Test Bank for MGMT 4th Canadian Edition By Chuck Williams, Terri Champion, Ike Hall

TEST BANK MGMT 4th Canadian Edition

by Chuck Williams, Terri Champion, Ike Hall Complete Chapters 1-18

Test Bank for MGMT 4th Canadian Edition By Chuck Williams, Terri Champion, Ike Hall (All Chapters, 100% Original Verified, A+ Grade) Name:

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Chapter 1 - Management

Indicate the answer choice that best completes the statement or answers the question.

1. What is the term for getting work done through others? a. management b. planning c. organizing d. strategizing 2. Ruth was hired to be the second-in-command at Graham Mailing Services. She was told that her job was to

deal with the employees to make sure they met the customers’ mailing specifications. She has not been instructed on how to run machines or in any other technical area. What is her position? a. marketing b. relationship control c. management d. strategizing 3. Management can maximize profits, production, and people by doing which of the following? a. utilizing resources efficiently b. utilizing resources inefficiently c. utilizing resources effectively d. utilizing resources ineffectively 4. A manager strives to accomplish tasks that help fulfill organizational objectives. What is the manager trying

to improve? a. organizational efficiency b. organizational effectiveness c. organizational functionality d. organizational productivity 5. The response to the 2016 wildfires in Fort McMurray, Alberta was reportedly hampered by incompatible

radio systems between different agencies. Which concept would a manager use to resolve this situation? a. operations b. management c. effectiveness d. efficiency 6. Management at the Ford automobile manufacturing plant located in Oakville, Ontario made a decision to

switch all overhead lighting to LEDs, which has generated thousands in energy savings. The managers made this decision with which of the following in mind? a. the triple bottom line b. productivity c. efficiency Powered by Cognero

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Chapter 1 - Management d. effectiveness 7. During the COVID-19 pandemic, many restaurants were forced to temporarily shut down, lay off staff, and

reduce costs as much as possible until public health measures were lifted. Owners and managers of these restaurants would have been focused on which of the following during this time? a. public image b. efficiency c. organizational effectiveness d. goal setting 8. Henri Fayol argued that the success of an enterprise generally depends more on the administrative ability of

its leaders than on what? a. their ability to motivate others b. their conceptual skills c. their technical ability d. their interpersonal skills 9. What is the term for the accomplishment of tasks that help fulfill organizational objectives? a. optimizing b. satisficing c. efficiency d. effectiveness 10. To achieve its goal of increased market share, a coffee and donut shop launched a program in London,

Ontario, that awards grade-school students a free donut for every “A” on their report card. What management function was used to create this program? a. controlling b. leading c. planning d. organizing 11. Nestlé was unsuccessful in early attempts to sell its chocolate in India. It discovered its chocolate bars were

not suitable for the Indian markets because the candy became messy from sitting in direct sunlight without the benefit of air conditioning. Nestlé adopted an innovative strategy and developed Chocostick, a liquid chocolate that is now very popular. Which management function did Nestlé use to solve its problem? a. planning b. controlling c. organizing d. leading 12. What management function is being engaged when a manager is determining organizational goals and the

means for achieving them? a. planning Powered by Cognero

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Chapter 1 - Management b. organizing c. controlling d. leading 13. A recently opened bakery’s 2022 objectives were to increase its revenues by at least 15 percent and reduce

its net losses by at least 25 percent. According to your textbook, what management function would be instrumental in setting and meeting these goals? a. leading b. planning c. organizing d. controlling 14. A manager is monitoring progress toward goal achievement, and taking corrective action when needed.

What management function is being engaged? a. leading b. organizing c. planning d. controlling 15. Malika works as a small business banking specialist within TD’s contact centre. She just celebrated her one-

year anniversary with TD, but unfortunately she’s not meeting any of her scorecard metrics. Her manager has now asked that she job shadow a few of her colleagues to better understand successful sales tactics. Which management function is Malika’s manager performing? a. controlling b. planning c. observing d. leading 16. Which of the following encourages employees to work harder, to work for extended periods, and to think of

better ways to do their jobs? a. planning b. controlling c. motivating d. goal-setting 17. A business school administrator is determining what classes will be offered, in which rooms, and who will

teach each class. What management function is involved in this work? a. planning b. organizing c. controlling d. leading 18. A Canadian Armed Forces drill instructor is motivating new recruits to challenge themselves. What Powered by Cognero

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Chapter 1 - Management

management function is being engaged? a. planning b. organizing c. controlling d. leading 19. A Canadian magazine published a recipe for dinner rolls and the description had a religious connotation.

The ensuing controversy forced the magazine to pull its issue off newsstands and issue an apology. Which management function did the magazine employ by issuing an apology to readers? a. planning b. organizing c. controlling d. leading 20. General managers, plant managers, divisional managers, and regional manners are all considered which type

of manager? a. team b. front-line c. top d. middle 21. In 2021, a major food manufacturer was forced to recall strained prunes because they contained pieces of

rubber. What management function did the recall entail? a. controlling b. leading c. planning d. organizing 22. A human resource manager had to find inexpensive ways to reward employees and bolster morale during a

sales-flattening economic downturn. Which management function would need to be engaged? a. planning b. organizing c. leading d. controlling 23. Designers such as Marimekko and Marant have partnered with Swedish retailer Hennes & Mauritz (better

known as H&M) to sell an affordable line of exclusively designed high-fashion clothing. Hennes & Mauritz will take responsibility for manufacturing and marketing the clothes. What management function guided the alliance between the designer and the retailer? a. controlling b. leading c. planning Powered by Cognero

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Chapter 1 - Management d. organizing 24. Jane is in charge of her sports team’s annual fundraising auction. She will decide who will ask local

businesses for prizes, who will determine the site, who will sell tickets to customers, and who will work the night of the auction. Which of the following activities is she engaged in? a. planning b. leading c. controlling d. organizing 25. The Dilawri Group, a Winnipeg-based automotive firm, wants to ensure its employees are “happy to walk

into its buildings every single day.” Which management function is being used to make this happen? a. leading b. organizing c. planning d. controlling 26. Suncor experienced significant financial and operational challenges during the oil crisis of 2018. Which type

of manager was expected to develop the long-term plans needed to ensure the company’s stability and survival? a. supervising manager b. top manager c. front-line manager d. middle manager 27. Which of the following functions is typically performed by middle managers? a. planning and implementing strategies for achieving organizational goals b. developing in employees the attitudes of commitment to and ownership of the company’s

performance c. creating a positive organizational culture through language and action d. monitoring the business environment 28. In 2022, Kraft Mac & Cheese went through a brand refresh and logo change. a. middle management b. front-line management c. team leaders d. product supervisors 29. Which of the following job responsibilities is typically fulfilled by a middle manager for a manufacturing

firm? a. monitoring how consumers feel about environmental waste b. scheduling vacation time for employees c. determining how the company will implement a plan calling for a 10 percent decrease in costs Powered by Cognero

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Chapter 1 - Management d. maintaining a positive organizational culture 30. Which of the following duties would be performed by a top manager for a management consulting firm? a. establishing a positive organizational culture b. ensuring that employees are attired according to the company dress code c. evaluating the performance of individual consultants d. monitoring expense statements turned in by consultants 31. Professors at a typical business school are assigned to departments, such as accounting or marketing. The

chairs of the departments are managers. Which title best describes them? a. supervising manager b. front-line manager c. middle manager d. corporate head 32. Who in a police department is typically responsible for determining which police officers will work

overtime? a. middle managers b. administrative managers c. front-line managers d. regional managers 33. Who is typically responsible for creating a positive organizational culture through language and action? a. top managers b. middle managers c. team leaders d. group facilitators 34. Which of the following titles represents the level of a marketing manager? a. supervising manager b. top manager c. middle manager d. corporate head 35. Which of the following terms would typically be used to describe the position of a human resource

manager? a. supervising manager b. top manager c. middle manager d. department manager 36. Who is typically responsible for setting objectives consistent with organizational goals and then planning Powered by Cognero

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Chapter 1 - Management

and implementing strategies for achieving these goals? a. top managers b. front-line managers c. team leaders d. middle managers 37. Which of the following functions is typically performed by a middle manager? a. responding to customer complaints b. coordinating groups and departments c. ensuring printers, faxes, and other office machines are maintained regularly d. setting long-term strategies for the organization 38. Who typically coordinates and links groups, departments, and divisions within a company? a. top managers b. middle managers c. team leaders d. front-line managers 39. Who is typically responsible for figuring out "how" to do the "what"? a. middle managers b. front-line managers c. group facilitators d. team leaders 40. Which of the following tasks are front-line managers most likely to perform? a. reviewing the performance of corporate investments b. encouraging, monitoring, and rewarding employee performance c. determining how to deal with long-term environmental changes d. periodically observing the company’s organizational culture 41. Who typically trains and supervises the performance of non-managerial employees and are directly

responsible for producing the company’s products or services? a. general managers b. middle managers c. front-line managers d. team leaders 42. At which level of management would a manager typically plan an employee picnic, select and order

performance awards to be presented at the picnic, and encourage workers to attend the event? a. marketing b. front-line c. top Powered by Cognero

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Chapter 1 - Management d. middle 43. Walker supervises operations on the chassis assembly line for a large vehicle manufacturer. Most of his

time is spent on ensuring quality control maintenance, scheduling workers, and training new employees. What type of manager is he? a. front-line manager b. middle manager c. team leader d. group facilitator 44. Which of the following tasks would a front-line manager for a large electric generator manufacturer

perform? a. monitoring how customers feel about electric-powered engines b. determining whether the company needs to expand its production overseas c. monitoring and managing the performance of the company’s international subsidiaries d. managing the performance of the employees who build the generators 45. Who is responsible for placing orders for food and paper supplies and for setting up weekly work schedules

at a fast-food restaurant? a. corporate vice president b. middle manager c. front-line manager d. top manager 46. Chandler, a manager at KPMG, aims to impart company values, strategies, and lessons during each of his

interactions with employees and fellow colleagues. Sometimes he feels like he is repeating himself too much, but then he remembers the value of consistent messaging. What type of manager is Chandler? a. front-line manager b. team leader c. top manager d. middle manager 47. Which of the tasks listed below will middle managers most likely have to perform? a. facilitating a bottom-up planning approach to supervising b. managing the performance of entry-level employees c. implementing the changes generated by top managers d. developing employees’ commitment to and ownership of the company’s performance 48. As a result of the COVID-19 pandemic, more and more companies are implementing hybrid or remote

working arrangements for employees. Which type of manager helps facilitate communication between higher and lower levels of the organization in the virtual business environment? a. middle manager b. top manager Powered by Cognero

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Chapter 1 - Management c. front-line manager d. team leader 49. The ability to self-reflect and recognize one’s own strengths and weaknesses and work style, and how they

may impact one’s ability to work with others in the organization, can be a real benefit to which type of manager? a. middle manager b. top manager c. front-line manager d. team leader 50. A shoe company expects its designers to operate like a team when they create new shoe designs. Most of its

designers do not have a background in fashion, so it is important that they share their expertise. What task would each team leader most likely be responsible for? a. developing organizational codes of ethics b. managing external and internal team relationships c. developing growth strategies d. coordinating the performances of all teams 51. Which of the following is a typical responsibility of a corporate team leader? a. conducting quality control audits b. facilitating team activities toward accomplishing a goal c. acting as a department liaison d. overseeing strategy implementation 52. Which of the following is NOT one of the six essential skills every front-line manager needs? a. ability to delegate b. strategic thinking c. team building and leading d. personal leadership awareness 53. According to Henry Mintzberg, what are the three major roles that managers fulfill while performing their

jobs? a. informational roles, interpersonal roles, and decisional roles b. coordination roles, ethical roles, and organizational roles c. interpersonal roles, ethical roles, and coordination roles d. informational roles, decisional roles, and organizational roles 54. Which of the following is an example of an interpersonal role? a. figurehead b. monitor c. disseminator Powered by Cognero

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Chapter 1 - Management d. spokesperson 55. The marketing manager of a packaged goods company was asked to meet with the organization’s research

and development department to explain why the company needed to change its product naming conventions.

What interpersonal role would the marketing manager take on in this situation? a. liaison b. disseminator c. figurehead d. resource allocator 56. A university president is often seen as a figurehead. Which of the following duties are they most likely to

perform in that role? a. They distribute critical information to students. b. They monitor the political environment. c. They help faculty adapt to incremental changes. d. They perform ceremonial duties when new facilities open.

57. After the death of her husband, Miriam McAllister became the CEO of a company that is the world’s

leading manufacturer of kidney dialysis machines. When she took the position, it was believed that she would perform only ceremonial duties and would not want to take active part in running the company. In other words, what role was it assumed she would choose? a. resource allocator b. monitor c. spokesperson d. figurehead 58. Henry Mintzberg would describe sisters Kendall and Justine Barber, the co-founders of Poppy Barley

Shoes, as taking leader roles within the organization. In this role, how do the sisters spend much of their time? a. negotiating b. responding to instrumental change c. performing ceremonial duties d. motivating and encouraging employees 59. A marketing manager was hired by a plumbing fixtures manufacturer to operate information booths at more

than 20 different international trade shows annually. According to Henry Mintzberg, which managerial role would this marketing manager have? a. resource allocator b. figurehead c. communicator d. spokesperson 60. In a speech delivered to a forum for retail leaders, Dr. Hans-Joachim Koerber stated, “Sustained growth is

essential. Sustaining growth is a challenge for virtually every company.” What informational role did Dr. Powered by Cognero

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Koerber assume? a. liaison b. resource allocator c. figurehead d. spokesperson 61. The WE Charity’s board of directors made a commitment to ask their stakeholders for feedback about their

experiences with and perceptions of the organization’s signature event, WE Day. The head of the organization volunteered to conduct the environmental scanning and share what he learned with the others. Which informational roles did the head of the organization assume? a. liaison and spokesperson b. liaison and resource allocator c. monitor and disseminator d. monitor and negotiator 62. After the death of her husband, Miriam McAllister became the CEO of a company that is the world’s

leading manufacturer of kidney dialysis machines. Even though she was not expected to, she was quick to ask company employees to develop ideas for new products that would lead to organizational growth in a changing environment. What decisional role did McAllister assume? a. leader b. disseminator c. resource allocator d. entrepreneur 63. In what decisional role do managers adapt themselves, their subordinates, and their units to incremental

change? a. resource allocator b. entrepreneur c. disturbance handler d. liaison 64. Bombardier announced a turnaround plan in 2015, and has provided regular updates to the media and

financial world since. According to Henry Mintzberg, which managerial role would have been adopted in order to make these announcements? a. disturbance handler b. controller c. spokesperson d. entrepreneur 65. Connie O’Day is a middle manager for the publishers of Maclean’s magazine, a Canadian news and general

interest publication targeted at Canadians from a wide variety of backgrounds. O’Day spends much of her day conducting interviews with groups of Canadians to determine what they consider most important in their lives.

She also keeps an eye on the sales and content of other news and general interest magazines. Which Powered by Cognero

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informational role does O’Day perform? a. entrepreneur b. monitor c. spokesperson d. liaison 66. Which informational role do managers play when sharing information they have collected with their

subordinates and others in the company? a. monitor b. figurehead c. resource allocator d. disseminator 67. The sales manager is in charge of monitoring the expense accounts of her sales force. Which of the

following roles is most closely associated with her actions? a. resource allocator b. entrepreneur c. disturbance handler d. disseminator 68. Recent Facebook and Twitter advertisements for washing machines by LG Canada were accused of being

sexist, and a backlash ensued. What role were the LG Canada managers forced into? a. entrepreneurs b. disturbance handlers c. liaisons d. disseminators 69. According to Henry Mintzberg, which role would a manager assume if trying to convince union members to

accept a significant reduction in pay in order to keep the manufacturing plant open? a. resource allocator b. entrepreneur c. liaison d. negotiator 70. Which of the following skills is most exhibited by an accountant who has the ability to create a budget,

compare the budget to the actual income statement, and determine unnecessary expenses? a. technical skill b. human skill c. conceptual skill d. analytical skill 71. Which types of skills tend to be most important to the success of lower-level managers?

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Chapter 1 - Management a. decisional skills b. human skills c. analytical skills d. technical skills 72. An advertisement for a beer company was criticized for promoting skiing out of bounds, which has a

significant cost to search and rescue organizations. Which kinds of skills would have helped the company’s marketing manager determine that the advertisement was creating bad publicity for the company? a. informational b. conceptual c. interpersonal d. decisional 73. Which of the following skills is demonstrated by helping others express their thoughts and feelings, while

being sensitive to others’ needs and viewpoints? a. human skill b. conceptual skill c. technical skill d. decisional skill 74. Which types of skills tend to be equally important at all levels of management? a. technical skills b. human skills c. decisional skills d. analytical skills 75. Parminder has been with her company for 15 years. She started at the lowest level in manufacturing and

worked her way up through all the management levels. She is now the vice president of operations. Which skill was Parminder most likely equally adept at through each level of her progress? a. technical skills b. human skills c. decisional skills d. analytical skills 76. Which set of skills increases in importance for success as people rise through the managerial ranks? a. technical skills b. analytical skills c. conceptual skills d. human skills 77. Shin has been praised for her ability to see the organization as a whole and understand how different parts of

the company affect each other. Shin is receiving praise for which of her skills?

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Chapter 1 - Management a. interpersonal b. conceptual c. innovative d. human 78. Terrell notices that any time Hassan is in a group setting he is unwilling to listen to the opinions of his

colleagues and dominates most of the conversation. When others try to express their opinions, he tends to dismiss them and move on to another topic. Hassan may lack which of the following skills? a. human b. technical c. conceptual d. motivation 79. Which skills become less important as managers rise through the managerial ranks? a. interpersonal skills b. human skills c. conceptual skills d. technical skills 80. After six months in the role, what do new managers most typically believe their job is? a. to exercise formal authority b. to maintain control and avoid delegation c. to develop people’s potential d. to solve problems for subordinates 81. What do managers tend to do after their first year of managerial experience? a. They exercise more formal authority. b. They do less listening and more telling. c. They view themselves as the boss. d. They use more positive reinforcement.

82. After a year as a manager, what do new managers typically realize to be their job’s most frequent role? a. troubleshooting b. managing tasks c. problem solving d. developing people 83. Narrative 1-1

Michael Medline held the CEO position of Canadian Tire Corporation for about 15 months until July 2016, when the board asked its former CEO, Stephen Wetmore, to return. The board was concerned about the longterm digital strategy Medline proposed, despite strong financial results and his unique ability to understand how the different parts of the company affect each other. Medline had extensive operational experience, including Powered by Cognero

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running two of Canadian Tire Corporation’s apparel divisions in addition to the core auto parts and petroleum businesses.

Refer to Narrative 1-1. Which of the following most contributed to Medline’s dismissal? a. ineffectiveness b. lack of synergy c. lack of advocacy d. inefficiency 84. Narrative 1-1

Michael Medline held the CEO position of Canadian Tire Corporation for about 15 months until July 2016, when the board asked its former CEO, Stephen Wetmore, to return. The board was concerned about the longterm digital strategy Medline proposed, despite strong financial results and his unique ability to understand how the different parts of the company affect each other. Medline had extensive operational experience, including running two of Canadian Tire Corporation’s apparel divisions in addition to the core auto parts and petroleum businesses.

Refer to Narrative 1-1. Which management function did the board argue Medline had failed to perform at the time of his departure? a. planning b. controlling c. leading d. organizing 85. Narrative 1-1

Michael Medline held the CEO position of Canadian Tire Corporation for about 15 months until July 2016, when the board asked its former CEO, Stephen Wetmore, to return. The board was concerned about the longterm digital strategy Medline proposed, despite strong financial results and his unique ability to understand how the different parts of the company affect each other. Medline had extensive operational experience, including running two of Canadian Tire Corporation’s apparel divisions in addition to the core auto parts and petroleum businesses.

Refer to Narrative 1-1. Which of the following tasks would Medline, as the CEO of Canadian Tire Corporation, have been responsible for? a. developing plans to address digital initiatives b. making sales calls c. ensuring that the ecommerce functions were operating efficiently on a daily basis d. sourcing new suppliers for the most popular items sold in-store 86. Narrative 1-1

Michael Medline held the CEO position of Canadian Tire Corporation for about 15 months until July 2016, when the board asked its former CEO, Stephen Wetmore, to return. The board was concerned about the longterm digital strategy Medline proposed, despite strong financial results and his unique ability to understand how the different parts of the company affect each other. Medline had extensive operational experience, including Powered by Cognero

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running two of Canadian Tire Corporation’s apparel divisions in addition to the core auto parts and petroleum businesses.

Refer to Narrative 1-1. What role did Medline play in terms of determining which initiatives should be highestranked? a. the managerial role b. the informational role c. the decisional role d. the organizational role 87. Narrative 1-1

Michael Medline held the CEO position of Canadian Tire Corporation for about 15 months until July 2016, when the board asked its former CEO, Stephen Wetmore, to return. The board was concerned about the longterm digital strategy Medline proposed, despite strong financial results and his unique ability to understand how the different parts of the company affect each other. Medline had extensive operational experience, including running two of Canadian Tire Corporation’s apparel divisions in addition to the core auto parts and petroleum businesses.

Refer to Narrative 1-1. According to the textbook, managers need four skills to be successful. The fact that Medline could see the organization as a whole and understand how different parts of the company affect each other indicates he had which type of skills? a. technical b. interpersonal c. conceptual d. human 88. Narrative 1-2

In April 2013, Volkswagen reported a net profit increase of 41 percent. While the future looks bright for VW today, it was not always so. In August 2005, VW’s past chief executive officer, Bernd Pischetsrieder, announced another restructuring plan for the company. VW is Europe’s largest carmaker and needed to make itself profitable once again. To do so, VW cut thousands of jobs through natural attrition, early retirement, and buyouts of worker contracts. The carmaker also reviewed its component parts factories in Brunswick, Kassel, and Wolfsburg to help it accomplish its organizational goal. Pischetsrieder blamed much of the company’s problems on restructuring that was done in 1993. He insisted that the company missed a whole generation of managers because its former CEO eliminated a whole management layer. As a result, 45 percent of the managers at that time went into retirement over the following three to four years.

Refer to Narrative 1-2. What is VW examining in its component parts factories? a. efficiency b. synergy c. effectiveness d. autonomy 89. Narrative 1-2

In April 2013, Volkswagen reported a net profit increase of 41 percent. While the future looks bright for VW Powered by Cognero

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today, it was not always so. In August 2005, VW’s past chief executive officer, Bernd Pischetsrieder, announced another restructuring plan for the company. VW is Europe’s largest carmaker and needed to make itself profitable once again. To do so, VW cut thousands of jobs through natural attrition, early retirement, and buyouts of worker contracts. The carmaker also reviewed its component parts factories in Brunswick, Kassel, and Wolfsburg to help it accomplish its organizational goal. Pischetsrieder blamed much of the company’s problems on restructuring that was done in 1993. He insisted that the company missed a whole generation of managers because its former CEO eliminated a whole management layer. As a result, 45 percent of the managers at that time went into retirement over the following three to four years.

Refer to Narrative 1-2. Which of the following management functions was most involved in the initial restructuring efforts that occurred in 1993? a. leading b. planning c. controlling d. organizing 90. Narrative 1-2

In April 2013, Volkswagen reported a net profit increase of 41 percent. While the future looks bright for VW today, it was not always so. In August 2005, VW’s past chief executive officer, Bernd Pischetsrieder, announced another restructuring plan for the company. VW is Europe’s largest carmaker and needed to make itself profitable once again. To do so, VW cut thousands of jobs through natural attrition, early retirement, and buyouts of worker contracts. The carmaker also reviewed its component parts factories in Brunswick, Kassel, and Wolfsburg to help it accomplish its organizational goal. Pischetsrieder blamed much of the company’s problems on restructuring that was done in 1993. He insisted that the company missed a whole generation of managers because its former CEO eliminated a whole management layer. As a result, 45 percent of the managers at that time went into retirement over the following three to four years.

Refer to Narrative 1-2. Which of the following management functions is most involved in deciding how to replace retiring managers? a. organizing b. planning c. controlling d. leading 91. Narrative 1-2

In April 2013, Volkswagen reported a net profit increase of 41 percent. While the future looks bright for VW today, it was not always so. In August 2005, VW’s past chief executive officer, Bernd Pischetsrieder, announced another restructuring plan for the company. VW is Europe’s largest carmaker and needed to make itself profitable once again. To do so, VW cut thousands of jobs through natural attrition, early retirement, and buyouts of worker contracts. The carmaker also reviewed its component parts factories in Brunswick, Kassel, and Wolfsburg to help it accomplish its organizational goal. Pischetsrieder blamed much of the company’s problems on restructuring that was done in 1993. He insisted that the company missed a whole generation of managers because its former CEO eliminated a whole management layer. As a result, 45 percent of the managers at that time went into retirement over the following three to four years.

Refer to Narrative 1-2. What role is Bernd Pischetsrieder an example of?

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Chapter 1 - Management a. supervisor b. middle manager c. team leader d. top manager 92. Narrative 1-2

In April 2013, Volkswagen reported a net profit increase of 41 percent. While the future looks bright for VW today, it was not always so. In August 2005, VW’s past chief executive officer, Bernd Pischetsrieder, announced another restructuring plan for the company. VW is Europe’s largest carmaker and needed to make itself profitable once again. To do so, VW cut thousands of jobs through natural attrition, early retirement, and buyouts of worker contracts. The carmaker also reviewed its component parts factories in Brunswick, Kassel, and Wolfsburg to help it accomplish its organizational goal. Pischetsrieder blamed much of the company’s problems on restructuring that was done in 1993. He insisted that the company missed a whole generation of managers because its former CEO eliminated a whole management layer. As a result, 45 percent of the managers at that time went into retirement over the following three to four years.

Refer to Narrative 1-2. Which role did Bernd Pischetsrieder assume in making his announcement about restructuring? a. figurehead b. spokesperson c. liaison d. monitor 93. Narrative 1-2

In April 2013, Volkswagen reported a net profit increase of 41 percent. While the future looks bright for VW today, it was not always so. In August 2005, VW’s past chief executive officer, Bernd Pischetsrieder, announced another restructuring plan for the company. VW is Europe’s largest carmaker and needed to make itself profitable once again. To do so, VW cut thousands of jobs through natural attrition, early retirement, and buyouts of worker contracts. The carmaker also reviewed its component parts factories in Brunswick, Kassel, and Wolfsburg to help it accomplish its organizational goal. Pischetsrieder blamed much of the company’s problems on restructuring that was done in 1993. He insisted that the company missed a whole generation of managers because its former CEO eliminated a whole management layer. As a result, 45 percent of the managers at that time went into retirement over the following three to four years.

Refer to Narrative 1-2. Bernd Pischetsrieder flew to Brussels to meet with employees at a VW plant and explain his plans for improving the company’s profitability. What role did the CEO assume? a. figurehead b. spokesperson c. liaison d. disseminator 94. Narrative 1-3

From the start, Spendify Inc., an online goods retailer, has been in a hurry to be a success. According to company founder and chief executive officer (CEO) Carla Santos, “Our initial strategy was very focused and very unidimensional. It was GOE: Growth over everything.”

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With billions to spend from its initial stock offering (Spendify’s stock quickly rose to over $100 per share), the company spent $600 million to build ten high-tech warehouses across the country. Each was capable of shipping 60 million items per year, and Spendify needed to control the entire buying transaction, beginning with online ordering, proceeding to quick warehouse handling and boxing, and ending with timely shipping and delivery.

Unfortunately, Spendify grew so fast that it soon lost control of the basics. It burned money so quickly that it had to issue bonds to raise another $4.2 billion to keep the company running. Still, it had only enough business and cash to run six of those new warehouses. Consequently, the company took a $200 million loss to close two of the warehouses and lay off 1,500 people. Furthermore, the six remaining warehouses were poorly run.

Defective products, which should have been returned to manufacturers, sat on the shelves wasting space.

Mystery orders kept showing up. Instead of declining the deliveries, workers put whole truckloads of unordered items on the shelves. Spendify had so much unsold inventory in its warehouses that CEO Santos sent out an email with a point-blank message: “Get the crap out.” Spendify’s problem was not its sales, which were growing exponentially, but rather in poor management. As a result, its stock, once valued at over $100 per share, dropped to a low of $6. Spendify has lost more than $3 billion since its inception. As for profits, founder Santos cautioned patience.

In the year that Spendify reported its first quarterly profit that profit amounted to only $5 million on $1.12 billion in sales in its fourth quarter, and Spendify still lost $45 million for the year. Furthermore, it still has long-term debt of $2.2 billion to pay off at the rate of $120 million per year. Results like these would have cost any other CEO their job. If Spendify is ultimately to survive and be profitable, what does it need to do to become a more efficiently run company?

Refer to Narrative 1-3. CEO Carla Santos must wrestle with basic management issues, such as how to get more done at Spendify with a minimum of effort, expense, or waste. In other words, which of the following will be the goal of the CEO’s management strategy? a. increasing effectiveness b. finding synergies c. making the company more environmentally friendly d. increasing efficiency 95. Narrative 1-3

From the start, Spendify Inc., an online goods retailer, has been in a hurry to be a success. According to company founder and chief executive officer (CEO) Carla Santos, “Our initial strategy was very focused and very unidimensional. It was GOE: Growth over everything.”

With billions to spend from its initial stock offering (Spendify’s stock quickly rose to over $100 per share), the company spent $600 million to build ten high-tech warehouses across the country. Each was capable of shipping 60 million items per year, and Spendify needed to control the entire buying transaction, beginning with online ordering, proceeding to quick warehouse handling and boxing, and ending with timely shipping and delivery.

Unfortunately, Spendify grew so fast that it soon lost control of the basics. It burned money so quickly that it had to issue bonds to raise another $4.2 billion to keep the company running. Still, it had only enough business Powered by Cognero

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and cash to run six of those new warehouses. Consequently, the company took a $200 million loss to close two of the warehouses and lay off 1,500 people. Furthermore, the six remaining warehouses were poorly run.

Defective products, which should have been returned to manufacturers, sat on the shelves wasting space.

Mystery orders kept showing up. Instead of declining the deliveries, workers put whole truckloads of unordered items on the shelves. Spendify had so much unsold inventory in its warehouses that CEO Santos sent out an email with a point-blank message: “Get the crap out.” Spendify’s problem was not its sales, which were growing exponentially, but rather in poor management. As a result, its stock, once valued at over $100 per share, dropped to a low of $6. Spendify has lost more than $3 billion since its inception. As for profits, founder Santos cautioned patience.

In the year that Spendify reported its first quarterly profit that profit amounted to only $5 million on $1.12 billion in sales in its fourth quarter, and Spendify still lost $45 million for the year. Furthermore, it still has long-term debt of $2.2 billion to pay off at the rate of $120 million per year. Results like these would have cost any other CEO their job. If Spendify is ultimately to survive and be profitable, what does it need to do to become a more efficiently run company?

Refer to Narrative 1-3. Which traditional management function was key in achieving the goal of getting rid of thousands of dollars’ worth of unsold inventory? a. organizing b. leading c. planning d. controlling 96. Narrative 1-3

From the start, Spendify Inc., an online goods retailer, has been in a hurry to be a success. According to company founder and chief executive officer (CEO) Carla Santos, “Our initial strategy was very focused and very unidimensional. It was GOE: Growth over everything.”

With billions to spend from its initial stock offering (Spendify’s stock quickly rose to over $100 per share), the company spent $600 million to build ten high-tech warehouses across the country. Each was capable of shipping 60 million items per year, and Spendify needed to control the entire buying transaction, beginning with online ordering, proceeding to quick warehouse handling and boxing, and ending with timely shipping and delivery.

Unfortunately, Spendify grew so fast that it soon lost control of the basics. It burned money so quickly that it had to issue bonds to raise another $4.2 billion to keep the company running. Still, it had only enough business and cash to run six of those new warehouses. Consequently, the company took a $200 million loss to close two of the warehouses and lay off 1,500 people. Furthermore, the six remaining warehouses were poorly run.

Defective products, which should have been returned to manufacturers, sat on the shelves wasting space.

Mystery orders kept showing up. Instead of declining the deliveries, workers put whole truckloads of unordered items on the shelves. Spendify had so much unsold inventory in its warehouses that CEO Santos sent out an email with a point-blank message: “Get the crap out.” Spendify’s problem was not its sales, which were growing exponentially, but rather in poor management. As a result, its stock, once valued at over $100 per share, dropped to a low of $6. Spendify has lost more than $3 billion since its inception. As for profits, founder Santos cautioned patience.

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In the year that Spendify reported its first quarterly profit that profit amounted to only $5 million on $1.12 billion in sales in its fourth quarter, and Spendify still lost $45 million for the year. Furthermore, it still has long-term debt of $2.2 billion to pay off at the rate of $120 million per year. Results like these would have cost any other CEO their job. If Spendify is ultimately to survive and be profitable, what does it need to do to become a more efficiently run company?

Refer to Narrative 1-3. Which traditional management function will be key in ensuring that Spendify is never again burdened with thousands of dollars’ worth of unsold inventory? a. organizing b. leading c. planning d. controlling 97. Narrative 1-3

From the start, Spendify Inc., an online goods retailer, has been in a hurry to be a success. According to company founder and chief executive officer (CEO) Carla Santos, “Our initial strategy was very focused and very unidimensional. It was GOE: Growth over everything.”

With billions to spend from its initial stock offering (Spendify’s stock quickly rose to over $100 per share), the company spent $600 million to build ten high-tech warehouses across the country. Each was capable of shipping 60 million items per year, and Spendify needed to control the entire buying transaction, beginning with online ordering, proceeding to quick warehouse handling and boxing, and ending with timely shipping and delivery.

Unfortunately, Spendify grew so fast that it soon lost control of the basics. It burned money so quickly that it had to issue bonds to raise another $4.2 billion to keep the company running. Still, it had only enough business and cash to run six of those new warehouses. Consequently, the company took a $200 million loss to close two of the warehouses and lay off 1,500 people. Furthermore, the six remaining warehouses were poorly run.

Defective products, which should have been returned to manufacturers, sat on the shelves wasting space.

Mystery orders kept showing up. Instead of declining the deliveries, workers put whole truckloads of unordered items on the shelves. Spendify had so much unsold inventory in its warehouses that CEO Santos sent out an email with a point-blank message: “Get the crap out.” Spendify’s problem was not its sales, which were growing exponentially, but rather in poor management. As a result, its stock, once valued at over $100 per share, dropped to a low of $6. Spendify has lost more than $3 billion since its inception. As for profits, founder Santos cautioned patience.

In the year that Spendify reported its first quarterly profit that profit amounted to only $5 million on $1.12 billion in sales in its fourth quarter, and Spendify still lost $45 million for the year. Furthermore, it still has long-term debt of $2.2 billion to pay off at the rate of $120 million per year. Results like these would have cost any other CEO their job. If Spendify is ultimately to survive and be profitable, what does it need to do to become a more efficiently run company?

Refer to Narrative 1-3. What is Carla Santos most responsible for as CEO of Spendify? a. developing employee commitment to the company’s performance b. monitoring and managing the performance of subunits and individual managers who report to her c. setting objectives consistent with top management’s goals Powered by Cognero

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Chapter 1 - Management d. coordinating and linking groups, departments, and divisions within the company 98. Narrative 1-3

From the start, Spendify Inc., an online goods retailer, has been in a hurry to be a success. According to company founder and chief executive officer (CEO) Carla Santos, “Our initial strategy was very focused and very unidimensional. It was GOE: Growth over everything.”

With billions to spend from its initial stock offering (Spendify’s stock quickly rose to over $100 per share), the company spent $600 million to build ten high-tech warehouses across the country. Each was capable of shipping 60 million items per year, and Spendify needed to control the entire buying transaction, beginning with online ordering, proceeding to quick warehouse handling and boxing, and ending with timely shipping and delivery.

Unfortunately, Spendify grew so fast that it soon lost control of the basics. It burned money so quickly that it had to issue bonds to raise another $4.2 billion to keep the company running. Still, it had only enough business and cash to run six of those new warehouses. Consequently, the company took a $200 million loss to close two of the warehouses and lay off 1,500 people. Furthermore, the six remaining warehouses were poorly run.

Defective products, which should have been returned to manufacturers, sat on the shelves wasting space.

Mystery orders kept showing up. Instead of declining the deliveries, workers put whole truckloads of unordered items on the shelves. Spendify had so much unsold inventory in its warehouses that CEO Santos sent out an email with a point-blank message: “Get the crap out.” Spendify’s problem was not its sales, which were growing exponentially, but rather in poor management. As a result, its stock, once valued at over $100 per share, dropped to a low of $6. Spendify has lost more than $3 billion since its inception. As for profits, founder Santos cautioned patience.

In the year that Spendify reported its first quarterly profit that profit amounted to only $5 million on $1.12 billion in sales in its fourth quarter, and Spendify still lost $45 million for the year. Furthermore, it still has long-term debt of $2.2 billion to pay off at the rate of $120 million per year. Results like these would have cost any other CEO their job. If Spendify is ultimately to survive and be profitable, what does it need to do to become a more efficiently run company?

Refer to Narrative 1-3. Spendify has had nearly a billion dollars in losses because of poor decisions, such as overbuilding warehouses and investing in failed dot-com companies. Which of the following skills is most important for Spendify’s top managers to have to become more effective? a. technical skills b. human skills c. conceptual skills d. motivating skills 99. Narrative 1-4

In 2014, Coca-Cola and PepsiCo launched two mid-calorie sodas, Coca-Cola Life and Pepsi Next (in Canada), banking on the health-conscious trend. Health-conscious consumers rejected the drinks en masse since one serving of the new drinks contains about a day’s worth of sugar for women.

Refer to Narrative 1-4. Which word best describes the product introductions, given that the objective of both soft-drink manufacturers was to increase their market share?

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Chapter 1 - Management a. synergistic b. empathetic c. inefficient d. autonomous 100. Narrative 1-4

In 2014, Coca-Cola and PepsiCo launched two mid-calorie sodas, Coca-Cola Life and Pepsi Next (in Canada), banking on the health-conscious trend. Health-conscious consumers rejected the drinks en masse since one serving of the new drinks contains about a day’s worth of sugar for women.

Refer to Narrative 1-4. Which level of management at each company was responsible for determining that the soda should be added to the product line? a. top management b. team leaders c. product supervisors d. middle management 101. Narrative 1-4

In 2014, Coca-Cola and PepsiCo launched two mid-calorie sodas, Coca-Cola Life and Pepsi Next (in Canada), banking on the health-conscious trend. Health-conscious consumers rejected the drinks en masse since one serving of the new drinks contains about a day’s worth of sugar for women.

Refer to Narrative 1-4. Which of Mintzberg’s managerial roles would have been used to determine that a potential market niche existed for a lower-sugar cola? a. the managerial role b. the informational role c. the decisional role d. the organizational role 102. Narrative 1-4

In 2014, Coca-Cola and PepsiCo launched two mid-calorie sodas, Coca-Cola Life and Pepsi Next (in Canada), banking on the health-conscious trend. Health-conscious consumers rejected the drinks en masse since one serving of the new drinks contains about a day’s worth of sugar for women.

Refer to Narrative 1-4. Earlier attempts to enter the less-sweetened cola market with Coca-Cola C2 and Pepsi Edge failed. When reintroducing the mid-calorie sodas, the management team most likely made which of the following mistakes? a. saying “I” instead of “we b. not seeking out mentors c. micromanaging d. forgetting to ask “why?”

Indicate whether the statement is true or false.

103. Good management is basic to starting and growing a business, but once some measure of success has been Powered by Cognero

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achieved, it becomes less important. a. True b. False 104. Managers are responsible for doing the basic work in the company. a. True b. False 105. Companies that plan have larger profits and faster growth than companies that don’t. a. True b. False 106. The classical functions of management are (1) making things happen, (2) meeting the competition, (3)

organizing people, projects, and processes, and (4) leading. a. True b. False 107. Top managers are the managers responsible for facilitating team activities toward goal accomplishment. a. True b. False 108. Typical titles used for top managers are general manager, plant manager, regional manager, and divisional

manager. a. True b. False 109. Top managers are responsible for creating a context for change in the organization. a. True b. False 110. Front-line managers are responsible for setting objectives consistent with organizational goals, and for

planning and implementing subunit strategies for achieving these objectives. a. True b. False 111. Companies invest significant resources into the development of front-line supervisors. a. True b. False 112. Middle managers are typically responsible for coordinating and linking groups, departments, and divisions

within a company. a. True b. False 113. Front-line managers are the only managers who do not supervise other managers.

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Chapter 1 - Management a. True b. False 114. Middle managers play a critical role in helping an organization reach its goals, as they supervise up to 80%

of the workforce and have a direct impact on key performance metrics like employee engagement and turnover. a. True b. False 115. The job of team leader is a management position. a. True b. False 116. Team leaders direct the work of individuals within the team structure. a. True b. False 117. In the liaison role, managers perform duties like speaking at the opening of a new facility or representing

the company at a community event. a. True b. False 118. Team leaders are responsible for managing both internal team relationships and external relationships with

other teams, departments, and divisions in a company. a. True b. False 119. Strategic thinking is one of six essential skills every front-line manager needs. a. True b. False 120. Team leaders are less reliant on interpersonal conflict management because it is a critical skill for front-line

managers. a. True b. False 121. The three interpersonal subroles are monitor, disseminator, and spokesperson. a. True b. False 122. Henry Mintzberg concluded that managers fulfill three major roles while performing their jobs. These

roles are categorized as interpersonal roles, organizational roles, and decisional roles. a. True b. False 123. The decisional roles consist of four subroles: entrepreneur, disturbance handler, resource allocator, and Powered by Cognero

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spokesperson. a. True b. False 124. In the entrepreneur role, managers adapt themselves, their subordinates, and their units to incremental

change. a. True b. False 125. Companies look for a total of three sets of skills in individuals to identify potential managers. These

desired skills are technical skills, human skills, and conceptual skills. a. True b. False 126. Technical skill refers to the ability to see the organization as a whole, how the different parts affect each

other, and how the company fits into or is affected by its environment. a. True b. False 127. For many managers, the knowledge, skills, and abilities that led to success early in their careers—that is,

before their promotion into the ranks of management—may not necessarily help them succeed as managers. a. True b. False 128. Conceptual skills are most important for lower-level managers. a. True b. False 129. Upper-level managers may spend more time dealing with people than lower-level managers. a. True b. False 130. Front-line managers are responsible for implementing the changes or strategies generated by middle

managers. a. True b. False

131. Define efficiency and effectiveness, and explain their relationship to the process of management.

132. List and briefly identify the four classical functions of management.

133. Identify the four different kinds of managers. List one of the basic responsibilities for each of these four

different manager types.

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Chapter 1 - Management 134. What are the four major responsibilities of the typical middle manager?

135. List the six essential skills every front-line manager needs.

136. Among the four kinds of management jobs, specify the one that is the most recent addition to

organizations. List the basic responsibilities of that management job.

137. List and briefly identify the three basic managerial roles identified by Henry Mintzberg. Include a list of

the basic subroles that characterize each of these roles in your definition.

138. List and briefly identify the three kinds of skills that companies look for in managers.

139. Within the three sets of skills that companies look for in managers, specify those that tend to be more

important or more prevalent in higher-level than lower-level managers.

140. Identify six of the nine common mistakes that managers make.

141. Top managers are responsible for (1) creating a context for change, (2) developing attitudes of commitment

and ownership, (3) creating a positive organizational culture through words and actions, and (4) monitoring their company’s business environment. Of these four dimensions, which ones do you think can also be subject to a significant impact from the day-to-day actions of middle managers, front-line managers, and team leaders?

Explain the rationale for your answer.

142. Compare and contrast the managerial roles of liaison, spokesperson, and negotiator. Explain both the

similarities that link these roles behaviourally and the differences that are used by Henry Mintzberg to differentiate them.

143. Compare and contrast the relative importance of the three skills that companies look for in managers as

they rise through the management hierarchy. In other words, describe the similarities and differences in these skills among lower-, middle-, and upper-level managers, and explain the reasons for the differences.

144. Describe the transition to management during the first year. Explain how this illustrates the chapter’s

emphasis on human skills as being more important than technical skills for success or failure in management.

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Chapter 1 - Management Answer Key 1. a 2. c 3. a 4. b 5. d 6. c 7. b 8. c 9. d 10. c 11. a 12. a 13. b 14. d 15. a 16. a 17. b 18. d 19. c 20. d 21. a 22. c 23. d 24. d 25. a Powered by Cognero

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Chapter 1 - Management 26. b 27. a 28. a 29. c 30. a 31. b 32. c 33. a 34. c 35. c 36. d 37. b 38. b 39. a 40. b 41. c 42. b 43. a 44. d 45. c 46. c 47. c 48. a 49. c 50. b 51. b Powered by Cognero

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Chapter 1 - Management 52. a 53. a 54. a 55. a 56. d 57. d 58. d 59. d 60. d 61. c 62. d 63. b 64. c 65. b 66. d 67. a 68. b 69. d 70. a 71. d 72. b 73. a 74. b 75. b 76. c Powered by Cognero

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Chapter 1 - Management 77. b 78. a 79. d 80. d 81. d 82. d 83. a 84. a 85. a 86. c 87. c 88. c 89. d 90. a 91. d 92. b 93. d 94. d 95. c 96. d 97. a 98. c 99. c 100. d 101. b 102. d Powered by Cognero

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Chapter 1 - Management 103. False 104. False 105. True 106. False 107. False 108. False 109. True 110. False 111. False 112. True 113. True 114. False 115. True 116. False 117. False 118. True 119. True 120. False 121. False 122. False 123. False 124. True 125. True 126. False 127. True Powered by Cognero

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Chapter 1 - Management 128. False 129. True 130. False 131. Managers need to be concerned with both efficiency and effectiveness in the work process. Efficiency is

getting work done with a minimum of effort, expense, or waste. By itself, efficiency is not enough to ensure managerial success. Managers must also strive for effectiveness, which is accomplishing tasks that help fulfill organizational objectives.

132. The four classical functions of management are planning (determining organizational goals and a means of

achieving them), organizing (establishing where decisions will be made, who will do what jobs and tasks, and who will work for whom), leading (inspiring and motivating workers to work hard to achieve organizational goals), and controlling (monitoring progress toward goal achievement and taking corrective action when needed).

133. Top managers are responsible for creating a context for change, developing attitudes of commitment and

ownership, creating a positive organizational culture through words and actions, and monitoring their company’s business environments. Middle managers are responsible for planning and allocating resources to meet objectives, coordinating and linking groups and departments, monitoring and managing the performance of subunits and individual managers, and implementing the changes or strategies generated by top managers.

Front-line managers are responsible for managing the performance of entry-level employees, teaching people who directly report to them how to do their jobs, making employee work schedules, dealing with employee and customer concerns, monitoring employee performance, and modifying operations based on middle management’s intermediate-range plans. Team leaders are responsible for facilitating team activities toward accomplishing a goal, managing external relationships, and facilitating internal team relationships.

134. The four major responsibilities of middle managers are (1) setting objectives consistent with top

management’s goals and planning and implementing subunit strategies for achieving these objectives; (2) coordinating and linking groups, departments, and divisions within a company; (3) monitoring and managing the performance of subunits and individual managers who report to them; and (4) implementing the changes or strategies generated by top managers.

135. Front-line managers need the following six essential leadership skills to be successful and contribute to

organizational success: strategic thinking, team building and leading, organizational savvy, personal leadership awareness, communication, and coaching and emotional intelligence.

136. The fourth kind of manager is a team leader. This relatively new kind of management job developed as

companies shifted to self-managing teams, which, by definition, have no formal supervisor. Team leaders are responsible for facilitating team performance (but the team itself is responsible for performance), managing external relationships, and facilitating internal team relationships.

137. Managers fulfill three major roles while performing their jobs: (1) interpersonal roles (e.g., talking to

people), which include the subroles of figurehead, leader, and liaison; (2) informational roles (e.g., gathering and giving information), which include the subroles of monitor, disseminator, and spokesperson; and (3) decisional roles (e.g., making decisions), including the subroles of entrepreneur, disturbance handler, resource allocator, and negotiator.

