Description

INSTANT DOWNLOAD COMPLETE TEST BANK WITH ANSWERS

 

 

ISBN-10: 0132176319
ISBN-13: 9780132176316

 

Modern Management Concepts and Skills 12th Edition by Samuel C. Certo -Test Bank

 

 

Sample  Questions

 

Modern Management, 12e (Certo)

Chapter 3   Corporate Social Responsibility, Ethics, and Sustainability

 

1) According to the concept of corporate social responsibility, managers should regard societal goals as more important than organizational goals.

Answer:  FALSE

Page Ref: 52

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

2) The Davis Model of Corporate Social Responsibility proposes businesses to operate as two-way open systems, with open receipt of inputs from society and open disclosure of operations to the public.

Answer:  TRUE

Page Ref: 53

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

3) Certain business institutions become involved in certain social problems that are outside their normal areas of operation. This behavior is inconsistent with the Davis Model of Corporate Social Responsibility.

Answer:  FALSE

Page Ref: 54

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

4) Consumer affairs and community volunteerism are considered areas of corporate social responsibility.

Answer:  TRUE

Page Ref: 54

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

 

5) Empirical studies, conducted by various corporations in the United States, have demonstrated a definitive relationship between corporate social responsibility and profitability.

Answer:  FALSE

Page Ref: 55

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

6) Adherence to legislated social responsibilities is the minimum standard of social responsibility performance that business managers must achieve.

Answer:  TRUE

Page Ref: 56

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

7) The primary function of the Equal Employment Opportunity Commission is to ensure that employers  holding federal contracts grant equal employment opportunity to people regardless of their race or sex.

Answer:  FALSE

Page Ref: 56

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

8) The primary function of the Consumer Product Safety Commission is the regulation of safety and health conditions in nongovernment workplaces.

Answer:  FALSE

Page Ref: 56

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

9) The greater the degree of effectiveness and efficiency in pursuing its social responsibilities, the more socially responsive the organization is said to be.

Answer:  TRUE

Page Ref: 57

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

 

10) Any individual or group that is directly or indirectly affected by an organization’s decisions is called a stakeholder.

Answer:  TRUE

Page Ref: 58

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

11) The social obligation approach considers business as having both societal and economic goals as well as the obligation to anticipate potential social problems and work actively toward preventing their occurrence.

Answer:  FALSE

Page Ref: 59

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

12) Organizations that take the social obligation approach usually achieve higher levels of social responsiveness than organizations that take the social responsibility approach.

Answer:  FALSE

Page Ref: 60

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

13) Controlling in the area of social responsibility does not entail assessments or measurements.

Answer:  FALSE

Page Ref: 61

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

14) All companies should take social responsibility measurements in the quality-of-life area and the economic function area.

Answer:  TRUE

Page Ref: 61-62

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

15) A social audit is conducted to measure the present social responsibility activities of an organization.

Answer:  TRUE

Page Ref: 62

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

16) Ethical managers strive for success within the confines of sound management practices that are characterized by fairness and justice.

Answer:  TRUE

Page Ref: 63

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

17) A code of ethics is an informal statement that organizations release to help its employees obtain a basic understanding of ethics.

Answer:  FALSE

Page Ref: 64

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

18) The utilitarian principle advocates the view that people should act in a way they would expect others to act toward them.

Answer:  FALSE

Page Ref: 66

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

19) Kant’s categorical imperative proposes to act in such a way that the action taken under the circumstances could be a universal law, or rule, of behavior.

Answer:  TRUE

Page Ref: 67

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

20) A whistle-blower is an employee who performs quality reviews within an organization and reports flaws in the processes.

Answer:  FALSE

Page Ref: 68

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

21) The Sarbanes-Oxley Act prohibits retaliation by employers against whistle-blowers.

Answer:  TRUE

Page Ref: 68

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

22) Sustainability is the degree to which a person or entity can put its competitors out of business.

Answer:  FALSE

Page Ref: 68

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

23) The term triple bottom-line emphasizes that managers should focus on building organizations that are sustainable in economic, environmental, and societal activities.

Answer:  FALSE

Page Ref: 69

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

24) Managers pursue sustainability because it serves as a catalyst for innovation.

Answer:  TRUE

Page Ref: 70

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

25) Which of the following statements is true about corporate social responsibility?

  1. A) It is the managerial obligation to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem.
  2. B) It is the managerial obligation to cater to the needs of the stockholders, while abiding by the laws of the society.
  3. C) It is the managerial obligation to take action that protects and improves both the welfare of society as a whole and the interests of the organization.
  4. D) It is the managerial obligation to abide to societal laws when pursuing organizational goals.
  5. E) It is the managerial obligation to ensure ethical decision-making in an organization to benefit its customers.

Answer:  C

Page Ref: 52

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

26) In the Davis Model of Corporate Social Responsibility, Proposition 1 states that social responsibility arises from social power. This proposition is derived from the premise that ________.

  1. A) business should consider the long- and short-term societal consequences of all business activities before technical feasibility and economic profitability
  2. B) business must be willing to listen to what must be done to sustain or improve societal welfare
  3. C) if a business possesses the expertise to solve a social problem with which it may not be directly associated, it should be held responsible for helping society solve that problem
  4. D) business needs to completely finance activities that may be socially advantageous but economically disadvantageous
  5. E) business has a significant amount of influence on critical social issues such as minority employment and environmental pollution

Answer:  E

Page Ref: 53

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

27) Which of the following propositions of the Davis Model of Corporate Social Responsibility states that business cannot be expected to completely finance activities that may be socially advantageous but economically disadvantageous?

  1. A) Proposition 5: Business institutions, as citizens, have the responsibility to become involved in certain social problems that are outside their normal areas of operation.
  2. B) Proposition 1: Social responsibility arises from social power.
  3. C) Proposition 3: The social costs and benefits of an activity, product, or service shall be thoroughly calculated and considered in deciding whether to proceed with it.
  4. D) Proposition 4: The social costs related to each activity, product, or service shall be passed on to the consumer.
  5. E) Proposition 2: Business shall operate as a two-way open system, with open receipt of inputs from society and open disclosure of its operations to the public.

Answer:  D

Page Ref: 54

Objective:  1

Difficulty:  Moderate

Classification:  Conceptual

 

28) Which of the following arguments provided by Milton Friedman suggests that corporate social responsibility may be unethical?

  1. A) Corporate social responsibility compels managers to spend money on some individuals that rightfully belongs to other individuals.
  2. B) Corporate social responsibility is not mandated by law, which means that it has to be done by will, not by compulsion.
  3. C) Empirical studies have not yet demonstrated a definitive relationship between corporate social responsibility and profitability.
  4. D) Profitability and growth go hand-in-hand with responsible treatment of employees, customers, and the community.
  5. E) Firms use corporate social responsibility to increase their brand awareness.

Answer:  A

Page Ref: 55

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

 

 

29) Which of the following is the primary function of the Equal Employment Opportunity Commission?

  1. A) It ensures that employers holding federal contracts grant equal employment opportunity to people regardless of their race or sex.
  2. B) It strives to reduce consumer misunderstanding of manufacturers’ product design, labeling, and so on, by promoting clarity of these messages.
  3. C) It formulates and enforces environmental standards in such areas as water, air, and noise pollution.
  4. D) It regulates safety and health conditions in nongovernment workplaces.
  5. E) It investigates and conciliates employment discrimination complaints that are based on race, sex, or creed.

Answer:  E

Page Ref: 56

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

30) The primary function of the Office of Federal Contract Compliance Programs is to ensure that employers holding federal contracts ________.

  1. A) abide by the safety and health regulations of the Occupational Safety and Health Administration
  2. B) improve safety conditions for workers by enforcing all safety and equipment standards
  3. C) grant equal employment opportunity to people regardless of their race or sex
  4. D) strive to reduce consumer misunderstanding of its products
  5. E) abide by the environmental standards enforced by the Environment Protection Agency

Answer:  C

Page Ref: 56

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

 

31) Which of the following is the primary function of the Consumer Product Safety Commission?

  1. A) It ensures that employers holding federal contracts abide by the product safety standards.
  2. B) It strives to reduce consumer misunderstanding of manufacturers’ product design, labeling, and so on, by promoting clarity of these messages.
  3. C) It formulates and enforces environmental standards in such areas as water, air, and noise pollution.
  4. D) It regulates safety and health conditions in nongovernment workplaces.
  5. E) It investigates product safety concerns prior to the launch of a product.

Answer:  B

Page Ref: 56

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

 

 

32) Lebron wants to file a complaint against EatFry, a fast-food restaurant, because he was rejected in a job interview with the firm. Lebron believes that he was discriminated because of race. Which of the following federal agencies should he approach?

  1. A) Consumer Product Safety Commission
  2. B) Mining Enforcement and Safety Administration
  3. C) Occupational Safety and Health Administration
  4. D) Environmental Protection Agency
  5. E) Equal Employment Opportunity Commission

Answer:  E

Page Ref: 56

AACSB:  Analytic Skills

Objective:  2

Difficulty:  Easy

Classification:  Application

33) Social responsiveness can be defined as ________.

  1. A) the speed with which an organization adapts to the changing societal culture
  2. B) an organization’s effectiveness in abiding by the laws of the society
  3. C) the degree of effectiveness and efficiency with which an organization fulfills its stockholders’ needs while benefitting the stakeholders
  4. D) the degree of effectiveness and efficiency an organization displays in pursuing its social responsibilities
  5. E) the degree of effectiveness with which an organization can predict the changes in a society, such as the consumers changing preferences

Answer:  D

Page Ref: 57

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

34) Managers can fulfill their social obligation towards consumers by ________.

  1. A) abiding to the laws
  2. B) providing safe working environments
  3. C) repaying debts
  4. D) increasing the value of the organization
  5. E) providing safe products

Answer:  E

Page Ref: 58

Objective:  3

Difficulty:  Moderate

Classification:  Conceptual

 

 

35) Managers who have successfully increased the value of the organization have fulfilled their social obligation towards ________.

  1. A) stockholders
  2. B) consumers
  3. C) government agencies
  4. D) employees and unions
  5. E) banks and other lenders

Answer:  A

Page Ref: 58

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

36) Managers can fulfill their social obligation towards government agencies by ________.

  1. A) providing safe products
  2. B) repaying debts to banks
  3. C) abiding by the laws
  4. D) increasing the value of the organization
  5. E) providing safe working environments

Answer:  C

Page Ref: 58

Objective:  3

Difficulty:  Moderate

Classification:  Conceptual

37) Tangarine, a detergent manufacturer, realizes that a malfunction of one of its automated machines has significantly altered the composition of the detergent. Continued exposure to this altered detergent can cause skin cancer in the long-term. The social obligation to which of its stakeholders is Tangarine violating?

  1. A) the suppliers
  2. B) the employees
  3. C) the stockholder
  4. D) the customers
  5. E) the unions

Answer:  D

Page Ref: 58

AACSB:  Analytic Skills

Objective:  3

Difficulty:  Moderate

Classification:  Application

 

 

38) Which of the following statements is true about the social obligation approach?

  1. A) It sees business as having both economic and societal goals.
  2. B) It considers business as having both societal and economic goals as well as the obligation to anticipate potential social problems.
  3. C) It sees business as having societal goals and the obligation to anticipate potential social problems, but lacking economic goals.
  4. D) It considers business as having primarily economic purposes and confines social responsibility activity mainly to existing legislation.
  5. E) It considers business as having both societal and economic goals as well as the obligation to anticipate potential social problems and work actively toward preventing their occurrence.

Answer:  D

Page Ref: 59

Objective:  3

Difficulty:  Moderate

Classification:  Conceptual

 

39) The social responsibility approach sees business as having ________.

  1. A) both societal and economic goals as well as the obligation to anticipate potential social problems and work actively toward preventing their occurrence
  2. B) societal goals and the obligation to anticipate potential social problems, but lacking economic goals.
  3. C) both societal and economic goals as well as the obligation to anticipate potential social problems
  4. D) primarily economic purposes and confines social responsibility activity mainly to existing legislation
  5. E) both economic and societal goals

Answer:  E

Page Ref: 59

Objective:  3

Difficulty:  Moderate

Classification:  Conceptual

40) Which of the following statements is true about the social responsiveness approach?

  1. A) It sees business as having societal goals, but lacking economic goals.
  2. B) It considers business as having both societal and economic goals as well as the obligation to anticipate potential social problems and work actively toward preventing their occurrence.
  3. C) It sees business as having societal goals and the obligation to anticipate potential social problems, but lacking economic goals.
  4. D) It considers business as having primarily economic purposes and confines social responsibility activity mainly to existing legislation.
  5. E) It sees business as having both economic and societal goals.

Answer:  B

Page Ref: 59

Objective:  3

Difficulty:  Moderate

Classification:  Conceptual

 

41) ________ is defined as the process of determining how the organization will achieve its objectives, or get where it wants to go.

  1. A) Influencing
  2. B) Organizing
  3. C) Planning
  4. D) Controlling
  5. E) Implementing

Answer:  C

Page Ref: 60

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

42) Planning social responsibility activities involves ________.

  1. A) establishing all organizational resources that emphasize the attainment of the organization’s social objectives
  2. B) determining how the organization will achieve its social responsibility objectives
  3. C) guiding the activities of organization members to help attain the organization’s social responsibility objectives
  4. D) making things happen as they were planned to happen
  5. E) determining and reporting progress in the attainment of social responsibility objectives

Answer:  B

Page Ref: 60

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

43) Which of the following statements is true about organizing?

  1. A) It is the process of determining how the organization will achieve its objectives.
  2. B) It is the management process of guiding the activities of organization members to help attain organizational objectives.
  3. C) It is the process of making things happen as they were planned to happen.
  4. D) It is the process of establishing orderly uses for all the organization’s resources.
  5. E) It is the process of determining how the organization gets where it wants to go.

