MGMT 2nd Canadian Edition – Test Bank

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Chapter 5—Planning and Decision Making

 

MULTIPLE CHOICE

 

  1. In 1997, Royal Dutch/Shell earned $8 billion in profit. In that year, top management decided to strive to increase the company’s profits to $17 billion annually by 2001. Which classical management function would be instrumental in achieving this goal?
a. motivating
b. research and development
c. planning
d. marketing

 

 

ANS:  C

Planning is defined as choosing a goal and developing a strategy to attain that goal.

 

PTS:   1                    REF:   p. 69              OBJ:   1                    BLM:  Higher Order

 

  1. After implementing a plan and giving his sales staff specific sales targets to achieve each month, Muhammad has found they waste far less time and their activities are all geared toward servicing customers, finding new clients, and closing the sale. Which benefit of planning is Muhammad seeing in his sales staff?
a. intensified effort
b. persistence
c. direction
d. creation of task strategies

 

 

ANS:  C

Plans encourage managers and employees to direct efforts toward activities that help accomplish their goals and away from activities that don’t.

 

PTS:   1                    REF:   p. 69              OBJ:   1                    BLM:  Higher Order

 

  1. Eleanor gave her production team a specific objective of increasing production by 3 percent over the previous month and keeping rejects below the standard of 0.05 percent. Eleanor noticed the team having far more drive and energy, and overall more alertness and commitment to their tasks. Which benefit of planning is Eleanor seeing in her production team?
a. intensified effort
b. persistence
c. direction
d. creation of task strategies

 

 

ANS:  A

Research shows that a specific plan will result in harder work.

 

PTS:   1                    REF:   p. 69              OBJ:   1                    BLM:  Higher Order

 

 

  1. According to the textbook, which of the following is a benefit of planning?
a. It encourages people to work harder for extended periods.
b. It encourages people to do others’ jobs in a variety of different ways.
c. It reduces employee turnover.
d. It creates a mechanistic environment.

 

 

ANS:  A

Section 1 of the chapter offers four benefits from planning: (1) intensified work effort, (2) increased persistence toward goals, (3) direction, and (4) creation of task strategies that lead to stronger performance.

 

PTS:   1                    REF:   p. 69              OBJ:   1                    BLM:  Remember

 

  1. According to the textbook, which of the following is a benefit of planning?
a. It improves vertical integration of departments.
b. It encourages people to engage in behaviours directly related to goal accomplishment.
c. It encourages people to remain with the company, rather than go to work for the competition.
d. It eliminates the need for change agents.

 

 

ANS:  B

Section 1 of the chapter offers four benefits from planning: (1) intensified work effort, (2) increased persistence toward goals, (3) direction, and (4) creation of task strategies that lead to stronger performance.

 

PTS:   1                    REF:   p. 69              OBJ:   1                    BLM:  Higher Order

 

  1. Lacy learned about planning in her management course. That night, Lacy set specific goals to achieve in doing her homework. Lacy’s mom happily noticed Lacy complete an extra two hours of homework. Which benefit of planning did Lacy’s mom witness?
a. intensified effort
b. persistence
c. direction
d. creation of task strategies

 

 

ANS:  B

Planning leads to persistence—working hard for long periods.

 

PTS:   1                    REF:   p. 69              OBJ:   1                    BLM:  Higher Order

 

  1. A manufacturing manager is eliminating distractions from the factory so that workers can remain focused on completing their tasks. Which benefit of planning will result from the manager’s actions?
a. intensified effort
b. persistence
c. direction
d. development of task strategies

 

 

ANS:  C                    PTS:   1                    REF:   p. 69               OBJ:   1

BLM:  Higher Order

 

 

  1. Nancy was surprised her department’s sales figures did not meet the goals she set in her plan. On further inspection, she realized the expectation that competition would not reduce their prices did not hold true. Which pitfall in planning is this an example of?
a. assumptions
b. commitment
c. assertion
d. tactics

 

 

ANS:  A

The three pitfalls of planning are as follows: (1) planning may produce a false sense of security; (2) planning may impede change and adaptation; and (3) planners may operate detached from the ground-level reality of the company and its environment. Assumptions may play a role in creating a false sense of security to the degree that planners view them as certain vs. probabilistic.

 

PTS:   1                    REF:   p. 70              OBJ:   1                    BLM:  Higher Order

 

  1. According to the text, which of the following is a pitfall of planning?
a. the acceptance of sacrificing solutions
b. a mistaken sense of certainty based on faulty assumptions
c. the inability of line personnel to accept the long-term benefits of planning
d. a need for expensive employee training before plans can be effectively implemented

 

 

ANS:  B

The three pitfalls of planning are as follows: (1) planning may produce a false sense of security; (2) planning may impede change and adaptation; and (3) planners may operate detached from the ground-level reality of the company and its environment.

 

PTS:   1                    REF:   p. 70              OBJ:   1                    BLM:  Higher Order

 

  1. Mandy continues to put chocolates and toffees in her gift baskets since customers have always raved about them. Sales continue to decline with people being more health conscious, but Mandy feels they will still purchase her baskets for her delicious treats. Which pitfall of planning is this an example of?
a. Planning may produce a false sense of security.
b. Planning may impede change and adaptation.
c. Planners may be detached from the company and its environment.
d. Planning can create laziness in workers.

 

 

ANS:  B

Mandy fails to adapt to the changing needs of her more health conscious customer base.

 

PTS:   1                    REF:   p. 70              OBJ:   1                    BLM:  Higher Order

 

 

  1. Thomas knows that the value of the Canadian dollar against the US dollar can greatly affect his hotel bookings. Thomas and his team have created several alternative plans and they are ready to make adjustments depending on what value the dollar will settle at. Which step in planning is this an example of?
a. maintain flexibility
b. develop effective action plans
c. develop goal commitment
d. track progress toward goal achievement

 

 

ANS:  A

The last step in developing an effective plan is to maintain flexibility.

 

PTS:   1                    REF:   p. 73              OBJ:   2                    BLM:  Higher Order

 

  1. Monica purchased a scale to make sure she reduced the weight of her racing bike by exactly seven grams. Which S.M.A.R.T goal guideline is Monica following?
a. Goals should be specific
b. Goals should be measurable.
c. Goals should be attainable.
d. Goals should be realistic.

 

 

ANS:  B

S.M.A.R.T. goals are measurable. Monica is able to measure the minute change in weight of her bike.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Higher Order

 

  1. Ken’s financial planning business has produced far more sales when he changed his activities from “selling as many RRSPs as possible each month” to selling “$100,000 in RRSPs per month.” Which S.M.A.R.T goal guideline is Ken following?
a. Goals should be specific.
b. Goals should be measurable.
c. Goals should be attainable.
d. Goals should be timely.

 

 

ANS:  A

S.M.A.R.T. goals should be specific. Ken has a precise target in sales to work toward.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Higher Order

 

  1. Patrick started a lawn service company and found that in his neighbourhood, the young families took pleasure from doing their own lawn care. When he began promoting his services to more mature neighbourhoods where older home owners wanted someone else to care for their lawns, Patrick was able to hit his sales targets. Which S.M.A.R.T goal guideline did Patrick follow?
a. Goals should be specific.
b. Goals should be measurable.
c. Goals should be attainable.
d. Goals should be realistic.

 

 

ANS:  D

S.M.A.R.T. goals should be realistic. By targeting a neighbourhood that wanted the services Patrick offered instead of the neighbourhood that did not want his lawn services, Patrick was able to make the sales to meet his targets.