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Chapter 1 - Management 138. When companies look for employees who would be good managers, they look for individuals who have

technical skills, human skills, and conceptual skills, as well as the motivation to manage. Technical skills refer to the ability to apply the specialized procedures, techniques, and knowledge required to get the job done.

Human skills are the ability to work well with others. Conceptual skills relate to being able to see the organization as a whole, to appreciate how the different parts of the company affect one another and how the company fits into or is affected by its external environment.

139. When companies look for employees who would be good managers, they look for individuals who have

technical skills (the ability to apply the specialized procedures, techniques, and knowledge required to get the job done), human skills (the ability to work well with others), and conceptual skills (the ability to see the organization as a whole and understand how the different parts of the company affect one another and how the company fits into or is affected by its external environment). Technical skills become less important as managers rise through the managerial ranks. Human skills are equally important at all levels of management.

Conceptual skills increase in importance as managers rise through the management hierarchy.

140. Nine mistakes made by managers are (1) not delegating; (2) micromanaging; (3) forgetting to ask "why?";

(4) changing too much too soon; (5) avoiding difficult conversations; (6) not checking in with the team; (7) not seeking out mentors; (8) saying "I" instead of "we"; and (9) talking more and listening less.

141. In their day-to-day activities, lower-level managers probably do not have a significant impact on two of the

four dimensions: creating a context for change and monitoring their company’s business environment.

Regarding both of these dimensions, lower-level managers have neither the time available to collect the necessary information for analysis, synthesis, and decision making, nor the authority to develop and put in place overall strategies, visions, or mission statements. On the other hand, when it comes to the dimension of developing attitudes of commitment and ownership, the day-to-day treatment of peers, subordinates, and other employees will often have an impact on the attitudes and commitment of those employees and their personal acceptance of responsibility for their share of the company’s performance. Similarly, by their actions, lowerlevel managers can demonstrate the importance of, and their commitment to, company values and strategies, thereby addressing the dimension of creating a positive organizational culture through words and actions. They can support and enhance a positive organizational culture through their actions and language by living those values and commitments and demonstrating this to all employees through personal behaviour. Employees will be more likely to accept and support the organization’s culture if they see managers at all levels “living the culture” in their day-to-day work.

142. The roles of liaison, spokesperson, and negotiator are all subroles within Mintzberg’s larger framework of

three major roles fulfilled by managers while performing their jobs. The liaison is an interpersonal subrole, the spokesperson is an informational subrole, and the negotiator is a decisional subrole. From the behavioural point of view, each of these subroles is characterized by direct communication between the manager and other people. Specifically, in the liaison role, managers deal with people outside their units. For example, a production manager might meet with an engineering manager to develop solutions to problems. In the spokesperson role, managers share information with people outside their departments and companies. For example, a CEO might explain company performance to the board of directors. In the negotiator role, managers negotiate schedules, projects, goals, outcomes, resources, and employee raises, as in negotiating a union contract, for example. Thus, from the perspective of the behaviour of the manager, there is considerable similarity and overlap in these roles—Mintzberg differentiates them in terms of their primary focus. In the case of behaviour associated with the liaison role, the primary focus is on dealing with people outside of the managers’ unit (as opposed to their own subordinates or bosses), and thus the role is interpersonal. In the case Powered by Cognero

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of the spokesperson, the primary focus is on the sharing of information with people outside their units or companies, and thus the role is informational. Finally, in the case of the negotiator, the primary focus is on making or influencing decisions in a manner that will benefit the company, and thus the role is decisional.

143. Companies look for three sets of skills in individuals to be promoted into the managerial ranks at any level.

These include technical skills, human skills, and conceptual skills. Thus, in terms of similarities, all three of these skills are required in anyone who wants to be a manager. Companies do not want one-dimensional managers. They want managers with a balance of skills. They want managers who know their stuff (technical skills), are equally comfortable working with blue-collar and white-collar employees (human skills), and are able to assess the complexities of today’s competitive marketplace and position their companies for success (conceptual skills). There are, however, differences in the relative importance of each of these characteristics to managerial success at different levels of the management hierarchy. Technical skills are most important for lower-level managers because these managers supervise the line workers who produce products or serve customers. Team leaders and front-line managers need technical knowledge and skills to train new employees and help them solve problems, as well as to solve the problems that their employees cannot handle. Although technical skills become less important as managers rise through the managerial ranks, they retain importance at all levels. Human skill (the ability to work well with others) is equally important at all levels of management.

However, since lower-level managers spend much of their time solving technical problems, upper-level managers may spend more time dealing directly with people. Conceptual skills increase in importance as managers rise through the managerial ranks. Conceptual skill relates to being able to see the organization as a whole and to understand how the different parts of the company affect one another and how the company fits into or is affected by its external environment, such as the local community, social and economic forces, customers, and competition. Good managers have to be able to recognize, understand, and reconcile multiple complex problems and perspectives, making conceptual skills particularly important to upper-level managers.

144. Managers often begin their jobs by using more formal authority and emphasizing their role as boss in the

management of tasks. New managers typically do not believe that their job is to manage people, other than handling the tasks of hiring and firing. However, most managers find that being a manager has little to do with “bossing” their subordinates. After six months on the job, many managers were surprised at the fast pace, the heavy workload, and the reaction that “helping” their subordinates was viewed as interference. In short, they came to realize that their initial expectations about managerial work had been wrong. After a year on the job, most of the managers no longer thought of themselves as doers, but as managers who get things done through others. In making the transition, they finally realized that people development was the most important part of their job. By the end of one year, most managers will have abandoned their authoritarian approach for one based on communication, listening, and positive reinforcement. In completing this classic transition from doer to manager, they stop trying to do everything themselves and emphasize getting work done through others. In this way, their previous satisfaction (as individual contributors) with the direct production of goods or services is replaced with the “thrill” of coaching and developing the people who work for them. As the basic activities occupying their time change, their need for technical skills becomes less, while their need for human skills remains crucial to their success. In fact, nine of the most critical mistakes that managers make revolve around people skills rather than technical skills: these are not delegating; micromanaging; forgetting to ask “why?”; changing too much too soon; avoiding difficult conversations; not checking in with the team; not seeking out mentors; saying “I” instead of “we”; and talking more and listening less. Thus, human skills clearly are more important than technical skills for success or failure in management.

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Chapter 2 - Organizational Environments and Cultures

Indicate the answer choice that best completes the statement or answers the question.

1. What are the two types of external organizational environments? a. general and specific b. public and private c. global and national d. organizational and interpersonal 2. Which of the following environments affects all organizations? a. the global environment b. the national environment c. the general environment d. the formal environment 3. George is analyzing his competition and reviewing changes in overseas markets to create a new strategy for

his organization. Which environment is George concerned with? a. the specific environment b. the external environment c. the formal environment d. the national environment 4. Which of the following is a type of company most likely to be facing a dynamic environment? a. a video game manufacturer b. a bakery c. the dairy industry d. a manufacturer of pet food 5. Many businesses, especially those in the hospitality and service industries, were severely impacted by the

COVID-19 pandemic in 2020. The pandemic represents an event in which type of environment? a. external b. internal c. global d. macro 6. Oil and gas companies must choose where and how to compete as the world transitions to a low-carbon

future. With so much technological innovation in the oil and gas industry, new legislation being introduced, and changing public perceptions, this industry represents which type of environment? a. unchanged b. specific c. dynamic d. stable Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 7. Which theory states that companies go through long, simple periods of environmental stability followed by

short, complex periods of dynamic, fundamental environmental change, finishing with a return to environmental stability? a. the environmental change theory b. the theory of environmental dynamics c. the punctuated equilibrium theory d. the theory of resource scarcity 8. What industry has experienced both the stable and dynamic environments predicted by punctuated

equilibrium theory over the past 20 years? a. airline b. baking c. video game d. landscaping 9. Imagine a Canadian fertilizer manufacturer wanted to export its fertilizer to Guatemala. What type of

component in the manufacturer’s general environment is represented by the fact that 75 percent of Guatemalans live below the poverty line? a. technological b. sociocultural c. economic d. political/legal 10. Tony’s Donair in Halifax is a family-run business and its loyal customers enjoy the traditional donair recipes

perfected over 40 years in business. Which type of environment is this company an example of? a. technological environment b. complex environment c. custom environment d. simple environment 11. Carson’s industry has changed overnight with technology and communication advancements. His company

faces new competition from overseas markets and his once loyal customers want better pricing or will leave.

Carson has to find a new way to manufacture products to remain competitive. Which environment does Carson operate within? a. competitive b. complex c. dynamic d. abundant 12. The COVID-19 pandemic disrupted production of semiconductor chips, which are a critical component of

most modern-day vehicles. Global shipping was also impacted by the pandemic, which ultimately resulted in a global shortage of semiconductor chips. What is this an example of? a. resource abundance Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures b. resource scarcity c. simple environment d. environmental change 13. Which of the following defines the degree to which an organization’s external environment has an

abundance or lack of critical organizational resources? a. environmental complexity b. environmental capacity c. differentiation opportunity d. resource scarcity 14. Which of the following is lowest when environmental change and complexity are low and resources are

plentiful? a. organizational effectiveness b. business confidence c. punctuated equilibrium theory d. environmental uncertainty 15. Eleanor must steer her company through a crisis. She must search for a new supplier of a raw material that

makes her product unique. New competition is forcing her to reduce prices, and her production process is outdated. Which environmental characteristic is Eleanor dealing with? a. uncertainty b. differentiation c. difficulty d. entrepreneurship 16. Which environmental characteristic is likely to be particularly salient for many companies in a strong

economy, where the demand for qualified job applicants exceeds the supply? a. environmental complexity b. environmental change c. resource scarcity d. environmental uncertainty 17. Which environment in a hospital is concerned with legislation about the disposal of biological wastes, the

development of more sophisticated imaging machines, and longer patient life spans? a. internal environment b. specific environment c. sociocultural environment d. general environment 18. Which of the following environments consists of the economy and the technological, sociocultural, and

political/legal trends that indirectly affect all organizations?

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Chapter 2 - Organizational Environments and Cultures a. the complex environment b. the specific environment c. the general environment d. the indirect environment 19. Which of the following is a component of the specific environment that directly influences a restaurant’s

day-to-day operation? a. its regular customers b. the country’s Gross National Product c. a societal trend toward eating less fat d. more rigid enforcement of provincial labour and occupational health laws 20. Howard is reflecting on the rapid changes in the economy. The increasing volatility of oil prices over the

past year has caused many firms to reconsider their options. What environment is oil part of? a. resource environment b. technological environment c. specific environment d. general environment 21. Which of the following is a component of Coca-Cola’s specific environment and will directly influence how

Coca-Cola does business? a. competition, such as Pepsi b. laws concerning sanitation c. inflation d. the increased popularity of energy drinks 22. Which of the following is a component of a book publisher’s general environment and will indirectly

influence how it does business? a. other book publishing companies b. pornography laws c. an advocacy group supporting free books for children d. a trend toward less leisure time 23. Frustrated with high cellphone costs, Caroline is rallying companies through the industry trade association to

petition the government to allow overseas competition to enter the Canadian cellphone industry. Which specific environment component is Caroline a part of? a. advocacy b. supplier c. industry regulation d. competitor 24. Mary Brown’s is a fried chicken restaurant chain famous for its chicken. It recently announced that several Powered by Cognero

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of its restaurants became compliant with a set of religious dietary restrictions. Which of the following would have been the most likely factor in its specific environment for the chain to make that decision? a. he government is incentivizing restaurants to offer more diverse menu options b. Canadian Food Inspection Agency (CFIA) regulations changed c. a boycott proposed by members of the religion in question d. customers requesting their products be made compliant with their dietary practices 25. Kelly is deciding which industry to move funds into for her investing clients. She reads that managers in the

Canadian mining sector forecast export growth due to overseas production requirements. What kind of reports is Kelly reading? a. industry regulations b. business confidence indices c. competitive analyses d. supplier dependence reports 26. Which essentials must technology use to transform inputs (e.g., raw materials and information) into outputs

(products or services)? a. knowledge, tools, and techniques b. capital, plans, and management c. plans, knowledge, and tools d. management, capital, and techniques 27. More premature babies than ever before are surviving due to improvements in medical knowledge and care.

This is likely due to which component of the general environment? a. technological b. sociocultural c. economic d. demographic 28. Following the election of the federal Liberal government in 2015, Canadians were seen to more frequently

sew flags onto their travel gear. What component of the general environment changed? a. technological b. sociocultural c. economic d. competitive 29. Fear of a lawsuit prevents many employers from giving totally honest references about former employees.

What component change of the general environment does this reflect? a. technological b. social c. economic d. political/legal Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 30. The manager of a company that produces plant-based sausage wants to conduct a competitive analysis. What

should the manager look at? a. the political/legal climate of the region b. technological changes that affect food processing c. business confidence indices for the restaurant and hospitality industry d. other plant-based meat manufacturers 31. White Spot is a casual dining restaurant chain that is famous for the Triple “O” sauce on its burgers. Which

of the following would be a component of its sociocultural environment? a. a period of business prosperity b. the development of fully automated drive-through windows c. a price war with Cactus Club and Moxies d. the preference of most consumers to eat out rather than at home 32. Restaurants in Ontario that do not pass health and safety standards are required to post a failing evaluation

on their front window for the public to see. Customers can now make more informed decisions about which restaurant to eat at. Which component of the general environment is this a part of? a. customer b. political/legal c. competitor d. technological 33. White Spot is a casual dining restaurant chain that is famous for the Triple “O” sauce on its burgers. Which

of the following would be a component of White Spot’s general environment? a. meat-processing companies that provide its ground beef b. consumers who will drive kilometres out of their way to eat a Triple “O” burger c. boycotts by organizations such as PETA (People for the Ethical Treatment of Animals) d. indications of improved economic growth in the coming year 34. Due to increased competition in the shipping industry, companies such as Purolator and CANPAR have

implemented new processing methods to move parcels more efficiently. Which environmental component have they addressed? a. competitor b. economy c. technological d. sociocultural 35. Scenario 2-1

Two home builders are building homes in nearby subdivisions. One is offering 2,500 square foot homes with two-acre yards. The other is offering a similar size of house with quarter-acre yards. The builder offering the smaller lots cannot keep up with demand. The builder offering the larger lots has several unsold houses.

Refer to Scenario 2-1. What could the builder with the larger lots use to determine why his homes are not selling?

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Chapter 2 - Organizational Environments and Cultures a. proactive customer monitoring b. consumer confidence forecasts c. demographic information d. reactive customer monitoring 36. Scenario 2-1

Two home builders are building homes in nearby subdivisions. One is offering 2,500 square foot homes with two-acre yards. The other is offering a similar size of house with quarter-acre yards. The builder offering the smaller lots cannot keep up with demand. The builder offering the larger lots has several unsold houses.

Refer to Scenario 2-1. What did the builder with the smaller lots most likely do to determine what home buyers desired? a. reactive customer monitoring b. proactive customer monitoring c. competitive analysis d. consumer confidence forecasting 37. Vikas learns that customers are not happy with the time it takes servers in his restaurant to bring them their

final bill. He informs his servers to make improvements from now on. What kind of monitoring did Vikas use to make this change? a. consumer confidence monitoring b. competitive analysis monitoring c. reactive customer monitoring d. proactive customer monitoring 38. Which of the following involves determining who your competitors are, anticipating competitors’ moves,

and assessing competitors’ strengths and weaknesses? a. competitive mapping b. a market audit c. a SWOT analysis d. a competitive analysis 39. Kelty was caught off guard when a new competitor opened across the street. Kelty had spent so much time

evaluating the plans of her number one competitor that she failed to properly analyze the actions of other competitors. What did Kelty fail at? a. thoroughly analyzing potential competitors b. overestimating her competition c. reactive monitoring d. relying on competitive intelligence 40. What is typically the most important factor in the relationship between companies and their suppliers? a. how dependent they are on each other b. how much they know about each other Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures c. how compatible their organizational cultures are d. the type of product being manufactured 41. Thomas is preparing for a meeting with one of his two largest customers. Understanding their needs will

help Thomas develop a strategy to lobby the government to make changes to regulations affecting the import of his products even though this action could harm the relationship with smaller customers. What does this scenario exemplify? a. managerial commitment b. buyer dependence c. industry regulation d. advocacy group activities 42. At one time, independent booksellers found it very hard to carry all the books from the different publishers.

Creating a centralized warehouse streamlined order and return procedures. What resulted from creating the centralized warehouse? a. high buyer dependence on a supplier b. pure competition c. transactional freedom d. high supplier dependence on a buyer 43. Small manufacturers often are successful because Walmart agrees to carry their products. If Walmart does

not like a price increase, however, it often will refuse to do business with the manufacturer. At this point, many small manufacturers will offer price reductions—they fear failure if they lose the Walmart account. Which of the following best describes the relationship between these small manufacturers and Walmart? a. buyer dependent b. relationship based c. transformational d. supplier dependent 44. Which of the following is defined by a high degree of buyer or seller dependence leading to a state in which

one party benefits at the expense of the other? a. relationship behaviour b. transactional behaviour c. relational monopoly d. opportunistic behaviour 45. Uber’s entry into Calgary had its bumps along the way—the City of Calgary filed a court injunction

claiming Uber had not complied with its bylaws regarding taxis and limousines. Which environmental aspect best defines this impact on Uber’s specific environment? a. sociocultural aspect b. economic aspect c. political/legal aspect d. industry regulation Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 46. Which of the following is likely to decrease but not eliminate opportunistic behaviour? a. buyer dependence b. supplier dependence c. industry regulation d. relationship behaviour 47. White Spot is a casual dining restaurant chain that is famous for the Triple “O” sauce on its burgers. Which

of the following would be an industry regulation component of White Spot’s specific environment? a. an increase in the prime lending rate b. local health inspectors c. class-action suits against all casual dining restaurants d. inflation 48. The Dairy Farmers of Canada published a commercial that took a stance against a recent free trade deal that

was likely to dismantle the Canadian dairy production system, arguing that low prices would result in threats to consumers. Which of the following is this ad an example of? a. boycotting b. opportunistic behaviour c. media advocacy d. lobbying 49. Which tactic involves an advocacy group actively trying to convince consumers NOT to purchase a

company’s products or services? a. lobbying b. public communications c. media advocacy d. boycott 50. Advocacy groups use a variety of tactics to convince businesses to comply with their stance on certain

issues. Which of the following advocacy group tactics would be most likely to cause a business to fail? a. media advocacy b. product boycotts c. public communications d. lobbying 51. What is the first step that managers take to make sense of their changing environments? a. environmental scanning b. environmental interpreting c. acting on threats and opportunities d. competitive analysis

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Chapter 2 - Organizational Environments and Cultures 52. Which of the following is a step in the process that managers use to make sense of their changing

environments? a. proactive customer monitoring b. reactive customer monitoring c. acting on threats and opportunities d. conducting a competitive analysis 53. Environmental scanning can achieve all except which of the following? a. reducing uncertainty b. enabling managers to stay up to date on factors in their industry c. helping managers develop and implement their organizational strategies d. helping managers develop and sustain their organizational culture 54. Simons was one of Canada’s first fashion retailers, and has now expanded outside Québec. How would

Simons view other companies that have a broad presence in fashion retail? a. as a weakness b. as a risk c. as an opportunity d. as a threat 55. What is the term for the events and trends inside an organization that affect management, employees, and the

organizational culture? a. managerial environment b. internal environment c. industry environment d. general environment 56. What is the term for the set of key values, beliefs, and attitudes shared by members of an organization? a. industry code of ethics b. internal environment c. organizational culture d. organizational vision 57. A new hire at Henderson Textile Co. was amazed at its employees, who would take 30-minute restroom

breaks, leave for the day at 2 p.m., and generally belittle the company’s management. Which of the following is likely faulty when such actions have developed among employees? a. the general environment b. a benchmark c. a response to an opportunity d. the organizational culture 58. Which of the following is a primary source of organizational culture?

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Chapter 2 - Organizational Environments and Cultures a. the company’s founder b. the organization’s competitive strategy c. the industry in which the organization operates d. the company’s suppliers 59. People celebrated for their qualities and achievements within an organization are referred to as which of the

following? a. organizational heroes b. organizational advocators c. organizational boycotters d. management heroes 60. Some organizational cultures cannot meet the challenges posed by innovation. BlackBerry squandered the

opportunities presented by the smartphone revolution, even though it had produced arguably the world’s most widely adopted smartphone at one point. What did its organizational culture lack? a. adaptability b. synergy c. a formula for success laddering d. knowledge management 61. Which of the following is a characteristic of successful organizational cultures? a. unions b. advocacy c. involvement d. competition 62. The Edmonton Oilers hockey team develops a sense of history for its current players by displaying

successful seasons’ banners and the retired numbers of great players in its stadium and locker room. What tactic(s) for maintaining organizational culture are the Oilers using? a. organizational complexity and consistency b. organizational benchmarking c. organizational mapping d. organizational stories and heroes 63. IKEA strives to have a positive impact on the world—from the communities where it sources its materials to

the way its products help its customers live a more sustainable life. IKEA wants to create a better everyday life for many people. What is this called? a. adaptability b. responsiveness c. involvement d. vision Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 64. One difficulty encountered in a merger is the inability of employees in the two existing organizational

cultures to operate harmoniously. Which of the following characteristics do both merging organizational cultures most likely lack? a. responsiveness b. adaptability c. involvement d. consistency 65. In many failed dot-com companies, lower and middle management adhered to innovation and expected that

work would be fun, while top management envisioned profitability with the elimination of unnecessary expenses. Which of the following did these companies lack? a. empathy b. employee involvement c. consistent organizational cultures d. adaptability 66. Two business partners had different ideas about the direction their company should take. As a result,

resources were wasted and the company failed due to its inability to compete effectively. What did the business partners NOT share? a. the same definition of profit b. the ability to run an efficient operation c. an ability to recognize the level of competition in their business d. a clear vision 67. An organization’s culture exists on three levels. Which of the following is the most visible level? a. values and beliefs b. artifacts c. unconscious assumptions d. shared visions 68. The president of a company changes the organization’s culture. He posts a new vision for higher customer

satisfaction clearly for all employees to see, rewards the development of customer relationships, and gives bonuses for winning back lost customers. What did the president address directly to effect the change in culture? a. the subconscious codes of conduct employees operate within b. employee assumptions and beliefs about the organization c. visible artifacts and the behaviour of employees toward customers d. the company’s mission 69. A management team is meeting to strategize how to change the organization’s culture to become more

customer focused. Which of the following ideas would serve as the best advice? a. Send subliminal messages about customer service to their employees’ subconscious minds. b. Focus on rewarding managers whose groups excel at developing strong customer relations.

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Chapter 2 - Organizational Environments and Cultures c. Address the unwritten rules about code of conduct and behaviour. d. Create stories about customer service and send them through the company’s grapevine.

70. What is the relationship between change and organizational culture? a. Organizational culture is best changed by replacing current employees with new ones. b. Organizational culture changes more quickly when new managers are hired. c. Agreement among all employees must exist before an organization’s culture can change. d. Changing employees’ assumptions and beliefs about a company can be very difficult.

71. What does a consistent organizational culture mean for a company? a. A consistent organizational culture does not guarantee good company performance. b. A consistent organizational culture that is also strong is always a good culture. c. Employees learn consistent organizational cultures on their own. d. Having a consistent organizational culture makes adapting to drastic changes easier.

72. Which of the following ideas has a company with a successful organizational culture likely adopted? a. Employee involvement in decision making often derails consistent corporate culture. b. Change should be embraced rather than avoided. c. Only upper management should be involved with creating corporate culture. d. Successful corporate culture is a short-term phenomenon.

73. When Sobeys purchased Canada Safeway, one of the changes made was to feature renowned chef Jamie

Oliver on in-store advertising. What is this an example of? a. visible artifacts b. iconic representations c. organizational metaphors d. organizational allegories 74. A mace is commonly used at a university or college convocation ceremony. The mace was originally a

weapon, then became the symbol of government, and now has become the symbol of authority of the institution to grant diplomas or degrees. In terms of organizational culture, what is the mace an example of? a. a visible artifact b. an iconic representation c. an organizational metaphor d. an organizational allegory 75. Which of the following would be an example of a visible artifact for an organization that is being merged

with a large international firm? a. personal parking spaces for all salespeople b. higher sales c. better supplier relations d. fewer cash-flow pressures Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 76. Josie is the new manager at a sports apparel company. She finds she gets four days of work from her sales

staff as they have always treated Fridays as casual days with long lunches and loafing even though she has requested productivity reports for each day of the week. What is Josie learning as a new manager? a. Corporate cultures are dynamic creations that respond positively to change. b. Corporate cultures are unaffected by changes in perks, office layouts, or social practices. c. Corporate cultures are very difficult to change. d. Corporate cultures require a manager who wants to modify one to hire new employees.

77. The Canadian arm of American Express uses cubicles for many of its employees. Each employee must

reserve their cubicle daily. Employees are forbidden from personalizing their cubicles. If American Express wanted to change its organizational culture, what could it begin with? a. creating a new human resource department b. hiring a cultural ombudsperson c. adhering to affirmative action regulations d. allowing employees to use assigned work spaces longer term 78. Which of the following is a viable strategy for developing a consistent organizational culture? a. Create a clear company vision. b. Allow workers to set their own goals and strategies to achieve them. c. Select job applicants who seem to dislike confrontation. d. Eliminate the company dress code.

79. Narrative 2-1

Dofasco Inc. is a different kind of steel company. Tiny by industry standards, the Canadian-based company has just 8,500 employees and a market cap of $2.3 billion. Dofasco operates with a close eye on the “triple bottom line.” In addition to tracking financial metrics, Dofasco also monitors its impact on society and the environment. As a result, the company has outperformed many of its biggest competitors. Despite a recent slump in the automobile industry, which accounted for 50 percent of its business, Dofasco ran at 100 percent capacity and finished as one of the only integrated steelmakers in all of North America to make a profit that year. Dofasco is also one of the only companies in the steel industry without a union, and its employees like it that way. Employee turnover at the company’s main operation is less than one percent annually. Part of its low turnover rate is due to the company’s concern about protecting its external environment. As the CEO of the company said, “One way to get happy employees is not to wreck their community in which they live.”

Refer to Narrative 2-1. Dofasco operates according to the punctuated equilibrium theory. Which statement explains what this means for the company? a. Dofasco incorporates both planning and control within its long-term strategy. b. Dofasco operates with a virtually flat organizational structure. c. Dofasco has periods of long stability interrupted by short periods of dynamic change. d. Dofasco motivates its employees by maintaining a salary/wage equilibrium.

80. Narrative 2-1

Dofasco Inc. is a different kind of steel company. Tiny by industry standards, the Canadian-based company has Powered by Cognero

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just 8,500 employees and a market cap of $2.3 billion. Dofasco operates with a close eye on the “triple bottom line.” In addition to tracking financial metrics, Dofasco also monitors its impact on society and the environment. As a result, the company has outperformed many of its biggest competitors. Despite a recent slump in the automobile industry, which accounted for 50 percent of its business, Dofasco ran at 100 percent capacity and finished as one of the only integrated steelmakers in all of North America to make a profit that year. Dofasco is also one of the only companies in the steel industry without a union, and its employees like it that way. Employee turnover at the company’s main operation is less than one percent annually. Part of its low turnover rate is due to the company’s concern about protecting its external environment. As the CEO of the company said, “One way to get happy employees is not to wreck their community in which they live.”

Refer to Narrative 2-1. Which component of Dofasco’s environment would the slump in the automobile industry be part of? a. indirect b. general c. competitive d. specific 81. Narrative 2-1

Dofasco Inc. is a different kind of steel company. Tiny by industry standards, the Canadian-based company has just 8,500 employees and a market cap of $2.3 billion. Dofasco operates with a close eye on the “triple bottom line.” In addition to tracking financial metrics, Dofasco also monitors its impact on society and the environment. As a result, the company has outperformed many of its biggest competitors. Despite a recent slump in the automobile industry, which accounted for 50 percent of its business, Dofasco ran at 100 percent capacity and finished as one of the only integrated steelmakers in all of North America to make a profit that year. Dofasco is also one of the only companies in the steel industry without a union, and its employees like it that way. Employee turnover at the company’s main operation is less than one percent annually. Part of its low turnover rate is due to the company’s concern about protecting its external environment. As the CEO of the company said, “One way to get happy employees is not to wreck their community in which they live.”

Refer to Narrative 2-1. Which component of Dofasco’s environment would be affected by the fact that Ford purchased less steel from Dofasco during the auto industry’s slump? a. specific b. competitive c. economic d. general 82. Narrative 2-1

Dofasco Inc. is a different kind of steel company. Tiny by industry standards, the Canadian-based company has just 8,500 employees and a market cap of $2.3 billion. Dofasco operates with a close eye on the “triple bottom line.” In addition to tracking financial metrics, Dofasco also monitors its impact on society and the environment. As a result, the company has outperformed many of its biggest competitors. Despite a recent slump in the automobile industry, which accounted for 50 percent of its business, Dofasco ran at 100 percent capacity and finished as one of the only integrated steelmakers in all of North America to make a profit that year. Dofasco is also one of the only companies in the steel industry without a union, and its employees like it that way. Employee turnover at the company’s main operation is less than one percent annually. Part of its low turnover rate is due to the company’s concern about protecting its external environment. As the CEO of the Powered by Cognero

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company said, “One way to get happy employees is not to wreck their community in which they live.”

Refer to Narrative 2-1. Rio Tinto is another steel producer in Canada. Which aspect of Dofasco’s specific environment is Rio Tinto part of? a. supplier b. customer c. advocator d. competitor 83. Narrative 2-1

Dofasco Inc. is a different kind of steel company. Tiny by industry standards, the Canadian-based company has just 8,500 employees and a market cap of $2.3 billion. Dofasco operates with a close eye on the “triple bottom line.” In addition to tracking financial metrics, Dofasco also monitors its impact on society and the environment. As a result, the company has outperformed many of its biggest competitors. Despite a recent slump in the automobile industry, which accounted for 50 percent of its business, Dofasco ran at 100 percent capacity and finished as one of the only integrated steelmakers in all of North America to make a profit that year. Dofasco is also one of the only companies in the steel industry without a union, and its employees like it that way. Employee turnover at the company’s main operation is less than one percent annually. Part of its low turnover rate is due to the company’s concern about protecting its external environment. As the CEO of the company said, “One way to get happy employees is not to wreck their community in which they live.”

Refer to Narrative 2-1. Which technique would Dofasco most likely have used to keep apprised of environmental changes that could affect how the company does business? a. a social audit b. multi-attribute research c. environmental resolution d. environmental scanning 84. Narrative 2-1

Dofasco Inc. is a different kind of steel company. Tiny by industry standards, the Canadian-based company has just 8,500 employees and a market cap of $2.3 billion. Dofasco operates with a close eye on the “triple bottom line.” In addition to tracking financial metrics, Dofasco also monitors its impact on society and the environment. As a result, the company has outperformed many of its biggest competitors. Despite a recent slump in the automobile industry, which accounted for 50 percent of its business, Dofasco ran at 100 percent capacity and finished as one of the only integrated steelmakers in all of North America to make a profit that year. Dofasco is also one of the only companies in the steel industry without a union, and its employees like it that way. Employee turnover at the company’s main operation is less than one percent annually. Part of its low turnover rate is due to the company’s concern about protecting its external environment. As the CEO of the company said, “One way to get happy employees is not to wreck their community in which they live.”

Refer to Narrative 2-1. What is the company’s commitment to the “triple bottom line” and to keeping its employees happy indicative of? a. organizational hierarchy b. organizational culture c. general environment d. specific environment Powered by Cognero

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Indicate whether the statement is true or false.

85. Environmental change, environmental complexity, and resource scarcity are all characteristics of specific

environments. a. True b. False 86. The two kinds of external organizational environments are the general environment that affects all

organizations and the specific environment that is unique to each company. a. True b. False 87. External environments are the forces and events outside a company that have the potential to influence or

affect it. a. True b. False 88. According to its rate of environmental change, an organization’s environment can be either stable or

dynamic, but not both. a. True b. False 89. Environmental complexity refers to the degree of change in the external factors that affect organizations. a. True b. False 90. Resource scarcity is the degree to which an organization’s external environment has an abundance or lack of

critical organizational resources. a. True b. False 91. Environmental uncertainty can be expected to increase under conditions in which rates of environmental

change and complexity go up and environmental resources become scarce. a. True b. False 92. A company’s general environment consists of the economy and the technological, sociocultural, and

political/legal trends that indirectly affect all organizations. a. True b. False 93. The general environment is unique to each firm’s industry and directly affects the way each organization

conducts day-to-day business. a. True Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures b. False 94. Changes in any sector of the general environment eventually affect most organizations. a. True b. False 95. The specific segment of an organization’s external environment is unique to its region of the country. a. True b. False 96. Business confidence indices are a viable alternative to economic statistics for management decision making. a. True b. False 97. Managers often prefer economic statistics to business confidence indices as tools for managerial decision

making because of their inherently greater accuracy. a. True b. False 98. The best way to manage legal responsibilities is to retain a large staff of legal specialists to defend the

company against any charges. a. True b. False 99. In contrast to the general segment of the external environment that directly influences an organization,

changes in the specific segment of an organization’s external environment indirectly affect the way a company conducts its business. a. True b. False 100. Proactive customer monitoring involves identifying and addressing customer trends and problems after

they occur. a. True b. False 101. Managers can sometimes do a poor job of identifying potential competitors. a. True b. False 102. Buyer dependence is the degree to which a company relies on a supplier because of the importance of the

supplier’s product to the company and the difficulty of finding other sources of that product. a. True b. False 103. A decrease in either buyer dependence or supplier dependence can lead to opportunistic behaviour.

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Chapter 2 - Organizational Environments and Cultures a. True b. False 104. Advocacy groups are typically composed of concerned citizens who have a strong feeling about a common

issue, even though the members’ points of view may differ significantly. a. True b. False 105. Three techniques that can be used by advocacy groups to influence companies are public communications,

media advocacy, and product boycotts. a. True b. False 106. Advocacy groups cannot directly regulate organizational practices. a. True b. False 107. Because external environments can be dynamic, confusing, and complex, managers use a three-step process

to make sense of the changes in their external environments. Those steps are (1) environmental scanning, (2) interpreting environmental factors, and (3) acting on threats and opportunities. a. True b. False 108. CEOs in better performing firms scan their firm’s environment more often and more thoroughly than do

CEOs in more poorly performing firms. a. True b. False 109. Organizational culture refers to the set of key values, beliefs, and attitudes shared by organizational

members. a. True b. False 110. A primary source of organizational culture is the company founder. a. True b. False 111. When members of an organization share key events from the past, including details about people within the

organization and how they acted in certain situations, they are sharing organizational stories. a. True b. False 112. Organizational heroes are used to make sense of organizational events and changes. a. True b. False Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 113. Extensive research demonstrates clearly that organizational culture is strongly related to organizational

success. a. True b. False 114. Successful organizational cultures seem to be based solely upon consistency, that is, the “strength” of the

organizational culture. a. True b. False 115. A company’s culture defines the organization’s purpose or reason for existing. a. True b. False 116. In the context of an organization’s general environment, technology is the computers and information

systems advances that all companies need to keep up with their competitors and customer expectations. a. True b. False 117. Sociocultural considerations are especially important for organizations pursuing international growth. a. True b. False 118. Following the 2020 election of President Biden in the United States, companies began the process of

environmental scanning to know how to respond to his election. a. True b. False 119. Typically, managers view environmental events and issues as either weaknesses or opportunities. a. True b. False 120. Managers should be completely confident in their responses to threats or opportunities. a. True b. False

121. Briefly differentiate between the external and internal environments that companies face, and explain why

these environments are important.

122. Briefly define and explain the relationship among environmental change, complexity, uncertainty, and

resource scarcity.

123. Compare and contrast the general environment with the specific environment faced by a company.

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Chapter 2 - Organizational Environments and Cultures 124. Briefly identify the two predictors of future economic activity that are available to managers for decision

making. Specify which predictor managers typically prefer.

125. Identify and provide examples of the two important ways in which sociocultural changes and trends

influence organizations.

126. Identify the major concern facing businesses from the perspective of the political/legal component of the

general environment. What is the most appropriate action that businesses can take to manage their legal responsibilities?

127. Briefly differentiate the two basic approaches used for monitoring customers.

128. Define advocacy groups. List the three approaches to influencing businesses that they are likely to use.

Specify which one of these three is most likely to have an impact on company sales and profits.

129. List and briefly define the four characteristics of successful organizational cultures.

130. Describe the three levels of organizational culture and what managers should focus on to bring about

change to the culture.

131. Describe environmental change and its relationship to punctuated equilibrium theory. Give an example of

an industry whose environment has been characterized by the punctuated equilibrium model in recent years.

132. Identify and discuss the implications of changes in the political/legal component of the general

environment facing organizations over the past decade. Give one example of a relevant recent change. What is the best way for companies to manage their legal responsibilities?

133. Define advocacy groups. Explain the basic techniques that advocacy groups use to achieve their goals.

Provide one example of the use of advocacy techniques.

134. Identify and explain the three-step process that managers use to make sense of changes in their external

environments. Explain how environmental scanning contributes to organizational performance.

135. List and describe the four characteristics of successful organizational cultures and explain what is meant by

success in this context. Identify an organization that you are aware of that seems to have a successful organizational culture, and characterize that organization on each of these four dimensions. Can an organization still have a successful culture if it is weak on one of these dimensions?

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Chapter 2 - Organizational Environments and Cultures Answer Key 1. a 2. c 3. b 4. a 5. a 6. c 7. c 8. a 9. c 10. d 11. b 12. b 13. d 14. d 15. a 16. c 17. d 18. c 19. a 20. d 21. a 22. d 23. a 24. d 25. b Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 26. a 27. a 28. b 29. d 30. d 31. d 32. b 33. d 34. c 35. d 36. b 37. c 38. d 39. a 40. a 41. b 42. a 43. a 44. d 45. d 46. d 47. b 48. c 49. d 50. b 51. a Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 52. c 53. d 54. d 55. b 56. c 57. d 58. a 59. a 60. a 61. c 62. d 63. d 64. b 65. c 66. d 67. b 68. c 69. b 70. d 71. a 72. b 73. a 74. a 75. a 76. c Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 77. d 78. a 79. c 80. b 81. a 82. d 83. d 84. b 85. False 86. True 87. True 88. False 89. False 90. True 91. True 92. True 93. False 94. True 95. False 96. True 97. False 98. False 99. False 100. False 101. True 102. False Powered by Cognero

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Chapter 2 - Organizational Environments and Cultures 103. False 104. False 105. True 106. True 107. True 108. True 109. True 110. True 111. True 112. False 113. False 114. False 115. False 116. False 117. True 118. False 119. False 120. False 121. The external and internal environments that companies face refer to two different sets of forces that affect

those organizations. External environments are the forces and events outside a company that have the potential to influence or affect it. The internal environment, on the other hand, consists of the trends and events within an organization that affect the management, employees, and organizational culture. Thus, one set of forces exists outside of the organization, while the other set of forces exists within the organization. In order to be successful, companies must continually adapt to changes in both sets of forces.

122. There are three basic characteristics of changing external environments: (1) environmental change (the rate

at which a company’s general and specific environments change); (2) environmental complexity (the number of external factors in the environment that affect organizations); and (3) resource scarcity (the degree to which an organization’s external environment has an abundance or scarcity of critical organizational resources).

Environmental change, complexity, and resources affect environmental uncertainty, which is how well managers can understand or predict the external changes and trends affecting their businesses.

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Chapter 2 - Organizational Environments and Cultures 123. Both the general and specific environments faced by a company are considered part of the external

environment facing the firm, as opposed to part of the firm’s internal environment. It is here that the similarity ends, however. The general environment consists of the economy and the technological, sociocultural, and political/legal trends that indirectly affect all organizations. Changes in any sector of the general environment eventually affect most organizations. By contrast, each organization has a specific environment that is unique to that firm’s industry and directly affects the way it conducts day-to-day business. The specific environment includes customers, competitors, suppliers, industry regulations, and advocacy groups.

124. Two types of predictors of future economic activity are available for managerial use in decision making.

These are economic statistics and business confidence indices.

Instead of relying solely on economic statistics, some managers try to predict future economic activity by tracking business confidence. Because of this, managers often prefer to use business confidence indices, which are measures of how confident managers are about future business growth. Managers often prefer business confidence indices to economic statistics because they know that other managers make business decisions that are in line with their expectations concerning the economy’s future.

125. Sociocultural changes and trends influence organizations in two important ways. First, changing

demographic characteristics such as the number of people with particular skills or the growth or decline in particular population segments (marital status, age, ethnicity, etc.) affect how companies run their businesses.

For example, the number of international students in Canadian postsecondary institutions continues to rise dramatically, and in addition to contributing healthy tuition revenue to postsecondary institutions international students increase the social and cultural diversity of campuses and contribute to the local economy they are studying in. Second, sociocultural changes in behaviour, attitudes, and beliefs also affect the demand for a business’s products and services. For example, the aging of North America may be responsible for changing attitudes that have led to a 30 percent drop in the sale of real Christmas trees.

126. The political/legal component of the general environment includes the legislation, regulations, and court

decisions that govern and regulate business behaviour. During the pandemic, new regulations and protocols were introduced that impacted Canadian businesses and consumers alike, including public health restrictions, health screening, and workplace safety measures. In addition to trying to navigate newly introduced public health and safety policies, managers also needed to ensure that they fully understood their responsibilities as an employer and that they were complying with all the requirements under the Occupational Health and Safety Act and the Employment Standards Act. From a managerial perspective, the best mitigator against legal risk is prevention. As a manager, it is your responsibility to educate yourself about the laws and regulations that could affect your business. Failure to do so may put you and your company at risk of sizable penalties and fines.

127. There are two basic strategies for monitoring customers: reactive and proactive. Reactive customer

monitoring consists of identifying and addressing customer trends and problems after they occur. Listening closely to customer complaints is one good way to do this. Proactive customer monitoring, on the other hand, entails identifying and addressing customer needs, trends, and issues before they occur (or before customers complain).

128. Advocacy groups are groups of concerned citizens who band together to try to influence the business

practices of specific industries, businesses, and professions. Advocacy groups cannot force organizations to change their practices; however, they can use three techniques to try to influence companies: public communications, media advocacy, and product boycotts. Product boycotts are most likely to significantly reduce company sales and profits.

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Chapter 2 - Organizational Environments and Cultures 129. The four characteristics of successful organizational cultures are (1) adaptability, which is the ability to

notice and respond to changes in the organization’s environment; (2) employee involvement, which refers to the promotion of employee participation in decision making, often through enhanced autonomy, accountability, and responsibility; (3) company vision, which refers to a company’s purpose or reason for existing; and finally (4) consistent organizational cultures, which refers to a culture in which the company actively defines and teaches organizational values, beliefs, and attitudes.

130. Changing organizational culture is a very difficult process. It requires patience, vigilance, and a focus on

changing the parts of an organizational culture that managers can control. There are three levels of organizational culture. On the first, or surface, level are the elements of an organization’s culture that can be seen and observed, such as symbolic artifacts (e.g., dress codes and office layouts) and workers’ and managers’ behaviours. Next, just below the surface, are the values and beliefs expressed by people in the company. These values and beliefs cannot be seen, but they become clear if you listen carefully to what people say and to how decisions are made or explained. Finally, unconsciously held assumptions and beliefs about the company are buried deep below the surface. These are the unwritten views and rules that are so strongly held and so widely shared that they are rarely discussed or even thought about unless someone attempts to change them or unknowingly violates them. Having a consistent or strong organizational culture doesn’t guarantee good performance. Companies with strong cultures can perform poorly if strongly held core beliefs make it difficult to bring about needed change. Their consistency sometimes prevents them from adapting to change.

131. Environmental change is the rate at which a company’s general and specific environments change. In

stable environments, the rate of environmental change is slow. In dynamic environments, the rate of environmental change is fast. While companies would seem to be in either stable external environments or dynamic external environments, recent research suggests that companies often experience both stable and dynamic external environments. According to punctuated equilibrium theory, companies go through long, simple periods of stability (equilibrium), followed by short, complex periods of dynamic, fundamental change (revolutionary periods), finishing with a return to stability (new equilibrium). One example of punctuated equilibrium is the Canadian airline industry. Over the years, the Canadian airline industry has experienced a number of revolutionary periods followed by a temporary return to stability. In 1978, the Canadian airline industry followed the lead of the US and began to deregulate the airline industry. Prior to deregulation, the industry was dominated by the “friendly duopoly” of CP Air and Air Canada, which shared over 95 percent of the market; however, the federal government controlled where airlines could fly, when they could fly, the prices they could charge, and the number of flights they could have on a particular route. Full deregulation was not seen in Canada until 1988, and when it was, customers as well as airlines suddenly had more options.

Competition began to heat up: several new air carriers were launched and regional carrier Pacific Western purchased several airlines to form Canadian Airlines. Although still smaller than Air Canada, Canadian Airlines’ expansion allowed the company to compete with Air Canada on a more even basis: once again, two companies dominated the skies and the industry settled into a period of relative stability.

Then in 1996, Calgary-based WestJet Airlines entered the scene with a low-cost business model, offering customers more affordable air travel options, and competition once again increased. Eventually, a faltering Canadian Airlines was purchased by Air Canada in 2000, leaving again only two national carriers, Air Canada and WestJet. Several smaller carriers (like Porter Airlines, which operates from Billy Bishop Airport on Toronto Island) have met with success by operating smaller aircraft and appealing to business travellers; however, Air Canada and WestJet still dominate the Canadian skies. The WestJet business model has shifted somewhat: with the introduction of charges for checked baggage and premium seating and expansion of its fleet Powered by Cognero

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to include trans-Atlantic flights to Europe, WestJet is slowly becoming a more full service carrier. The low-cost approach was not completely abandoned by WestJet, with the introduction in 2018 of Swoop—an “ultra” lowcost carrier (ULCC) airline, offering deep discount fares on point-to-point flying to a limited number of destinations in North America. The interest in the ULCC model continues, with companies like Flair Airlines, Lynx Air, and Canada Jetlines all hoping to capitalize on the budget-minded traveller as the country emerges from the COVID-19 pandemic. Time will tell whether the ULCC model will be embraced by the Canadian market, how the COVID-19 pandemic will impact future air travel, and whether the Canadian government will deregulate the industry further to allow more international competition. Any or all of these scenarios may impact the stability of the airline industry and once again demonstrate the punctuated equilibrium theory.

132. Over the last few years, legislative changes that raised the minimum wage paid to employees across the

provinces have posed a challenge to some businesses in the form of higher operating costs and lower profits.

For some managers, this meant taking a critical look at operating practices and business models to identify opportunities and develop revised strategies to recover the additional costs and help bolster profitability. In Ontario, the minimum wage rose from $11.60 to $14.35 per hour in 2019 and to $15.00 effective January 1, 2022. During the pandemic, new regulations and protocols were introduced that impacted Canadian businesses and consumers alike, including public health restrictions, health screening, and workplace safety measures. In addition to trying to navigate newly introduced public health and safety policies, managers also needed to ensure that they fully understood their responsibilities as an employer and that they were complying with all the requirements under the Occupational Health and Safety Act and the Employment Standards Act. (NB: Other potential examples may be adduced by students, including Canada’s Anti-Spam Legislation [CASL], the introduction of carbon taxes in Alberta, e-cigarette/flavoured tobacco legislation in Newfoundland, or signage regulations in Québec.)

133. Advocacy groups are groups of concerned citizens who band together to try to influence the business

practices of specific industries, businesses, and professions. The members of a group generally share the same point of view on a particular issue. For example, environmental advocacy groups might try to get manufacturers to reduce carbon emissions. Unlike the industry regulation component of the specific environment, advocacy groups cannot force organizations to change their practices. However, they can use a number of techniques to try to influence companies: public communications, media advocacy, and product boycotts. The public communications approach relies on voluntary participation by the news media and the advertising industry to get an advocacy group’s message out. In contrast to the public communications approach, media advocacy is a much more aggressive form of advocacy. A media advocacy approach typically involves framing issues as public issues (i.e., issues affecting everyone); exposing questionable, exploitative, or unethical practices; and forcing media coverage by buying media time or creating controversy that is likely to receive extensive news coverage. A product boycott is a tactic in which an advocacy group actively tries to convince consumers to not purchase a company’s product or service. Boycotts can significantly reduce company sales and profits.