Answer:  D

Page Ref: 60

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

 

44) Organizing for social responsibility activities entails ________.

  1. A) making things happen as they were planned to happen
  2. B) guiding the activities of organization members to help attain the organization’s social responsibility objectives
  3. C) determining how the organization will achieve its social responsibility objectives
  4. D) establishing for all organizational resources logical uses that emphasize the attainment of the organization’s social objectives
  5. E) determining and reporting progress in the attainment of social responsibility objectives

Answer:  D

Page Ref: 60-61

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

45) ________ is defined as the management process of guiding the activities of organization members to help attain organizational objectives.

  1. A) Implementing
  2. B) Organizing
  3. C) Controlling
  4. D) Planning
  5. E) Influencing

Answer:  E

Page Ref: 61

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

46) As applied to the social responsibility area, influencing is the process of ________.

  1. A) determining how the organization will achieve its social responsibility objectives
  2. B) guiding the activities of organization members to help attain the organization’s social responsibility objectives
  3. C) making things happen as they were planned to happen
  4. D) determining and reporting progress in the attainment of social responsibility objectives
  5. E) establishing for all organizational resources logical uses that emphasize the attainment of the organization’s social objectives

Answer:  B

Page Ref: 61

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

47) In which of the following stages of performing social responsibility activities does a manager lead, communicate, motivate, and work with groups to attain the organization’s social responsibility objectives?

  1. A) influencing
  2. B) controlling
  3. C) implementing
  4. D) planning
  5. E) organizing

Answer:  A

Page Ref: 61

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

48) Which of the following occurs during the controlling process?

  1. A) establishing orderly uses for all the organization’s resources
  2. B) guiding the activities of organization members to help attain organizational objectives
  3. C) determining how the organization will achieve its objectives
  4. D) making things happen as they were planned to happen
  5. E) determining how the organization will get where it wants to go

Answer:  D

Page Ref: 61

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

49) Which of the following activities indicates that the organization is conducting a social responsibility measurement in the economic function area?

  1. A) creating jobs for society
  2. B) dealing fairly with employees and customers
  3. C) investing money to solve community social problems
  4. D) conducting studies to pinpoint social problems
  5. E) participating in long-range community planning

Answer:  A

Page Ref: 61

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

 

50) The social responsibility measurement in the ________ area includes performing tasks like producing goods and services that people need, paying fair wages, and ensuring worker safety.

  1. A) problem-recognition
  2. B) quality-of-life
  3. C) social investment
  4. D) economic function
  5. E) problem-solving

Answer:  D

Page Ref: 61

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

51) Remington Steel Co. is a steel manufacturing company that has seen an increased number of work-related injuries in its factories and, recently, an accident that resulted in the death of a worker. To correct this problem, Remington replaced all its old machinery and equipment, restricted workers’ access to dangerous machinery, and made safety costumes mandatory for workers at all times. This resulted in a drastic decrease in work injuries. By performing these activities, Remington conducted a social responsibility measurement in the ________ area.

  1. A) problem-solving
  2. B) economic function
  3. C) problem-recognition
  4. D) social investment
  5. E) quality-of-life

Answer:  B

Page Ref: 61

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

52) Manga, a fashion and apparel company, opens a new factory in India. By performing this activity, Manga conducted a social responsibility measurement in the ________ area.

  1. A) social investment
  2. B) quality-of-life
  3. C) problem-recognition
  4. D) economic function
  5. E) problem-solving

Answer:  D

Page Ref: 61

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

 

53) Which of the following activities indicates that the organization is conducting a social responsibility measurement in the quality-of-life area?

  1. A) conducting studies to pinpoint social problems
  2. B) ensuring worker safety
  3. C) dealing fairly with employees and customers
  4. D) participating in long-range community planning
  5. E) producing goods and services that people need

Answer:  C

Page Ref: 62

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

54) The social responsibility measurement in the ________ area includes tasks like making an effort to preserve the natural environment.

  1. A) problem-solving
  2. B) economic function
  3. C) social investment
  4. D) problem-recognition
  5. E) quality-of-life

Answer:  E

Page Ref: 62

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

55) Which of the following activities performed by an organization indicates that it is conducting a social responsibility measurement in the social investment area?

  1. A) putting in money and human resources to solve community social problems
  2. B) participating in long-range community planning
  3. C) conducting studies to pinpoint social problems
  4. D) ensuring worker safety
  5. E) dealing fairly with employees and customers

Answer:  A

Page Ref: 62

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

 

56) A firm that is involved in assisting community organizations dedicated to education, charities, and the arts is conducting a social responsibility measurement in the ________ area.

  1. A) problem-solving
  2. B) economic function
  3. C) social investment
  4. D) problem-recognition
  5. E) quality-of-life

Answer:  C

Page Ref: 62

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

57) Which of the following is an example of an organization undertaking social responsibility measurements in the social investment area?

  1. A) Blanc Co., a mobile manufacturer, donates $10 million to Lance Armstrong Cancer Foundation.
  2. B) Caterpillar, the world’s largest manufacturer of construction and mining equipment, replaces its old machinery and equipments to reduce workers injuries.
  3. C) Glance, a textile manufacturing company, increases its workers pay after its union declared a strike to demand pay hikes.
  4. D) Glasco Computers, a computer hardware manufacturer, makes sure that it abides by the law while catering to its customers’ needs.
  5. E) UCB, a fashion and apparel company, opens six factories in different locations in China.

Answer:  A

Page Ref: 62

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

58) Which of the following activities performed by an organization indicates that it is conducting a social responsibility measurement in the problem-solving area?

  1. A) ensuring worker safety
  2. B) conducting studies to pinpoint social problems
  3. C) dealing fairly with employees and customers
  4. D) producing goods and services that people need
  5. E) investing human resources to solve community social problems

Answer:  B

Page Ref: 62

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

 

59) A firm that is participating in long-range community planning is conduction a social responsibility measurement in the ________ area.

  1. A) problem-solving
  2. B) economic function
  3. C) social investment
  4. D) problem-recognition
  5. E) quality-of-life

Answer:  A

Page Ref: 62

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

60) Which of the following statements is true about a social audit?

  1. A) It is the process of measuring the increase in a firm’s brand awareness after it conducts social responsibility activities.
  2. B) It is the process of forecasting the impact of an organization’s social responsibility activities on the society to decide its feasibility.
  3. C) It is the process of measuring the increase in an organization’s profits after it has conducted social responsibility activities.
  4. D) It is the process of measuring the present social responsibility activities of an organization to assess its performance in this area.
  5. E) It is the process of measuring the impact of an organization’s social responsibility activities on the society.

Answer:  D

Page Ref: 62

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

61) The study of ethics in management can be approached from many different directions. A practical approach is to view ethics as catalyzing managers to ________.

  1. A) abide by the laws
  2. B) fulfill stockholders needs
  3. C) encourage workforce diversity
  4. D) discourage whistleblowing
  5. E) take socially responsible actions

Answer:  E

Page Ref: 62

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

 

62) In business, ethics can be defined as ________.

  1. A) the capacity to reflect on customer preferences in the corporate decision-making process
  2. B) the capacity to reflect on competitive strategies in the corporate decision-making process
  3. C) the capacity to reflect on values in the corporate decision-making process
  4. D) the capacity to reflect on production bottlenecks in the corporate decision-making process
  5. E) the capacity to reflect on workforce diversity in the corporate decision-making process

Answer:  C

Page Ref: 63

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

63) ________ can be categorized as “outside” stakeholders of an organization.

  1. A) Stockholders
  2. B) Managers
  3. C) Employees
  4. D) Customers
  5. E) Shareholders

Answer:  D

Page Ref: 63

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

64) Which of the following suggests that an organization is acting unethically?

  1. A) The customers are unhappy with one of the products manufactured by the organization.
  2. B) The public pressures legislators and other government officials to enforce existing regulations.
  3. C) The organization looses its customers to competitors due to lack of after-sale services for its products.
  4. D) The public pressures the organization to conduct social responsibility activities.
  5. E) The union members of the organization declare a strike to demand a hike in salaries.

Answer:  B

Page Ref: 64

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

 

65) ________ is a formal statement that acts as a guide for the ethics of how people within a particular organization should act and make decisions.

  1. A) A social audit
  2. B) A whistleblower’s policy
  3. C) Corporate governance
  4. D) A code of ethics
  5. E) A mission statement

Answer:  D

Page Ref: 64

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

66) Which of the following actions suggests that an individual is following the golden rule?

  1. A) Acting in a way you would expect others to act toward you.
  2. B) Taking actions that would be viewed as proper by a disinterested panel of professional peers.
  3. C) Acting in a way that results in the greatest good for the greatest number of people.
  4. D) Taking actions that abide by the laws of the state.
  5. E) Acting in a way that the action taken under the circumstances could be a universal law of behavior.

Answer:  A

Page Ref: 66

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

67) Roger believes in the statement, “what you give, you receive.” He shows respect to everyone he knows and meets everyday and expects them to show him respect. Roger’s behavior is consistent with ________.

  1. A) the utilitarian principle
  2. B) the golden rule
  3. C) the deontological principle
  4. D) Kant’s categorical imperative
  5. E) the four-way test

Answer:  B

Page Ref: 66

AACSB:  Analytic Skills, Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

 

68) Individuals following the ________ act in a way that results in the greatest good for the greatest number of people.

  1. A) golden rule
  2. B) deontological principle
  3. C) utilitarian principle
  4. D) virtue ethics principle
  5. E) Kantian principle

Answer:  C

Page Ref: 66

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

69) Consider how the Federal Reserve Board sets interest rates. The Fed examines the relevant economic data and makes a judgment about the present and future state of the economy. If economic activity seems to be slowing down, the Fed might decide to lower interest rates as a means for stimulating economic growth. If the economy seems to be growing too fast and the inflation rate is increasing, they might choose to raise interest rates. Lowering or raising interest rates, in and of itself, is neither good nor bad; the rightness of the act depends on the consequences. This action is consistent with the ________.

  1. A) utilitarian principle
  2. B) golden rule
  3. C) virtue ethics principle
  4. D) deontological principle
  5. E) Kantian principle

Answer:  A

Page Ref: 66

AACSB:  Analytic Skills, Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Difficult

Classification:  Application

 

70) Which of the following actions suggests that an individual is following Kant’s categorical imperative?

  1. A) Acting in a way you would expect others to act toward you.
  2. B) Taking actions that would be viewed as proper by a disinterested panel of professional peers.
  3. C) Acting in a way that results in the greatest good for the greatest number of people.
  4. D) Taking actions that abide by the laws of the state.
  5. E) Acting in a way that the action taken under the circumstances could be a universal law of behavior.

Answer:  E

Page Ref: 67

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

71) Susanne does not lie. She does not lie even in situations where telling the truth would hurt an individual or lying could make someone feel better. In her words, “Lying is immoral. Nothing can justify lying to someone.” Susanne’s behavior is consistent with ________.

  1. A) the utilitarian principle
  2. B) the golden rule
  3. C) the consequentialist principle
  4. D) Kant’s categorical imperative
  5. E) the four-way test

Answer:  D

Page Ref: 67

AACSB:  Analytic Skills, Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Moderate

Classification:  Application

72) Which of the following scenarios can be justified by Kant’s categorical imperative?

  1. A) Rahman is a 9 year old boy who works in a manufacturing plant in India for 2 cents an hour to support his family.
  2. B) Bobby committed his first crime when he was 14 years old and required money to support his family.
  3. C) Joey killed a burglar who sneaked into his house and tried to kill him.
  4. D) Karol lied to her parents of Leon because she did not want them to know that she was pregnant.
  5. E) Percy stole his friend’s iPod because his parents did not have the money to afford it.

Answer:  C

Page Ref: 67

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

73) “Established laws are generally considered minimum standards for ethics.” Which of the following standards is based on the preceding statement?

  1. A) the legal test
  2. B) the utilitarian principle
  3. C) Kant’s categorical imperative
  4. D) the golden rule
  5. E) the four-way test

Answer:  A

Page Ref: 67

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

74) Which of the following is one of the questions asked by the managers while conducting the four-way test?

  1. A) Is the proposed action or decision legal?
  2. B) Is the decision truthful?
  3. C) Would I feel comfortable explaining to a national TV audience why I took this action?
  4. D) Is this decision beneficial for me?
  5. E) Is this decision improving employee productivity?

Answer:  B

Page Ref: 67

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

75) Which of the following was passed amid outcries of public outrage over outrageous management practices discovered at several companies including Enron, WorldCom, and Tyco?

  1. A) Gramm–Leach–Bliley Act
  2. B) Financial modernization Act
  3. C) Sarbanes-Oxley Act
  4. D) Patriot Act
  5. E) Freedom of Information Act

Answer:  C

Page Ref: 67

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

76) Which of the following statements is true about the Sarbanes-Oxley Act of 2002?

  1. A) It prohibits any one institution from acting as any combination of an investment bank, a commercial bank, and an insurance company.
  2. B) It allows for the full or partial disclosure of previously unreleased information and documents controlled by any public enterprise.
  3. C) It requires financial institutions to keep records of cash purchases of negotiable instruments and to report suspicious activity that might signify money laundering, tax evasion, or other criminal activities.
  4. D) Areas covered under this act include maintaining generally accepted accounting practices and ensuring company structure and processes that enhance integrity and reputation.
  5. E) It encourages commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.

Answer:  D

Page Ref: 67

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

77) The Sarbanes–Oxley Act supports ________ as a vehicle for both discouraging deceptive management practices while encouraging ethical management practices.

  1. A) shoulder surfing
  2. B) whistle-blowing
  3. C) phishing
  4. D) crowdsourcing
  5. E) nearshoring

Answer:  B

Page Ref: 68

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

78) ________ is the act of an employee reporting suspected misconduct or corruption believed to exist within an organization.