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Higher Order

 

  1. An increase in sales over the previous year seems likely since the economy is better this year than last year. Which aspect of S.M.A.R.T. goals would an increase in sales represent?
a. synergistic
b. measurable
c. attainable
d. realistic

 

 

ANS:  D

S.M.A.R.T. goals should be (1) Specific, (2) Measurable, (3) Attainable, (4) Realistic, and (5) Timely.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Higher Order

 

  1. What is the most popular approach to increasing goal commitment?
a. setting goals together as a team
b. making goals public
c. getting top management’s support
d. assigning realistic and attainable goals

 

 

ANS:  A

Participative goal setting leads to higher goal commitment and is the most popular approach to achieving commitment.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Remember

 

  1. Which of the following is the most popular method for increasing goal commitment?
a. encouraging worker participation in goal setting
b. keeping goals private
c. setting ethical goals
d. using an ombudsperson to set goals

 

 

ANS:  A

Participative goal setting leads to higher goal commitment and is the most popular approach to achieving commitment.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Higher Order

 

  1. Which of the following is a commonly used method for increasing goal commitment?
a. rewarding whistle-blowing
b. making the desired aim public
c. getting union support
d. using the equity theory

 

 

ANS:  B

The text includes the example of 1-800-GOT-JUNK when they publicly committed to a goal of raising revenue.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Remember

 

 

  1. What lists the specific steps, people, resources, and time period for accomplishing a goal?
a. a strategy
b. a proximal goal
c. a distal goal
d. an action plan

 

 

ANS:  D                    PTS:   1                    REF:   p. 71               OBJ:   2

BLM:  Remember

 

  1. Which of the following is a favoured approach for tracking progress toward goal achievement?
a. setting response and stimulus goals
b. gathering and providing performance feedback
c. using operant and classical conditioning
d. providing mechanistic and dynamic feedback

 

 

ANS:  B

Providing feedback is identified as an approach to tracking progress toward goal attainment.

 

PTS:   1                    REF:   p. 72              OBJ:   2                    BLM:  Remember

 

  1. A manager had a goal to reduce the expenses incurred by the sales force. He examined the weekly expense sheets prepared by the individual salespeople and met with those that needed to further reduce their expenses. Which accepted method for tracking progress toward goal achievement was he using?
a. setting realistic and attainable goals
b. gathering and providing performance feedback
c. developing concrete action plans
d. making sure goals are measurable

 

 

ANS:  B

Providing feedback is identified as an approach to tracking progress toward goal attainment.

 

PTS:   1                    REF:   p. 72              OBJ:   2                    BLM:  Higher Order

 

  1. A manufacturer of suntan lotion sets a goal to achieve a 3 percent increase in sales over the next three months. In relation to the time frame set to achieve it, what type of goal is this?
a. a strategic goal
b. an operational goal
c. a distal goal
d. a proximal goal

 

 

ANS:  D

Proximal goals are short-term goals, or subgoals, while distal goals are long-term or primary goals.

 

PTS:   1                    REF:   p. 72              OBJ:   2                    BLM:  Higher Order

 

 

  1. Which of the following can help organizations maintain flexibility as they plan?
a. strategic planning
b. options-based planning
c. assumptions-based planning
d. change agent planning

 

 

ANS:  B

Options-based planning, a major approach to planning, provides greater strategic flexibility.

 

PTS:   1                    REF:   p. 73              OBJ:   2                    BLM:  Remember

 

  1. Which type of planning keeps choices open by making small, simultaneous investments in many alternative plans?
a. learning-based
b. options-based
c. conditioned
d. functional

 

 

ANS:  B                    PTS:   1                    REF:   p. 73               OBJ:   2

BLM:  Remember

 

  1. Which type of planning leaves commitments open by maintaining slack resources?
a. options-based planning
b. learning-based planning
c. traditional planning
d. operant planning

 

 

ANS:  A                    PTS:   1                    REF:   p. 73               OBJ:   2

BLM:  Remember

 

  1. What must an organization have for options-based planning to work?
a. slack resources
b. use of cross-functional teams
c. broad spans of management
d. tall organizational structures

 

 

ANS:  A

Slack resources are defined as a cushion of extra resources that can be used with options-based planning to adapt to unanticipated changes, problems, or opportunities.

 

PTS:   1                    REF:   p. 73              OBJ:   2                    BLM:  Remember

 

  1. What levels of an organization must have goals and action plans that support the goals and action plans at the top of the organization for planning to work best?
a. bottom and staff levels
b. top and middle levels
c. bottom and middle levels
d. group levels

 

 

ANS:  C                    PTS:   1                    REF:   p. 73               OBJ:   3

BLM:  Remember

 

  1. Top management is responsible for developing plans that make clear how the company will serve customers and position itself against competitors in the next two to five years. Which term is usually associated with these types of long-term plans?
a. standing plans
b. tactical plans
c. operational plans
d. strategic plans

 

 

ANS:  D

Strategic plans, typically developed by top management, are defined as such.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Remember

 

  1. Who is responsible for developing strategic plans that make clear how the company will serve customers and position itself against competitors in the next two to five years?
a. an action team
b. middle management
c. planning staff
d. top management

 

 

ANS:  D                    PTS:   1                    REF:   p. 74               OBJ:   3

BLM:  Remember

 

  1. What expresses a company’s purpose and destination that it hopes to reach?
a. vision statement
b. action plan
c. strategy
d. mission statement

 

 

ANS:  A

Definition of vision statement.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Remember

 

  1. Anthony writes and frames a statement to give clear direction to his staff for what he wants his company to achieve. The statement says, “To provide the highest level of student career direction in Canada.” What kind of statement did Anthony write?
a. the strategic statement
b. the mission statement
c. the vision statement
d. the value statement

 

 

ANS:  C

Definition of a vision statement.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Higher Order

 

 

  1. From what does a mission directly flow?
a. from tactical plans
b. from contingency plans
c. from operational plans
d. from a vision

 

 

ANS:  D                    PTS:   1                    REF:   p. 74               OBJ:   3

BLM:  Remember

 

  1. Disney is not in the movie and theme park business; it wants to create fun and fantasy for its customers. Which of the following is described by this statement?
a. transformational mission
b. vision
c. strategic mission
d. target

 

 

ANS:  B

This statement describes Disney’s enduring purpose.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Higher Order

 

  1. Richard writes a statement that he plans to frame and hang on the wall to motivate his staff. The statement says, “To rekindle optimism and ethical behaviour in our youth, one student at a time”. What kind of statement did Richard write?
a. strategic statement
b. mission statement
c. vision statement
d. value statement

 

 

ANS:  B

A mission is a statement of a company’s overall goal that unifies company-wide efforts toward its vision, stretches and challenges the organization, and possesses a finish line and a time frame.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Higher Order

 

  1. Which statement provides a broad declaration of an organization’s purpose that distinguishes it from the others of a similar type?
a. strategic statement
b. mission statement
c. vision statement
d. value statement

 

 

ANS:  B

A mission is a statement of a company’s overall goal that unifies company-wide efforts toward its vision, stretches and challenges the organization, and possesses a finish line and a time frame.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Remember

 

 

  1. A statement found at a certified organic food marketer’s website reads, “At Seeds of Change, we’re committed to making delicious foods that are healthy for you as well as the planet.” This statement will not change over time. What type of statement is it?
a. vision
b. mission
c. statement of value
d. discretionary responsibility

 

 

ANS:  A

This statement presents Seeds of Change’s enduring purpose, or vision.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Higher Order

 

  1. Which of the following within a company does NOT change over time?
a. the mission
b. the vision
c. the strategy
d. the action plan

 

 

ANS:  B

One of the chief characteristics of a vision is that it is enduring.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Remember

 

  1. Most people who have watched the television show Star Trek are familiar with this statement: “To explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.” What is this statement an example of?
a. a plan of action
b. a tactical plan
c. a mission
d. a strategy

 

 

ANS:  C

A mission is a statement of a company’s overall goal that unifies company-wide efforts toward its vision, stretches and challenges the organization, and possesses a finish line and a time frame.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Higher Order

 

  1. An Australian manufacturer of skis and snowboards wants to increase awareness of its brand in the Canadian market. A plan to accomplish this objective might be to host a series of skiing and snowboarding competitions in the Canadian Rockies to raise brand awareness. What type of plan is this?
a. contingency
b. single-use
c. visionary
d. tactical

 

 

ANS:  D

Tactical plans are plans created and implemented by middle managers. They specify how the company will use resources, budgets, and people over the next six months to two years to accomplish specific goals within its mission statement. Here, the Australian manufacturer is using this tactical plan to increase brand awareness in Canada.

