenomenon is called groupthink.
True False
31. In the context of decision making in groups, the job of a devil’s advocate is to create potentially
destructive conflict.
True False
32. In brainstorming, group members generate as many ideas about a problem as they can.
True False
33. Which of the following steps in the formal planning process involves studying past events, examining
current conditions, and forecasting future trends?
A. Analyzing the situation
B. Generating alternative goals and plans
C. Evaluating goals and plans
D. Selecting goals and plans
E. Monitoring and controlling performance
34. The outcome of situational analysis is the:
A. evaluation of the merits and feasibility of a range of alternatives.
B. prioritization and elimination of goals.
C. identification and diagnosis of planning assumptions, issues, and problems.
D. selection of the most appropriate and feasible alternative.
E. proper implementation of a plan.
35. In the context of the planning process, _____ are the targets or ends the manager wants to reach.
A. goals
B. plans
C. scenarios
D. strategies
E. threats
36. A plan which focuses on ongoing activities designed to achieve an enduring set of goals and may become
a more permanent policy or rule is called a _____.
A. start-up plan
B. single-use plan
C. standing plan
D. contingency plan
E. subject plan
37. A plan to integrate employees into a new payroll system, assuming that it is not likely to be repeated in
the foreseeable future, is an example of a _____ plan.
A. standing
B. single-use
C. start-up
D. contingency
E. subject
38. According to the _____ plan of Widget Inc., if expansion to new markets in Australia does not
materialize, the company will strive for expansion in Asia.
A. operations
B. internal
C. contingency
D. standing
E. start-up
39. Which stage of the planning process is Axis Corp. involved in if it is assessing how well alternative plans
meet high-priority goals while considering the cost of each initiative and the likely investment return?
A. Implementing goals and plans
B. Selecting goals and plans
C. Analyzing the situation
D. Monitoring and controlling performance
E. Evaluating goals and plans
40. In which step of the planning process do managers identify the priorities and trade-offs among goals and
plans?
A. Evaluation of goals and plans
B. Selection of goals and plans
C. Implementation of goals and plans
D. Monitoring of goals and plans
E. Generating alternative goals and plans
41. In the context of the planning process, implementation of selected plans will be most successful when:
A. only senior managers participate in the planning process.
B. limited financial resources are made available to the manager.
C. they are linked to other organizational systems like budgets and rewards.
D. they are converted into strict rules for employees to follow.
E. they are projected as confidential issues concerning top management.
42. In the context of the planning process, which of the following statements is true of the final step that
involves monitoring and controlling performance?
A. Monitoring and controlling performance is not as important as the other steps in the planning process.
B. Managers must continually monitor the performance of their work units against the unit’s goals and
plans.
C. It is the first step taken up by managers in the planning process.
D. Managers need to re-start the planning process if plans are implemented improperly.
E. Managers consider monitoring and controlling performance as the most important step in the planning
process.
43. Which of the following is one of the four levels of planning?
A. Feasible
B. Synergistic
C. Tactical
D. Internal
E. Traditional
44. In the context of the levels of planning, typical strategic goals involve:
A. updating equipment used.
B. increasing market share.
C. advertising expenditures.
D. compliance with civil rights laws.
E. human resource utilization.
45. Which of the following is true of the strategic goals of an organization?
A. Once the strategic goals have been set, the organization will automatically begin improving.
B. The strategic goals of an organization should be limited to top management.
C. Strategic goals include fostering quantity and quality of outputs as well as increasing productivity.
D. Setting high strategic goals eliminates the risk of failure.
E. In order to achieve the desired results, strategic goals must not be changed after documentation.
46. In the context of the levels of planning, strategic goals are:
A. major targets that relate to the long-term survival of the organization.
B. specific to a functional area in the organization.
C. driven by operational plans.
D. focused on the major actions a unit must take.
E. procedures and processes to get day-to-day work done.
47. The level of planning involving the longest time horizon, usually ranging from three to seven years, is:
A. operational planning.
B. missionary planning.
C. tactical planning.
D. departmental planning.
E. strategic planning.
48. The process of translating broad strategic goals and plans into specific goals and plans relevant to a
particular portion of the organization is known as:
A. strategic planning.
B. operational planning.
C. tactical planning.
D. contingency planning.
E. feasibility planning.
49. The process of identifying the specific procedures and processes required at lower levels of the
organization is known as:
A. strategic planning.
B. operational planning.
C. tactical planning.
D. contingency planning.
E. acquisition planning.
50. In _____ planning, frontline managers usually focus on routine tasks such as production runs, delivery
schedules, and human resource requirements.
A. acquisition
B. feasibility
C. tactical
D. operational
E. strategic
51. In the context of the levels of planning, the formal planning model is _____, with top-level strategies
flowing down through the levels of the organization into more specific goals and plans.
A. innovative
B. hierarchical
C. tactical
D. concentrated
E. uncertain
52. In the context of the levels of planning, an organization’s strategic, tactical, and operational goals and
plans must be _____ in order to be fully effective.
A. aligned
B. independent
C. mutually exclusive
D. focused on long-term gains only
E. focused on short-term benefits only
53. Which of the following is true of the strategic vision of an organization?
A. The strategic vision provides a perspective on where the organization is headed.
B. The strategic vision describes the organization as it currently operates.
C. A strategic vision statement is a clear and concise expression of the organization’s basic purpose.
D. An effective strategic vision statement must motivate all employees financially.
E. The strategic vision emphasizes short-term gains of an organization.
54. In the context of resources and core capabilities, tangible assets include:
A. patents.
B. real estate.
C. company reputation.
D. technical knowledge.
E. learning and experience.
55. Resources are a source of competitive advantage only when they create customer value, are rare, are
organized, and are:
A. historical.
B. difficult to imitate.
C. equally available.
D. commonplace.
E. expensive.
56. Hot Pizza, a chain of full service pizzerias, periodically compares the quality of its food and service with
its competitors in order to continually improve its performance. This corporate strategy is known as:
A. brainstorming.
B. diversification.
C. benchmarking.
D. vertical integration.
E. horizontal integration.
57. A technique that helps managers summarize relevant and important facts from the internal and external
analyses of an organization in order to formulate strategy is known as:
A. BCG matrix.
B. SWOT analysis.
C. benchmarking.
D. diversification.
E. functional strategy.
58. A(n) _____ strategy identifies the set of businesses, markets, or industries in which the organization
competes and the distribution of resources among those businesses.
A. vertical
B. unrelated
C. uncertain
D. functional
E. corporate
59. In order to reduce production costs, Everlasting Tire decided to buy out a rubber plant and begin
manufacturing their own rubber for their tires. The corporate strategy adopted by the company is known
as:
A. concentration.
B. vertical integration.
C. related diversification.
D. unrelated diversification.
E. differentiation.
60. Party Beverages Corp. had focused only on alcoholic beverages for the last two decades. Now, the
company is considering entering the soft drink market. In the context of the above scenario, which of the
following corporate strategies will the company adopt?
A. Vertical integration
B. Related diversification
C. Unrelated diversification
D. Concentration
E. Low-cost
61. GR Real Estate Inc. recently decided to expand from its original base in real estate to several wide-
ranging industries such as trucking, lawn mower manufacturing and catering. This corporate strategy is
known as:
A. vertical integration.
B. unrelated diversification.
C. related diversification.
D. concentration.
E. low-cost.
62. The O’Brien Corporation is evaluating the purchase of a small firm which manufactures doodads, a
product involving advanced technology. Doodads are expected to revolutionize the home construction
industry. The firm to be purchased has only a minor share of this growing market, but the market is
expected to grow rapidly. In which of the following categories of business in the BCG matrix would this
firm be placed?
A. Cash cows
B. Stars
C. Spinoffs
D. Question marks
E. Dogs
63. In the context of the BCG matrix, a star represents a company:
A. with high growth and a strong competitive position in the market.
B. that requires substantial investments to improve their position in the market.
C. with low growth and a strong competitive position in the market.
D. that generates excess revenues and funds other businesses.
E. that will be divested as soon as possible.
64. The most effective strategy that can be adopted by strategy managers is one that:
A. cannot be described in detail.
B. competitors are unable to imitate.
C. is based on the principle of rigidity.
D. cannot be deconstructed.
E. can be purchased at a reasonable cost.
65. The first step in strategy implementation involves articulating in simple language what a particular
business must do to create or sustain a competitive advantage. This step is known as:
A. assessing organizational capabilities.
B. developing an implementation agenda.
C. defining strategic tasks.
D. creating an implementation plan.
E. developing a mission statement.
66. Which of the following is true of strategic control systems?
A. They must rigidly enforce the strategic plan in the face of changing conditions.
B. Unlimited spending may be allowed as long as the organization is progressing according to its
strategy.
C. Corrective action is taken when discrepancies exist between an organization’s progress and its
strategy.
D. The first component of the strategic management process is strategic control.
E. These systems are designed to help determine the organization’s output by evaluating price
competition.
67. When the problem is frequent, repetitive, routine, with much certainty regarding cause-and-effect
relationships, a _____ decision may be taken.
A. qualitative
B. programmed
C. non-economic
D. risky
E. nonprogrammed
68. Which of the following best describes the preferred approach for managers confronted with risk?
A. They avoid it by any means necessary.
B. They eliminate it with a thorough understanding of the consequences of each option.
C. They anticipate it, minimize it, and control it.
D. They understand there is no way to manage it.
E. They thrive on taking risks.
69. Which of the following is true of managerial decision making?
A. Most managerial decisions lack structure.
B. Managerial decisions are always free of risk.
C. Managerial decisions are taken under conditions of perfect certainty.
D. Managers show consistency in their decisions in response to novel problems.
E. A manager’s decisions have the characteristics of programmed decisions.
70. Shadow Blinds, an American company, is trying to decide whether to open its first international branch in
Europe or Asia. The managers of the company are operating under a condition of _____.
A. goal displacement
B. illusion of control
C. social reality
D. uncertainty
E. maximization
71. In the context of managerial decision making, when one can estimate the likelihood of various
consequences but still does not know with certainty what will happen, one is facing _____.
A. certainty
B. maximization
C. risk
D. optimization
E. framing effects
72. In the context of managerial decision making, the state that exists when decision makers have insufficient
information is known as:
A. certainty.
B. uncertainty.
C. risk.
D. probability.
E. indecision.
73. A formal decision-making process has six stages. Which of the following is one of these stages?
A. Thriving on the risks of taking a decision
B. Minimizing the consequences of a decision
C. Anticipating the outcome of a decision
D. Evaluating the decision
E. Controlling the damage caused by a wrong decision
74. The first step in an ideal decision-making process is to:
A. make a choice.
B. evaluate alternatives.
C. implement the decision.
D. generate alternative solutions.
E. identify the problem.
75. The manager of a restaurant noticed that the number of customers in the evening was decreasing. She
promptly ordered the chef to rewrite the evening menu. Later, customer feedback indicated that the
problem was not the menu but poor service from the waitstaff. The manager’s decision to have the menu
revised suggests that she failed to:
A. identify and diagnose the problem.
B. evaluate alternatives.
C. generate alternative solutions.
D. evaluate the decision.
E. make a choice.
76. In the context of generating alternative solutions during the decision-making process, _____ solutions
must be designed for specific problems.