The text uses PETA as an examples. Students may have other equally good examples.

134. Because external environments can be dynamic, confusing, and complex, managers use a three-step process

to make sense of the changes in their external environments: (1) environmental scanning, (2) interpreting environmental factors, and (3) acting on threats and opportunities. Environmental scanning is searching the environment for important events or issues that might affect an organization. Managers scan their environments based on their organizational strategies, their need for up-to-date information, and their need to reduce Powered by Cognero

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uncertainty. After scanning, managers determine what environmental events and issues mean to the organization. Typically, managers either view environmental events and issues as threats or opportunities.

When managers identify environmental events as threats, they take steps to protect the company from harm.

When managers identify environmental events as opportunities, they formulate alternatives for taking advantage of them to improve company performance.

Environmental scanning is important because it contributes to organizational performance. It helps managers detect environmental changes and problems before they become organizational crises. Companies led by CEOs who do more environmental scanning have higher profits. CEOs in better performing firms scan the environments in which their firms operate more frequently and scan more key factors in their environments in more depth and detail than do CEOs in poorer performing firms.

135. Preliminary research shows that organizational culture is related to organizational success. The four

characteristics of successful organizational cultures are adaptability, employee involvement, a clear company vision, and consistent organizational cultures. The research shows that cultures based on these four characteristics can help companies achieve higher profits, quality, sales growth, return on assets, and employee satisfaction. The specifics of these four characteristics are as follows: Adaptability is the ability to notice and respond to changes in the organization’s environment. Employee involvement refers to the promotion of employee participation in decision making, often through enhanced autonomy, accountability, and responsibility. A clear company vision refers to a company’s purpose or reason for existing. Finally, consistent organizational cultures refers to a culture in which the company actively defines and teaches organizational values, beliefs, and attitudes.

Student examples may vary widely, but should systematically comment on each of the four dimensions. Since an organization could still be considered successful even if weak on one dimension, students should take this into account in their individual assessments.

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Chapter 3 - Ethics and Social Responsibility

Indicate the answer choice that best completes the statement or answers the question.

1. What is ethics as it relates to workplace behaviour? a. Ethics is behaving in a way that makes actions easier than acting unethically. b. Ethics is the mindset employees must have to eliminate risks of misconduct when making choices

about how to behave. c. Ethics is the unseen rules that guide the behaviour of employees. d. Ethics is the set of moral principles or values that defines right and wrong for a person or group.

2. According to the Ethics and Compliance Institute, the four major ethics outcomes related to how employees

make decisions and behave in the workplace include all EXCEPT which of the following? a. observations of misconduct b. pressure to compromise ethical standards c. ethical intensity of the decision d. reporting misconduct 3. A survey by Deloitte reported that employees who were considering leaving their jobs cited which of the

following as the greatest factor? a. lack of engagement b. loss of trust c. misalignment with the company's vision d. limited career advancement opportunities 4. Which of the following describes unethical behaviour that violates organizational norms about right and

wrong? a. organizational deviance b. workplace deviance c. workplace destruction d. ethical deviance 5. A dissatisfied employee purposely puts less oil in a machine used in manufacturing products to increase the

risk of the machine failing. Which activity is this employee engaged in? a. production deviance b. employee deviance c. property deviance d. operational deviance 6. An employee who feels he is being underpaid steals company merchandise to sell for his own profit. What

act is this employee engaged in? a. inventory shrinkage b. production deviance c. property deviance Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility d. employee shrinkage 7. A disgruntled employee who feels he is being underpaid purposely works slowly when his supervisor is not

present and often arrives late for work and leaves early. What kind of behaviour is this employee engaged in? a. production deviance b. employee shrinkage c. product shrinkage d. property deviance 8. A female employee was passed over for a promotion that was awarded to a new and younger male employee.

Disgruntled, the older female employee gives the younger employee who got the job false information, thereby making his work more difficult. What behaviour is the older female employee engaged in? a. production deviance b. employee shrinkage c. political deviance d. personal aggression 9. A new employee is encouraged to cooperate in a scheme to cheat on worker time cards. The employee

refuses to cooperate, and two colleagues verbally threaten him with physical harm if he does not comply. In what behaviour are the employees who threatened their colleague engaged? a. employee shrinkage b. workplace violence and harassment c. political deviance d. personal deviance 10. Jonah, a cashier at Montreal Bagel Co., steals two dozen frozen bagels at the end of each shift, against

company policy. What is this referred to as? a. employee deviance b. employee losses c. product shrinkage d. employee shrinkage 11. Harpreet often spends two hours of his shift scrolling social media, checking his personal email, and texting

family and friends. What is Harpreet guilty of? a. political deviance b. property deviance c. cyberloafing d. social loafing 12. Any behaviour that demeans, embarrasses, humiliates, annoys, alarms, or verbally abuses a person is

referred to as which of the following? a. bullying b. deviance Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility c. harassment d. workplace violence 13. When addressing certain issues, managers who are more aware of the large impact their decisions will have

on others are more likely to worry about doing the right thing. Which type of issue does this situation best describe? a. social consensus b. ethical intensity c. temporal immediacy d. proximity of effect 14. Which term is used to describe the degree of concern people have about activities that question moral

standards? a. ethical intensity b. social consensus c. temporal immediacy d. magnitude of consequences 15. Which of the following factors contributes to ethical intensity? a. temporal effect b. probability of efficiency c. proximity of effect d. social commitment 16. On which of the following does ethical intensity partly depend? a. magnitude of dilemma b. social acceptance c. intent of the manager d. temporal immediacy 17. A plant worker is unhappy with his performance review. He considers purposely spilling a hazardous

chemical to cause an evacuation of the plant. He decides against this, however. A spill could put many of his fellow workers at risk of injury from inhaling the chemical’s fumes or evacuating. Which of the following influenced this worker’s ethical decision making? a. magnitude of consequences b. enormity of influence c. location immediacy d. probability of response 18. A company’s accounting clerk realizes that an error has been made—the period’s income is overstated. The

clerk will soon be leaving for another job and knows that the error will not be found for several months after she has gone. To avoid having to work longer to fix the error, she decides she won’t say anything. Which of the following factors affected the intensity of the clerk’s decision?

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Chapter 3 - Ethics and Social Responsibility a. resource consequences b. magnitude of influence c. temporal immediacy d. probability of response 19. Why would the intentional tampering of a car’s brake line have greater ethical intensity than driving 10

km/h over the speed limit? a. social consensus b. magnitude of influence c. temporal immediacy d. probability of effect 20. Which of the following is strong when a decision has large, certain, immediate consequences, and when we

are physically or psychologically close to those affected by it? a. ethical variance b. ethical involvement level c. ethical compliance d. ethical intensity 21. Shell Oil Company’s plan to sink Brent Spar, an abandoned offshore oil-storage buoy, had a massive effect

on employee motivation and recruitment. The number of qualified people applying for jobs at Shell plummeted, and many employees looked for positions in other companies. The plan caused much greater harm than Shell’s managers had ever imagined it would. Which of the following was much greater than predicted? a. synergistic effect b. impact proximity c. concentration of synergy d. magnitude of consequences 22. To cut costs, a company chooses to terminate 50 employees instead of reducing the hours of 800 workers by

10%. The decision the company made has which of the following? a. high concentration of effect b. low concentration of effect c. low probability of effect d. high moral consensus 23. What are the three levels of moral development identified by Kohlberg? a. amoral, moral, and post-moral b. preconventional, conventional, and postconventional c. introductory, growth, and maturity d. individual, organizational, and industry-wide 24. Every day before he leaves work, Doug takes a headset, stapler, or other company item and puts it in his Powered by Cognero

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lunch box to bring home. Doug sees nothing wrong with his behaviour since he feels inadequately paid. What level of moral development is Doug operating at? a. conventional b. legally mandated c. preconventional d. postconventional 25. According to Kohlberg’s model, which level of moral development are people at when they make decisions

based on selfish reasons? a. the amoral level b. the preconventional level c. the conventional level d. the postconventional level 26. According to Kohlberg’s model, which level of moral development are people at when they make decisions

that conform to societal expectations? a. the unconventional level b. the preconventional level c. the conventional level d. the postconventional level 27. According to Kohlberg’s model, which level of moral development are people at when they always use

internalized ethical principles to solve ethical dilemmas? a. the amoral level b. the preconventional level c. the unconventional level d. the postconventional level 28. Which principle of ethical decision making states you should never take any action that harms the least

fortunate or vulnerable among us in some way? a. personal virtue b. religious injunctions c. utilitarian benefits d. distributive justice 29. Which principle of ethical decision making states you should never take an action that is unkind or that

harms a sense of community, such as the positive feelings that come from working together to accomplish a commonly accepted goal? a. principle of long-term self-interest b. principle of religious injunctions c. principle of personal virtue d. principle of government requirements Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 30. What should managers do to encourage more ethical decision making in an organization? a. They should carefully select and hire new employees. b. They should let the employees be the ethical leaders in the company. c. They should forgive employees who steal inventory. d. They should promote based on gender.

31. What written test estimates honesty by directly asking job applicants what they think or feel about theft or

about punishment of unethical behaviours? a. situational-based integrity test b. personality-based integrity test c. behavioural integrity test d. overt integrity test 32. For what purpose can managers use integrity tests? a. to select and hire ethical employees b. to force the use of the principle of distributive justice when dealing with customers c. to determine which principle of ethical decision making is most appropriate to a situation d. to assess the ethical intensity of an issue 33. Which type of integrity test indirectly estimates honesty by measuring psychological traits? a. overt b. psychographic-based c. covert d. personality-based 34. What can Sobeys management and non-management employees easily attain with the click of a mouse to

read about the organization’s core values and specific ethical standards on topics like accepting gifts and samples from suppliers? a. Sobeys Vision for the Future Document b. Sobeys Overt Integrity Code c. Sobeys Mission Statement Code d. Sobeys Code of Business Conduct and Ethics 35. What information source should employees of Canadian Tire consult if they are unsure of how to respond to

a gift from a supplier? a. standards and procedures specific to the retail industry b. the company’s business code of ethics c. the company’s mission statement d. someone in the company’s publicity department 36. Which of the following is an objective of ethics training? a. reducing costs Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility b. achieving credibility with employees c. improving negotiations with suppliers d. encouraging customers to purchase more from the company 37. In addition to establishing ethical standards, managers should also be involved in ethics and compliance

training in order to do what? a. motivate employees b. create an ethical company culture c. discourage whistleblowers from speaking up d. increase revenues 38. What is the last step in the basic model of ethical decision making? a. monitor the results b. determine benchmarks c. act d. make a choice 39. What is the next step in the basic model of ethical decision making after the problem is identified? a. diagnose the situation b. identify the constituents c. determine alternative solutions d. analyze the options 40. A company’s chief financial officer was found guilty of extorting large sums of corporate funds and

depositing them into an offshore bank account. The officer had been arrested after a financial manager uncovered suspicious financial records. Which of the following best describes the financial manager? a. whistleblower b. ethical ombudsman c. covert manager d. covert stakeholder 41. Ted Cooper, an engineer with the City of Ottawa, was terminated in May 2022 due to an email he sent to

his supervisor, in which he threatened to involve the Auditor-General. His union sought arbitration over the issue. What issue does the arbitration point to? a. the importance of discretionary responsibility b. a problem with too-specific codes of ethics c. one of the problems of being a whistleblower d. the creation of a sustainable ethical climate 42. How many steps are there in the basic model of ethical decision making? a. six steps b. five steps Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility c. four steps d. three steps 43. In 2014, Raman Autar, an engineer with Barrick Gold, raised concerns about the health, safety, and

environmental practices at an Argentinian mine. He was fired by Barrick Gold shortly before a toxic solution was spilled into waterways. What is Autar’s role in this instance? a. whistleblower b. ethical ombudsman c. secondary stakeholder d. covert stakeholder 44. Why is it often difficult for an employee to assume the role of whistleblower? a. because managers have such broad spans of management b. because the employee is often the one punished c. because the organization is decentralized d. because the employee needs empowerment 45. According to a recent study on ethics in the Canadian workplace, what discourages most people from

becoming whistleblowers? a. lack of company action on their complaints b. retaliation from supervisors and fellow workers c. causing trouble for friends who are acting unethically d. the risk of losing their jobs 46. Historically, which type of responsibility means making a profit by producing something valued by society? a. discretionary b. ethical c. legal d. economic 47. What is social responsibility? a. a business’s obligation to pursue policies, make decisions, and take actions that benefit society b. a business tactic used to create relationship bonds with customers c. the actions the law obliges companies to take to protect their external environments d. a business’s responsibility to its shareholders 48. Which of the following involves the voluntary activities undertaken by an organization to operate in an

economically, socially, and environmentally ethical manner? a. social responsibility b. corporate social responsibility c. corporate ethical responsibility d. economic responsibility Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 49. A company called CitiGrow is selling organic produce to consumers for $37.50 a week from “microplots”

around Winnipeg. Prior to CitiGrow assuming responsibility for the plots, they were empty lots. What did CitiGrow exercise? a. equitable responsibility b. fiscal responsibility c. organizational responsibility d. social responsibility 50. In an article about WestJet, the company’s CEO said WestJet wanted to enrich its communities and grow

sustainably. The CEO wanted the company to be committed to which of the following? a. corporate social consensus b. social munificence c. corporate social responsibility d. corporate social respect 51. Gas prices in Belleville and Kingston, ON were allegedly fixed in an anti-competitive manner during 2007,

and a settlement, admitting no wrong-doing, was reached with Pioneer Energy, Canadian Tire, Mr. Gas, and Sunoco. Which model would they most likely use to justify their actions? a. the economic model b. the stakeholder model c. the shareholder model d. the accounting model 52. Which model holds that as long as a company is operating legally, its only social responsibility is to

maximize profits? a. the economic model b. the stakeholder model c. the shareholder model d. the accounting model 53. According to Milton Friedman, which of the following is a problem with corporate social responsibility? a. Social responsibility comes with a high cost that is borne by company shareholders. b. The time, money, and attention diverted to social causes undermine market efficiency. c. Companies publicize socially responsible actions while they quietly pollute and mistreat the

environment. d. The marketplace will ultimately determine the importance of social causes.

54. What is the term for the various persons or groups with a legitimate interest in a company’s actions? a. stakeholders b. shareholders c. indirect investors Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility d. boundary spanners 55. Which of the following groups is least important for an organization to satisfy when it comes to assuring

long-term survival? a. investors b. customers c. the media d. employees 56. A company called CitiGrow is selling organic produce to consumers for $37.50 a week from “microplots”

around Winnipeg, in addition to selling to restaurants. Prior to CitiGrow assuming responsibility for the plots, they were empty lots. Which of the following is an example of a primary stakeholder group for CitiGrow? a. community activists b. Winnipeg Free Press c. the microplots’ farmers d. organic markets 57. What are the two general categories of stakeholders? a. primary and secondary b. reactive and proactive c. business and nonbusiness d. relevant and irrelevant 58. What type of stakeholders are groups such as shareholders, employees, customers, suppliers, governments,

and local communities on which the organization depends for long-term survival? a. primary b. secondary c. functional d. conventional 59. A carbon monoxide leak at St. John’s International Airport in St. John’s, NL led to four workers being

transported to hospital and a stop-work order being issued by Employment and Social Development Canada, a federal government agency. Which role did Employment and Social Development Canada thereby serve? a. primary shareholder b. primary stakeholder c. secondary shareholder d. secondary stakeholder 60. Management’s most important responsibility is long-term survival (not just maximizing profits). What type

of model does this statement represent? a. economic b. stakeholder Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility c. societal d. shareholder 61. Which of the following is an example of a stakeholder group that an organization must satisfy to ensure

long-term survival? a. suppliers b. Statistics Canada c. the general public d. the media 62. According to the stakeholder model, which of the following stakeholder groups is theoretically the least

important to the company? a. investors b. customers c. suppliers d. lobbyists 63. Why are secondary stakeholders important to a company? a. The company depends on them for long-term survival. b. They can affect public perceptions and opinions. c. The company is endangered by a termination of their relationship. d. They have the direct power to control management decisions.

64. Which group can influence or be influenced by the company and can affect public perceptions about its

socially responsible behaviour? a. preliminary stakeholders b. secondary stakeholders c. conventional stakeholders d. reactive stakeholders 65. Which of the following is an example of a stakeholder group that neither engages in regular transactions

with the company nor is critical to its long-term survival but can still affect public perceptions and opinions about the company’s socially responsible behaviour? a. the media b. suppliers c. the government d. employees 66. Which of the following is a secondary stakeholder group? a. the government b. suppliers c. trade associations Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility d. employees 67. In which of the following roles were the media acting when they informed the public about a carbon

monoxide leak at St. John’s International Airport in St. John’s, NL that led to four workers being transported to hospital? a. overt constituents b. covert constituents c. secondary shareholders d. secondary stakeholders 68. Vocam Inc., a Canadian business training company, is currently marketing a training video designed to

teach companies how to address social media and email etiquette. Which of the following is an example of a secondary stakeholder group for Vocam? a. companies that use the video for training b. actors in the video c. distributors of the training video d. business magazines that run ads for the training video 69. Nestlé is facing boycotts from an organization called The Council of Canadians as a result of Nestlé’s rights

to use groundwater reservoirs for a very low price. Which type of stakeholder is The Council of Canadians with respect to Nestlé? a. covert b. functional c. reactive d. secondary 70. A consumer advocacy group is critical of ads by a delivery company that claim its priority service is a low-

cost, two-day service while failing to disclose that their regular service generally reaches the destination just as quickly and for a tenth of the cost. The consumer advocacy group wants the delivery company to take responsibility for its actions and do what is right. What term defines this type of responsibility? a. utilitarian b. fiscal c. legal d. ethical 71. Gas prices in Belleville and Kingston, ON were allegedly fixed in an anti-competitive manner during 2007,

and companies such as Pioneer Energy, Canadian Tire, Mr. Gas, and Sunoco were investigated. Which responsibilities did these companies allegedly ignore? a. economic responsibilities b. ethical responsibilities c. legal responsibilities d. discretionary responsibilities Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 72. Which of the following terms best applies to the expectations that a company will voluntarily serve a social

role beyond its economic, legal, and ethical responsibilities? a. stakeholder responsibilities b. overt responsibilities c. discretionary responsibilities d. social responsibilities 73. Which type of responsibility can companies fail to fulfill and still be considered ethical? a. legal b. fiscal c. discretionary d. overt 74. It is illegal to hunt newborn seals in Canada, but the fur of newborn seals is still sold to some buyers. If

companies buy this fur, what kind of responsibility to society would they be ignoring? a. economic b. ethical c. legal d. discretionary 75. In which of the following instances does a social responsibility problem exist? a. when company actions do not meet the expectations of the media b. when a company recalls a product due to a manufacturing defect c. when company actions do not meet stakeholder expectations d. when a company’s workforce is only 20 percent women 76. Lever’s most successful product in India is Fair & Lovely, a skin-whitening agent that is sold to dark-

skinned women in India to help them conform to their culture’s definition of beauty. Lever is emphasizing one type of responsibility, to make a profit, and ignoring another type of responsibility, which is to help women realize that appearance is superficial. What are these two types of responsibilities, respectively? a. legal; ethical b. discretionary; ethical c. economic; legal d. economic; discretionary 77. GlaxoSmithKline (GSK) has been making anti-AIDS drugs such as Retrovir and Epivir available in hard-hit

areas of Africa at up to 75 percent off the global price. Still, it managed to outrage AIDS prevention groups.

GSK decided to use the patent protection rules of the World Trade Organization (WTO) to take action against governments importing lower-cost drug versions. At which level of social responsibility was GSK acting by using the WTO’s regulation? a. economic b. fiscal c. legal Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility d. discretionary 78. GlaxoSmithKline (GSK) has been making anti-AIDS drugs such as Retrovir and Epivir available in hard-hit

areas of Africa at up to 75 percent off the global price. At which level of social responsibility was GSK acting by providing the drugs at a fraction of their usual costs? a. discretionary b. global c. altruistic d. economic 79. When media informed the public that Nestlé had access to groundwater reservoirs at a very low price,

creating significant public interest, Nestlé responded by acknowledging that they shared the public’s “concern” for water sustainability. Which kind of strategy did Nestlé use to respond to its social responsibility problems? a. reactive strategy b. prospective strategy c. proactive strategy d. accommodative strategy 80. A Canadian metals broker advertises “95 percent of orders shipped from stock” even though the company

has no warehouses and no inventory. When questioned about the falseness of the ad, the broker responded, “We do ship 95 percent of our orders from stock, but from suppliers’ stocks, not ours.” Which type of strategy did the broker use to respond to the ethical question? a. reactive b. offensive c. accommodative d. proactive 81. Gas prices in Belleville and Kingston, ON were allegedly fixed in an anti-competitive manner during 2007,

and a settlement, admitting no wrong-doing, was reached with Pioneer Energy, Canadian Tire, Mr. Gas and Sunoco. Which type of strategy did the four firms implement? a. offensive b. reactive c. proactive d. accommodative 82. Which of the following social responsiveness strategies could be considered a public relations approach? a. reactive b. defensive c. communicative d. proactive 83. Which type of strategy is a company implementing if it chooses to accept responsibility for a problem and

does all that society expects to solve the problem?

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Chapter 3 - Ethics and Social Responsibility a. reactive b. defensive c. accommodative d. proactive 84. A company faced with a social problem decides to demonstrate the greatest possible willingness to meet or

exceed society’s expectations of how it should respond. Which type of strategy is the company implementing? a. reactive b. productive c. proactive d. accommodative 85. The Rainforest Action Network launched a bruising PR campaign against Home Depot to stop it from

selling old-growth lumber. After two years of bad publicity and resistance to new store locations, Home Depot surrendered. Today, its suppliers work with environmental and forestry groups to certify that their wood products are not from endangered areas. What type of strategy did Home Depot use to respond to demands that it be socially responsible? a. proactive b. accommodative c. predictive d. defensive 86. Which of the following represents the principle of long-term self-interest? a. reducing capital costs and maintaining a profitable financial position b. reducing capital costs and investing in strategic options c. reducing operational costs and maintaining a profitable financial position d. reducing operational costs and maintaining a positive reputation 87. Which virtue holds that you should never do anything that is not honest, open, and truthful and that you

would not be glad to see reported in the news or on social media? a. distributive justice virtue b. personal virtue c. private virtue d. utilitarian virtue 88. Which of the following would be acceptable behaviour for a self-driving car in the event of an unavoidable

crash under the principle of utilitarian benefits? a. injure the lone occupant of the vehicle to prevent colliding with a school bus b. injure a pedestrian to prevent injuring the lone occupant of the vehicle c. injure a person in a wheelchair to prevent injuring the lone occupant of the vehicle d. injure two occupants of the vehicle to prevent injuring a squirrel on the road Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 89. For which of the following actions would you have to rely on an ethical principle other than the utilitarian

principle to justify it? a. not hiring smokers to work for your 50-person business in order to save on healthcare premiums b. bulldozing a house to build a highway c. hiring only men for a labour-intensive role d. giving $20 to every student in a 27-person class except for the 5 who have blue eyes.

90. Which of the following describes the principle of individual rights? a. action taken by a fiduciary b. action that doesn’t harm the least fortunate c. action that isn’t unkind or harms a community d. action that doesn’t violate people’s agreed-upon entitlements 91. What is the defining characteristic of an ethical decision? a. the principle of distributive justice is used b. the principle of self-dealing is used c. all affected stakeholders will be satisfied with the decision d. some stakeholders will not agree with the principles used 92. Which of the following principles is likely to produce the least restrictive moral guidance for a manager in

an ethical dilemma? a. the principle of government requirements b. the principle of personal virtue c. the principle of religious injunctions d. the principle of long-term self-interest 93. Narrative 3-1

IBM has a long-standing “Reinventing Education” program, which involves intensive research into how educational institutions can use the fruits of new technologies to transform what they do and thereby improve education. In the process, the program is helping to shape a market of significant interest to IBM. IBM views the program as an investment rather than as a charitable contribution.

Refer to Narrative 3-1. Which type of strategy is IBM using to show its social responsibility? a. proactive b. accommodative c. predictive d. defensive 94. Narrative 3-1

IBM has a long-standing “Reinventing Education” program, which involves intensive research into how educational institutions can use the fruits of new technologies to transform what they do and thereby improve education. In the process, the program is helping to shape a market of significant interest to IBM. IBM views the program as an investment rather than as a charitable contribution.

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Refer to Narrative 3-1. The IBM program is an example of the positive relationship between social responsibility and which of the following? a. social consensus b. secondary shareholders c. economic performance d. covert stakeholders 95. Narrative 3-1

IBM has a long-standing “Reinventing Education” program, which involves intensive research into how educational institutions can use the fruits of new technologies to transform what they do and thereby improve education. In the process, the program is helping to shape a market of significant interest to IBM. IBM views the program as an investment rather than as a charitable contribution.

Refer to Narrative 3-1. The IBM program best illustrates which of the following types of ethical responsibilities firms have? a. discretionary responsibility b. legal responsibility c. ethical responsibility d. economic responsibility 96. Refer to Narrative 3-1. The IBM program best illustrates which of the following principles of ethical

decision making? a. principle of distributive justice b. principle of government requirements c. principle of personal virtue d. principle of long-term self-interest 97. Which of the following offsets a company’s costs of being socially responsible? a. a better product or corporate reputation that results in stronger sales or higher profit margins b. higher employee morale that results in less turnover costs c. better government relations that results in higher tax credits and other incentives d. a higher corporate profile in the media that results in less likelihood of boycotts or other negative

social responses 98. A small manufacturer of scented candles has asked if acting socially responsible would increase its

profitability. Which of the following is the most correct response? a. Yes. Look at the examples of Starbucks Coffee and Ben & Jerry’s. b. Yes. There is strong evidence of a positive relationship between social responsibility and economic performance. c. No. Stakeholders do not support social responsibility if it lowers profits. d. No. There is no guarantee that profitability results from social responsibility.

99. Narrative 3-2

South Africa is experiencing an AIDS epidemic. Life expectancy in that country is 48 years; 30 percent of the Powered by Cognero

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population is HIV positive. The largest employer by far in South Africa is Anglo American, a mining conglomerate. Between 25 and 30 percent of its employees are HIV positive. Anglo American employee Dr. Brian Brink decided Anglo could help arrest the growth of AIDS by providing its 130,000 South African employees with free anti-AIDS medicine, and executives agreed. The decision to provide the drug makes Anglo one of the largest customers for AIDS medicine in the world. Anglo provides clinics staffed with companyemployed doctors and nurses to provide for the medical needs of its employees. Anglo paid for the medicine and set up a system to dispense it and monitor treatment. Anglo also supplies education, counselling, and disease testing as well as condoms to all of its employees. Anglo’s decision to fight AIDS has sent a palpable wave of relief, optimism, and hope throughout South Africa. Other companies have followed Anglo American’s lead.

Refer to Narrative 3-2. Which term best describes the result of Anglo’s decision and the related wave of relief, optimism, and hope throughout South Africa? a. social consensus b. probability of effect c. concentration of effect d. magnitude of consequences 100. Narrative 3-2

South Africa is experiencing an AIDS epidemic. Life expectancy in that country is 48 years; 30 percent of the population is HIV positive. The largest employer by far in South Africa is Anglo American, a mining conglomerate. Between 25 and 30 percent of its employees are HIV positive. Anglo American employee Dr. Brian Brink decided Anglo could help arrest the growth of AIDS by providing its 130,000 South African employees with free anti-AIDS medicine, and executives agreed. The decision to provide the drug makes Anglo one of the largest customers for AIDS medicine in the world. Anglo provides clinics staffed with companyemployed doctors and nurses to provide for the medical needs of its employees. Anglo paid for the medicine and set up a system to dispense it and monitor treatment. Anglo also supplies education, counselling, and disease testing as well as condoms to all of its employees. Anglo’s decision to fight AIDS has sent a palpable wave of relief, optimism, and hope throughout South Africa. Other companies have followed Anglo American’s lead.

Refer to Narrative 3-2. Which term best describes the obligation that Anglo American had to take actions that benefit society? a. moral consensus b. corporate social responsibility c. ethical diversity d. ethical sourcing 101. Narrative 3-2

South Africa is experiencing an AIDS epidemic. Life expectancy in that country is 48 years; 30 percent of the population is HIV positive. The largest employer by far in South Africa is Anglo American, a mining conglomerate. Between 25 and 30 percent of its employees are HIV positive. Anglo American employee Dr. Brian Brink decided Anglo could help arrest the growth of AIDS by providing its 130,000 South African employees with free anti-AIDS medicine, and executives agreed. The decision to provide the drug makes Anglo one of the largest customers for AIDS medicine in the world. Anglo provides clinics staffed with companyemployed doctors and nurses to provide for the medical needs of its employees. Anglo paid for the medicine Powered by Cognero

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and set up a system to dispense it and monitor treatment. Anglo also supplies education, counselling, and disease testing as well as condoms to all of its employees. Anglo’s decision to fight AIDS has sent a palpable wave of relief, optimism, and hope throughout South Africa. Other companies have followed Anglo American’s lead.

Refer to Narrative 3-2. What is the role of the miners who work for Anglo American? a. secondary stakeholders b. organizational shareholders c. primary stakeholders d. whistleblowers 102. Narrative 3-2

South Africa is experiencing an AIDS epidemic. Life expectancy in that country is 48 years; 30 percent of the population is HIV positive. The largest employer by far in South Africa is Anglo American, a mining conglomerate. Between 25 and 30 percent of its employees are HIV positive. Anglo American employee Dr. Brian Brink decided Anglo could help arrest the growth of AIDS by providing its 130,000 South African employees with free anti-AIDS medicine, and executives agreed. The decision to provide the drug makes Anglo one of the largest customers for AIDS medicine in the world. Anglo provides clinics staffed with companyemployed doctors and nurses to provide for the medical needs of its employees. Anglo paid for the medicine and set up a system to dispense it and monitor treatment. Anglo also supplies education, counselling, and disease testing as well as condoms to all of its employees. Anglo’s decision to fight AIDS has sent a palpable wave of relief, optimism, and hope throughout South Africa. Other companies have followed Anglo American’s lead.

Refer to Narrative 3-2. What level of responsibility did Anglo American demonstrate? a. legal responsibility b. equitable responsibility c. discretionary responsibility d. moral responsibility 103. Narrative 3-2

South Africa is experiencing an AIDS epidemic. Life expectancy in that country is 48 years; 30 percent of the population is HIV positive. The largest employer by far in South Africa is Anglo American, a mining conglomerate. Between 25 and 30 percent of its employees are HIV positive. Anglo American employee Dr. Brian Brink decided Anglo could help arrest the growth of AIDS by providing its 130,000 South African employees with free anti-AIDS medicine, and executives agreed. The decision to provide the drug makes Anglo one of the largest customers for AIDS medicine in the world. Anglo provides clinics staffed with companyemployed doctors and nurses to provide for the medical needs of its employees. Anglo paid for the medicine and set up a system to dispense it and monitor treatment. Anglo also supplies education, counselling, and disease testing as well as condoms to all of its employees. Anglo’s decision to fight AIDS has sent a palpable wave of relief, optimism, and hope throughout South Africa. Other companies have followed Anglo American’s lead.

Refer to Narrative 3-2. To meet its obligation for social responsibility, Anglo American used a progressive approach in doing what it could to solve the problems caused by the AIDS epidemic in South Africa. Which type of strategy did the mining conglomerate use?

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Chapter 3 - Ethics and Social Responsibility a. participative b. reactive c. economically based d. proactive 104. Narrative 3-3

Gap Inc. runs Gap, Banana Republic, and Old Navy clothing stores. Gap Inc. has received intense negative news coverage regarding the treatment of workers in the overseas factories from which it buys its clothes. They have multiple regulatory requirements to adhere to because the goods are sold in Canada, including needing to comply with CCOHS (Canadian Centre for Occupational Health and Safety) or Environment Canada regulations.

For example, in a dusty factory in Lesotho, Africa, workers can’t escape breathing in the fibres. When they cough, their mucus is full of coloured fibres. In another Gap supplier’s factory in Bangladesh, workers are beaten for simple mistakes and often not paid for the work. In El Salvador, workers complained about abuse and terrible working conditions. One worker said, “I’m very proud to sew pants for Gap, but the board of directors should not be proud of what is happening to us. Gap has abandoned us.”

Some wages were so low that workers couldn’t buy enough food for themselves and their families. A union organizer said, “We want them to pay a wage that allows a decent standard of living and allow workers to organize unions to improve their conditions in factories.”

Gap is not the only company that relies on such suppliers. Almost any plant in the non-developed countries of the Far East would also have to answer to CCOHS or Environment Canada. Because of strong competition and price-conscious consumers, retailers like Gap quickly switch orders from one factory or country to another whenever they can find a lower price. According to protest groups, that intense pressure to keep prices low encourages factory owners and managers to do everything they can to cut their costs, including mistreating workers. And with 4,000 factories in 50 countries supplying clothes for Gap Inc.’s three stores, protest groups see Gap as a big part of the problem.

Intense negative publicity, protest groups calling for worldwide Gap boycotts, and the company losing money is a tough situation for the CEO. Since Gap is a publicly traded company, keeping shareholders happy is a fundamental responsibility. On the one hand, the company needs to be profitable, which seems to mean overseas suppliers keeping their prices low. On the other hand, negative publicity and boycotts may lower sales and reduce profits.

Refer to Narrative 3-3. Who are the primary stakeholders for Gap? a. the television networks that show its commercials b. local radio stations that run ads about sales c. its customers d. special interest groups that think Gap is not accurately depicting women 105. Narrative 3-3

Gap Inc. runs Gap, Banana Republic, and Old Navy clothing stores. Gap Inc. has received intense negative news coverage regarding the treatment of workers in the overseas factories from which it buys its clothes. They have multiple regulatory requirements to adhere to because the goods are sold in Canada, including needing to Powered by Cognero

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comply with CCOHS (Canadian Centre for Occupational Health and Safety) or Environment Canada regulations.

For example, in a dusty factory in Lesotho, Africa, workers can’t escape breathing in the fibres. When they cough, their mucus is full of coloured fibres. In another Gap supplier’s factory in Bangladesh, workers are beaten for simple mistakes and often not paid for the work. In El Salvador, workers complained about abuse and terrible working conditions. One worker said, “I’m very proud to sew pants for Gap, but the board of directors should not be proud of what is happening to us. Gap has abandoned us.”

Some wages were so low that workers couldn’t buy enough food for themselves and their families. A union organizer said, “We want them to pay a wage that allows a decent standard of living and allow workers to organize unions to improve their conditions in factories.”

Gap is not the only company that relies on such suppliers. Almost any plant in the non-developed countries of the Far East would also have to answer to CCOHS or Environment Canada. Because of strong competition and price-conscious consumers, retailers like Gap quickly switch orders from one factory or country to another whenever they can find a lower price. According to protest groups, that intense pressure to keep prices low encourages factory owners and managers to do everything they can to cut their costs, including mistreating workers. And with 4,000 factories in 50 countries supplying clothes for Gap Inc.’s three stores, protest groups see Gap as a big part of the problem.

Intense negative publicity, protest groups calling for worldwide Gap boycotts, and the company losing money is a tough situation for the CEO. Since Gap is a publicly traded company, keeping shareholders happy is a fundamental responsibility. On the one hand, the company needs to be profitable, which seems to mean overseas suppliers keeping their prices low. On the other hand, negative publicity and boycotts may lower sales and reduce profits.

Refer to Narrative 3-3. Which of Gap’s actions indicate it was ignoring its discretionary responsibilities to society? a. Gap ignored the terrible treatment of overseas workers in the clothing industry. b. Gap created competitive advantages that are not sustainable. c. Gap engaged in fashion obsolescence. d. Gap allowed demand for its clothing to exceed the supply.

106. Narrative 3-3

Gap Inc. runs Gap, Banana Republic, and Old Navy clothing stores. Gap Inc. has received intense negative news coverage regarding the treatment of workers in the overseas factories from which it buys its clothes. They have multiple regulatory requirements to adhere to because the goods are sold in Canada, including needing to comply with CCOHS (Canadian Centre for Occupational Health and Safety) or Environment Canada regulations.

For example, in a dusty factory in Lesotho, Africa, workers can’t escape breathing in the fibres. When they cough, their mucus is full of coloured fibres. In another Gap supplier’s factory in Bangladesh, workers are beaten for simple mistakes and often not paid for the work. In El Salvador, workers complained about abuse and terrible working conditions. One worker said, “I’m very proud to sew pants for Gap, but the board of directors should not be proud of what is happening to us. Gap has abandoned us.”

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Some wages were so low that workers couldn’t buy enough food for themselves and their families. A union organizer said, “We want them to pay a wage that allows a decent standard of living and allow workers to organize unions to improve their conditions in factories.”

Gap is not the only company that relies on such suppliers. Almost any plant in the non-developed countries of the Far East would also have to answer to CCOHS or Environment Canada. Because of strong competition and price-conscious consumers, retailers like Gap quickly switch orders from one factory or country to another whenever they can find a lower price. According to protest groups, that intense pressure to keep prices low encourages factory owners and managers to do everything they can to cut their costs, including mistreating workers. And with 4,000 factories in 50 countries supplying clothes for Gap Inc.’s three stores, protest groups see Gap as a big part of the problem.

Intense negative publicity, protest groups calling for worldwide Gap boycotts, and the company losing money is a tough situation for the CEO. Since Gap is a publicly traded company, keeping shareholders happy is a fundamental responsibility. On the one hand, the company needs to be profitable, which seems to mean overseas suppliers keeping their prices low. On the other hand, negative publicity and boycotts may lower sales and reduce profits.

Refer to Narrative 3-3. Which of the following strategies did Gap initially use in response to the negative media publicity? a. proactive b. defensive c. accommodative d. reactive 107. Narrative 3-3

Gap Inc. runs Gap, Banana Republic, and Old Navy clothing stores. Gap Inc. has received intense negative news coverage regarding the treatment of workers in the overseas factories from which it buys its clothes. They have multiple regulatory requirements to adhere to because the goods are sold in Canada, including needing to comply with CCOHS (Canadian Centre for Occupational Health and Safety) or Environment Canada regulations.

For example, in a dusty factory in Lesotho, Africa, workers can’t escape breathing in the fibres. When they cough, their mucus is full of coloured fibres. In another Gap supplier’s factory in Bangladesh, workers are beaten for simple mistakes and often not paid for the work. In El Salvador, workers complained about abuse and terrible working conditions. One worker said, “I’m very proud to sew pants for Gap, but the board of directors should not be proud of what is happening to us. Gap has abandoned us.”

Some wages were so low that workers couldn’t buy enough food for themselves and their families. A union organizer said, “We want them to pay a wage that allows a decent standard of living and allow workers to organize unions to improve their conditions in factories.”

Gap is not the only company that relies on such suppliers. Almost any plant in the non-developed countries of the Far East would also have to answer to CCOHS or Environment Canada. Because of strong competition and price-conscious consumers, retailers like Gap quickly switch orders from one factory or country to another whenever they can find a lower price. According to protest groups, that intense pressure to keep prices low encourages factory owners and managers to do everything they can to cut their costs, including mistreating Powered by Cognero

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workers. And with 4,000 factories in 50 countries supplying clothes for Gap Inc.’s three stores, protest groups see Gap as a big part of the problem.

Intense negative publicity, protest groups calling for worldwide Gap boycotts, and the company losing money is a tough situation for the CEO. Since Gap is a publicly traded company, keeping shareholders happy is a fundamental responsibility. On the one hand, the company needs to be profitable, which seems to mean overseas suppliers keeping their prices low. On the other hand, negative publicity and boycotts may lower sales and reduce profits.

Refer to Narrative 3-3. Today it could be argued that Gap has become the most proactive retailer in the industry. What actions would indicate that this is the case? a. Gap admits responsibility for problems but does the least required to meet society’s expectations. b. Gap does less than society expects. c. Gap accepts responsibility for a problem and does all that society expects to solve that problem. d. Gap anticipates responsibility for a problem before it occurs and does more than society expects to address the problem.

Indicate whether the statement is true or false.

108. Ethics is the set of moral principles or values that defines right and wrong for a person or group. a. True b. False 109. Workplace deviance is unethical behaviour that violates organizational norms about right and wrong. a. True b. False 110. An employee steals company inventory. This employee is engaged in property deviance. a. True b. False 111. Although there is no national ethics legislation aimed directly at the private sector, many associations,

regulatory bodies, and companies have decided to create their own code of ethics. a. True b. False 112. The Government of Canada does not play an active role in supporting ethical and responsible business

practices in the public or private sector. a. True b. False 113. A manufacturing employee slows down his work speed and often arrives late. This employee is engaged in

production deviance. a. True b. False Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 114. The level of agreement on whether behaviour is good or bad is defined as the level of ethical acceptance. a. True b. False 115. Magnitude of consequences is the total harm or benefit derived from an ethical decision. a. True b. False 116. Proximity of effect is the time between an act and the consequences the act produces. a. True b. False 117. Probability of effect is the chance that something will happen and then result in harm to others. a. True b. False 118. Concentration of effect is how much an act affects the average person. a. True b. False 119. Kohlberg’s three phases of moral development in order are law and order, instrumental exchange, and

universal principle. a. True b. False 120. People at the postconventional level of moral development make moral decisions based on selfish reasons. a. True b. False 121. All adults reach the postconventional level of morality. a. True b. False 122. The two types of integrity testing currently used by employers are overt integrity tests and personality-

based integrity tests. a. True b. False 123. In order to ensure that a company’s ethics code will encourage ethical decision making and behaviour,

companies need to accomplish two objectives. The first is to communicate the codes to others both within and outside the company, and the second is to develop practical ethical standards and procedures specific to the company’s line of business. a. True b. False Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 124. The first step in establishing an ethical climate in a company is for managers to act ethically themselves. a. True b. False 125. There is general agreement regarding what is socially responsible corporate behaviour. a. True b. False 126. The shareholder model and the stakeholder model are two techniques for determining to whom

organizations should be socially responsible. a. True b. False 127. The shareholder model holds that management’s most important responsibility is long-term survival (not

just maximizing profits), which is achieved by satisfying the interests of multiple corporate stakeholders (not just shareholders). a. True b. False 128. The stakeholder model holds that the only social responsibility that businesses have is to maximize profits. a. True b. False 129. Stakeholders are people or groups with a legitimate interest in a company’s actions. a. True b. False 130. The categories of social responsibility for a company are economic, legal, ethical, and discretionary. a. True b. False 131. According to the stakeholder model of social responsibility, no stakeholder groups are more or less

important than any other. a. True b. False 132. The media would be an example of a secondary stakeholder group for an organization. a. True b. False 133. All four areas of social responsibility for companies (economic, legal, ethical, and discretionary) share

equal importance in a company’s overall level of social responsibility. a. True b. False Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 134. Companies will always be considered unethical if they do not perform their discretionary responsibilities. a. True b. False 135. “Does it pay to be socially responsible?” With regard to the question, research has clearly demonstrated

that there is an inherent relationship between a company’s social responsibility and economic performance. a. True b. False 136. A company using a reactive strategy to respond to demands for social responsibility will do less than

society expects. a. True b. False 137. It would be safe to say that while it sometimes pays to be socially responsible, at other times socially

responsible behaviour can create significant costs. a. True b. False 138. The principle of long-term self-interest can be said to promote selfishness. a. True b. False 139. Reducing operational costs is compatible with the principle of long-term self-interest. a. True b. False 140. Not violating the law is one of the principles of ethical decision making. a. True b. False 141. The principle of utilitarian benefits, because it prioritizes actions that create greater good for society,

always leads to clear choices. a. True b. False 142. Infringing upon others’ agreed-upon rights is frowned upon by the principle of government requirements. a. True b. False 143. The poor, uneducated, and unemployed are the primary concern for those following the principle of

religious injunctions. a. True b. False Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 144. The principle of distributive justice holds that you should never take any action that infringes on others’

agreed-upon rights. a. True b. False 145. It is possible to make an ethical decision that all stakeholders will be satisfied with. a. True b. False 146. The principle of personal virtue suggests that you should eat healthily and exercise. a. True b. False

147. What is ethical behaviour and workplace deviance? List and briefly describe the different types of

workplace deviance.

148. Why should companies, like Lockheed Martin, establish business conduct compliance programs?

149. Describe why employees find whistleblowing a difficult decision to make.

150. List the three factors that influence ethical decision making. How does training influence these three

factors and, thus, improve ethical decision making?

151. Identify and briefly describe Kohlberg’s three phases of moral development.

152. What are the four steps managers can take to encourage more ethical decision making in their

organizations?

153. What are the three steps managers must follow to create an ethical business climate?

154. Define stakeholders. What are the two types of stakeholder groups? Give one example of each.

155. List and briefly describe the four areas of corporate social responsibility that are most relevant to

stakeholders.

156. Compare and contrast the principles of personal virtue and distributive justice with respect to a proposed

policy not to hire people over the age of 60.

157. Discuss the concept of the triple bottom line and how it relates to the success of an organization.

158. What is social responsiveness? Identify the four strategies that can be used to respond to social

responsibility problems. What is the common dimension on which these strategies differ? Use the relationship between social responsibility and economic performance to explain why a company might choose one strategy over another in a given set of circumstances.

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Chapter 3 - Ethics and Social Responsibility 159. Use two different principles of ethical decision making to justify a company’s decision to sell alcoholic

beverages.

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Chapter 3 - Ethics and Social Responsibility Answer Key 1. d 2. c 3. b 4. b 5. c 6. d 7. a 8. c 9. b 10. d 11. c 12. c 13. b 14. a 15. a 16. d 17. a 18. c 19. d 20. d 21. d 22. a 23. b 24. c 25. b Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 26. c 27. d 28. d 29. b 30. a 31. d 32. a 33. d 34. d 35. b 36. b 37. b 38. c 39. b 40. a 41. c 42. a 43. a 44. b 45. a 46. d 47. a 48. b 49. d 50. c 51. c Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 52. c 53. b 54. a 55. c 56. c 57. a 58. a 59. b 60. b 61. a 62. d 63. b 64. b 65. a 66. c 67. d 68. d 69. d 70. d 71. c 72. c 73. c 74. c 75. c 76. d Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 77. a 78. a 79. a 80. a 81. b 82. b 83. c 84. d 85. b 86. c 87. b 88. a 89. c 90. d 91. d 92. a 93. a 94. c 95. a 96. d 97. a 98. d 99. d 100. b 101. c 102. c Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 103. d 104. c 105. a 106. d 107. d 108. True 109. True 110. True 111. True 112. False 113. True 114. False 115. True 116. False 117. True 118. True 119. False 120. False 121. False 122. True 123. True 124. True 125. False 126. True 127. False Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility 128. False 129. True 130. True 131. False 132. True 133. False 134. False 135. False 136. True 137. True 138. False 139. True 140. True 141. False 142. False 143. False 144. False 145. False 146. False 147. Ethical behaviour refers to behaviour that conforms to a society’s accepted principles of right and wrong.

Workplace deviance is unethical behaviour that violates organizational norms about right and wrong.

Production deviance is unethical behaviour that hurts the quality and quantity of work produced. Property deviance is unethical behaviour aimed at company property or products. Political deviance involves using one’s influence to harm others in the company. Personal aggression or workplace violence and harassment occurs when an individual is abused, threatened, intimidated, or assaulted as a result of their employment.

148. In addition to the annual company-wide ethics training, Lockheed Martin also provides additional business

conduct compliance training to educate employees about the standards of conduct that relate specifically to particular jobs, and supplementary training for employees who might face increased ethical risks based on geographic location.

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Chapter 3 - Ethics and Social Responsibility 149. Many people feel that any violations they report will not result in any meaningful action. They are also in

fear of repercussions against themselves. Despite these inhibitions, whistleblowing is on the rise.

