Chapter 5 Business Management 1. Business strategy focuses on improving the company's competitive position. Answer: True Explanation: Strategic management is the process of helping an organization maintain an effective alignment with its environment. One specific type is business, or competitive, strategy. 2. Contingency planning seeks to identify how a company will respond to change. Answer: True Explanation: Contingency planning is planning for change: It seeks to identify in advance important aspects of a business or its market that might change. 3. When a sales manager compares actual sales to the quarterly sales quota, she is performing the controlling function of management. Answer: True Explanation: Controlling is the process of monitoring a firm's performance to make sure that it is meeting its goals. 4. The first step in the control process is to compare actual performance to standards. Answer: False Explanation: The first step in the control process occurs when managers establish standards. 5. Operations managers are responsible for production, inventory, and quality control. Answer: True Explanation: In general, operations refers to the systems by which a firm produces goods and services. 6. Information managers are responsible for getting products from producers to consumers. Answer: False Explanation: Information managers design and implement systems to gather, organize, and distribute information. 7. The last step in the decision-making process is the selection of the best alternative. Answer: False Explanation: Implementing the chosen alternative is the last step in the process. 8. Changes in technology will result in a decrease in the amount of information that managers will use to make decisions. Answer: False Explanation: In today's world, the amount of information has reached staggering proportions. 9. The starting point in effective management is setting goals. Answer: True Explanation: In addition, managers must consider what actions will and will not achieve company goals. 10. Goal setting helps managers assess performance. Answer: True Explanation: For example, if a unit sets a goal of increasing sales by 10 percent in a given year, managers in that unit who attain or exceed the goal can be rewarded. 11. Long-term goals are derived directly from a firm's mission statement. Answer: True Explanation: Long-term goals relate to extended periods of time, typically five years or more; long-term goals are strategic goals that are directly related to the firm's mission statement. 12. Doubling the number of merchants participating in a sales program over the next 10 years is an example of a long-term goal. Answer: True Explanation: Long-term goals relate to extended periods of time, typically five years or more. 13. Increasing sales by 4 percent in the next six months would be an example of an intermediate goal. Answer: False Explanation: Increasing sales by 4 percent over six months would be an example of a short-term goal; short-term goals are set for up to a year. 14. When IBM analyzes its internal strengths and weaknesses, it is conducting an organizational analysis. Answer: True Explanation: In addition to analyzing external factors by performing an environmental analysis, managers can examine internal strengths and weaknesses via organizational analysis. 15. Corporate culture is largely a result of state and local laws and regulations. Answer: False Explanation: Corporate culture refers to the shared experiences, stories, beliefs, and norms that characterize an organization. 16. A strong corporate culture directs employees' efforts and helps everyone work toward the same goals. Answer: True Explanation: Managers must carefully consider the kind of culture they want for their organizations and then work to nourish that culture by communicating with everyone who works there. 17. It is not possible to change an organization's corporate culture. Answer: False Explanation: Organizations must sometimes change their corporate culture. 18. Many managers spend as much as four hours a day in meetings. Answer: True Explanation: Meetings are one of the four most common causes of wasted time in organizations. 19. The effectiveness of managers in using time can be undermined by frequent phone calls. Answer: True Explanation: Because of the frequency with which managers are interrupted by phone calls, experts suggest having an assistant screen all calls and setting aside a certain block of time each day to return the important ones as an effective time management tool. 20. A firm first sets its strategies and then focuses attention on goals to accomplish them. Answer: False Explanation: After a firm has set its goals, it then focuses attention on strategies to accomplish them. 21. Strategy has a wider scope than planning. Answer: True Explanation: Planning is often concerned with the nuts and bolts of setting goals, choosing tactics, and establishing schedules; strategy tends to have a wider scope. 22. An organization retrenches by increasing its investment in a particular area. Answer: False Explanation: Retrenching is a corporate strategy that involves reducing investment in a particular area. 23. SWOT analysis is usually conducted before strategic goals have been established. Answer: False Explanation: Strategic goals are established first; THEN the internal strengths and weaknesses and the external opportunities and threats are evaluated through SWOT analysis. 24. Which business constituents analyze their competitive environments and plan, organize, direct, and control the operations of their organizations? A) stockholders B) managers C) regulators D) agents E) customers Answer: B Explanation: B) Management itself is the process of planning, organizing, leading, and controlling an organization's financial, physical, human, and information resources to achieve its goals. Managers oversee the use of all these resources in their respective firms. 25. Which aspect of the management process involves determining what the organization needs to do and how best to get it done? A) organizing B) planning C) controlling D) processing E) monitoring Answer: B Explanation: B) Planning is determining what the organization needs to do and how best to get it done. 26. Which type of manager is responsible for implementing the strategies, policies, and decisions made by top managers? A) first-line manager B) middle manager C) supervisory manager D) office manager E) financial managers Answer: B Explanation: B) Just below top managers are middle managers, who implement strategies, policies, and decisions made by top managers. 27. Which type of manager spends most of their time working with and supervising the employees who report to them? A) first-line managers B) information managers C) top managers D) chief executive officers E) operations managers Answer: A Explanation: A) Supervisors and office managers are the first-line managers who work with and supervise the employees who report to them. 28. What type of skills are needed to understand and work well with people in the workplace? A) human relations skills B) technical skills C) conceptual skills D) motor skills E) decision-making skills Answer: A Explanation: A) Human relations skills are skills in understanding and getting along with other people. 29. Which of the following refers to a person's ability to think in the abstract, to diagnose and analyze different situations, and to see beyond the present situation? A) human relations skills B) decision-making skills C) conceptual skills D) production skills E) technical skills Answer: C Explanation: C) Conceptual skills refer to the ability to think abstractly as well as diagnose and analyze different situations. 30. What type of skills requires defining problems and selecting the best course of action to take? A) human relations skills B) production skills C) conceptual skills D) decision-making skills E) technical skills Answer: D Explanation: D) Decision-making skills include the ability to define problems and select the best courses of action. 31. What identifies performance targets used by organizations and their managers to measure success or failure at every level? A) tactics B) goals C) strategies D) mission statements E) promotions Answer: B Explanation: B) Goals are objectives that a business hopes (and plans) to achieve. 32. If Kodak sets out to increase its share of the 35-mm film market by 10 percent during the next eight years, what kind of goal is the organization setting? A) a short-term goal B) an intermediate goal C) a tactical goal D) a long-term goal E) an organizational goal Answer: D Explanation: D) A long-term goal is one set for an extended time, typically five years or more into the future. 33. When the finance department aims for a 3 percent increase in return on investment in three years, what type of goal is the organization setting? A) a long-term goal B) a tactical goal C) a short-term goal D) an intermediate goal E) an organizational goal Answer: D Explanation: D) An intermediate goal is one set for a period of one to five years into the future. 