A. realistic
B. goal-oriented
C. open-ended
D. adjustable
E. custom-made
77. Anne is evaluating a new customer relationship management software solution for her business. She
knows several business owners and managers who have implemented the software in their organizations.
Instead of conducting a trial in her own company, she asks them for their advice. Anne is most likely
searching for a(n) _____ solution to her problem.
A. experimental
B. optimal
C. ready-made
D. statistical
E. custom-made
78. In the context of making a choice, _____ requires searching thoroughly for a complete range of
alternatives, carefully assessing each alternative, comparing one to another, and then choosing or creating
the very best.
A. benchmarking
B. maximizing
C. forecasting
D. satisficing
E. optimizing
79. Pat has to decide which paper clips to purchase for her office. She looks at the office supply catalog and
picks the first one that is priced reasonably. Which method of making a decision does she use?
A. Forecasting
B. Optimizing
C. Satisficing
D. Maximizing
E. Brainstorming
80. Managers who use the method of optimizing to make their decisions will attempt to choose:
A. the first minimally acceptable alternative.
B. among those alternatives with known results.
C. the least expensive alternative.
D. the alternative that produces the least conflict.
E. an alternative that achieves the best possible balance among several goals.
81. In the context of formal decision making, which of the following is indicated by negative feedback?
A. Too much time has been dedicated in implementing the decision.
B. Implementation of the decision may need more resources.
C. The decision has been made under undue pressure from top management.
D. The problem has been incorrectly diagnosed.
E. The decision has been unfairly beaten down by competitors.
82. The psychological bias known as illusion of control refers to:
A. a decision bias influenced by the way in which a problem or decision alternative is phrased or
presented.
B. a belief that one can influence events even when one has no control over what will happen.
C. a bias weighting short-term costs and benefits more heavily than longer-term costs and benefits.
D. a condition that occurs when a decision-making group loses sight of its original goal and a new, less
important goal emerges.
E. a phenomenon that occurs in decision making when group members avoid disagreement as they strive
for consensus.
83. Illusion of control, discounting the future, and framing effects are examples of:
A. social realities.
B. psychological biases.
C. strategic planning steps.
D. ready-made solutions.
E. time pressures.
84. _____ refer(s) to a decision bias influenced by the way in which a problem or decision alternative is
phrased or presented.
A. Framing effects
B. Discounting the future
C. An illusion of control
D. Social realities
E. Time pressures
85. Discounting the future refers to:
A. focusing on gains in the long run.
B. failing to consider inflationary costs.
C. underestimating the short-term effects of a decision.
D. valuing short-term benefits more heavily than long-term benefits.
E. failing to consider the effects of new entrants into the industry.
86. A company recently made changes to its organizational structure. While deciding upon the changes to
be implemented, the company invited many employees to discuss the issue with the senior management.
This enabled the employees to hear the relevant arguments both for the chosen alternative and against the
rejected alternatives. An advantage of using employees in the group discussion was that:
A. the employees dominated the discussions and promoted their ideas.
B. the phenomenon of groupthink was encouraged.
C. the satisficing method of decision making was employed.
D. goal displacement was furthered.
E. the employees understood why the decision was made.
87. An advantage in using a group for decision making is that it leads to:
A. a higher level of commitment to the decision.
B. domination by one member in leading the discussion.
C. a phenomenon known as groupthink.
D. the process of decision making known as satisficing.
E. saving precious time, money, and resources.
88. In the context of making decisions in a group, when a strong leader makes his or her preferences clear,
and the result is the same as it would have been if the leader had made the decision alone, it leads to a
situation known as _____.
A. groupthink
B. satisficing
C. domination
D. brainstorming
E. goal displacement
89. A phenomenon that occurs in decision-making when group members avoid disagreement as they strive
for consensus is known as:
A. goal displacement.
B. domination.
C. intuition.
D. groupthink.
E. brainstorming.
90. A meeting attended by five executives was being held at a company. A decision needed to be made about
the following year’s marketing campaign. Tony, an outspoken and aggressive person, insisted that his
ideas be followed since there could not be a better alternative. Nobody else contributed to the discussion,
and Tony’s views were accepted. This group discussion suffered from:
A. groupthink.
B. domination.
C. satisficing.
D. intellectual stimulation.
E. goal displacement.
91. When a group accepts an alternative without taking the time or effort to explore many options, the group
has reached a _____ decision.
A. maximizing
B. innovative
C. satisficing
D. constructive
E. optimizing
92. _____ is a condition that occurs when a decision-making group loses sight of its original purpose and a
new, less important aim emerges.
A. Goal displacement
B. Illusion of control
C. Satisficing
D. Brainstorming
E. Groupthink
93. Leaders of decision-making groups should:
A. discourage constructive conflict among the group members.
B. encourage groupthink to speed up decision-making.
C. reach a decision by employing the satisficing method.
D. encourage multiple alternatives from a variety of perspectives.
E. discourage exploring new alternatives in order to reach a conclusion faster.
94. In an effort to combat groupthink and an overall lack of creativity, the group leader assigned Tiffany the
job of criticizing ideas, for the sake of argument, throughout the meeting. Tiffany is playing the role of a:
A. maximizer.
B. devil’s advocate.
C. dialectic.
D. strategic planner.
E. dominator.
95. In an attempt to make a conflict between two employees less personal and emotional, their manager
instructs them to approach the same problem from a different viewpoint. They have a structured debate
and come to a conclusion that suits both employees. This is an example of using the _____ approach.
A. maximizing
B. satisficing
C. devil’s advocate
D. dialectic
E. goal displacement
96. Which of the following is true of brainstorming?
A. The group is encouraged to say anything except to criticize other people.
B. A time pressure is necessary to enhance creativity.
C. Total and consistent agreement among group members can be useful.
D. Innovative ideas must lead to immediate payoffs.
E. Task-related conflict cannot hurt performance.
97. To be effective, goals should have certain qualities, which can be recalled through the use of the acronym
SMART. List and describe each of these characteristics.
98. Discuss strategic, tactical, and operational planning. What are the characteristics of each in terms of
managerial level and level of detail?
99. In the context of a SWOT analysis, describe at least five elements of an environmental analysis.
100.Describe the two broad categories of resources and describe each one. Describe how resources can be a
source of competitive advantage.
101.Describe low-cost and differentiation strategies, and how a business can achieve competitive advantage
with either of them.
102.Differentiate between programmed and nonprogrammed decisions. Which type is more typical for
managerial decisions?
103.List the six steps of a formal decision-making process.
104.Explain the four disadvantages of using a group to make decisions.
Use the paragraph given below to answer the following questions.
Scenario A. The senior management of Alpha Omega, Corp. have conducted a planning meeting. They
need to make decisions about the following questions:
1. How many employees should be hired for the cafeteria this month?
2. Should the company expand into a new region in the next ten years?
3. How can the visibility of their marketing campaign be increased?
4. How can the biggest trucks in the business be scheduled for next week?
5. Should the company allow employees to work from home?
105.Which of the following questions is related to strategic planning?
A. How many employees should be hired for the cafeteria this month?
B. How can the visibility of their marketing campaign be increased?
C. How can the biggest trucks in the business be scheduled for next week?
D. Should the company allow employees to work from home?
E. Should the company expand into a new region in the next ten years?
106.The decision regarding the number of employees to be hired for the cafeteria is a part of operational
planning because:
A. it translates broad strategic goals and plans into specific goals and plans relevant to a particular portion
of the organization.
B. it focuses on the major actions a unit must take to fulfill its part of the strategic plan.
C. it involves a specific procedure that is required at lower levels of the organization.
D. it involves making decisions about the organization’s long-term goals and strategies.
E. it has a strong external orientation and covers major portions of the organization.
Use the information given below to answer the following questions. Scenario B. Chem-Free Natural
Pharmaceuticals has completed a SWOT analysis as part of their ongoing strategic planning process.
They have collected the following information:
1. New regulations have been passed limiting their ability to sell certain formulations over the counter.
2. As compared to their competitors, their management team is by far the best in the industry.
3. They have fallen behind in research and development in the last few years.
4. More people are becoming interested in natural alternatives to traditional chemical pharmaceuticals;
this trend is expected to continue over the next decade.
5. The company has inadequate financial resources to invest in their operations.
107.In the context of the given scenario, which of the following is a strength of Chem-Free Natural
Pharmaceuticals?
A. New regulations have been passed limiting their ability to sell certain formulations over the counter.
B. As compared to their competitors, their management team is by far the best in the industry.
C. The company has inadequate financial resources to invest in their operations.
D. They have fallen behind in research and development in the last few years.
E
.
More people are becoming interested in natural alternatives to traditional chemical pharmaceuticals;
this trend is expected to continue over the next decade.
108.In the context of the given scenario, which of the following is an opportunity for Chem-Free Natural
Pharmaceuticals?
A. New regulations have been passed limiting their ability to sell certain formulations over the counter.
B. As compared to their competitors, their management team is by far the best in the industry.
C. The company has inadequate financial resources to invest in their operations.
D. They have fallen behind in research and development in the last few years.
E
.
More people are becoming interested in natural alternatives to traditional chemical pharmaceuticals;
this trend is expected to continue over the next decade.
109.In the context of the given scenario, which of the following is a threat for Chem-Free Natural
Pharmaceuticals?
A. New regulations have been passed limiting their ability to sell certain formulations over the counter.
B. As compared to their competitors, their management team is by far the best in the industry.
C. The company has inadequate financial resources to invest in their operations.
D. They have fallen behind in research and development in the last few years.
E
.
More people are becoming interested in natural alternatives to traditional chemical pharmaceuticals;
this trend is expected to continue over the next decade.
Scenario C. Use the information given below to answer the following questions. Shine cosmetics, a
global company, is considering its corporate strategy. Several people on the board of directors believe
they have the “perfect” strategy for the company. Joe believes that the best option is to continue their
present strategy of offering cosmetics to customers who like the “look” of the products. Martin wants the
company to expand by purchasing the manufacturing plants that produce Shine products. Cathy wants
to add products like skin care and perfume to the product line. Ruth wants to develop the company by
opening restaurants or setting up an amusement park.
110.Which of the following corporate strategies does Martin advocate?
A. Concentration
B. Vertical integration
C. Related diversification
D. Unrelated diversification
E. Price skimming
111.Which of the following corporate strategies does Cathy advocate?
A. Concentration
B. Vertical integration
C. Related diversification
D. Unrelated diversification
E. Price skimming
112.Which of the following corporate strategies does Ruth advocate?