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Higher Order

 

  1. A department store is experiencing greater than usual shrinkage, and management wants it stopped. Middle management decided to hire a security company to study the problem and develop the best plan for dealing with it. What type of plan has middle management adopted?
a. contingency
b. strategic
c. operational
d. tactical

 

 

ANS:  D

Tactical plans are plans created and implemented by middle managers. They specify how the company will use resources, budgets, and people over the next six months to two years to accomplish specific goals within its mission statement.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Higher Order

 

  1. What type of plan specifies how a company will use resources, budgets, and people to accomplish specific goals within its mission?
a. strategic
b. tactical
c. operational
d. single-use

 

 

ANS:  B                    PTS:   1                    REF:   p. 74               OBJ:   3

BLM:  Remember

 

  1. Who is responsible for creating tactical plans?
a. team leaders
b. lower-level managers
c. middle managers
d. top managers

 

 

ANS:  C                    PTS:   1                    REF:   p. 74               OBJ:   3

BLM:  Remember

 

  1. What type of plan would be used to create the festivities to celebrate the 100-year anniversary of a manufacturer?
a. single-use plan
b. contingency plan
c. scenario plan
d. standing plan

 

 

ANS:  A

Single-use plans are defined as plans that cover unique, one-time events—in this case, the 100-year anniversary.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Higher Order

 

 

  1. What type of plan is often implemented with a management by objectives (MBO) technique?
a. single-use
b. standing
c. operational
d. tactical

 

 

ANS:  D

MBO is defined as a four-step process in which managers and employees discuss and select goals, develop tactical plans, and meet regularly to review progress toward goal accomplishment. MBO focuses on shorter-term tactical planning.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. What is the third step in the management by objectives (MBO) process?
a. jointly discuss possible goals
b. jointly select goals that are challenging
c. jointly develop tactical plans
d. jointly review progress toward goal accomplishment

 

 

ANS:  C

MBO is defined as a four-step process in which managers and employees discuss and select goals, develop tactical plans, and meet regularly to review progress toward goal accomplishment.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. Which of the following is achieved effectively with the management by objectives (MBO) technique?
a. tactical planning
b. development of policies and procedures
c. broadening of the span of transformation
d. problem framing

 

 

ANS:  A

MBO is defined as a four-step process in which managers and employees discuss and select goals, develop tactical plans, and meet regularly to review progress toward goal accomplishment. MBO is focused on tactical planning.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Higher Order

 

  1. Who is primarily responsible for developing operational plans?
a. lower-level managers
b. middle managers
c. top managers
d. staff advisers

 

 

ANS:  A                    PTS:   1                    REF:   p. 75               OBJ:   3

BLM:  Remember

 

 

  1. Which type of plan directs the behaviour, efforts, and priorities of employees for periods ranging from one month to six months?
a. strategic
b. tactical
c. operational
d. standing

 

 

ANS:  C

Operational plans are defined as day-to-day plans, developed and implemented by lower-level managers, for producing or delivering the organization’s products and services over a 30-day to six-month period.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. What type of plans are single-use plans, standing plans, and budgets?
a. strategic
b. tactical
c. operational
d. MBO

 

 

ANS:  C                    PTS:   1                    REF:   p. 75               OBJ:   3

BLM:  Remember

 

  1. Which of the following is a type of operational plan?
a. single-use plans
b. contingency plans
c. short-term strategies
d. mission modifications

 

 

ANS:  A

The three kinds of operational plans are single-use plans, standing plans, and budgets.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. Which type of operational plan saves managers time because it is created once and then used repeatedly to handle frequently recurring events?
a. standing plan
b. budget plan
c. multiple-use plan
d. options-based plan

 

 

ANS:  A

Standing plans are used repeatedly to handle frequently recurring events.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

 

  1. In case of a fire, most organizations have a series of actions that must take place, beginning with notifying the fire department and including evacuating buildings. What kind of standing plan is this?
a. rules and regulations
b. procedures
c. policies
d. organizational norms

 

 

ANS:  B

Procedures are defined as standing plans that indicate the specific steps that should be taken in response to a particular event. Here, the company has established procedures to be used in the event of a fire.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Higher Order

 

  1. Which of the following are types of standing plans?
a. policies and procedures
b. targeted plans
c. long-term tactical strategies
d. transformational plans

 

 

ANS:  A                    PTS:   1                    REF:   p. 75               OBJ:   3

BLM:  Remember

 

  1. Which type of standing plan indicates the specific steps that should be taken in response to a particular event?
a. policies
b. procedures
c. actionable plans
d. single-use plans

 

 

ANS:  B

Definition of procedures.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. What standing plan indicates the general course of action that should be taken in response to a particular event or situation?
a. policy
b. procedure
c. rule
d. regulation

 

 

ANS:  A

Definition of a policy.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

 

  1. Which of the following are the most specific type of standing plan?
a. policies
b. procedures
c. rules and regulations
d. forecasts

 

 

ANS:  C

Rules and regulations are defined as standing plans that describe how a particular action should be performed, or what must happen or not happen in response to a particular event. Rules and regulations are more specific than procedures because they precisely define what must happen (and not happen) in response to a particular event.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Higher Order

 

  1. What type of planning is a budget?
a. strategic
b. tactical
c. operational
d. actionable

 

 

ANS:  C                    PTS:   1                    REF:   p. 75               OBJ:   3

BLM:  Remember

 

  1. New employees were instructed to never wear loose-fitting clothes when working around the canning machine. What kind of standing plan is this?
a. rules and regulations
b. procedures
c. policies
d. organizational norms

 

 

ANS:  A

This is a precise statement of the type of clothing that should not be worn in the workplace—a rule.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. What is the term for the process of choosing a solution from available alternatives?
a. decision making
b. problem identification
c. multivariable selection
d. problem solving

 

 

ANS:  A                    PTS:   1                    REF:   p. 76               OBJ:   3

BLM:  Remember

 

  1. What is the term for a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions?
a. problem identification
b. rational decision making
c. benchmarking
d. multivariable selection

 

 

ANS:  B                    PTS:   1                    REF:   p. 76               OBJ:   3

BLM:  Remember

 

  1. Neither Chile nor Peru has a mass-market café culture, but that fact has not stopped Starbucks from trying to determine how best to expand into those markets. What process is Starbucks engaging in?
a. intuitive conditioning
b. benchmarking
c. decision making
d. organizational design

 

 

ANS:  C

Decision making is the process of choosing a solution from available alternatives.

 

PTS:   1                    REF:   p. 76              OBJ:   3                    BLM:  Higher Order

 

  1. Neither Chile nor Peru has a mass-market café culture, but that fact has not stopped Starbucks from trying to determine what can be done to make its coffee houses successful in those markets. By recognizing that people in these two South American countries do not drink coffee in the quantity that people do in North America, Starbucks has begun a process involving problem identification. What type of process is this?
a. rational decision making
b. trend analysis
c. sacrificing
d. selection of optimal solutions

 

 

ANS:  A

The first step in rational decision making is problem identification.

 

PTS:   1                    REF:   p. 76              OBJ:   4                    BLM:  Higher Order

 

  1. The European Union encourages companies to abandon national boundaries and offer the same products to all of the member countries. Allianz, Germany’s largest insurance group, is considering converting from a German company to a European company. If it makes this decision rationally, what will it do first?
a. It will create decision criteria based on national GNPs.
b. It will identify problems arising from tax and regulatory issues.
c. It will decide whether to expand to one nation at a time.
d. It will create a committee to make the final decision.