34. What does e-partnering involve? A) buying shares of small companies that provide technology unavailable to the "purchasing" company B) buying shares of small companies that are similar to the "purchasing" firm C) linking up to the inventory records of another company D) sharing a Web server with another company E) advertising another company on the "purchasing" company's Web site Answer: A Explanation: A) E-partnering is buying shares of small companies that can provide technology that the buyer itself does not have. It is a corporate strategy for growth. 35. Which kind of strategy takes place at the level of the product line and focuses on a firm's competitive position? A) functional B) business C) local D) fundamental E) environmental Answer: B Explanation: B) Business (or competitive) strategy takes place at the level of the business unit or product line and focuses on improving the company's competitive position. 36. Which element of an organization is defined by shared experiences, stories, beliefs, and norms? A) its human resources B) its product philosophy C) its corporate culture D) its mission statement E) its organizational structure Answer: C Explanation: C) Every company has a unique identity, a corporate culture: the shared experiences, stories, beliefs, and norms that characterize an organization. This culture helps define the work and business climate that exists in an organization. 37. Which of the following is TRUE about corporate culture? A) It can direct employees' efforts toward goals. B) It is usually determined by outside forces. C) It cannot be changed. D) It is easy to change. E) It rarely affects newcomers in an organization. Answer: A Explanation: A) Every company has a unique identity, a corporate culture: the shared experiences, stories, beliefs, and norms that characterize an organization. This culture helps define the work and business climate that exists in an organization. 38. Which description defines the planning function of the management process? A) guiding and motivating employees to meet organizational objectives B) discussing how best to arrange an organization's resources into a coherent structure C) scanning the business environment for threats and opportunities D) determining what an organization needs to do and how best to get it done E) monitoring a firm's performance to make sure that it is meeting its goals Answer: D Explanation: D) Further, planning has three components. First, it begins when managers determine the firm's goals. Next, they develop a strategy for achieving those goals. Finally, they design tactical and operational plans for implementing the strategy. 39. Which description identifies the organizing function of the management process? A) guiding and motivating employees to meet organizational objectives B) determining how best to arrange an organization's resources into a coherent structure C) scanning the business environment for threats and opportunities D) monitoring an organization's performance to ensure that it is meeting its goals E) determining what an organization needs to do and how best to get it done Answer: B Explanation: B) This function is sometimes illustrated through the use of organization charts, which help everyone understand roles and reporting relationships. 40. Hewlett-Packard decides to move toward a more centralized structure. This is an example of which function in the management process? A) planning B) leading C) organizing D) controlling E) monitoring Answer: C Explanation: C) Organizing is determining the best way to arrange a business's resources and activities into a coherent structure. 41. Which description identifies the controlling function of the management process? A) guiding and motivating employees to meet organizational objectives B) determining how to arrange a firm's resources into a coherent structure C) scanning the business environment for threats and opportunities D) monitoring a firm's performance to ensure that it is meeting its goals E) determining what an organization needs to do and how best to get it done Answer: D Explanation: D) The control process begins when managers establish performance standards; they then compare results with those identified standards. 42. Comparing actual performance against standards is an example of which function of the management process? A) planning B) organizing C) leading D) controlling E) strategizing Answer: D Explanation: D) Controlling is the process of monitoring a firm's performance to make sure that it is meeting its goals. 43. Steve motivates employees by rewarding them with additional vacation when standards are achieved. This is an example of which function in the management process? A) leading B) planning C) organizing D) marketing E) strategizing Answer: A Explanation: A) When leading, a manager works to guide and motivate employees to meet the firm's objectives. 44. Which type of business constituent has titles such as President and CEO? A) first-line managers B) top managers C) middle managers D) power brokers E) stockholders Answer: B Explanation: B) These are titles given to top managers, who are responsible for the overall performance of the organization. 45. Which level of management is responsible for the overall performance and effectiveness of the firm? A) top managers B) first-line managers C) middle managers D) supervisory managers E) human resource managers Answer: A Explanation: A) Top managers set general policies, formulate strategies, approve all significant decisions, and represent the company in deals with other firms and with government bodies. 46. Which level of management sets general policies, formulates strategies, approves all significant decisions, and represents the company in dealings with other firms and with government bodies? A) operations managers B) production managers C) top managers D) middle managers E) first-line managers Answer: C Explanation: C) Top managers, through these types of activities, are responsible for the overall performance and effectiveness of the firm. 47. Titles such as plant manager, operations manager, and division manager designate which level of management? A) first-line managers B) middle managers C) top managers D) supervisors E) technology managers Answer: B Explanation: B) Middle managers are responsible for implementing the strategies and working toward the goals set by top managers. 48. The titles supervisor, office manager, and group leader are examples of which level of management? A) top management B) middle management C) first-line management D) operations management E) human resource management Answer: C Explanation: C) First-line managers spend most (but not all) of their time working with and supervising the employees who report to them. 49. Which of the following are responsible for production and quality control? A) information managers B) human resource managers C) first-line managers D) operations managers E) marketing managers Answer: D Explanation: D) The term operations refers to the systems by which a firm produces goods and services. 50. Which of the following managers are directly responsible for getting products from producers to consumers? A) human resource managers B) public relations managers C) information managers D) marketing managers E) financial managers Answer: D Explanation: D) Marketing encompasses the development, pricing, promotion, and distribution of goods and services. 51. Who is responsible for designing and implementing systems to gather, organize, and distribute facts and data essential for the running of the company? A) marketing managers B) information managers C) production managers D) human resource managers E) research and development managers Answer: B Explanation: B) Huge increases in both the sheer volume of information and the ability to manage it have led to the emergence of this important function. 52. Which of the following managers are responsible for planning and overseeing the firm's accounting functions? A) financial managers B) information managers C) production managers D) human resource managers E) marketing managers Answer: A Explanation: A) Levels of financial management include chief financial officer, division controller, and accounting supervisor. 53. An accountant's ability to audit a company's records is an example of what type of skills? A) motor skills B) technical skills C) human relations skills D) conceptual skills E) decision-making skills Answer: B Explanation: B) The skills needed to perform specialized tasks are called technical skills. 54. Camille Graham is a manager who works well with people and makes them feel excited about their work. What type of skills is she illustrating? A) human relations skills B) technical skills C) accounting skills D) conceptual skills E) marketing skills Answer: A Explanation: A) Human relations skills enable managers to understand and get along with other people. 