A. Concentration
B. Vertical integration
C. Related diversification
D. Unrelated diversification
E. Price skimming
Scenario D. Use the information given below to answer the following questions. Healthy Day Regional
Medical Center’s management team has several decisions to make. They are:
1. Determine which patients have to be admitted the next day.
2. Decide whether to purchase the only other medical center in the region.
3. Decide which candidates will meet the requirements for the nursing training program.
4. Determine whether the medical center should diversify to include more advanced (and substantially
more costly) technologies.
113.Decision 4 is an example of a _____ decision.
A. programmed
B. nonprogrammed
C. trivial
D. certain
E. risk-free
114.Decision 1 is a _____ decision because it can be solved using rules and procedure.
A. tactical
B. strategic
C. programmed
D. nonprogrammed
E. risky
115.In the context of decision 3, if the authorities select the first candidate who meets the minimum
requirements without examining every candidate’s file to see if anyone else has better qualifications, they
are adopting the method of:
A. maximization.
B. satisficing.
C. optimizing.
D. constraint.
E. constructive conflict.

5 Key
1.
(p. 92)
In an organization, the process of planning moves in a linear fashion.
FALSE
Planning moves in a cycle. The outcomes of plans are evaluated and, if necessary, revised.
AACSB: Analytic
Bateman – Chapter 05 #1
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
2.
(p. 92)
Situational analysis, as part of the formal planning process, focuses on internal forces at work within
the organization and examines influences from the external environment.
TRUE
The situational analysis focuses on the internal forces at work in the organization or work unit and,
consistent with the open-systems approach, examines influences from the external environment.
AACSB: Analytic
Bateman – Chapter 05 #2
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
3.
(p. 93)
To be effective, goals should be measurable, specific, attainable, relevant, and time-bound.
TRUE
To be effective, goals should have certain qualities, which are easy to remember with the acronym
SMART: specific, measurable, attainable, relevant, and time-bound.
AACSB: Analytic
Bateman – Chapter 05 #3
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
4.
(p. 94)
Standing plans are designed to achieve a set of goals that are not likely to be repeated in the
future.
FALSE
Standing plans focus on ongoing activities designed to achieve an enduring set of goals.
AACSB: Analytic
Bateman – Chapter 05 #4
Blooms: Remember
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 1 Easy
Topic: The Planning Process
5.
(p. 95)
In the context of planning scenarios, a different contingency plan is attached to each scenario.
TRUE
In some organizations, the alternative generation, evaluation, and selection steps generate planning
scenarios. A different contingency plan is attached to each scenario.
AACSB: Analytic
Bateman – Chapter 05 #5
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
6.
(p. 96)
The final step in the formal planning process, monitoring and controlling performance, identifies the
priorities and trade-offs among the goals and plans.
FALSE
Although it is sometimes ignored, the sixth step in the formal planning process—monitoring and
controlling—is essential. Managers must continually monitor the actual performance of their work
units against the unit’s goals and plans. They also need to develop control systems to measure that
performance and allow them to take corrective action when plans are implemented improperly or the
situation changes.
AACSB: Analytic
Bateman – Chapter 05 #6
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
7.
(p. 96)
Making decisions about the organization’s short-term goals and tactics is known as strategic
planning.
FALSE
Strategic planning involves making decisions about the organization’s long-term goals and strategies.
AACSB: Analytic
Bateman – Chapter 05 #7
Blooms: Remember
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 1 Easy
Topic: Levels of Planning
8.
(p. 97)
An organization’s operational plans serve as the foundation for its strategic plans and tactical
plans.
FALSE
The organization’s strategic goals and plans serve as the foundation for planning by middle-level and
frontline managers. Exhibit 5.2 shows that as goals and plans move from the strategic level to the
tactical level and then to the operational level, they become more specific and involve shorter time
periods.
AACSB: Analytic
Bateman – Chapter 05 #8
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
9.
(p. 97)
The formal planning model emphasizes a bottom-up approach.
FALSE
The formal planning model is hierarchical, with top-level strategies flowing down through the levels
of the organization into more specific goals and plans and an ever-more-limited timetable.
AACSB: Analytic
Bateman – Chapter 05 #9
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
10.
(p. 97)
Managers throughout an organization may be involved in developing the strategic plan and
contributing critical elements.
TRUE
Managers throughout an organization may be involved in developing the strategic plan and
contributing critical elements. Also, in practice, lower-level managers may make decisions that shape
strategy, whether or not top executives realize it.
AACSB: Analytic
Bateman – Chapter 05 #10
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
11.
(p. 98)
To be effective, the organization’s strategic plans should focus on goals that are different from those
of its tactical plans and operational plans.
FALSE
To be fully effective, the organization’s strategic, tactical, and operational goals and plans must be
aligned —that is, they must be consistent, mutually supportive, and focused on achieving the common
purpose and direction.
AACSB: Analytic
Bateman – Chapter 05 #11
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
12.
(p. 99)
An organization’s mission statement describes the company’s basic purpose and scope of
operations.
TRUE
The mission is a clear and concise expression of the organization’s basic purpose. It describes what
the organization does, whom it does it for, its basic good or service, and its values.
AACSB: Analytic
Bateman – Chapter 05 #12
Blooms: Remember
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 1 Easy
Topic: Strategic Planning Process
13.
(p. 99)
An organization’s mission statement focuses on long-term goals while its strategic vision focuses on
short-term plans.
FALSE
The mission describes the organization as it currently operates. The strategic vision points to the
future; it provides a perspective on where the organization is headed and what it can become.
AACSB: Analytic
Bateman – Chapter 05 #13
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
14.
(p. 101)
Stakeholders are only those groups and individuals who have a financial stake in the company.
FALSE
Stakeholders are groups and individuals who affect and are affected by achievement of the
organization’s mission, goals, and strategies. They include buyers, suppliers, competitors, government
and regulatory agencies, unions and employee groups, the financial community, owners and
shareholders, and trade associations.
AACSB: Analytic
Bateman – Chapter 05 #14
Blooms: Remember
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 1 Easy
Topic: Strategic Planning Process
15.
(p. 101)
In the context of the strategic planning process, a critical task in environmental analysis is forecasting
future trends.
TRUE
One critical task in environmental analysis is forecasting future trends. Forecasting techniques range
from simple judgment to complex mathematical models that examine systematic relationships among
many variables.
AACSB: Analytic
Bateman – Chapter 05 #15
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
16.
(p. 102)
Resources are a source of competitive advantage only when they are valuable, rare, difficult to imitate,
and organized.
TRUE
Resources are a source of competitive advantage only under all of the following circumstances: the
resources are instrumental for creating customer value —that is, they increase the benefits customers
derive from a good or service relative to the costs they incur; the resources are rare and not equally
available to all competitors; the resources are difficult to imitate and the resources are well organized.
AACSB: Analytic
Bateman – Chapter 05 #16
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
17.
(p. 103)
The goal of satisficing is to thoroughly understand the “best practices” of other firms and to undertake
actions to achieve better performance and lower costs.
FALSE
The goal of benchmarking is to thoroughly understand the “best practices” of other firms and to
undertake actions to achieve better performance and lower costs.
AACSB: Analytic
Bateman – Chapter 05 #17
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
18.
(p. 104)
The corporate strategy of concentration involves expanding the domain of the organization into supply
channels and to distributors.
FALSE
Concentration involves focusing on a single business competing in a single industry. Frequently
companies pursue concentration strategies to gain entry into an industry when industry growth is good
or when the company has a narrow range of competencies.
AACSB: Analytic
Bateman – Chapter 05 #18
Blooms: Remember
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Topic: Strategic Planning Process
19.
(p. 105-
106)
The BCG matrix is not a substitute for management judgment; it helps managers of businesses
evaluate their strategy alternatives.
TRUE
A popular technique for analyzing a corporation’s strategy for managing its portfolio is the
BCG matrix, developed by the Boston Consulting Group. The BCG matrix is not a substitute for
management judgment, creativity, insight, or leadership. But along with other techniques, it can help
managers evaluate their strategy alternatives.
AACSB: Analytic
Bateman – Chapter 05 #19
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
20.
(p. 106)
Businesses using a low-cost strategy try to be efficient and offer a standard, no-frills product.
TRUE
Businesses using a low-cost strategy try to be efficient and offer a standard, no-frills product.
AACSB: Analytic
Bateman – Chapter 05 #20
Blooms: Remember
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Level of Difficulty: 1 Easy
Topic: Business Strategy
21.
(p. 108)
Functional strategies are implemented only at the top levels of management.
FALSE
Functional strategies are implemented by each functional area of the organization to support the
business strategy.
AACSB: Analytic
Bateman – Chapter 05 #21
Blooms: Remember
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Level of Difficulty: 1 Easy
Topic: Business Strategy
22.
(p. 104)
A strategic control system must encourage efficient operations while allowing flexibility to adapt to
changing conditions.
TRUE
A strategic control system is designed to support managers in evaluating the organization’s progress
with its strategy and, when discrepancies exist, taking corrective action. The system must encourage
efficient operations that are consistent with the plan while allowing flexibility to adapt to changing
conditions.
AACSB: Analytic
Bateman – Chapter 05 #22
Blooms: Understand
Learning Objective: 05-05 Identify the keys to effective strategy implementation.
Level of Difficulty: 2 Medium
Topic: Fifth, Implement the Strategy
23.
(p. 110)
Managers usually face novel and unstructured problems, leaving them uncertain about how to
proceed.
TRUE
Lack of structure is typical of managerial decisions. Usually there is no automatic procedure to follow.
Problems are novel and unstructured, leaving the decision maker uncertain about how to proceed.
AACSB: Analytic
Bateman – Chapter 05 #23
Blooms: Understand
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
24.
(p. 112)
Decision makers who search for custom-made solutions use ideas they have tried before or follow the
advice of others who have faced similar problems.
FALSE
Decision makers who search for ready-made solutions use ideas they have tried before or follow the
advice of others who have faced similar problems.
AACSB: Analytic
Bateman – Chapter 05 #24
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
25.
(p. 115)
In the context of the decision-making process in an organization, those who implement a decision
must understand the choice and must be committed to its successful implementation.
TRUE
The decision-making process does not end once a choice is made. Those who implement the decision
should understand the choice and why it was made. They also must be committed to its successful
implementation.
AACSB: Analytic
Bateman – Chapter 05 #25
Blooms: Understand
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
26.
(p. 115)
In the context of managerial decision making, decision evaluation is useful only if the negative
feedback has been received.
FALSE
Decision evaluation is useful whether the conclusion is positive or negative.
AACSB: Analytic
Bateman – Chapter 05 #26
Blooms: Understand
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
27.
(p. 117)
Discounting the future is a psychological bias that applies to students who do not study.
TRUE
Discounting the future, in evaluating alternatives, is weighing short-term costs and benefits more
heavily than longer-term costs and benefits. This bias applies to students who don’t study.
AACSB: Analytic
Bateman – Chapter 05 #27
Blooms: Understand
Learning Objective: 05-07 Give examples of some individual barriers that affect rational decision making.