 

 

ANS:  B

Problem identification is the first step in rational decision making.

 

PTS:   1                    REF:   p. 76              OBJ:   4                    BLM:  Higher Order

 

  1. What is said to exist when there is a gap between a desired state—what managers want—and an existing state—the situation that the managers are facing?
a. a service gap
b. a benchmark
c. a condition of uncertainty
d. a problem

 

 

ANS:  D                    PTS:   1                    REF:   p. 76               OBJ:   4

BLM:  Higher Order

 

 

  1. Which of the following is one of the six steps in the rational decision-making process?
a. choose a minimally acceptable alternative solution
b. evaluate the effectiveness of the decision
c. weight the criteria
d. introduce the decision to those who will be affected by it

 

 

ANS:  C                    PTS:   1                    REF:   p. 76               OBJ:   4

BLM:  Remember

 

  1. In the 1960s, Coca-Cola executives in Atlanta learned that a bottler in the Colombian jungle was bottling pirated Coke in dumped bottles. The soft-drink company was at that time expanding globally and building its reputation on exacting production standards. Which of the following does the unauthorized bottler best exemplify?
a. a standard of malfeasance
b. a problem
c. a benchmark
d. a keystone issue

 

 

ANS:  B

A problem exists when there is a gap between a desired state—what managers want—and an existing state, or the situation the managers are facing.

 

PTS:   1                    REF:   p. 76              OBJ:   4                    BLM:  Higher Order

 

  1. In which process is each decision compared directly to every other criterion?
a. absolute comparisons
b. relative comparisons
c. minimum comparative threshold
d. comparative ranking scales

 

 

ANS:  B                    PTS:   1                    REF:   p. 77               OBJ:   4

BLM:  Higher Order

 

  1. In the 1960s, Coca-Cola executives in Atlanta learned that a bottler in the Colombian jungle was bottling pirated Coke in dumped bottles. Since the soft-drink company was at that time expanding globally and building its reputation on exacting production standards, Coca-Cola decided it had to bring some sort of legal action against the unauthorized bottler, ignore it, or buy it. In which stage of the rational decision-making process would this decision have been made?
a. problem definition
b. criteria weighting
c. generation of alternative courses of action
d. identification of decision criteria

 

 

ANS:  C

Coca-Cola is looking at possible courses of action that would solve the problem.

 

PTS:   1                    REF:   p. 76–77         OBJ:   4                    BLM:  Higher Order

 

 

  1. As a company that manufactures janitorial cleaning supplies tries to develop more environmentally friendly products that can clean as well as its current ones, the company’s manager must select among alternatives derived from oranges, parsley, lemon, or a combination of these ingredients. Which step in the rational decision-making model is this?
a. generate alternative courses of action
b. evaluate each alternative
c. compute the optimal decision
d. implement the optimal alternative

 

 

ANS:  B

The company must evaluate each alternative ingredient.

 

PTS:   1                    REF:   p. 76              OBJ:   4                    BLM:  Higher Order

 

  1. When Coca-Cola discovered it had an unauthorized bottler selling Coke in the Colombian jungle, it used the rational decision-making process to find a solution. The managers at Coca-Cola evaluated the possible courses of action. According to the text, what would Coca-Cola have likely found about this stage of the decision-making process?
a. that this stage was the least expensive of all the stages
b. that this stage was the most time consuming of all the stages
c. that this stage was the last stage in the process for Coca-Cola
d. that this stage required Coca-Cola to use complex mathematical models

 

 

ANS:  B                    PTS:   1                    REF:   p. 76–77         OBJ:   4

BLM:  Higher Order

 

  1. Joyce wishes to reduce flaws produced by her night shift. At each stage of production she has her production supervisor measure 20 samples to ensure they are each within 0.005 mm of the required size. What type of comparison is Joyce having her supervisor conduct?
a. relative
b. specific
c. absolute
d. attainable

 

 

ANS:  C

In absolute comparisons each criterion is compared to a standard.

 

PTS:   1                    REF:   p. 77              OBJ:   4                    BLM:  Higher Order

 

  1. In which type of comparison is each criterion compared directly to other criterion?
a. relative
b. specific
c. absolute
d. attainable

 

 

ANS:  A                    PTS:   1                    REF:   p. 77               OBJ:   4

BLM:  Remember

 

 

  1. Where does groupthink often occur?
a. in newly formed groups whose members were arbitrarily selected and who are assigned to make programmed decisions
b. in groups in which members have dissimilar backgrounds
c. in standing committees whose members are under no pressure to agree
d. in highly cohesive groups, where there is much pressure for members to agree

 

 

ANS:  D                    PTS:   1                    REF:   p. 80               OBJ:   5

BLM:  Remember

 

  1. Which step in the decision-making process can be done better by groups than by individuals?
a. defining the problem and generating alternatives
b. creating cohesive solutions to organizational problems as a whole
c. creating weighted alternatives and coping with bounded rationality
d. dealing with the problems associated with bounded rationality

 

 

ANS:  A                    PTS:   1                    REF:   p. 80               OBJ:   5

BLM:  Remember

 

  1. What term is usually associated with the emotional reaction that can occur when disagreements become personal rather than professional?
a. a-type conflict
b. c-type conflict
c. emotive empowerment
d. organizational disharmony

 

 

ANS:  A                    PTS:   1                    REF:   p. 81               OBJ:   5

BLM:  Remember

 

  1. In which approach to decision making is an individual or a subgroup assigned the role of a critic?
a. dialectical inquiry
b. groupthink
c. devil’s advocacy
d. Delphi technique

 

 

ANS:  C                    PTS:   1                    REF:   p. 81               OBJ:   5

BLM:  Remember

 

  1. What have studies of the proper use of the devil’s advocacy and dialectical inquiry approaches shown?
a. The approaches lead to less a-type conflict.
b. The approaches lead to improved decision mentoring.
c. The approaches lead to greater acceptance of decisions once they have been made.
d. The approaches introduce c-type conflict into the decision-making process.

 

 

ANS:  D                    PTS:   1                    REF:   p. 81               OBJ:   5

BLM:  Remember

 

 

  1. In which decision-making method does a panel of experts respond to questions and to one another until an agreement is reached on how a specific issue should be handled?
a. dialectical inquiry technique
b. nominal group technique
c. Delphi technique
d. electronic brainstorming technique

 

 

ANS:  C                    PTS:   1                    REF:   p. 82               OBJ:   5

BLM:  Remember

 

  1. How does the nominal group technique improve group decision making?
a. The technique requires the selection of co-leaders to prevent member dominance.
b. The technique provides predetermined group norms.
c. The technique eliminates group cohesiveness.
d. The technique decreases a-type conflict.

 

 

ANS:  D                    PTS:   1                    REF:   p. 81               OBJ:   5

BLM:  Remember

 

  1. Which statement presents a rule for effective brainstorming?
a. Limit ideas to conserve time.
b. Select an open-minded group leader.
c. Give certain people in the group the most freedom to generate ideas.
d. Allow criticism.

 

 

ANS:  B                    PTS:   1                    REF:   p. 82               OBJ:   5

BLM:  Remember

 

  1. Which disadvantage of face-to-face brainstorming can be overcome by electronic brainstorming?
a. assimilation blocking
b. production blocking
c. delegation errors
d. group norm evaluation

 

 

ANS:  B

One example of production blocking is having to wait your turn to share an idea.

 

PTS:   1                    REF:   p. 82              OBJ:   5                    BLM:  Remember

 

 

Narrative 5-1

Krispy Kreme is a relatively small donut seller. It has only 295 stores, while Dunkin’ Donuts has more than 3,600 outlets in the United States and Canada. In spite of its size, Krispy Kreme has been described by many as “the hottest brand in America.” The company’s success is due in large part to the long-term vision of its top management and its establishment and achievement of S.M.A.R.T. goals. Founder Vernon Rudolph ran the company until 1973, when he died without naming a successor. This matter caused the company problems for the next decade.