150. The three factors that influence ethical decision making are the ethical intensity of the decision, the moral

development of the manager, and the ethical principles used to solve the problems. Since ethical intensity refers to the degree of concern that people have about an ethical issue, it should be relatively easy for training to improve ethical decision making based upon this dimension. Similarly, training can be used to clarify specific ethical principles and how they might be used in decision making. Students might argue that moral development—an individual difference characteristic of an employee—would be much harder to influence through training. This position has merit, although the evidence does show that one’s level of moral maturity can change, depending on individual and situational factors. Specifically, we know that as people age, become more educated, or deal with dilemmas high in ethical intensity, they are more likely to make ethical decisions using a higher level of moral maturity. Thus, training is indeed likely to have a significant impact on this dimension. Beyond an issue’s ethical intensity and a manager’s level of moral maturity, the particular ethical principles that managers use will also affect how they solve ethical dilemmas. A number of different ethical principles can be used to make business decisions: long-term self-interest, personal virtue, religious injunctions, government requirements, utilitarian benefits, individual rights, and distributive justice. Training can help employees better understand each principle, all of which encourage managers and employees to take others’ interests into account when making ethical decisions.

151. Kohlberg identified three phases of moral development, which influence ethical decisions that people

make. At the first level, called the preconventional level of moral development, people decide based on selfish reasons. At the second level, the conventional level, people make decisions that conform to societal expectations. Finally, people at the postconventional level of moral maturity always use internalized ethical principles to solve ethical dilemmas.

152. Managers can encourage more ethical decision making in their organizations by (1) carefully selecting and

hiring new employees, (2) establishing a specific code of ethics, (3) training employees to make ethical decisions, and (4) creating an ethical climate.

153. The three steps in creating an ethical business climate are (1) setting good personal examples, (2) involving

management in the company ethics program, and (3) establishing a reporting system that encourages whistleblowers to report potential ethics violations.

154. Stakeholders are persons or groups with a “stake” or legitimate interest in a company’s actions. There are

two types of stakeholder groups: primary and secondary. A primary stakeholder group is any group on which an organization relies for its long-term survival. Examples include investors, customers, communities, employees, suppliers, and governments. A secondary stakeholder is any group that can influence or be influenced by the company and can affect public perceptions about its socially responsible behaviour. Examples include the media and special interest groups.

155. Companies can best benefit their stakeholders by fulfilling their economic, legal, ethical, and discretionary

responsibilities. Being profitable, or meeting one’s economic responsibility, is a business’s most basic social responsibility. Legal responsibility consists of following a society’s laws and regulations. Ethical responsibility means not violating accepted principles of right and wrong when doing business. Because different stakeholders may disagree about what is or is not ethical, meeting ethical responsibilities is more difficult than meeting economic or legal responsibilities. Discretionary responsibilities are social responsibilities beyond basic economic, legal, and ethical responsibilities. Companies are not considered unethical if they do not perform Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility

these.

156. The principle of personal virtue holds that you should never do anything that is not honest, open, and

truthful and that you would not be glad to see reported in the newspapers, on TV, or on the Internet. It is a personal principle. The principle of distributive justice suggests that you should never take any action that harms the least fortunate among us in some way. This principle takes a societal lens. People have no control over their age, so this policy may not be acceptable under a policy of distributive justice. Conversely, if a firm has an honest reason not to want to hire persons who are over 60, that may be justifiable under the principle of personal virtue. It is unclear what the best course of action may be.

[Note: Student answers may vary; look for congruence with the principle definitions.]

157. The triple bottom line (TBL) is a sustainability framework that assesses an organization’s social,

environmental, and economic impact. In terms of the three Ps, the TBL refers to people, planet, and profit.

Instead of focusing just on the traditional bottom line profit, it is suggested that companies should be preparing three distinct bottom lines to evaluate how an organization is doing in terms of the three Ps: people, planet, and profit. “People” relates to the positive and negative impact an organization has on its most important stakeholders, those individuals that are part of a company’s “people account.” The company’s “planet account” is a measure of the positive and negative impacts an organization has on its natural environment; for example, actions to reduce its carbon footprint and the adoption of environmentally sustainable business practices. The traditional bottom line measure of financial performance is profit. However, the financial profit a company generates should not be considered the only focus; rather, it should be considered to be only one part of a business plan. An organization should also take into account the positive and negative impact it has on the local, national, and international economy; for example, creating employment, generating innovation, paying taxes, wealth creation, or any other economic impact an organization has. The concept of TBL points to the fact that the success of an organization should not be measured solely by economic performance; in this way, it supports the stakeholder model of social responsibility. By measuring factors like the social and environmental performance of a company, the TBL encourages managers to pay attention to these issues and consider the full cost of doing business.

158. Social responsiveness is the strategy chosen by a company to respond to stakeholders’ economic, legal,

ethical, or discretionary expectations concerning social responsibility. A social responsibility problem exists whenever company actions do not meet stakeholder expectations. One model of social responsiveness identifies four strategies for responding to social responsibility problems: reactive, defensive, accommodative, and proactive. These strategies differ on one common dimension: the extent to which the company is willing to act to meet or exceed society’s expectations. A company using a reactive strategy will do less than society expects and may deny responsibility for a problem. By contrast, a company using a defensive strategy would admit responsibility for a problem, but would do the least required to meet societal expectations. A company using an accommodative strategy would accept responsibility for a problem and take a progressive approach by doing all that was expected to solve the problem. Finally, a company using a proactive strategy would anticipate responsibility for a problem before it occurred, do more than expected to address the problem, and lead the industry in its approach.

A company might choose one strategy over another for financial and/or ethical reasons. There is not an inherent relationship between social responsibility and economic performance. Sometimes it pays to be socially responsible, and sometimes it can cost the company significantly to do so. Further, while socially responsible behaviour may be seen as the “right thing to do,” it does not guarantee profitability. Therefore, if company management chooses a proactive or accommodative strategy toward social responsibility (as opposed to a Powered by Cognero

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Chapter 3 - Ethics and Social Responsibility

defensive or reactive strategy), it should do so because it wants to benefit society and its corporate stakeholders, not because it expects a better financial return.

159. Student answers will vary, but the three most common principles students are likely to use are as follows:

1) The principle of long-term self-interest (assuming the externalities imposed by alcoholic beverages are not borne by the firm or taken into account in this equation); 2) The principle of government requirements (in most jurisdictions) says firms can sell alcoholic beverages under certain conditions; and 3) The principle of individual rights suggests firms shouldn’t abrogate individuals’ rights to consume alcoholic beverages.

[It may be possible to argue this using other ethical principles, and should be graded accordingly.]

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Chapter 4 - Planning and Decision Making

Indicate the answer choice that best completes the statement or answers the question.

1. In November 2022, Mazda raised its sales target for electric vehicles to 40 percent of its global total by

2030. Which classical management function would be instrumental in achieving this goal? a. motivating b. research and development c. planning d. marketing 2. After implementing a plan and giving his sales staff specific sales targets to achieve each month, Muhammad

has found they waste far less time and their activities are all geared toward servicing customers, finding new clients, and closing the sale. Which benefit of planning is Muhammad seeing in his sales staff? a. intensifies effort b. reduces uncertainty c. provides direction d. facilitates decision making 3. Eleanor gave her production team a specific objective of increasing production by 3 percent over the previous month and keeping rejects below the standard of 0.05 percent. Eleanor noticed the team having far more drive and energy, and overall more alertness and commitment to their tasks. Which benefit of planning is Eleanor

seeing in her production team? a. intensifies effort b. reduces uncertainty c. provides direction d. facilitates decision making 4. According to the textbook, which of the following is a benefit of planning? a. It encourages people to work harder for extended periods. b. It encourages people to do others’ jobs in a variety of different ways. c. It reduces employee turnover. d. It creates a mechanistic environment.

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

6. Lacy learned about planning in her management course. That night, Lacy set specific goals to achieve in doing her homework. Lacy’s mom happily noticed Lacy complete an extra two hours of homework. Which

benefit of planning did Lacy’s mom witness? a. intensifies effort b. reduces uncertainty Powered by Cognero

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Chapter 4 - Planning and Decision Making c. provides direction d. facilitates decision making 7. A manufacturing manager is eliminating distractions from the factory so that workers can remain focused on completing their tasks. Which benefit of planning will result from the manager’s actions? a. intensifies effort b. reduces uncertainty c. provides direction d. facilitates decision making 8. Nancy was surprised her department’s sales figures did not meet the goals she set in her plan. On further inspection, she realized the expectation that competition would not reduce their prices did not hold true. Which

pitfall in planning is this an example of? a. false sense of certainty b. detachment of planners c. impeding change d. accelerating change 9. According to the text, which of the following is a pitfall of planning? a. the acceptance of sacrificing solutions b. the detachment of planners c. the inability of line personnel to accept the long-term benefits of planning d. a need for expensive employee training before plans can be effectively implemented 10. Mandy continues to put chocolates and toffees in her gift baskets since customers have always raved about them. Sales continue to decline with people being more health conscious, but Mandy feels they will still purchase her baskets for her delicious treats. Which pitfall of planning is this an example of? a. Planning may produce a false sense of security. b. Planning may impede change and adaptation. c. Planners may be detached from the company and its environment. d. Planning can create laziness in workers.

11. Ken’s financial planning business produced far more sales when he changed his activities from selling “as

many RRSPs as possible each month” to selling “$100,000 in RRSPs per month.” Which S.M.A.R.T goal guideline is Ken following? a. Goals should be specific. b. Goals should be realistic. c. Goals should be attainable. d. Goals should be timely.

12. Thomas knows that the value of the Canadian dollar against the US dollar can greatly affect his hotel’s

bookings. Thomas and his team have created several alternative plans and they are ready to make adjustments depending on what value the dollar will settle at. Which step in planning is this an example of?

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Chapter 4 - Planning and Decision Making a. maintain flexibility b. develop effective action plans c. develop goal commitment d. track progress toward goal achievement 13. Monica purchased a scale to make sure she reduced the weight of her racing bike by exactly seven grams.

Which S.M.A.R.T goal guideline is Monica following? a. Goals should be specific. b. Goals should be measurable. c. Goals should be attainable. d. Goals should be realistic.

14. Patrick started a lawn service company and found that in his neighbourhood, the young families took pleasure from doing their own lawn care. When he began promoting his services to more mature

neighbourhoods where older home owners wanted someone else to care for their lawns, Patrick was able to hit his sales targets. Which S.M.A.R.T goal guideline did Patrick follow? a. Goals should be specific. b. Goals should be measurable. c. Goals should be attainable. d. Goals should be realistic.

15. An increase in sales over the previous year seems likely since the economy is better this year than last year.

Which aspect of S.M.A.R.T. goals would an increase in sales represent? a. synergistic b. measurable c. attainable d. realistic 16. Which of the following lists the steps (how), people (who), resources (what), and time period (when) for

accomplishing a goal? a. mission statement b. company prospectus c. strategic plan d. action plan 17. Which of the following is the most popular method for increasing goal commitment? a. encouraging worker participation in goal setting b. keeping goals private c. setting ethical goals d. using an ombudsperson to set goals 18. Which of the following is a commonly used method for increasing goal commitment?

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Chapter 4 - Planning and Decision Making a. rewarding whistleblowing b. making the goal public c. getting union support d. using the equity theory 19. Which of the following defines the preliminary levels of performance that need to be achieved to attain the

long-term goal or ultimate level of performance? a. an action plan b. strategy c. medium-term goal d. a short-term goal 20. Which of the following is a favoured approach for tracking progress toward goal achievement? a. setting response and stimulus goals b. gathering and providing performance feedback c. using operant and classical conditioning d. providing mechanistic and dynamic feedback 21. A manager had a goal to reduce the expenses incurred by the sales force. He examined the weekly expense sheets prepared by the individual salespeople and met with those who needed to further reduce their expenses.

Which accepted method for tracking progress toward goal achievement was he using? a. setting realistic and attainable goals b. gathering and providing performance feedback c. developing concrete action plans d. making sure goals are measurable 22. A manufacturer of suntan lotion sets a goal to achieve a 3 percent increase in sales over the next three months. In relation to the time frame set to achieve it, what type of goal is this? a. a strategic goal b. an operational goal c. a long-term goal d. a short-term goal 23. Which of the following can help organizations maintain flexibility as they plan? a. strategic planning b. options-based planning c. assumptions-based planning d. change agent planning 24. Which type of planning keeps choices open by making small, simultaneous investments in many alternative

plans? a. learning-based Powered by Cognero

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Chapter 4 - Planning and Decision Making b. options-based c. conditioned d. functional 25. Which type of planning leaves commitments open by maintaining slack resources? a. options-based planning b. learning-based planning c. traditional planning d. operant planning 26. What must an organization have for options-based planning to work? a. slack resources b. use of cross-functional teams c. broad spans of management d. tall organizational structures 27. What levels of an organization must have goals and action plans that support the goals and action plans at

the top of the organization for planning to work best? a. bottom and staff levels b. top and middle levels c. bottom and middle levels d. group levels 28. Top management is responsible for developing plans that make clear how the company will serve customers and position itself against competitors in the next two to five years. Which term is usually associated with these

types of long-term plans? a. standing plans b. tactical plans c. operational plans d. strategic plans 29. Who is responsible for developing strategic plans that make clear how the company will serve customers

and position itself against competitors in the next two to five years? a. an action team b. middle management c. planning staff d. top management 30. What expresses the purpose and destination that a company hopes to reach? a. vision statement b. action plan c. strategy Powered by Cognero

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Chapter 4 - Planning and Decision Making d. mission statement 31. Anthony writes and frames a statement to give clear direction to his staff for what he wants his company to achieve. The statement says, “To provide the highest level of student career direction in Canada.” What kind of

statement did Anthony write? a. a strategic statement b. a mission statement c. a vision statement d. a value statement 32. What is developed from answering key questions such as what do we do, whom do we serve, and how do we

serve them? a. tactical plans b. a purpose c. a vision d. a mission 33. Disney is not in the movie and theme park business; it wants to create fun and fantasy for its customers.

Which of the following is described by this statement? a. transformational mission b. vision c. strategic mission d. target 34. Richard writes a statement that he plans to frame and hang on the wall to motivate his staff. The statement

says, “To rekindle optimism and ethical behaviour in our youth, one student at a time.” What kind of statement did Richard write? a. strategic statement b. mission statement c. vision statement d. value statement 35. Which statement provides a broad declaration of an organization’s purpose that distinguishes it from the

others of a similar type? a. strategic statement b. mission statement c. vision statement d. value statement 36. A statement found at a certified organic food marketer’s website reads, “At Seeds of Change, we’re

committed to making delicious foods that are healthy for you as well as the planet.” This statement will not change over time. What type of statement is it? a. vision Powered by Cognero

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Chapter 4 - Planning and Decision Making b. mission c. statement of value d. discretionary responsibility 37. Which of the following within a company provides a view to the future? a. the mission b. the vision c. the strategy d. the action plan 38. Most people who have watched the television show Star Trek are familiar with this statement: “To explore

strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before.”

What is this statement an example of? a. a plan of action b. a tactical plan c. a mission d. a strategy 39. An Australian manufacturer of skis and snowboards wants to increase awareness of its brand in the Canadian market. A plan to accomplish this objective might be to host a series of skiing and snowboarding competitions in the Canadian Rockies to raise brand awareness. What type of plan is this? a. contingency b. single-use c. visionary d. tactical 40. A department store is experiencing greater than usual shrinkage, and management wants it stopped. Middle

management decided to hire a security company to study the problem and develop the best plan for dealing with it. What type of plan has middle management adopted? a. contingency b. strategic c. operational d. tactical 41. What type of plan specifies how a company will use resources, budgets, and people to accomplish specific

goals within its mission? a. strategic b. tactical c. operational d. single-use 42. Who is responsible for creating tactical plans?

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Chapter 4 - Planning and Decision Making a. team leaders b. lower-level managers c. middle managers d. top managers 43. What type of plan would be used to create the festivities to celebrate the 100-year anniversary of a

manufacturer? a. single-use plan b. contingency plan c. scenario plan d. standing plan 44. Who is primarily responsible for developing operational plans? a. lower-level managers b. middle managers c. top managers d. staff advisers 45. Which type of plan directs the behaviour, efforts, and priorities of employees for periods ranging from one

month to six months? a. strategic b. tactical c. operational d. standing 46. What type of plans are single-use plans, standing plans, and budgets? a. strategic b. tactical c. operational d. MBO 47. Which of the following is a type of operational plan? a. single-use plans b. contingency plans c. short-term strategies d. mission modifications 48. Which type of operational plan saves managers time because it is created once and then used repeatedly to

handle frequently recurring events? a. standing plan b. budget plan c. multiple-use plan Powered by Cognero

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Chapter 4 - Planning and Decision Making d. options-based plan 49. In case of a fire, most organizations have a series of actions that must take place, beginning with notifying the fire department and including evacuating buildings. What kind of standing plan is this? a. rules and regulations b. procedures c. policies d. organizational norms 50. Which of the following are types of standing plans? a. policies and procedures b. targeted plans c. long-term tactical strategies d. transformational plans 51. Which type of standing plan indicates the specific steps that should be taken in response to a particular

event? a. policies b. procedures c. actionable plans d. single-use plans 52. What standing plan indicates the general course of action that should be taken in response to a particular

event or situation? a. policy b. procedure c. rule d. regulation 53. Which of the following are the most specific type of standing plan? a. policies b. procedures c. rules and regulations d. forecasts 54. What type of planning is a budget? a. strategic b. tactical c. operational d. actionable 55. New employees are instructed to never wear loose-fitting clothes when working around the canning Powered by Cognero

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machine. What kind of standing plan is this? a. rules and regulations b. procedures c. policies d. organizational norms 56. What is the term for the process of choosing a solution from available alternatives? a. decision making b. problem identification c. multivariable selection d. problem solving 57. What is the term for quantitative planning that forces managers to decide how to allocate available money to

best accomplish company goals? a. resource planning b. budgeting c. benchmarking d. multivariable selection 58. Which of the following is a systematic process in which managers define problems, evaluate alternatives,

and choose optimal solutions that provide maximum benefits to their organizations? a. intuitive conditioning b. benchmarking c. rational decision making d. organizational design 59. The European Union encourages companies to abandon national boundaries and offer the same products to all of the member countries. Allianz, Germany’s largest insurance group, is considering converting from a German company to a European company. If it makes this decision rationally, what will it do first? a. It will create decision criteria based on national GNPs. b. It will identify problems arising from tax and regulatory issues. c. It will decide whether to expand to one nation at a time. d. It will create a committee to make the final decision.

60. Neither Chile nor Peru has a mass-market café culture, but that fact has not stopped Starbucks from trying to determine what can be done to make its coffee houses successful in those markets. By recognizing that people

in these two South American countries do not drink coffee in the quantity that people do in North America, Starbucks has begun a process involving problem identification. What type of process is this? a. rational decision making b. trend analysis c. sacrificing d. selection of optimal solutions Powered by Cognero

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Chapter 4 - Planning and Decision Making 61. What is said to exist when there is a gap between a desired state—what managers want—and an existing

state—the situation that the managers are facing? a. a service gap b. a benchmark c. a condition of uncertainty d. a problem 62. Which of the following is one of the eight steps in the rational decision-making process? a. choose a minimally acceptable alternative solution b. evaluate the effectiveness of each alternative solution c. weight the criteria d. introduce the decision to those who will be affected by it 63. In 2013, Lululemon battled as many as 50 websites selling counterfeit yoga apparel. Which of the following

do the unauthorized websites best exemplify? a. a standard of malfeasance b. a problem c. a benchmark d. a keystone issue 64. In which process is each decision criterion compared directly to every other criterion? a. absolute comparisons b. relative comparisons c. minimum comparative threshold d. comparative ranking scales 65. In 2013, Lululemon became aware of numerous Chinese websites selling counterfeit goods. They decided

they had to either take legal action, ignore the sites, or reach a distribution agreement with the sites. In which stage of the rational decision-making process would this decision have been made? a. problem definition b. criteria weighting c. generation of alternative courses of action d. identification of decision criteria 66. As a company that manufactures janitorial cleaning supplies tries to develop more environmentally friendly

products that can clean as well as its current ones, the company’s manager must select among alternatives derived from oranges, parsley, lemon, or a combination of these ingredients. Which step in the rational decision-making model is this? a. generate alternative courses of action b. evaluate each alternative c. compute the optimal decision d. implement the optimal alternative Powered by Cognero

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Chapter 4 - Planning and Decision Making 67. When Lululemon discovered it had as many as 50 Chinese websites selling counterfeit knockoffs, it used the rational decision-making process to find a solution. The managers at Lululemon evaluated the possible courses of action. According to the text, what would Lululemon have likely found about this stage of the decision-

making process? a. that this stage was the least expensive of all the stages b. that this stage was the most time consuming of all the stages c. that this stage was the last stage in the process for Lululemon d. that this stage required Lululemon to use complex mathematical models 68. Joyce wishes to reduce flaws produced by her night shift. At each stage of production she has her production supervisor measure 20 samples to ensure they are each within 0.005 mm of the required size. What type of

comparison is Joyce having her supervisor conduct? a. relative b. specific c. absolute d. attainable 69. Which step in the decision-making process is often more time consuming and more expensive than the other

steps? a. evaluating each alternative b. computing the optimal decision c. weighting the criteria d. generating alternative courses of action 70. What are managers doing when they choose an alternative that is “good enough”? a. optimizing b. satisficing c. conforming d. sacrificing 71. Where does groupthink often occur? a. in newly formed groups whose members were arbitrarily selected and who are assigned to make

programmed decisions b. in groups in which members have dissimilar backgrounds c. in standing committees whose members are under no pressure to agree d. in highly cohesive groups where there is much pressure for members to agree 72. Which step(s) in the decision-making process can be done better by groups than by individuals? a. defining the problem and generating alternatives b. creating cohesive solutions to organizational problems as a whole c. creating weighted alternatives and coping with bounded rationality d. dealing with the problems associated with bounded rationality Powered by Cognero

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Chapter 4 - Planning and Decision Making 73. What term is usually associated with the emotional reaction that can occur when disagreements become

personal rather than professional? a. a-type conflict b. c-type conflict c. emotive empowerment d. organizational disharmony 74. In which approach to decision making is an individual or a subgroup assigned the role of a critic? a. dialectical inquiry b. groupthink c. devil’s advocacy d. Delphi technique 75. Which of the following describes the devil’s advocacy approach? a. The approach leads to less a-type conflict. b. The approach leads to improved decision mentoring. c. The approach leads to greater acceptance of decisions once they have been made. d. The approach introduces c-type conflict into the decision-making process.

76. In which decision-making method do group members spend quiet time thinking about potential problem

definitions and solutions? a. dialectical inquiry technique b. nominal group technique c. Delphi technique d. electronic brainstorming technique 77. How does the nominal group technique improve group decision making? a. The technique requires the selection of co-leaders to prevent member dominance. b. The technique provides predetermined group norms. c. The technique eliminates group cohesiveness. d. The technique decreases a-type conflict.

78. Which statement presents a rule for effective brainstorming? a. Limit ideas to conserve time. b. The more ideas, the better. c. Give certain people in the group the most freedom to generate ideas. d. Allow criticism.

79. Which of the following eliminates challenges associated with bringing team members together physically in

one space for brainstorming? a. devil's advocacy b. electronic brainstorming Powered by Cognero

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Chapter 4 - Planning and Decision Making c. norming d. nominal group technique 80. Narrative 4-1

Whole Foods is an American-based natural and organic foods retailer that has grown from one store to 424 in the United States since 1980, with an additional 12 in Canada and nine in the United Kingdom. In 2015, CEO John Mackey announced the chain would grow to 40 Canadian locations, and was then looking for a Montreal location. Later, the company committed to a timeline for an Edmonton store to open in fall 2016 and a Calgary store to open in summer 2017. However, in January 2017, the retailer announced it was not proceeding with its Alberta openings.

Refer to Narrative 4-1. How does Whole Foods benefit from planning? a. Planning makes persistence unnecessary. b. Planning allows managers to direct their employees to “do their best.” c. Planning gives direction to managers and employees. d. Planning eliminates the need for task strategies.

81. Narrative 4-1

Whole Foods is an American-based natural and organic foods retailer that has grown from one store to 424 in the United States since 1980, with an additional 12 in Canada and nine in the United Kingdom. In 2015, CEO John Mackey announced the chain would grow to 40 Canadian locations, and was then looking for a Montreal location. Later, the company committed to a timeline for an Edmonton store to open in fall 2016 and a Calgary store to open in summer 2017. However, in January 2017, the retailer announced it was not proceeding with its Alberta openings.

Refer to Narrative 4-1. Whole Foods had a goal to open a store in south Edmonton by fall 2016. Why was this an example of a S.M.A.R.T. goal? a. It’s specific, marketable, achievable, response driven, and temporal. b. It’s specific, measurable, attainable, realistic, and timely. c. It’s service-oriented, manageable, achievable, realistic, and time-oriented. d. It’s standardized, measurable, actionable, response driven, and temporal.

82. Narrative 4-1

Whole Foods is an American-based natural and organic foods retailer that has grown from one store to 424 in the United States since 1980, with an additional 12 in Canada and nine in the United Kingdom. In 2015, CEO John Mackey announced the chain would grow to 40 Canadian locations, and was then looking for a Montreal location. Later, the company committed to a timeline for an Edmonton store to open in fall 2016 and a Calgary store to open in summer 2017. However, in January 2017, the retailer announced it was not proceeding with its Alberta openings.

Refer to Narrative 4-1. Whole Foods has a goal to grow to 40 stores in Canada. What type of goal is this? a. long-term b. temporal c. adjacent d. short-term Powered by Cognero

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Chapter 4 - Planning and Decision Making 83. Narrative 4-1

Whole Foods is an American-based natural and organic foods retailer that has grown from one store to 424 in the United States since 1980, with an additional 12 in Canada and nine in the United Kingdom. In 2015, CEO John Mackey announced the chain would grow to 40 Canadian locations, and was then looking for a Montreal location. Later, the company committed to a timeline for an Edmonton store to open in fall 2016 and a Calgary store to open in summer 2017. However, in January 2017, the retailer announced it was not proceeding with its Alberta openings.

Refer to Narrative 4-1. What would Whole Foods have used to seek out locations in Montreal? a. decision criteria b. absolute comparisons c. maximizing d. judgments and decisions 84. Narrative 4-1

Whole Foods is an American-based natural and organic foods retailer that has grown from one store to 424 in the United States since 1980, with an additional 12 in Canada and nine in the United Kingdom. In 2015, CEO John Mackey announced the chain would grow to 40 Canadian locations, and was then looking for a Montreal location. Later, the company committed to a timeline for an Edmonton store to open in fall 2016 and a Calgary store to open in summer 2017. However, in January 2017, the retailer announced it was not proceeding with its Alberta openings.

Refer to Narrative 4-1. Which of the following would the Canadian expansion plans for Whole Foods have been? a. a strategic plan implemented by middle management b. a tactical plan implemented by first-line managers c. a tactical plan implemented by middle management d. an operational plan implemented by lower-level managers 85. Narrative 4-2

WestJet was widely known in its earliest incarnations for flying only one model of plane—the Boeing 737, in several variations. However, the 737 imposed several limitations on WestJet’s operating model, because it has a relatively limited range and has too much capacity for some midsize markets such as Penticton, BC and Brandon, MB. During winter seasons from about 2010 to 2014, WestJet “wet leased” Boeing 757 aircraft with extended range to serve some of its popular holiday destinations in Hawaii and elsewhere. In 2013, WestJet announced that it would begin operating Bombardier Q400 turboprops through its wholly owned subsidiary WestJet Encore, so that they could reach destinations that were not previously accessible or cost-effective to serve with their Boeing 737s.

Most recently, in October 2015, WestJet took delivery of four “widebody” Boeing 767s formerly used by Australia’s national airline, QANTAS, and used those to significantly expand its trans-Atlantic service. They have publicly stated that if the Boeing 767 service offerings are successful, the aircraft will be replaced by newer models such as the Boeing 787 Dreamliner. In December 2016, they announced a new contract with their pilots’ association that grants pilots additional pay for flying widebody aircraft such as the Boeing 767 or 787.

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Refer to Narrative 4-2. What should WestJet have done in the first stage of the planning process to launch WestJet Encore? a. It should have developed an effective action plan that would satisfy all of its customers. b. It should have determined its problem was an inability to cost-effectively serve midsize markets. c. It should have developed several alternative methods for serving midsize markets. d. It should have established a budget.

86. Narrative 4-2

WestJet was widely known in its earliest incarnations for flying only one model of plane—the Boeing 737, in several variations. However, the 737 imposed several limitations on WestJet’s operating model, because it has a relatively limited range and has too much capacity for some midsize markets such as Penticton, BC and Brandon, MB. During winter seasons from about 2010 to 2014, WestJet “wet leased” Boeing 757 aircraft with extended range to serve some of its popular holiday destinations in Hawaii and elsewhere. In 2013, WestJet announced that it would begin operating Bombardier Q400 turboprops through its wholly owned subsidiary WestJet Encore, so that they could reach destinations that were not previously accessible or cost-effective to serve with their Boeing 737s.

Most recently, in October 2015, WestJet took delivery of four “widebody” Boeing 767s formerly used by Australia’s national airline, QANTAS, and used those to significantly expand its trans-Atlantic service. They have publicly stated that if the Boeing 767 service offerings are successful, the aircraft will be replaced by newer models such as the Boeing 787 Dreamliner. In December 2016, they announced a new contract with their pilots’ association that grants pilots additional pay for flying widebody aircraft such as the Boeing 767 or 787.

Refer to Narrative 4-2. If WestJet sets a target to evaluate its trans-Atlantic service fleet in 2030, which type of goal will it have adopted? a. generational b. learning-based c. short-term d. long-term 87. Narrative 4-2

WestJet was widely known in its earliest incarnations for flying only one model of plane—the Boeing 737, in several variations. However, the 737 imposed several limitations on WestJet’s operating model, because it has a relatively limited range and has too much capacity for some midsize markets such as Penticton, BC and Brandon, MB. During winter seasons from about 2010 to 2014, WestJet “wet leased” Boeing 757 aircraft with extended range to serve some of its popular holiday destinations in Hawaii and elsewhere. In 2013, WestJet announced that it would begin operating Bombardier Q400 turboprops through its wholly owned subsidiary WestJet Encore, so that they could reach destinations that were not previously accessible or cost-effective to serve with their Boeing 737s.

Most recently, in October 2015, WestJet took delivery of four “widebody” Boeing 767s formerly used by Australia’s national airline, QANTAS, and used those to significantly expand its trans-Atlantic service. They Powered by Cognero

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have publicly stated that if the Boeing 767 service offerings are successful, the aircraft will be replaced by newer models such as the Boeing 787 Dreamliner. In December 2016, they announced a new contract with their pilots’ association that grants pilots additional pay for flying widebody aircraft such as the Boeing 767 or 787.

Refer to Narrative 4-2. What type of planning allowed WestJet to shift its long-range services from “wet leased” 757s to wholly owned 767s? a. resource-based b. learning-based c. options-based d. generational 88. Narrative 4-2

WestJet was widely known in its earliest incarnations for flying only one model of plane—the Boeing 737, in several variations. However, the 737 imposed several limitations on WestJet’s operating model, because it has a relatively limited range and has too much capacity for some midsize markets such as Penticton, BC and Brandon, MB. During winter seasons from about 2010 to 2014, WestJet “wet leased” Boeing 757 aircraft with extended range to serve some of its popular holiday destinations in Hawaii and elsewhere. In 2013, WestJet announced that it would begin operating Bombardier Q400 turboprops through its wholly owned subsidiary WestJet Encore, so that they could reach destinations that were not previously accessible or cost-effective to serve with their Boeing 737s.

Most recently, in October 2015, WestJet took delivery of four “widebody” Boeing 767s formerly used by Australia’s national airline, QANTAS, and used those to significantly expand its trans-Atlantic service. They have publicly stated that if the Boeing 767 service offerings are successful, the aircraft will be replaced by newer models such as the Boeing 787 Dreamliner. In December 2016, they announced a new contract with their pilots’ association that grants pilots additional pay for flying widebody aircraft such as the Boeing 767 or 787.

Refer to Narrative 4-2. Which statement sums up the primary problem at WestJet? a. Its customers are not brand loyal. b. Its advertising campaigns are ineffective. c. Its aircraft fleet represented a constraint. d. Its expansion plans were too ambitious.

89. Narrative 4-2

WestJet was widely known in its earliest incarnations for flying only one model of plane—the Boeing 737, in several variations. However, the 737 imposed several limitations on WestJet’s operating model, because it has a relatively limited range and has too much capacity for some midsize markets such as Penticton, BC and Brandon, MB. During winter seasons from about 2010 to 2014, WestJet “wet leased” Boeing 757 aircraft with extended range to serve some of its popular holiday destinations in Hawaii and elsewhere. In 2013, WestJet announced that it would begin operating Bombardier Q400 turboprops through its wholly owned subsidiary WestJet Encore, so that they could reach destinations that were not previously accessible or cost-effective to serve with their Boeing 737s.

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Most recently, in October 2015, WestJet took delivery of four “widebody” Boeing 767s formerly used by Australia’s national airline, QANTAS, and used those to significantly expand its trans-Atlantic service. They have publicly stated that if the Boeing 767 service offerings are successful, the aircraft will be replaced by newer models such as the Boeing 787 Dreamliner. In December 2016, they announced a new contract with their pilots’ association that grants pilots additional pay for flying widebody aircraft such as the Boeing 767 or 787.

Refer to Narrative 4-2. What decision criterion did WestJet use to develop alternative courses of action to solve its problem? a. minimize risk b. minimize environmental uncertainty c. create environmental complexity d. ignore resource scarcity Indicate whether the statement is true or false.

90. Creating and executing a plan is one of the most important tasks a manager has. a. True b. False 91. On average, companies with plans have larger profits and grow much faster than companies that don’t. a. True b. False 92. Planning can impede change, create a false sense of certainty, and lead to the detachment of planners. a. True b. False 93. Planning is one of the best ways to improve organizational and individual performance. a. True b. False 94. Planning is a three-step process consisting of first, setting goals; next, developing effective action plans; and

finally, tracking progress toward goal achievement. a. True b. False 95. S.M.A.R.T. goals are specific, meaningful, active, reachable, and timely. a. True b. False 96. Encouraging worker participation in goal setting, making goals public, and getting top management’s

support are all recommended ways to increase goal commitment. a. True b. False Powered by Cognero

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Chapter 4 - Planning and Decision Making 97. Long-term goals seem very far off in the future and, as such, are not as motivating or rewarding. a. True b. False 98. For planning to be effective, workers need a specific, challenging goal as well as regular feedback to track

their progress. a. True b. False 99. An approach to maintaining flexibility in organizations while they plan is change-based planning. a. True b. False 100. Planning works best when the goals and action plans at the bottom and middle of the organization support

the goals and action plans at the top of the organization. a. True b. False 101. Developing a vision and mission statement is the sole responsibility of middle management. a. True b. False 102. A mission statement is a broad statement of an organization’s purpose and why it exists. a. True b. False 103. A vision statement is focused more on what the organization wants to become and the destination it hopes

to reach. a. True b. False 104. Tactical plans specify how a company will use resources, budgets, and people to accomplish specific goals

within its mission. a. True b. False 105. Tactical plans and objectives are used to direct behaviour, efforts, and attention over the next six months to

two years. a. True b. False 106. The three kinds of operational plans are single-use plans, standing plans, and budgets. a. True b. False Powered by Cognero

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Chapter 4 - Planning and Decision Making 107. Standing plans deal with unique, one-time-only events. a. True b. False 108. The three kinds of standing plans are policies, procedures, and rules and regulations. a. True b. False 109. Budgeting is a form of operational planning. a. True b. False 110. All decision making is rational. a. True b. False 111. The term decision making is used to refer to the process of choosing a solution from available alternatives. a. True b. False 112. The process of rational decision making emphasizes the use of systematic procedures to arrive at optimal

solutions; the process of decision making does not. a. True b. False 113. The eight steps in the rational decision-making process are as follows:

1) Frame the problem.

2) Identify decision criteria.

3) Weight the criteria.

4) Generate alternative courses of action.

5) Evaluate each alternative.

6) Compute the optimal decision.

7) Implement the decision.

8) Evaluate the effectiveness of the decision. a. True b. False 114. Both absolute comparisons and relative comparisons are methods for identifying decision criteria. a. True b. False 115. Management’s goal of rational decision making is to choose optimal solutions that provide maximum

benefit to their organizations. a. True b. False Powered by Cognero

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Chapter 4 - Planning and Decision Making 116. Different managers will rank criteria differently. a. True b. False 117. Groupthink is more likely to occur in a highly cohesive group that is insulated from others and has no

established procedure for systematically defining problems and exploring alternatives. a. True b. False 118. The optimal decision is computed by adding together each alternative’s criterion weighting. a. True b. False 119. Efficiency is built into the decision implementation process. a. True b. False 120. Fully rational decision-making processes do not require outcome evaluation. a. True b. False 121. In practice, most managers seek optimal solutions for decisions. a. True b. False

122. What is planning? What are its benefits?

123. Briefly describe the benefits and pitfalls of planning.

124. List the steps in effective planning.

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

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

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

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

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

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

131. List the eight steps in the rational decision-making process.

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Chapter 4 - Planning and Decision Making 132. Briefly explain what decision criteria are. Identify two approaches that may be used to weight these criteria.

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

134. You overhear a staff member complain that a decision on which computers to purchase for the branch wasn’t made correctly because the best alternative wasn’t chosen. Use the theory of satisficing to explain to the

staff member how the decision may have been made.

135. Describe a planning effort that you are acquainted with (either through reading or personal experience) and evaluate the manifestation of benefits and pitfalls of planning described in the chapter in the case. In other words, explain how, if at all, the benefits of planning described in the text were apparent in your case. Similarly, identify any of the significant pitfalls of planning that might have been apparent in your case. Comment on the

extent to which your case seems to substantiate or refute the claims made for the benefits and pitfalls of planning, as described in the text.

136. Tanisha Mukherjee is the daughter of a well-known financier. She is currently in her first year of

university, but has decided that she wants to earn an MBA as soon as possible after earning her bachelor’s degree. Outline the five steps in effective planning. Use the guidelines for effective planning to develop an appropriate plan for Tanisha.

137. Discuss the advantages and pitfalls of group decision making, and explain the conditions in which

groupthink is likely to occur.

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

139. Explain the steps of the rational decision-making process and discuss how this process may help to

overcome predispositions and biases that a manager has in a given decision-making situation.

140. Define the two types of conflicts that may spontaneously occur in group decision-making situations. List and explain an approach to structured conflict that may help to enhance the quality of group decisions. Be sure

to comment on the research results evaluating its effectiveness.

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Chapter 4 - Planning and Decision Making Answer Key 1. c 2. c 3. a 4. a 5. b 6. a 7. c 8. a 9. b 10. b 11. a 12. a 13. b 14. d 15. d 16. d 17. a 18. b 19. d 20. b 21. b 22. d 23. b 24. b 25. a Powered by Cognero

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Chapter 4 - Planning and Decision Making 26. a 27. c 28. d 29. d 30. a 31. c 32. d 33. b 34. b 35. b 36. a 37. b 38. c 39. d 40. d 41. b 42. c 43. a 44. a 45. c 46. c 47. a 48. a 49. b 50. a 51. b Powered by Cognero

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Chapter 4 - Planning and Decision Making 52. a 53. c 54. c 55. a 56. a 57. b 58. c 59. b 60. a 61. d 62. c 63. b 64. b 65. c 66. b 67. b 68. c 69. a 70. b 71. d 72. a 73. a 74. c 75. d 76. b Powered by Cognero

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Chapter 4 - Planning and Decision Making 77. d 78. b 79. b 80. c 81. b 82. a 83. a 84. c 85. b 86. d 87. c 88. c 89. a 90. True 91. True 92. True 93. True 94. False 95. False 96. True 97. True 98. True 99. False 100. True 101. False 102. True Powered by Cognero

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Chapter 4 - Planning and Decision Making 103. True 104. True 105. True 106. True 107. False 108. True 109. True 110. False 111. True 112. True 113. False 114. False 115. True 116. True 117. True 118. False 119. False 120. True 121. False 122. Planning is choosing a goal and developing a method to achieve that goal. Planning is one of the best ways to improve organizational and individual performance. It encourages people to work harder (intensified effort),

to work hard for extended periods (persistence), to engage in behaviours directly related to goal accomplishment (directed behaviour), and to think of better ways to do their jobs (task strategies). But most important, companies that plan have larger profits and faster growth than companies that don’t plan.

123. Planning refers to choosing a goal and developing a method or strategy to achieve that goal. Planning has numerous benefits. It is one of the best ways to improve both organizational and individual performance. It

encourages people to work harder (intensified effort), to work hard for extended periods (persistence), to engage in behaviours directly related to goal accomplishment (directed behaviour), and to think of better ways to do their jobs (task strategies). But most important, companies that plan have larger profits and faster growth than Powered by Cognero

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companies that don’t plan. Planning, however, also has three potential pitfalls. Companies that are overly committed to their plans may be slow to adapt to changes in their environment. Planning is based on assumptions about the future, and when those assumptions are wrong, plans are likely to fail. Finally, planning can fail when planners are detached from the implementation of plans.

124. Planning consists of five steps: (a) setting goals, (b) developing commitment to the goals, (c) developing

effective action plans, (d) tracking progress toward goal achievement, and (e) maintaining flexibility in planning.

125. One way of writing effective goals for yourself, your job, or your company is to use the S.M.A.R.T. guidelines. S.M.A.R.T. goals are specific, measurable, attainable, realistic, and timely. The purpose of the S.M.A.R.T. guidelines is to give managers an easy-to-remember acronym that can help them set effective goals

during their stressful and busy daily activities.

126. Managers can bring about goal commitment in three ways. The first, and most popular, approach is to set

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

127. There are two accepted methods of tracking progress. The first is to set short-term goals and long-term goals. Short-term goals enable you to achieve a long-term goal one step at a time. The idea behind setting shortterm goals is that they may be more motivating and rewarding than waiting to achieve far-off long-term goals.

The second method of tracking progress is to gather and provide performance feedback. Regular, frequent

performance feedback allows workers and managers to track their progress toward goal achievement and make adjustments in effort, direction, and strategies.

128. The three kinds of operational plans are (a) single-use plans, which cover unique, one-time-only events; (b)

standing plans, which save managers time because they are created once and then used repeatedly to handle frequently recurring events; and (c) budgets, which are quantitative plans, through which managers decide how to allocate available money to best accomplish company goals.

129. The three types of standing plans are policies, procedures, and rules and regulations, which increase in specificity in that order. Policies are the least specific type of standing plan. They indicate the general course of action that company managers should take in response to a particular event or situation. Procedures are more

specific than policies because they indicate the series of steps that should be taken in response to a particular event. Rules and regulations are even more specific than procedures because they specify what must happen or not happen. They describe precisely how a particular action should be performed.

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

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

131. The eight steps in the rational decision-making process are as follows:

1. define the problem, 2. identify decision criteria, Powered by Cognero

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3. weight the criteria, 4. generate alternative courses of action, 5. evaluate each alternative, 6. compute the optimal decision 7. implement the decision, and 8. evaluate the effectiveness of the decision 132. Decision criteria are the standards used to guide judgments and decisions. The more criteria that a potential solution meets, the better that solution should be. After identifying decision criteria, the next step in the rational decision-making process is deciding which criteria are more or less important. While there are numerous

mathematical models for weighting decision criteria, all require the decision maker to provide an initial ranking of the decision criteria. Some use absolute comparisons, in which each criterion is compared to a standard or ranked on its own merits. Another method is relative comparisons, in which each criterion is compared directly to every other criterion.

133. The two types of conflicts that might spontaneously occur in a group are c-type conflict and a-type conflict.

C-type conflict, or cognitive conflict, focuses on problem- and issue-related differences of opinion. In c-type

conflict, group members disagree because their different experiences and expertise lead them to different views of the problem and its potential solutions. However, c-type conflict is also characterized by a willingness to examine, compare, and reconcile those differences to produce the best possible solution. By contrast, a-type conflict, meaning “affective conflict,” refers to the emotional reactions that can occur when disagreements become personal rather than professional. A-type conflict often results in hostility, anger, resentment, distrust, cynicism, and apathy. So, unlike c-type conflict, a-type conflict undermines team effectiveness by preventing teams from engaging in the kinds of activities, such as c-type conflict, that are critical to team effectiveness.

Thus, c-type conflict can enhance the quality of group decisions, while a-type conflict will probably reduce the effectiveness of those decisions.

134. Satisficing is choosing a “good enough” alternative. Only a few alternatives may have been assessed against a set of decision criteria. A limited selection of alternatives may have been considered due to limited time, money, and/or expertise. At some point, the cost of making a perfectly optimal decision would have

outweighed the risk of making a “good enough” decision.

135. Planning is defined as choosing a goal and developing a method or strategy to achieve that goal. Student

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

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

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planning can fail when planners are detached from the implementation of plans.

136. Planning consists of five steps: (a) setting goals, (b) developing commitment to the goals, (c) developing

effective action plans, (d) tracking progress toward goal achievement, and (e) maintaining flexibility in planning. In terms of (a) setting goals, goals need to be specific and challenging in order to direct behaviour and increase effort. Tanisha’s present goal is specific, but could be made more challenging by targeting any one of the top 5 MBA programs in the country as her goal. In terms of (b) developing commitment to her goal, we can assume that if Tanisha has selected this goal on her own and understands all of its implications, then she is probably already sufficiently committed to it at a personal level. She might enhance this commitment by making a public statement of her goal, and soliciting (and receiving) support from her parents in achieving it. In terms of (c) developing effective action plans, Tanisha should research the MBA degree and how it contributes to career success. Thereafter, she should draw up a concrete written plan, outlining the specific steps, people, resources, and time period for accomplishing her goal. Her research will probably lead her to conclude that she should gain several years of work experience in her desired industry before enrolling in an MBA program. In terms of (d) tracking progress toward goal achievement, Tanisha should set a series of integrated short-term and long-term goals, where the proximal goals (e.g., maintaining a high GPA, arranging for an internship while in college, networking as much as possible to develop connections for a later job search) and clearly related subgoals will move her forward to her distal (long-term or primary) goals. Examples of distal goals might be obtaining an entry-level position in finance at a major corporation upon graduation and then obtaining company support to pursue a top-flight MBA degree within five years of beginning work. Further, she should utilize her grades as well as contact with her professors while in college to solicit feedback and evaluate her progress, and use her performance appraisals and other contacts as sources of feedback once she begins working full time after graduation. Finally, in terms of (e) maintaining flexibility in planning, Tanisha should be ready to revise her overall plan, if, at any point along the way, insurmountable obstacles become apparent. For example, if it should become clear that she cannot earn a high GPA in college, then she should lower her sights and shoot for a less prestigious MBA program.

137. Groups can do a much better job than individuals in two important steps of the decision-making process:

defining the problem and generating alternative solutions. Group members usually possess different skills, experience, and knowledge, so groups are able to view problems from multiple perspectives and to gain access to more information. So, groups find it easier to generate more alternative solutions, and studies have found that generating more solutions is critical to improving the quality of decisions. Generating possible solutions together can help groups perform better on complex tasks. It can also strengthen the commitment to making chosen solutions work.

Still, group decision making has some pitfalls that can quickly erase these gains. One possible pitfall is groupthink. Groupthink occurs in highly cohesive groups, when group members feel intense pressure to agree with one another so that the group can approve a proposed solution. Groupthink is likely to occur when the group is insulated from others with different perspectives, when the group leader begins by expressing a strong preference for a particular decision, when the group has no established procedure for systematically defining problems and exploring alternatives, and when group members have similar backgrounds and experiences. A second potential problem with group decision making is that it takes considerable time. Reconciling schedules so that group members can meet takes time. Furthermore, it’s a rare group that consistently holds productive task-oriented meetings to work through the decision process effectively. A third possible pitfall to group decision making is that sometimes one or two individuals, perhaps the boss or a strong-willed group member, can dominate group discussions and limit the group’s consideration of different problem definitions and alternative solutions. A final pitfall to group decision making is equality bias, which causes individuals to treat Powered by Cognero

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all group members as equally competent. More highly competent people tend to underestimate their abilities, while less competent people tend to overestimate theirs.

138. Planning at all levels of management must follow the five steps in effective planning: (a) setting goals, (b)

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

139. Rational decision making is a systematic process of defining problems, evaluating alternatives, and

choosing optimal solutions.