Level of Difficulty: 2 Medium
Topic: Human Nature Erects Barriers to Good Decisions
28.
(p. 117)
Individuals usually make higher-quality decisions when compared to groups, provided there is enough
time.
FALSE
If enough time is available, groups usually make higher-quality decisions than most individuals acting
alone. However, groups often are inferior to the best individual.
AACSB: Analytic
Bateman – Chapter 05 #28
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
29.
(p. 117)
In today’s complex business environment, some experts advise that significant problems should never
be tackled by groups.
FALSE
Some advise that in today’s complex business environment, significant problems should always be
tackled by groups.
AACSB: Analytic
Bateman – Chapter 05 #29
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
30.
(p. 118)
An advantage of using a group for decision making is that disagreement is unlikely to happen, and this
phenomenon is called groupthink.
FALSE
Pressure to avoid disagreement can lead to a phenomenon called groupthink. Pressure to go along with
the group’s preferred solution stifles creativity and other behaviors characteristic of vigilant decision
making.
AACSB: Analytic
Bateman – Chapter 05 #30
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
31.
(p. 119)
In the context of decision making in groups, the job of a devil’s advocate is to create potentially
destructive conflict.
FALSE
The role of devil’s advocate is assigned to someone who has the job of criticizing ideas within the
group to increase the likelihood of constructive conflict.
AACSB: Analytic
Bateman – Chapter 05 #31
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
32.
(p. 119)
In brainstorming, group members generate as many ideas about a problem as they can.
TRUE
In brainstorming, group members generate as many ideas about a problem as they can.
AACSB: Analytic
Bateman – Chapter 05 #32
Blooms: Remember
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 1 Easy
Topic: Groups Make Many Decisions
33.
(p. 92)
Which of the following steps in the formal planning process involves studying past events, examining
current conditions, and forecasting future trends?
A. Analyzing the situation
B. Generating alternative goals and plans
C. Evaluating goals and plans
D. Selecting goals and plans
E. Monitoring and controlling performance
Planning begins with a situational analysis. Within their time and resource constraints, planners should
gather, interpret, and summarize all information relevant to the planning issue in question. They study
past events, examine current conditions, and try to forecast future trends.
AACSB: Analytic
Bateman – Chapter 05 #33
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
34.
(p. 92)
The outcome of situational analysis is the:
A. evaluation of the merits and feasibility of a range of alternatives.
B. prioritization and elimination of goals.
C. identification and diagnosis of planning assumptions, issues, and problems.
D. selection of the most appropriate and feasible alternative.
E. proper implementation of a plan.
The outcome of situational analysis is the identification and diagnosis of planning assumptions, issues,
and problems.
AACSB: Analytic
Bateman – Chapter 05 #34
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
35.
(p. 93)
In the context of the planning process, _____ are the targets or ends the manager wants to reach.
A. goals
B. plans
C. scenarios
D. strategies
E. threats
Goals are the targets or ends the manager wants to reach.
AACSB: Analytic
Bateman – Chapter 05 #35
Blooms: Remember
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 1 Easy
Topic: The Planning Process
36.
(p. 94)
A plan which focuses on ongoing activities designed to achieve an enduring set of goals and may
become a more permanent policy or rule is called a _____.
A. start-up plan
B. single-use plan
C. standing plan
D. contingency plan
E. subject plan
Standing plans focus on ongoing activities designed to achieve an enduring set of goals.
Many companies have standing plans for recruiting minority group members and women.
Standing plans may become more permanent policies and rules for running the organization.
AACSB: Analytic
Bateman – Chapter 05 #36
Blooms: Remember
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 1 Easy
Topic: The Planning Process
37.
(p. 94)
A plan to integrate employees into a new payroll system, assuming that it is not likely to be repeated
in the foreseeable future, is an example of a _____ plan.
A. standing
B. single-use
C. start-up
D. contingency
E. subject
Single-use plans are designed to achieve a set of goals that are not likely to be repeated in the future.
AACSB: Analytic
Bateman – Chapter 05 #37
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
38.
(p. 94)
According to the _____ plan of Widget Inc., if expansion to new markets in Australia does not
materialize, the company will strive for expansion in Asia.
A. operations
B. internal
C. contingency
D. standing
E. start-up
Contingency plans specify actions to take when a company’s initial plans have not worked well or
events in the external environment require a sudden change.
AACSB: Reflective Thinking
Bateman – Chapter 05 #38
Blooms: Apply
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 3 Hard
Topic: The Planning Process
39.
(p. 94)
Which stage of the planning process is Axis Corp. involved in if it is assessing how well alternative
plans meet high-priority goals while considering the cost of each initiative and the likely investment
return?
A. Implementing goals and plans
B. Selecting goals and plans
C. Analyzing the situation
D. Monitoring and controlling performance
E. Evaluating goals and plans
In the third stage of the planning process, managers evaluate the advantages, disadvantages, and
potential effects of each alternative goal and plan. They must prioritize the goals and even eliminate
some of them. Also, managers consider how well alternative plans meet high-priority goals,
considering the cost of each initiative and the likely investment return.
AACSB: Analytic
Bateman – Chapter 05 #39
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
40.
(p. 94-95)
In which step of the planning process do managers identify the priorities and trade-offs among goals
and plans?
A. Evaluation of goals and plans
B. Selection of goals and plans
C. Implementation of goals and plans
D. Monitoring of goals and plans
E. Generating alternative goals and plans
In step 4 of the planning process, once managers have assessed the goals and plans, they select the
most appropriate and feasible alternative. The evaluation process identifies the priorities and trade-offs
among the goals and plans.
AACSB: Analytic
Bateman – Chapter 05 #40
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
41.
(p. 95)
In the context of the planning process, implementation of selected plans will be most successful when:
A. only senior managers participate in the planning process.
B. limited financial resources are made available to the manager.
C. they are linked to other organizational systems like budgets and rewards.
D. they are converted into strict rules for employees to follow.
E. they are projected as confidential issues concerning top management.
Proper implementation is key to achieving goals. Managers and employees must understand the plan,
have the resources to implement it, and be motivated to do so. Including employees in the previous
steps of the planning process paves the way for the implementation phase. Employees usually are
better informed, more committed, and more highly motivated when a goal or plan is one that they
helped develop. Finally, linking the plan to other systems in the organization, particularly the budget
and reward systems, helps ensure its successful implementation.
AACSB: Analytic
Bateman – Chapter 05 #41
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
42.
(p. 96)
In the context of the planning process, which of the following statements is true of the final step that
involves monitoring and controlling performance?
A. Monitoring and controlling performance is not as important as the other steps in the planning
process.
B. Managers must continually monitor the performance of their work units against the unit’s goals and
plans.
C. It is the first step taken up by managers in the planning process.
D. Managers need to re-start the planning process if plans are implemented improperly.
E. Managers consider monitoring and controlling performance as the most important step in the
planning process.
Managers must continually monitor the actual performance of their work units against the unit’s goals
and plans.
AACSB: Analytic
Bateman – Chapter 05 #42
Blooms: Understand
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 2 Medium
Topic: The Planning Process
43.
(p. 96)
Which of the following is one of the four levels of planning?
A. Feasible
B. Synergistic
C. Tactical
D. Internal
E. Traditional
Planning is used by managers at all four levels: top-level (strategic managers), middle-level (tactical
managers), frontline (operational managers), and team leaders.
AACSB: Analytic
Bateman – Chapter 05 #43
Blooms: Remember
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 1 Easy
Topic: Levels of Planning
44.
(p. 96)
In the context of the levels of planning, typical strategic goals involve:
A. updating equipment used.
B. increasing market share.
C. advertising expenditures.
D. compliance with civil rights laws.
E. human resource utilization.
Typical strategic goals include growing, increasing market share, improving profitability, boosting
return on investment, fostering quantity and quality of outputs, increasing productivity, improving
customer service, and contributing to society.
AACSB: Analytic
Bateman – Chapter 05 #44
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
45.
(p. 96)
Which of the following is true of the strategic goals of an organization?
A. Once the strategic goals have been set, the organization will automatically begin improving.
B. The strategic goals of an organization should be limited to top management.
C. Strategic goals include fostering quantity and quality of outputs as well as increasing productivity.
D. Setting high strategic goals eliminates the risk of failure.
E. In order to achieve the desired results, strategic goals must not be changed after documentation.
Typical strategic goals include growing, increasing market share, improving profitability, boosting
return on investment, fostering quantity and quality of outputs, increasing productivity, improving
customer service, and contributing to society.
AACSB: Analytic
Bateman – Chapter 05 #45
Blooms: Remember
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 1 Easy
Topic: Levels of Planning
46.
(p. 96)
In the context of the levels of planning, strategic goals are:
A. major targets that relate to the long-term survival of the organization.
B. specific to a functional area in the organization.
C. driven by operational plans.
D. focused on the major actions a unit must take.
E. procedures and processes to get day-to-day work done.
Strategic goals are major targets or end results that relate to the long-term survival, value, and growth
of the organization.
AACSB: Analytic
Bateman – Chapter 05 #46
Blooms: Remember
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 1 Easy
Topic: Levels of Planning
47.
(p. 97)
The level of planning involving the longest time horizon, usually ranging from three to seven years, is:
A. operational planning.
B. missionary planning.
C. tactical planning.
D. departmental planning.
E. strategic planning.
Exhibit 5.2 shows that as goals and plans move from the strategic level to the tactical level and
then to the operational level, they become more specific and involve shorter time periods. A
strategic plan typically has a time horizon of three to seven years, but sometimes it spans decades.
AACSB: Analytic
Bateman – Chapter 05 #47
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
48.
(p. 97)
The process of translating broad strategic goals and plans into specific goals and plans relevant to a
particular portion of the organization is known as:
A. strategic planning.
B. operational planning.
C. tactical planning.
D. contingency planning.
E. feasibility planning.
Tactical planning translates broad strategic goals and plans into specific goals and plans relevant to a
particular portion of the organization, often a functional area such as marketing or human resources.
AACSB: Analytic
Bateman – Chapter 05 #48
Blooms: Remember
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 1 Easy
Topic: Levels of Planning
49.
(p. 97)
The process of identifying the specific procedures and processes required at lower levels of the
organization is known as:
A. strategic planning.
B. operational planning.
C. tactical planning.
D. contingency planning.
E. acquisition planning.
Operational planning identifies the specific procedures and processes required at lower levels of the
organization.
AACSB: Analytic
Bateman – Chapter 05 #49
Blooms: Remember
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 1 Easy
Topic: Levels of Planning
50.
(p. 97)
In _____ planning, frontline managers usually focus on routine tasks such as production runs, delivery
schedules, and human resource requirements.
A. acquisition
B. feasibility
C. tactical
D. operational
E. strategic
Operational plans may cover just several months and usually focus on routine tasks such as production
runs, delivery schedules, and human resource requirements.