 

  1. Refer to the Narrative 5-1.   How does Krispy Kreme benefit from planning?
a. Planning makes persistence unnecessary.
b. Planning allows managers to direct their employees to “do their best.”
c. Planning gives direction to managers and employees.
d. Planning eliminates the need for task strategies.

 

 

ANS:  C

Section 1 of the chapter offers four benefits from planning: (1) intensified work effort; (2) increased persistence toward goals; (3) direction; and (4) creation of task strategies that lead to stronger performance.

 

PTS:   1                    REF:   p. 69              OBJ:   1                    BLM:  Higher Order

 

  1. Refer to the Narrative 5-1.  Krispy Kreme has a goal to open six new stores by 2012 in British Columbia, where it already has a well-established reputation. Why is this an example of a S.M.A.R.T. goal?
a. It’s specific, marketable, achievable, response driven, and temporal.
b. It’s specific, measurable, attainable, realistic, and timely.
c. It’s service oriented, manageable, achievable, realistic, and time oriented.
d. It’s standardized, measurable, actionable, response driven, and temporal.

 

 

ANS:  B

Characteristics of S.M.A.R.T. goals.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Higher Order

 

  1. Refer to the Narrative 5-1.  Krispy Kreme has a goal to open six new stores in the next six months in British Columbia, where it already has a well-established reputation. What type of goal is this?
a. distal
b. temporal
c. adjacent
d. proximal

 

 

ANS:  D

Proximal goals are short-term.

 

PTS:   1                    REF:   p. 72              OBJ:   2                    BLM:  Higher Order

 

 

  1. Refer to the Narrative 5-1. Krispy Kreme has a goal to never reveal its secret recipe to anyone outside the company. What type of goal is this?
a. distal
b. temporal
c. adjacent
d. proximal

 

 

ANS:  A

Distal goals are long-term and primary goals.

 

PTS:   1                    REF:   p. 72              OBJ:   2                    BLM:  Higher Order

 

  1. Refer to the Narrative 5-1. Which of the following would be an example of an operational plan for Krispy Kreme?
a. to open a new plant for making donut mix outside the United States
b. to change the colour of the “walking KK” logo of the company
c. to turn on the HOT DONUTS NOW sign whenever fresh donuts come off the line
d. to hire a new human relations vice-president to oversee all of the company’s operations

 

 

ANS:  C

Operational plans are day-to-day type decisions such as this advertising move.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Higher Order

 

Narrative 5-2

Sales of Yuengling (pronounced Ying-Ling) beer are up 225 percent in the last six years. Yuengling’s Eagle Brewery, carved into Sharp Mountain in 1831 to maintain a perfect 10 degrees Celsius for storing beer, is the oldest brewery in the United States. The aging plant can’t keep up with the growing demand for its beer. So far, thanks to hard work, dedicated workers, and some luck, production capacity doubled from 250,000 to 500,000 barrels per year, but pushing for more will destroy the old equipment.

 

With sales up so dramatically, however, the company faces a problem. It runs the risk of losing its customer base due to no product on the shelves. Shortages are so bad that the advertising budget has been cut from $3 to $2 a barrel. Ironically, with production stuck at 500,000 barrels a year, Yuengling beer has become harder to find as it has become more popular. Rather than sacrifice sales in its home market of Pennsylvania, its largest market share (10 percent), the company has temporarily stopped shipping beer to out-of-state distributors. Since that strategy won’t help Yuengling grow outside Pennsylvania, the question remains: How does the company permanently increase beer production to meet the growing demand?

 

Five options have been identified. (1) Add new storage and finishing tanks to Eagle Brewery to increase production capacity by 10 percent to 550,000 barrels a year. Though doable, this solution is only short term. (2) Outsource production to another company. Doing this would be more cost effective, but would the product taste different? For a “specialty” beer, this could be a substantial risk. Outsourcing is affordable, and Yuengling has done it before. (3) Buy another brewery, but those available are expensive and require significant upgrades. For example, it would cost $13 million to buy and $5 million to fix Stroh’s 1.5 million-barrel brewery in Tampa, Florida, which is far from Yuengling’s north-eastern markets. (4) Build a new factory capable of producing 1.2 million barrels per year. Doing this would cost $50 million and take three years. (5) “Do nothing.” The company is already very profitable, has low overhead costs, and is efficient. In other words, by “doing nothing” the company could still make a lot of money without incurring the risks inherent in the other options. Risk is a real consideration because Yuengling was losing money just a few years ago.

 

  1. Refer to the Narrative 5-2.  What should Yuengling have done in the first stage of the planning process?
a. It should have developed an effective action plan that would satisfy all of its customers.
b. It should have determined its problem was demand for its beer exceeding its ability to supply it.
c. It should have developed several alternative methods for supplying its beer to customers.
d. It should have established a budget.

 

 

ANS:  B                    PTS:   1                    REF:   p. 76               OBJ:   1

BLM:  Higher Order

 

  1. Refer to the Narrative 5-2.  Yuengling gets a loan for a new $50 million brewery. If it decides to pay off its loan within five years, which type of goal will it have adopted?
a. generational
b. learning-based
c. distal
d. proximal

 

 

ANS:  D                    PTS:   1                    REF:   p. 72               OBJ:   2

BLM:  Higher Order

 

  1. Refer to the Narrative 5-2.  What type of planning would allow Yuengling to purchase the Stroh’s brewery?
a. resource-based
b. learning-based
c. options-based
d. generational

 

 

ANS:  C                    PTS:   1                    REF:   p. 73               OBJ:   1

BLM:  Higher Order

 

  1. Refer to the Narrative 5-2.  Which statement sums up the primary problem at Yuengling?
a. Its customers are not brand loyal.
b. Its advertising campaigns are ineffective.
c. Demand for its beer exceeds supply.
d. Supply of its beer exceeds demand.

 

 

ANS:  C                    PTS:   1                    REF:   p. 76               OBJ:   3

BLM:  Higher Order

 

  1. Refer to the Narrative 5-2.  What decision criterion did Yuengling use to develop alternative courses of action to solve its problem?
a. Minimize risk.
b. Minimize environmental uncertainty.
c. Create environmental complexity.
d. Ignore resource scarcity.

 

 

ANS:  A                    PTS:   1                    REF:   p. 76               OBJ:   3

BLM:  Higher Order

 

TRUE/FALSE

 

  1. Creating and executing a plan is one of the most important tasks a manager has.

 

ANS:  T                    PTS:   1                    REF:   p. 69               OBJ:   1

BLM:  Higher Order

 

  1. On average, companies with plans have larger profits and grow much faster than companies that don’t.

 

ANS:  T                    PTS:   1                    REF:   p. 69               OBJ:   1

BLM:  Remember

 

  1. Planning can impede change, create a false sense of certainty, and lead to the detachment of planners.

 

ANS:  T                    PTS:   1                    REF:   p. 70               OBJ:   1

BLM:  Remember

 

  1. Planning is one of the best ways to improve organizational and individual performance.

 

ANS:  T                    PTS:   1                    REF:   p. 69               OBJ:   1

BLM:  Remember

 

  1. Planning is a three-step process consisting of first, setting goals; next, developing effective action plans; and finally, tracking progress toward goal achievement.

 

ANS:  F

Planning consists of five steps: (a) setting goals, (b) developing commitment to the goals, (c) developing effective action plans, (d) tracking progress toward goal achievement, and (e) maintaining flexibility in planning.

 

PTS:   1                    REF:   p. 70              OBJ:   1                    BLM:  Remember

 

  1. S.M.A.R.T. goals are Specific, Meaningful, Active, Reachable, and Timely.

 

ANS:  F

S.M.A.R.T. goals are Specific, Measurable, Attainable, Realistic, and Timely.