  1. A) Phishing
  2. B) Crowdsourcing
  3. C) Shoulder surfing
  4. D) Pharming
  5. E) Whistle-blowing

Answer:  E

Page Ref: 68

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

79) Brenda works as an accountant in a software firm. She notices that the company has inflated its balance sheet to show profits, when in reality it is under loss. Brenda reports this inconsistency to the CFO and then to the local authorities, when the CFO refused to take action. Which of the following explains Brenda actions?

  1. A) crowdsourcing
  2. B) phishing
  3. C) whistle-blowing
  4. D) shoulder surfing
  5. E) pharming

Answer:  C

Page Ref: 68

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

 

80) Which of the following is an example of whistle-blowing?

  1. A) Niobi, an employee of Glesnt Co., complains to her project manager about the sexual advances that Brent, her supervisor, makes on her.
  2. B) Rupert files a product liability suit against SilkSmooth Co., a shampoo manufacturer, because its use caused his hair to fall.
  3. C) Joan, an employee of Pierce International-a financial services firm, reports illegal accounting practices to the Security and Exchange Commission.
  4. D) Linda files a complaint to the Employee Equal Opportunity Commission against Jueruie Co. after she was rejected in the interview based on her gender.
  5. E) Noa, a customer of Cone Inc., complains about the bad customer-service it received for the products.

Answer:  C

Page Ref: 68

AACSB:  Analytic Skills, Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Difficult

Classification:  Application

81) A whistle-blower is ________ .

  1. A) the employee who reports the alleged activities of the firm
  2. B) the customer who files a product liability suit against the firm
  3. C) the business lawyer who protects the firm against law suits
  4. D) the employee who performs the unethical or illegal activity in the firm
  5. E) the manager who protects the employee who reports the alleged activities of the firm

Answer:  A

Page Ref: 68

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

82) Tavern Inc. is a personal investment firm contemplating the introduction of a whistleblower’s policy. It conducts a board meeting to thoroughly analyze the consequences of this action. During this meeting, Michelle, one of the members of the board, argues strongly against this decision. According to her, the fall of Enron in 2001, which resulted in thousands of employees losing their jobs and retirement pensions and investors losing millions of dollars, can be attributed to whistle-blowers like Sherron Watkins. Michelle believes that whistle-blowing was the primary cause for  Enron’s bankruptcy. Which of the following is a strong rebuttal to Michelle’s argument?

  1. A) Investors and employees alike are responsible for their own actions; they should be very careful when choosing firms to invest or work in.
  2. B) Whistle-blowers like Sherron Watkins have a very strong moral character which is uncommon in the population.
  3. C) Enron was committing a crime which would have gradually surfaced, causing more losses than those that occurred due to Sherron Watkins’ whistle-blowing act.
  4. D) Regulatory agencies and governmental institutions should be held responsible for Enron’s bankruptcy after Sherron Watkins’ whistle-blowing act.
  5. E) It was whistle-blowing that brought companies like Enron, Worldcom, and Tyco to its knees.

Answer:  C

Page Ref: 68

AACSB:  Reflective Thinking Skills

Objective:  4

Difficulty:  Difficult

Classification:  Critical thinking

 

83) ________ is the degree to which a person or entity can meet its present needs without compromising the ability of other people or entities to meet their needs in the future.

  1. A) Accountability
  2. B) Reliability
  3. C) Sustainability
  4. D) Maintainability
  5. E) Scalability

Answer:  C

Page Ref: 68

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

84) A sustainable organization is an organization that has the ability to ________.

  1. A) be profitable during challenging economic periods
  2. B) meet its present needs without compromising the ability of future generations to meet their needs
  3. C) produce high-quality products at reasonably low prices when the economy is unsupporting
  4. D) increase its brand awareness by conducting social responsibility activities on a large scale
  5. E) innovate continuously and produce high-quality innovative products on a consistent basis

Answer:  B

Page Ref: 69

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

85) In building a sustainable organization, management should strive to make the organization sustainable in three areas. Which of the following areas is the organization focusing on when it minimizes waste by not overproducing goods and generating a fair profit for stakeholders?

  1. A) the economy
  2. B) the customer
  3. C) the environment
  4. D) the government
  5. E) the society

Answer:  A

Page Ref: 69

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

86) In building a sustainable organization, management should strive to make the organization sustainable in three areas. Which of the following areas is the organization focusing on when it emphasizes performing behavior akin to protecting natural resources like air, water, and land?

  1. A) the economy
  2. B) the customer
  3. C) the environment
  4. D) the government
  5. E) the society

Answer:  C

Page Ref: 69

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

87) In building a sustainable organization, management should strive to make the organization sustainable in three areas. Which of the following areas is the organization focusing on when it maintains the well-being and protection of the communities in which it does business?

  1. A) the economy
  2. B) the customer
  3. C) the environment
  4. D) the government
  5. E) the society

Answer:  E

Page Ref: 69

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

88) The term ________ emphasizes that managers should focus on building organizations that are sustainable in economic, environmental, and societal activities.

  1. A) restructured bottom-line
  2. B) safe harbor bottom-line
  3. C) bottom-line synergy
  4. D) triple bottom-line
  5. E) competitive bottom-line

Answer:  D

Page Ref: 69

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

89) What are the major propositions of the Davis model of corporate social responsibility?

Answer:  Proposition 1: Social responsibility arises from social power. This proposition is derived from the premise that business has a significant amount of influence on, or power over, such critical social issues as minority employment and environmental pollution. In essence, the collective action of all businesses in the country primarily determines the proportion of minorities employed and the prevailing condition of the environment in which all citizens must live.

Proposition 2: Business shall operate as a two-way open system, with open receipt of inputs from society and open disclosure of its operations to the public. According to this proposition, business must be willing to listen to what must be done to sustain or improve societal welfare. In turn, society must be willing to listen to business reports on what it is doing to meet its social responsibilities. Davis suggests that there must be ongoing, honest, and open communications between business and society’s representatives if the overall welfare of society is to be maintained or improved.

Proposition 3: The social costs and benefits of an activity, product, or service shall be thoroughly calculated and considered in deciding whether to proceed with it. This proposition stresses that technical feasibility and economic profitability are not the only factors that should influence business decision making. Business should also consider both the long- and short-term societal consequences of all business activities before undertaking them.

Proposition 4: The social costs related to each activity, product, or service shall be passed on to the consumer. This proposition states that business cannot be expected to completely finance activities that may be socially advantageous but economically disadvantageous. The cost of maintaining socially desirable activities within business should be passed on to consumers through higher prices for the goods or services related to these activities.

Proposition 5: Business institutions, as citizens, have the responsibility to become involved in certain social problems that are outside their normal areas of operation. This last proposition points out that if a business possesses the expertise to solve a social problem with which it may not be directly associated, it should be held responsible for helping society solve that problem. Davis reasons that because business eventually will reap an increased profit from a generally improved society, business should share in the responsibility of all citizenry to generally improve society.

Page Ref: 53-54

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

90) Do you agree with the view that businesses must be involved in social responsibility activities? Explain your answer.

Answer:  Student answers will vary for this question. Some of the possible arguments are given below.

Arguments for business performing social responsibility activities: (1) Business, as a whole, is a subset of society, one that exerts a significant impact on the way society exists. Because business is such an influential member of society, it has the responsibility to help maintain and improve the overall welfare of society. (2) Business should perform social responsibility activities because profitability and growth go hand-in-hand with responsible treatment of employees, customers, and the community.

Arguments against business performing social responsibility activities: Making business managers simultaneously responsible to business owners for reaching profit objectives and to society for enhancing societal welfare sets up a conflict of interest that could potentially cause the demise of business as it is known today.

Page Ref: 54-55

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

 

91) Name two federal agencies that enforce social responsibility legislation and explain their primary roles.

Answer:  Equal Employment Opportunity Commission: Investigates and conciliates employment discrimination complaints that are based on race, sex, or creed

Environmental Protection Agency: Formulates and enforces environmental standards in such areas as water, air, and noise pollution.

The students may discuss any two of the seven agencies mentioned in the text.

Page Ref: 56

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

92) Who are organizational stakeholders and what types of responsibilities does an organization have to them?

Answer:  Organizational stakeholders are all the individuals and groups, both internal and external, which are directly or indirectly affected by an organization’s decisions. Some examples would include: stockholders – to increase the value of the organization and provide a reasonable return on investment; banks and other lenders – to repay the debts in a timely fashion; consumers – to provide safe products, to inform the consumer about the product; local communities – to avoid practices that harm the environment and perform activities that benefit the community; government and governmental agencies – to abide by the law.

Page Ref: 58

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  3

Difficulty:  Moderate

Classification:  Conceptual

93) S. Prakash Sethi has presented three important management approaches to meeting social obligations. Briefly explain these approaches.

Answer:  S. Prakash Sethi provides three ways that management can meet social obligations: (1) social obligation approach; (2) social responsibility approach; and (3) social responsiveness approach. The social obligation approach is an approach to meeting social obligations that considers business to have primarily economic purposes and confines social responsibility activity largely to conformance to existing legislation. The social responsibility approach is an approach to meeting social obligations that considers business as having both societal and economic goals. The social responsiveness approach is an approach to meeting social obligations that considers business to have societal and economic goals as well as the obligation to anticipate potential social problems and to work actively toward preventing them from occurring.

Page Ref: 59-60

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

94) What are the four areas in which all companies should take social responsibility measurements?

Answer:  The economic function area: This measurement gives some indication of the economic contribution the organization is making to society.

The quality-of-life area: The measurement of quality of life should focus on whether the organization is improving or degrading the general quality of life in society.

The social investment area: The measurement of social investment deals with the degree to which the organization is investing both money and human resources to solve community social problems.

The problem-solving area: The measurement of problem solving should focus on the degree to which the organization deals with social problems, such as participating in long-range community planning and conducting studies to pinpoint social problems.

Page Ref: 62

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

95) Define the term social audit. List the basic steps in conducting a social audit.

Answer:  A social audit is the process of measuring the present social responsibility activities of an organization to assess its performance in this area. The basic steps in conducting a social audit are monitoring, measuring, and appraising all aspects of an organization’s social responsibility performance.

Page Ref: 62

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

96) How do you define ethics in business?

Answer:  In business, ethics can be defined as the capacity to reflect on values in the corporate decision making process, to determine how these values and decisions affect various stakeholder groups, and to establish how managers can use these observations in day-to-day company management.

Page Ref: 63

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

97) What is a code of ethics? What are the issues that it commonly addresses?

Answer:  A code of ethics is a formal statement that acts as a guide for the ethics of how people within a particular organization should act and make decisions. Codes of ethics commonly address such issues as conflict of interest, competitors, privacy of information, gift giving, and giving and receiving political contributions or business. The development and distribution of a code of ethics is perceived as an effective and efficient means of encouraging ethical practices within organizations.

Page Ref: 64-65

AACSB:  Ethical Understanding and Reasoning Abilities

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

98) Many governments protect employees who turn into whistleblowers. Why do you think it is necessary? Explain your answer.

Answer:  Whistle-blowing is the act of an employee reporting suspected misconduct or corruption believed to exist within an organization. A whistle-blower is the employee who reports the alleged activities. Many countries have formulated regulations to protect whistleblowers. The Sarbanes—Oxley Act is one such act that protects the whistleblowers. Whistleblowing helps the regulators identify unethical practices and should be encouraged. Whistleblower protection is important due to two reasons. (1) Whistleblowers may face actions from their employers and would often find it difficult to find employment elsewhere. (2) Providing protection could encourage people to engage in whistleblowing.

Page Ref: 68

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

 

99) What is sustainability? Why is building sustainable organizations important?

Answer:  Sustainability is the degree to which a person or entity can meet its present needs without compromising the ability of other people or entities to meet their needs in the future. Some of the reasons for building sustainable organizations are given below.

(1) Increased Profit: Increased sustainability commonly results in more profitable organizations.

(2) Increased Productivity: Sustainable organizations relates to employee productivity.

(3) Increased Innovation: A third reason commonly given why managers should pursue sustainability is that such a pursuit serves as a catalyst for innovation.

Page Ref: 68-70

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

Modern Management, 12e (Certo)

Chapter 5   Managing in the Global Arena

 

1) International management is the performance of management activities across national borders.

Answer:  TRUE

Page Ref: 110

AACSB:  Dynamics of the Global Economy

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

2) Establishing a formal partnership with a foreign company is a form of international management.

Answer:  TRUE

Page Ref: 110

AACSB:  Dynamics of the Global Economy

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

3) One form of international management is fighting competition in foreign markets.

Answer:  TRUE

Page Ref: 110

AACSB:  Dynamics of the Global Economy

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

4) Transnational organizations have the least international involvement of all types of organizations involved in the international arena.

Answer:  FALSE

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

5) Domestic organizations essentially operate within a single country.

Answer:  TRUE

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

6) In order to be classified as a domestic corporation, a corporation must acquire all resources and sell all products within one country.

Answer:  FALSE

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

7) An international organization has a lower level of international involvement than a multinational organization.

Answer:  TRUE

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

8) A multinational corporation is a company that is primarily based in one country but has continuing transactions in other countries.

Answer:  FALSE

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

9) A company that merely exports products to a foreign country cannot be considered a multinational corporation.

Answer:  FALSE

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

10) A company that exports products to a foreign country and establishes sales organizations abroad is considered to be a domestic company.

Answer:  FALSE

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

11) The host company is the company investing in international operations.

Answer:  FALSE

Page Ref: 116

AACSB:  Dynamics of the Global Economy

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

12) Expatriates are organization members who live and work in a country in which they are not citizens.

Answer:  TRUE

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

13) Third-country nationals are organization members who are citizens of the country in which the facility of a foreign-born organization is located.