AACSB: Analytic
Bateman – Chapter 05 #50
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
51.
(p. 97)
In the context of the levels of planning, the formal planning model is _____, with top-level strategies
flowing down through the levels of the organization into more specific goals and plans.
A. innovative
B. hierarchical
C. tactical
D. concentrated
E. uncertain
The formal planning model is hierarchical, with top-level strategies flowing down through the
levels of the organization into more specific goals and plans and an ever-more-limited timetable.
AACSB: Analytic
Bateman – Chapter 05 #51
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
52.
(p. 98)
In the context of the levels of planning, an organization’s strategic, tactical, and operational goals and
plans must be _____ in order to be fully effective.
A. aligned
B. independent
C. mutually exclusive
D. focused on long-term gains only
E. focused on short-term benefits only
To be fully effective, the organization’s strategic, tactical, and operational goals and plans must be
aligned—that is, they must be consistent, mutually supportive, and focused on achieving the common
purpose and direction.
AACSB: Analytic
Bateman – Chapter 05 #52
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
53.
(p. 99)
Which of the following is true of the strategic vision of an organization?
A. The strategic vision provides a perspective on where the organization is headed.
B. The strategic vision describes the organization as it currently operates.
C. A strategic vision statement is a clear and concise expression of the organization’s basic purpose.
D. An effective strategic vision statement must motivate all employees financially.
E. The strategic vision emphasizes short-term gains of an organization.
The strategic vision points to the future; it provides a perspective on where the organization is headed
and what it can become.
AACSB: Analytic
Bateman – Chapter 05 #53
Blooms: Remember
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 1 Easy
Topic: Strategic Planning Process
54.
(p. 102)
In the context of resources and core capabilities, tangible assets include:
A. patents.
B. real estate.
C. company reputation.
D. technical knowledge.
E. learning and experience.
Tangible assets include real estate, production facilities, and raw materials. Intangible assets include
company reputation, culture, technical knowledge, and patents, as well as accumulated learning and
experience.
AACSB: Analytic
Bateman – Chapter 05 #54
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
55.
(p. 102)
Resources are a source of competitive advantage only when they create customer value, are rare, are
organized, and are:
A. historical.
B. difficult to imitate.
C. equally available.
D. commonplace.
E. expensive.
Resources are a source of competitive advantage only when they create customer value, are rare, are
organized, and are difficult to imitate.
AACSB: Analytic
Bateman – Chapter 05 #55
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
56.
(p. 103)
Hot Pizza, a chain of full service pizzerias, periodically compares the quality of its food and service
with its competitors in order to continually improve its performance. This corporate strategy is known
as:
A. brainstorming.
B. diversification.
C. benchmarking.
D. vertical integration.
E. horizontal integration.
Benchmarking is the process of assessing how well one company’s basic functions and skills compare
with those of another company or set of companies. The goal of benchmarking is to thoroughly
understand the “best practices” of other firms and to undertake actions to achieve better performance
and lower costs.
AACSB: Reflective Thinking
Bateman – Chapter 05 #56
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
57.
(p. 103)
A technique that helps managers summarize relevant and important facts from the internal and
external analyses of an organization in order to formulate strategy is known as:
A. BCG matrix.
B. SWOT analysis.
C. benchmarking.
D. diversification.
E. functional strategy.
A SWOT analysis is an assessment of the organization’s strengths, weaknesses, opportunities, and
threats. SWOT analysis helps managers summarize the relevant, important facts from their external
and internal analyses.
AACSB: Analytic
Bateman – Chapter 05 #57
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
58.
(p. 104)
A(n) _____ strategy identifies the set of businesses, markets, or industries in which the organization
competes and the distribution of resources among those businesses.
A. vertical
B. unrelated
C. uncertain
D. functional
E. corporate
A corporate strategy identifies the set of businesses, markets, or industries in which the organization
competes and the distribution of resources among those businesses.
AACSB: Analytic
Bateman – Chapter 05 #58
Blooms: Remember
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 1 Easy
Topic: Strategic Planning Process
59.
(p. 105)
In order to reduce production costs, Everlasting Tire decided to buy out a rubber plant and begin
manufacturing their own rubber for their tires. The corporate strategy adopted by the company is
known as:
A. concentration.
B. vertical integration.
C. related diversification.
D. unrelated diversification.
E. differentiation.
Vertical integration is a corporate strategy to expand the organization’s domain into supply channels
or to distributors, generally to eliminate uncertainties and reduce costs associated with suppliers or
distributors.
AACSB: Reflective Thinking
Bateman – Chapter 05 #59
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
60.
(p. 105)
Party Beverages Corp. had focused only on alcoholic beverages for the last two decades. Now, the
company is considering entering the soft drink market. In the context of the above scenario, which of
the following corporate strategies will the company adopt?
A. Vertical integration
B. Related diversification
C. Unrelated diversification
D. Concentration
E. Low-cost
Related diversification is a corporate strategy to move into new businesses related to the company’s
original core business.
AACSB: Reflective Thinking
Bateman – Chapter 05 #60
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
61.
(p. 105)
GR Real Estate Inc. recently decided to expand from its original base in real estate to several wide-
ranging industries such as trucking, lawn mower manufacturing and catering. This corporate strategy
is known as:
A. vertical integration.
B. unrelated diversification.
C. related diversification.
D. concentration.
E. low-cost.
Unrelated diversification is a corporate strategy to expand into unrelated businesses, typically to
minimize risks due to market fluctuations in one industry.
AACSB: Reflective Thinking
Bateman – Chapter 05 #61
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
62.
(p. 105)
The O’Brien Corporation is evaluating the purchase of a small firm which manufactures doodads, a
product involving advanced technology. Doodads are expected to revolutionize the home construction
industry. The firm to be purchased has only a minor share of this growing market, but the market is
expected to grow rapidly. In which of the following categories of business in the BCG matrix would
this firm be placed?
A. Cash cows
B. Stars
C. Spinoffs
D. Question marks
E. Dogs
Question marks are high-growth, weak-competitive position businesses that require substantial
investment to improve their position, or else they should be divested.
AACSB: Reflective Thinking
Bateman – Chapter 05 #62
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
63.
(p. 105)
In the context of the BCG matrix, a star represents a company:
A. with high growth and a strong competitive position in the market.
B. that requires substantial investments to improve their position in the market.
C. with low growth and a strong competitive position in the market.
D. that generates excess revenues and funds other businesses.
E. that will be divested as soon as possible.
Stars are businesses with high growth and a strong competitive position, which require heavy
investment, but their strong position lets them generate the needed revenues.
AACSB: Analytic
Bateman – Chapter 05 #63
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
64.
(p. 108)
The most effective strategy that can be adopted by strategy managers is one that:
A. cannot be described in detail.
B. competitors are unable to imitate.
C. is based on the principle of rigidity.
D. cannot be deconstructed.
E. can be purchased at a reasonable cost.
Whatever strategy managers adopt, the most effective strategy is one that competitors are unwilling
or unable to imitate. If the organization’s strategic plan is one that could easily be adopted by industry
competitors, it may not be sufficiently distinctive or, in the long run, contribute significantly to the
organization’s competitiveness.
AACSB: Analytic
Bateman – Chapter 05 #64
Blooms: Understand
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Level of Difficulty: 2 Medium
Topic: Business Strategy
65.
(p. 108)
The first step in strategy implementation involves articulating in simple language what a particular
business must do to create or sustain a competitive advantage. This step is known as:
A. assessing organizational capabilities.
B. developing an implementation agenda.
C. defining strategic tasks.
D. creating an implementation plan.
E. developing a mission statement.
In general, strategy implementation involves four related steps, the first of which is defining strategic
tasks. This involves articulating in simple language what a particular business must do to create
or sustain a competitive advantage and to help employees understand how they contribute to the
organization.
AACSB: Analytic
Bateman – Chapter 05 #65
Blooms: Understand
Learning Objective: 05-05 Identify the keys to effective strategy implementation.
Level of Difficulty: 2 Medium
Topic: Fifth, Implement the Strategy
66.
(p. 109)
Which of the following is true of strategic control systems?
A. They must rigidly enforce the strategic plan in the face of changing conditions.
B. Unlimited spending may be allowed as long as the organization is progressing according to its
strategy.
C. Corrective action is taken when discrepancies exist between an organization’s progress and its
strategy.
D. The first component of the strategic management process is strategic control.
E. These systems are designed to help determine the organization’s output by evaluating price
competition.
A strategic control system is designed to support managers in evaluating the organization’s progress
with its strategy and, when discrepancies exist, taking corrective action.
AACSB: Analytic
Bateman – Chapter 05 #66
Blooms: Remember
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 1 Easy
Topic: Fifth, Implement the Strategy
67.
(p. 110)
When the problem is frequent, repetitive, routine, with much certainty regarding cause-and-effect
relationships, a _____ decision may be taken.
A. qualitative
B. programmed
C. non-economic
D. risky
E. nonprogrammed
With programmed decisions, the problem is frequent, repetitive, and routine, with much certainty
regarding cause-and-effect relationships.
AACSB: Analytic
Bateman – Chapter 05 #67
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
68.
(p. 110)
Which of the following best describes the preferred approach for managers confronted with risk?
A. They avoid it by any means necessary.
B. They eliminate it with a thorough understanding of the consequences of each option.
C. They anticipate it, minimize it, and control it.
D. They understand there is no way to manage it.
E. They thrive on taking risks.
Risk as a quality of managerial decision making differs from taking a risk. Although it sometimes
seems as though risk takers are admired and that entrepreneurs and investors thrive on taking risks,
good decision makers prefer to manage risk. Knowing that their decisions entail risk, they anticipate
the risk, minimize it, and control it.
AACSB: Analytic
Bateman – Chapter 05 #68
Blooms: Understand
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
69.
(p. 110)
Which of the following is true of managerial decision making?
A. Most managerial decisions lack structure.
B. Managerial decisions are always free of risk.
C. Managerial decisions are taken under conditions of perfect certainty.
D. Managers show consistency in their decisions in response to novel problems.
E. A manager’s decisions have the characteristics of programmed decisions.
Lack of structure is typical of managerial decisions. Usually there is no automatic procedure to follow.
Problems are novel and unstructured, leaving the decision maker uncertain about how to proceed. In
other words, a manager’s decisions most often have the characteristics of nonprogrammed decisions.
AACSB: Analytic
Bateman – Chapter 05 #69
Blooms: Understand
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
70.
(p. 110)
Shadow Blinds, an American company, is trying to decide whether to open its first international
branch in Europe or Asia. The managers of the company are operating under a condition of _____.
A. goal displacement
B. illusion of control
C. social reality
D. uncertainty
E. maximization
More often managers face uncertainty, meaning they have insufficient information to know the
consequences of different actions.
AACSB: Reflective Thinking
Bateman – Chapter 05 #70
Blooms: Apply
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
71.
(p. 110)
In the context of managerial decision making, when one can estimate the likelihood of various
consequences but still does not know with certainty what will happen, one is facing _____.