 

PTS:   1                    REF:   p. 71              OBJ:   1                    BLM:  Remember

 

 

  1. Encouraging worker participation in goal setting, making goals public, and getting top management’s support are all recommended ways to increase goal commitment.

 

ANS:  T                    PTS:   1                    REF:   p. 71               OBJ:   2

BLM:  Remember

 

  1. Both proximal and distal goals are used to provide additional motivation and rewards for employees.

 

ANS:  T                    PTS:   1                    REF:   p. 72               OBJ:   2

BLM:  Remember

 

  1. For planning to be effective, workers need a specific, challenging goal as well as regular feedback to track their progress.

 

ANS:  T                    PTS:   1                    REF:   p. 72               OBJ:   2

BLM:  Remember

 

  1. An approach to maintaining flexibility in organizations while they plan is change-based planning.

 

ANS:  F

The approach is options-based planning to maintain flexibility.

 

PTS:   1                    REF:   p. 73              OBJ:   2                    BLM:  Remember

 

  1. Planning works best when the goals and action plans at the bottom and middle of the organization support the goals and action plans at the top of the organization.

 

ANS:  T                    PTS:   1                    REF:   p. 73               OBJ:   3

BLM:  Remember

 

  1. Developing a vision and mission statement is the sole responsibility of middle management.

 

ANS:  F

Developing a vision and mission statement is the responsibility of top managers.

 

PTS:   1                    REF:   p. 74; Exhibit 5.3                             OBJ:   3

BLM:  Remember

 

  1. A mission is a statement of a company’s purpose or reason for existing.

 

ANS:  F

This definition applies to a vision. The mission, which flows from the vision, is a more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possesses a finish line and a time frame.

 

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Remember

 

  1. The organization’s vision must change regularly to adapt to changes in the environment over time.

 

ANS:  F

One defining characteristic of an organizational vision is that it should be enduring.

PTS:   1                    REF:   p. 74              OBJ:   3                    BLM:  Remember

 

  1. Tactical plans specify how a company will use resources, budgets, and people to accomplish specific goals within its mission.

 

ANS:  T                    PTS:   1                    REF:   p. 74               OBJ:   3

BLM:  Remember

 

  1. Tactical plans and objectives are used to direct behaviour, efforts, and attention over the next six months to two years.

 

ANS:  T                    PTS:   1                    REF:   p. 74               OBJ:   3

BLM:  Remember

 

  1. Management by objectives is a two-step process in which managers and their employees discuss possible goals and then meet regularly to review progress toward accomplishment of those goals.

 

ANS:  F

Management by objectives is a four-step process in which managers and their employees

(a) discuss possible goals, (b) collaboratively select goals that are challenging, attainable, and consistent with the company’s overall goals, (c) jointly develop tactical plans that lead to accomplishment of tactical goals and objectives, and (d) meet regularly to review progress toward accomplishment of those goals.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. One disadvantage of MBO is that managers are frequently unable to give employees feedback on their performance.

 

ANS:  F

Managers are quite able to do this; they are just reluctant to do so.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. The three kinds of operational plans are single-use plans, standing plans, and budgets.

 

ANS:  T                    PTS:   1                    REF:   p. 75               OBJ:   3

BLM:  Remember

 

  1. Standing plans deal with unique, one-time-only events.

 

ANS:  F

This definition applies to single-use plans. Standing plans are created once and then used repeatedly to handle frequently recurring events.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. The three kinds of standing plans are policies, procedures, and rules and regulations.

 

ANS:  T                    PTS:   1                    REF:   p. 75               OBJ:   3

BLM:  Remember

 

 

  1. Budgeting is a critical management task, one that most managers could do better.

 

ANS:  T                    PTS:   1                    REF:   p. 75               OBJ:   3

BLM:  Remember

 

  1. All decision making is rational.

 

ANS:  F

Rational decision making is a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions. Not all decision making is this logical.

 

PTS:   1                    REF:   p. 76              OBJ:   4                    BLM:  Remember

 

  1. The term decision making is used to refer to the process of choosing a solution from available alternatives.

 

ANS:  T                    PTS:   1                    REF:   p. 76               OBJ:   4

BLM:  Remember

 

  1. The process of rational decision making emphasizes the use of systematic procedures to arrive at optimal solutions; the process of decision making does not.

 

ANS:  T                    PTS:   1                    REF:   p. 76               OBJ:   4

BLM:  Higher Order

 

  1. The six steps in the rational decision-making process are as follows:

1) Frame the problem.

2) Identify decision criteria.

3) Weight the criteria.

4) Generate alternative courses of action.

5) Evaluate each alternative.

6) Compute the optimal decision.

 

ANS:  F

The six steps in the rational decision-making process are as follows:

1. define the problem,
2. identify decision criteria,
3. weight the criteria,
4. generate alternative courses of action,
5. evaluate each alternative, and
6. compute the optimal decision.

 

 

PTS:   1                    REF:   p. 76              OBJ:   4                    BLM:  Remember

 

  1. Both absolute comparisons and relative comparisons are methods for identifying decision criteria.

 

ANS:  F

These are methods for weighting the criteria, not identifying them.

 

PTS:   1                    REF:   p. 74              OBJ:   4                    BLM:  Remember

 

  1. Management’s goal of rational decision making is to choose optimal solutions that provide maximum benefit to their organizations.

 

ANS:  T                    PTS:   1                    REF:   p. 74               OBJ:   4

BLM:  Remember

 

  1. Different managers will rank criteria differently.

 

ANS:  T                    PTS:   1                    REF:   p. 76               OBJ:   4

BLM:  Remember

 

  1. Groupthink is more likely to occur in a highly cohesive group that is insulated from others and has no established procedure for systematically defining problems and exploring alternatives.

 

ANS:  T                    PTS:   1                    REF:   p. 80               OBJ:   5

BLM:  Remember

 

SHORT ANSWER

 

  1. What is planning? What are its benefits?

 

ANS:

Planning is choosing a goal and developing a method to achieve that goal. Planning is one of the best ways to improve organizational and individual performance. It encourages people to work harder (intensified effort), to work hard for extended periods (persistence), to engage in behaviours directly related to goal accomplishment (directed behaviour), and to think of better ways to do their jobs (task strategies). But most important, companies that plan have larger profits and faster growth than companies that don’t plan.

 

PTS:   1                    REF:   p. 69              OBJ:   1                    BLM:  Remember

 

  1. Briefly describe the benefits and pitfalls of planning.

 

ANS:

Planning refers to choosing a goal and developing a method or strategy to achieve that goal. Planning has numerous benefits. It is one of the best ways to improve both organizational and individual performance. It encourages people to work harder (intensified effort), to work hard for extended periods (persistence), to engage in behaviours directly related to goal accomplishment (directed behaviour), and to think of better ways to do their jobs (task strategies). But most important, companies that plan have larger profits and faster growth than companies that don’t plan. Planning, however, also has three potential pitfalls. Companies that are overly committed to their plans may be slow to adapt to changes in their environment. Planning is based on assumptions about the future, and when those assumptions are wrong, plans are likely to fail. Finally, planning can fail when planners are detached from the implementation of plans.

 

PTS:   1                    REF:   p. 69–70         OBJ:   1                    BLM:  Remember

 

 

  1. List the steps in effective planning.

 

ANS:

Planning consists of five steps: (a) setting goals, (b) developing commitment to the goals, (c) developing effective action plans, (d) tracking progress toward goal achievement, and (e) maintaining flexibility in planning.