55. How might an effective manager choose the best plan of action when making a decision? A) making a self-generated list of pros and cons and choosing based on the list B) using the results of a survey that was sent to key customers who will be affected C) sending a feedback form to customers after the plan has been executed D) creating only one plan with no alternatives so it has to work E) reviewing what other managers have done in the same situation and doing the same Answer: B Explanation: B) An effective manager will consider the effects on all stakeholders before taking a certain action. 56. Which of the following managers depend most on conceptual skills? A) first-line managers B) top managers C) middle managers D) marketing managers E) financial managers Answer: B Explanation: B) Conceptual skills, closely associated with top managers, refer to a person's ability to think in the abstract, to diagnose and analyze different situations, and to see beyond the present situation. 57. What activity do company managers undertake in order to measure success or failure at every organizational level? A) planning tactics B) setting goals C) devising strategies D) auditing skills E) publicizing promotions Answer: B Explanation: B) The starting point in effective strategic management is setting goals—objectives that a business hopes and plans to achieve. 58. Which of the following best describes a mission? A) an objective that a business hopes and plans to achieve B) a broad set of organizational plans for implementing decisions made for achieving organizational goals C) the shared experiences, stories, beliefs, and norms that characterize an organization D) an organization's statement of how it will achieve its purpose in the environment in which it conducts business E) an organization's competitive standing in the marketplace Answer: D Explanation: D) That purpose can be profits, the discovery and transmission of new knowledge, market share, the enforcement of public policies, etc. 59. What do a company's vision and mission statement have in common? A) They are both used to generate profits. B) They are both directed toward employees. C) They are both used to keep management on track. D) They are both directed toward customers. E) They are both used to set profit objectives. Answer: C Explanation: C) A company's vision and mission statement are used to keep management moving toward defined goals. 60. Sometimes a corporation buys and operates multiple businesses in compatible industries as part of its corporate strategy. This is an example of what type of strategy? A) customer-driven diversification B) unrelated diversification C) e-partnering D) strategic diversification E) complex collaborations Answer: D Explanation: D) When businesses a corporation operates are related to one another, the strategy is related diversification. If the businesses are not similar, the strategy is unrelated diversification. 61. Which of the following best describes business strategy? A) a strategy for determining the firm's overall attitude toward growth and the way it will manage its businesses or product lines B) a strategy at the business-unit or product-line level that focuses on improving a firm's competitive position C) a strategy by which managers in specific areas decide how best to achieve corporate goals through productivity D) a strategy that assists first-line managers in making day-to-day decisions about motivating employees E) a strategy that integrates an organization's marketing goals into a cohesive whole by focusing on the ideal product mix to achieve maximum profit potential Answer: B Explanation: B) Further, a strategy outlines how the business intends to meet its goals and includes the organization's responsiveness to new challenges and new needs. 62. Which of the following best describes functional strategy? A) a strategy for determining the firm's overall attitude toward growth and the way it will manage its businesses or product lines B) a strategy at the business-unit or product-line level that focuses on improving a firm's competitive position C) a strategy by which managers in specific areas decide how best to achieve corporate goals through productivity D) a strategy that assists first-line managers in making day-to-day decisions about motivating employees E) a strategy that integrates an organization's marketing goals into a cohesive whole by focusing on the ideal product mix to achieve maximum profit potential Answer: C Explanation: C) At the level of functional strategy, managers in specific areas such as marketing, finance, and operations decide how best to achieve corporate goals by performing their functional activities most effectively. 63. Which of the following is NOT a characteristic of a solid contingency plan? A) contact information for an on-site crisis manager B) information systems backup software C) an evacuation plan D) a prioritized list of critical operations E) a summary of common types of emergencies Answer: E Explanation: E) A summary of common types of emergencies would not be of much assistance in a crisis. However, a good contingency plan will provide all of the other information listed in anticipation of an emergency situation. 64. Doreen Madison has been tracking product sales for McCoy Industries. She notices that sales of surgical supplies have fallen off in the past six months and she is considering strategies to reverse this trend. This is an example of what function of the management process? A) planning B) organizing C) leading D) controlling E) budgeting Answer: D Explanation: D) Controlling is the process of monitoring a firm's performance to make sure that it is meeting its goals. 65. CFO and controller are titles associated with what type of manager? A) financial B) information C) human resource D) marketing E) operations Answer: A Explanation: A) Nearly every company has financial managers to plan and oversee its accounting functions and financial resources. 66. Terrell is being considered for promotion from a supervisory role to top management. He is unsure whether he is qualified for the position. He wants to ensure that he is an effective manager, and not simply having success in the workplace because of his multiple promotions in the last few years. Although he's never been a top manager, there are some things he does in his personal life other members of the management team think qualify him for the position. What personal activity does management most likely think is a good indicator of whether or not Terrell will be an effective top manager? A) He is part of a theatrical group that gives performances to hundreds of people, showing that he is not afraid to speak in front of a crowd. B) He juggles being a parent, working as a middle manager, and having personal hobbies, showing an ability to do well in all aspects of his life without going overboard in one or neglecting another. C) He has many siblings, showing that he knows how to share space with a large number of people. D) He quickly learns how to play new games by following the rules explained to him. E) He was a member of the debate team in high school and consequently is well-versed in being able to argue both sides of an issue. Answer: B Explanation: B) This scenario shows Terrell's personal skills of time-management and interpersonal skills will contribute to his being an effective manager. 67. Starbucks has established itself as the premier marketer of the finest coffee in the world while maintaining its uncompromising principles and continuing to grow. This statement illustrates what aspect of Starbucks' organization? A) its strategy B) its tactic C) its mission D) its diversity E) its profitability Answer: C Explanation: C) This is the mission statement for Starbucks. 68. "Teach For America provides a critical source of well-trained teachers who are helping break the cycle of educational inequity. These teachers, called corps members, commit to teaching for two years in one of 39 urban and rural regions across the country, going above and beyond traditional expectations to help their students achieve at high levels. "Teach For America's 20,000 alumni are playing critical leadership roles in the effort to improve the quality of public education in low-income communities. Armed with the experience, conviction, and insight that come from leading children to fulfill their potential, our alumni are working from all sectors to shape our schools, policies, and investments in low-income communities." What objective might Teach For America have, based on its company mission? A) Teach For America will transition from a nonprofit to a for-profit organization in 2015. B) Teach For America will open a food bank in low-income communities in each of its 39 regional offices. C) Teach For America will increase the number of its alumni in leadership positions within school systems across the United States by 10 percent each year. D) Teach For America will change the corps member service commitment to four years, versus two. E) Teach For America will open ten new regional offices by the year 2020. Answer: C Explanation: C) The mission emphasizes an importance of moving alumni toward leadership positions in public school systems throughout the United States. 