A. certainty
B. maximization
C. risk
D. optimization
E. framing effects
When you can estimate the likelihood of various consequences but still do not know with certainty
what will happen, you are facing risk.
AACSB: Analytic
Bateman – Chapter 05 #71
Blooms: Understand
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
72.
(p. 110)
In the context of managerial decision making, the state that exists when decision makers have
insufficient information is known as:
A. certainty.
B. uncertainty.
C. risk.
D. probability.
E. indecision.
More often managers face uncertainty, meaning they have insufficient information to know the
consequences of different actions.
AACSB: Analytic
Bateman – Chapter 05 #72
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
73.
(p. 111)
A formal decision-making process has six stages. Which of the following is one of these stages?
A. Thriving on the risks of taking a decision
B. Minimizing the consequences of a decision
C. Anticipating the outcome of a decision
D. Evaluating the decision
E. Controlling the damage caused by a wrong decision
The ideal decision-making process moves through six stages:
Identify and diagnose the problem.
Generate alternative solutions.
Evaluate alternatives.
Make the choice.
Implement the decision.
Evaluate the decision.
AACSB: Analytic
Bateman – Chapter 05 #73
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
74.
(p. 111)
The first step in an ideal decision-making process is to:
A. make a choice.
B. evaluate alternatives.
C. implement the decision.
D. generate alternative solutions.
E. identify the problem.
The ideal decision-making process moves through six stages:
identify and diagnose the problem; generate alternative solutions; evaluate alternatives; make the
choice; implement the decision; and evaluate the decision.
AACSB: Analytic
Bateman – Chapter 05 #74
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
75.
(p. 112)
The manager of a restaurant noticed that the number of customers in the evening was decreasing. She
promptly ordered the chef to rewrite the evening menu. Later, customer feedback indicated that the
problem was not the menu but poor service from the waitstaff. The manager’s decision to have the
menu revised suggests that she failed to:
A. identify and diagnose the problem.
B. evaluate alternatives.
C. generate alternative solutions.
D. evaluate the decision.
E. make a choice.
Recognizing that a problem or opportunity exists is only the beginning of the first stage of formal
decision making. The decision maker also must want to do something about it and must believe that
the resources and abilities necessary for solving the problem exist. Then the decision maker must dig
in deeper and attempt to diagnose the true cause of the situation.
AACSB: Reflective Thinking
Bateman – Chapter 05 #75
Blooms: Apply
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
76.
(p. 112)
In the context of generating alternative solutions during the decision-making process, _____ solutions
must be designed for specific problems.
A. realistic
B. goal-oriented
C. open-ended
D. adjustable
E. custom-made
Custom-made solutions must be designed for specific problems. This technique often combines ideas
into new, creative solutions. Potentially, custom-made solutions can be devised for any challenge.
AACSB: Analytic
Bateman – Chapter 05 #76
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
77.
(p. 112)
Anne is evaluating a new customer relationship management software solution for her business.
She knows several business owners and managers who have implemented the software in their
organizations. Instead of conducting a trial in her own company, she asks them for their advice. Anne
is most likely searching for a(n) _____ solution to her problem.
A. experimental
B. optimal
C. ready-made
D. statistical
E. custom-made
Decision makers who search for ready-made solutions use ideas they have tried before or follow the
advice of others who have faced similar problems.
AACSB: Reflective Thinking
Bateman – Chapter 05 #77
Blooms: Apply
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 3 Hard
Topic: Managerial Decision Making
78.
(p. 114)
In the context of making a choice, _____ requires searching thoroughly for a complete range of
alternatives, carefully assessing each alternative, comparing one to another, and then choosing or
creating the very best.
A. benchmarking
B. maximizing
C. forecasting
D. satisficing
E. optimizing
Maximizing results is the greatest benefit at the lowest cost, with the largest expected total
return. Maximizing requires searching thoroughly for a complete range of alternatives, carefully
assessing each alternative, comparing one to another, and then choosing or creating the very best.
AACSB: Analytic
Bateman – Chapter 05 #78
Blooms: Understand
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
79.
(p. 114)
Pat has to decide which paper clips to purchase for her office. She looks at the office supply catalog
and picks the first one that is priced reasonably. Which method of making a decision does she use?
A. Forecasting
B. Optimizing
C. Satisficing
D. Maximizing
E. Brainstorming
Satisficing is choosing the first option that is minimally acceptable or adequate; the choice appears to
meet a targeted goal or criterion.
AACSB: Reflective Thinking
Bateman – Chapter 05 #79
Blooms: Apply
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 3 Hard
Topic: Managerial Decision Making
80.
(p. 114)
Managers who use the method of optimizing to make their decisions will attempt to choose:
A. the first minimally acceptable alternative.
B. among those alternatives with known results.
C. the least expensive alternative.
D. the alternative that produces the least conflict.
E. an alternative that achieves the best possible balance among several goals.
Optimizing means achieving the best possible balance among several goals.
AACSB: Analytic
Bateman – Chapter 05 #80
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
81.
(p. 114)
In the context of formal decision making, which of the following is indicated by negative feedback?
A. Too much time has been dedicated in implementing the decision.
B. Implementation of the decision may need more resources.
C. The decision has been made under undue pressure from top management.
D. The problem has been incorrectly diagnosed.
E. The decision has been unfairly beaten down by competitors.
Negative feedback means one of two things:
Implementation will require more time, resources, effort, or thought.
The decision was a bad one.
AACSB: Analytic
Bateman – Chapter 05 #81
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
82.
(p. 116)
The psychological bias known as illusion of control refers to:
A. a decision bias influenced by the way in which a problem or decision alternative is phrased or
presented.
B. a belief that one can influence events even when one has no control over what will happen.
C. a bias weighting short-term costs and benefits more heavily than longer-term costs and benefits.
D. a condition that occurs when a decision-making group loses sight of its original goal and a new, less
important goal emerges.
E. a phenomenon that occurs in decision making when group members avoid disagreement as they
strive for consensus.
Illusion of control refers to a belief that one can influence events even when one has no control over
what will happen. Such overconfidence can lead to failure because decision makers ignore risks and
fail to evaluate the odds of success objectively.
AACSB: Analytic
Bateman – Chapter 05 #82
Blooms: Remember
Learning Objective: 05-07 Give examples of some individual barriers that affect rational decision making.
Level of Difficulty: 1 Easy
Topic: Human Nature Erects Barriers to Good Decisions
83.
(p. 116)
Illusion of control, discounting the future, and framing effects are examples of:
A. social realities.
B. psychological biases.
C. strategic planning steps.
D. ready-made solutions.
E. time pressures.
Decisions are influenced by subjective psychological biases, time pressures, and social realities. A few
of the many documented subjective biases are illusion of control, framing effects, and discounting the
future.
AACSB: Analytic
Bateman – Chapter 05 #83
Blooms: Remember
Learning Objective: 05-07 Give examples of some individual barriers that affect rational decision making.
Level of Difficulty: 1 Easy
Topic: Human Nature Erects Barriers to Good Decisions
84.
(p. 116)
_____ refer(s) to a decision bias influenced by the way in which a problem or decision alternative is
phrased or presented.
A. Framing effects
B. Discounting the future
C. An illusion of control
D. Social realities
E. Time pressures
Framing effects refer to a decision bias influenced by the way in which a problem or decision
alternative is phrased or presented.
AACSB: Analytic
Bateman – Chapter 05 #84
Blooms: Remember
Learning Objective: 05-07 Give examples of some individual barriers that affect rational decision making.
Level of Difficulty: 1 Easy
Topic: Human Nature Erects Barriers to Good Decisions
85.
(p. 117)
Discounting the future refers to:
A. focusing on gains in the long run.
B. failing to consider inflationary costs.
C. underestimating the short-term effects of a decision.
D. valuing short-term benefits more heavily than long-term benefits.
E. failing to consider the effects of new entrants into the industry.
Discounting the future refers to a bias weighting short-term costs and benefits more heavily than
longer-term costs and benefits.
AACSB: Analytic
Bateman – Chapter 05 #85
Blooms: Remember
Learning Objective: 05-07 Give examples of some individual barriers that affect rational decision making.
Level of Difficulty: 1 Easy
Topic: Human Nature Erects Barriers to Good Decisions
86.
(p. 118)
A company recently made changes to its organizational structure. While deciding upon the changes
to be implemented, the company invited many employees to discuss the issue with the senior
management. This enabled the employees to hear the relevant arguments both for the chosen
alternative and against the rejected alternatives. An advantage of using employees in the group
discussion was that:
A. the employees dominated the discussions and promoted their ideas.
B. the phenomenon of groupthink was encouraged.
C. the satisficing method of decision making was employed.
D. goal displacement was furthered.
E. the employees understood why the decision was made.
Using groups to make a decision offers several potential advantages. One is increased understanding
for those involved. People who participate in a group discussion are more likely to understand why the
decision was made. They will have heard the relevant arguments both for the chosen alternative and
against the rejected alternatives.
AACSB: Reflective Thinking
Bateman – Chapter 05 #86
Blooms: Apply
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
87.
(p. 118)
An advantage in using a group for decision making is that it leads to:
A. a higher level of commitment to the decision.
B. domination by one member in leading the discussion.
C. a phenomenon known as groupthink.
D. the process of decision making known as satisficing.
E. saving precious time, money, and resources.
Group discussion typically leads to a higher level of commitment to the decision. Buying
into the proposed solution translates into high motivation to ensure that it is executed well.
AACSB: Analytic
Bateman – Chapter 05 #87
Blooms: Apply
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
88.
(p. 118)
In the context of making decisions in a group, when a strong leader makes his or her preferences clear,
and the result is the same as it would have been if the leader had made the decision alone, it leads to a
situation known as _____.
A. groupthink
B. satisficing
C. domination
D. brainstorming
E. goal displacement
Sometimes one group member dominates the discussion. When this occurs—as when a strong leader
makes his or her preferences clear—the result is the same as it would have been if the dominant
individual had made the decision alone. However, the dominant person does not necessarily have the
most valid opinions, and even if that person leads the group to a good decision, the process will have
wasted everyone else’s time.
AACSB: Analytic
Bateman – Chapter 05 #88
Blooms: Remember
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 1 Easy
Topic: Groups Make Many Decisions
89.
(p. 118)
A phenomenon that occurs in decision-making when group members avoid disagreement as they
strive for consensus is known as:
A. goal displacement.
B. domination.
C. intuition.
D. groupthink.
E. brainstorming.
Groupthink is a phenomenon that occurs in decision making when group members avoid disagreement
as they strive for consensus.
AACSB: Analytic
Bateman – Chapter 05 #89
Blooms: Remember
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 1 Easy
Topic: Groups Make Many Decisions
90.