The eight steps in the rational decision-making process are (1) define the problem, (2) identify decision criteria, (3) weight the criteria, (4) generate alternative courses of action, (5) evaluate each alternative, (6) compute the optimal decision, (7) implement the decision, and (8) evaluate the effectiveness of the decision. The first step in decision making is to identify and define the problem. A problem exists when there is a gap between a desired state (what is wanted) and an existing state (the situation you are facing). The second step in decision making is to identify the decision criteria relevant to your situation. Decision criteria are the standards used to guide judgments and decisions. Typically, the more criteria a potential solution meets, the better that solution will be.

After identifying decision criteria, the next step is to decide which criteria are more or less important. Although there are numerous mathematical models for weighting decision criteria, all require the decision maker to provide an initial ranking of the criteria. Some use absolute comparisons, in which each criterion is compared to a standard or ranked on its own merits. Another method uses relative comparisons, in which each criterion is compared directly to every other criterion. After identifying and weighting the criteria that will guide the decision-making process, the next step is to identify courses of action that could solve the problem. In general, the idea is to generate as many alternatives as possible. The next step is to systematically evaluate each alternative against each criterion. Because of the amount of information that must be collected, this step can take much longer and be much more expensive than other steps in the decision-making process. The next step in the decision-making process is to compute the optimal decision by determining the optimal value of each alternative. Once a decision has been made, the next step is to implement it. An important first step in the implementation process is for management to provide clear and concise communication of the decision to those who will be affected. The final stage of the decision-making process is to evaluate the outcome of the decision and the success of the implementation. Analysis and feedback tools can provide management with a mechanism to determine the effectiveness of the decision. The use of periodic progress reports can help gauge how the implementation is going and identify any potential problems before they occur.

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Chapter 4 - Planning and Decision Making 140. Most people view conflict negatively. However, the right kind of conflict can lead to much better group decision making. C-type conflict, or cognitive conflict, focuses on problem- and issue-related differences of opinion. In c-type conflict, group members disagree because their different experiences and expertise lead them to different views of the problem and its potential solutions. However, c-type conflict is also characterized by a willingness to examine, compare, and reconcile those differences to produce the best possible solution. By

contrast, a-type conflict, or affective conflict, refers to the emotional reactions that can occur when disagreements become personal rather than professional. A-type conflict often results in hostility, anger, resentment, distrust, cynicism, and apathy. So, unlike c-type conflict, a-type conflict undermines team effectiveness by preventing teams from engaging in the kinds of activities, such as c-type conflict, that are critical to team effectiveness.

Devil’s advocacy is a method that introduces structured c-type conflict into the group decision-making process.

Devil’s advocacy creates c-type conflict by assigning an individual or a subgroup the role of critic. This individual criticizes and questions a proposed solution in order to help decision makers decide whether to use, change, or not use the original proposed solution.

When properly used, the devil’s advocacy approach introduces c-type conflict into the decision-making process.

Further, contrary to the common belief that conflict is bad, studies show that these methods lead to less a-type conflict, improved decision quality, and greater acceptance of decisions once they have been made

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Indicate the answer choice that best completes the statement or answers the question.

1. Which of the following represents the series of tactics or tasks that a company undertakes to attain the vision

of the company? a. strategy b. mission c. action plan d. tactical plan 2. Which of the following are the assets, capabilities, processes, information, and knowledge that an

organization controls? a. grand strategies b. distinctive competencies c. competitive advantages d. resources 3. A sustainable competitive advantage exists for an organization when other companies have tried

unsuccessfully to duplicate the advantage and when which of the following happens? a. the other companies have been prohibited from duplicating the advantage by federal law b. the other companies have, for the moment, stopped trying to duplicate the advantage c. the organization is able to implement exclusive distribution d. the organization operates in the international marketplace 4. Which condition must be met if a firm’s resources are to be used to achieve a sustainable competitive

advantage? a. differentiation b. imperfectly imitable resources c. related diversification d. unrelated diversification 5. When making travel plans, many tourists utilize Expedia.ca because it serves as a one-stop travel site for

building a dream vacation. No other site duplicates the efficiency and effectiveness of Expedia and many consumers have rated Expedia.ca as the superior travel site. What type of resources has Expedia.ca apparently used to create a sustainable competitive advantage? a. longevity b. quality c. price d. imperfectly imitable 6. Royal Bank of Canada is the largest bank in Canada. Would this position give it a sustainable competitive

advantage, and why? a. Yes, because size would make its operations synergistic. b. No, because size is not a criterion for sustainable competitive advantage.

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Chapter 5 - Organizational Strategy c. Yes, because large institutions make more effective use of resources. d. No, because large organizations are always targeted for anti-trust activities.

7. Which type of resource is NOT controlled or possessed by many competing firms? a. rare resources b. perfectly imitable resources c. non-substitutable resources d. strategically dissonant resources 8. Wagyu beef sold in Canada is often a crossbreed with the Wagyu breed from Japan. Brant Lake Wagyu raises

their Wagyu crossbreed cattle on a mix of pasture feeding and barley. The Wagyu crossbreed cattle, therefore, are impossible or extremely costly and difficult to duplicate, making them what type of resource? a. rare resource b. imperfectly imitable resource c. nonsubstitutable resource d. strategically dissonant resource 9. To differentiate its products from other similar brands, Aveda beauty products focuses on educating its

customers on general skin and hair care. Its salespeople are trained to answer questions and help customers find solutions. What has Aveda achieved with customer education and employee training? a. synergy through relationship marketing b. prevention of product duplication c. efficient use of imitative resources d. a competitive advantage 10. To test or verify a company's strategy, the company can use the VRIO framework. What does VRIO stand

for? a. valuable, rare, imitable, organized b. valuable, rare, imitable, open c. valuable, resources, imitable, organized d. valuable, rare, inefficient, open 11. What is the first step in the strategy-making process? a. assess the need for strategic change b. conduct a situational analysis c. choose strategic alternatives d. evaluate the impact of changes on the internal environment 12. In 2015, Target Canada filed for bankruptcy. Its parent corporation, the US-based Target Corporation,

identified the need for strategic change in its Canadian operations. What is the next step Target Corporation should take in this strategy-making process? a. finding the optimal strategic solution Powered by Cognero

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Chapter 5 - Organizational Strategy b. brainstorming c. assessing the need for strategic change d. conducting a situational analysis 13. UBC student Ann Makosinski has developed a coffee mug that generates electricity to charge a cell phone.

She has filed a patent for the device. What does she have from the patent on the coffee mug? a. sustainable competitive advantage b. aggregate marketing strategy c. reliable differentiation d. strategic stance 14. What does an organization experience when it is reluctant to change strategies or competitive practices that

have been successful in the past? a. strategic dissonance b. strategic inertia c. competitive dissonance d. competitive inertia 15. BlackBerry struggled to adapt its once world-leading smartphones to respond to a more dynamic smartphone

market dominated by Android and iOS operating systems. What is this an example of? a. competitive apathy b. strategic apathy c. competitive inertia d. strategic inertia 16. What is an organization said to be experiencing when there is a discrepancy between upper management’s

intended strategy and the strategy implemented by the lower levels of management? a. horizontal conflict b. character of the rivalry c. strategic dissonance d. competitive inertia 17. What can people do in an organization to improve the speed and accuracy with which they react to the need

for strategic change? a. encourage competitive dissonance b. identify whether any differentiation discrepancy is occurring c. actively look for signs of strategic inertia d. actively look for signs of strategic dissonance 18. The easiest way to examine factors in the external environment is to go through which type of analysis? a. PESTEEL analysis b. SWOT analysis Powered by Cognero

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Chapter 5 - Organizational Strategy c. PERT analysis d. Gantt analysis 19. The idea that the more businesses in which a corporation competes the smaller the corporation's overall

chances of failing is the theory behind which of the following strategies? a. grand b. portfolio c. acquisition d. unrelated diversification 20. What is another term for SWOT analysis? a. market audit analysis b. firm-level strategy analysis c. competitive advantage analysis d. situational analysis 21. Companies in the Canadian chemical industry are struggling to stay profitable due to the introduction of

increased government tariffs on chemical exports to other countries. In a situational analysis, what term would be associated with this challenge? a. internal threat b. external opportunity c. external threat d. internal opportunity 22. Specialized Bicycle Components introduced the first major-production mountain bike in 1980. Two-thirds

of its profits come from the sale of mountain bikes. It is recognized worldwide for its ability to design and produce superior mountain bikes. Which of the following terms best defines this ability? a. customer sustainability b. organizational advantage c. relative competence d. distinctive competence 23. Which of the following are the less visible, internal decision-making routines, problem-solving processes,

and organizational cultures that determine how efficiently inputs can be turned to outputs? a. core capabilities b. competitive advantages c. strengths and weaknesses d. distinctive competencies 24. Distinctive competencies cannot be sustained for long without which of the following? a. imperfectly imitable resources b. valuable resources Powered by Cognero

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Chapter 5 - Organizational Strategy c. valuable competencies d. core capabilities 25. What mechanism is used to examine external threats and opportunities facing a firm as well as its internal

strengths and weaknesses? a. organizational scanning b. internal marketing c. corporate strategy d. a situational analysis 26. Specialized Bicycle Components introduced the first major-production mountain bike in 1980. Since then,

the company has maintained a technological leadership in the production of bikes and bike accessories and an organizational culture that encourages innovation. Which one of the following refers to the company’s technological leadership and its organizational culture? a. customer sustainabilities b. organizational advantages c. relative competencies d. core capabilities 27. Which of the following might an internal situational analysis for a pet food manufacturer reveal? a. a growing dog and cat population in Canada b. an indication that dogs need less calcium in their diet c. a less expensive, more nutritious imported brand of pet food d. a need for management that understands the trends in pet care 28. Which term refers to the overall organizational strategy that addresses the question “What business or

businesses are we in or should we be in”? a. firm-level strategy b. corporate-level strategy c. industry-level strategy d. portfolio strategy 29. What are the two major approaches to corporate-level strategy? a. portfolio strategy and secondary strategy b. grand strategy and temporal strategy c. grand strategy and portfolio strategy d. temporal strategy and secondary strategy 30. Which of the following is an example of a common approach to corporate-level strategy? a. positioning strategies b. adaptive strategies c. ROI strategies Powered by Cognero

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Chapter 5 - Organizational Strategy d. grand strategies 31. How can the portfolio strategy be used to help managers acquire companies that fit well with the rest of their

corporate portfolio? a. The fewer businesses in which a corporation competes, the smaller its overall chances of failing. b. Risk can be reduced through related diversification—creating or acquiring companies with related core capabilities. c. Invest the profits and cash from mature, slow-growth businesses into newer, faster growing businesses. d. The most significant advantage of the portfolio strategy is the ability to categorize businesses as stars, exclamation points, question marks, and dogs.

32. Besides selling coffee, Starbucks markets a line of compilation CDs under the brand name Hear Music.

Which term best describes this making and marketing of CDs? a. related differentiation b. related diversification c. integrated acquisition d. unrelated diversification 33. Clorox Corporation, the manufacturer of bleach and bleach-based cleaning products, acquired Kingsford

Charcoal and Prime Choice brand steak sauce. What is this action an example of? a. related differentiation b. related diversification c. integrated acquisition d. unrelated diversification 34. What is the term for a portfolio strategy that managers use to categorize their corporation’s businesses by

growth rate and relative market share to help them decide how to invest corporate funds? a. investment matrix b. SWOT matrix c. BCG matrix d. portfolio management matrix 35. Specialized Bicycle Components introduced the first major-production mountain bike in 1980. Specialized

bikes have a large share of a fast-growing market. According to the BCG matrix, what would the company Specialized Bicycle Components be classified as? a. problem child b. cash cow c. exclamation point d. star 36. TD Canada Trust was formed through the merger of the Toronto-Dominion Bank and Canada Trust, both

national banking entities. Considering both banking companies had similar core capabilities, what is this an Powered by Cognero

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example of? a. related differentiation b. related diversification c. integrated acquisition d. competency acquisition 37. Hector wanted to grow his business beyond the food industry and started investing in clothing, toys, and

travel companies. Hector’s vice president did not agree with these investments, citing which problem of portfolio strategy? a. managers must decide which question marks are most likely to turn into stars b. acquiring unrelated businesses is not useful c. the BCG matrix yields incorrect judgments about a company's potential d. the BCG matrix can weaken the strongest performer in the corporate portfolio 38. Which of the following is probably the best approach to diversification in portfolio management? a. related differentiation b. related diversification c. unrelated diversification d. unrelated differentiation 39. Which type of strategy, manifested in three ways, is a broad corporate-level strategic plan used to achieve

strategic goals and guide the strategic alternatives that managers of individual businesses or subunits may use? a. grand strategy b. growth strategy c. stability strategy d. retrenchment/recovery strategy 40. In an attempt to minimize its expenses, Toyota Canada discontinued the Scion brand in 2016. Which type of

grand strategy was Toyota using? a. retrenchment b. stability c. growth d. maturity 41. What type of grand strategy is McDonald’s using when it increases its profits in Canada by offering

uniquely Canadian products, such as poutine? a. growth b. decline c. retrenchment d. repositioning 42. What term could be used to describe Coca-Cola’s acquisition of a water-treatment and bottling plant so it Powered by Cognero

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could produce and market Dasani brand bottled water? a. a repositioning strategy b. growth c. niche marketing d. a retrenchment strategy 43. Rogers and Shaw announced a merger between both companies occurring in 2023. What is this action an

example of? a. recovery strategy b. a stability strategy c. a pioneering strategy d. growth strategy 44. By which of the following actions can companies achieve growth? a. by shrinking the scope of their business b. through direct expansion of their operations c. by deleting all cash cows from their portfolios d. by maintaining only stars in their portfolios 45. What type of strategy are companies most likely following when they are trying to improve the way in

which they sell the same goods or services to the same customers? a. growth b. pioneering c. retrenchment d. stability 46. Which type of strategy do companies often choose when their external environment doesn’t change much or

when they have struggled with periods of explosive growth? a. stability b. growth c. pioneering d. portfolio 47. What strategy is used to turn around very poor company performance by shrinking the size or scope of the

business? a. growth strategy b. stability strategy c. retrenchment strategy d. repositioning strategy 48. Which of the following strategies is analogous to pruning roses? a. growth strategy Powered by Cognero

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Chapter 5 - Organizational Strategy b. stability strategy c. retrenchment/recovery strategy d. portfolio strategy 49. What strategy is characterized by significant cost reductions, the layoffs of employees, the closing of poorly

performing stores, offices, or manufacturing plants, or the closing or selling of entire lines of products or services? a. portfolio b. retrenchment c. stability d. firm-level 50. Which of the following involves taking strategic actions to return the company to a growth strategy? a. harvesting b. revitalization c. revival d. recovery 51. Which strategy, if successful, is often followed by a recovery stage? a. retrenchment b. portfolio c. focus d. differentiation 52. Which corporate strategy addresses the question “How should we compete in this industry”? a. corporate-level b. industry-level c. firm-level d. niche-specific 53. Which of the following is one of the five forces Michael Porter identified as being the ones to determine an

industry’s overall attractiveness and potential for long-term profitability? a. existence of complementary products b. organizational structure c. existing benchmarks d. bargaining power of suppliers 54. Which of the following is determined by Michael Porter’s five industry forces? a. potential for long-term change b. potential for short-term profitability c. potential for short-term change d. potential for long-term profitability Powered by Cognero

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Chapter 5 - Organizational Strategy 55. Apple and Samsung lead the cellphone industry and usually one or the other company leads the industry in

phone sales. Which of Porter’s five industry forces is this an example of? a. character of the culture b. competitive barrier c. competitive rivalry d. benchmarked rivalries 56. Which of the following is one of the five industry forces that determine an industry’s overall attractiveness

and potential for long-term profitability? a. character of management b. existing complementary products c. level of government subsidies d. threat of substitute products 57. Ads for the Hudson’s Bay Company are highlighting the company’s longevity and symbiotic relationship

with Canada’s history. Which type of positioning strategy is Hudson’s Bay more than likely using? a. differentiation b. retrenchment c. diversification d. focus 58. Clorox Corporation controls 60 percent of the bleach market. Imagine you are an entrepreneur who is

considering developing and marketing a new brand of bleach. Which one of Michael Porter’s five industry forces should you be most concerned about? a. bargaining power of buyers b. threat of substitute products or services c. threat of new entrants d. competitive rivalry 59. Calgary-based recruiting firm S.i. Systems specializes in information technology staffing in key markets

across Canada. Which of the following best describes the strategy used by S.i. Systems? a. adaptive b. growth c. diversification d. focus 60. Which of the following will most likely be characteristic of companies when the bargaining power of

suppliers and buyers is high? a. Companies will find it more difficult to be profitable. b. Companies will most likely use a growth strategy. c. Companies will divest themselves of all of their cash cows.

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Chapter 5 - Organizational Strategy d. Companies will engage in organizational restructuring.

61. Which type of strategy protects companies from industry forces by deterring new entrants and forcing down

the price of substitute products? a. diversification b. differentiation c. cost d. focus 62. What are the four basic strategies identified by Michael Porter? a. entrepreneurial, growth, focus cost, and stability b. diversification, acquisition, differentiation, and divestment c. defender strategy, diversification, differentiation, and cost strategy d. cost, differentiation, focus cost, and focus differentiation 63. When Home Depot opened stores in Canada, it ran a series of ads featuring an animated hammer that was

busily reducing prices to show the U.S.-based home improvement store had the lowest prices. According to Michael Porter’s ideas, which strategy did Home Depot adopt to deal with existing Canadian stores that sold similar products? a. cost strategy b. diversification c. focus differentiation d. differentiation 64. Infinity Inc. makes a paperweight with real flowers preserved within a solid clear crystal polymer.

Independent gift stores sell Infinity’s paperweights to collectors of nature-related keepsakes. The larger gift companies find this market too niche for them. What kind of strategy has Infinity adopted? a. focus b. differentiation c. cost d. diversification 65. Resource similarity determines the extent to which firms will be in direct competition with one another.

What other factor does the same? a. market commonality b. resource quality c. related diversification d. product differentiation 66. Which of the following organizations are most directly in competition with each other? a. Walmart and Gap b. a local flower shop and Sobeys Powered by Cognero

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Chapter 5 - Organizational Strategy c. FedEx and UPS d. an independent bookstore and a library 67. Which statement best describes the status of Tim Hortons and Second Cup as direct competitors? a. They have a low degree of resource variability. b. They have a high degree of market commonality. c. They have a low degree of competitive inertia. d. They have a low degree of market commonality.

68. What is it called when the strategic actions that your company takes can probably be matched by your direct

competitors, from a competitive standpoint? a. market commonality b. resource similarity c. character of the rivalry d. competitive inertia 69. Under which of the following conditions is a competitive attack by the stronger of two rivals more likely to

produce sustained competitive advantage for that rival? a. high market commonality b. high competitive autonomy c. high resource similarity d. low resource similarity 70. Buyer power is affected by which of the following factors? a. price sensitivity b. regulatory barriers c. number of suppliers d. uniqueness of service 71. Which of the following is a threat of substitution? a. number of customers b. cost of change c. specialist knowledge d. legal barriers to entry 72. Firms in direct competition can take which of the following actions? a. grand strategies and corporate-level strategies b. strategic choices and tactical choices c. attacks and responses d. divestment and investment 73. In which circumstance is an attack on a rival LESS likely?

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Chapter 5 - Organizational Strategy a. market commonality is unknown b. when the attacker has no bargaining power c. resource similarity is strong d. resource similarity is weak 74. In which circumstance is a company more likely to respond to an attack? a. market commonality is strong b. market commonality is weak c. market commonality does not exist d. resource similarity is weak 75. Under situations of low resource similarity, which of the following is the most probable outcome of an

attack? a. market commonality is likely to be strengthened b. market commonality is likely to be weakened c. sustained competitive advantage is not likely to be achieved d. sustained competitive advantage is likely to be achieved 76. Which tools are most useful to implement a strategy? a. balanced scorecards, early responses, and Gantt charts b. Gantt charts, retaliation, and early responses c. retaliation, PERT diagrams, and balanced scorecards d. Gantt charts, balanced scorecards, and PERT diagrams 77. Narrative 5-1

The Rolling Stones are the most successful act in the music industry largely because they run the band as a business—Rolling Stones Inc. Since 1989, the band has generated more than $1.5 billion in gross revenues.

That total includes sales of records, song rights, merchandising, sponsorship money, and touring. Unlike some other groups, the Stones carry no antibusiness baggage. The company licenses over 50 products from underwear to formalwear. Its record earnings from one tour came from the Voodoo Lounge tour in 1994, which grossed $121.2 million. Over the past decade, the group’s song writing has made about $56 million. The next time you see Mick Jagger, think of him as the highly successful CEO of a mid-sized corporation. The goal of the corporation is to continue providing products that differ from its competitors’ offerings so that fans will continue to pay a premium price for what it sells.

Refer to Narrative 5-1. Which of the following can the Rolling Stones be said to have, since other music groups cannot duplicate the value the band is providing to customers? a. contingency management style b. sustainable competitive advantage c. resource diversity d. resource munificence 78. Narrative 5-1

The Rolling Stones are the most successful act in the music industry largely because they run the band as a Powered by Cognero

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business—Rolling Stones Inc. Since 1989, the band has generated more than $1.5 billion in gross revenues.

That total includes sales of records, song rights, merchandising, sponsorship money, and touring. Unlike some other groups, the Stones carry no antibusiness baggage. The company licenses over 50 products from underwear to formalwear. Its record earnings from one tour came from the Voodoo Lounge tour in 1994, which grossed $121.2 million. Over the past decade, the group’s song writing has made about $56 million. The next time you see Mick Jagger, think of him as the highly successful CEO of a mid-sized corporation. The goal of the corporation is to continue providing products that differ from its competitors’ offerings so that fans will continue to pay a premium price for what it sells.

Refer to Narrative 5-1. Before 1989, the Stones and all other touring bands would hire a tour director who would cut individual deals with local promoters in each city to set up the shows. In 1989, the Stones were the first group to book their tours themselves, dealing with the venues directly and eliminating the local promoters.

The band’s income increased from about $400,000 per show to $1 million per show. If the Stones had instead remained with the same strategy, what would they have been guilty of? a. competitive autonomy b. resource substitution c. resource lethargy d. competitive inertia 79. Narrative 5-1

The Rolling Stones are the most successful act in the music industry largely because they run the band as a business—Rolling Stones Inc. Since 1989, the band has generated more than $1.5 billion in gross revenues.

That total includes sales of records, song rights, merchandising, sponsorship money, and touring. Unlike some other groups, the Stones carry no antibusiness baggage. The company licenses over 50 products from underwear to formalwear. Its record earnings from one tour came from the Voodoo Lounge tour in 1994, which grossed $121.2 million. Over the past decade, the group’s song writing has made about $56 million. The next time you see Mick Jagger, think of him as the highly successful CEO of a mid-sized corporation. The goal of the corporation is to continue providing products that differ from its competitors’ offerings so that fans will continue to pay a premium price for what it sells.

Refer to Narrative 5-1. When it comes to operating as a business, what characteristics have the Rolling Stones demonstrated compared to other musicians? a. distinctive competence b. marginal advantage c. contingency style d. synergistic hierarchy 80. Narrative 5-1

The Rolling Stones are the most successful act in the music industry largely because they run the band as a business—Rolling Stones Inc. Since 1989, the band has generated more than $1.5 billion in gross revenues.

That total includes sales of records, song rights, merchandising, sponsorship money, and touring. Unlike some other groups, the Stones carry no antibusiness baggage. The company licenses over 50 products from underwear to formalwear. Its record earnings from one tour came from the Voodoo Lounge tour in 1994, which grossed $121.2 million. Over the past decade, the group’s song writing has made about $56 million. The next time you see Mick Jagger, think of him as the highly successful CEO of a mid-sized corporation. The goal of the corporation is to continue providing products that differ from its competitors’ offerings so that fans will Powered by Cognero

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continue to pay a premium price for what it sells.

Refer to Narrative 5-1. Which kind of diversification have the Rolling Stones used to grow their business? a. unrelated b. investment-specific c. autonomous d. relative 81. Narrative 5-1

The Rolling Stones are the most successful act in the music industry largely because they run the band as a business—Rolling Stones Inc. Since 1989, the band has generated more than $1.5 billion in gross revenues.

That total includes sales of records, song rights, merchandising, sponsorship money, and touring. Unlike some other groups, the Stones carry no antibusiness baggage. The company licenses over 50 products from underwear to formalwear. Its record earnings from one tour came from the Voodoo Lounge tour in 1994, which grossed $121.2 million. Over the past decade, the group’s song writing has made about $56 million. The next time you see Mick Jagger, think of him as the highly successful CEO of a mid-sized corporation. The goal of the corporation is to continue providing products that differ from its competitors’ offerings so that fans will continue to pay a premium price for what it sells.

Refer to Narrative 5-1. What kind of grand strategy has Rolling Stones Inc. been using in recent years? a. retrenchment b. accommodative c. participative d. stability 82. Narrative 5-1

The Rolling Stones are the most successful act in the music industry largely because they run the band as a business—Rolling Stones Inc. Since 1989, the band has generated more than $1.5 billion in gross revenues.

That total includes sales of records, song rights, merchandising, sponsorship money, and touring. Unlike some other groups, the Stones carry no antibusiness baggage. The company licenses over 50 products from underwear to formalwear. Its record earnings from one tour came from the Voodoo Lounge tour in 1994, which grossed $121.2 million. Over the past decade, the group’s song writing has made about $56 million. The next time you see Mick Jagger, think of him as the highly successful CEO of a mid-sized corporation. The goal of the corporation is to continue providing products that differ from its competitors’ offerings so that fans will continue to pay a premium price for what it sells.

Refer to Narrative 5-1. Which kind of positioning strategy does Rolling Stones Inc. use? a. accommodation b. consultation c. differentiation d. prospector 83. Narrative 5-2

The traditional image of a public library is one that is full of books on shelves, librarians shushing patrons, and is dark, cut off from the light outside. The Calgary Public Library’s CEO, Bill Ptacek, would like to change this image. He’s cut back on the book collection by 13 percent, eliminated the $12 annual membership fee, and Powered by Cognero

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reconceptualized the library as a place for social gathering. He’s done all this despite the Calgary Public Library circulating more items than any other library in Canada except Toronto’s. The library is largely funded by the City of Calgary with some grants from senior levels of government. Under Ptacek’s tenure, many staff have shifted to working out of more than one branch. Calgary’s new downtown library is designed with semi-private nooks, more gathering spaces, and is focused on a community hub. On any given night, you’re as likely to find a rock concert as you are a community group in a meeting room or children playing in their new play areas.

Some patrons and staff miss their “quiet library,” though, and have complained.

Refer to Narrative 5-2. Use the VRIO framework to determine which component Ptacek felt was lacking in the library’s value proposition. a. Is it valuable? b. Is it rare? c. Is it costly or difficult to imitate? d. Is the firm organized to capture the value of the resources?

84. Narrative 5-2

The traditional image of a public library is one that is full of books on shelves, librarians shushing patrons, and is dark, cut off from the light outside. The Calgary Public Library’s CEO, Bill Ptacek, would like to change this image. He’s cut back on the book collection by 13 percent, eliminated the $12 annual membership fee, and reconceptualized the library as a place for social gathering. He’s done all this despite the Calgary Public Library circulating more items than any other library in Canada except Toronto’s. The library is largely funded by the City of Calgary with some grants from senior levels of government. Under Ptacek’s tenure, many staff have shifted to working out of more than one branch. Calgary’s new downtown library is designed with semi-private nooks, more gathering spaces, and is focused on a community hub. On any given night, you’re as likely to find a rock concert as you are a community group in a meeting room or children playing in their new play areas.

Some patrons and staff miss their “quiet library,” though, and have complained.

Refer to Narrative 5-2. Calgary’s library system, on a per-capita basis, was already busier than Toronto’s. Why did Ptacek believe change was needed? a. He needed to reduce staff to be successful b. He had conducted a distinctive competence-seeking exercise. c. He believed competitive inertia had set in. d. He responded to the demands of a shadow-strategy task force.

85. Narrative 5-2

The traditional image of a public library is one that is full of books on shelves, librarians shushing patrons, and is dark, cut off from the light outside. The Calgary Public Library’s CEO, Bill Ptacek, would like to change this image. He’s cut back on the book collection by 13 percent, eliminated the $12 annual membership fee, and reconceptualized the library as a place for social gathering. He’s done all this despite the Calgary Public Library circulating more items than any other library in Canada except Toronto’s. The library is largely funded by the City of Calgary with some grants from senior levels of government. Under Ptacek’s tenure, many staff have shifted to working out of more than one branch. Calgary’s new downtown library is designed with semi-private nooks, more gathering spaces, and is focused on a community hub. On any given night, you’re as likely to find a rock concert as you are a community group in a meeting room or children playing in their new play areas.

Some patrons and staff miss their “quiet library,” though, and have complained.

Refer to Narrative 5-2. What was Ptacek trying to change about the library?

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Chapter 5 - Organizational Strategy a. He needed to change the library’s core capabilities. b. He needed to conduct a PESTEEL analysis. c. He needed to increase the number of valuable resources (books) available to patrons. d. He responded to the demands of patrons and staff by creating a quieter library.

86. Narrative 5-2

The traditional image of a public library is one that is full of books on shelves, librarians shushing patrons, and is dark, cut off from the light outside. The Calgary Public Library’s CEO, Bill Ptacek, would like to change this image. He’s cut back on the book collection by 13 percent, eliminated the $12 annual membership fee, and reconceptualized the library as a place for social gathering. He’s done all this despite the Calgary Public Library circulating more items than any other library in Canada except Toronto’s. The library is largely funded by the City of Calgary with some grants from senior levels of government. Under Ptacek’s tenure, many staff have shifted to working out of more than one branch. Calgary’s new downtown library is designed with semi-private nooks, more gathering spaces, and is focused on a community hub. On any given night, you’re as likely to find a rock concert as you are a community group in a meeting room or children playing in their new play areas.

Some patrons and staff miss their “quiet library,” though, and have complained.

Refer to Narrative 5-2. Which of the following strategies was Ptacek pursuing for the library? a. a portfolio strategy b. a stability strategy c. an industry strategy d. a retrenchment strategy 87. Narrative 5-2

The traditional image of a public library is one that is full of books on shelves, librarians shushing patrons, and is dark, cut off from the light outside. The Calgary Public Library’s CEO, Bill Ptacek, would like to change this image. He’s cut back on the book collection by 13 percent, eliminated the $12 annual membership fee, and reconceptualized the library as a place for social gathering. He’s done all this despite the Calgary Public Library circulating more items than any other library in Canada except Toronto’s. The library is largely funded by the City of Calgary with some grants from senior levels of government. Under Ptacek’s tenure, many staff have shifted to working out of more than one branch. Calgary’s new downtown library is designed with semi-private nooks, more gathering spaces, and is focused on a community hub. On any given night, you’re as likely to find a rock concert as you are a community group in a meeting room or children playing in their new play areas.

Some patrons and staff miss their “quiet library,” though, and have complained.

Refer to Narrative 5-2. Which direct competition example best describes how Ptacek might view Amazon.ca? a. McDonald’s vs. Burger King (Quadrant I) b. McDonald’s vs. Wendy’s (Quadrant II) c. McDonald’s vs. Boston Pizza (Quadrant III) d. McDonald’s vs. Subway (Quadrant IV) Indicate whether the statement is true or false.

88. Companies use their resources to improve organizational efficiency and effectiveness. a. True Powered by Cognero

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Chapter 5 - Organizational Strategy b. False 89. There are four conditions that must be met if a firm’s resources are to be used to achieve a sustainable

competitive advantage. The resources must be valuable, rare, imperfectly imitable, and the firm must be organized appropriately. a. True b. False 90. The three steps of the strategy-making process are (1) to assess the need for strategic change, (2) to conduct

a situational analysis, and (3) to choose the strategic alternatives. a. True b. False 91. Companies face little uncertainty in their strategic business environments. a. True b. False 92. Companies that succeed are often constantly re-examining strategies or competitive practices that have been

successful in the past in order to ascertain their probable future success. a. True b. False 93. Strategic dissonance is a discrepancy between upper management’s intended strategy and the strategy

actually implemented by the lower levels of management. a. True b. False 94. An analysis of an organization’s external environment begins with an assessment of the company’s

distinctive competencies and core capabilities. a. True b. False 95. A core capability is something that a company can make, do, or perform better than its competitors. a. True b. False 96. A PESTEEL analysis includes both economic and external-employee factors. a. True b. False 97. A sustainable competitive advantage can be achieved only when a firm has organized its management

systems, processes, policies, organizational structure, and culture to be able to fully realize the potential of its valuable, rare, and costly-to-imitate resources and capabilities. a. True b. False Powered by Cognero

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Chapter 5 - Organizational Strategy 98. A company with a small share of a fast-growing market is referred to as a dog. a. True b. False 99. YouTube, Google Maps, and Android are all considered question marks. a. True b. False 100. The threat of new entrants includes the time and cost of any entry, specialist knowledge, cost of

manufacturing facilities, existing cost advantages, and other political or legal barriers to entry. a. True b. False 101. Creating uncontested market space, making the competition irrelevant, and creating and capturing new

demand are all consistent with a red ocean strategy. a. True b. False 102. Companies define their competition when they’re setting their corporate-level strategies. a. True b. False 103. Corporate-level strategy is the overall organizational strategy that addresses the question “What business or

businesses are we in or should we be in?” a. True b. False 104. Portfolio strategy is a corporate-level strategy that minimizes risk by diversifying investment among

various businesses or product lines. a. True b. False 105. Based upon the research evidence, related diversification appears to be a better strategy for portfolio

management than unrelated diversification. a. True b. False 106. Companies can grow either externally or internally. a. True b. False 107. Companies often choose a stability strategy when their external environment doesn’t change much, or after

they have struggled with periods of explosive growth. a. True b. False Powered by Cognero

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Chapter 5 - Organizational Strategy 108. If retrenchment works, it is typically followed by a stability strategy. a. True b. False 109. Industry-level strategy is a corporate strategy that addresses the question “How should we compete against

a particular firm in our industry?” a. True b. False 110. Competitive rivalry is a measure of the intensity of competitive behaviour between companies in an

industry. a. True b. False 111. The threat of substitute products or services is a measure of the ease with which customers can find

substitutes for an industry’s goods or services. a. True b. False 112. Bargaining power of buyers tends to be higher when a company sells a popular product to multiple buyers

than when a company is dependent on just a few high-volume buyers. a. True b. False 113. The four basic strategies are cost strategy, differentiation, focus cost, and focus differentiation. a. True b. False 114. Differentiation is the positioning strategy of producing a product or service of acceptable quality at

consistently lower production costs than competitors can, so that the firm can offer the product or service at the lowest price in the industry. a. True b. False 115. A focus strategy entails using either a cost or a differentiation approach to producing a good or service. a. True b. False 116. Most companies compete directly with all the firms in their industry. a. True b. False 117. The two factors that determine the extent to which firms will be in direct competition with one another are

market commonality and resource similarity.

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Chapter 5 - Organizational Strategy a. True b. False 118. The greater the market commonality, the less intense the direct competition between two companies. a. True b. False 119. From a competitive standpoint, resource similarity means that the strategic actions your company takes can

probably be matched by your direct competitors. a. True b. False 120. PERT diagrams are helpful to determine strategic actions against direct competitors. a. True b. False 121. Gantt charts are helpful to determine strategic actions against direct competitors. a. True b. False 122. Blue ocean strategy suggests firms should exploit existing demand. a. True b. False 123. Red ocean strategy suggests firms should create uncontested market space. a. True b. False 124. A response is a competitive countermove, prompted by a rival’s attack, designed to defend or improve a

company’s market share or profit. a. True b. False 125. An attack is a competitive move designed to reduce a rival’s market share or profits. a. True b. False 126. A competitive advantage becomes a sustainable competitive advantage when other companies have found

it very expensive to duplicate the value a firm is providing to customers. a. True b. False

127. Briefly identify the four conditions that must be met if a firm’s resources are to be used to achieve a Powered by Cognero

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sustainable competitive advantage.

128. Discuss competitive inertia. What can people in an organization do to improve the speed and accuracy with

which they react to the need for strategic change?

129. How do companies use situational analysis? What are the basic components of a situational analysis?

130. Briefly describe the BCG matrix and how it is used. Include in your description the types of

recommendations that result from the use of the BCG matrix.

131. Explain what is meant by a grand strategy. List and define the three types of grand strategies.

132. List the five industry forces that determine overall levels of competition in an industry. Identify what

happens to competition as these forces increase in strength.

133. List the four basic strategies and distinguish among them. Identify a company of your choosing and

describe its positioning strategy.

134. Define direct competition and identify its constituent components. Then, identify under which conditions a

local espresso coffee shop would compete against McDonald’s and their McCafe initiative.

135. Define attacks and responses in terms of competitive moves, and discuss under what conditions each are

most likely.

136. When videocassette recorders first became popular in the mid-1980s, a new form of “mom and pop” small

business sprang up across the country: the video rental store. At the time, new videotapes of popular movies cost anywhere from $80 to $200. As the popularity of videocassette players grew, these small, independent video rental stores grew rapidly to meet the demand of consumers for inexpensive movie rentals. There was considerable competition between stores to be the first to have new movies available for rental. However, some stores disappointed customers by not having enough copies of new films when they were most in demand.

Within about five to eight years of competition, most of these mom and pop video rental stores were ultimately put out of business by the large regional, and then national, chains, such as Blockbuster. Now, Blockbuster and other national video rental chains no longer exist due to the emergence of multiple streaming platforms, such as Netflix, Amazon Prime, and Crave, which offer consumers increased choice, convenience, and accessibility.

Using the concept of sustainable competitive advantage along with the four conditions required to produce it, explain how such a transition from hundreds of independent mom and pop video stores, to a few national chains (like Blockbuster), to obsoletion of video rental stores altogether could have happened.

137. Describe the steps of the strategy-making process and explain how the concepts of competitive inertia and

strategic dissonance are related to the strategy-making process.

138. Explain the basics of portfolio strategy. Identify the best approach to diversification using this strategy. Be

sure to explain your rationale for arguing that the specified approach to diversification is the best.

139. Identify Porter’s five industry forces and their role in industry-level strategy. Identify which one among

these five forces could be considered the central one, with its value impacted by the relative values of the four Powered by Cognero

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other forces.

140. Explain what is meant by direct competition. Identify the factors that determine it, and specify the basic

strategic moves involved in such competition. If you were heading a company engaged in direct competition with other firms, explain the circumstances under which you would prefer to engage in direct competition in order to develop a sustained competitive advantage.

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Chapter 5 - Organizational Strategy Answer Key 1. a 2. d 3. b 4. b 5. d 6. b 7. a 8. b 9. d 10. a 11. a 12. d 13. a 14. d 15. c 16. c 17. d 18. a 19. b 20. d 21. c 22. d 23. a 24. d 25. d Powered by Cognero

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Chapter 5 - Organizational Strategy 26. d 27. d 28. b 29. c 30. d 31. b 32. d 33. d 34. c 35. d 36. b 37. b 38. b 39. a 40. a 41. a 42. b 43. d 44. b 45. d 46. a 47. c 48. c 49. b 50. d 51. a Powered by Cognero

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Chapter 5 - Organizational Strategy 52. b 53. d 54. d 55. c 56. d 57. a 58. d 59. d 60. a 61. c 62. d 63. a 64. a 65. a 66. c 67. b 68. b 69. d 70. a 71. b 72. c 73. c 74. a 75. d 76. d Powered by Cognero

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Chapter 5 - Organizational Strategy 77. b 78. d 79. a 80. a 81. d 82. c 83. d 84. c 85. a 86. d 87. c 88. True 89. True 90. True 91. False 92. False 93. True 94. False 95. False 96. True 97. True 98. True 99. False 100. True 101. False 102. True Powered by Cognero

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Chapter 5 - Organizational Strategy 103. True 104. True 105. True 106. True 107. True 108. False 109. False 110. True 111. True 112. False 113. True 114. False 115. True 116. False 117. True 118. False 119. True 120. False 121. False 122. False 123. False 124. True 125. True 126. False 127. To provide a sustainable competitive advantage, the firm’s resources must be valuable (capable of

improving efficiency and effectiveness), rare (not possessed by many competing firms), imperfectly imitable Powered by Cognero

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(extremely costly or difficult to duplicate), and the firm must be organized to capture that value.

128. Competitive inertia refers to a reluctance to change strategies or competitive practices that have been

successful in the past. Besides being aware of the dangers of competitive inertia, to improve the speed and accuracy with which they react to the need for strategic change people in an organization can actively look for signs of strategic dissonance. Strategic dissonance is a discrepancy between a company’s intended strategy and the strategic actions managers take when implementing that strategy. Strategic dissonance can indicate that managers are not doing what they should to carry out company strategy; it can also mean that the intended strategy is out of date and needs to be changed.

129. A situational analysis can help managers determine the need for strategic change. A situational analysis,

also called a SWOT analysis for strengths, weaknesses, opportunities, and threats, is an assessment of the strengths and weaknesses in an organization’s internal environment and the opportunities and threats in its external environment. An analysis of an organization’s internal environment (a company’s strengths and weaknesses) begins with an assessment of distinctive competencies and core capabilities. Once these are identified, managers look outside the company to assess the opportunities and threats in the external environment. Environmental scanning, strategic groups, and shadow-strategy task forces are useful tools in this regard.

130. The BCG matrix is a portfolio strategy, developed by the Boston Consulting Group, that managers use to

categorize the corporation’s businesses by growth rate and relative market share, helping them decide how to invest corporate funds. The matrix separates businesses into four categories, based on how fast the market is growing (high-growth or low-growth) and the size of the business’s share of that market (small or large). It thus identifies each business as either a star (high growth, high market share), cash cow (low growth, high market share), question mark (high growth, low market share), or dog (low growth, low market share). Since the idea is to redirect investment from slow-growing to fast-growing companies, the BCG matrix starts by recommending that, while they last, the substantial cash flows from cash cows should be reinvested in stars to help them grow even faster and obtain even more market share. Cash flows should also be directed to those question marks that are most likely to turn into stars. It recommends that dogs be sold to other companies, or be closed down and liquidated for their assets.

131. A grand strategy is a broad strategic plan used to help an organization achieve its strategic goals. Grand

strategies guide the strategic alternatives that managers of individual businesses or subunits may use. There are three kinds of grand strategies: growth (where the purpose is to increase profits, revenues, market share, or the number of places (store, offices, locations) in which the company does business), stability (where the purpose is to continue doing what the company has been doing, but just do it better), and retrenchment/recovery (where the purpose is to turn around poor company performance by shrinking the size or scope of the business, and then taking strategic actions to return to a growth strategy).

132. The five industry forces that determine an industry’s overall attractiveness and potential for long-term

profitability are (1) competitive rivalry, (2) threat of new entrants, (3) threat of substitute products or services, (4) bargaining power of suppliers, and (5) bargaining power of buyers. The stronger these forces, the greater the competition, and thus the less attractive the industry becomes to corporate investors because it is more difficult for companies to be profitable.

133. According to Michael Porter, there are four basic strategies: cost, differentiation, focus cost, and focus

differentiation. A cost strategy involves producing a product or service of comparable quality at consistently lower cost than competitors (because of production ability, sourcing ability, distribution ability, special Powered by Cognero

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processes, etc.) so that the firm can offer the product or service at the lowest price in the industry. A differentiation strategy means making your product or service sufficiently different from competitors’ offerings that customers are willing to pay a premium price for the extra value or performance it provides. A focus strategy means that a company uses either a focus cost or a focus differentiation to produce a specialized product or service for a limited, specially targeted group of customers in a particular geographic region or market segment. [Students’ answers will vary on the last portion of the question depending which company they choose.]

134. Direct competition is the rivalry between two companies offering similar products and services that

acknowledge each other as rivals and take offensive and defensive positions as they act and react to each other’s strategic actions. One constituent component is market commonality, or the degree to which two companies have overlapping products, services, or customers in multiple markets. The more markets in which there is product, service, or customer overlap, the more intense the direct competition will be between the two companies. Resource similarity is the extent to which a competitor has similar amounts and kinds of resources—that is, similar assets, capabilities, processes, information, and knowledge for creating and sustaining an advantage over competitors. From a competitive standpoint, resource similarity means that your direct competitors can probably match the strategic actions that your company takes. McDonald’s has little market commonality with a local espresso coffee shop, because the latter is likely geared toward coffee connoisseurs, and McDonald’s has significantly more resources than a local shop, which means that the local firm will not directly compete with McDonald’s, but rather with other alternatives.

135. Attacks are competitive moves designed to reduce a rival’s market share or profits. Responses, by contrast,

are competitive countermoves, prompted by a rival’s attack, to defend or improve a company’s market share or profit. Attacks are primarily motivated by market commonality; when it is strong, there is less motivation for firms to attack. Responses are more likely to occur when resource similarity is high.

136. Firms can use their resources to create and sustain a competitive advantage, that is, to provide greater value

for customers than competitors can. As the mom and pop video rental stores began to grow, they were meeting a strong and growing consumer demand with little competition. However, as more of them emerged, they began to compete with one another more aggressively. Unfortunately, the nature of their business was such that a sustainable competitive advantage would be very expensive to achieve. A competitive advantage becomes sustainable when other companies cannot duplicate the benefits it provides and have, for now, stopped trying.

To provide a sustainable competitive advantage, the firm’s resources must be valuable (capable of improving efficiency and effectiveness), rare (not possessed by many competing firms), imperfectly imitable (extremely costly or difficult to duplicate), and the firm must be organized to effectively capture this value.

It quickly became clear that the most successful video rental stores would have a very large inventory of a broad variety of videos for rent, including many copies of the latest releases, which were expensive. When this was done, browsing customers could always find something satisfying to rent, and customers looking for the latest hit movie that was just released would be guaranteed a copy upon arrival at the store. Thus, sustainable competitive advantage required a large video inventory (valuable) that most mom and pop video rental stores did not possess (rare), which was extremely costly to duplicate (imperfectly imitable), and could not be satisfied by having more copies of cheaper, but less popular films on hand (being organized to take advantage of resource value). Since this advantage could be achieved only with a large infusion of capital, along with effective management, the large, national retailers such as Blockbuster emerged and beat out the smaller, less capable, and less agile mom and pop competition.

Eventually, even the national video rental stores reached extinction because they couldn't keep up with the Powered by Cognero

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demand and accessibility of modern streaming and video on demand services and weren’t able to adapt their business models to respond to changing consumer preferences (e.g., most people don't even own a DVD player anymore). The resources of video rental stores were no longer valuable, rare, or imperfectly imitable, and the Blockbusters of the world were no longer organized to capture the value of their resources.

137. The strategy-making process is the method by which companies create strategies that produce a sustainable

competitive advantage (a competitive advantage that other companies have, for the moment, stopped trying to duplicate). The strategy-making process consists of three steps: (1) assessing the need for strategic change, (2) conducting a situational analysis, and (3) choosing strategic alternatives. The concepts of competitive inertia and strategic dissonance both relate to the first step, that of assessing the need for strategic change. There is a great deal of turbulence and uncertainty in strategic business environments, and top-level managers are often slow to recognize the need for strategic change, especially at successful companies that have created and sustained competitive advantages. In such companies, top managers often focus on the strategies that made their companies successful and continue to rely on them, even as the competition changes. Thus, success often leads to competitive inertia—a reluctance to change strategies or competitive practices that have been successful in the past. Obviously, such inertia can provide the time and opportunity for competitors to catch up and overtake a company’s ongoing strategy, and thereby destroy their competitive advantage.

Managers need to be aware of the dangers of competitive inertia and need to take steps to improve the speed and accuracy with which they determine the need for strategic change. One way to do this is to actively look for signs of strategic dissonance. Strategic dissonance is a discrepancy between a company’s intended strategy and the strategic actions managers take when actually implementing that strategy. While strategic dissonance can indicate that these managers are not doing what they should to carry out company strategy, it can also mean that the intended strategy is out of date and needs to be changed.

138. Portfolio strategy is a corporate-level strategy that minimizes risk by diversifying investment among

various businesses or product lines. Portfolio strategy provides the following guidelines to help managers acquire companies that fit well with the rest of their corporate portfolio and sell those that don’t.