69. Carlos wants to complete his M.B.A. in three years. This is an example of what kind of goal? A) long-term B) intermediate C) short-term D) objective E) problematic Answer: B Explanation: B) Intermediate goals are set for a period of one to five years. 70. Increasing sales by 4 percent in the next eight months is an example of what kind of goal? A) tactical B) strategic C) short-term D) intermediate E) long-term Answer: C Explanation: C) Short-term goals are set for a period of one year or less. 71. The marketing manager wants to increase regional sales by 2 percent each quarter over the next year. This is an example of what kind of goal? A) long-term B) intermediate C) short-term D) strategic E) tactical Answer: C Explanation: C) Short-term goals are set for one year or less. 72. Which of the following is the best example of unrelated diversification? A) Ford Motor Company merging with General Motors B) Northwest Airlines merging with Procter & Gamble C) McDonald's merging with Burger King D) Tootsie Roll merging with Hershey E) Bath and Body Works merging with The Body Store Answer: B Explanation: B) Northwest Airlines provides air travel for the public, whereas Procter & Gamble manufactures consumer goods. 73. The first step in the planning process is determining goals. What is the next step? A) developing a strategic mission B) developing a comprehensive strategy C) developing an array of tactics D) developing an operational plan E) developing a functioning budget Answer: B Explanation: B) Planning begins when managers determine the firm's goals; next, a comprehensive strategy is developed. After that, tactical and operational plans for implementing the strategy are set. 74. Which variable of SWOT analysis identifies changing consumer tastes, hostile takeover offers, and new government regulations? A) threats B) opportunities C) strategies D) internal factors E) weaknesses Answer: A Explanation: A) Organizational threats are external variables that may adversely affect the organization; they can be outlined through SWOT analysis. 75. When conducting a SWOT analysis of an organization, which question can help management brainstorm for the strengths section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line? Answer: D Explanation: D) This question will help management brainstorm an organization's internal strengths. 76. When conducting a SWOT analysis of an organization, which question can help management brainstorm for the weaknesses section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line? Answer: C Explanation: C) This question will help management brainstorm an organization's internal weaknesses. 77. When conducting a SWOT analysis of an organization, which question can help management brainstorm for the opportunities section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line? Answer: A Explanation: A) This question will help management brainstorm opportunities that external constituents may offer. 78. When conducting a SWOT analysis of an organization, which question can help management brainstorm for the threats section of the analysis? A) What external changes present interesting possibilities? B) What aspect of the organization's vision can be altered? C) What necessary skills do the organization's employees currently lack? D) What does the organization offer that makes it stand out from other organizations? E) What external economic forces can affect the organization's bottom line? Answer: E Explanation: E) This question will help management evaluate outside factors that may pose a threat to the company. 79. Which of the following would be classified as opportunities for an organization? A) government regulations B) highly unionized workers C) new competitors D) possible company expansion E) economy fluctuations Answer: D Explanation: D) The other factors would typically be considered threats; possible expansion of the firm is an opportunity that could possibly lead to enhanced sales, increased market share, and a stronger market image. 80. What type of analysis focuses on external factors? A) organizational analysis B) governmental analysis C) environmental analysis D) functional analysis E) financial analysis Answer: C Explanation: C) External threats and opportunities are revealed through environmental analysis. 81. Which of the following is NOT considered an organizational strength? A) strong market position B) dedicated work force C) changing consumer tastes D) technical expertise E) recognized customer relation management Answer: C Explanation: C) Organizational strengths are any number of positive attributes within an organization from which the organization might benefit. 82. Marty uses computer forecasts to determine possible outcomes of an intended change in his division. What element of management is Marty utilizing? A) strategy formulation B) goal setting C) crisis management D) contingency planning E) related diversification Answer: D Explanation: D) Contingency planning is planning for change: It seeks to identify in advance important aspects of a business or its market that might change. 83. According to the CEOs of several companies that have undergone radical change in the last decade, what does NOT happen within such organizations? A) At the highest level, analysis of the company's environment highlights extensive change as the most effective response to its problems. B) Lower-level employees develop informal groups to plan for change. C) The firm sets up new systems for appraising and compensating employees who enforce the firm's new values. D) Top management begins to formulate a vision of a new company. E) Change is characterized by much conflict and resistance. Answer: B Explanation: B) Conflict and resistance typically characterize this period. The purpose is to give the new culture solid shape from within the firm. Whatever the new vision, it must include renewed focus on the activities of competitors and the needs of customers. 84. Define the term management. Answer: Management is the process of planning, organizing, leading, and controlling an organization's financial, physical, human, and information resources to achieve its goals. Explanation: Typically a manager's day would involve attention to all these aspects of the role. 85. What are the basic steps in decision making? Answer: The basic steps are to gather facts, identify solutions, evaluate alternatives, and implement the chosen course of action. Explanation: An important additional step is an evaluation process to determine whether the steps in the decision-making process have yielded the required results. 86. What is a mission statement? Answer: A mission statement is a statement of how the organization will achieve its purposes in the environment in which it conducts business. Explanation: It is an important way that a firm encapsulates and communicates its core business to employees, clients, and a range of other stakeholders. 87. Identify the four leading causes of wasted time in the workplace as outlined in the text. Answer: The four leading causes of wasted time in the workplace include paperwork, meetings, phone calls, and e-mail. Explanation: It is very important that managers at all levels are able to use their time effectively, since wasted time translates into added costs for the company. 88. What is the difference between a goal and a strategy? Answer: A goal is an objective that a business hopes and plans to achieve. A strategy is a broad set of organizational plans for implementing the decisions made for achieving organizational goals. Explanation: A strategy entails the goals that a company sets out to achieve. Therefore the strategy constitutes the way that the goals can be realized. 89. In the "Samuel Adams Makes Headway" case study, how has Koch likely used technical skills in developing his product? Answer: First of all, Koch has likely relied on a lot of family experience; that is certainly a type of skill that cannot be learned in a recipe book. In addition, Koch has understood the value of using superior German ingredients, which have given his product its push into the marketplace. No doubt the actual production processes involved in his products have been learned and perfected over a long period of time. Explanation: Technical skills cover the skills needed to undertake specialized tasks. Koch was able to successfully harness technical skills in producing a successful line of boutique beer. 90. What is SWOT analysis? Answer: After strategic goals have been set, organizations usually go through SWOT analysis as they continue to formulate their strategy. This process involves assessing organizational strengths (S) and weaknesses (W) and environmental opportunities (O) and threats (T). Explanation: A SWOT analysis is a widely used process for evaluating the current strengths and weaknesses of a company's business. 