 

PTS:   1                    REF:   p. 70              OBJ:   1                    BLM:  Remember

 

  1. Identify and explain the purpose of the S.M.A.R.T. guidelines.

 

ANS:

One way of writing effective goals for yourself, your job, or your company is to use the S.M.A.R.T. guidelines. S.M.A.R.T. goals are Specific, Measurable, Attainable, Realistic, and Timely. The purpose of the S.M.A.R.T. guidelines is to give managers an easy-to-remember acronym that can help them set effective goals during their stressful and busy daily activities.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Remember

 

  1. Identify three ways of increasing goal commitment. Which one is most commonly used by managers?

 

ANS:

Managers can bring about goal commitment in three ways. The first, and most popular, approach is to set goals through participation. Rather than assigning goals to workers, managers and employees choose goals together. The second technique is making the goal public, by having individuals and work units tell others about their goals. The third way of increasing goal commitment is to obtain top management’s support. Top management can show support for a plan or program by providing funds, speaking publicly about the plan, or participating in the plan itself.

 

PTS:   1                    REF:   p. 71              OBJ:   2                    BLM:  Remember

 

  1. Briefly identify and explain the two accepted methods of tracking progress toward goal achievement.

 

ANS:

There are two accepted methods of tracking progress. The first is to set proximal goals and distal goals. Proximal goals are short-term goals, or subgoals, whereas distal goals are long-term or primary goals. The idea behind setting proximal goals is that they may be more motivating and rewarding than waiting to achieve far-off distal goals. The second method of tracking progress is to gather and provide performance feedback. Regular, frequent performance feedback allows workers and managers to track their progress toward goal achievement and make adjustments in effort, direction, and strategies.

 

PTS:   1                    REF:   p. 72              OBJ:   2                    BLM:  Remember

 

  1. Identify the four basic steps in the management by objectives process.

 

ANS:

Management by objectives is a four-step process in which managers and employees (a) discuss possible goals; (b) collaboratively select goals; (c) jointly develop tactical plans; and (d) meet regularly to review progress toward goal accomplishment.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. List and briefly describe the three kinds of operational plans.

 

ANS:

The three kinds of operational plans are (a) single-use plans, which cover unique, one-time-only events; (b) standing plans, which save managers time because they are created once and then used repeatedly to handle frequently recurring events; and (c) budgets, which are quantitative plans, through which managers decide how to allocate available money to best accomplish company goals.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. List and briefly describe the three kinds of standing plans, and comment on their relative specificity.

 

ANS:

The three types of standing plans are policies, procedures, and rules and regulations, which increase in specificity in that order. Policies are the least specific type of standing plan. They indicate the general course of action that company managers should take in response to a particular event or situation. Procedures are more specific than policies because they indicate the series of steps that should be taken in response to a particular event. Rules and regulations are even more specific than procedures because they specify what must happen or not happen. They describe precisely how a particular action should be performed.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. Define the terms decision making and rational decision making. Briefly differentiate between them.

 

ANS:

Decision making is the process of choosing a solution from available alternatives. Rational decision making is a systematic process in which managers define problems, evaluate alternatives, and choose optimal solutions that provide maximum benefits to their organizations. Thus, rational decision making is more structured and would be one approach that might be used in the more general process of decision making.

 

PTS:   1                    REF:   p. 76              OBJ:   4                    BLM:  Remember

 

  1. List the six steps in the rational decision-making process.

 

ANS:

The six steps in the rational decision-making process are as follows:

1. define the problem,
2. identify decision criteria,
3. weight the criteria,
4. generate alternative courses of action,
5. evaluate each alternative, and
6. compute the optimal decision.

 

 

PTS:   1                    REF:   p. 76              OBJ:   4                    BLM:  Remember

 

 

  1. Briefly explain what decision criteria are. Identify two approaches that may be used to weight these criteria.

 

ANS:

Decision criteria are the standards used to guide judgments and decisions. The more criteria that a potential solution meets, the better that solution should be. After identifying decision criteria, the next step in the rational decision-making process is deciding which criteria are more or less important. While there are numerous mathematical models for weighting decision criteria, all require the decision maker to provide an initial ranking of the decision criteria. Some use absolute comparisons, in which each criterion is compared to a standard or ranked on its own merits. Another method is relative comparisons, in which each criterion is compared directly to every other criterion.

 

PTS:   1                    REF:   p. 76–77         OBJ:   4                    BLM:  Remember

 

  1. Briefly identify the two types of conflicts that may spontaneously occur in group decision-making situations. Comment on the probable effectiveness of group decisions given each type of conflict.

 

ANS:

The two types of conflicts that might spontaneously occur in a group are c-type conflict and a-type conflict. C-type conflict, or cognitive conflict, focuses on problem- and issue-related differences of opinion. In c-type conflict, group members disagree because their different experiences and expertise lead them to different views of the problem and its potential solutions. However, c-type conflict is also characterized by a willingness to examine, compare, and reconcile those differences to produce the best possible solution. By contrast, a-type conflict, meaning “affective conflict,” refers to the emotional reactions that can occur when disagreements become personal rather than professional. A-type conflict often results in hostility, anger, resentment, distrust, cynicism, and apathy. So, unlike c-type conflict, a-type conflict undermines team effectiveness by preventing teams from engaging in the kinds of activities, such as c-type conflict, that are critical to team effectiveness. Thus, c-type conflict can enhance the quality of group decisions, while a-type conflict will probably reduce the effectiveness of those decisions.

 

PTS:   1                    REF:   p. 81              OBJ:   5                    BLM:  Remember

 

 

ESSAY

 

  1. Describe a planning effort that you are acquainted with (either through reading or personal experience), and evaluate the manifestation of benefits and pitfalls of planning described in the chapter as manifest in the case you know. In other words, explain how, if at all, the benefits of planning described in the text were apparent in your case. Similarly, identify any of the significant pitfalls of planning that might have been apparent in your case. Comment on the extent to which your case seems to substantiate or refute the claims made for the benefits and pitfalls of planning, as described in the text.

 

ANS:

Planning is defined as choosing a goal and developing a method or strategy to achieve that goal. Student case examples should clearly identify both the goal of the planning effort and the method to be used to achieve it. Better answers will appropriately integrate more of the benefits and pitfalls of planning, which are summarized below. Adequate answers will simply restate text examples. Better answers will be original, appropriate applications of the text material applied to a case or scenario not presented in the text or class lecture. Either way, answers should clearly indicate how the events and outcomes in the case that is presented either substantiate or refute the statements made about the benefits and pitfalls of planning in the text.

 

Planning has numerous benefits. It is one of the best ways to improve both organizational and individual performance. It encourages people to work harder (intensified effort), to work hard for extended periods (persistence), to engage in behaviours directly related to goal accomplishment (directed behaviour), and to think of better ways to do their jobs (task strategies). But most important, companies that plan have larger profits and faster growth than companies that don’t plan. Planning, however, also has three potential pitfalls. Companies that are overly committed to their plans may be slow to adapt to changes in their environment. Planning is based on assumptions about the future, and when those assumptions are wrong, plans are likely to fail. Finally, planning can fail when planners are detached from the implementation of plans.

 

PTS:   1                    REF:   p. 69–71         OBJ:   1                    BLM:  Higher Order

 

  1. Cheryl Trump is the daughter of a well-known financier. She is currently in her first year of college, but has decided that she wants to earn an MBA as soon as possible after earning her four-year college degree. Outline the five steps in effective planning. Use the guidelines for effective planning to develop an appropriate plan for Cheryl.