First, the more businesses in which a corporation competes, the smaller its overall chances of failing. Because the emphasis is on adding more businesses to support the overall corporation, managers who use portfolio strategy are often on the lookout for acquisitions, that is, other companies to buy. Second, beyond adding new businesses to the corporate portfolio, portfolio strategy can reduce risk even more through unrelated diversification—creating or acquiring companies in completely unrelated businesses. If the businesses are unrelated, then losses in one business or industry will have minimal effect on the performance of other companies in the corporate portfolio. Third, investing the profits and cash flows from mature, slow-growth businesses into newer, faster-growing businesses can reduce long-term risk.

Thus, portfolio strategy recommends the acquisition of more, unrelated businesses as an overall risk management strategy. However, the research that has been done in the 20 plus years since the introduction of portfolio strategy has demonstrated that one of its basic assumptions is incorrect—portfolio strategy assumes that unrelated diversification will minimize risk. The research evidence (as summarized graphically in Exhibit 5.7) shows that this is not the case. There is a U-shaped relationship between diversification and risk. Single businesses with no diversification (represented by the left side of the curve) are extremely risky; if the single business fails, the entire business fails. So, in part, the portfolio strategy of diversifying is correct—competing in a variety of different businesses can lower risk. However, portfolio strategy is partly wrong, too—the right side of the curve shows that conglomerates composed of completely unrelated businesses are even riskier than Powered by Cognero

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single, undiversified businesses. The U-shaped curve in Exhibit 5.7 indicates that the best approach is probably related diversification, in which the different business units share similar products, manufacturing, marketing, technology, or cultures. The key to related diversification is to acquire or create new companies with core capabilities that complement the core capabilities of businesses already in the corporate portfolio. In sum, in contrast to single, undiversified businesses or unrelated diversification, related diversification reduces risk because the different businesses can work as a team, relying on one another for needed experience, expertise, and support. Related diversification thus represents the best approach to diversification.

139. Industry-level strategy is a corporate strategy that addresses the question “How should we compete in this

industry?” According to Harvard professor Michael Porter, the five industry forces that determine an industry’s overall attractiveness and potential for long-term profitability are (1) character of the rivalry, (2) threat of new entrants, (3) threat of substitute products or services, (4) bargaining power of suppliers, and (5) bargaining power of buyers. The stronger these forces, the greater the competition, and thus the less attractive the industry becomes to corporate investors because it is more difficult for companies to be profitable.

The central force among these five, as identified in Exhibit 5.8, is character of the rivalry. Competitive rivalry is a measure of the intensity of competitive behaviour between companies in an industry. Is the competition among firms aggressive and cutthroat, or do competitors focus more on serving customers than on attacking each other? Both industry attractiveness and profitability decrease when rivalry is cutthroat.

The threat of new entrants is a measure of the degree to which barriers to entry make it easy or difficult for new companies to get started in an industry. If it is easy for new companies to get started in the industry, then competition will increase and prices and profits will fall. However, if there are sufficient barriers to entry, such as large capital requirements to buy expensive equipment or plant facilities or the need for specialized knowledge, then competition will be weaker and prices and profits will generally be higher.

The threat of substitute products or services is a measure of the ease with which customers can find substitutes for an industry’s products or services. If customers can easily find substitute products or services, the competition will be greater and profits will be lower. If there are few or no substitutes, competition will be weaker and profits will be higher.

Bargaining power of suppliers is a measure of the influence that suppliers of parts, materials, and services to firms in an industry have on the prices of these inputs. If an industry has numerous suppliers from whom to buy parts, materials, and services, companies will be able to bargain with suppliers to keep prices low. On the other hand, if there are few suppliers, or if a company is dependent on a supplier with specialized skills and knowledge, then suppliers will have the bargaining power to dictate price levels.

Bargaining power of buyers is a measure of the influence that customers have on the firm’s prices. If a company is dependent on just a few high-volume buyers, those buyers will typically have enough bargaining power to dictate prices. By contrast, if a company sells a popular product or service to multiple buyers, then the company has more power to set prices.

As the threat of new entrants, threat of substitute products or services, bargaining power of suppliers, and bargaining power of buyers increase, the overall competitive environment in an industry similarly increases. In a more competitive environment, cutthroat competition is more likely to pay off. Thus, these four factors in combination tend to influence the overall character of the rivalry, which could thus be conceived as the central force among them impacting upon industry strategy.

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Chapter 5 - Organizational Strategy 140. Most companies do not compete directly with all the firms in their industry. Instead of “competing” with

the industry, most firms compete directly with just a few companies. Direct competition is the rivalry between two companies offering similar products and services that acknowledge each other as rivals and take offensive and defensive positions as they act and react to each other’s strategic actions. Two factors determine the extent to which firms will be in direct competition with each other: market commonality and resource similarity.

Market commonality is the degree to which two companies have overlapping products, services, or customers in multiple markets. The more markets in which there is product, service, or customer overlap, the more intense the direct competition between the two companies. Resource similarity is the extent to which a competitor has similar amounts and kinds of resources, that is, similar assets, capabilities, processes, information, and knowledge used to create and sustain an advantage over competitors. From a competitive standpoint, resource similarity means that the strategic actions that your company takes can probably be matched by your direct competitors.

There are two basic strategic moves in direct competition between firms: attacks and responses. An attack is a competitive move designed to reduce a rival’s market share or profits. A response is a countermove, prompted by a rival’s attack, designed to defend or improve a company’s market share or profit. Attacks and responses can include smaller, more tactical moves, like price cuts, or resource-intensive strategic moves, such as introducing new products or services within the firm’s existing business.

From the standpoint of developing a sustained competitive advantage, it would be preferable to compete in an environment of high market commonality and low resource similarity, where your company is the stronger one.

In this context, since you are stronger, your competitors will be less likely to attack you. This context also means that any attacks initiated by your firm on your competitors probably will not be effectively countered, and you will win. The high market commonality ensures that there is plenty of market share to be gained by defeating your competitors. In this context, you would be most likely to develop a sustained competitive advantage, as long as you did not allow competitive inertia to set in over time after you have taken over the market.

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Chapter 6 - Innovation and Change

Indicate the answer choice that best completes the statement or answers the question.

1. What is the term for the successful implementation of creative ideas in organizations? a. organizational change b. organizational innovation c. organizational creativity d. organizational development 2. Which of the following occurs when entrepreneurial ideas are created inside an existing company? a. interpreneurship b. extrapreneurship c. intracreativity d. intrapreneurship 3. Josephine is a valuable employee to her company. She has found new ways to complete work processes that

have saved the company thousands of dollars. What makes Josephine so valuable to her company? a. synergistic use of resources b. ideation c. creativity d. organizational adaptation 4. Creativity was needed to improve efficiency without raising costs at WestJet. Over the last few years, the

company has implemented winglets and a bring-your-own-device policy across their fleet. What do these successful changes exemplify? a. corporate synergy b. organizational innovation c. assembly networking d. reverse engineering 5. McDonald’s restaurants are involved in a long-term, worldwide movement to change consumers’ perceptions

of their products by selling food that is healthier. What is McDonald’s engaged in? a. organizational change b. reverse engineering c. market diversification d. product revitalization 6. George was appointed president of a health devices company. Within a year the board of directors was very

happy with George’s appointment. The company’s structure was transformed to a team structure. New suppliers were found. The culture became one of hard work and meeting goals. What did George bring to the company to please the board? a. organizational innovation b. organizational development c. organizational change Powered by Cognero

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Chapter 6 - Innovation and Change d. organizational re-engineering 7. When Gregg Steiner became the vice president for Pinxav, he knew the diaper-rash product manufacturer’s

sales were declining. At a trade show, Steiner was pitching the product and said, “If you’re not happy with the product, I will not only give you your money back—I’ll buy you our competitor’s product. I’ll buy you whatever other brand you want.” Suddenly, customers were interested, and they all pulled out their money.

None of the customers ever took Steiner up on his offer. Steiner then decided to make it part of his business practice. What is this new guarantee an example of? a. corporate synergy b. organizational innovation c. assembly networking d. organizational networking 8. Gametime tapped a market that Ticketmaster had neglected: it specialized in locating and securing premium

seating and tickets to sold-out events. What did the company use to locate and serve a profitable market? a. synergy b. ideation c. creativity d. organizational adaptation 9. What must necessarily come before organizational innovation in the successful implementation of creative

ideas in organizations? a. synergy b. design competition c. resource development d. creativity 10. The development of CDs was a source of which of the following to companies in the recording industry, just

as audiotapes and 8-track tapes had once been? a. a sustainable competitive advantage b. creativity re-engineering c. technological discontinuity d. technological replacement 11. What is the term for the knowledge, tools, and techniques used to transform inputs into outputs? a. resource manipulation b. procedural innovation c. a transformation system d. technology 12. TRX Ltd. used to budget a large amount of expenditure for meetings where managers from across the

province would meet at head office. With the inception of phone conferencing the budget for meetings was cut substantially as managers were required to come to head office less frequently. With the inception of video Powered by Cognero

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conferencing, managers now never conduct meetings by phone and rarely meet at head office. What is this an example of? a. the technology process b. a technology pattern c. a technology cycle d. the technology continuum 13. What is the shape of the typical innovation pattern that nearly all technology cycles follow? a. W-curve b. U-curve c. bell-shaped d. S-curve 14. Which of the following best identifies where in the typical S-curve pattern of innovation increased effort—

that is, money, research and development, etc.—brings only small improvements in technological performance? a. at the beginning and end of the cycle b. in the middle of the cycle only c. at the end of the cycle only d. throughout the entire cycle 15. Where in the typical S-curve pattern of innovation will small amounts of effort result in significant increases

in performance? a. during the growth stage of the cycle b. at the midpoint of the cycle c. at the end of the cycle d. throughout the cycle 16. Innovation streams are patterns of innovation over time that can create which of the following? a. satisfaction of more customers with fewer resources b. sustainable competitive advantage c. variable cost control d. core competencies 17. In the typical S-curve pattern of innovation, increased effort—that is, money, research and development,

etc.—brings only small improvements in technological performance when the performance limits of the technology are reached. At what point in the cycle does this occur? a. during the introductory stage of the cycle b. at the break-even point of the cycle c. during the maturity stage of the cycle d. at the end of the cycle 18. At what point in the typical S-curve pattern of innovation is a company likely to be when significant Powered by Cognero

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Chapter 6 - Innovation and Change

improvements in performance can be gained only through radical new designs or new performance-enhancing materials? a. It is at its break-even point. b. It is at the problem identification stage of the innovation cycle. c. It is at the end of the innovation cycle. d. It is at either the beginning or end of the innovation cycle.

19. A technology cycle occurs whenever there are major advances or changes in which particular aspects of a

field or discipline? a. the human, technical, and conceptual skills needed b. the structure or personnel requirements c. the internal environment resources d. the knowledge, tools, and techniques 20. What is the term for patterns of innovation over time that can create a sustainable competitive advantage? a. innovation maps b. organization development c. results-driven change d. innovation streams 21. Through which of the following processes does an innovation stream move from one technology cycle to

another? a. technological substitution b. technological variation c. technological continuity d. technological selection 22. In terms of innovation streams, what occurs when customers purchase flat-screen computer monitors to

replace older, bulkier monitors? a. technological substitution b. technological expansion c. re-engineering d. demarketing 23. When DaimlerChrysler learned that it took longer than any other U.S. car manufacturer to assemble a

vehicle, it purchased newer, more flexible manufacturing systems to replace its older ones. Which period of the innovation stream did it enter when it made this change? a. technological adaptation b. the era of dominant design c. the technological growth stage d. discontinuous change Powered by Cognero

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Chapter 6 - Innovation and Change 24. Which phase of a technology cycle is characterized by technological substitution and design competition? a. technological adaptation b. the era of dominant design c. the technological growth stage d. discontinuous change 25. What is the term for the purchase of new technologies to replace older ones? a. adaptive change b. design replacement c. technological substitution d. dominant design 26. Which of the following characterizes discontinuous change in an innovation stream? a. synergy b. technological substitution c. incremental change d. empathetic design 27. During which phase of a technology cycle do companies innovate by lowering the cost and improving the

functioning and performance of the dominant design? a. the technological discontinuity phase b. the discontinuous change phase c. the process implementation phase d. the incremental change phase 28. What are the phases of a technology cycle within an innovation stream in order from beginning to end? a. incremental change, discontinuous change, dominant design, and technological discontinuity b. discontinuous change, incremental change, technological discontinuity, and dominant design c. dominant design, discontinuous change, incremental change, and technological discontinuity d. technological discontinuity, discontinuous change, dominant design, and incremental change 29. The auto industry has been perfecting the internal combustion engine (ICE) for some 120 years. Billions of

dollars of work is ongoing at all of the auto companies on alternatives to ICEs. A cooperative program between the Big Three and government to replace ICEs with electric engines has been operating since 1993. What is the internal combustion engine (ICE) an example of? a. a dominant design b. design dichotomy c. a synergistic design d. a differential design 30. When companies bet on the wrong design or old technology, a phenomenon occurs in which a new

dominant design prevents them from competitively selling their products. What is this phenomenon known as?

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Chapter 6 - Innovation and Change a. technological lockout b. technological stoppage c. innovation lockout d. technological discontinuity 31. October 15, 2013, was known as Tablet Tuesday. Several large technology companies launched their next

generation of tablets. Microsoft introduced its second tablet. Apple’s new iPad promised to be sleeker and faster. Nokia introduced its first tablet. What occurred on this date with these companies and their new product introductions? a. technological discontinuity b. design competition c. technology cycle d. innovation streams 32. Titleist has been manufacturing golf balls for several years, but each year it comes out with new designs.

Titleist developed the new Pro V1 golf ball, with a solid core that is designed to benefit players with high swing speeds. Which term describes how this manufacturer remains competitive? a. technological discontinuity b. discontinuous change c. dominant design d. incremental change 33. To successfully manage innovation streams, companies need to be good at which of the following? a. managing sources of innovation b. innovation during synergistic change c. reciprocity d. environmental design issues 34. At Deloitte’s Montreal offices, upper management encourages collaboration among employees. Throughout

the organization, there are flex spaces and social spaces to facilitate this collaboration. What type of workplace culture does this exemplify? a. creative work environment b. innovative society c. homogeneous work environment d. participative work team 35. Malcolm believes people produce best when they are exposed to some form of pressure. He changed the

goals of his design team from being easily attainable to being of much higher standard and needing completion within shorter time frames. What component of a creative work environment did Malcolm introduce to the design team? a. challenging work b. mechanistic structures c. freedom Powered by Cognero

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Chapter 6 - Innovation and Change d. autocratic leadership 36. Challenging work promotes creativity because it creates a rewarding psychological experience known as

which of the following? a. surge b. flow c. stream d. ripple 37. Donald feels his design team could be more creative if they met somewhere other than the lunch room where

others are constantly coming and going. Donald created space in his large office where the team could meet without interruptions. After this move the team meetings were much more productive. What component of a creative work environment did Donald use to encourage greater creativity in his team? a. regular brainstorming meetings b. training c. employee profit-sharing d. the removal of organizational impediments 38. Calgary-based DIRTT Environmental Services is exploring new products and markets through the

development of interior construction and design products in its plants in British Columbia, Arizona, and Georgia. What can DIRTT do to jump-start this innovative process? a. It can manage flow through the use of Gantt charts. b. It can concentrate on dominant design and ignore incremental design. c. It can engage in creative reciprocity. d. It can establish creative work environments.

39. Which of the following is an organizational impediment to creativity in a work environment? a. internal synergies b. organic management structures c. change culture d. power struggles 40. Narrative 6-1

Unverferth Manufacturing is a manufacturer and supplier of innovative agricultural equipment. Recently it began developing a new 12-row strip-till subsoiler that is ideal for cotton production. Before introducing the new tiller to the market, Unverferth developed and tested nearly three dozen product prototypes.

Refer to Narrative 6-1. What approach to innovation did Unverferth use? a. the compression approach b. the experiential approach c. the technological substitution approach d. the generational change approach Powered by Cognero

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Chapter 6 - Innovation and Change 41. Narrative 6-1

Unverferth Manufacturing is a manufacturer and supplier of innovative agricultural equipment. Recently it began developing a new 12-row strip-till subsoiler that is ideal for cotton production. Before introducing the new tiller to the market, Unverferth developed and tested nearly three dozen product prototypes.

Refer to Narrative 6-1. What did Unverferth use to produce the best possible tiller before introducing it to the market? a. service development b. process duplication c. design iteration d. design compliance 42. Which approach to innovation assumes that innovation is occurring within a highly uncertain environment

and that the key to fast product innovation is to use intuition, flexible options, and hands-on experience to reduce uncertainty and accelerate learning and understanding? a. the compression approach b. the experiential approach c. the technological substitution approach d. the generational change approach 43. Which of the following is a part of the experiential approach to innovation? a. distant management b. testing c. independent work d. initiative conversations 44. Sears Canada is working to revitalize a tired national brand. It recently tested a new logo and store layout in

stores in Thornhill and Burlington, ON, before rolling the changes out nationally. Which of the following, therefore, was used to develop Sears Canada’s new store layouts? a. server development b. process duplication c. design iteration d. design compliance 45. What is a reason to use milestones in the experiential approach to innovation? a. Milestones serve to eliminate manufacturing bottlenecks. b. Milestones shorten the innovation process. c. Milestones create incrementally sustainable advantages. d. Milestones virtually eliminate problems associated with the control function of management.

46. What is the first aspect for managing innovation during discontinuous change? a. design iteration b. budgeting Powered by Cognero

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Chapter 6 - Innovation and Change c. establishment of a dominant design d. involvement of suppliers 47. Which statement describes the outcome from the use of milestones in the experiential approach to

innovation? a. The use of milestones results in the general chaos that follows technological discontinuities. b. The use of milestones lengthens the innovation process. c. The use of milestones maintains the status quo. d. The use of milestones lets an organization know when to take corrective action.

48. Jennifer is expanding her Canadian company by penetrating the Asian market. She brings together a task

force comprising managers from marketing, finance, and operations to determine how to be successful in this market. What kind work team did Jennifer create to expand into Asia? a. milestone team b. innovation team c. multifunctional team d. experiential team 49. Which approach to managing innovation assumes that innovation is a predictable process made up of a

series of steps and that condensing the time it takes to complete those steps can speed up innovation? a. compression b. milestones c. dialectical d. generational 50. ARI is a leading provider of sales and profit-building technology services for equipment dealers. When

Unverferth Manufacturing wanted to change the way it supplied information to its dealers by implementing a website, it contacted ARI. ARI provided a solution that allowed Unverferth to replace its paper catalogues with catalogues on CDs and to create a website. Aided by supplier involvement, Unverferth was able to eliminate costly paper catalogues and gain the ability to provide up-to-the-minute information to its dealers. Which approach to innovation does this incremental change exemplify? a. generational b. experiential c. milestones d. compression 51. Which innovation management approach is best in fairly certain environments, during periods of

incremental change, and when the goals are lower costs and incremental improvements in the performance and function of the existing technological design? a. experiential b. compression c. prototypical d. milestones Powered by Cognero

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Chapter 6 - Innovation and Change 52. What are the goals of the compression approach to innovation? a. lower costs and incremental change of dominant design b. the development of milestones and the comparison of actual milestones with forecasts c. the establishment of a dominant design and speed d. absolute-time management and the creation of a dominant design 53. What is the first step in the compression approach to innovation? a. overlapping of the individual steps b. planning for incremental innovation c. supplier involvement d. granting of autonomy 54. Which of the following is an important part of both the compression approach and the experiential approach

to innovation? a. multifunctional teams b. design iterations c. milestones d. synergistic processes 55. What is said to have occurred when incremental improvements are made to a dominant technological design

such that the improved version of the technology is fully backward compatible with the older version? a. a milestone b. an intuitive change c. a generational change d. a coercive change 56. Unverferth Manufacturing makes agricultural equipment. It used finite element analysis (FEA) software to

speed up the design cycle for its 12-row subsoiler. Which aspect of the compression approach to innovation would the use of this software assist? a. planning b. supplier involvement c. shortening time of individual steps d. multifunctional teams 57. Backward compatibility is an important consideration for software users who are using an accounting

program to facilitate their tax preparation and who want to use a newer version that has greater capacity.

Therefore, which of the following do many software manufacturers engage in? a. coercive change b. dominant design manipulation c. generational change d. intuitive change Powered by Cognero

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Chapter 6 - Innovation and Change 58. Jim is very happy with how his company has provided a living for himself and his family. His wife, Kim,

knows the company needs to adopt new technologies to continue to serve their customers especially with growing competition. However, Jim is reluctant and asks Kim why they should change something that has been so successful. What kind of force is Jim to his company in this situation? a. dialectical b. generational c. resistance d. experiential 59. According to social psychologist Kurt Lewin, what leads to differences in the form, quality, or condition of

an organization over time? a. compressed changes b. generational forces c. generational changes d. change forces 60. Which of the following is one of the sources of resistance to change? a. self-interest b. multifunctional teams c. a dynamic organizational culture d. discontinuous innovation 61. Paul has hired an Industry Canada consultant to review the labour-intensive process his company uses to

make its products. Paul is hoping that automation can be implemented to reduce the costs of production and make his company more profitable. What kind of force is Paul to his company? a. experiential: resistance to change will not occur when those affected by the change participate in its planning and implementation b. generational: resistance to change will not occur when employees are educated about the need for change c. resistance: resistance to change will not occur when change efforts receive significant managerial support d. change: resistance to change will always occur; it is inevitable 62. According to Kurt Lewin, which of the following is one of the three steps in the basic process of managing

organizational change? a. unfreezing b. organizational dialogue c. change definition d. incremental change 63. According to Kurt Lewin, what are the three steps in the basic process of managing organizational change? a. unfreezing, change intervention, and refreezing b. organizational change, departmental change, and individual change Powered by Cognero

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Chapter 6 - Innovation and Change c. change definition, change motivation, and change d. synthesizing, motivating, and rewarding 64. Which of the following is one method for managing resistance to change? a. implementation of rigid structures b. autocratic leadership c. change simulation d. negotiation 65. What should managers use as an approach to manage resistance to change when the resistance is based on

insufficient, incorrect, or misleading information? a. education and communication b. participation and experience c. negotiation and mentoring d. coercion and rewards 66. Downsizing has thinned the ranks of hospital personnel. In one hospital, management was bewildered by the

high staff turnover rate, while in patient care areas, each nurse was doing the work of two nurses. Hospital employees were adamantly resisting any more change. According to Kurt Lewin, what method could hospital administrators use to manage this resistance? a. reduce communication to employees about the change process b. adopt an autocratic leadership style c. provide significant managerial support d. encourage employees to work independently 67. Which of the following is a method for managing resistance to change that should be used only as a last

resort or under crisis conditions? a. mentoring b. arbitration c. negotiation d. coercion 68. When Enbridge merged with Spectra Energy, the company cited “achievable cost synergies,” which usually

means staff cuts. In which stage of organizational change would the CEO need to use empathy and communicate the specific details of the merger? a. change intervention b. the change prototype c. unfreezing d. refreezing 69. When Joe Natale joined Rogers Communications in early 2017, the company was faltering due to customer

dissatisfaction and inefficient operations. Natale’s vision was to restore Rogers to a leadership role within the industry. It was a radical proposition. During which stage of organizational change would it be especially Powered by Cognero

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important to have this vision in mind? a. change intervention b. the change prototype c. unfreezing d. refreezing 70. Which of the following is one group that John Kotter recommends be included in a core change coalition to

guide and support organizational change? a. lobbyists b. suppliers c. union leaders d. creditors 71. According to John Kotter, during which stage of organizational change do managers tend to make the

mistake of not having a powerful change coalition? a. unfreezing change b. implementing change c. refreezing change d. initiating change 72. According to John Kotter, which of the following actions will adversely influence refreezing efforts? a. sharing a vision b. removing obstacles to the company’s new vision c. creating a powerful enough guiding coalition d. declaring victory too soon 73. Which statement describes an advantage of the results-driven change approach? a. it supplants the sole emphasis on activity with a focus on process, not on outcomes b. managers reinforce the status quo c. it encourages employees to resist making rash decisions d. managers introduce changes in procedures, philosophy, or behaviour only when they will improve

measured performance 74. Which type of change is the General Electric fastworks approach? a. activity-oriented change b. results-driven change c. generational change d. vision-driven change 75. Which term refers to the individual who is formally in charge of guiding a change effort? a. change ombudsperson b. staff moderator Powered by Cognero

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Chapter 6 - Innovation and Change c. change mentor d. change agent 76. Connie has changed the organizational structure in her company to a team structure. Many employees have

new functions and different people to work with. Connie has given Pat the responsibility to ensure the changes implemented are followed. What role has Pat been given by Connie? a. change ombudsperson b. staff moderator c. change mentor d. change agent 77. Which of the following describes organizational development? a. it requires a steering committee b. it takes a short-term approach to change c. it is a philosophy and collection of planned change interventions d. it assumes that top management support is not necessary for change 78. When Joe Natale joined Rogers Communications, the company was faltering due to customer dissatisfaction

and inefficient operations. Natale’s vision was to restore Rogers to a leadership role within the industry. It was a radical proposition. What role did Natale fill in this case? a. change ombudsman b. staff moderator c. change mentor d. change agent 79. What is the first of eight steps in organizational development intervention? a. pioneering b. inception c. introduction d. entry 80. Which of the following approaches is aimed at changing large systems, small groups, or individuals? a. the General Electric fastworks approach b. the functional approach to change c. organizational development d. results-driven change 81. Which of the following techniques is used in large-system intervention? a. survey feedback b. training c. team building d. counselling/coaching Powered by Cognero

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Chapter 6 - Innovation and Change 82. Which of the following is likely to occur in organizations that don’t recognize the need for change? a. technological substitution b. organizational decline c. design competition d. coercive design intervention 83. An NHL team that has lost 12 of its last 15 games but sticks with its coach and key players because they’ll

turn it around is most likely in which stage of organizational decline? a. blinded b. inaction c. faulty action d. crisis 84. When Firm A announces a round of job cuts and “belt tightening,” which stage of organizational decline is it

in? a. blinded b. inaction c. faulty action d. crisis 85. A firm that pays retention bonuses, payable only if they stay to a critical point, to key executives to guide

them through a tumultuous period in the firm’s history is most likely in which stage of organizational decline? a. blinded b. inaction c. faulty action d. crisis 86. Which of the following actions is most appropriate for a firm in Stage 5 of organizational decline? a. prompt action b. corrective action c. effective reorganization d. dissolution 87. Narrative 6-2

An Internet strategy enabled Nestlé to change its way of doing business and allowed the company to change its staid, risk-averse culture. Nestlé leaders overhauled company processes—from buying raw materials to processing purchase orders to marketing the roughly 2,000 products under its 200 brands.

Refer to Narrative 6-2. In terms of organizational development, what type of intervention did Nestlé use? a. unit b. large system c. unit-focused Powered by Cognero

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Chapter 6 - Innovation and Change d. results-focused 88. Narrative 6-2

An Internet strategy enabled Nestlé to change its way of doing business and allowed the company to change its staid, risk-averse culture. Nestlé leaders overhauled company processes—from buying raw materials to processing purchase orders to marketing the roughly 2,000 products under its 200 brands.

Refer to Narrative 6-2. Which type of change did Nestlé use to reinvent the company? a. activity-oriented b. results-driven c. generational d. vision-driven 89. Narrative 6-3

Athabasca University has evolved over its nearly 50-year history. Course delivery has evolved along with Athabasca University—from text-based learning modules to video cassettes, partnerships with educational television, and now to an Internet-enabled teaching and learning model that coexists with the text and videobased independent learning models. In 1994, Athabasca pioneered an online Executive MBA program. In addition to innovating learning models, Athabasca developed a Centre for Distance Education, which is globally known for its research into distance learning and offers graduate programs in the field.

Refer to Narrative 6-3. Which of the following terms applies to why Athabasca developed the online executive MBA in 1994? a. technological subtraction b. technological discontinuity c. process obsolescence d. process addition 90. Narrative 6-3

Athabasca University has evolved over its nearly 50-year history. Course delivery has evolved along with Athabasca University—from text-based learning modules to video cassettes, partnerships with educational television, and now to an Internet-enabled teaching and learning model that coexists with the text and videobased independent learning models. In 1994, Athabasca pioneered an online Executive MBA program. In addition to innovating learning models, Athabasca developed a Centre for Distance Education, which is globally known for its research into distance learning and offers graduate programs in the field.

Refer to Narrative 6-3. Which of the following stages did Athabasca University enter as it tried to compete with its online executive MBA product? a. technological adaptation b. the era of dominant design c. the technological growth stage d. discontinuous change 91. Narrative 6-3 Powered by Cognero

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Athabasca University has evolved over its nearly 50-year history. Course delivery has evolved along with Athabasca University—from text-based learning modules to video cassettes, partnerships with educational television, and now to an Internet-enabled teaching and learning model that coexists with the text and videobased independent learning models. In 1994, Athabasca pioneered an online Executive MBA program. In addition to innovating learning models, Athabasca developed a Centre for Distance Education, which is globally known for its research into distance learning and offers graduate programs in the field.

Refer to Narrative 6-3. Athabasca University continues to innovate its online collaborative learning model, used for the executive MBA, at the same time as it provides an individualized, self-paced learning option for other courses. What does the existence of both technologies exemplify? a. design substitution b. modular management c. design competition d. hierarchical management 92. Narrative 6-3

Athabasca University has evolved over its nearly 50-year history. Course delivery has evolved along with Athabasca University—from text-based learning modules to video cassettes, partnerships with educational television, and now to an Internet-enabled teaching and learning model that coexists with the text and videobased independent learning models. In 1994, Athabasca pioneered an online Executive MBA program. In addition to innovating learning models, Athabasca developed a Centre for Distance Education, which is globally known for its research into distance learning and offers graduate programs in the field.

Refer to Narrative 6-3. Athabasca leverages the Centre for Distance Education to break down barriers and that celebrates new initiatives and ideas. What is this called? a. a creative work environment b. an open system c. an adaptive culture d. a culture of change 93. Narrative 6-4

Emily Morgan is a 30-year veteran at Levi Strauss & Company. She joined the company as a secretary in the advertising department and slowly began rising through the ranks. The more she saw how the company worked, the more dissatisfied she became. When talk of reinventing the company spread through headquarters and senior management began looking for volunteers, Morgan became a part of the change initiative. She led the team that designed the Develop Sources process, a system for working with suppliers. Eventually, Morgan became vice president for fulfillment, Asia. Her job was to convince Levi’s Asian suppliers to adopt more efficient production and distribution techniques. The Asian suppliers were afraid of change. Once Morgan and her staff showed suppliers how use of the Develop Sources program would benefit them, Morgan’s job to transform Levi’s Asian operations became easier.

Refer to Narrative 6-4. In order to maintain a competitive advantage in the clothing industry, Levi’s had to create new, more efficient methods of dealing with its suppliers. What is the term for the process of Levi’s discontinuing inefficient methods of dealing with suppliers through substituting electronic networks for outdated systems?

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Chapter 6 - Innovation and Change a. dominant design b. competitive advantage c. innovation stream d. comparative differential 94. Narrative 6-4

Emily Morgan is a 30-year veteran at Levi Strauss & Company. She joined the company as a secretary in the advertising department and slowly began rising through the ranks. The more she saw how the company worked, the more dissatisfied she became. When talk of reinventing the company spread through headquarters and senior management began looking for volunteers, Morgan became a part of the change initiative. She led the team that designed the Develop Sources process, a system for working with suppliers. Eventually, Morgan became vice president for fulfillment, Asia. Her job was to convince Levi’s Asian suppliers to adopt more efficient production and distribution techniques. The Asian suppliers were afraid of change. Once Morgan and her staff showed suppliers how use of the Develop Sources program would benefit them, Morgan’s job to transform Levi’s Asian operations became easier.

Refer to Narrative 6-4. Why did Levi’s decide in 1982 to change the way it was conducting business? a. to protect its competitive advantage b. to downsize its workforce c. to make outsourcing more economically feasible d. to create economies of scale 95. Narrative 6-4

Emily Morgan is a 30-year veteran at Levi Strauss & Company. She joined the company as a secretary in the advertising department and slowly began rising through the ranks. The more she saw how the company worked, the more dissatisfied she became. When talk of reinventing the company spread through headquarters and senior management began looking for volunteers, Morgan became a part of the change initiative. She led the team that designed the Develop Sources process, a system for working with suppliers. Eventually, Morgan became vice president for fulfillment, Asia. Her job was to convince Levi’s Asian suppliers to adopt more efficient production and distribution techniques. The Asian suppliers were afraid of change. Once Morgan and her staff showed suppliers how use of the Develop Sources program would benefit them, Morgan’s job to transform Levi’s Asian operations became easier.

Refer to Narrative 6-4. Which of the following characteristics did Levi’s most likely NOT have prior to the reinvention of the company in 1982? a. a history of innovation discontinuity b. design iteration c. competitive advantage d. a creative work environment 96. Narrative 6-4

Emily Morgan is a 30-year veteran at Levi Strauss & Company. She joined the company as a secretary in the Powered by Cognero

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advertising department and slowly began rising through the ranks. The more she saw how the company worked, the more dissatisfied she became. When talk of reinventing the company spread through headquarters and senior management began looking for volunteers, Morgan became a part of the change initiative. She led the team that designed the Develop Sources process, a system for working with suppliers. Eventually, Morgan became vice president for fulfillment, Asia. Her job was to convince Levi’s Asian suppliers to adopt more efficient production and distribution techniques. The Asian suppliers were afraid of change. Once Morgan and her staff showed suppliers how use of the Develop Sources program would benefit them, Morgan’s job to transform Levi’s Asian operations became easier.

Refer to Narrative 6-4. What was the result of the unfreezing, change intervention, and refreezing processes used by Morgan and her team? a. motivated Asian suppliers b. management of the Asian suppliers’ resistance to change c. creation of a more dynamic work environment d. coordination of a creative work environment 97. Narrative 6-4

Emily Morgan is a 30-year veteran at Levi Strauss & Company. She joined the company as a secretary in the advertising department and slowly began rising through the ranks. The more she saw how the company worked, the more dissatisfied she became. When talk of reinventing the company spread through headquarters and senior management began looking for volunteers, Morgan became a part of the change initiative. She led the team that designed the Develop Sources process, a system for working with suppliers. Eventually, Morgan became vice president for fulfillment, Asia. Her job was to convince Levi’s Asian suppliers to adopt more efficient production and distribution techniques. The Asian suppliers were afraid of change. Once Morgan and her staff showed suppliers how use of the Develop Sources program would benefit them, Morgan’s job to transform Levi’s Asian operations became easier.

Refer to Narrative 6-4. Which of the following elements did Morgan find strong in Asia initially? a. change forces b. internal strengths c. frozen change d. resistance forces 98. Narrative 6-4

Emily Morgan is a 30-year veteran at Levi Strauss & Company. She joined the company as a secretary in the advertising department and slowly began rising through the ranks. The more she saw how the company worked, the more dissatisfied she became. When talk of reinventing the company spread through headquarters and senior management began looking for volunteers, Morgan became a part of the change initiative. She led the team that designed the Develop Sources process, a system for working with suppliers. Eventually, Morgan became vice president for fulfillment, Asia. Her job was to convince Levi’s Asian suppliers to adopt more efficient production and distribution techniques. The Asian suppliers were afraid of change. Once Morgan and her staff showed suppliers how use of the Develop Sources program would benefit them, Morgan’s job to transform Levi’s Asian operations became easier.

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Refer to Narrative 6-4. What specific technique for dealing with resistance to change did Morgan use to convince the Asian suppliers that it was in their best interest to adopt the Develop Sources process? a. coercion b. top management support c. education and communication d. direction 99. Narrative 6-4

Emily Morgan is a 30-year veteran at Levi Strauss & Company. She joined the company as a secretary in the advertising department and slowly began rising through the ranks. The more she saw how the company worked, the more dissatisfied she became. When talk of reinventing the company spread through headquarters and senior management began looking for volunteers, Morgan became a part of the change initiative. She led the team that designed the Develop Sources process, a system for working with suppliers. Eventually, Morgan became vice president for fulfillment, Asia. Her job was to convince Levi’s Asian suppliers to adopt more efficient production and distribution techniques. The Asian suppliers were afraid of change. Once Morgan and her staff showed suppliers how use of the Develop Sources program would benefit them, Morgan’s job to transform Levi’s Asian operations became easier.

Refer to Narrative 6-4. Which of the following roles does Emily Morgan exemplify? a. ombudsperson b. mentor c. organizational liaison d. change agent 100. Narrative 6-5

Bill Gore started the W.L. Gore Company when he left DuPont to develop innovative uses for Teflon (PTFE), the then new non-stick plastic. Today, W.L. Gore is best known for Gore-Tex, a waterproof, windproof, and temperature-resistant fabric that breathes and does not trap perspiration and body heat. Gore-Tex is used for coats, gloves, camping and hiking gear, and for protective outerwear worn by firefighters and military, emergency, and medical personnel.

But in recent years, Gore-Tex sales have steadily declined. A number of alternative fabrics, such as Entrant GII and eVENT, work nearly as well but cost only $6 to $8 per yard compared to $15 to $30 per yard for Gore-Tex. So W.L. Gore must reduce its dependence on Gore-Tex, which accounts for 21 percent of its $1.6 billion in revenues, by consistently developing other innovative products.

In general, W.L. Gore goes for dramatic rather than incremental improvements. On its website, it declares that Gore’s products are designed to be the highest quality in their class and revolutionary in their effect.

Gore created Glide dental floss, which doesn’t shred, tear, and get caught in your teeth. Glide is a thin, Teflonlike tape which was soon the number two floss in the market, and today is the number one floss recommended by dental professionals. Gore then sold Glide to Procter & Gamble, but still makes Glide for P&G, earning substantial profits. It then reinvested in other innovative products, such as CleanStream filters for vacuum cleaners; Radome, used to cover microwave transmission sites (think of the large golf-ball structures you Powered by Cognero

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sometimes see around airports); stent-grafts for medical treatment; and many more.

Gore frequently asks potential customers for help when designing new products (e.g., design iterations and testing). For example, the Gore engineer developing Elixir acoustic guitar strings talked to another Gore engineer who played the guitar. They, in turn, asked experienced guitar players to give them feedback on the product. Thanks to Elixir strings’ thin plastic coating, their resistance to dust, skin fragments, dirt, and oil lends a better sound for five times longer than normal guitar strings. Elixir strings now have a 35 percent share of the market.

Gore also provides flexible options for innovation by making time for dabbling. Everyone in the company is encouraged to spend 10 percent of their time on new ideas or products. If those ideas have potential, a Gore sponsor, typically a more senior person, will guide and coach that employee on how to further advance the idea or product. When ideas or innovations are to the point where further development requires a significant investment by the company, they are reviewed by a multifunctional team that goes through an exercise called Real, Win, Worth. They ask: Is the opportunity real? Is there really somebody out there that will buy this? Can we win? What do the economics look like? Can we make money doing this? Is it unique and valuable? Can we have a sustained advantage [such as a patent]?

Refer to Narrative 6-5. What feature did Gore-Tex fabric give its manufacturer when it was introduced? a. discontinuous change b. competitive advantage c. product-driven vision d. generational product 101. Narrative 6-5

Bill Gore started the W.L. Gore Company when he left DuPont to develop innovative uses for Teflon (PTFE), the then new non-stick plastic. Today, W.L. Gore is best known for Gore-Tex, a waterproof, windproof, and temperature-resistant fabric that breathes and does not trap perspiration and body heat. Gore-Tex is used for coats, gloves, camping and hiking gear, and for protective outerwear worn by firefighters and military, emergency, and medical personnel.

But in recent years, Gore-Tex sales have steadily declined. A number of alternative fabrics, such as Entrant GII and eVENT, work nearly as well but cost only $6 to $8 per yard compared to $15 to $30 per yard for Gore-Tex. So W.L. Gore must reduce its dependence on Gore-Tex, which accounts for 21 percent of its $1.6 billion in revenues, by consistently developing other innovative products.

In general, W.L. Gore goes for dramatic rather than incremental improvements. On its website, it declares that Gore’s products are designed to be the highest quality in their class and revolutionary in their effect.

Gore created Glide dental floss, which doesn’t shred, tear, and get caught in your teeth. Glide is a thin, Teflonlike tape which was soon the number two floss in the market, and today is the number one floss recommended by dental professionals. Gore then sold Glide to Procter & Gamble, but still makes Glide for P&G, earning substantial profits. It then reinvested in other innovative products, such as CleanStream filters for vacuum cleaners; Radome, used to cover microwave transmission sites (think of the large golf-ball structures you sometimes see around airports); stent-grafts for medical treatment; and many more.

Gore frequently asks potential customers for help when designing new products (e.g., design iterations and Powered by Cognero

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testing). For example, the Gore engineer developing Elixir acoustic guitar strings talked to another Gore engineer who played the guitar. They, in turn, asked experienced guitar players to give them feedback on the product. Thanks to Elixir strings’ thin plastic coating, their resistance to dust, skin fragments, dirt, and oil lends a better sound for five times longer than normal guitar strings. Elixir strings now have a 35 percent share of the market.

Gore also provides flexible options for innovation by making time for dabbling. Everyone in the company is encouraged to spend 10 percent of their time on new ideas or products. If those ideas have potential, a Gore sponsor, typically a more senior person, will guide and coach that employee on how to further advance the idea or product. When ideas or innovations are to the point where further development requires a significant investment by the company, they are reviewed by a multifunctional team that goes through an exercise called Real, Win, Worth. They ask: Is the opportunity real? Is there really somebody out there that will buy this? Can we win? What do the economics look like? Can we make money doing this? Is it unique and valuable? Can we have a sustained advantage [such as a patent]?

Refer to Narrative 6-5. Which kind of innovation is encouraged at W.L. Gore? a. transitional b. compression c. dominant design d. incremental 102. Narrative 6-5

Bill Gore started the W.L. Gore Company when he left DuPont to develop innovative uses for Teflon (PTFE), the then new non-stick plastic. Today, W.L. Gore is best known for Gore-Tex, a waterproof, windproof, and temperature-resistant fabric that breathes and does not trap perspiration and body heat. Gore-Tex is used for coats, gloves, camping and hiking gear, and for protective outerwear worn by firefighters and military, emergency, and medical personnel.

But in recent years, Gore-Tex sales have steadily declined. A number of alternative fabrics, such as Entrant GII and eVENT, work nearly as well but cost only $6 to $8 per yard compared to $15 to $30 per yard for Gore-Tex. So W.L. Gore must reduce its dependence on Gore-Tex, which accounts for 21 percent of its $1.6 billion in revenues, by consistently developing other innovative products.

In general, W.L. Gore goes for dramatic rather than incremental improvements. On its website, it declares that Gore’s products are designed to be the highest quality in their class and revolutionary in their effect.

Gore created Glide dental floss, which doesn’t shred, tear, and get caught in your teeth. Glide is a thin, Teflonlike tape which was soon the number two floss in the market, and today is the number one floss recommended by dental professionals. Gore then sold Glide to Procter & Gamble, but still makes Glide for P&G, earning substantial profits. It then reinvested in other innovative products, such as CleanStream filters for vacuum cleaners; Radome, used to cover microwave transmission sites (think of the large golf-ball structures you sometimes see around airports); stent-grafts for medical treatment; and many more.

Gore frequently asks potential customers for help when designing new products (e.g., design iterations and testing). For example, the Gore engineer developing Elixir acoustic guitar strings talked to another Gore engineer who played the guitar. They, in turn, asked experienced guitar players to give them feedback on the product. Thanks to Elixir strings’ thin plastic coating, their resistance to dust, skin fragments, dirt, and oil lends Powered by Cognero

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a better sound for five times longer than normal guitar strings. Elixir strings now have a 35 percent share of the market.

Gore also provides flexible options for innovation by making time for dabbling. Everyone in the company is encouraged to spend 10 percent of their time on new ideas or products. If those ideas have potential, a Gore sponsor, typically a more senior person, will guide and coach that employee on how to further advance the idea or product. When ideas or innovations are to the point where further development requires a significant investment by the company, they are reviewed by a multifunctional team that goes through an exercise called Real, Win, Worth. They ask: Is the opportunity real? Is there really somebody out there that will buy this? Can we win? What do the economics look like? Can we make money doing this? Is it unique and valuable? Can we have a sustained advantage [such as a patent]?

Refer to Narrative 6-5. Gore’s approach to innovation is to use frequent design iterations, frequent testing, regular milestones, multifunctional teams, and powerful leadership. What approach to innovation does the company use? a. experiential b. transitional c. vision-driven d. generational 103. Narrative 6-5

Bill Gore started the W.L. Gore Company when he left DuPont to develop innovative uses for Teflon (PTFE), the then new non-stick plastic. Today, W.L. Gore is best known for Gore-Tex, a waterproof, windproof, and temperature-resistant fabric that breathes and does not trap perspiration and body heat. Gore-Tex is used for coats, gloves, camping and hiking gear, and for protective outerwear worn by firefighters and military, emergency, and medical personnel.

But in recent years, Gore-Tex sales have steadily declined. A number of alternative fabrics, such as Entrant GII and eVENT, work nearly as well but cost only $6 to $8 per yard compared to $15 to $30 per yard for Gore-Tex. So W.L. Gore must reduce its dependence on Gore-Tex, which accounts for 21 percent of its $1.6 billion in revenues, by consistently developing other innovative products.

In general, W.L. Gore goes for dramatic rather than incremental improvements. On its website, it declares that Gore’s products are designed to be the highest quality in their class and revolutionary in their effect.

Gore created Glide dental floss, which doesn’t shred, tear, and get caught in your teeth. Glide is a thin, Teflonlike tape which was soon the number two floss in the market, and today is the number one floss recommended by dental professionals. Gore then sold Glide to Procter & Gamble, but still makes Glide for P&G, earning substantial profits. It then reinvested in other innovative products, such as CleanStream filters for vacuum cleaners; Radome, used to cover microwave transmission sites (think of the large golf-ball structures you sometimes see around airports); stent-grafts for medical treatment; and many more.

Gore frequently asks potential customers for help when designing new products (e.g., design iterations and testing). For example, the Gore engineer developing Elixir acoustic guitar strings talked to another Gore engineer who played the guitar. They, in turn, asked experienced guitar players to give them feedback on the product. Thanks to Elixir strings’ thin plastic coating, their resistance to dust, skin fragments, dirt, and oil lends a better sound for five times longer than normal guitar strings. Elixir strings now have a 35 percent share of the Powered by Cognero

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market.

Gore also provides flexible options for innovation by making time for dabbling. Everyone in the company is encouraged to spend 10 percent of their time on new ideas or products. If those ideas have potential, a Gore sponsor, typically a more senior person, will guide and coach that employee on how to further advance the idea or product. When ideas or innovations are to the point where further development requires a significant investment by the company, they are reviewed by a multifunctional team that goes through an exercise called Real, Win, Worth. They ask: Is the opportunity real? Is there really somebody out there that will buy this? Can we win? What do the economics look like? Can we make money doing this? Is it unique and valuable? Can we have a sustained advantage [such as a patent]?

Refer to Narrative 6-5. Elixir, Gore’s acoustic guitar string, is coated with a thin layer of plastic that avoids the accumulation of dust, microscopic layers of skin (from musicians’ fingers), and dirt and oil, all of which affect musical quality and sound. What process did Gore employees use to develop Elixir? a. transitional innovation b. compression design c. dominant design d. incremental change 104. Narrative 6-5

Bill Gore started the W.L. Gore Company when he left DuPont to develop innovative uses for Teflon (PTFE), the then new non-stick plastic. Today, W.L. Gore is best known for Gore-Tex, a waterproof, windproof, and temperature-resistant fabric that breathes and does not trap perspiration and body heat. Gore-Tex is used for coats, gloves, camping and hiking gear, and for protective outerwear worn by firefighters and military, emergency, and medical personnel.

But in recent years, Gore-Tex sales have steadily declined. A number of alternative fabrics, such as Entrant GII and eVENT, work nearly as well but cost only $6 to $8 per yard compared to $15 to $30 per yard for Gore-Tex. So W.L. Gore must reduce its dependence on Gore-Tex, which accounts for 21 percent of its $1.6 billion in revenues, by consistently developing other innovative products.