Answer:  FALSE

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

14) Host-country nationals do not need to be relocated or undergo training in the culture, language, or tax laws of the country where the organization is doing business.

Answer:  TRUE

Page Ref: 117

AACSB:  Dynamics of the Global Economy

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

15) Repatriation is the process of ensuring the adjustment of a worker to a foreign country.

Answer:  FALSE

Page Ref: 118

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

16) A license agreement is a right granted by one company to another to use its brand name and technology in the manufacture or sale of goods and services.

Answer:  TRUE

Page Ref: 119

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

17) The European Union is an example of an international market agreement.

Answer:  TRUE

Page Ref: 121

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

18) A polycentric attitude reflects the belief that multinational corporations should regard home-country management practices as superior to foreign-country management practices.

Answer:  FALSE

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

19) Managers with an ethnocentric attitude are prone to stereotype foreign management practices as faulty and unreasonable.

Answer:  TRUE

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

20) Transnational organizations usually take one particular continent as their business arena.

Answer:  FALSE

Page Ref: 127

AACSB:  Dynamics of the Global Economy

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

 

21) The different types of organizations in ascending order of the extent of involvement in the international arena are ________.

  1. A) domestic, international, multinational, transnational
  2. B) international, transnational, domestic, multinational
  3. C) multinational, domestic, transnational, global
  4. D) transnational, international, multinational, domestic
  5. E) domestic, multinational, transnational, international

Answer:  A

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

22) Which of the following categories of organizations generally has the lowest level of international involvement?

  1. A) global organizations
  2. B) domestic organizations
  3. C) international organizations
  4. D) multinational organizations
  5. E) transnational organizations

Answer:  B

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

23) Which of the following types of organizations has the highest level of international involvement?

  1. A) international organizations
  2. B) multinational organizations
  3. C) transnational organizations
  4. D) ethnocentric organizations
  5. E) domestic organizations

Answer:  C

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

24) ________ organizations essentially operate within a single country.

  1. A) Multinational
  2. B) Transnational
  3. C) Global
  4. D) Domestic
  5. E) International

Answer:  D

Page Ref: 112

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

25) SNL manufactures and sells customized shoes for people with special needs. The company caters mostly to customers within the U.S., though it occasionally sends products to overseas customers. The company is very eco-friendly, and takes pride in sourcing all its raw materials locally. According to the information, SNL is a(n) ________ company.

  1. A) transnational
  2. B) global
  3. C) multinational
  4. D) domestic
  5. E) international

Answer:  D

Page Ref: 112

AACSB:  Analytic Skills

Objective:  2

Difficulty:  Moderate

Classification:  Application

26) Adam & Sons is a fifty-year-old watch company based in Alabama. The  major bulk of its sales has always taken place within the U.S. Adam & Sons recently became the sole U.S. distributors for Japanese watch manufacturer TLC. Adam & Sons would therefore be classified as a(n) ________.

  1. A) international organization
  2. B) multinational organization
  3. C) transnational organization
  4. D) global organization
  5. E) domestic organization

Answer:  A

Page Ref: 113

AACSB:  Analytic Skills

Objective:  2

Difficulty:  Moderate

Classification:  Application

 

 

27) Which of the following describes a company that is primarily based within one country but has continuing and meaningful transactions in other countries?

  1. A) domestic organization
  2. B) international organization
  3. C) multinational organization
  4. D) transnational organization
  5. E) global organization

Answer:  B

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

28) BLT is a sandwich chain based in Boston. Word-of-mouth popularity opened up the market and the company is now opening branches in New Jersey and Connecticut as well. The company sources all its raw materials locally and makes it a point to use sustainable practices. Which of the following actions would make BLT a multinational company?

  1. A) It begins stocking organic foods produced by local farms.
  2. B) It distributes artisanal chocolate produced by a South African firm.
  3. C) It licenses a fast-food chain in England to use its brand name.
  4. D) It diversifies its product lineup to include different types of foods.
  5. E) It begins selling cheeses imported from France.

Answer:  C

Page Ref: 113

AACSB:  Analytic Skills

Objective:  2

Difficulty:  Moderate

Classification:  Application

29) An organization that has significant operations in more than one country, disregards national boundaries, and is guided by a common strategy from a corporation center is a(n) ________.

  1. A) global organization
  2. B) domestic organization
  3. C) international corporation
  4. D) multinational corporation
  5. E) transnational organization

Answer:  D

Page Ref: 113

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

30) Which of the following is the simplest stage of multinationalization?

  1. A) establishing sales organizations abroad
  2. B) licensing the use of the organization’s pattern and know-how to foreign firms that make and sell the organization’s product
  3. C) establishing foreign manufacturing facilities
  4. D) multinationalizing the organization’s management from top to bottom
  5. E) exporting the organization’s product to foreign countries

Answer:  E

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

31) What is the most advanced stage in multinationalization of a company?

  1. A) licensing its brand names to foreign firms
  2. B) establishing foreign manufacturing facilities
  3. C) establishing sales organizations abroad
  4. D) exporting the organization’s products to foreign countries
  5. E) multinationalizing ownership of the corporate stock

Answer:  E

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

32) EasyWear Apparels is based in the U.S. and recently established a manufacturing unit in Montreal and a manufacturing unit and retail outlet in Leeds in the U.K. Which of the following scenarios mirrors EasyWear’s situation?

  1. A) An automobile company headquartered in Austria starts production for its German market in Berlin.
  2. B) A cell phone producer based in Finland starts selling its products in India.
  3. C) Dell Computers has established sales organizations in major cities all over the world.
  4. D) Fiona, an Italian shoe manufacturer, allows a firm in Kuala Lumpur the use of its patterns.
  5. E) McDonald’s has a standing contract with Coca Cola to sell its beverages in all its outlets.

Answer:  A

Page Ref: 114

AACSB:  Reflective Thinking Skills

Objective:  2

Difficulty:  Difficult

Classification:  Critical thinking

 

 

33) Which of the following is a characteristic of domestic management?

  1. A) widely disparate economic conditions
  2. B) national markets varying greatly in population and area
  3. C) different national sovereignties
  4. D) markets at different stages of the industrial revolution
  5. E) people living in similar value systems

Answer:  E

Page Ref: 114

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

34) Apparel company RED Lion Ltd. has a strong presence along the West Coast in the U.S., and is looking to expand its market overseas. The company began through the export route, exporting apparel to firms in the U.K., but now wants to establish manufacturing units abroad. Which of the following would weaken the company’s decision to expand abroad?

  1. A) Establishing manufacturing abroad would reduce RED Lion’s shipping costs.
  2. B) There is increasing economic uncertainty in the U.S. market.
  3. C) The preferences of customers in both countries are similar.
  4. D) The economic systems in the two countries are very different.
  5. E) A competitor in the U.S. market recently went out of business.

Answer:  D

Page Ref: 116

AACSB:  Reflective Thinking Skills

Objective:  3

Difficulty:  Easy

Classification:  Critical thinking

35) A company investing in international operations is known as the ________.

  1. A) quasi corporation
  2. B) parent company
  3. C) subsidiary company
  4. D) holding company
  5. E) host company

Answer:  B

Page Ref: 116

AACSB:  Dynamics of the Global Economy

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

 

36) A country in which an investment is made by a foreign company is termed as a(n) ________.

  1. A) host country
  2. B) parent country
  3. C) home country
  4. D) expatriate country
  5. E) subordinate country

Answer:  A

Page Ref: 116

AACSB:  Dynamics of the Global Economy

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

37) ________ are members of an organization who live and work in a country where they do not have citizenship.

  1. A) Expatriates
  2. B) Host-country nationals
  3. C) Naturalized citizens
  4. D) Repatriates
  5. E) Dual citizens

Answer:  A

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

38) Joe is a citizen of Sri Lanka who lives and works for a company in Brazil. He is considered to be a(n) ________.

  1. A) dual citizen
  2. B) expatriate
  3. C) repatriate
  4. D) host-country national
  5. E) third-country national

Answer:  B

Page Ref: 116

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

39) Citizens of a country who work in a foreign-based organization located in their own country are known as ________.

  1. A) expatriates
  2. B) host-country nationals
  3. C) third-country nationals
  4. D) repatriates
  5. E) immigrants

Answer:  B

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

40) Gary is an English national working for an American company situated in London. He is a(n) ________.

  1. A) host-country national
  2. B) third-country national
  3. C) repatriate
  4. D) expatriate
  5. E) immigrant

Answer:  A

Page Ref: 116

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

41) Organization members who are citizens of one country and work in another country for an organization headquartered in still another country are known as ________.

  1. A) expatriates
  2. B) host-country nationals
  3. C) third-country nationals
  4. D) repatriates
  5. E) naturalized citizens

Answer:  C

Page Ref: 116

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

42) Hugh is an American citizen currently living in Denmark. He works for a company that has its headquarters in France. He is a(n) ________.

  1. A) third-country national
  2. B) host-country national
  3. C) home-country national
  4. D) dual citizen
  5. E) repatriate

Answer:  A

Page Ref: 116

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Moderate

Classification:  Application

 

43) Zac, an American citizen, has worked for a company in Berlin for the last five years. Which of the following scenarios mirrors the situation Zac is in?

  1. A) Sandra is Polish and works for a U.K.-based company in Venice.
  2. B) Winston is a U.K. national but has been sent to Canada by his company to handle the operations there for the next two years.
  3. C) Vanessa is English and works in London for a company based in Denmark.
  4. D) Ursula is a Finn but has been in Germany for the last four years, working for a company headquartered in Japan.
  5. E) Nikolai works for an Irish company in Oslo and is a Norwegian by birth.

Answer:  B

Page Ref: 116

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Difficult

Classification:  Application

 

44) Organizations that operate globally find that ________ are the least expensive to employ.

  1. A) host-country nationals
  2. B) expatriates
  3. C) third-country nationals
  4. D) repatriates
  5. E) migrant workers

Answer:  A

Page Ref: 117

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

45) Which of the following is true for employees of multinational organizations?

  1. A) A third-country national works for a foreign organization in its home country.
  2. B) A host-country national will face problems adjusting to the culture of the country in which he works.
  3. C) Expatriates and third-country nationals have to be relocated and undergo training.
  4. D) A host-country national is an organization member who lives and works in a country where he or she does not have citizenship.
  5. E) Host-country nationals are usually the most expensive to employ.

Answer:  C

Page Ref: 117

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

46) The process of bringing individuals who have been working abroad back to their home country and reintegrating them into the organization’s home-country operations is called ________.

  1. A) repatriation
  2. B) expatriation
  3. C) immigration
  4. D) polycentrism
  5. E) emigration

Answer:  A

Page Ref: 118

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

47) The ________ function of management involves determining how an organization will achieve its objectives.

  1. A) planning
  2. B) organizing
  3. C) influencing
  4. D) controlling
  5. E) observing

Answer:  A

Page Ref: 119

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

48) When a United States computer manufacturer sells a shipment of 40 computers to a retailer in Germany, the computer manufacturer is engaged in the process of ________.

  1. A) importing
  2. B) exporting
  3. C) developing a license agreement
  4. D) direct investing
  5. E) repatriating

Answer:  B

Page Ref: 119

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

49) If a company in the United States allows a company in England to use its brand name for a fee, the company is said to have entered into a(n) ________.

  1. A) license agreement
  2. B) direct investing agreement
  3. C) venture agreement
  4. D) export agreement
  5. E) import agreement

Answer:  A

Page Ref: 119

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

50) An American clothing manufacturer has recently purchased a clothing factory in Taiwan. This action is known as ________.

  1. A) importing
  2. B) exporting
  3. C) licensing
  4. D) direct investing
  5. E) franchising

Answer:  D

Page Ref: 120

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

51) International planning in the area of ________ emphasizes reaching organizational objectives through the purchase of the operating assets of another company in a foreign country.

  1. A) direct investing
  2. B) joint venture
  3. C) importing
  4. D) exporting
  5. E) license agreements

Answer:  A

Page Ref: 119-120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

52) A partnership formed by a company in one country with a company in another country for the purpose of pursuing some mutually desirable business undertaking is known as a(n) ________.

  1. A) international market agreement
  2. B) direct investment
  3. C) joint venture
  4. D) license agreement
  5. E) franchise agreement

Answer:  C

Page Ref: 120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

53) International plans that include ________ emphasize the attainment of organizational objectives through partnerships with foreign companies.

  1. A) joint ventures
  2. B) imports
  3. C) exports
  4. D) license agreements
  5. E) direct investing

Answer:  A

Page Ref: 120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

54) An international market agreement is ________.

  1. A) a joint venture between two companies who want to enter markets in the other country
  2. B) an arrangement among a cluster of countries that facilitates a high level of trade among these countries
  3. C) an international import deal between two countries
  4. D) an agreement between an importer from one country and an exporter from another
  5. E) an agreement between a multinational company and its franchisees in a number of countries

Answer:  B

Page Ref: 120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

55) The European Union is a(n) ________ established dedicated to facilitating trade among member nations.

  1. A) international joint venture
  2. B) license agreement
  3. C) international market agreement
  4. D) transnational organization
  5. E) polycentric organization

Answer:  C

Page Ref: 121

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

56) Canada, the People’s Republic of China, Indonesia, and the United States are all members of the Asian-Pacific Economic Cooperation. This agreement is an example of a(n) ________ agreement.

  1. A) international license
  2. B) international market
  3. C) international framework
  4. D) international import
  5. E) international export

Answer:  B

Page Ref: 122

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

57) Which of the following statements is true about NAFTA?

  1. A) It aims at facilitating trade among the United States, Canada, and Mexico.
  2. B) It’s members include Denmark, the United Kingdom, Portugal, the Netherlands, Belgium.
  3. C) It is an international market agreement aimed at facilitating trade among African nations.
  4. D) It works to reduce tariffs and other trade barriers across the Asia-Pacific region.
  5. E) It has 21 members, including Canada, the People’s Republic of China, Indonesia, and the U.S.