 

ANS:

Planning consists of five steps: (a) setting goals, (b) developing commitment to the goals, (c) developing effective action plans, (d) tracking progress toward goal achievement, and (e) maintaining flexibility in planning. In terms of (a) setting goals, goals need to be specific and challenging in order to direct behaviour and increase effort. Cheryl’s present goal is specific, but could be made more challenging by targeting any one of the top 25 MBA programs in the country as her goal. In terms of (b) developing commitment to her goal, we can assume that if Cheryl has selected this goal on her own and understands all of its implications, then she is probably already sufficiently committed to it at a personal level. She might enhance this commitment by making a public statement of her goal, and soliciting (and receiving) support from her parents in achieving it. In terms of (c) developing effective action plans, Cheryl should research the MBA degree and how it contributes to career success. Thereafter, she should draw up a concrete written plan, outlining the specific steps, people, resources, and time period for accomplishing her goal. Her research will probably lead her to conclude that she should gain several years of work experience in her desired industry before enrolling in an MBA program. In terms of (d) tracking progress toward goal achievement, Cheryl should set a series of integrated proximal and distal goals, where the proximal goals (e.g., maintaining a high GPA, arranging for an internship while in college, networking as much as possible to develop connections for a later job search) and clearly related subgoals will move her forward to her distal (long-term or primary) goals. Examples of distal goals might be obtaining an entry-level position in finance at a major corporation upon graduation and then obtaining company support to pursue a top-flight MBA degree within five years of beginning work. Further, she should utilize her grades as well as contact with her professors while in college to solicit feedback and evaluate her progress, and use her performance appraisals and other contacts as sources of feedback once she begins working full time after graduation. Finally, in terms of (e) maintaining flexibility in planning, Cheryl should be ready to revise her overall plan, if, at any point along the way, insurmountable obstacles become apparent. For example, if it should become clear that she cannot earn a high GPA in college, then she should lower her sights and shoot for a less prestigious MBA program.

 

PTS:   1                    REF:   p. 69–70         OBJ:   1                    BLM:  Higher Order

 

  1. How can organizations maintain flexibility as they plan? Explain how the method for maintaining flexibility is different from traditional planning.

 

ANS:

Organizations can use options-based planning to maintain flexibility as they plan. The goal of options-based planning is to keep options open by making small, simultaneous investments in many options or plans; then, when one or a few of these plans emerge as likely winners, you invest even more in these plans while discontinuing or reducing investment in the others.

 

This approach differs significantly from traditional planning. In part, options-based planning is the opposite of traditional planning. For example, the purpose of a traditional action plan is to commit people and resources to a particular course of action. The purpose of options-based planning, however, is to leave those commitments open. Holding options open gives you choices and those choices give you flexibility.

PTS:   1                    REF:   p. 73              OBJ:   2                    BLM:  Remember

 

  1. Compare and contrast the planning done at the top, middle, and bottom levels of an organization.

 

ANS:

Planning at all levels of management must follow the five steps in effective planning: (a) setting goals, (b) developing commitment to the goals, (c) developing effective action plans, (d) tracking progress toward goal achievement, and (e) maintaining flexibility in planning. Similarly, planning at all three levels of management is interrelated. Proper planning requires that the goals at the bottom and middle of the organization support the objectives at the top of the organization. However, there are significant differences in the objectives and timetables of the planning process at the top, middle, and lower levels of the organization. Top management develops strategic plans that indicate how a company will serve customers and position itself against competitors over a two- to five-year period. Strategic planning starts with the creation of an organizational vision and mission. Middle managers use techniques such as management by objectives to develop tactical plans that direct behaviour, efforts, and priorities over the next six months to two years. Finally, lower-level managers develop operational plans that guide daily activities in producing or delivering an organization’s products and services. Operational plans typically span periods ranging from 30 days to six months. There are three kinds of operational plans: single-use plans, standing plans (policies, procedures, and rules and regulations), and budgets. Thus, managers at all three levels of planning should follow the same steps, but their objectives and timetables will differ, and plans at all levels must be carefully developed to ensure their effective interdependence in achieving overall organizational goals.

PTS:   1                    REF:   p. 69–71         OBJ:   3                    BLM:  Remember

 

  1. Describe the management by objectives (MBO) process.

 

ANS:

Management by objectives is a management technique often used by middle managers to develop and carry out tactical plans. Middle management is responsible for developing and carrying out tactical plans to accomplish the organization’s mission. Tactical plans specify how a company will use resources, budgets, and people to accomplish specific goals within its mission. Whereas strategic plans and objectives are used to focus company efforts over the next two to five years, tactical plans and objectives are used to direct behaviour, efforts, and attention over the next six months to two years. Management by objectives, or MBO, is a four-step process in which managers and their employees (1) discuss possible goals, (2) together select goals that are challenging, attainable, and consistent with the company’s overall goals, (3) jointly develop tactical plans that lead to accomplishment of tactical goals and objectives, and (4) meet regularly to review progress toward accomplishment of those goals.

 

PTS:   1                    REF:   p. 75              OBJ:   3                    BLM:  Remember

 

  1. Explain how the rational decision-making process may help to overcome predispositions and biases that a manager has in a given decision-making situation.

 

ANS:

Rational decision making is a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions. It is based upon a clearly defined series of six steps, which, when followed, force a manager to carefully identify and evaluate multiple relevant aspects of a problem. The systematic application of this process is likely to overcome intuitive feelings and biases, which might otherwise predominate in decision making.

 

The six steps in the rational decision-making process are (1) define the problem, (2) identify decision criteria, (3) weight the criteria, (4) generate alternative courses of action, (5) evaluate each alternative, and (6) compute the optimal decision. When managers pay more explicit attention to carefully defining the problem and concretely articulating decision criteria and weights, they develop a more objective framework for evaluating and selecting among alternatives. Further, the mathematical approach to computing the optimal value of each alternative in order to make the final decision further reduces the chances that non-rational biases or influences will intervene and influence the outcome. Thus, the rational decision-making process can help to ensure a more logical and systematically defensible decision pertaining to a problem facing a manager.

 

PTS:   1                    REF:   p. 76–77         OBJ:   4                    BLM:  Remember

 

 

  1. Define the two types of conflicts that may spontaneously occur in group decision-making situations. List and explain the approaches to structured conflict that may help to enhance the quality of group decisions. Be sure to comment on the research results evaluating their effectiveness.

 

ANS:

Most people view conflict negatively. However, the right kind of conflict can lead to much better group decision making. C-type conflict, or cognitive conflict, focuses on problem- and issue-related differences of opinion. In c-type conflict, group members disagree because their different experiences and expertise lead them to different views of the problem and its potential solutions. However, c-type conflict is also characterized by a willingness to examine, compare, and reconcile those differences to produce the best possible solution. By contrast, a-type conflict, or affective conflict, refers to the emotional reactions that can occur when disagreements become personal rather than professional. A-type conflict often results in hostility, anger, resentment, distrust, cynicism, and apathy. So, unlike c-type conflict, a-type conflict undermines team effectiveness by preventing teams from engaging in the kinds of activities, such as c-type conflict, that are critical to team effectiveness.

 

Devil’s advocacy and dialectical inquiry are two methods that introduce structured c-type conflict into the group decision-making process. Devil’s advocacy creates c-type conflict by assigning an individual or a subgroup the role of critic. This individual criticizes and questions a proposed solution in order to help decision makers decide whether to use, change, or not use the original proposed solution. Dialectical inquiry creates c-type conflict by forcing decision makers to state the assumptions of a proposed solution (a thesis) and to then generate a solution that is the opposite (antithesis) of the proposed solution. It takes the form of a debate between advocates of the thesis and antithesis, and similarly helps decision makers decide whether to use, change, or not use the original proposed solution.

 

When properly used, both the devil’s advocacy and dialectical inquiry approaches introduce c-type conflict into the decision-making process. Further, contrary to the common belief that conflict is bad, studies show that these methods lead to less a-type conflict, improved decision quality, and greater acceptance of decisions once they have been made. In meta-analytic research on the effectiveness of these techniques, each technique has been compared to decisions obtained by following experts’ advice. While the estimated probabilities of success may seem small, (55 percent for dialectical inquiry and 58 percent for devil’s advocacy), they very likely understate the effects of both techniques. In other words, the probabilities of success would have been much larger if both techniques had been compared to unstructured decision-making processes, which are typical of the approach of the average group or manager.

 

PTS:   1                    REF:   p. 81–83         OBJ:   5                    BLM:  Remember

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