In general, W.L. Gore goes for dramatic rather than incremental improvements. On its website, it declares that Gore’s products are designed to be the highest quality in their class and revolutionary in their effect.

Gore created Glide dental floss, which doesn’t shred, tear, and get caught in your teeth. Glide is a thin, Teflonlike tape which was soon the number two floss in the market, and today is the number one floss recommended by dental professionals. Gore then sold Glide to Procter & Gamble, but still makes Glide for P&G, earning substantial profits. It then reinvested in other innovative products, such as CleanStream filters for vacuum cleaners; Radome, used to cover microwave transmission sites (think of the large golf-ball structures you sometimes see around airports); stent-grafts for medical treatment; and many more.

Gore frequently asks potential customers for help when designing new products (e.g., design iterations and testing). For example, the Gore engineer developing Elixir acoustic guitar strings talked to another Gore engineer who played the guitar. They, in turn, asked experienced guitar players to give them feedback on the product. Thanks to Elixir strings’ thin plastic coating, their resistance to dust, skin fragments, dirt, and oil lends a better sound for five times longer than normal guitar strings. Elixir strings now have a 35 percent share of the market.

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Gore also provides flexible options for innovation by making time for dabbling. Everyone in the company is encouraged to spend 10 percent of their time on new ideas or products. If those ideas have potential, a Gore sponsor, typically a more senior person, will guide and coach that employee on how to further advance the idea or product. When ideas or innovations are to the point where further development requires a significant investment by the company, they are reviewed by a multifunctional team that goes through an exercise called Real, Win, Worth. They ask: Is the opportunity real? Is there really somebody out there that will buy this? Can we win? What do the economics look like? Can we make money doing this? Is it unique and valuable? Can we have a sustained advantage [such as a patent]?

Refer to Narrative 6-5. The list of Gore’s products clearly indicates that the company’s core competency is innovation. Patterns of innovation over time can create sustainable competitive advantage, in a number of different products and industries. Which of the following is Gore, therefore, capable of developing? a. innovation cycles b. innovation designs c. innovation transitions d. innovation streams Indicate whether the statement is true or false.

105. Organizational innovation is defined as doing things differently in an organization. a. True b. False 106. A technology cycle begins with the “birth” of a new technology and ends when that technology reaches its

limits and “dies” as it is replaced by a newer, substantially better technology. a. True b. False 107. Nearly all technology cycles follow a bell-shaped pattern of innovation. a. True b. False 108. The typical S-curve pattern of innovation indicates that both early and late in the technology cycle,

increased effort—that is, money, research and development, etc.—brings only small improvements in technological performance. a. True b. False 109. Companies that want to sustain a competitive advantage must understand and protect themselves from the

strategic threats of innovation. a. True b. False 110. The research on technology cycles and technological innovation applies only to high-tech products

developed in the bioengineering, robotics, and computer industries.

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Chapter 6 - Innovation and Change a. True b. False 111. The term innovation streams refers to patterns of innovation over time that can create a sustainable

competitive advantage. a. True b. False 112. An innovation stream begins with a technological discontinuity, in which a scientific advance or a unique

combination of existing technologies creates a significant breakthrough in performance or function. a. True b. False 113. Technological innovation makes it possible not only to duplicate the benefits obtained from a company’s

distinctive advantage, but also quickly creates an opportunity to turn a company’s competitive advantage into a competitive disadvantage. a. True b. False 114. Technology cycles for low-tech products follow the typical U-curve pattern of innovation. a. True b. False 115. Technological discontinuities are followed by discontinuous change characterized by technological

substitution and design competition. a. True b. False 116. Dominant designs emerge because they solve a practical problem, as a result of the negotiations of

independent standards bodies or because of critical mass. a. True b. False 117. The same techniques for managing innovation work equally as well after technological discontinuities as

during periods of incremental change. a. True b. False 118. A creative work environment requires organizational encouragement and supervisory encouragement, as

well as work group encouragement. a. True b. False 119. Supervisory encouragement of creativity occurs when management encourages risk taking and new ideas,

supports and fairly evaluates new ideas, rewards and recognizes creativity, and encourages the sharing of new Powered by Cognero

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ideas throughout the company. a. True b. False 120. The three parts of the experiential approach to innovation are design iterations, testing, and milestones. a. True b. False 121. Milestones are formal review points that tend to lengthen the innovation process. a. True b. False 122. Fully functional change occurs when incremental improvements are made to a dominant technological

design so that the improved version of the technology is fully backward compatible with the older version. a. True b. False 123. In a properly managed organization, there will be no resistance to needed change. a. True b. False 124. According to Kurt Lewin, managing organizational change is a simple process that requires organizational

dialogue, change intervention, and reformatting. a. True b. False 125. Resistance to change results from organizational factors, such as the absence of promotion guidelines,

bonuses, and praise. a. True b. False 126. Even though education and communication, participation, negotiation, top management support, and

coercion can all be used to manage resistance to change, coercion should be used only in crisis situations or as a last resort. a. True b. False 127. Declaring victory too soon is one mistake managers often make in the refreezing stage of change. a. True b. False 128. Results-driven change focuses primarily on changing company procedures, management philosophy, or

employee behaviour. a. True b. False Powered by Cognero

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Chapter 6 - Innovation and Change 129. The General Electric fastworks approach is a special kind of activity-oriented change. a. True b. False 130. Organizational decline is an irreversible occurrence when companies don’t anticipate, recognize, neutralize,

or adapt to the internal or external pressures that threaten their survival. a. True b. False 131. In terms of organizational decline, overconfidence is a potential cause of inaction. a. True b. False 132. Retention bonuses are needed for talented managers in a company that’s in an organizational decline crisis

mode. a. True b. False 133. Bankruptcy occurs at the dissolution stage of organizational decline. a. True b. False

134. Define creativity. Explain its relationship to organizational innovation.

135. Briefly describe the typical pattern of technology cycles that occurs during technological innovation.

136. What are innovation streams? Describe a typical innovation stream.

137. How are technology cycles and innovation streams related?

138. What are creative work environments? What does a manager need to do to develop and manage creative

work environments?

139. Given the nature and demands of technology cycles and innovation streams, identify the two types of

change that companies need to be able to manage. What are the approaches most appropriate for managing each type of change?

140. Differentiate between the experiential and compression approaches to innovation. What is the single

component that both approaches have in common?

141. Identify and briefly describe the three steps involved in the process of managing organizational change, as

defined by Kurt Lewin.

142. Identify the methods that can be used to manage resistance to change. Which one should be used only as a Powered by Cognero

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last resort?

143. Provide one example of a common error made by managers when they lead change at each of the three

steps of the change process.

144. Distinguish between inaction and faulty action in the context of organizational decline.

145. Explain how the concept of innovation streams relates to the concept of sustainable competitive advantage.

Give an example of how this occurs in the business world.

146. In the mid-1990s, in hopes of replacing consumer videotape use in the viewing of prerecorded movies, two

forms of digital videodisk were introduced, DVD and DIVX. While DVD technology was used by a variety of manufacturers (including Sony and RCA), DIVX was a proprietary format developed by Circuit City. Both formats could play DVD movies, which cost about $30 each. However, DIVX movies (which could be played only on a DIVX player, and not on a DVD player) could be purchased for $5 and viewed for 24 hours, with the ability to view them renewable (including perpetual viewing) for a reasonable charge and a telephone call.

Circuit City believed that consumers beginning to buy videodisk players and disks would prefer its format, since the disks were less expensive and offered the convenience similar to a rental with the option of a purchase (conveniently, by telephone from home) at a later date. However, the DIVX format never took off, and in mid1999, Circuit City announced that it was being discontinued. This left DVD as the dominant format for videodisks.

Relate this example to the model of the innovation stream and explain how this competition in formats between DVD and DIVX fits the model of the innovation stream.

147. Identify and briefly describe the three things that companies need to be good at in order to successfully

manage innovation streams. Explain why managing these factors is important. Specify which one of the three might tend to be more influenced by organizational culture and less influenced by the manager’s own personal ability.

148. Shortly after taking office in January 1993, President Bill Clinton decided to take steps to eliminate

discrimination which he believed was occurring against gay men and women in the military. Without consulting with members of the military, he announced that he would be issuing an Executive Order banning all forms of discrimination against homosexuals in the military. There followed a tremendous controversy, played out in the public press and media, including threats of resignation by members of the Joint Chiefs of Staff. Ultimately, the new president backed down and agreed not to issue any Executive Order until a special commission (including members of the public and the military) had been formed and given the opportunity to study the problem and agree upon specific recommendations for change. This procedure was followed, and what resulted was the “Don’t Ask, Don’t Tell” approach to dealing with homosexuality in the military. The Canadian military has gone much further than the “Don’t Ask, Don’t Tell” policy. In 1996, the Jean Chrétien Liberals received the support of the Bloc Québécois and NDP parties, which had openly gay MPs. In 1996, sexual orientation was added to the Canadian human rights legislation.

Identify and briefly describe the three steps involved in the process of managing organizational change, according to Kurt Lewin, and specify which of these three steps President Clinton initially handled poorly in the above scenario. Then, identify the approaches that can be used to manage resistance to change, and specify Powered by Cognero

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which of them the president was using when he made his initial announcement regarding the planned Executive Order, and which were probably used in reaching the final resolution to this issue.

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Chapter 6 - Innovation and Change Answer Key 1. b 2. d 3. c 4. b 5. a 6. c 7. b 8. c 9. d 10. c 11. d 12. c 13. d 14. a 15. b 16. b 17. d 18. c 19. d 20. d 21. a 22. a 23. d 24. d 25. c Powered by Cognero

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Chapter 6 - Innovation and Change 26. b 27. d 28. d 29. a 30. a 31. b 32. d 33. a 34. a 35. a 36. b 37. d 38. d 39. d 40. b 41. c 42. b 43. b 44. c 45. b 46. a 47. d 48. c 49. a 50. d 51. b Powered by Cognero

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Chapter 6 - Innovation and Change 52. a 53. b 54. a 55. c 56. c 57. c 58. c 59. d 60. a 61. d 62. a 63. a 64. d 65. a 66. c 67. d 68. c 69. a 70. c 71. a 72. d 73. d 74. b 75. d 76. d Powered by Cognero

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Chapter 6 - Innovation and Change 77. c 78. d 79. d 80. c 81. a 82. b 83. b 84. c 85. d 86. d 87. b 88. b 89. b 90. d 91. c 92. a 93. c 94. a 95. d 96. b 97. d 98. c 99. d 100. b 101. c 102. a Powered by Cognero

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Chapter 6 - Innovation and Change 103. d 104. d 105. False 106. True 107. False 108. True 109. True 110. False 111. True 112. True 113. True 114. False 115. True 116. True 117. False 118. True 119. False 120. False 121. False 122. False 123. False 124. False 125. False 126. True 127. True Powered by Cognero

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Chapter 6 - Innovation and Change 128. False 129. False 130. False 131. False 132. False 133. True 134. Creativity is the production of novel and useful ideas. Organizational innovation is the successful

implementation of creative ideas in an organization. Thus, creativity is a precursor to the process of organizational innovation, and organizational creativity could be considered a form of organizational innovation.

135. Technology cycles typically follow an S-curve pattern of innovation. Early in the cycle, technological

progress is slow and improvements in technological performance are small. However, as a technology matures, performance improves quickly. Finally, small improvements occur as the limits of a technology are reached. At this point, significant improvements in performance must come from new technologies.

136. Innovation streams are patterns of innovation over time that can create a sustainable competitive advantage.

A typical innovation stream consists of a series of technology cycles, which begin with a new technology and end when that technology is replaced by a newer, substantially better technology. Innovation streams typically consist of (1) a technological discontinuity; (2) discontinuous change, characterized by technological substitution and design competition; (3) the emergence of a dominant design; and (4) a focus on incremental change until the next technological discontinuity occurs.

137. A technology cycle begins with the “birth” of a new technology and ends when that technology reaches its

limits and “dies” as it is replaced by a newer, substantially better technology. Technology cycles typically follow an S-curve pattern of innovation. Early in the cycle, technological progress is slow and improvements in technological performance are small. However, as a technology matures, performance improves quickly.

Finally, small improvements occur as the limits of a technology are reached. At this point, significant improvements in performance must come from new technologies. Innovation streams are defined as patterns of innovation over time that can create a sustainable competitive advantage. As illustrated in Exhibit 6.2, Innovation Streams: Technology Cycles over Time. Each cycle involves variation selection based upon four stages of activity (technological discontinuity, discontinuous change, dominant design, and era of incremental change), followed by technological substitution involving the advanced technology, and then repeating this cyclical process until another technological advance occurs.

138. Creative work environments are workplace cultures in which workers perceive that new ideas are

welcomed, valued, and encouraged. Creative work environments have six components that encourage creativity: challenging work, organizational encouragement, supervisory encouragement, work group encouragement, freedom, and a lack of organizational impediments. The sixth component, organizational impediments, must be managed so as not to discourage creativity. Organizational impediments include such things as internal conflict and power struggles, rigid management structures, and a conservative bias toward the status quo. These can all discourage creativity, since they create the perception that others in the organization Powered by Cognero

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will decide which ideas are acceptable and deserve support.

139. Given the nature and demands of technology cycles and innovation streams, managers must be equally

good at managing innovation in two very different circumstances. Unfortunately, what works well when managing innovation after technological discontinuities doesn’t work well when managing innovation during periods of incremental change (and vice versa). First, during discontinuous change, companies must find a way to anticipate and survive the technological discontinuities that can suddenly transform industry leaders into losers and industry unknowns into industry powerhouses. The most appropriate approach under these circumstances is the experiential approach to innovation. Second, after a new dominant design emerges following discontinuous change, companies must manage the very different process of incremental improvement and innovation in order to keep up with industry leaders. In this case, a compression approach to innovation is most appropriate.

140. The experiential and compression approaches are complementary approaches to managing innovation,

which are differentially appropriate to the phases of the technology cycle. The experiential approach is used to manage innovation in highly uncertain environments during periods of discontinuous change, while the compression approach is used to manage innovation in more certain environments during periods of incremental change. There are five parts to the experiential approach to innovation: design iterations, testing, milestones, multifunctional teams, and powerful leaders. There are also five parts to the compression approach to innovation: planning, supplier involvement, shortening the time of individual steps, overlapping steps, and multifunctional teams. The single component that both approaches have in common is multifunctional teams.

141. According to Kurt Lewin, managing organizational change is a basic process of unfreezing, change

intervention, and refreezing. Unfreezing is getting the people affected by change to believe that change is needed. During the change intervention itself, workers and managers change their behaviour and work practices. Refreezing is supporting and reinforcing the new changes so they stick.

142. The following methods can be used to manage resistance to change: education and communication,

participation, negotiation, top management support, and coercion. Managers should educate employees about the need for change and communicate change-related information to them. Employees who participate in planning and implementing the change process have a better understanding of the need for change and are more likely to support it. Employees are less likely to resist change if they are allowed to negotiate—that is, discuss and agree on—who will do what after change occurs. Resistance to change also decreases when change efforts receive significant managerial support, including providing the training, resources, and autonomy needed to make change happen. Finally, use of formal power and authority to force others to change is called coercion.

Because of the intense negative reactions it can create—that is, fear, stress, resentment, and sabotage of company products—coercion should be used only when a crisis exists or when all other attempts to reduce resistance to change have failed.

143. The basic change process occurs in three stages (unfreezing, change, refreezing). John Kotter has listed

common errors of managers in leading the change process at each of these three stages. By stage, these errors are unfreezing—not establishing a great enough sense of urgency, not creating a powerful enough guiding coalition; change—lacking a vision, under-communicating the vision by a factor of 10, not removing obstacles to the new vision, not systematically planning for and creating short-term wins; and refreezing—declaring victory too soon, not anchoring changes in the corporation’s culture.

144. In the inaction stage, as organizational performance problems become more visible, management may

recognize the need to change but still take no action. The managers may be waiting to see if the problems will Powered by Cognero

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correct themselves. Or they may be suffering from competitive inertia, in which they find it difficult to change the practices and policies that previously led to success. Possibly, too, they wrongly assume that they can easily correct the problems, so they don’t recognize the situation as urgent. Faulty action normally occurs when firms are faced with rising costs and decreasing profits and market share. Management announces “belt tightening” plans designed to cut costs, increase efficiency, and restore profits. In other words, rather than recognize the need for fundamental changes, managers assume that if they just run the company more strictly, company performance will return to previous levels.

145. Organizations can create a competitive advantage for themselves if they have a distinctive competence that

allows them to make, do, or perform something better than their competitors. Furthermore, a competitive advantage becomes sustainable if other companies cannot duplicate the benefits obtained from that distinctive competence. Technological innovation, however, makes it possible not only to duplicate the benefits obtained from a company’s distinctive advantage, but also to quickly turn a company’s competitive advantage into a competitive disadvantage.

The best way to protect a competitive advantage is to create a stream of innovative ideas and products.

Innovation streams begin with technological discontinuities that create significant breakthroughs in performance or function. Technological discontinuities are followed by discontinuous change, in which customers purchase new technologies (technological substitution) and companies compete to establish the new dominant design (design competition). Dominant designs emerge because of critical mass, because they solve a practical problem, or because of the negotiations of independent standards bodies. Because technological innovation is both competence enhancing and competence destroying, companies that bet on the wrong design often struggle, while companies that bet on the eventual dominant design usually prosper. Emergence of a dominant design leads to a focus on incremental change, lowering costs, and small, but steady improvements in the dominant design. This focus continues until the next technological discontinuity occurs.

Students may provide a variety of examples to illustrate the concepts of innovation streams resulting in a sustainable competitive advantage. The text provides an example of Intel and the innovation stream associated with its microchips. Student examples should be evaluated with regard to the degree to which they are appropriate and clearly integrate the concepts and components of innovation streams into their explanations. In general, examples that come from outside the text demonstrate a higher level of learning than those simply repeating points made in the book.

146. Companies that want to sustain a competitive advantage must understand and protect themselves from the

strategic threats of innovation. In the long run, the best way for a company to do that is by creating a stream of its own innovative ideas and products year after year. Innovation streams (patterns of innovation over time that can create a sustainable competitive advantage) begin with technological discontinuities that create significant breakthroughs in performance or function. This was occurring as digital videodisk technology was being introduced as a potential replacement for videotape. Technological discontinuities are followed by discontinuous change, in which customers purchase new technologies (technological substitution—or the replacement of VHS videotape recorders with videodisk players) and companies compete to establish the new dominant design (design competition—DVD or DIVX).

Dominant designs emerge because of critical mass, because they solve a practical problem, or because of the negotiations of independent standards bodies. In this case, DVD was accepted by a variety of manufacturers and developed according to independent standards. Circuit City took a big risk in developing DIVX, which was a different, incompatible, and proprietary format that it hoped would prove more popular than DVD. In the end, it Powered by Cognero

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proved less popular. DVD began to develop a critical mass of players in the marketplace, and Circuit City decided to admit its mistake and cut its losses immediately.

Because technological innovation is both competence enhancing and competence destroying, companies that bet on the wrong design often struggle (leading to technological lockout: when a new dominant design prevents a company from competitively selling its products or makes it difficult to do so), while companies that bet on the eventual dominant design usually prosper. In this case, Circuit City bet on the wrong design and lost, while Sony, RCA, and others bet on the winning design. The elimination of DIVX from the videodisk market heralds the emergence of a dominant design in the standard DVD format. This can be expected to lead to a focus on incremental change, lowering costs, and small, but steady improvements in that dominant design. This focus will continue until the next technological discontinuity occurs.

147. Given the nature and demands of technology cycles and innovation streams, managers must be equally

good at managing innovation in two very different circumstances. First, during discontinuous change, companies must find a way to anticipate and survive the technological discontinuities that can suddenly transform industry leaders into losers and industry unknowns into industry powerhouses. Companies that can’t manage innovation following technological discontinuities risk quick organizational decline and dissolution.

Second, after a new dominant design emerges following discontinuous change, companies must manage the very different process of incremental improvement and innovation. Companies that can’t manage incremental innovation slowly deteriorate as they fall farther behind industry leaders. Finally, in order to have innovation streams to manage, companies must be able to promote the creative ideas that lead to organizational innovation in the first place.

Unfortunately, what works well when managing innovation after technological discontinuities doesn’t work well when managing innovation during periods of incremental change (and vice versa). Consequently, to successfully manage innovation streams, companies need to be good at three things: (1) managing the sources of innovation, (2) managing innovation during discontinuous change, and (3) managing innovation during incremental change.

In terms of managing the sources of innovation, companies can jump-start innovation by building creative work environments, in which workers perceive that creative thoughts and ideas are welcomed and valued. Creative work environments have six components that encourage creativity: challenging work, organizational encouragement, supervisory encouragement, work group encouragement, freedom, and a lack of organizational impediments. The sixth component, organizational impediments, must be managed so as not to discourage creativity.

The experiential approach to innovation is most appropriate when managing discontinuous change, in which a technological discontinuity created a significant breakthrough in performance or function. This approach assumes that innovation is occurring within a highly uncertain environment and that the key to fast product innovation is to use intuition, flexible options, and hands-on experience to reduce uncertainty and accelerate learning and understanding. There are five parts to the experiential approach to innovation: design iterations, testing, milestones, multifunctional teams, and powerful leaders.

The compression approach to innovation can be used during periods of incremental change, in which the focus is on systematically improving the performance and lowering the cost of the dominant technological design.

The compression approach assumes that innovation is a predictable process, that incremental innovation can be planned using a series of steps, and that compressing the time it takes to complete those steps can speed up innovation. There are five parts to the compression approach to innovation: planning, supplier involvement, shortening the time of individual steps, overlapping steps, and multifunctional teams.

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Of these three approaches, one might argue that building creative work environments would be the one more affected by organizational culture than the individual manager’s own ability. The emphasis on attitudes, perception, and interpersonal behaviour in this approach would be more susceptible to overriding influences from organizational culture than the more procedural emphases of the other two approaches, which would be more easily influenced by managerial skill. However, an argument could be made for the experiential learning approach as being more affected by organizational culture, based upon the role of intuition, flexibility, multifunctional teams, and powerful leaders. Similarly, but perhaps to a lesser extent, an argument could be made for the compression approach as being more affected by organizational culture, based upon the use of multifunctional teams. However, this argument seems least appropriate in the context of all three approaches, given the more obvious behavioural components of the other two. The key to quality in answers is the extent to which the behavioural dimensions of values, beliefs, and attitudes are tied in to the argument in favour of majority influence for the given approach.

148. According to Kurt Lewin, managing organizational change is a basic process of unfreezing, change

intervention, and refreezing. Unfreezing is getting the people affected by change to believe that change is needed. During the change intervention itself, workers and managers change their behaviour and work practices. Refreezing is supporting and reinforcing the new changes so they “stick.” Initially, President Clinton handled the unfreezing stage poorly. While he was personally convinced that the existing procedures for dealing with homosexual men and women in the military were wrong and inappropriate, he did not involve any of the people who would be affected by the change in evaluating or verifying this opinion before announcing the change that he planned to make. Thus, he encountered a high level of resistance to change, both within and outside of the military. Because resistance to change is natural and inevitable, managers need to unfreeze resistance to change to create successful change programs. The following methods can be used to manage resistance to change: education and communication, participation, negotiation, top management support, and coercion.

When resistance to change is based on insufficient, incorrect, or misleading information, managers should educate employees about the need for change and communicate change-related information to them. Managers must also supply the information and funding or other support that employees need to make changes. Another way to reduce resistance to change is to have those affected by the change participate in planning and implementing the change process. Employees who participate have a better understanding of change and the need for it. Furthermore, employee concerns about change can be addressed as they occur if employees participate in the planning and implementation process. Employees are less likely to resist change if they are allowed to discuss and agree on who will do what after change occurs. Resistance to change also decreases when change efforts receive significant managerial support. Top managers must do more than talk about the importance of change. They must provide the training, resources, and autonomy needed to make change happen. Finally, use of formal power and authority to force others to change is called coercion. Because of the intense negative reactions it can create—that is, fear, stress, resentment, and sabotage of company products— coercion should be used only when a crisis exists or when all other attempts to reduce resistance to change have failed.

President Clinton was attempting to use coercion when he made his initial announcement about the impending Executive Order. However, this reliance only on his formal power and authority was insufficient (and inappropriate, as his first step and only step in managing resistance) to rally the military and the public to his side. Thus, he had to start over, by forming an independent commission to study the problem and make recommendations. Since this commission was made up of members of the public as well as the military, and Powered by Cognero

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there was considerable collection and evaluation of data before possible solutions were identified and ultimately agreed on by all parties, the final solution clearly entailed the use of all five methods for managing resistance— education and communication, participation, negotiation, top management support, and coercion (since the president would not let the issue be dropped). Jean Chrétien did not have to consider coercion when he introduced legislation to add sexual orientation to the Canadian human rights legislation. The support of the Bloc Québécois and NDP parties resulted in a smooth passing of the legislation.

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Indicate the answer choice that best completes the statement or answers the question.

1. Canadians are able to purchase teas from Asia, furniture from Mexico, and receive help from a customer

service agent in the Philippines. Canadian companies can export their Canadian-made products for people all over the world to enjoy. What does all of this activity exemplify? a. global business b. foreign direct investment c. multinational corporations d. trade agreements 2. In which method does a company build a new business or buy an existing business in a foreign country? a. strategic alliance b. foreign direct investment c. global new venture d. joint venture 3. Foreign direct investment data by industry reveal that most of the foreign capital in Canada is invested in

three sectors: manufacturing, mining, and which of the following? a. technology b. agriculture c. plastics d. oil 4. Multinational corporations are corporations that own businesses in which of the following? a. three or more countries b. two or more countries c. Canada and the US d. two or more continents 5. Nestlé is a company based in Switzerland with manufacturing plants in Colombia, Australia, Canada, Egypt,

Kenya, and more than 90 other nations. What type of company is Nestlé an example of? a. multidomestic global company b. multinational corporation c. ethnocentric organization d. acculturated corporation 6. Canada restricts goods that can enter the country, and charges a tax on sweetened waters from most countries.

What, in other words, does Canada impose on sweetened waters? a. import quotas b. customs classifications c. import standards d. tariffs Powered by Cognero

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Chapter 7 - Global Management 7. Europe imposes an import tax on Canadian automotive parts to protect the local auto industry from foreign

competition. What is the import tax an example of? a. a trade roadblock b. nationalism c. nationalization d. a trade barrier 8. What are the two general kinds of trade barriers? a. government import standards and industry import standards b. qualitative and quantitative barriers c. voluntary and involuntary barriers d. tariff barriers and non-tariff barriers 9. Mexico has imposed a 5 percent tax on many U.S. products entering Mexico, including pork. It has done so in

retaliation to the United States stopping Mexican trucks at its border. As a result, Canada’s pork, which has no tax imposed, enters Mexico at a cheaper price. What is the tax on U.S. pork an example of? a. an import duty b. a voluntary import restraint c. a subsidy d. a tariff 10. What does protectionism—the use of trade barriers to protect local companies and their workers—safeguard

against? a. international unions b. foreign competition c. trademark infringements d. patent violations 11. When products are imported into a country they are examined by customs agents, who classify the products

into one of 9000 different categories. What is this an example of? a. a tariff b. a nontariff barrier c. an import boycott d. an industry subsidy 12. The Canadian government imposes tariffs on imported textiles—between 10 and 12 percent—in part to

support the Canadian textile industry. What is the tariff on imported textiles an example of? a. a voluntary government restriction b. geocentrism c. protectionism d. a security quota Powered by Cognero

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Chapter 7 - Global Management 13. What is the term for a nontax method of increasing the cost or reducing the volume of imported goods? a. tariff b. nontariff barrier c. trade roadblock d. risk-aversive boycott 14. What is the term for a direct tax on imported goods designed to make it more expensive to buy those goods,

in hopes of reducing the volume of those imported goods in a given country? a. tariff b. nontariff barrier c. trade roadblock d. boycott quota 15. Canada is a bilingual country, so it requires that all products, whether domestic or imported, be labelled in a

bilingual manner. What has the government instituted? a. a tariff b. a government subsidy c. a voluntary export restraint d. a government import standard 16. Canada imposes limits on how much poultry and poultry products can enter the country. What type of

nontariff barrier does Canada use to control the amount of poultry imports? a. quotas b. subsidies c. boycotts d. customs classifications 17. In order to protect the health and safety of citizens, the Canadian Food Inspection Agency identifies specific

foreign companies that are allowed to export meat products to Canada. What is this list an example of? a. a subsidy b. an involuntary import restraint c. expropriation d. a government import standard 18. What is the term for long-term, low-interest loans, cash grants, and tax deductions given to domestic

companies to protect them from foreign competition? a. quotas b. voluntary export restraints c. government subsidies d. tariffs 19. To protect its cheese manufacturing industry, Canada put limitations on the amount of cheese that could be Powered by Cognero

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imported into Canada from the European Union. What is this limitation an example of? a. a voluntary import restraint b. a subsidy c. an agricultural import standard d. a quota 20. Which trade agreement, replaced by the WTO in 1995, represented the most significant change to the

regulations governing global trade? a. Maastricht Treaty of Europe b. North American Free Trade Agreement c. General Agreement on Tariffs and Trade d. Mercosur 21. Which of the following blended all European economies and currencies into one common economic market

with one common currency? a. the Maastricht Treaty b. the Pact for Free Trade Agreement c. the Global Agreement for Transactional Trading d. the South-East Asia Pact 22. If Canada were to seek admittance as a full member to the Association of Southeast Asian Nations

(ASEAN), what would Canada be preparing to become part of? a. a zone of ethnocentricity b. a regional trading zone c. a neutral trading area d. an international cartel 23. What does the acronym GATT stand for? a. Global Agreement on Temporal Trade b. Governing Agreement on Trade and Transactions c. General Agreement on Tariffs and Trade d. Government Aid of Trade and Transactions 24. What did the General Agreement on Tariffs and Trade (GATT) attempt to accomplish? a. decreasing both tariff and nontariff barriers b. eliminating taxes on trading goods between Canada, the United States, and Mexico c. eliminating tariffs between China and Japan d. protecting the exploitation of workers in third world countries 25. Which of the following administers trade agreements, provides a forum for trade negotiations, handles trade

disputes, monitors national trade policies, and offers technical assistance and training for developing countries? a. WTO Powered by Cognero

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Chapter 7 - Global Management b. GATT c. USMCA d. APEC 26. What is one of the significant changes from NAFTA to USMCA? a. 85% of vehicles must be made in North America to qualify for zero tariffs b. increased protections on drugs and other pharmaceutical products c. reduced copyright protections d. fewer restrictions on agricultural imports, such as dairy, chicken, eggs 27. Which of the following regional trade agreements replaced the North American Free Trade Agreement

(NAFTA)? a. United States–Canada Agreement b. Association of North Nations c. Asia-Pacific Economic Cooperation agreement d. United States–Mexico–Canada Agreement 28. Typically, what major question must a company answer once it has decided to go global? a. How many additional employees will the company need? b. How can the company strike the right balance between global consistency and local adaptation? c. To what extent should a company abide by global or regional trade agreements? d. Will the organization’s mission statement need to be changed?

29. What is a multinational company said to be acting with when it has offices, manufacturing plants, and

distribution facilities in different countries and runs them all based on the same rules, guidelines, policies, and procedures? a. policy certainty b. global consistency c. global adaptation d. global certainty 30. Which of the following do managers in a multinational firm at company headquarters typically prefer to

emphasize in order to simplify decisions? a. local consistency b. local adaptation c. global adaptation d. global consistency 31. Which of the following approaches tends to be most important to making an international business

successful in any given country? a. global consistency b. local adaptation Powered by Cognero

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Chapter 7 - Global Management c. domestic synergy d. predetermined benchmarks 32. Historically, which of the following have most companies used to successfully enter foreign markets? a. a phase model of globalization b. a global new venture approach c. a ripple approach d. a market echo approach 33. What is the correct sequence for the phase model of globalization? a. exporting; wholly owned affiliates; cooperative contracts; strategic alliances b. exporting; cooperative contracts; wholly owned affiliates; strategic alliances c. exporting; cooperative contracts; strategic alliances; wholly owned affiliates d. exporting; strategic alliances; cooperative contracts; wholly owned affiliates 34. T.I.P Ltd. was featured on the Discovery Channel for its ability to encapsulate very fragile natural items into

a solid clear medium. After the Discovery Channel feature, T.I.P’s customer base expanded beyond Canada.

T.I.P started selling its products all over North America, Europe, Asia, and the Caribbean. What is T.I.P’s expansion of sales to other countries an example of? a. foreign direct investment b. franchising c. licensing d. exporting 35. Tariffs, non-tariff barriers, and transportation costs are all disadvantages of which of the following? a. wholly owned affiliates b. exporting c. importing d. franchising 36. Quebec produces about 75 percent of the world’s maple syrup, and distributes it globally. What does Quebec

use to distribute this tasty product? a. franchising b. direct investment c. licensing d. exporting 37. What is the term for an agreement in which a foreign business owner pays a company a fee for the right to

conduct that business in his or her country? a. exporting agreement b. cooperative contract c. joint venture Powered by Cognero

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Chapter 7 - Global Management d. strategic alliance 38. Which of the following are two kinds of cooperative contracts? a. licensing and joint ventures b. franchising and licensing c. direct investment and indirect investment d. direct exporting and indirect exporting 39. Sodima is a French cooperative that owns the name, the trade secrets, and the patents on Yoplait yogurt.

Ultima Foods pays Sodima for the right to sell Yoplait yogurt in Canada. What is this arrangement an example of? a. licensing b. a global joint venture c. exporting d. a strategic alliance 40. Companies interested in combining key resources, costs, risks, technology, and people should form which of

the following? a. franchise b. strategic alliance c. cooperative contract d. strategic licence 41. Mountain Province Diamonds and De Beers partnered to open Gahcho Kué, a diamond mine in the

Northwest Territories, in late 2016. What is exemplified by the two companies working together to open the mine? a. exporting b. licensing c. a joint venture d. a cooperative contract 42. Ernst & Young, an international accounting and management consulting company, entered Hungary first by

establishing a joint venture with a local firm. Ernst & Young later acquired the company with which it had the alliance. Which type of entity did Ernst & Young then have in Hungary? a. a franchise b. a licensing arrangement c. a cooperative contract d. a wholly owned affiliate 43. All global new ventures share two common factors. One factor is that the company founders successfully

develop and communicate the company’s global vision. What is the other factor? a. the bringing of a good or service to several different foreign markets at the same time b. the use of local adaptation strategy Powered by Cognero

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Chapter 7 - Global Management c. a mechanistic organizational culture d. the ability to respond quickly and efficiently to any changes in the external environment 44. All global new ventures share two common factors. One factor is the bringing of a good or service to several

different foreign markets at the same time. What is the other factor? a. the development of culturally specific implementation policies b. the company founders successfully developing and communicating the company’s global vision from inception c. a mechanistic organizational culture d. the ability to respond quickly and efficiently to any changes in the external environment 45. Starbucks is expanding its global operations into South America in spite of the real probability of civil wars

and terrorist activities in many of the continent’s nations. Which of the following must Starbucks deal with as it expands into South America? a. political uncertainty b. economic uncertainty c. infrastructure regulation d. nationalistic equity 46. Which of the following is the most important factor in an attractive business climate? a. minimal political risk b. workforce quality c. access to a growing market d. purchasing power 47. Which of the following is a trend that has allowed companies to skip the phase model when going global? a. licensing b. quick and reliable air travel c. low-cost manufacturing facilities d. higher cost communication technologies 48. When McDonald’s initially entered into an agreement with a French entrepreneur who wanted to own and

operate a McDonald’s fast-food restaurant in Paris, it saw the new restaurant as an opportunity. Unfortunately, the restaurant in Paris was not maintained at the cleanliness standards prescribed by McDonald’s but at the cleanliness standards acceptable to the French. McDonald’s brought legal action to have the restaurant closed.

What does this situation provide an example of? a. an opportunity for McDonald’s to enter into more joint ventures b. a need for McDonald’s to curtail its international franchising c. a cultural threat against McDonald’s d. a problem with franchising in different cultures 49. What is the term for a strategic alliance in which two existing companies collaborate to form a third,

independent company?

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Chapter 7 - Global Management a. joint venture b. franchise c. wholly owned affiliate d. global new venture 50. Anthony is expanding his business into foreign markets. Anthony is providing a licence to a foreigner to use

his business model, name, and know-how. Anthony will help the foreigner get the business started and provide ongoing support. To whom is Anthony providing a licence as he grows his business globally? a. a sales agent b. a franchisee c. a distributor d. an importer 51. In Canada, General Motors and Suzuki have entered into an agreement to create CAMI Automotive. Suzuki

management runs the plant, which makes GM’s Geo cars. The agreement gives Suzuki access to GM dealers to sell its brand of vehicles. What kind of agreement do General Motors and Suzuki have? a. a licensing agreement b. a subsidiary arrangement c. a cooperative contract d. a joint venture 52. Ford Motor Company owns and operates a $1.9 billion manufacturing plant in Brazil. Which method of

organizing for global business has Ford used in Brazil? a. joint venture b. strategic alliance c. cooperative contract d. wholly owned affiliate 53. What is the primary disadvantage of using wholly owned affiliates as the means of entering a foreign

market? a. dumping b. countertrading c. nontariff barriers d. costs 54. German chip manufacturer Infineon Technologies AG has joined with Motorola Inc. and Agere Systems Inc.

to establish a new company to develop and license chip designs for cellphones. What type of entity have these three companies created? a. a licence facilitator b. a subsidized corporation c. a global new venture d. a joint venture Powered by Cognero

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Chapter 7 - Global Management 55. What trend has allowed companies to skip the phase model when going global? a. critical mass of experienced global businesspeople b. the globalization of the cocooning trend c. a critical need for resources d. the metamorphosis of marketplaces 56. What type of entity are companies with sales, employees, and financing in different countries that are

founded with an active global strategy? a. global new ventures b. strategic alliances c. wholly owned affiliates d. franchisees 57. Which of the following is an attribute of a country or region that has an attractive business climate for

companies that want to go global? a. easy access to stagnant markets b. experienced marketplace metamorphosis c. no political risks d. a limited infrastructure 58. Which of the following is an attribute of a country or region that has an attractive business climate for

companies that want to go global? a. a large population of unskilled workers b. an effective but cost-efficient location c. a small youth population d. natural boundaries 59. What is the most important factor used by a globalizing company for determining whether a country or a

region has an attractive business climate? a. easy access to growing markets b. marketplace metamorphosis c. global synergy d. a large, unskilled workforce 60. Which of the following factors helps a company determine the growth potential of a foreign market? a. political uncertainty b. purchasing power c. type of infrastructure d. land availability 61. A cosmetics company that is considering entering the South American market would be especially interested

in the discretionary income within that country. In other words, what would be a determining factor in the Powered by Cognero

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Chapter 7 - Global Management

company’s global strategy? a. purchasing power b. political uncertainty c. expropriation potential d. infrastructure 62. A Canadian company that operates cinemas wants to open a chain of movie theatres in Brazil. What is the

most important factor to the company as it tries to grow in the Brazilian market? a. workforce quality b. the strategy of the movie theatre chain c. tariff and nontariff barriers d. purchasing power 63. What are the two types of political risk that affect companies conducting global business? a. political uncertainty and policy uncertainty b. policy uncertainty and expropriation potential c. infrastructure dynamism and expropriation potential d. infrastructure dynamism and political uncertainty 64. Uganda is one of only two countries in the world that produce a mineral required in the manufacturing of

cellphones. Several mining companies recently moved their operations out of the region due to a bloody civil war resulting from a change in rulers. Which of the following influences on global business were the companies responding to? a. political uncertainty b. policy uncertainty c. economic risk d. infrastructure failure 65. The Government of Canada has a comprehensive agenda to move Canada toward its vision of zero plastic

waste and reduce plastic pollution. This includes developing targets, standards, and regulations toward eliminating plastic pollution in Canada. Since December 20, 2022, the manufacture and import for sale in Canada of checkout bags, cutlery, foodservice ware, stir sticks, and straws is prohibited, which has implications for businesses (including foreign companies) from all sectors, not just those in the food service industry. Which of the following influences on global business is this an example of? a. infrastructure uncertainty b. policy uncertainty c. political uncertainty d. competitive uncertainty 66. Which strategies can be used to minimize or adapt to the political risk inherent to global business? a. protectionist, avoidance, and offensive strategies b. creative, offensive, and defensive strategies c. cooperative, customary, and protectionist strategies Powered by Cognero

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Chapter 7 - Global Management d. control, avoidance, and cooperation strategies 67. Uganda is one of only two countries in the world that produce a mineral required in the manufacturing of

cellphones. A company that mines the rare mineral decided against investing in the country due to a bloody civil war resulting from a change in rulers. What strategy did the mining company use? a. avoidance strategy b. control strategy c. cooperation strategy d. elimination strategy 68. Which of the following cannot always protect against policy risk if a foreign government changes its laws

and policies to directly affect how foreign companies conduct business? a. geocentric attitude b. control strategy c. accommodation strategy d. cooperation strategy 69. Minimizing or adapting to the political risk inherent to global business makes use of joint ventures and

collaborative contracts. What strategy does this statement describe? a. defence strategy b. control strategy c. cooperation strategy d. avoidance strategy 70. A firm trying to prevent or reduce political risks will lobby foreign governments or international trade

agencies to change laws, regulations, or trade barriers that hurt its business in various countries. Which strategy is described by this statement? a. defensive strategy b. control strategy c. cooperation strategy d. protectionist strategy 71. What is the term for the set of shared values and beliefs that affects the perceptions, decisions, and

behaviour of the people from a particular country? a. national mindset b. national culture c. cultural nationalization d. cultural diversity 72. Which statement best describes an expatriate? a. An expatriate claims dual citizenship. b. An expatriate lives and works outside of their own country.

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Chapter 7 - Global Management c. An expatriate believes strongly in nationalization. d. An expatriate is unhappy with their present residence.

73. What is the purpose of pre-departure language and cross-cultural training? a. to cater to employees who require affective learning b. to increase job empathy c. to encourage job specialization d. to reduce the uncertainty for those becoming expatriates 74. What is the most important factor in determining the success or failure of an international assignment? a. how much language training was provided to the expatriate b. how much cross-cultural training was provided to the expatriate c. how well an expatriate’s spouse and family adjust to the foreign culture d. how willing the expatriate was to accept the foreign assignment 75. What process is used to assess how well managers and their families are likely to adjust to foreign cultures? a. cultural awareness screening b. socio-cultural analysis c. sensitivity screening d. adaptability screening 76. A friend has received a job offer for $100,000 a year in Norway. She’s excited, until you make which of the

following points? a. she could likely earn more in Japan b. she could likely earn more in Switzerland c. her purchasing power is higher than in Canada d. her purchasing power is lower than in Canada 77. Which of the following is the best explanation for Canada’s higher purchasing power relative to the average

Dane? a. a caffe latte venti costs $4.05 in Copenhagen, Denmark, while the same caffe latte venti costs an

average of $6 in Canada b. a caffe latte venti costs $6.05 in Copenhagen, Denmark, while the same caffe latte venti costs an average of $4 in Canada c. Canadians have less money to spend on products like automobiles d. a caffe latte venti costs the same in both Canada and Denmark 78. What are two qualitative factors that influence companies’ choice of foreign offices or manufacturing

locations? a. access to growing markets and minimal political risk b. minimal political risk and workforce quality c. workforce quality and company strategy Powered by Cognero

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Chapter 7 - Global Management d. company strategy and access to growing markets 79. Companies pursuing a differentiation strategy may prefer to open an office or manufacturing location in a

country where they have which of the following? a. access to growing markets and minimal political risk b. access to high quality materials and a skilled workforce c. a skilled workforce and access to growing markets d. minimal political risk and access to high quality materials 80. Besides qualitative factors, which quantitative factors are relevant to firms seeking to open a foreign office

or manufacturing location? a. currency exchange rates, tariff and nontariff barriers, and transportation and labour costs b. quantifiable political risk, currency exchange rates, and transportation and labour costs c. transportation and labour costs, materials costs, and quantifiable political risk d. quantifiable political risk, tariff and nontariff barriers, and currency exchange rates 81. Narrative 7-1

India has the fastest-growing demand for consumer products in the world. In recent years, Coca-Cola attempted to enter the Indian market once again. Coca-Cola’s first attempt to enter the Indian market a decade earlier was grossly mismanaged, which led to the company losing 20 billion Indian rupees. In that first attempt, Coca-Cola purchased Thumbs Up, the leading India-based carbonated soft drink. The company hoped to replace Thumbs Up with Coke while maintaining the Thumbs Up distribution strategy. For its return to the market, Coca-Cola built five plants, cut costly staff, revamped transport, shrunk bottles, and made the bottles lighter to increase a truck’s carrying capacity. It also increased its number of distributors and dumped a global advertising campaign that proved irrelevant to the Indian market.

Refer to Narrative 7-1. What process did Coca-Cola engage in during its first attempt to enter the Indian market? a. acculturation b. foreign direct investment c. internal importing d. globalization 82. Narrative 7-1

India has the fastest-growing demand for consumer products in the world. In recent years, Coca-Cola attempted to enter the Indian market once again. Coca-Cola’s first attempt to enter the Indian market a decade earlier was grossly mismanaged, which led to the company losing 20 billion Indian rupees. In that first attempt, Coca-Cola purchased Thumbs Up, the leading India-based carbonated soft drink. The company hoped to replace Thumbs Up with Coke while maintaining the Thumbs Up distribution strategy. For its return to the market, Coca-Cola built five plants, cut costly staff, revamped transport, shrunk bottles, and made the bottles lighter to increase a truck’s carrying capacity. It also increased its number of distributors and dumped a global advertising campaign that proved irrelevant to the Indian market.

Refer to Narrative 7-1. Why is Coca-Cola called a multinational company? a. It owns businesses in two or more countries.

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Chapter 7 - Global Management b. It is not affected by protectionism. c. It is able to avoid trade barriers. d. It pays no tariffs.

83. Narrative 7-1

India has the fastest-growing demand for consumer products in the world. In recent years, Coca-Cola attempted to enter the Indian market once again. Coca-Cola’s first attempt to enter the Indian market a decade earlier was grossly mismanaged, which led to the company losing 20 billion Indian rupees. In that first attempt, Coca-Cola purchased Thumbs Up, the leading India-based carbonated soft drink. The company hoped to replace Thumbs Up with Coke while maintaining the Thumbs Up distribution strategy. For its return to the market, Coca-Cola built five plants, cut costly staff, revamped transport, shrunk bottles, and made the bottles lighter to increase a truck’s carrying capacity. It also increased its number of distributors and dumped a global advertising campaign that proved irrelevant to the Indian market.

Refer to Narrative 7-1. Which kind of strategy has Coca-Cola used for its second entry into the Indian market? a. global consistency b. market differentiation c. local adaptation d. acculturation 84. Narrative 7-1

India has the fastest-growing demand for consumer products in the world. In recent years, Coca-Cola attempted to enter the Indian market once again. Coca-Cola’s first attempt to enter the Indian market a decade earlier was grossly mismanaged, which led to the company losing 20 billion Indian rupees. In that first attempt, Coca-Cola purchased Thumbs Up, the leading India-based carbonated soft drink. The company hoped to replace Thumbs Up with Coke while maintaining the Thumbs Up distribution strategy. For its return to the market, Coca-Cola built five plants, cut costly staff, revamped transport, shrunk bottles, and made the bottles lighter to increase a truck’s carrying capacity. It also increased its number of distributors and dumped a global advertising campaign that proved irrelevant to the Indian market.