(p. 118)
A meeting attended by five executives was being held at a company. A decision needed to be made
about the following year’s marketing campaign. Tony, an outspoken and aggressive person, insisted
that his ideas be followed since there could not be a better alternative. Nobody else contributed to the
discussion, and Tony’s views were accepted. This group discussion suffered from:
A. groupthink.
B. domination.
C. satisficing.
D. intellectual stimulation.
E. goal displacement.
Sometimes one group member dominates the discussion. When this occurs—as when a strong leader
makes his or her preferences clear—the result is the same as it would have been if the dominant
individual had made the decision alone. However, the dominant person does not necessarily have the
most valid opinions, and even if that person leads the group to a good decision, the process will have
wasted everyone else’s time.
AACSB: Reflective Thinking
Bateman – Chapter 05 #90
Blooms: Apply
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 3 Hard
Topic: Groups Make Many Decisions
91.
(p. 118)
When a group accepts an alternative without taking the time or effort to explore many options, the
group has reached a _____ decision.
A. maximizing
B. innovative
C. satisficing
D. constructive
E. optimizing
Satisficing is more likely with groups. Most people don’t like meetings and will do what they
can to end them. This may include criticizing members who want to continue exploring new
and better alternatives. The result is a satisficing, not an optimizing or maximizing, decision.
AACSB: Analytic
Bateman – Chapter 05 #91
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
92.
(p. 119)
_____ is a condition that occurs when a decision-making group loses sight of its original purpose and
a new, less important aim emerges.
A. Goal displacement
B. Illusion of control
C. Satisficing
D. Brainstorming
E. Groupthink
Group members’goal should be to come up with the best possible solution. With goal displacement,
new goals emerge to replace the original ones. When group members have different opinions, attempts
at rational persuasion might become a heated disagreement, and then winning the argument becomes
the new goal.
AACSB: Analytic
Bateman – Chapter 05 #92
Blooms: Remember
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 1 Easy
Topic: Groups Make Many Decisions
93.
(p. 119)
Leaders of decision-making groups should:
A. discourage constructive conflict among the group members.
B. encourage groupthink to speed up decision-making.
C. reach a decision by employing the satisficing method.
D. encourage multiple alternatives from a variety of perspectives.
E. discourage exploring new alternatives in order to reach a conclusion faster.
Managers can increase the likelihood of constructive conflict by assembling teams of different types
of people, creating frequent interactions and active debates, and encouraging multiple alternatives
from a variety of perspectives.
AACSB: Analytic
Bateman – Chapter 05 #93
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
94.
(p. 119)
In an effort to combat groupthink and an overall lack of creativity, the group leader assigned Tiffany
the job of criticizing ideas, for the sake of argument, throughout the meeting. Tiffany is playing the
role of a:
A. maximizer.
B. devil’s advocate.
C. dialectic.
D. strategic planner.
E. dominator.
Devil’s advocate refers to a person who has the job of criticizing ideas to ensure that their downsides
are fully explored.
AACSB: Reflective Thinking
Bateman – Chapter 05 #94
Blooms: Apply
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
95.
(p. 119)
In an attempt to make a conflict between two employees less personal and emotional, their manager
instructs them to approach the same problem from a different viewpoint. They have a structured
debate and come to a conclusion that suits both employees. This is an example of using the _____
approach.
A. maximizing
B. satisficing
C. devil’s advocate
D. dialectic
E. goal displacement
A leader may use a process called dialectic, a structured debate between two conflicting courses of
action. Structured debates between plans and counterplans can be useful before making a strategic
decision—one team might present the case for acquiring a firm while another team advocates not
making the acquisition.
AACSB: Analytic
Bateman – Chapter 05 #95
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
96.
(p. 119)
Which of the following is true of brainstorming?
A. The group is encouraged to say anything except to criticize other people.
B. A time pressure is necessary to enhance creativity.
C. Total and consistent agreement among group members can be useful.
D. Innovative ideas must lead to immediate payoffs.
E. Task-related conflict cannot hurt performance.
A common technique for eliciting creative ideas is brainstorming. The group generates as many ideas
about a problem as they can, and they are encouraged to say anything that comes to mind, except to
criticize other people or their ideas.
AACSB: Analytic
Bateman – Chapter 05 #96
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
97.
(p. 93)
To be effective, goals should have certain qualities, which can be recalled through the use of the
acronym SMART. List and describe each of these characteristics.
Goals are the targets or ends the manager wants to reach. To be effective, goals should have certain
qualities, which are easy to remember with the acronym SMART:
Specific—When goals are precise, employees know what they need to do to accomplish them.
• Measurable—As much as possible, the goal should quantify the desired results, so that there is no
doubt whether it has been achieved.
• Attainable (but challenging)—Employees need to recognize that they can attain their goals, so they
won’t become discouraged. However, they also should feel challenged to work hard and be creative.
• Relevant—Each goal should contribute to the organization’s overall mission and be consistent with
its values, including ethical standards.
• Time-bound—Effective goals specify a target date for completion.
AACSB: Analytic
Bateman – Chapter 05 #97
Blooms: Remember
Learning Objective: 05-01 Summarize the basic steps in any planning process.
Level of Difficulty: 1 Easy
Topic: The Planning Process
98.
(p. 96-97)
Discuss strategic, tactical, and operational planning. What are the characteristics of each in terms of
managerial level and level of detail?
Planning is used by managers at all four levels: top-level (strategic managers), middle-level (tactical
managers), frontline (operational managers), and team leaders.
Strategic planning involves making decisions about the organization’s long-term goals and strategies.
Strategic plans have a strong external orientation and cover major portions of the organization. Senior
executives are responsible for the development and execution of the strategic plan, although they
usually do not formulate or implement the entire plan personally.
Tactical planning translates broad strategic goals and plans into specific goals and plans relevant to a
particular portion of the organization, often a functional area such as marketing or human resources.
Tactical plans focus on the major actions a unit must take to fulfill its part of the strategic plan.
Operational planning identifies the specific procedures and processes required at lower levels of the
organization. Frontline managers usually focus on routine tasks such as production runs, delivery
schedules, and human resource requirements.
AACSB: Analytic
Bateman – Chapter 05 #98
Blooms: Understand
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 2 Medium
Topic: Levels of Planning
99.
(p. 100-
101)
In the context of a SWOT analysis, describe at least five elements of an environmental analysis.
The environmental analysis includes many elements:
• Industry profile: major product lines and significant market segments in the industry.
• Industry growth: growth rates for the entire industry, growth rates for key market segments,
projected changes in patterns of growth, and the determinants of growth.
• Industry forces: threat of new industry entrants, threat of substitutes, economic power of buyers,
economic power of suppliers, and internal industry rivalry.
• Competitor profile: major competitors and their market shares.
• Competitor analysis: goals, strategies, strengths, and weaknesses of each major competitor.
• Competitor advantages: the degree to which industry competitors have differentiated their goods or
services or achieved cost leadership.
• Legislation and regulatory activities and their effects on the industry.
• Political activity: the level of political activity undertaken by organizations and associations within
the industry.
• Social issues: current and potential social issues and their effects on the industry.
• Social interest groups: consumer, environmental, and other activist groups that try to influence the
industry.
• Labor issues: key labor needs, shortages, opportunities, and problems confronting the industry.
• Macroeconomic conditions: economic factors that affect supply, demand, growth, competition, and
profitability within the industry.
• Technological factors: scientific or technical methods that affect the industry, particularly recent and
potential innovations.
AACSB: Analytic
Bateman – Chapter 05 #99
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
100.
(p. 102)
Describe the two broad categories of resources and describe each one. Describe how resources can be
a source of competitive advantage.
Resources can take many forms, but they tend to fall into two broad categories:
• Tangible assets such as real estate, production facilities, raw materials, and so on.
• Intangible assets such as company reputation, culture, technical knowledge, and patents, as well as
accumulated learning and experience.
Resources are a source of competitive advantage only under all of the following circumstances:
• The resources are instrumental for creating customer value—that is, they increase the benefits
customers derive from a good or service relative to the costs they incur.
• The resources are rare and not equally available to all competitors.
If competitors have equal access to a resource, it can be valuable but cannot provide a competitive
advantage.
• The resources are difficult to imitate.
• The resources are well organized.
AACSB: Analytic
Bateman – Chapter 05 #100
Blooms: Understand
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 2 Medium
Topic: Strategic Planning Process
101.
(p. 106-
107)
Describe low-cost and differentiation strategies, and how a business can achieve competitive
advantage with either of them.
Businesses using a low-cost strategy try to be efficient and offer a standard, no-frills product.
Companies that succeed with a low-cost strategy often are large and take advantage of economies
of scale—reductions in unit cost from large purchases or manufacturing runs— in production or
distribution. Their scale may allow them to buy and sell goods and services at a lower price, which
leads to higher market share, volume, and ultimately profits. To succeed, an organization using this
strategy generally must be the cost leader in its industry or market segment. However, even a cost
leader must offer a product that is acceptable to customers.
With a differentiation strategy, a company tries to be unique in its industry or market segment along
dimensions that customers value. This unique or differentiated position within the industry often is
based on high product quality, excellent marketing and distribution, or superior service.
AACSB: Analytic
Bateman – Chapter 05 #101
Blooms: Understand
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy.
Level of Difficulty: 2 Medium
Topic: Business Strategy
102.
(p. 110)
Differentiate between programmed and nonprogrammed decisions. Which type is more typical for
managerial decisions?
With programmed decisions, the problem is frequent, repetitive, and routine, with much certainty
regarding cause-and-effect relationships. The decision procedure depends on policies, rules, and
definite procedures.
With nonprogrammed decisions, the problem is novel and unstructured, with much uncertainty
regarding cause-and-effect relationships. The decision procedure needs creativity, intuition, tolerance
for ambiguity, and creative problem solving.
Lack of structure is typical of managerial decisions. Usually there is no automatic procedure to follow.
Problems are novel and unstructured, leaving the decision maker uncertain about how to proceed. In
other words, a manager’s decisions most often have the characteristics of nonprogrammed decisions.
AACSB: Analytic
Bateman – Chapter 05 #102
Blooms: Understand
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 2 Medium
Topic: Managerial Decision Making
103.
(p. 111)
List the six steps of a formal decision-making process.
The ideal decision-making process moves through six stages:
• Identify and diagnose the problem.
• Generate alternative solutions.
• Evaluate alternatives.
• Make the choice.
• Implement the decision.
• Evaluate the decision.
These stages are general and applicable to any decision.
AACSB: Analytic
Bateman – Chapter 05 #103
Blooms: Remember
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 1 Easy
Topic: Managerial Decision Making
104.
(p. 118-
119)
Explain the four disadvantages of using a group to make decisions.
Things can go wrong when groups make decisions. Most of the potential problems concern the
process through which group members interact with one another:
• Sometimes one group member dominates the discussion. When this occurs—as when a strong leader
makes his or her preferences clear—the result is the same as it would have been if the dominant
individual had made the decision alone. However, the dominant person does not necessarily have the
most valid opinions, and even if that person leads the group to a good decision, the process will have
wasted everyone else’s time.