Answer:  A

Page Ref: 122

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

58) APEC was established in 1989 to further the economic growth and prosperity of the ________ community.

  1. A) North American
  2. B) Asia-Pacific
  3. C) Commonwealth
  4. D) European
  5. E) African

Answer:  B

Page Ref: 122

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

59) Which of the following countries is a member of the APEC?

  1. A) Germany
  2. B) Egypt
  3. C) Australia
  4. D) Argentina
  5. E) Brazil

Answer:  C

Page Ref: 122

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

60) Organization ________ is the sum of all established relationships among resources within an organization.

  1. A) structure
  2. B) overview
  3. C) mission
  4. D) path
  5. E) purpose

Answer:  A

Page Ref: 123

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

61) The organization chart ________ .

  1. A) establishes the organization’s goals for the year
  2. B) is the graphic illustration of organization structure
  3. C) lists departments in order of productivity
  4. D) details the organization’s plans for achieving its goals
  5. E) is the representation of the organization’s financial system

Answer:  B

Page Ref: 123

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

62) The manager of a multinational corporation in the U.S. thinks that following U.S. management practices is best for its operations in New Zealand because U.S. management practices are better than the management practices prevalent in New Zealand. This manager is said to have a(n) ________ attitude.

  1. A) ethnocentric
  2. B) polycentric
  3. C) geocentric
  4. D) xenocentric
  5. E) gynocentric

Answer:  A

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

63) Managers with a ________ attitude believe that the overall quality of management recommendations, rather than the location of managers, should determine the acceptability of management practices used to guide multinational corporations.

  1. A) ethnocentric
  2. B) polycentric
  3. C) geocentric
  4. D) xenocentric
  5. E) gynocentric

Answer:  C

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

64) A Canada-based shoe manufacturing company in Malaysia has hired a Malaysian manager to manage it, because the company’s CEO believes that the manager will understand the situation and manage the plant better than any foreign manager. This company is said to have a(n) ________ attitude.

  1. A) ethnocentric
  2. B) polycentric
  3. C) egocentric
  4. D) geocentric
  5. E) gynocentric

Answer:  B

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

65) The ________ attitude reflects the belief that because foreign managers are closer to foreign organizational units, they understand them better, and therefore foreign management practices are more insightful than home-country management practices.

  1. A) ethnocentric
  2. B) polycentric
  3. C) egocentric
  4. D) geocentric
  5. E) gynocentric

Answer:  B

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

66) A Belgium-based multinational company hires the best managers for its operations, regardless of the location of those managers. This company is said to have a(n) ________.

  1. A) ethnocentric attitude
  2. B) polycentric attitude
  3. C) egocentric attitude
  4. D) geocentric attitude
  5. E) gynocentric attitude

Answer:  D

Page Ref: 124

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

67) Which of the following statements is true for the various management attitudes?

  1. A) An organization characterized by the geocentric attitude incurs high travel and training expenses.
  2. B) The ethnocentric attitude reflects the belief that because foreign managers are closer to foreign organizational units, they understand them better.
  3. C) The ethnocentric attitude is generally thought to be the most appropriate for managers in multinational corporations.
  4. D) The polycentric attitude often causes resentment toward the home country within the foreign

society.

  1. E) Managers with a geocentric attitude stereotype home-country management practices as sound and reasonable and foreign management practices as faulty and unreasonable.

Answer:  A

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

68) Which of the following attitudes is generally thought to be the most appropriate for mangers in multinational corporations?

  1. A) geocentric
  2. B) ethnocentric
  3. C) polycentric
  4. D) egocentric
  5. E) regiocentric

Answer:  A

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

69) ________ is the set of characteristics of a given group of people and their environment and includes components like norms, values, habits, education and religion.

  1. A) Culture
  2. B) Politics
  3. C) Laws
  4. D) Morals
  5. E) Ethics

Answer:  A

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

70) March Hare Entertainment is a media company in London that specializes in bizarre and sometimes shocking campaigns. The firm is looking to expand into other countries, but will require a culture that is very similar to its home culture: open to experimentation and risk and not authoritarian. Which of the following countries is the best option for March Hare?

  1. A) Germany has high power distance and collectivism.
  2. B) Denmark has low power distance and low uncertainty avoidance.
  3. C) Japanese culture favors low individualism and high power distance.
  4. D) India has a long-term orientation and high uncertainty avoidance.
  5. E) France has low uncertainty avoidance and high power distance.

Answer:  B

Page Ref: 125

AACSB:  Analytic Skills

Objective:  5

Difficulty:  Moderate

Classification:  Application

71) France is a country where employees tend to follow whatever their managers say. They do not question the authority of their managers. Which of the following statements can be deduced from this information?

  1. A) France has a culture that promotes masculinity.
  2. B) France is a country where short-term orientation is prevalent.
  3. C) France is a country with high power distance.
  4. D) France is a society with low uncertainty avoidance.
  5. E) French society promotes individualism.

Answer:  C

Page Ref: 125

AACSB:  Analytic Skills

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

72) Countries that highly promote ________ have citizenry that tends to emphasize, expect, and accept more autocratic than democratic leadership.

  1. A) short-term orientation
  2. B) individualism
  3. C) power distance
  4. D) masculinity
  5. E) collectivism

Answer:  C

Page Ref: 125

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

73) In Greece, employees do not like to be in a situation they know nothing about. They like to be informed about every situation they are likely to face. It can be deduced that Greece is a society that has ________.

  1. A) feminine values
  2. B) long-term orientation
  3. C) low power distance
  4. D) high uncertainty avoidance
  5. E) high individualism

Answer:  D

Page Ref: 125

Objective:  5

Difficulty:  Moderate

Classification:  Application

74) In South Korean society, business success is pursued through people who work as a team. Managers believe that good interpersonal relationships among the members of a team are a must for success. What can be deduced from this?

  1. A) South Korean society has a long-term orientation.
  2. B) South Korea has high power distance.
  3. C) South Korea is low on uncertainty avoidance.
  4. D) South Korea has strong masculine values.
  5. E) South Korea is a collectivist culture.

Answer:  E

Page Ref: 125

AACSB:  Analytic Skills

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

75) Countries that are high in ________ prefer being in more defined and predictable situations.

  1. A) individualism
  2. B) masculinity
  3. C) collectivism
  4. D) power distance
  5. E) uncertainty avoidance

Answer:  E

Page Ref: 125

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

76) Japan has a society that values competitiveness and assertiveness over nurturing others and improving their quality of life. The people believe that success and wealth are very important. Japan is said to have a society that ________.

  1. A) emphasizes masculine values
  2. B) has short-term orientations
  3. C) has high power distance
  4. D) is low on uncertainty avoidance
  5. E) emphasizes collectivism

Answer:  A

Page Ref: 125

Objective:  5

Difficulty:  Moderate

Classification:  Application

77) Organizations headquartered in Pakistan train their employees in order to enable them to tackle the job that has to be performed immediately. The managers also prefer maintaining a day-to-day perspective. Pakistan is a good example of a ________ society.

  1. A) highly individualistic
  2. B) highly feminine
  3. C) short-term oriented
  4. D) low power distance
  5. E) low uncertainty avoidance

Answer:  C

Page Ref: 126

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

 

78) Which of the following is true according to Hofstede’s method of describing culture?

  1. A) Countries with low power distance tend to emphasize, expect, and accept more autocratic than democratic leadership.
  2. B) Highly feminine countries place a high worth on factors like competitiveness, assertiveness, success, and wealth.
  3. C) Power distance is the extent to which a society feels threatened by uncertain or unpredictable situations.
  4. D) Countries that are high in uncertainty avoidance prefer being in more defined and predictable situations.
  5. E) Countries with low uncertainty avoidance deemphasize short-run success to achieve long-run success.

Answer:  D

Page Ref: 125-126

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

79) The management of a company decides on a way to compare profits generated by organizational units located in different countries and expressed in terms of different currencies. What management function has been performed?

  1. A) planning
  2. B) influencing
  3. C) controlling
  4. D) organizing
  5. E) leading

Answer:  C

Page Ref: 126

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

80) ________ in multinational corporations requires that standards be set, performance be measured and compared to standards, and corrective action be taken if necessary.

  1. A) Planning
  2. B) Organizing
  3. C) Leading
  4. D) Controlling
  5. E) Influencing

Answer:  D

Page Ref: 126

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

81) A(n) ________ organization considers national borders to be inconsequential to its operations, with ownership, control, and management being from many different countries.

  1. A) international
  2. B) multinational
  3. C) pan-national
  4. D) transnational
  5. E) domestic

Answer:  D

Page Ref: 127

AACSB:  Dynamics of the Global Economy

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

82) Transnational organizations are also called ________.

  1. A) global corporations
  2. B) multinational corporations
  3. C) international corporations
  4. D) domestic corporations
  5. E) pan-national corporations

Answer:  A

Page Ref: 127

AACSB:  Dynamics of the Global Economy

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

83) The ________ organization transcends any single home country, with ownership, control, and management being from many different countries.

  1. A) pan-national
  2. B) transnational
  3. C) multinational
  4. D) international
  5. E) domestic

Answer:  B

Page Ref: 127

AACSB:  Dynamics of the Global Economy

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

 

84) Evelyn has worked for the Boston branch of Clarity Systems for the past ten years. She is being transferred to head the Madrid office of her company. Since the transfer was a hurried one, there was no time to train Evelyn in the specifics of doing business in Spanish culture. As soon as she arrived in Madrid, Evelyn had to conduct negotiations for the renewal of several supplier contracts. One of the suppliers gave her an expensive watch, saying that it was a custom of the country to give business associates gifts. Evelyn is unsure whether she should accept the gift as it seems like a bribe.  Which of the following ethical guidelines will help Evelyn determine whether or not to accept the gift?

  1. A) respecting core human rights
  2. B) respecting local traditions
  3. C) determining right from wrong by examining context
  4. D) using ethnocentrism
  5. E) increasing power distance

Answer:  C

Page Ref: 128

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

 

85) When a company provides an expatriate with information on how to survive the difficulties of adjusting to a new culture, the company is providing training in ________.

  1. A) logistic information
  2. B) cultural application
  3. C) cultural adaptation
  4. D) cultural profiling
  5. E) repatriation

Answer:  C

Page Ref: 128

AACSB:  Multicultural and Diversity Understanding

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

86) When a company provides an expatriate with basic information about life in a foreign country, such as personal safety, who to call in an emergency, and how to write a check, the company is providing training in ________.

  1. A) cultural profiling
  2. B) cultural adaptation
  3. C) cultural application
  4. D) logistical information
  5. E) repatriation

Answer:  D

Page Ref: 128

AACSB:  Multicultural and Diversity Understanding

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

87) During ________ training, the expatriates learn about the specific organizational roles that they are required to perform in the foreign country.

  1. A) application
  2. B) logistical information
  3. C) cultural adaptation
  4. D) cultural profiling
  5. E) repatriation

Answer:  A

Page Ref: 128

AACSB:  Multicultural and Diversity Understanding

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

88) Define the different categories of organizations by extent of international involvement.

Answer:  A number of different categories have evolved to describe the extent to which organizations are involved in the international arena. These categories are domestic organizations, international organizations, multinational organizations, and transnational or global organizations. This categorization format actually describes a continuum of international involvement, with domestic organizations representing the least and transnational organizations the most international involvement.

Domestic organizations are organizations that essentially operate within a single country. These organizations normally not only acquire necessary resources within a single country but also sell their goods or services within that same country.

International organizations are organizations that are based primarily within a single country but have continuing, meaningful international transactions in other countries. These organizations are more extensively involved in the international arena than are domestic organizations, but less so than either multinational or transnational organizations.

The multinational organization, commonly called the multinational corporation (MNC), represents the third level of international involvement. It is a company that has significant operations in more than one country.

A transnational organization, also called a global organization, takes the entire world as its business arena. It transcends any single home country, with ownership, control, and management being from many different countries.

Page Ref: 112-113, 127

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

 

89) What are the six stages of multinationalization? What activities does a company perform at each stage?

Answer:  Usually, a company goes through the following six phases of multinationalization:

Stage 1 – It exports its products to foreign countries.

Stage 2 – It establishes sales organizations abroad.

Stage 3 – It licenses use of its patterns and know-how to foreign firms that make and sell its products.

Stage 4 – It establishes foreign manufacturing facilities.

Stage 5 – It multinationalizes its management from top to bottom.

Stage 6 – It multinationalizes ownership of the corporate stock.

Page Ref: 114

AACSB:  Dynamics of the Global Economy

Objective:  2

Difficulty:  Moderate

Classification:  Conceptual

 

90) Why do managers make foreign investments? What are the risks involved in this?

Answer:  Normally, managers who make foreign investments expect that such investments will accomplish the following:

  1. Reduce or eliminate high transportation costs.
  2. Allow participation in the rapid expansion of a market abroad.
  3. Provide foreign technical, design, and marketing skills.
  4. Earn higher profits.

Unfortunately, many managers decide to internationalize their companies without having an accurate understanding of the risks involved in making such a decision. For example, political complications involving the parent company (the company investing in the international operations) and various factions within the host country (the country in which the investment is made) could prevent the parent company from realizing the desirable outcomes.

Page Ref: 116

AACSB:  Dynamics of the Global Economy

Objective:  3

Difficulty:  Moderate

Classification:  Conceptual

 

91) Discuss the three types of organizational members found in multinational corporations.

Answer:  Workers in multinationals can be categorized as expatriates, host-country nationals, and third-country nationals.

Expatriates are organization members who live and work in a country where they do not have citizenship.

Host-country nationals are organization members who are citizens of the country in which the facility of the foreign-based organization is located.