91. As CEO of Best Buy, Brad Anderson decided to stop paying commission to sales staff. Why was this decision considered risky, and how did it affect sales as well as the relationship with suppliers and customers? Answer: When Anderson made this decision there was a large degree of uncertainty about whether this tactic would be successful for the company. Sales staff no longer received commission, but were paid salary instead. For many staff this decision represented a loss of income. Additionally, suppliers were concerned that sales staff would not push their premium products without the reward of a high commission. Customers, on the other hand, appreciated the break from high-pressure sales tactics. Explanation: Customers appreciated the relief from high-pressure sales pitches, and revenue increased. 92. Define the term corporate culture. Answer: Corporate culture is the shared stories, beliefs, experiences, and norms that characterize an organization. Explanation: Corporate culture helps define the work and business climate within an organization. 93. Discuss the four main purposes of organizational goal setting. Answer: Goal setting provides direction and guidance for managers at all levels, helps firms allocate resources, helps to define corporate culture, and helps managers assess performance. Explanation: However, the process of setting goals needs to be conducted in a disciplined fashion in order to support these purposes. 94. Discuss the three broad levels of strategy that organizations may implement. Answer: Organizations may set corporate, business, and functional strategies. The purpose of corporate strategy is to determine the firm's overall attitude toward growth and the way it will manage its businesses or product lines. Business strategy, which takes place at the level of the business or product line, focuses on improving the company's competitive position. At the level of functional strategy, managers in specific areas decide how best to achieve corporate goals through productivity. Explanation: These three levels form a hierarchy in terms of strategic management and planning. 95. Describe Best Buy's "centricity" initiative. Answer: The keys to centricity are demographics and segmentation. Best Buy realized that the best customers vary demographically from store to store and decided to tailor their product offerings to the customers at a given store. Explanation: The keys to this initiative are based on demographics and market segmentation. 96. Differentiate between strategic, tactical, and operational plans. Answer: Strategic plans reflect decisions about resource allocations, company priorities, and the steps needed to meet strategic goals. Tactical plans are shorter-range plans for implementing specific aspects of the company's strategic plans. Operational plans set short-term targets for daily, weekly, or monthly performance. Explanation: Strategy needs to be translated into actual plans, which means that strategic, tactical, and operational plans are connected. 97. What are the purposes of having a strong corporate culture? Answer: A strong corporate culture serves several purposes. First, it directs employees' efforts and helps everyone work toward the same goals. Second, it helps newcomers identify accepted behaviors. Finally, it gives each organization its own identity, much as personalities give identity to people. Explanation: Corporate culture constitutes a unique identity giving every company a unique feel or signature. A well known example is the "work hard, play hard" culture that is part of the Google work environment. Donna Hamilton is excited to open her own restaurant, the Westminster Inn. Although Donna has worked as a chef and even managed a number of restaurants during her career, she is concerned that she gets off to a good start. Donna spends several weeks before the restaurant opens setting goals. 98. Donna feels that leading may be the most difficult part of her new job. Why would she feel this way? Answer: When leading, a manager works to guide and motivate employees to meet the firm's objectives. Motivated employees would be essential to the success of a new restaurant business. 99. Help Donna to understand the difference between conceptual skills and technical skills. Answer: Conceptual skills refer to a person's ability to think in the abstract, to diagnose and analyze different situations, and to see beyond the present situation. Technical skills are skills needed to perform specialized tasks. 100. Donna is especially concerned about what her competitors are doing. Why would an environmental analysis help her? Answer: An environmental analysis, which reveals the external opportunities and threats facing an organization, will reveal what competitors are doing. 101. Why should Donna undertake an organizational analysis? Answer: An organizational analysis reveals the internal strengths and weaknesses of an organization. 102. After planning, what is the next step in the management process? Why will Donna need to follow this process? Answer: After planning, the next step in the management process is organizing. Donna will need to make decisions about organizational structure. For example, Donna will need to determine how specialized each job should be and which employees will report to which supervisors. 103. At the end of the month, Donna compares actual sales to the goal that she set during the planning phase. Which of the management functions best describes this activity? Why is this important? Answer: Donna is now engaging in the process of controlling. It will be important to Donna that she track costs as well as profitability and make adjustments to her strategy if actual performance fails to meet her expectations. 104. How might a mission statement help Donna with her new business? Answer: A mission statement may help her identify and follow how her business will achieve its purposes in the environment in which it operates. The mission will likely include the restaurant's main objectives, organizational philosophy, and expected service to customers. 105. How will the types of goals that Donna will most likely make help her in growing her business? Answer: Donna will be wise to make long-term, intermediate, and short-term goals. Long-term goals relate to extended periods of time, typically five years or more. Intermediate goals are set for a period of one to five years. Short-term goals are typically set for one year or less. These goals will be signposts for business growth. 106. Donna is determined to spend a good amount of time on strategy formulation. How will she likely follow the process? Answer: Donna will first focus on setting strategic, long-term goals. She will then analyze the organization and the environment, possibly through conducting a SWOT analysis. After she better understands what her internal strengths and weaknesses are, as well as her external opportunities and threats, she can begin to match the organization and its environment. 107. Because Donna is not yet relying on other employees for the actual management of the restaurant, she has become concerned with crisis management. Explain why Donna may want to develop a crisis management plan. Answer: If Donna can't manage the restaurant, a crisis management plan would allow the business to continue. The plan might include a number of "just-in-case" plans in the event that she faces any type of emergency. 108. Why is corporate culture an important feature for Donna to examine? Can Donna significantly influence the corporate culture at the Westminster Inn? Answer: Corporate culture includes the shared experiences, stories, beliefs, and norms that characterize the organization. It is likely that Donna can have a significant influence on the corporate culture. 