• Satisficing is more likely with groups. Most people don’t like meetings and will do what they can
to end them. This may include criticizing members who want to continue exploring new and better
alternatives. The result is a satisficing, not an optimizing or maximizing, decision.
• Pressure to avoid disagreement can lead to a phenomenon called groupthink. Groupthink occurs
when people choose not to disagree or raise objections because they don’t want to break up a positive
team spirit. Some groups want to think as one, tolerate no dissension, and strive to remain cordial.
Such groups are overconfident, complacent, and perhaps too willing to take risks. Pressure to go along
with the group’s preferred solution stifles creativity and other behaviors characteristic of vigilant
decision making.
• Goal displacement often occurs in groups. Group members’ goal should be to come up with the
best possible solution. With goal displacement, new goals emerge to replace the original ones. When
group members have different opinions, attempts at rational persuasion might become a heated
disagreement, and then winning the argument becomes the new goal.
AACSB: Analytic
Bateman – Chapter 05 #104
Blooms: Understand
Learning Objective: 05-08 Summarize principles for group decision making.
Level of Difficulty: 2 Medium
Topic: Groups Make Many Decisions
Use the paragraph given below to answer the following questions.
Scenario A. The senior management of Alpha Omega, Corp. have conducted a planning meeting.
They need to make decisions about the following questions:
1. How many employees should be hired for the cafeteria this month?
2. Should the company expand into a new region in the next ten years?
3. How can the visibility of their marketing campaign be increased?
4. How can the biggest trucks in the business be scheduled for next week?
5. Should the company allow employees to work from home? Bateman – Chapter 05
105.
(p. 96)
Which of the following questions is related to strategic planning?
A. How many employees should be hired for the cafeteria this month?
B. How can the visibility of their marketing campaign be increased?
C. How can the biggest trucks in the business be scheduled for next week?
D. Should the company allow employees to work from home?
E. Should the company expand into a new region in the next ten years?
Strategic planning involves making decisions about the organization’s long-term goals and strategies.
Effective strategic planning answers questions such as: Where will we be active? How will we get
there (e.g., by increasing sales or acquiring another company)? How will we win in the marketplace
(e.g., by keeping prices low or offering the best service)? How fast will we move, and in what
sequence will we make changes? How will we obtain financial returns (low costs or premium prices)?
AACSB: Reflective Thinking
Bateman – Chapter 05 #105
Blooms: Apply
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 3 Hard
Topic: Levels of Planning
106.
(p. 96)
The decision regarding the number of employees to be hired for the cafeteria is a part of operational
planning because:
A. it translates broad strategic goals and plans into specific goals and plans relevant to a particular
portion of the organization.
B. it focuses on the major actions a unit must take to fulfill its part of the strategic plan.
C. it involves a specific procedure that is required at lower levels of the organization.
D. it involves making decisions about the organization’s long-term goals and strategies.
E. it has a strong external orientation and covers major portions of the organization.
Operational planning identifies the specific procedures and processes required at lower levels of the
organization. Frontline managers usually focus on routine tasks such as production runs, delivery
schedules, and human resource requirements.
AACSB: Reflective Thinking
Bateman – Chapter 05 #106
Blooms: Apply
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning.
Level of Difficulty: 3 Hard
Topic: Levels of Planning
Use the information given below to answer the following questions. Scenario B. Chem-Free Natural
Pharmaceuticals has completed a SWOT analysis as part of their ongoing strategic planning process.
They have collected the following information:
1. New regulations have been passed limiting their ability to sell certain formulations over the counter.
2. As compared to their competitors, their management team is by far the best in the industry.
3. They have fallen behind in research and development in the last few years.
4. More people are becoming interested in natural alternatives to traditional chemical pharmaceuticals;
this trend is expected to continue over the next decade.
5. The company has inadequate financial resources to invest in their operations. Bateman – Chapter 05
107.
(p. 103)
In the context of the given scenario, which of the following is a strength of Chem-Free Natural
Pharmaceuticals?
A. New regulations have been passed limiting their ability to sell certain formulations over the
counter.
B. As compared to their competitors, their management team is by far the best in the industry.
C. The company has inadequate financial resources to invest in their operations.
D. They have fallen behind in research and development in the last few years.
E
.
More people are becoming interested in natural alternatives to traditional chemical pharmaceuticals;
this trend is expected to continue over the next decade.
Strengths and weaknesses refer to internal resources. An organization’s strengths might include skilled
management, positive cash flow, and well-known and highly regarded brands.
AACSB: Reflective Thinking
Bateman – Chapter 05 #107
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
108.
(p. 103)
In the context of the given scenario, which of the following is an opportunity for Chem-Free Natural
Pharmaceuticals?
A. New regulations have been passed limiting their ability to sell certain formulations over the
counter.
B. As compared to their competitors, their management team is by far the best in the industry.
C. The company has inadequate financial resources to invest in their operations.
D. They have fallen behind in research and development in the last few years.
E
.
More people are becoming interested in natural alternatives to traditional chemical pharmaceuticals;
this trend is expected to continue over the next decade.
Opportunities and threats arise in the macroenvironment and competitive environment. Examples
of opportunities are a new technology that could make the supply chain more efficient and a market
niche that is currently underserved.
AACSB: Reflective Thinking
Bateman – Chapter 05 #108
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
109.
(p. 103)
In the context of the given scenario, which of the following is a threat for Chem-Free Natural
Pharmaceuticals?
A. New regulations have been passed limiting their ability to sell certain formulations over the
counter.
B. As compared to their competitors, their management team is by far the best in the industry.
C. The company has inadequate financial resources to invest in their operations.
D. They have fallen behind in research and development in the last few years.
E
.
More people are becoming interested in natural alternatives to traditional chemical pharmaceuticals;
this trend is expected to continue over the next decade.
Opportunities and threats arise in the macroenvironment and competitive environment. Threats might
include the possibility that competitors will enter the underserved niche once it has been shown to be
profitable.
AACSB: Reflective Thinking
Bateman – Chapter 05 #109
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
Scenario C. Use the information given below to answer the following questions. Shine cosmetics, a
global company, is considering its corporate strategy. Several people on the board of directors believe
they have the “perfect” strategy for the company. Joe believes that the best option is to continue
their present strategy of offering cosmetics to customers who like the “look” of the products. Martin
wants the company to expand by purchasing the manufacturing plants that produce Shine products.
Cathy wants to add products like skin care and perfume to the product line. Ruth wants to develop the
company by opening restaurants or setting up an amusement park. Bateman – Chapter 05
110.
(p. 105)
Which of the following corporate strategies does Martin advocate?
A. Concentration
B. Vertical integration
C. Related diversification
D. Unrelated diversification
E. Price skimming
Vertical integration is the acquisition or development of new businesses that produce parts or
components of the organization’s product.
AACSB: Reflective Thinking
Bateman – Chapter 05 #110
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
111.
(p. 105)
Which of the following corporate strategies does Cathy advocate?
A. Concentration
B. Vertical integration
C. Related diversification
D. Unrelated diversification
E. Price skimming
Related diversification is a strategy used to add new businesses that produce related products or are
involved in related markets and activities.
AACSB: Reflective Thinking
Bateman – Chapter 05 #111
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
112.
(p. 105)
Which of the following corporate strategies does Ruth advocate?
A. Concentration
B. Vertical integration
C. Related diversification
D. Unrelated diversification
E. Price skimming
Unrelated diversification is a strategy used to add new businesses that produce unrelated products or
are involved in unrelated markets and activities.
AACSB: Reflective Thinking
Bateman – Chapter 05 #112
Blooms: Apply
Learning Objective: 05-03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
Level of Difficulty: 3 Hard
Topic: Strategic Planning Process
Scenario D. Use the information given below to answer the following questions. Healthy Day
Regional Medical Center’s management team has several decisions to make. They are:
1. Determine which patients have to be admitted the next day.
2. Decide whether to purchase the only other medical center in the region.
3. Decide which candidates will meet the requirements for the nursing training program.
4. Determine whether the medical center should diversify to include more advanced (and substantially
more costly) technologies. Bateman – Chapter 05
113.
(p. 110)
Decision 4 is an example of a _____ decision.
A. programmed
B. nonprogrammed
C. trivial
D. certain
E. risk-free
With nonprogrammed decisions, the problem is novel and unstructured, with much uncertainty
regarding cause-and-effect relationships.
AACSB: Reflective Thinking
Bateman – Chapter 05 #113
Blooms: Apply
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 3 Hard
Topic: Managerial Decision Making
114.
(p. 110)
Decision 1 is a _____ decision because it can be solved using rules and procedure.
A. tactical
B. strategic
C. programmed
D. nonprogrammed
E. risky
Programmed decision making typically depends on policies, rules, and definite procedures.
AACSB: Reflective Thinking
Bateman – Chapter 05 #114
Blooms: Apply
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 3 Hard
Topic: Managerial Decision Making
115.
(p. 114)
In the context of decision 3, if the authorities select the first candidate who meets the minimum
requirements without examining every candidate’s file to see if anyone else has better qualifications,
they are adopting the method of:
A. maximization.
B. satisficing.
C. optimizing.
D. constraint.
E. constructive conflict.
Satisficing is choosing the first option that is minimally acceptable or adequate; the choice appears to
meet a targeted goal or criterion.
AACSB: Reflective Thinking
Bateman – Chapter 05 #115
Blooms: Apply
Learning Objective: 05-06 Explain how to make effective decisions as a manager.
Level of Difficulty: 3 Hard
Topic: Managerial Decision Making
5 Summary
Category # of Questions
AACSB: Analytic 91
AACSB: Reflective Thinking 24
Bateman – Chapter 05 119
Blooms: Apply 25
Blooms: Remember 35
Blooms: Understand 55
Learning Objective: 05-01 Summarize the basic steps in any planning process. 18
Learning Objective: 05-02 Discuss how strategic planning should be integrated with tactical and operational planning. 18
Learning Objective: 05-
03 Describe the strategic management process and the importance of SWOT analysis in strategy formulation.
28
Learning Objective: 05-04 Analyze how companies can achieve competitive advantage through business strategy. 4
Learning Objective: 05-05 Identify the keys to effective strategy implementation. 2
Learning Objective: 05-06 Explain how to make effective decisions as a manager. 24
Learning Objective: 05-07 Give examples of some individual barriers that affect rational decision making. 5
Learning Objective: 05-08 Summarize principles for group decision making. 17
Level of Difficulty: 1 Easy 35
Level of Difficulty: 2 Medium 59
Level of Difficulty: 3 Hard 20
Topic: Business Strategy 4
Topic: Fifth, Implement the Strategy 3
Topic: Groups Make Many Decisions 17
Topic: Human Nature Erects Barriers to Good Decisions 5
Topic: Levels of Planning 18
Topic: Managerial Decision Making 24
Topic: Strategic Planning Process 27
Topic: The Planning Process 17

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