Third-country nationals are organization members who are citizens of one country and who work in another country for an organization headquartered in still another country.

Organizations that operate globally may employ all three types of organization members.

Both expatriates and third-country nationals require relocation and training in the culture, language, tax laws, and basic lifestyle of the culture in the host country.

Page Ref: 116-117

AACSB:  Multicultural and Diversity Understanding

Objective:  4

Difficulty:  Moderate

Classification:  Conceptual

 

92) STL began as a manufacturer and retailer of customized apparel and accessories. Customers could choose their specifications online, and STL would produce and deliver the products to customers’ homes. Initially, its market was limited to the U.S., but the company has begun to receive enquiries from overseas customers from many other countries. However, STL does not have the financial resources or the confidence to set up operations in other countries. Which methods could the CEO use to meet this overseas demand, taking into account the company’s weaknesses?

Answer:  Student answers may vary.

As the company is receiving orders from customers from many countries, it would be difficult and expensive to set up bases in all those countries. The CEO could export the goods to the other countries as and when required. This would require minimal investment.

License agreements could also be a possibility, if STL could find another company willing to produce and market products using its brand name. STL could also enter into a joint venture with another company to produce and market its products in another country. However, both these methods would limit STL’s reach, as these arrangements would be limited to a few countries.

Page Ref: 119

AACSB:  Analytic Skills

Objective:  5

Difficulty:  Moderate

Classification:  Application

 

93) Explain the four components of international plans for multinational corporations.

Answer:  The four commonly included components of international plans are imports/exports, license agreements, joint ventures, and direct investing.

Importing is the buying of goods or services from another country. Exporting is selling goods or services to another country. Organizations of all sizes import and export.

License agreements are rights granted by one company to another company to use its brand name, technology, etc., in the manufacture or sale of goods and services. The company to which the license is extended pays some fee for the privilege.

Direct investing uses the assets of one company to purchase the operating assets of another company. International planning in this area emphasizes reaching organizational objectives through the purchase of the operating assets of another company in a foreign country.

Joint ventures are partnerships formed by a company in one country with a company in another country for the purpose of pursuing some mutually desirable business undertaking. International planning components that include joint ventures emphasize the attainment of organizational objectives through partnerships with foreign companies.

Page Ref: 119-120

AACSB:  Dynamics of the Global Economy

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

94) Explain the three basic managerial attitudes toward the operation of multinational corporations. What are their advantages and disadvantages?

Answer:  The three basic managerial attitudes toward the operation of multinational corporations include: ethnocentric, polycentric, and geocentric.

The ethnocentric attitude reflects the belief that multinational corporations should regard home-country management practices as superior to foreign-country management practices. Managers with this attitude are prone to stereotype home-country management practices as sound and reasonable and foreign management practices as faulty and unreasonable. It has the advantage of keeping the organization simple, but it generally causes organizational problems because it prevents the organization from receiving feedback from its foreign operations. In some cases, it even causes resentment toward the home country within the foreign society.

The polycentric attitude reflects the belief that because foreign managers are closer to foreign organizational units, they probably understand them better, and therefore foreign management practices should generally be viewed as more insightful than home-country management practices. It permits the tailoring of foreign organizational segments to their cultures, which can be an advantage. Unfortunately, this attitude can lead to the substantial disadvantage of creating numerous foreign organizational segments that are individually run and rather unique, which makes them difficult to control.

The geocentric attitude reflects the belief that the overall quality of management recommendations, rather than the location of mangers, should determine the acceptability of management practices used to guide multinational corporations. It is considered most appropriate for long-term organizational success. It is generally thought to be the most appropriate for managers in multinational corporations.This attitude promotes collaboration between foreign and home-country management and encourages the development of managerial skills regardless of the organizational segment or country in which managers operate.

Page Ref: 124

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

95) What can managers in multinational corporations do to influence employees?

Answer:  To successfully influence employees, managers in multinational corporations should:

  1. Acquire a working knowledge of the languages used in countries that house foreign operations – Multinational managers attempting to operate without such knowledge are prone to making costly mistakes.
  2. Understand the attitudes of people in countries that house foreign operations – An understanding of these attitudes can help managers design business practices that are suitable for unique foreign situations.
  3. Understand the needs that motivate people in countries housing foreign operations – For managers in multinational corporations to be successful at motivating employees in different countries, they must present these individuals with the opportunity to satisfy personal needs while being productive within the organization. In designing motivation strategies, multinational managers must understand that employees in different countries often have quite different personal needs.

Page Ref: 125

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

 

96) According to Hofstede, what are the five basic dimensions  of culture?

Answer:  According to Hofstede’s research, national cultural values vary on five basic dimensions:

  1. Power Distance – It is the degree to which a society promotes an unequal distribution of power. Countries that highly promote power distance have citizenry that tends to emphasize, expect, and accept more autocratic than democratic leadership.
  2. Uncertainty Avoidance – It is the extent to which a society feels threatened by uncertain or unpredictable situations. Countries that are high in uncertainty avoidance prefer being in more defined and predictable situations.
  3. Individualism and Collectivism – It is the degree to which people in a society operate primarily as individuals or within groups. People operating as individuals tend to focus on meeting their own needs. People in this situation tend to be self-reliant and succeed by competing with others. On the other hand, people who operate collectively tend to build relationships among others and downplay individualism.
  4. Masculinity and Femininity – It is the extent to which a culture emphasizes traditional masculine or feminine values. Traditional masculine values place a high worth on factors like competitiveness, assertiveness, success, and wealth.Traditional feminine values place a high worth on factors like caring for and nurturing others and increasing the quality of life.
  5. Short-Term and Long-Term Orientation – It is the degree to which a culture deemphasizes short-run success to achieve long-run success. Cultures that focus more on long-run success emphasize activities like planning, education, rewarding long-run results, and keeping a future oriented perspective. Conversely, cultures that focus more on short-run success emphasize training to enable one do a job now, rewarding short-run results, and maintaining a day-to-day perspective.

Page Ref: 125-126

AACSB:  Multicultural and Diversity Understanding

Objective:  5

Difficulty:  Moderate

Classification:  Conceptual

 

97) What can managers do to ensure that management action taken across national borders is ethical?

Answer:  Managers can ensure that management action taken across national borders is ethical by:

  1. Respecting core human rights – This guideline underscores the notion that all people deserve an opportunity to achieve economic advancement and an improved standard of living. In addition, all people have the right to be treated with respect.
  2. Respecting local traditions – This guideline suggests that managers hold the customs of foreign countries in which they conduct business in high regard.
  3. Determining right from wrong by examining context – This guideline suggests that managers should evaluate the specifics of the international situation confronting them in determining whether a particular management activity is ethical. Although some activities are wrong no matter where they take place, some that are unethical in one setting may be acceptable in another.

Page Ref: 128

AACSB:  Multicultural and Diversity Understanding

Objective:  7

Difficulty:  Moderate

Classification:  Conceptual

 

 

Modern Management, 12e (Certo)

Chapter 11   Fundamentals of Organizing

 

1) Organizing is the process of establishing orderly uses for all resources within the management system.

Answer:  TRUE

Page Ref: 250

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

2) Henri Fayol recommends that businesses avoid red tape, regulations, and paperwork when organizing resources.

Answer:  TRUE

Page Ref: 251

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

3) Henri Fayol recommends that businesses establish multiple guiding authorities when organizing resources.

Answer:  FALSE

Page Ref: 251

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

4) The final step in the organization process is to allocate resources and directives for subtasks.

Answer:  FALSE

Page Ref: 252

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

5) It is recognized today that the bureaucratic approach without an appropriate emphasis on the human variable is almost certainly a formula for organizational failure.

Answer:  TRUE

Page Ref: 253

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

 

6) Bureaucracy can be characterized as a management system with detailed procedures, rules, and a clearly outlined organizational hierarchy with impersonal relationships among organization members.

Answer:  TRUE

Page Ref: 253

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

7) Mary Parker Follett said that coordination can be attained with the least difficulty through direct horizontal relationships and personal communications.

Answer:  TRUE

Page Ref: 254

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

8) Traditionally, individuals at the top of a pyramid-shaped organizational structure have more authority but less responsibility than individuals at the bottom of the pyramid.

Answer:  FALSE

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

9) The formal structure of an organization evolves naturally and tends to be molded by individual norms and values and social relationships.

Answer:  FALSE

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

10) Vertical dimensioning is directly related to the concept of the scalar relationship—that is, the chain of command.

Answer:  TRUE

Page Ref: 255

Objective:  8

Difficulty:  Easy

Classification:  Conceptual

 

11) A company’s informal structure is represented primarily by the organizational chart.

Answer:  FALSE

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

12) Span of management refers to the number of organizational levels below that of a particular manager’s.

Answer:  FALSE

Page Ref: 255

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

13) In general, the closer subordinates are physically, the more of them managers can supervise effectively.

Answer:  TRUE

Page Ref: 255

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

14) V. A. Graicunas developed a formula for determining the number of actual relationships between a manager and subordinates when the number of subordinates is known.

Answer:  FALSE

Page Ref: 256

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

15) Normally, the greater the height of the organization chart, the smaller the span of management.

Answer:  TRUE

Page Ref: 257

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

16) The most widely used basis for establishing departments within the formal structure is by type of product.

Answer:  FALSE

Page Ref: 258

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

17) Within a matrix structure, workers are responsible for their original activities along with project activities.

Answer:  TRUE

Page Ref: 263

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

18) The matrix structure is contradictory to the principle of unity of command.

Answer:  TRUE

Page Ref: 263

Objective:  6

Difficulty:  Moderate

Classification:  Conceptual

 

19) Four primary forces influence the evolution of formal organizational structure: forces in the manager, forces in the task, forces in the environment, and forces in the subordinates.

Answer:  TRUE

Page Ref: 263-264

Objective:  8

Difficulty:  Easy

Classification:  Conceptual

 

20) Fayol has indicated that strict adherence to a particular chain of command is always advisable when seeking information.

Answer:  FALSE

Page Ref: 264

Objective:  8

Difficulty:  Easy

Classification:  Conceptual

21) ________ is the process of establishing orderly uses for resources within the management system.

  1. A) Organizing
  2. B) Communication
  3. C) Planning
  4. D) Controlling
  5. E) Motivation

Answer:  A

Page Ref: 250

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

 

22) ________ skill is the ability to establish orderly uses for resources within the management system.

  1. A) Organizing
  2. B) Communication
  3. C) Planning
  4. D) Controlling
  5. E) Marketing

Answer:  A

Page Ref: 250

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

23) According to Fayol’s guidelines for organizing resources, you should avoid ________.

  1. A) formulating precise decisions
  2. B) using sanctions against faults and errors
  3. C) instituting and effecting controls
  4. D) regulations, redtape, and paperwork
  5. E) defining duties

Answer:  D

Page Ref: 251

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

24) According to Fayol’s guidelines for organizing resources, you should do all of the following, EXCEPT ________.

  1. A) establish multiple guiding authorities
  2. B) define duties
  3. C) use sanctions against faults and errors
  4. D) encourage initiative and responsibility
  5. E) offer suitable rewards for services rendered

Answer:  A

Page Ref: 251

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

25) According to Fayol’s guidelines for organizing resources, you should ________.

  1. A) establish multiple guiding authorities
  2. B) make extensive use of regulations and paperwork
  3. C) not use sanctions against faults and errors
  4. D) recognize the unity of command
  5. E) not link rewards to performance

Answer:  D

Page Ref: 251

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

26) Which of the following is the first step in the organizing process?

  1. A) establish major tasks
  2. B) reflect on plans and objectives
  3. C) allocate resources and directives for subtasks
  4. D) evaluate results of organizing strategy
  5. E) divide major tasks into subtasks

Answer:  B

Page Ref: 251

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

27) The second and third steps of the organizing process focus on the ________.

  1. A) results of the organizing strategy
  2. B) organizational plans
  3. C) organizational goals and objectives
  4. D) tasks to be performed within the management system
  5. E) allocation of resources and directives

Answer:  D

Page Ref: 251

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

28) Which of the following is the last step in the organizing process?

  1. A) Allocate resources and directives for subtasks.
  2. B) Evaluate results of organizing strategy.
  3. C) Establish major tasks.
  4. D) Reflect on plans and objectives.
  5. E) Divide major tasks into subtasks.

Answer:  B

Page Ref: 251

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

29) The bureaucracy model of organizing was proposed by ________.

  1. A) V. A. Graicunas
  2. B) Henri Fayol
  3. C) Albert Einstein
  4. D) Mary Parker Follett
  5. E) Max Weber

Answer:  E

Page Ref: 253

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

30) Which of the following is one of the three main components of the management system that Weber termed a bureaucracy?

  1. A) minimum regulations and paperwork
  2. B) close, personal relations among organization members
  3. C) emphasis on the human variable
  4. D) detailed procedures and rules
  5. E) a loosely defined organizational hierarchy

Answer:  D

Page Ref: 253

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

31) Which of the following is one of the three main components of the management system that Weber termed a bureaucracy?

  1. A) minimum regulations and paperwork
  2. B) impersonal relations among organization members
  3. C) emphasis on the human variable
  4. D) a flat organizational structure
  5. E) a loosely defined organizational hierarchy

Answer:  B

Page Ref: 253

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

 

32) Which of the following is one of the three main components of the management system that Weber termed a bureaucracy?

  1. A) minimum regulations and paperwork
  2. B) close, personal relations among organization members
  3. C) emphasis on the human variable
  4. D) a flat organizational structure
  5. E) a clearly outlined organizational hierarchy

Answer:  E

Page Ref: 253

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

33) Which of the following is the main criticism of Weber’s bureaucracy model?