109. Why is it important for Donna to be setting goals? Answer: Donna can expect a number of benefits from the goal-setting process. Goal setting will provide direction and guidance, not only for Donna but also for her employees. It also will help Donna allocate resources, such as personnel and capital. The goal-setting process will help Donna to define corporate culture. Finally, by setting goals Donna will be able to determine if she has been successful and make changes, if necessary. The post-project review of the Alpha Supplement project is complete. It found failures in planning. Too much time was budgeted to market research, leaving not enough time for product development and quality assurance. As a result, the project could not have succeeded even if the project had been run perfectly. But there were other problems as well. Constant conflicts between team members demonstrated a failure of leadership. Finally, there were failures in controlling. When component providers failed to deliver, project leaders did not locate and train new providers in time. 110. Which of the following, if true, would most strongly suggest that the problems attributed to controlling were actually caused by planning failures? A) The team assignments in the project plan placed two employees on the Quality Control team despite their long history of hostility toward each other. B) The problems attributed to controlling were typical of the problems experienced by other project leaders in the industry. C) The project plan called for all possible component providers to produce components at their maximum capacity. D) The list of problems attributed to controlling also included the failure to adequately monitor production output. E) Even the most effective planning would not have made the project a success given the failures attributed to controlling. Answer: C Explanation: C) The project leaders failed to locate alternate component providers, but if Choice C is true, then there were no alternate component providers. Every provider that could have been used was already accounted for. So if Choice C is true, the failure to locate alternate component providers was best described as a planning failure, not a controlling failure. Choice A suggests that the leadership problems were affected by planning issues, but that's a different issue. Choice B suggests that there was nothing special going on here, but that's no reason to blame it all on planning. Choice D mentions an additional problem related to controlling, and so Choice D doesn't shift the focus away from controlling. Choice E shifts the blame for the failure to controlling, which is the opposite of what we're looking for. 111. Which of the following is MOST strongly suggested by the statements above? A) Most of the conflicts between team members concerned questions of roles and determining who had the authority to make decisions. B) There were no actions that the project leaders could have taken that would have solved the controlling problems of the Alpha Supplement project. C) The insufficient time allocated for product development was the only failure related to planning. D) If the project leaders had located alternate component providers, the Alpha Supplement project still would have failed. E) The failure of the Alpha Supplement project will make it more difficult for other projects to be approved. Answer: D Explanation: D) The planning failures guaranteed failure all by themselves. Therefore, the project would have failed even if the other problems (such as the component provider problem in Choice D) weren't there. Choices A and E are outside the scope of these claims. We don't know what typically happens (Choice A). Although it is possible that later projects will have a hard time getting approved (Choice E), the passage doesn't say what will happen in the future. Choice B: For all we know, the problems related to controlling were fixable. We just know that they were bad. Choice C: There could have been other problems related to planning. 112. Which of the following, if true, would MOST strongly suggest that the failures attributed to leadership were also caused by failures in organizing? A) Most of the conflicts between team members concerned questions of roles and determining who had the authority to make decisions. B) The market research was delayed because the firms hired to conduct customer interviews backed out of the project after the market research began. C) The reports of conflicts among team members were exaggerated in order to make the project leaders seem less competent. D) The failure to locate an alternative component provider is very similar to other failures that have appeared in past projects. E) Even the most successful projects encounter some problems related to each of the main management functions. Answer: A Explanation: A) The leadership problems included conflicts, but if Choice A is true, then those conflicts were caused by failures of organizing. That doesn't mean that leadership played no role here, but if Choice A is true, then problems of organizing contributed, too. Choice B makes the planning problems sound as though they were influenced by controlling problems. Choice C makes the leadership problem sound not as bad as they thought, but it doesn't tell us that those problems were caused by something else. Choice D makes the controlling problems sound as if they involved a failure to plan. Choice E says that some problems are expected, but this doesn't place the blame on organizing instead of leadership. Product Director: We need to pick the best manager for the Prensabi software project. The project involves the latest technology and is very complicated. For example, this project uses a technology called Stage, which is a motion-capture technique that does not require actors to wear specialized gear to record their movements. Since this is a technical project that requires strong technical skills, we should pick the manager with the strongest technical skills. Executive: The manager needs some familiarity with the technology, but he or she won't actually be writing the software code. The bigger challenge here is to analyze the goals of the project and make sure that it is being developed according to a strong overall vision. That's why we should insist that the manager have outstanding conceptual skills. 113. The Product Director and the Executive most likely disagree about which of the following questions? A) Does the manager need to have any technical skills? B) In choosing the best manager for the Prensabi project, are conceptual skills more important than human skills? C) Would it be a mistake to choose the manager with the strongest technical skills if that manager has weak conceptual skills? D) Is it ever a good idea to require strong conceptual skills when choosing a manager for a project? E) Is it likely that the requirements of the Prensabi project will change after the project is launched? Answer: C Explanation: C) The Product Director wants to choose the manager with the strongest technical skills, and that's it. The Executive says that some skills would be required, and so they would agree on Choice A. But the Executive wants to require strong conceptual skills, and so the two would disagree about Choice C. Choices B and E: neither speaker mentioned human skills (Choice B) or the possibility of changing requirements (Choice E). Choice D is tempting, because the Executive definitely would say "yes." But the Product Director doesn't claim that conceptual skills should never be required. So we don't know how the Product Director would respond to the question in Choice D. 114. Which of the following is most similar to the reasoning employed by the Product Director? A) The product requirements for the online collaboration tool are well-understood now, but they may change as the project develops. Since we cannot tell what will be required, we must choose a manager whose skills are outstanding in every way. B) It is clear that we need a large truck in order to move all of our office equipment. Therefore, we should choose the largest truck possible. C) The project before us requires both human skills and conceptual skills. Therefore, we should appoint two managers: one with outstanding human skills and one with outstanding conceptual skills. D) We need to choose a site for the sales conference. Choosing a place close to most employees' workplaces would save travel costs, but some employees also prefer to travel to an exotic location far away. Since it will be impossible to meet both goals, we should focus on the goal that is easier to accomplish. E) The design of the new office building should impress visiting guests, but that should not be the dominant factor in our decision. Relatively few guests visit our offices. Instead, we should save money by choosing an energy-efficient design. Answer: B Explanation: B) The Product Director thinks that technical skills are important, and therefore wants the manager with the strongest such skills. Similarly, in Choice B size is important, and so the author recommends the biggest truck. In both cases only one factor is important, and the recommendation is to get the most (strongest/biggest) of that. Choices A and C are flawed, but have elements that the original doesn't, such as "outstanding in every way" (Choice A) and multiple managers (Choice C). Choice D: "impossible to meet both goals" has no parallel in the original. Choice E sounds like something the Executive would say. 115. Which of the following, if true, would weaken the Product Director's argument? A) The project manager with the weakest technical skills also has the weakest human skills. B) The Prensabi project is so large that the project manager for the Prensabi project will be unable to take on any other projects until the Prensabi project is finished. C) The requirements of the Prensabi project are highly unusual. D) The project manager with the strongest technical skills has no experience with motion-capture technology. E) The project manager with the strongest conceptual skills has the weakest technical skills. Answer: D Explanation: D) Technical skills are required, and so the Product Director wants the person with the strongest technical skills. That isn't ridiculous, but what if that person doesn't have the specific technical skills that this project requires? If Choice D is true, then the person with the strongest technical skills does not have the technical skills required for this project. Choice A provides an additional reason not to choose the manager with the weak technical skills, but no one is recommending that manager anyway. Choices B and C: Knowing that the project is time-consuming (Choice B) and/or unusual (Choice C) doesn't tell us who should be managing it. Choice C might have been tempting, but we don't know why the project is unusual or how that would affect the requirements for the manager. Choice E would be a reason not to pick the manager with the strongest conceptual skills, but argues against the Executive and not the Product Director. Even on that task, Choice E is weak because the Executive believes that the manager should have some technical skills, and for all we know the manager with the weakest technical skills still has enough technical skills to do the job. Since the mid-1980s, Disney's strategic planning group turned the company into a huge and diverse collection of media and entertainment businesses. The sprawling Disney grew to include everything from theme resorts and film studios to media networks to consumer products and a cruise line. The newly transformed Disney company proved hard to manage and performed unevenly. Recently, Disney disbanded the centralized strategic planning unit, decentralizing its functions to Disney division managers. Since then, Disney's management has helped it perform strongly in a competitive marketplace. 116. A strategic manager at Disney believes that the video-on-demand unit should be sold because the return it has made on Disney's investment has been below Disney's standards. Which of the following, if true, would MOST weaken the strategic manager's conclusion? A) Other units at Disney have earned even lower returns on investment than the video-on-demand unit has earned. B) Video-on-demand is gaining in popularity over other methods of viewing videos. C) Some companies expect lower returns on investment than Disney expects. D) The video-on-demand unit uses a technology that was developed outside of Disney. E) If Disney sold off its video-on-demand unit, the move would likely be seen as the start of a trend in the media world. Answer: B Explanation: B) The video-on-demand unit has earned less than Disney expects, but what about the future? If Choice B were true, then video-on-demand is likely to perform better in the future, which would be a reason to keep it. Choice A says that other units have done worse, but that is not a reason to keep something that has performed poorly. Choice C says that some companies have different standards, but we have no reason to believe that those standards would be appropriate for Disney. Choice D discusses where the technology was developed, which is irrelevant. The issue is performance, not origin. Choice E tells us about the effects of the sale but not whether the sale itself is a good thing. 117. Which of the following, if true, would support the conclusion that disbanding the centralized planning unit helped Disney perform strongly? A) The centralized planning unit used a decision procedure that required business units to answer the same fundamental questions each year. B) In the entertainment industry, companies can be profitable if just a few of their projects earn extraordinarily high returns. C) The centralized planning unit was created in response to concerns that the company was losing focus on its core business. D) An economic downturn that took place after Disney disbanded the centralized planning unit reduced Disney customers' discretionary income. E) Disney's rivals often change their management structures as part of efforts to make their organizations more efficient and customer-focused. Answer: D Explanation: D) Disney performed well after the centralized planning unit was disbanded, but so what? Maybe Disney performed well for other reasons. Maybe the economy did better, and as result everyone should expect to do better. Choice D rules out this possibility and thereby strengthens the argument. Choice A talks about a decision procedure. Asking the same fundamental questions might be a good thing or a bad thing. There's no way to tell, so Choice A does not weaken the argument here. Choices B and E are about the industry in general, and don't tell us anything about the centralized planning unit at Disney. Choice C would weaken the argument by pointing out the relevance of the centralized planning unit. 118. Suppose that one of Disney's business units is a chain of sound studios. The studios have low profit potential, and the chain commands a relatively small share of the market. On these grounds, Disney is considering whether to sell the chain. Which of the following, if true, would MOST strongly suggest that Disney should keep the chain instead? A) The chain has reduced its operating loss in each of the last three years. B) The chain has penetrated the market in coastal areas but not inland areas. C) Other Disney companies use the chain's studios for a wide variety of projects, resulting in significant cost savings for Disney. D) The chain uses the most up-to-date technology in its sound studios. E) The chain staffing levels are comparable to those of similar companies in the industry. Answer: C Explanation: C) Normally, low profit potential and low market share indicate that selling might be the best option. But Choice C suggests a synergy benefit that provides a reason to keep the unit. If Choice C were true, then Disney might benefit from owning the unit despite low profits and low market share. Choice A says that things are not as bad as they used to be, but that's not an argument to keep it around. Losses are still bad, even if they are smaller than they were before. Choice B distinguishes coastal from inland areas, but there's no reason to believe that this makes a difference. Choice D, if anything, would weaken the argument. If the company can't succeed even though it has good equipment, then it might be time to sell it. Choice E says that staffing levels are typical for the industry, but that doesn't tell us if Disney should keep the unit or not. Kohler makes and markets familiar kitchen and bathroom fixtures. But Kohler also offers a breadth of other products and services, including furniture, tile and stone, and even small engines and backup power systems. It also owns resorts and spas. Kohler ties this diverse product portfolio together under the mission of "contributing to a higher level of gracious living for those who are touched by our products and services." Kohler's overall objective is to build profitable customer relationships by developing efficient yet beautiful products that embrace the "essence of gracious living." 119. If Kohler became known as a provider of products and services that embrace the "essence of gracious living," which of the following would be the MOST likely result? A) Kohler would feel pressure to expand its business to include a wider range of products and services. B) Customers who had a positive experience with some of Kohler's products would be more interested in trying other Kohler products. C) Kohler's divisions would be more likely to create their own individual mission statements. D) Sales of higher-priced goods and services would increase less than sales of lower-priced goods and services. E) Kohler's customers would be more likely to focus on price and less likely to focus on customer service. Answer: B Explanation: B) Customers who like Kohler's products and believe that Kohler stands for "gracious living" will associate "gracious living" with other Kohler products. This would make them more likely to try those products, Choice B. Choice A goes against the passage, which suggests that Kohler is more focused, adding only products and services that fit its mission. Choice C also goes against the passage, which suggests that Kohler is more unified in purpose. Choice D speculates about sales of higher-priced and lower-priced goods, but there is not enough information to make any solid conclusion here. Choice E goes against the passage, since the customers motivated by "gracious living" don't sound like the same people who hunt for the lowest price. 