  1. A) It fails to emphasize setting detailed procedures and rules.
  2. B) It gives short shrift to the human variable within organizations.
  3. C) It does not emphasize a clearly defined organizational structure.
  4. D) It overemphasizes positive relationships among organization members.
  5. E) It attempts to eliminate paperwork and regulations.

Answer:  B

Page Ref: 253

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

 

34) ________ is the assignment of various portions of a particular task among a number of organization members.

  1. A) Participation
  2. B) Job enlargement
  3. C) Division of labor
  4. D) Job rotation
  5. E) Work sharing

Answer:  C

Page Ref: 253

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

35) Alistair Fashions, a clothing manufacturer, uses an assembly-line to manufacture clothes whereby different groups of workers specialize in particular tasks—cutting fabric, finishing sleeves, making collars, fixing zippers, sewing buttons, etc. Identify the organizing system being used here.

  1. A) job rotation
  2. B) job enlargement
  3. C) participative management
  4. D) division of labor
  5. E) job enrichment

Answer:  D

Page Ref: 253

AACSB:  Analytic Skills

Objective:  4

Difficulty:  Easy

Classification:  Application

 

36) Which of the following is an advantage of division of labor?

  1. A) It emphasizes the human variable in organizations.
  2. B) It results in high levels of employee motivation.
  3. C) It results in specialization and higher skill levels.
  4. D) It makes work more interesting.
  5. E) It broadens the scope of work.

Answer:  C

Page Ref: 254

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

37) Which of the following is an advantage of division of labor?

  1. A) It broadens the scope of work.
  2. B) It results in high levels of employee motivation.
  3. C) It makes work more interesting.
  4. D) It saves time.
  5. E) It emphasizes the human variable in organizations.

Answer:  D

Page Ref: 254

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

 

38) Which of the following is an advantage of division of labor?

  1. A) It results in easier and more efficient work.
  2. B) It broadens the scope of work.
  3. C) It emphasizes the human variable in organizations.
  4. D) It makes work more interesting.
  5. E) It results in high levels of employee motivation.

Answer:  A

Page Ref: 254

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

39) Which of the following is a disadvantage of division of labor?

  1. A) It makes the work more difficult.
  2. B) It makes work more time-consuming and inefficient.
  3. C) It can result in workers getting bored of their work.
  4. D) It prevents workers from specializing at a task.
  5. E) It requires workers to know about the entire process and not just one task.

Answer:  C

Page Ref: 254

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

40) Which of the following is a disadvantage of division of labor?

  1. A) It makes the work more difficult.
  2. B) It overlooks the human variable in organizations.
  3. C) It makes work more time-consuming and inefficient.
  4. D) It prevents workers from specializing at a task.
  5. E) It requires workers to know about the entire process and not just one task.

Answer:  B

Page Ref: 254

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

 

41) ________ is defined as the orderly arrangement of group effort to provide unity of action in the pursuit of a common purpose.

  1. A) Justification
  2. B) Combination
  3. C) Amalgamation
  4. D) Coordination
  5. E) Rationalization

Answer:  D

Page Ref: 254

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

42) Which of the following is one of Follett’s guidelines on coordination?

  1. A) Personal communication should be minimized in coordination.
  2. B) Managers can assume that if their system shows coordination now, it will show coordination in the future.
  3. C) The human element should be minimized in coordination.
  4. D) Managers should plan for coordination.
  5. E) Coordination can be achieved with least difficulty through vertical relationships.

Answer:  D

Page Ref: 254

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

43) Follett said that coordination can be attained with the least difficulty through ________.

  1. A) a bureaucratic structure
  2. B) a strict adherence to the chain of command
  3. C) minimizing the human element
  4. D) direct horizontal relationships and personal communications
  5. E) discussions with people higher up the organization hierarchy

Answer:  D

Page Ref: 254

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

 

44) Which of the following is one of Follett’s guidelines on coordination?

  1. A) Personal communication should be minimized in coordination.
  2. B) Managers can assume that if their system shows coordination now, it will show coordination in the future.
  3. C) The human element should be minimized in coordination.
  4. D) Coordination cannot be left to chance.
  5. E) Coordination can be achieved with least difficulty through vertical relationships.

Answer:  D

Page Ref: 254

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

45) Which of the following is one of Follett’s guidelines on coordination?

  1. A) Personal communication should be minimized in coordination.
  2. B) Managers can assume that if their system shows coordination now, it will show coordination in the future.
  3. C) The human element should be minimized in coordination.
  4. D) The communication process is an essential consideration in any attempt to encourage coordination.
  5. E) Coordination can be achieved with least difficulty through vertical relationships.

Answer:  D

Page Ref: 254

Objective:  5

Difficulty:  Easy

Classification:  Conceptual

 

46) Formal structure is ________.

  1. A) molded by individual norms and values and social relationships
  2. B) defined as the relationships that evolve naturally among organization members
  3. C) represented primarily by the organization chart
  4. D) usually drawn directly from an organization’s informal structure
  5. E) usually identical to an organization’s informal structure

Answer:  C

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

47) Informal structure is ________.

  1. A) molded by individual norms and values and social relationships
  2. B) defined as the relationships among organizational resources as outlined by management
  3. C) represented primarily by the organization chart
  4. D) usually represented in a pyramid form
  5. E) usually identical to an organization’s formal structure

Answer:  A

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

48) Organization structure is represented primarily by means of a graphic illustration called a(n) ________.

  1. A) semantic network
  2. B) executive dashboard
  3. C) directed graph
  4. D) organization chart
  5. E) critical path

Answer:  D

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

49) Traditionally, an organization chart is constructed in ________ form.

  1. A) radial tree
  2. B) spider diagram
  3. C) pyramid
  4. D) hyperbolic tree
  5. E) pie-diagram

Answer:  C

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

50) Which of the following is true about the traditional organization chart constructed in pyramid form?

  1. A) Lines between boxes designate informal lines of communication between individuals.
  2. B) Relative positioning of individuals within boxes on the chart indicates broad social relationships.
  3. C) Individuals toward the top of the pyramid have more authority than those toward the bottom.
  4. D) Such organizational charts cannot communicate the complexity of the organization.
  5. E) Individuals toward the bottom of the pyramid have more responsibility than those toward the top.

Answer:  C

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

51) ________ is directly related to the concept of the scalar relationship—that is, the chain of command.

  1. A) Matrix structuring
  2. B) Departmentalizing
  3. C) Vertical dimensioning
  4. D) Horizontal dimensioning
  5. E) Lateralizing

Answer:  C

Page Ref: 255

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

52) Unity of command is the management principle that recommends that ________.

  1. A) all managers share the same goals
  2. B) all employees should accept their formal leader or leaders
  3. C) an individual have only one boss
  4. D) organizational plans be consistent with organizational goals
  5. E) the organizing system be consistent with organizational plans

Answer:  C

Page Ref: 255

Objective:  8

Difficulty:  Easy

Classification:  Conceptual

 

53) Span of management refers to ________.

  1. A) the number of levels in an organization
  2. B) the number of organizational levels above an individual
  3. C) the number of organizational levels below an individual
  4. D) the number of bosses an individual has
  5. E) the number of individuals a manager supervises

Answer:  E

Page Ref: 255

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

54) Fred is a Grade D manager in Lighthouse Infrastructure and manages a small team of eight engineers.  The company has 15 Grade D managers. He worked his way up from the lowest grade, Grade E, where he was one of 52 line managers and hopes to be promoted to Grade C soon, which would make him one of the six vice-presidents in the company. However, breaking into Grade B, comprising three presidents, will be a challenge. Only the CEO and COO occupy Grade A. Which of the following numbers represents Fred’s span of control?

  1. A) 15
  2. B) 60
  3. C) 52
  4. D) 8
  5. E) 11

Answer:  D

Page Ref: 255

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

 

55) According to the contingency viewpoint to designing span of management, the appropriate span of management widens when ________.

  1. A) the activities performed by supervised individuals are similar
  2. B) subordinates are carrying out complex functions
  3. C) the manager needs to spend a lot of time on planning activities
  4. D) subordinates’ activities need to be synchronized carefully
  5. E) subordinates are widely physically separated

Answer:  A

Page Ref: 255

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

56) According to the contingency viewpoint to designing span of management, the appropriate span of management widens when ________.

  1. A) the activities performed by supervised individuals are dissimilar
  2. B) subordinates are carrying out complex functions
  3. C) the manager needs to spend a lot of time on planning activities
  4. D) subordinates’ activities need to be synchronized carefully
  5. E) subordinates are physically located close to one another

Answer:  E

Page Ref: 255

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

57) According to the contingency viewpoint to designing span of management, the appropriate span of management widens when ________.

  1. A) the activities performed by supervised individuals are dissimilar
  2. B) subordinates are carrying out simple functions
  3. C) the manager needs to spend a lot of time on planning activities
  4. D) subordinates’ activities need to be synchronized carefully
  5. E) subordinates are widely physically separated

Answer:  B

Page Ref: 255

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

58) Dorothy Woods, CEO of Arcadia Corp., is planning to widen the spans of management in the organization in order to have a flatter organization. Which of the following, if true, would support Dorothy’s strategy?

  1. A) Arcadia Corp. is a market leader in developing, manufacturing and selling customized innovative, cutting edge communication technology to corporations.
  2. B) Arcadia Corp. is engaged in manufacturing bottle caps for a leading cola brand.
  3. C) Arcadia Corp. relies heavily on virtual teams spread across its offices in several countries.
  4. D) Arcadia Corp. will save a significant amount of money on managers’ salaries if it reduces the number of managerial levels.
  5. E) Arcadia Corp. has a reputation for pioneering innovative managerial practices in the industry.

Answer:  B

Page Ref: 255-256

Objective:  7

Difficulty:  Moderate

Classification:  Critical thinking

 

59) According to the contingency viewpoint to designing span of management, the appropriate span of management narrows when ________.

  1. A) the activities performed by supervised individuals are similar
  2. B) subordinates are carrying out simple functions
  3. C) the manager needs to spend a lot of time on planning activities
  4. D) subordinates’ activities need little synchronization
  5. E) subordinates are physically located close to one another

Answer:  C

Page Ref: 256

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

60) According to the contingency viewpoint to designing span of management, the appropriate span of management narrows when ________.

  1. A) the activities performed by supervised individuals are similar
  2. B) subordinates are carrying out simple functions
  3. C) the manager spends little time on planning activities
  4. D) subordinates’ activities need to be synchronized carefully
  5. E) subordinates are physically located close to one another

Answer:  D

Page Ref: 256

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

61) According to the contingency viewpoint to designing span of management, which of the following situations would warrant a relatively wide span of control?

  1. A) Supervising a team of scientists engaged in complex research work.
  2. B) Supervising a team of factory workers sewing buttons onto shirts.
  3. C) Managing a virtual team of engineers spread across several countries.
  4. D) Managing a highly interdependent production team.
  5. E) Managing and coordinating the activities of a marketing team.

Answer:  B

Page Ref: 256

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

 

 

62) ________ developed a formula for determining the number of possible relationships between a manager and subordinates when the number of subordinates is known.

  1. A) Mary Parker Follett
  2. B) Henri Fayol
  3. C) F. W. Taylor
  4. D) Max Weber
  5. E) V. A. Graicunas

Answer:  E

Page Ref: 256

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

63) Graicunas’s formula is as follows: C = n(+ n- 1). What does C stand for in this formula?

  1. A) the total number of departments possible in an organization
  2. B) the appropriate number of subordinates a manager can have
  3. C) the appropriate number of levels an organization can have
  4. D) the total number of possible relationships between manager and subordinates
  5. E) the degree of the difficulty in coordinating a certain number of subordinates

Answer:  D

Page Ref: 256-257

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

64) Graicunas’s formula is as follows: C = n(+ n- 1). What does n stand for in this formula?

  1. A) the total number of departments in an organization
  2. B) the appropriate number of subordinates a manager can have
  3. C) the total number of levels an organization can have
  4. D) the known number of subordinates for a particular manager
  5. E) the appropriate number of possible relationships between manager and subordinates

Answer:  D

Page Ref: 256-257

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

 

65) Andrew is a mid-level manager with three organizational levels above him and two below him. He has four analysts reporting directly to him. Using Graicunas’s formula, calculate the total number of possible relationships between Andrew and his subordinates.

  1. A) 4
  2. B) 16
  3. C) 44
  4. D) 56
  5. E) 64

Answer:  C

Page Ref: 256-257

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

66) According to Graicunas’s formula for determining the number of possible relationships between a manager and subordinates, as the number of subordinates increases arithmetically, the number of possible relationships between the manager and those subordinates ________.

  1. A) increases proportionately
  2. B) decreases proportionately
  3. C) increases geometrically
  4. D) increases arithmetically too
  5. E) decreases geometrically

Answer:  C

Page Ref: 257

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

67) Which of the following is a criticism of Graicuna’s work in span of management?

  1. A) He failed to emphasize the importance of span of management on the organization.
  2. B) He does not recognize the principle of unity of command.
  3. C) He does not consider the number of actual relationships among superiors and subordinates.
  4. D) He fails to specify what will happen if the number of subordinates increases or decreases.
  5. E) He takes into account managers’ relationships outside the organization.

Answer:  C

Page Ref: 257

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

 

68) Which of the following is true about the height of an organization chart?

  1. A) An organization’s structure should be built from bottom to top to ensure that appropriate spans of management are achieved at all levels.
  2. B) Span of management usually has no influence on the height of an organization chart.
  3. C) Increasing spans of management to eliminate certain management positions and thereby reducing salary expenses will help the organization achieve long-tern success.
  4. D) Normally, the greater the height of the organization chart, the smaller the span of management.
  5. E) Overall, managers seem to be using taller organizational structures now than in the past.

Answer:  D

Page Ref: 257

Objective:  7

Difficulty:  Moderate

Classification:  Conceptual

69) The ________ of an organization refers to the extent to which firms use lateral subdivisions or specialties within an organization.