120. Suppose that Kohler is deciding whether to create a line of self-installed kitchen and bathroom fixtures. In what way would Kohler's definition of its mission lead it to make a different decision than it would make if it had no defined mission and merely attempted to follow widely accepted business practices? A) Kohler would focus on the customers' underlying needs instead of their demand for existing Kohler products. B) Kohler would pursue opportunities that are very different from the areas in which it has competed successfully. C) Kohler would alter its conception of "gracious living" to include activities such as installing kitchen and bathroom fixtures. D) Kohler would not produce the new line of fixtures if it determined that doing so would not fit with its definition of "gracious living." E) Kohler would create the new line of fixtures if the expected profits were higher than products that could more reasonably fit under its definition of "gracious living." Answer: D Explanation: D) Having a brand identity has advantages, but keeping that identity will sometimes require an organization to pass up opportunities that would conflict with the brand's image. In this case, Kohler's mission would lead it to avoid the line of fixtures if, as in Choice D, that line did not fit with the mission. Choice A is good advice for any company, but does not speak to Kohler's mission. Choices B, C, and E go against the passage. Having a mission determines what the organization does, not the other way around. Cathi Prokofit is a candidate for a position at Domino Grace, a financial services firm. She knows that corporate culture can have a large impact on employees, and so she is trying to learn as much as she can about the culture at Domino Grace. During one of her interviews, a Domino Grace Human Resources representative describes the culture as very team-oriented, people-oriented, and hard-working. 121. Which of the following best explains why Cathi should be skeptical about the description of the corporate culture at Domino Grace? A) Human Resources representatives have no direct knowledge of corporate cultures. B) Human Resources representatives have an incentive to describe the company in a positive light. C) Human Resources representatives have a strong role in determining corporate culture. D) The description of the corporate culture at Domino Grace is self-contradictory. E) There are no other reliable sources of information about the corporate culture at Domino Grace. Answer: B Explanation: B) The HR representative claims that the Domino Grace corporate culture is team-oriented, people-oriented, and hard-working. That sounds great, but what would we expect the HR representative to say? If Domino Grace is a nasty place where management doesn't care and no one wants to work, would we expect the HR representative to say that? People representing the company to potential employees have an incentive to present the company in a positive way, and so Choice B explains why Cathi might be skeptical about the description. Choice A: Human Resources representatives usually know what's going on. Choice C isn't always true, and even if it were, then it would make the description sound more believable. Choice D: There's nothing self-contradictory about the description. All those things could be true. Cathi just doesn't know if they are. Choice E isn't accurate, and if it were, it would force Cathi to believe the description. 122. Which of the following questions would be most important to determine the attitude toward risk that prevails in Domino Grace's corporate culture? A) Have any initiatives produced extremely positive results? B) How does the pay of the top executives at Domino Grace compare to that of top executives at other companies? C) Were failed projects more likely to suffer from insufficient attention to detail or ineffective teamwork? D) What procedures does Domino Grace use before deciding whether to proceed with a new initiative? E) Does Domino Grace ever place the interests of its employees ahead of its interest in financial performance? Answer: D Explanation: D) Risk tolerance is the willingness to go forward even though something might go wrong. So Choice D tells us about Domino Grace's attitude toward risk. Choice A is tempting, but the fact that an initiative went well doesn't mean that it was risky. Choice B: There is no strong connection between executive pay and attitudes toward risk. Choices C and E shed light on other aspects of Domino Grace's corporate culture, but not their attitude toward risk. 123. Which of the following, if true, would support the conclusion that Domino Grace rewards employees based on the process that led to results and not simply the results themselves? A) When initiatives achieve especially strong results, employees often receive supplementary bonuses in excess of what is called for in their bonus plan. B) Employees are not punished when initiatives fail due to changes in external environment that could not have been predicted. C) Employees are often rewarded for successful initiatives even when the employees' efforts did not contribute to the success of the initiative. D) Employees are rewarded for positive outcomes but not punished for negative ones. E) Employees are punished for negative outcomes but not rewarded for positive ones. Answer: B Explanation: B) A focus on outcomes means that the result is what's important. Good results get rewarded, and bad results get punished. A focus on process means the steps that went into that result are what matters. A good result might not be rewarded if it was achieved in a bad way, or, as Choice B has it, a bad result might be excused if the result was not the fault of the people involved. The other choices are consistent with a focus on results over process. 124. Cathi has learned that organizations that promote employees' knowledge of the organization's history tend to have strong corporate cultures and that Domino Grace employees lack such knowledge. Cathi concludes that Domino Grace lacks a strong corporate culture. Which of the following points out a flaw in this reasoning? A) It fails to consider the possibility that Domino Grace has a long history that would inspire employees. B) It mistakenly assumes that all companies with strong corporate cultures adopt the same corporate culture. C) It erroneously concludes that the strength of a corporate culture has no effect on that company's performance. D) It is based on the belief that a few exceptions invalidate a rule that applies in most cases. E) It presupposes that employees' knowledge of company history is necessary in order to have a strong corporate culture. Answer: E Explanation: E) Knowledge of history indicates a strong corporate culture, but it goes too far to claim that any company that lacks such knowledge lacks a strong corporate culture. Lots of other things could indicate a strong culture, so it is a mistake to think that this knowledge is necessary. Choice E points this out. Choice A: Cathi thinks that history is important, so she doesn't do what Choice A says she does. Choice B would be a problem if Cathi did it, but she doesn't make that claim. Choice C is another claim that Cathi doesn't make. She never mentions performance. Choice D is the opposite of what Cathi does. She ignores the possibility of exceptions. 125. Which of the following, if true, would BEST support the conclusion that Domino Grace has a weak corporate culture? A) Operations employees operate in a team-based environment; Human Resources employees promote a people-oriented atmosphere. B) The Sales department is run in a highly competitive way; the executives at Domino Grace seek a stable revenue stream instead of spending resources pursuing new revenue streams. C) Sales employees are actively encouraged to take risks; Accounts employees are rewarded based on the percentage of their clients that stay with Domino Grace. D) The Operations staff pursues a philosophy of innovation; the Accounting department follows legally required procedures. E) Accounts employees are expected to show great attention to detail. Sales employees are judged based on the revenue they generate and not the steps they took to generate that revenue. Answer: C Explanation: C) If a company has a weak corporate culture, values are not shared widely. So the choice that provides evidence of a weak corporate culture will be the one that suggests the greatest inconsistency. Only Choice C involves a contradiction. Sales employees are encouraged to take risks, but the Accounts employees are encouraged to avoid anything that might make a client leave. If the corporate culture were strong, then the same values would be shared, but Choice C suggests that they are not. The other choices involve different aspects of corporate culture that could coexist without contradiction. Choice D might seem like a contradiction, but sticking to the law doesn't mean that you're not innovative. Test Bank for Business Essentials US Edition Ronald J. Ebert, Ricky W. Griffin 9780133034028, 9780273766599, 9780136070764
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