  1. A) laddering
  2. B) horizontal dimensioning
  3. C) vertical integration
  4. D) vertical dimensioning
  5. E) backward integration

Answer:  B

Page Ref: 258

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

70) Which of the following is the most widely used basis for departmentalization?

  1. A) customer
  2. B) work functions
  3. C) geography
  4. D) matrix
  5. E) product or service

Answer:  B

Page Ref: 258

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

 

71) The organization structure at Kinetic Machines is horizontally divided into Marketing, Finance, Production, and R&D departments. Identify the departmentalization mode being used here.

  1. A) product
  2. B) geographic
  3. C) functional
  4. D) customer
  5. E) matrix

Answer:  C

Page Ref: 258

AACSB:  Analytic Skills

Objective:  6

Difficulty:  Moderate

Classification:  Application

 

72) Which of the following is an advantage of departmentalizing by matrix?

  1. A) It clarifies the power structure within the firm.
  2. B) It helps employees prioritize responsibilities.
  3. C) It facilitates coordination across projects.
  4. D) It allows firms to achieve unity of command.
  5. E) It allows firms to pool human resources for short-term and long-term projects.

Answer:  E

Page Ref: 258

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

73) Which of the following is an advantage of functional departmentalizing?

  1. A) facilitates coordination between various functions
  2. B) facilitates assigning of blame when a product performs poorly
  3. C) allows firms to pool human resources for both short-term and long-term projects
  4. D) promotes consistency in how functions are carried out
  5. E) facilitates differentiation of strategy across different segments

Answer:  D

Page Ref: 259

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

 

74) Which of the following is a  potential disadvantage of functional departmentalizing?

  1. A) difficulty for employees to prioritize responsibilities
  2. B) lack of unity of command
  3. C) difficulty in coordinating between various functions
  4. D) difficulty in assigning blame or credit for the performance of a function
  5. E) lack of consistency in carrying out functions

Answer:  C

Page Ref: 259

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

75) The organization structure at Sinclair Funds, a financial services company, is divided horizontally into Insurance, Mutual Funds, and Wealth Management departments. Identify the departmentalization mode being used here.

  1. A) matrix
  2. B) customer
  3. C) product or service
  4. D) geographic
  5. E) functional

Answer:  C

Page Ref: 259

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

 

76) Gizmo Sales, a  company that sells office supplies to companies in Atlanta, GA, has organized the business horizontally into departments named North Atlanta, South Atlanta, and Downtown Atlanta. This indicates that Gizmo has departmentalized on the basis of ________.

  1. A) products
  2. B) projects
  3. C) customers
  4. D) territories
  5. E) functions

Answer:  D

Page Ref: 260

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

 

77) Pixel Technologies, a manufacturer of electronic products and cell phones, has departmentalized the organization on the basis of ________ by dividing the business into two divisions–Electronics Retailers and Cell Phone Retailers.

  1. A) geography
  2. B) products
  3. C) functional
  4. D) customers
  5. E) matrix

Answer:  D

Page Ref: 261

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

 

78) At Landmark Constructions, crucial projects are handled completely by project managers who are empowered to borrow marketing, sales, engineering, finance and R&D staff and other employees from various parts of the organization to complete their projects. Identify the departmentalization mode being used in this company.

  1. A) customer
  2. B) matrix
  3. C) product
  4. D) geographic
  5. E) functional

Answer:  B

Page Ref: 262-263

AACSB:  Analytic Skills

Objective:  7

Difficulty:  Moderate

Classification:  Application

 

79) ________ organizations are also called project organizations.

  1. A) Silo
  2. B) Functional
  3. C) Radial
  4. D) Pyramid
  5. E) Matrix

Answer:  E

Page Ref: 263

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

80) Which of the following modes of departmentalization contradicts the principle of the unity of command?

  1. A) customer
  2. B) functional
  3. C) geographic
  4. D) matrix
  5. E) product or service

Answer:  D

Page Ref: 263

Objective:  7

Difficulty:  Difficult

Classification:  Conceptual

 

81) Which of the following is an advantage of departmentalizing by matrix?

  1. A) It clarifies the power structure within the firm.
  2. B) It helps employees prioritize responsibilities.
  3. C) It allows organizations to focus on several projects simultaneously.
  4. D) It facilitates coordination across projects.
  5. E) It allows firms to achieve unity of command.

Answer:  C

Page Ref: 263

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

82) Which of the following is a disadvantage of departmentalizing by matrix?

  1. A) It results in duplication of effort.
  2. B) It can be confusing for employees.
  3. C) It does not allow firms to maintain flexibility.
  4. D) It does not allow firms to pool resources for short term projects.
  5. E) It results in a bureaucratic organization.

Answer:  B

Page Ref: 263

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

 

83) Which of the following is true about departmentalizing by matrix?

  1. A) It ensures unity of command.
  2. B) Project managers generally report directly to the company CEO.
  3. C) A matrix organization essentially has a bureaucratic structure.
  4. D) When on a project, workers are not responsible for their original duties.
  5. E) This mode is usually not utilized for short term projects.

Answer:  B

Page Ref: 263

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

84) Four primary forces influence the evolution of a formal structure: forces in the manager, forces in the task, forces in the environment, and forces in the ________.

  1. A) subordinates
  2. B) market
  3. C) shareholders
  4. D) economy
  5. E) community

Answer:  A

Page Ref: 264

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

 

85) In the context of forces influencing formal structure, the customers and suppliers of the management system, along with existing political and social structures constitute the forces in the ________.

  1. A) manager
  2. B) task
  3. C) environment
  4. D) subordinates
  5. E) activity

Answer:  C

Page Ref: 264

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

 

86) Discuss the five main steps in the organizing process.

Answer:  The first step in the organizing process is to reflect on plans and objectives. This is an essential first step because planning involves determining how the organization will attain its objectives, and organizing involves determining how managers will use organizational resources to activate plans. The second step is to establish major tasks, or jobs, to be done within an organization to achieve the objectives established by plans. The third step is to subdivide the tasks into subtasks, which can be thought of as the elements of doing one’s job. The fourth step is to allocate resources and directives for subtasks. This essentially means the manager must now determine who will do the tasks and subtasks, and the relationships between those people. The fifth step is to evaluate the results of the implemented organizational strategy. The manager must gather feedback on how well the strategy is working.

Page Ref: 251-252

Objective:  1

Difficulty:  Easy

Classification:  Conceptual

87) “A bureaucratic approach to organizing is well-suited to large manufacturing organizations where workers are engaged in low-skilled, routine work.” Do you agree with this statement? Why/ why not? Will the bureaucratic approach be effective in a small company that creates advertisements and films for corporates? Explain your answer.

Answer:  Student answers may vary. Detailed procedures and rules, a clearly outlined organizational hierarchy, and impersonal relationships among organization members are likely to be effective in increasing the efficiency and productivity of workers engaged in routine, low-skilled work in large organizations. That being said, no modern company can completely ignore the human variable. The inflexible and impersonal nature of the bureaucratic approach is not suitable for organizations where employees must carry out creative work.

Page Ref: 253

AACSB:  Reflective Thinking Skills

Objective:  2

Difficulty:  Difficult

Classification:  Critical thinking

 

 

88) Describe what is meant by the term “division of labor.” Also explain the advantages and disadvantages associated with division of labor.

Answer:  Division of labor is the assignment of various portions of a particular task among a number of organization members. Division of labor calls for specialization. Several explanations have been offered for the usefulness of division of labor. First, when workers specialize in a particular task, their skill at performing that task tends to increase. Second, workers who have one job, and one place in which to do it, do not lose valuable time changing tools or locations. Third, when workers concentrate on performing only one job, they naturally try to make the job easier and more efficient. Lastly, division of labor creates a situation in which workers need only to know how to perform their part of the work task, rather than the entire process for producing the end product. Therefore, the task of understanding their work does not become too burdensome. Arguments have also been presented against the use of an extreme division of labor. Essentially, these arguments contend that division of labor focuses solely on efficiency and economic benefit and overlooks the human variable in organizations. Work that is extremely specialized tends to be boring and therefore will eventually cause production rates to go down as workers become resentful of being treated like machines.

Page Ref: 253-254

Objective:  4

Difficulty:  Easy

Classification:  Conceptual

89) Define the concepts of vertical dimensioning, scalar relationships, and unity of command and explain how they are related.

Answer:  Vertical dimensioning refers to the extent to which an organization uses vertical levels to separate job responsibilities.

Vertical dimensioning is directly related to the concept of the scalar relationship—that is, the chain of command. Every organization is built on the premise that the individual at the top possesses the most authority and that other individuals’ authority is scaled downward according to their relative position on the organization chart. The lower a person’s position on the organization chart, then, the less authority that person possesses.

The scalar relationship, or chain of command, is related to the unity of command. Unity of command is the management principle that recommends that an individual have only one boss. If too many bosses give orders, the result will probably be confusion, contradiction, and

frustration—a sure recipe for ineffectiveness and inefficiency in an organization.

Page Ref: 255

Objective:  3

Difficulty:  Easy

Classification:  Conceptual

 

 

90) Explain the concept of span of management, and discuss the factors that influence the appropriateness of the size of an individual’s span of management.

Answer:  Span of management is the number of individuals a manager supervises; the greater the number of individuals the greater the span of management. The central concern of span of management is to determine how many individuals a manager can supervise effectively. To assist in determining the appropriate span of management, Harold Koontz developed five situational factors that influence the span of management. The first factor is similarity of functions—the more that subordinates are performing similar functions, the more that the appropriate span of management widens. The next factor is geographic continuity. The closer subordinates are physically, the more the manager can supervise effectively. Complexity of functions is the next factor. The more difficult and involved the activities of the subordinates are, the more difficult it is to manage a large number of subordinates effectively. Coordination as a factor deals with the amount of time managers must spend synchronizing the activities of their subordinates. The greater amount of time spent doing so, the smaller the span of management. The final factor, planning, suggests the more time managers spend planning, the fewer individuals they can manage effectively.

Page Ref: 255-256

Objective:  7

Difficulty:  Easy

Classification:  Conceptual

91) What is meant by the horizontal dimensioning of an organization? Also explain the terms departments, departmentalizing, and list the various modes of departmentalizing and organization.

Answer:  The horizontal dimensioning of an organization refers to the extent to which firms use lateral subdivisions or specialties within an organization. Overall, to build organizations horizontally, organizations establish departments. A department is a unique group of resources established by management to perform some organizational task. Departmentalizing is the process of establishing departments within the management system.

Typically, these departments are based on, or contingent on, such situational factors as the work functions being performed, the product or service being offered, the territory being covered, and the customer being targeted.

Page Ref: 258

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

 

92) What are the advantages and disadvantages of departmentalizing on the basis of functions?

Answer:  The primary advantage of functional departmentalizing is the control conferred to the various functional heads, which in turn promotes consistency in how each function is carried out across the organization. It also makes it easy to assign blame or credit for the performance of a function.

However, this structure may implicitly impose functional standardization that may not optimize the needs of the organization’s various products and services. Also, it may prove difficult to coordinate between various functions and will make it difficult to assign blame or credit when a product does poorly or well.

Page Ref: 258-259

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

93) Describe departmentalization by matrix. What the advantages and disadvantages of such a structure?

Answer:  A matrix organization is one in which a project manager(s) borrows workers from various parts of the organization to complete some specific project. For this reason, matrix organizations are also called project organizations. The project itself may be either long term or short term, and once finished, the employees borrowed to complete it return to their original jobs. Within a matrix structure, the workers are responsible for their original activities along with project activities. Because of the importance of matrix structure projects, project managers generally report directly to the company CEO.

The chief advantage of the matrix structure is that it allows the organization to focus on various projects simultaneously. It allows firms to pool human resources for both short- and long- term projects and allows firms to maintain flexibility over time.

However, the matrix structure can be confusing, and employees may not be able to effectively cope with two bosses. It may be difficult for employees to understand power structure within the firm and to prioritize responsibilities based on multiple authority figures.

Page Ref: 263

Objective:  6

Difficulty:  Easy

Classification:  Conceptual

 

94) What are the forces influencing formal structure?

Answer:  The formal structure of a management system is continually evolving. Four primary forces influence this evolution: forces in the manager, forces in the task, forces in the environment, and forces in the subordinates. The evolution of a particular organization is actually the result of a complex and dynamic interaction among these forces.

Forces in the manager are the unique way in which a manager perceives organizational problems. Naturally, background, knowledge, experience, and values influence the manager’s perception of what the organization’s formal structure should be or how it should be changed. In the same way, similar forces influence the employee and play a key role in how he or she views work. Forces in the task include the degree of technology involved in performing the task and the task’s complexity. As task activities change, a force is created to change the existing organization. Forces in the environment include the customers and suppliers of the management system, along with existing political and social structures. Forces in the subordinates include the needs and skill levels of subordinates. Obviously, as the environment and subordinates change, forces are created simultaneously to change the organization.

Page Ref: 263-264

Objective:  2

Difficulty:  Easy

Classification:  Conceptual

 

95) Should a manager always adhere to established organization structure and related chain of command? Outline Fayol’s stand on this question.

Answer:  Fayol has indicated that strict adherence to a particular chain of command is not always advisable. Fayol recommended that in some situations a bridge, or gangplank, be used to allow managers on different vertical chains to communicate with each other. However, managers should be careful in allowing the use of these organizational bridges because although it may be quicker and cheaper, it could also exclude important people up the chain from the communication channel, and their ignorance might prove more costly to the organization in the long run than would following the established chain of command. When managers allow the use of an organizational bridge, they must be extremely careful to inform all other appropriate individuals within the organization of any information received that way.

Page Ref: 264

Objective:  2

Difficulty:  Easy

Classification:  Conceptual