Refer to Narrative 7-1. To increase distribution, Coca-Cola provided the financing needed for the retailers to purchase refrigeration units, and the refrigeration manufacturer gave deep price discounts. What type of agreement did Coca-Cola enter into with this manufacturer? a. franchise agreement b. direct investment c. strategic alliance d. brokered agreement 85. Narrative 7-1

India has the fastest-growing demand for consumer products in the world. In recent years, Coca-Cola attempted to enter the Indian market once again. Coca-Cola’s first attempt to enter the Indian market a decade earlier was grossly mismanaged, which led to the company losing 20 billion Indian rupees. In that first attempt, Coca-Cola purchased Thumbs Up, the leading India-based carbonated soft drink. The company hoped to replace Thumbs Up with Coke while maintaining the Thumbs Up distribution strategy. For its return to the market, Coca-Cola built five plants, cut costly staff, revamped transport, shrunk bottles, and made the bottles lighter to increase a truck’s carrying capacity. It also increased its number of distributors and dumped a global advertising campaign Powered by Cognero

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that proved irrelevant to the Indian market.

Refer to Narrative 7-1. Which of the following is reflected by the need for Coca-Cola to create a promotional strategy specifically targeted to the Indian market? a. a diversification strategy b. an awareness of cultural differences c. the desire to maintain a high contribution margin d. an insular approach to strategy Indicate whether the statement is true or false.

86. Global business is the buying of goods and services by people from different countries. a. True b. False 87. Multinational corporations are corporations that own businesses in three or more countries. a. True b. False 88. Foreign direct investment occurs when a company builds a new business or buys an existing business in a

foreign country. a. True b. False 89. Few restrictions on foreign ownership exist in Canada. a. True b. False 90. Trade barriers are a form of protectionism. a. True b. False 91. Voluntary export restraints and quotas are functionally equivalent. a. True b. False 92. Government subsidies include mechanisms such as tariff adjustments, quotas, and import standards. a. True b. False 93. The General Agreement on Tariffs and Trade is headquartered in Geneva, Switzerland. a. True b. False 94. The General Agreement on Tariffs and Trade includes protections for trademarks, patents, and copyrights.

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Chapter 7 - Global Management a. True b. False 95. The Maastricht Treaty established a regional trade zone a. True b. False 96. Canada is a party to the CAFTA-DR Free Trade Agreement. a. True b. False 97. In the past, governments have erected trade barriers to make it much more expensive or difficult (indeed,

sometimes impossible) for consumers to buy or consume imported goods. a. True b. False 98. Free trade agreements are important to consumers because they increase choices, competition, and

purchasing power and thereby decrease what people pay for food, clothing, necessities, and luxuries. a. True b. False 99. The “Maharaja Mac” is an example of global consistency. a. True b. False 100. Home Depot’s success in China can be attributed to its global consistency. a. True b. False 101. Amazon choosing to grow its video services in India by developing new shows specifically for Indian

viewers is an example of local adaptation. a. True b. False 102. Exporting provides greater control over research, design, and production decisions. a. True b. False 103. Transportation costs strongly influence export product pricing. a. True b. False 104. The primary disadvantage of exporting is that despite the many trade agreements in effect between

countries many exported goods are subject to tariff and non-tariff barriers that can substantially increase their final cost to consumers.

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Chapter 7 - Global Management a. True b. False 105. Two forms of cooperative contracts used in global business are franchising and joint ventures. a. True b. False 106. Under licensing agreements, the licensee receives royalty payments for allowing the licensor to produce its

products. a. True b. False 107. Franchisors often succeed in local cultures because they are owned by local business people who are

familiar with the market, and can adjust their product to local tastes. a. True b. False 108. Global joint ventures are less risky to a firm than a wholly owned venture. a. True b. False 109. The primary advantage of wholly owned businesses is that the parent company receives all of the profits

and has complete control over the foreign facilities. a. True b. False 110. Global joint ventures bring together two cultures: the culture of the first partner and of the second. a. True b. False 111. In the past, companies generally followed the phase model of globalization. a. True b. False 112. Global new ventures bring products to market one country at a time. a. True b. False 113. Mexicans have a higher purchasing power than Canadians and Americans. a. True b. False 114. Companies selling basic goods, such as food, shelter, and transportation, may have more success selling

them in markets where purchasing power is high. a. True Powered by Cognero

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Chapter 7 - Global Management b. False 115. Companies entering foreign markets should open an office or manufacturing location in that market. a. True b. False 116. Quantitative factors such as the kind of facility being built, tariff and nontariff barriers, exchange rates, and

transportation and labour costs are the primary considerations when choosing an office/manufacturing location. a. True b. False 117. Governments are vulnerable to dissent, which can be a primary cause of policy uncertainty. a. True b. False 118. Political risk has two primary components: political uncertainty and economic uncertainty. a. True b. False 119. The most appropriate response to political risk is to avoid entering a risky overseas market. a. True b. False 120. Cooperation is always able to protect against policy risk, even if a foreign government changes its laws and

policies to directly affect how foreign companies conduct business. a. True b. False 121. A control response to political risk involves managing risk through joint ventures, franchising, and

licensing. a. True b. False 122. The first step in dealing with national culture is to identify the differences between nations’ shared values

and beliefs that affect the perceptions, decisions, and behaviour of two nations’ peoples. a. True b. False 123. An expatriate is someone who lives and works outside their native country. a. True b. False 124. Executives frequently take advantage of cross-cultural training.

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Chapter 7 - Global Management a. True b. False 125. Cultural simulations identify specific critical differences between cultures. a. True b. False 126. Field experience training asks trainees to talk to residents in an ethic neighbourhood regarding cultural

differences. a. True b. False 127. Expatriates are often shielded from the local culture, in contrast to their families. a. True b. False 128. Key characteristics that predict adaptation to overseas assignments include having effective marital

communication, a sense of humour, and respect for others’ beliefs. a. True b. False

129. Define foreign direct investment. Name one of the top eight countries with the largest direct foreign

investment in Canada.

130. What are trade barriers? Identify the two general kinds of trade barriers used by governments, and give one

example of each.

131. During the 1990s, trade agreements were developed on the worldwide and regional levels. Provide an

example of, and briefly describe, a regional trade agreement and a worldwide trade agreement.

132. Compare and contrast global consistency and local adaptation as policies for entering foreign markets.

133. Briefly explain the phase model of globalization. List its stages in their appropriate order.

134. Briefly explain how companies can assess the growth potential of new markets.

135. Identify the two basic types of political risk facing organizations when conducting global business. Which

one is more common?

136. Briefly comment on the types of training that should be provided when managers go on international

assignments in order to ensure the success of those managers. (Clarify, as well, to whom that training should be provided.)

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Chapter 7 - Global Management 137. Describe the basic provisions of the General Agreement on Tariffs and Trade (GATT) and give three

examples of how it benefitted Canadian industries. How does the WTO compare to the GATT? Provide an overview of the functions of the WTO. 138. Explain how the concepts of global consistency and local adaptation are relevant to success of a global

business. Give one example of a good or service that would be likely to succeed with the use of global consistency. Give one example of a good or service that would be likely to succeed with the use of local adaptation.

139. What is the phase model of globalization? Identify the factors that have allowed companies to follow

different paths to globalization, and then explain the nature of the global new venture. Comment on the extent to which it is likely that this latter approach to globalization will increase.

140. Identify and discuss the basic components of an attractive business climate. Also comment on the extent to

which a fast-food restaurant franchise might make a different assessment of relevant factors than would a capital-intensive business, such as an oil refinery and pipeline company.

141. A married manager with two children has been offered the opportunity to go abroad on an expatriate

assignment for the company in a foreign country for a period of three years. If the manager chooses to accept the assignment, they want to perform very well in order to continue moving up the corporate ladder. Describe the different methods available to successfully prepare workers, and their families, for international assignments.

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Chapter 7 - Global Management Answer Key 1. a 2. b 3. d 4. b 5. b 6. d 7. d 8. d 9. d 10. b 11. b 12. c 13. b 14. a 15. d 16. a 17. d 18. c 19. d 20. c 21. a 22. b 23. c 24. a 25. a Powered by Cognero

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Chapter 7 - Global Management 26. d 27. d 28. b 29. b 30. d 31. b 32. a 33. c 34. d 35. b 36. d 37. b 38. b 39. a 40. b 41. c 42. d 43. a 44. b 45. a 46. c 47. b 48. d 49. a 50. b 51. d Powered by Cognero

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Chapter 7 - Global Management 52. d 53. d 54. d 55. a 56. a 57. c 58. b 59. a 60. b 61. a 62. d 63. a 64. a 65. b 66. d 67. a 68. d 69. c 70. b 71. b 72. b 73. d 74. c 75. d 76. d Powered by Cognero

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Chapter 7 - Global Management 77. b 78. c 79. b 80. a 81. b 82. a 83. c 84. c 85. b 86. False 87. False 88. True 89. False 90. True 91. True 92. False 93. False 94. True 95. True 96. False 97. True 98. True 99. False 100. False 101. True 102. True Powered by Cognero

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Chapter 7 - Global Management 103. True 104. True 105. False 106. False 107. False 108. True 109. True 110. False 111. True 112. False 113. False 114. False 115. False 116. False 117. True 118. False 119. False 120. False 121. False 122. False 123. True 124. False 125. False 126. True 127. True Powered by Cognero

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Chapter 7 - Global Management 128. True 129. Foreign direct investment is a method of investment in which a company builds a new business or buys an

existing business in a foreign country. The top eight countries with the largest direct foreign investment in Canada are the United Kingdom, Japan, Germany, the Netherlands, the United States, France, Switzerland, and Luxembourg.

130. Trade barriers are government-imposed regulations that increase the cost and restrict the number of

imported goods. Governments have used two general kinds of trade barriers: tariff and non-tariff barriers. A tariff is a direct tax on imported goods. Tariffs increase the cost of imported goods relative to domestic goods.

For example, China placed a 15 to 40 percent tariff on cars imported into China over the last few years. Nontariff barriers are non-tax methods of increasing the cost or reducing the volume of imported goods. There are five types of non-tariff barriers: quotas, voluntary export restraints, government import standards, government subsidies, and customs valuation/classification. An example of a non-tariff barrier would be the quota (or specific limit on imports) on yearly imports of raw sugar cane into Canada.

131. The two geographic levels at which trade agreements were developed during the 1990s are worldwide and

regional. The single worldwide agreement was the General Agreement on Tariffs and Trade (GATT), intended to reduce and eliminate tariffs, limit government subsidies, and protect intellectual property. In addition to this global agreement, a second major development in the historic move toward reduction of trade barriers has been the creation of regional trading zones, in which tariff and non-tariff barriers are reduced or eliminated for countries within the trading zone. The largest and most important trading zones are in Europe (the Maastricht Treaty), North America (the United States–Mexico–Canada agreement, or USMCA), South America (Mercosur, and the proposed South American Community of Nations, or SACN), and Asia (ASEAN, Association of Southeast Asian Nations, and APEC, Asia-Pacific Economic Cooperation).

132. Global business requires a balance between global consistency and local adaptation. Global consistency

means using the same rules, guidelines, policies, and procedures in each foreign location. Managers at company headquarters like global consistency because it simplifies decisions. Local adaptation means adapting standard procedures to differences in foreign markets. Local managers prefer a policy of local adaptation because it gives them more control. Not all businesses need the same combinations of global consistency and local adaptation.

Some thrive by emphasizing global consistency and ignoring local adaptation. Others succeed by ignoring global consistency and emphasizing local adaptation.

133. The phase model of globalization refers to a series of four sequential stages that most companies have

historically gone through in growing from domestic to global companies. The four stages are (1) exporting, (2) cooperative contracts (which take the form of either licensing or franchise agreements), (3) strategic alliances (characterized by the global joint venture), and finally, (4) wholly owned affiliates. At each step, the company would grow much larger, would use those resources to enter more global markets, would be less dependent on home country sales, and would be more committed in its orientation to global business.

134. When deciding where to go global, companies try to find countries or regions with promising business

climates. The most important factor in an attractive business climate is access to a growing market. Two factors help companies determine the growth potential of foreign markets: purchasing power and foreign competitors.

Purchasing power is measured by comparing the relative cost of a standard set of goods and services in different countries. Countries with high and growing levels of purchasing power are good choices for companies looking for attractive global markets. The second part of assessing growing global markets is to analyze the degree of global competition, which is determined by the number and quality of companies that Powered by Cognero

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already compete in foreign markets. Companies should look for countries where foreign competitors are weak.

135. When conducting global business, companies should attempt to identify two types of political risk: political

uncertainty and policy uncertainty. Political uncertainty is associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events.

Policy uncertainty refers to the risk associated with changes in laws and government policies that directly affect the way foreign companies conduct business. It is the most common form of political risk in global business and perhaps the most frustrating.

136. Managers should receive both language and cross-cultural training, such as documentary training, cultural

simulations, or field experiences, before going on assignment. In addition, since the evidence clearly shows that how well an expatriate’s spouse and family adjust to the foreign culture is the most important factor in determining the success or failure of an international assignment, language and cross-cultural training should be provided for the spouses and children of expatriates as well.

137. 124 countries agreed to adopt the General Agreement on Tariffs and Trade (GATT). Through tremendous

decreases in tariff and non-tariff barriers, GATT made it much easier and cheaper for consumers in all countries to buy foreign products. First, the GATT cut average tariffs worldwide by 40 percent. A reduction in tariffs benefits Canadian industries whose goods were made less competitive by these measures. GATT eliminated tariffs in 10 specific industries: beer, alcohol, construction equipment, farm machinery, furniture, medical equipment, paper, pharmaceuticals, steel, and toys. Obviously, Canadian industries in these areas would find this beneficial. GATT put stricter limits on government subsidies. Canadian electronics and high-tech industries would benefit. GATT protected intellectual property such as trademarks, patents, and copyright. The Canadian entertainment and software industries should both benefit significantly from this provision. The GATT was replaced in 1995 by the WTO. The WTO administers trade agreements, provides a forum for trade negotiations, handles trade disputes, monitors national trade policies, and offers technical assistance and training for developing countries. Recently the WTO’s Trade Facilitation Agreement (TFA) was implemented, and it simplifies and standardizes customs procedures around the world. Trade disputes between countries are now settled by arbitration panels from the WTO. Countries had once been able to use their veto power to cancel a panel’s decision; today, WTO rulings are final, but not binding.

138. Global business requires a balance between global consistency and local adaptation that is an appropriate

fit for the environment facing the particular global company. Global consistency means that when a multinational company has offices, manufacturing plants, and distribution facilities in different countries, it will run those offices, plants, and facilities based on the same rules, guidelines, policies, and procedures. Managers at company headquarters value global consistency, because it simplifies decisions.

Local adaptation is a company policy to modify its standard operating procedures to adapt to differences in foreign customers, governments, and regulatory agencies. Local adaptation is typically more important to local managers who are charged with making the international business successful in their countries.

Multinational companies struggle to find the correct balance between global consistency and local adaptation. If companies focus too much on local adaptation, they run the risk of losing the cost efficiencies and productivity that result from using standardized rules and procedures throughout the world. If they lean too much toward global consistency, they run the risk of using management procedures poorly suited to particular countries’ markets, cultures, and employees.

Thus, not all businesses need the same combinations of global consistency and local adaptation. Some thrive by emphasizing global consistency and ignoring local adaptation. Others succeed by ignoring global consistency Powered by Cognero

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and emphasizing local adaptation. Students’ examples will vary, but most students should realize that high-tech products as simple as nasal strips to prevent snoring will be the easiest to use global consistency. The Maharaja Mac example in the text should provide students with an example of local adaptation.

139. The phase model of globalization says that as companies move from a domestic to a global orientation,

they use four organizational forms in sequence. These forms are exporting, cooperative contracts, strategic alliances, and wholly owned affiliates. The process begins with exporting, which occurs when companies produce products in their home countries and sell those products to customers in foreign countries. This phase is followed by cooperative contracts, which represent an agreement in which a foreign business owner pays a company a fee for the right to conduct that business in his or her country (such contracts may take the form of either licensing or franchising). The third stage is strategic alliances, where companies combine key resources, costs, risk, technology and people, as for example, in the joint venture, which is a strategic alliance in which two existing companies collaborate to form a third, independent company. Finally, the company would move to the wholly owned affiliate phase, where foreign offices, facilities, and manufacturing plants that are 100 percent owned by the parent company. At each step, the company would grow much larger, would use those resources to enter more global markets, would be less dependent on home country sales, and would be more committed in its orientation to global business. However, evidence suggests that some companies do not follow the phase model of globalization. Some skip phases on their way to becoming more global and less domestic. Others, known as “new global ventures,” don’t follow the phase model at all.

Three trends have combined to allow companies to skip the phase model when going global. First, quick, reliable air travel can transport people to nearly any point in the world within one day. Second, low-cost communication technologies, such as international e-mail, teleconferencing, and phone conferencing, make it easier to communicate with global customers, suppliers, managers, and employees. Third, there is now a critical mass of businesspeople with extensive personal experience in all aspects of global business. This combination of events has made it possible to start companies that are global from inception. With sales, employees, and financing in different countries, global new ventures are new companies founded with an active global strategy.

While there are several different kinds of global new ventures, they share two common factors. First, the company founders successfully develop and communicate the company’s global vision. Second, rather than going global one country at a time, new global ventures bring a product or service to market in several foreign markets at the same time.

It is highly likely that this latter approach to globalization will increase. Each of the three trends that have enabled the development of global new ventures is continuing and will undoubtedly accelerate. As the technology and human resources necessary to develop global businesses grow, companies will pursue such growth, as it creates a global win-win situation. That is, companies win by increasing market share and profitability, consumers win through decreasing costs and increasing product selection, and national economies win through industrialization and economic growth.

140. An attractive global business climate has three characteristics: (1) it positions the company for easy access

to growing markets, (2) it is an effective but cost-efficient place to build an office or manufacturing site, and (3) it minimizes the political risk to the company. A fast-food company would probably make a very different assessment of several relevant factors than would a capital-intensive business, such as an oil refinery and pipeline company. Comments on these differences will be clarified in the ensuing discussion.

Regarding the first factor, positioning the company for easy access to growing markets, this is most clearly relevant to the fast-food company, which must have its stores located directly in the growth area. An oil Powered by Cognero

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refinery/pipeline company would need to be located reasonably close to the source of the crude oil, but would not have to be directly within the market for the sale of the product. On the other hand, since transportation costs for oil can be significant, the company should be as close as feasible to the target market. Growth potential is determined through an evaluation of purchasing power and foreign competitors. The purchasing power dimension would be more relevant to the fast-food company since it is selling a discretionary product. The product mix of the oil company would determine the relevance of this dimension (e.g., gasoline, diesel fuel, heating oil combinations depending upon the needs of the relevant target market). Foreign competitors may be less relevant to the fast-food company than the oil company, which may be competing with state-owned and operated facilities.

With regard to the second factor, locating an effective but cost-efficient place to build an office or manufacturing site, we would find significantly greater relevance to the oil company since the fast-food company could license or franchise to foreign markets. While the oil company could export, the conditions in the host country would be crucial to its long-term viability, since political factors could ultimately determine its success or failure. Both companies would need to consider the qualitative factors of workforce quality and company strategy, though the oil company is less labour intensive and may find it easier to bring in qualified technical personnel than would the fast-food company. In addition, quantitative factors would need to be taken into account by both companies. Among these, tariff and nontariff barriers, exchange rates, and transportation and labour costs would be relevant to both companies. The kind of facility being built would be of greater significance to the oil company.

The final factor, minimizing political risk to the company, would be acutely important to the oil company, but less so to the fast-food company. Since the fast-food company can readily use licensing or franchising to overcome trade barriers and insulate itself from political risk with a cooperative strategy of risk management, it may be in a better position on this dimension. The oil company could be at significant risk from both political uncertainty (associated with the risk of major changes in political regimes that can result from war, revolution, death of political leaders, social unrest, or other influential events) and policy uncertainty (associated with changes in laws and government policies that directly affect the way foreign companies conduct business). For the oil company, careful selection of the site for the facility beforehand is probably the most crucial step (i.e., an avoidance strategy). Assuming that a reasonable and relatively stable country has been selected, the control strategy (lobbying foreign governments) and cooperative strategy (using joint ventures) can help to reduce the political risk.

141. The manager who wants to continue moving up the corporate ladder must be critically concerned with

obtaining the proper screening and support to ensure that the overseas assignment will be successful.

Considerable research shows that expatriates are much more likely to be successful if they receive language and cross-cultural training, such as documentary training, cultural simulations, or field experiences, before going on assignment. Pre-departure language and cross-cultural training can reduce the uncertainty that expatriates feel, the understandings that arise between expatriates and natives, and the inappropriate ways in which expatriates unknowingly behave when they travel to a foreign country. Expatriates who receive pre-departure language and cross-cultural training make faster adjustments to foreign cultures and perform better on their international assignments. Documentary training focuses on identifying specific critical differences between cultures. After learning specific critical differences through documentary training, trainees can then participate in cultural simulations, in which they practise adapting to cultural differences. Finally, field experience simulation training places trainees in an ethnic neighbourhood for three to four hours to talk to residents about cultural differences.

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Chapter 7 - Global Management

Adjustment of expatriates’ spouses and families, which is the most important determinant of success in international assignments, can be improved through adaptability screening and intercultural training.

Adaptability screening is not just companies assessing employees; it can also mean that employees screen international assignments for desirability. It’s used to assess how well managers and their families are likely to adjust to foreign cultures. Prudential Relocation Management’s international division has developed an Overseas Assignment Inventory to help the Canadian International Development Agency select people who will adapt well by assessing the open-mindedness of a spouse and family, their respect for others’ beliefs, their sense of humour, and the spouses’ marital communication.

Language and cross-cultural training for families is just as important as language and cross-cultural training for expatriates. In fact, it may be more important, because unlike expatriates, whose professional jobs often shield them from the full force of a country’s culture, spouses and children are often fully immersed in foreign neighbourhoods and schools. Households must be run, shopping must be done, and bills must be paid.

Likewise, children and their parents must deal with different cultural beliefs and practices. Thus, in an ideal world, all of these procedures, which have been shown to contribute to the success of the expatriate, should be employed. Unfortunately, in the real world, only about a third of the managers who go on international assignments receive any kind of pre-departure training. Thus, our manager’s decision of whether or not to accept the assignment should be very carefully considered, based upon the likely impact of strong or weak performance on future career prospects and the level of support the company is willing and able to provide.

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Chapter 8 - Designing Adaptive Organizations

Indicate the answer choice that best completes the statement or answers the question.

1. As a class project, Senora is working with other classmates to create a company that would market NASCAR

memorabilia. She is instructed to use the traditional approach to create the organization’s structure. What should Senora do? a. create an organizational structure with vertical and horizontal configurations b. use an organizational process to create a matrix design c. create a virtual organization d. use the organizational structure to control creativity 2. What is the term for the collection of activities that transforms inputs into outputs that customers value? a. re-engineering b. functionalization c. organizational structure d. organizational process 3. What is the definition of the term organizational process? a. the definition of roles, not activities b. the limitations on the adaptivity of an organization c. the use of vertical and horizontal departmentalization d. the activities whereby inputs are transformed into outputs that customers value 4. Which of the following is concerned with who reports to whom, and who does what and where? a. departmentalization b. organizational process c. functionalization d. organizational structure 5. What type of departmentalization organizes work and workers into distinct units responsible for certain

business roles or areas of expertise? a. functional b. customer c. matrix d. product 6. Kimberly-Clark is subdivided into organizational units called Kimberly-Clark Health Care, which sells

products to hospitals; Kimberly-Clark Professional, which sells to businesses; and Kimberly-Clark Consumer, which sells the company’s products to consumers. Which of the following does Kimberly-Clark use? a. hierarchical functionalization b. product departmentalization c. a nonlinear organizational structure d. customer departmentalization Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 7. A method of subdividing work and workers into separate units that take responsibility for completing tasks is

referred to as which of the following? a. re-engineering b. functionalization c. departmentalization d. functional empowerment 8. As companies grow, which type of departmentalization may lead to slower decision making and produce

managers with narrow experience and expertise? a. customer b. process c. functional d. product 9. Which statement presents a characteristic of functional departmentalization? a. Functional departmentalization allows work to be done by highly qualified specialists. b. Functional departmentalization increases costs by reducing duplication. c. Functional departmentalization complicates communication and coordination for departmental

managers. d. Functional departmentalization is a form of matrix departmentalization.

10. Which statement presents a characteristic of functional departmentalization? a. Functional departmentalization lowers costs by reducing duplication. b. Functional departmentalization increases costs by creating duplication. c. Functional departmentalization produces managers with broader experience and expertise. d. Functional departmentalization makes cross-department coordination easier.

11. Which of the following is a characteristic of functional departmentalization? a. It makes it easier for top managers to assess work-unit performance. b. It makes communication and coordination less problematic for managers. c. It produces managers with broader experience and expertise. d. It enhances coordination between departments.

12. Hallmark has four departments: (1) Flowers and Gifts, (2) Cards and E-cards, (3) Hallmark Collectibles, and

(4) Photo Albums and Scrapbooks. Which type of departmentalization does Hallmark use? a. matrix b. product c. customer d. geographic 13. Pierre is the president of his company. He is frustrated that it is difficult to get his managers together.

Decision making is slow, and it’s hard to get a consensus on what new products the company should introduce.

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What type of departmentalization does Pierre’s company have? a. product b. customer c. geographic d. functional 14. A manufacturer of acrylic, latex, and nitrile gloves sells to medical laboratories; to factories where

employees handle chemicals; to companies that manufacture micro-tech equipment; and to cleaning services.

The manufacturer is organized to better satisfy the needs of each of its four target markets. Which type of departmentalization does the manufacturer use? a. matrix b. product c. customer d. geographic 15. Large accounting agencies typically have separate departments that deal with households, businesses, and

governments. Which type of departmentalization do many of these accounting agencies use to better serve the needs of their clients? a. matrix b. product c. customer d. functional 16. Companies such as Sprint and American Express focus on both business clients and consumer clients.

Which type of departmentalization have they adopted? a. boundaryless b. product c. customer d. functional 17. What is the primary disadvantage of customer departmentalization? a. an overemphasis on customer needs b. duplication of resources c. difficulties in coordinating across departments d. overspecialization of managers and workers 18. Procter & Gamble has divisions for personal grooming and beauty, house and home, health and wellness,

baby and family, and pet nutrition and care. Which type of departmentalization does the company use? a. functional b. geographic c. product Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations d. customer 19. A general manager of a manufacturing firm wishes to increase efficiency by reducing duplication throughout

the organization. Which form of departmentalization should he adopt? a. functional b. matrix c. product d. geographic 20. Marianne is working on a special project. She reports to the project manager as well as her finance manager

where her full-time work resides. What organizational structure is Marianne working within? a. geographic b. matrix c. product d. customer 21. What is the primary disadvantage of geographic departmentalization? a. the absence of cross-departmental coordination b. broken chains of command c. spans of control that are too wide d. the duplication of resources 22. Commerce Insurance Services has five divisions: personal, core commercial, Main Street business, major

commercial, and benefits. The company is also departmentalized along product lines. What type of departmentalization does Commerce Insurance Services use? a. boundaryless b. product c. customer d. matrix 23. Which of the following is an advantage of matrix departmentalization? a. Most employees in an organization that uses matrix departmentalization report to one boss. b. With matrix departmentalization, companies have a greater pool of resources available to carry out

tasks. c. With matrix departmentalization, there is reduced coordination between functional and project managers. d. The most common matrix combines geographic and product departmentalization.

24. Which type of departmentalization has the primary advantage of allowing companies to efficiently manage

large, complex tasks by minimizing duplication? a. product b. functional Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations c. matrix d. geographic 25. Aleeza is managing the financial area of a special project to launch the company in Asia. Aleeza and the

transportation manager disagree on how product should be moved between borders. The two are meeting with the senior project manager to resolve this issue. What type of matrix is Aleeza working within? a. the networked matrix b. the synergistic matrix c. the complex matrix d. the hierarchical matrix 26. Rose is managing the marketing area of a project to introduce a new line of products. Rose and the manager

responsible for sales of this new product cannot agree on the launch date. They are meeting today to work out a date that they can both accept. What type of matrix is Rose working within? a. simple matrix b. networked matrix c. empathetic matrix d. matrix of convenience 27. John feels like he is being pulled in all directions. The project manager he reports to wants him in an all-day

meeting on Tuesday. The sales manager for his regular functions wants him to meet with an important client on Tuesday. John is not sure what to do. What type of departmentalization is John working within? a. matrix b. functional c. customer d. product 28. Of all types of departmentalization, which one requires the highest level of management skill for successful

implementation? a. geographic b. customer c. matrix d. product 29. Which type of departmentalization often evolves from a simple form to a more complex form due to

problems associated with conflicts over schedules, budgets, and available resources (including employees)? a. hierarchical b. functional c. customer d. matrix 30. Honeywell Inc. reorganized its European operations along customer lines to prepare for a unified European

Union. In doing so, it abandoned matrix departmentalization. What was the best reason for Honeywell to have Powered by Cognero

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engaged in such restructuring? a. to create pools of resources b. to empower its employees c. to better adhere to the management philosophy of staff authority d. to end conflict between product managers in different parts of its matrix 31. Joseph is a supervisor of accounts receivable. He tells a staff member to call a particular customer to inform

them they are overdue on a payment. The staff member does not like making these calls but does what he is told. In terms of chain of command, what type of authority does Joseph have? a. departmental b. centralized c. functional d. line 32. Which of the following is characteristic of organizational authority? a. chain of command b. empowerment c. behavioural informality d. re-engineering 33. Robert Strickland works in the legal department at a large consumer products manufacturer. His job is to

craft warnings on package labels. Which of the following defines Strickland’s work? a. line function b. boundary-spanning role c. chain of command role d. staff function 34. Shelley is part of a special team overseeing the property development of the company’s new location. She

reports to Brian, the manager of the project, and she continues to report to Reginald, the manager of the area where she works full time. What principle does this matrix organization violate? a. line authority b. unity of command c. delegation of authority d. degree of centralization 35. Which of the following is a key assumption underlying the chain of command, which refers to the idea that

workers should report to just one supervisor? a. delegation of command b. empowerment c. synergistic authority d. unity of command Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 36. Delmar works in the sales department of a toy manufacturer. Delmar has several very large retail customers

that he spends the majority of time making sure they are well taken care of. What type of function would Delmar’s activities be associated with? a. staff b. line c. mechanistic d. organic 37. Jennifer works in the public relations department of a large pharmaceutical company. Her job is to write

speeches for the company’s top managers, to issue press and video releases, to host plant tours, and to be involved in community affairs. Which of the following does Jennifer have? a. line authority b. mechanistic authority c. empowerment obligations d. staff authority 38. An international distribution company has a shipping division, a warehouse division, and a computer

hardware and software distribution centre, as well as a marketing research department, a human resources department, and an accounting department. A salesperson who works in the shipping division is told by the accounting department that he must turn in a weekly expense account; at the same time, his supervisor in the shipping division wants expense accounts submitted monthly. Preparing the expense account form takes at least two hours, and the salesperson wants to devote as much time as possible to sales. Which of the following is the salesperson likely experiencing a problem with? a. line authority b. delegation of authority c. centralization d. chain of command 39. Which of the following statements best describes the chain of command? a. The chain of command is the vertical line of authority that clarifies who reports to whom. b. The chain of command acts at cross-purposes to the unity of command principle. c. The chain of command is relevant only in mechanistic organizations. d. The chain of command does not permit delegation of authority.

40. Which of the following individuals most likely performs a staff function? a. the supervisor of the loading dock b. the organization’s receptionist c. the vice president of marketing d. a member of the office cleaning crew 41. Which term most closely refers to assigning direct authority and responsibility to a subordinate to fulfill

tasks for which the manager is normally responsible? a. a job description Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations b. staff functionality c. delegation of authority d. decentralization 42. When managers delegate work, three transfers occur. Two of the transfers are responsibility and authority.

What is the third? a. utility b. synergy c. reciprocity d. accountability 43. The marketing manager of a company that manufactures church furniture has been given the job of

increasing corporate profits by 5 percent during the upcoming year. The manager has decided to give their assistant the full responsibility and authority for developing a mailing campaign to target churches located in the state of Florida and its Gulf Cost that were damaged or destroyed by Hurricane Ian. The manager is making this individual accountable for the campaign’s success. What has the marketing manager done? a. implemented feedback controls b. created a staff position c. embraced the matrix organizational philosophy d. delegated the task 44. Robin works in customer service of a department store. She handles returned products. For most products, if

they are returned in original packaging, are undamaged, and the customer has the receipt, Robin will accept the return for a full refund. However, for camping gear, the policy is no returns and no exceptions. What term describes how Robin handles returned products? a. consistency planning b. organizational autonomy c. standardization d. problem empowerment 45. Large hospitals purchase more than 15,000 individual products on a routine basis. One challenge for a

hospital’s purchasing department is that the various hospital departments use different product descriptions and classifications for the same item. One purchasing manager plans to institute a hospital-wide purchasing policy that gives a specific code to each item. In doing so, what is the purchasing manager engaging in? a. consistency planning b. organizational autonomy c. standardization d. problem empowerment 46. The Toronto Blue Jays are owned by media conglomerate Rogers Communications. The team’s president

and general manager report to Rogers’s senior leadership team, but rarely have to seek approval before making trades or signing free agents. Which term best describes this situation? a. centralization Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations b. standardization c. top management empowerment d. decentralization 47. Boxing Canada has moved its head office and training facilities to Montreal from various locations across

the country. Which of the following best represents the principle Boxing Canada is relying upon? a. centralization of authority b. standardization c. top management reciprocity d. job specialization 48. Which of the following is characteristic of decentralization? a. It leads to faster decision making and more satisfied customers and employees. b. It tends to stymie employee capabilities. c. It pertains most to large companies. d. It has proven to be more appropriate where standardization is important.

49. Which of the following actions is appropriate where standardization is important? a. centralize authority b. decentralize authority c. emphasize line authority d. ensure a flat organizational structure 50. Which of the following are characterized by simple, easy-to-learn steps, little variety, and much repetition? a. consistent jobs b. specialized jobs c. reengineered tasks d. standardized jobs 51. Which of the following can job specialization result in? a. high job satisfaction b. employee boredom c. low employee turnover d. complicated job designs 52. Which of the following determines the number, kind, and variety of tasks that individual workers perform in

their roles? a. standardization b. task mapping c. job design d. job specialization Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 53. Josephine notices that one of her better workers seems less enthusiastic about her work. Josephine adds

different tasks to the job to hopefully reduce the boredom the worker is feeling. What did Josephine engage in to alter the worker’s job? a. task aggregation b. job specialization c. job enlargement d. employee specialization 54. The Toronto Metropolitan University library is organized in a hierarchy with six unit heads reporting to a

chief librarian. The units are archives, audiovisual/interlibrary loans, library access services, reference and information, systems, and technical services. Within these units are 15 librarians and 47 full-time library staff.

One tool used in the organizational development of the library was to systematically move employees from one job to another to give them an opportunity to learn and use different skills. Which of the following was the Toronto Metropolitan University library using? a. task aggregation b. job specialization c. job enlargement d. job rotation 55. In one job design approach, the number of different tasks that a worker performs within one job is increased,

and workers are given the authority and control to make meaningful decisions about their work. Which of the following is associated with this approach? a. job rotation and job enlargement b. job specialization and job enrichment c. job specialization and job rotation d. job enlargement and job enrichment 56. An organization is characterized by broadly defined jobs and responsibilities; loosely defined, frequently

changing roles; decentralized authority; and horizontal communication based on task knowledge. Which of the following best describes its nature? a. centralized b. mechanistic c. departmentalized d. organic 57. The CEO of an electronics company stated that an organizational chart was inapplicable in his organization

and “a dangerous method of thinking.” According to this CEO, the first requirement of management is to make the fullest use of the capacities of its members; any individual’s job should be as little defined as possible, so that it can “shape itself” to the person’s special abilities and initiative. Which type of organization does this company more than likely have? a. centralized b. mechanistic c. departmentalized Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations d. organic 58. Which type of organization works best in a stable, unchanging business environment? a. centralized b. mechanistic c. departmentalized d. organic 59. During the COVID-19 pandemic, which type of organization provided the ability to shift work from one

location to another and repurpose manufacturing facilities to support new uses? a. centralized b. mechanistic c. departmentalized d. organic 60. Nigel works for a high-tech company that has a dynamic working environment. Nigel’s job title is technical

support but he really works in all areas of operations. He rarely knows what he will be doing from day to day and enjoys the ability to make decisions to solve problems as they arise. What type of organization does Nigel work in? a. organic b. mechanistic c. matrix d. functional 61. An organization is characterized by specialized jobs and responsibilities; precisely defined, unchanging

roles; and a rigid chain of command based on centralized authority and vertical communication. Which of the following describes the organization? a. modular b. departmentalized c. standardized d. mechanistic 62. Deirdre has a well-defined job. Deirdre knows exactly what each day will be like. If she ever needs help or

runs into a problem she goes to Monica, her supervisor, for guidance. What type of organization does Deirdre work in? a. organic b. mechanistic c. matrix d. functional 63. What is the term for a fundamental rethinking and radical redesign of business processes to achieve huge

improvements in critical performance measures, such as cost, quality, service, and speed? a. pooling interdependence Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations b. reciprocating interdependence c. re-engineering d. repositioning 64. In recent years, the Air Force Weather Agency (AFWA) has undergone a radical change in how it

determines and shares local weather conditions with pilots. Before, the local-base weather station was responsible for warnings, and the quality of the information varied. Now AFWA provides the same high standard of weather information to all pilots. What process did the AFWA go through? a. customization b. micro-adaptation c. sequential independence d. re-engineering 65. LexisNexis realized that its ability to serve new Web-based customers was severely strained. Thousands of

small and midsize law firms represented a huge business opportunity for the company’s legal-information services, but they often had to wait 48 hours to have their Web accounts activated after signing up. For smaller firms seeking to buy documents in small quantities, often to apply to pending cases, such a delay was intolerable. Clearly, LexisNexis needed to revamp its customer sign-up and order-fulfillment processes, which were designed for large law firms and the ordering of hardcover legal tomes. Which of the following would LexisNexis most likely use to radically change its business practices? a. standardization b. micro-adaptation c. sequential independence d. re-engineering 66. Workers perceive their work to have meaning and perceive themselves to be competent, having an impact,

and capable of self-determination. What is the term for this feeling of intrinsic motivation? a. reciprocity b. motivational assertion c. autonomy d. empowerment 67. What are the three types of task interdependence? a. pooled, delegated, and systematic b. delegated, integrated, and combined c. sequential, delegated, and pooled d. reciprocal, pooled, and sequential 68. Zara clothing stores has developed a system that can order new fashions and deliver them to the store in only

three weeks. The system begins inside the store via Internet communications between store manager and headquarters. As soon as a manager notices that a certain item is selling especially well, the manager can send a new order out from the store and give suggestions for new colours and designs. Next, designers and managers receive the information and match it with suggestions from other Zara store managers. Designers then draw up Powered by Cognero

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the new styles and send the patterns to Zara factories in Spain, where they are made. The clothes reach Zara’s stores within 48 hours. What is Zara using to pass information to the next person in the line of development? a. standardization b. sequential interdependence c. pooled interdependence d. manager empowerment 69. A military expert described the way military forces were organized for Operation Desert Storm as “pooled

interdependence.” Several branches of the military took part in the operation. What does this information suggest about the workings of the military branches? a. The branches independently contributed to the success of the campaign. b. The branches worked with each other in a give-and-take manner. c. The branches performed identical tasks. d. The branches accepted the fact that one group’s output was another group’s input.

70. During any disaster, leaders need to give their employees a sense that everyone is participating in the relief

effort. United Way BC gave its employees paid time off to support on-the-ground flood relief efforts during the devastating flooding that occurred in BC in the summer of 2021. What did United Way BC use to allow its employees to gain a feeling of intrinsic motivation? a. standardization b. sequential interdependence c. pooled interdependence d. empowerment 71. Why do about 70 percent of all re-engineering projects fail? a. because of how the process affects people in the workplace b. because the process requires a change in the organization’s vision c. because staff personnel must be given line authority to implement re-engineering d. because satisfactory benchmarks cannot be located 72. Novo Nordisk is a European manufacturer of pharmaceuticals. Rikke Nedergaard Bischoff, a clinical-

development scientist, contends that Novo upholds the standards expected of public institutions without the stifling bureaucracy. She says, “There’s a great deal of empowerment at Novo Nordisk.” What does Novo Nordisk provide Nedergaard Bischoff with? a. a rigid chain of command b. a mechanistic work environment c. feelings of intrinsic motivation d. re-engineering opportunities 73. In essence, how does re-engineering change organizations? a. by increasing reciprocal interdependence b. by decreasing the use of autonomy c. by increasing pooled interdependence Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations d. by decreasing delegation 74. Which of the following is an approach to managing inter-organizational processes? a. matrix organizations b. modular organizations c. flat organizations d. hierarchical organizations 75. Which type of organization outsources all remaining business activities to outside companies, suppliers,

specialists, or consultants except for the core business activities that it can perform better, faster, and cheaper than others? a. a modular organization b. a hierarchical organization c. a boundaryless organization d. an organizational network 76. Anthony feels that he should focus on what he does well, which is coaching executives to be more

productive. Rather than trying to do all the marketing, accounting, and other administrative functions himself, he hires professionals do these for him. What type of organization did Anthony convert his business into? a. modular b. virtual c. boundaryless d. network 77. Which type of organization is part of a network in which many companies share skills, costs, capabilities,

markets, and customers with one another? a. modular b. virtual c. matrix d. electronic 78. A PROS cooperative is a recognized association of park, recreation, open space, and related entities united

voluntarily to achieve through collaboration what can’t be achieved through individual and independent action.

PROS cooperatives conserve the diversity of valued resources and recreation opportunities to benefit individuals, communities, the economy, and the environment. Which organizational type does a PROS cooperative exemplify? a. modular b. boundaryless c. decentralized d. virtual 79. In the automobile industry, three car manufacturers and a variety of suppliers and distributors have formed a

network to create economies in production through outsourcing. The goal is to cut as much as $3,000 from the Powered by Cognero

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costs of producing one car. Which type of organization is described? a. matrix b. functional c. modular d. virtual 80. Which type of organization is always changing in composition? a. modular b. boundaryless c. decentralized d. virtual 81. Narrative 8-1

A $100 million loss, plummeting advertising sales, a stock price that has fallen from an all-time high of $237 to less than $10 per share, and layoffs that cost 800 people their jobs, including the previous CEO. Welcome to Yahoo! At this once phenomenally successful company, so many basic things have gone wrong that the question is, where do you start to fix it?

One key problem is the organizational structure. With just 3,200 employees, Yahoo has 44 different business units. General Electric, with 300,000 employees, has only 13. Yahoo doesn’t have a direct sales unit—no one, it turns out, is responsible for cultivating customers because customer advertising dollars were being thrown at the company. Consequently, most orders took place via e-mail. Yahoo didn’t have to establish relationships with customers because customers came to it. Unfortunately, this led to arrogance. A potential customer said the message was, “Buy our stuff [meaning Yahoo’s advertising], and shut up.” Jeff Mallett, Yahoo’s former president, said, “We ran Yahoo to optimize market share. I make no apologies for that. If there was a company that didn’t get it [Internet advertising], we moved on very quickly.”

Another problem was the overly creative, freewheeling, spontaneous company culture in which everyone, including the CEO, worked in cubicles, representing an overly informal culture with no controls. At Yahoo, employees played soccer in a large open space outside the company boardroom, even while the board was meeting. Furthermore, no one had an overall perspective of what was best for the entire company.

Consequently, unit managers would beg, borrow, and steal from the network (the overall company) to help their own properties. Beyond that, ideas were pursued without having to get anyone’s feedback or approval. Yahoo’s chief operating officer said, “Yahoo’s original mission was to grow as fast as you can and put things out there and see what works.” The more serious problem, he said, was that “nobody knew what would work.”

Yahoo was so informal, so unfocused, and so freewheeling that no one really worried about whether the company could charge for the services it provided and make a profit. “There was a fear,” said one manager, “that if all of our efforts were put into profit making, we’d starve research and development and lose our innovation.”

Refer to Narrative 8-1. One cause of the precipitous drop in the value of Yahoo’s stock was the company’s inability to subdivide work and workers into separate organizational units responsible for completing particular tasks. That caused Yahoo trouble. For example, the company had no sales unit to cultivate and call on advertising customers. Which of the following had Yahoo decided NOT to engage in?

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Chapter 8 - Designing Adaptive Organizations a. decentralization b. cultural rigidity c. the appropriate change of command d. departmentalization 82. Narrative 8-1

A $100 million loss, plummeting advertising sales, a stock price that has fallen from an all-time high of $237 to less than $10 per share, and layoffs that cost 800 people their jobs, including the previous CEO. Welcome to Yahoo! At this once phenomenally successful company, so many basic things have gone wrong that the question is, where do you start to fix it?

One key problem is the organizational structure. With just 3,200 employees, Yahoo has 44 different business units. General Electric, with 300,000 employees, has only 13. Yahoo doesn’t have a direct sales unit—no one, it turns out, is responsible for cultivating customers because customer advertising dollars were being thrown at the company. Consequently, most orders took place via e-mail. Yahoo didn’t have to establish relationships with customers because customers came to it. Unfortunately, this led to arrogance. A potential customer said the message was, “Buy our stuff [meaning Yahoo’s advertising], and shut up.” Jeff Mallett, Yahoo’s former president, said, “We ran Yahoo to optimize market share. I make no apologies for that. If there was a company that didn’t get it [Internet advertising], we moved on very quickly.”

Another problem was the overly creative, freewheeling, spontaneous company culture in which everyone, including the CEO, worked in cubicles, representing an overly informal culture with no controls. At Yahoo, employees played soccer in a large open space outside the company boardroom, even while the board was meeting. Furthermore, no one had an overall perspective of what was best for the entire company.

Consequently, unit managers would beg, borrow, and steal from the network (the overall company) to help their own properties. Beyond that, ideas were pursued without having to get anyone’s feedback or approval. Yahoo’s chief operating officer said, “Yahoo’s original mission was to grow as fast as you can and put things out there and see what works.” The more serious problem, he said, was that “nobody knew what would work.”

Yahoo was so informal, so unfocused, and so freewheeling that no one really worried about whether the company could charge for the services it provided and make a profit. “There was a fear,” said one manager, “that if all of our efforts were put into profit making, we’d starve research and development and lose our innovation.”

Refer to Narrative 8-1. After restructuring, Yahoo’s four new departments were consumer services, marketing services, business and enterprise services, and premium services. Which type of organizational structure did Yahoo adopt during its restructuring? a. product b. matrix c. networked d. functional 83. Narrative 8-1

A $100 million loss, plummeting advertising sales, a stock price that has fallen from an all-time high of $237 to less than $10 per share, and layoffs that cost 800 people their jobs, including the previous CEO. Welcome to Powered by Cognero

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Yahoo! At this once phenomenally successful company, so many basic things have gone wrong that the question is, where do you start to fix it?

One key problem is the organizational structure. With just 3,200 employees, Yahoo has 44 different business units. General Electric, with 300,000 employees, has only 13. Yahoo doesn’t have a direct sales unit—no one, it turns out, is responsible for cultivating customers because customer advertising dollars were being thrown at the company. Consequently, most orders took place via e-mail. Yahoo didn’t have to establish relationships with customers because customers came to it. Unfortunately, this led to arrogance. A potential customer said the message was, “Buy our stuff [meaning Yahoo’s advertising], and shut up.” Jeff Mallett, Yahoo’s former president, said, “We ran Yahoo to optimize market share. I make no apologies for that. If there was a company that didn’t get it [Internet advertising], we moved on very quickly.”

Another problem was the overly creative, freewheeling, spontaneous company culture in which everyone, including the CEO, worked in cubicles, representing an overly informal culture with no controls. At Yahoo, employees played soccer in a large open space outside the company boardroom, even while the board was meeting. Furthermore, no one had an overall perspective of what was best for the entire company.

Consequently, unit managers would beg, borrow, and steal from the network (the overall company) to help their own properties. Beyond that, ideas were pursued without having to get anyone’s feedback or approval. Yahoo’s chief operating officer said, “Yahoo’s original mission was to grow as fast as you can and put things out there and see what works.” The more serious problem, he said, was that “nobody knew what would work.”

Yahoo was so informal, so unfocused, and so freewheeling that no one really worried about whether the company could charge for the services it provided and make a profit. “There was a fear,” said one manager, “that if all of our efforts were put into profit making, we’d starve research and development and lose our innovation.”

Refer to Narrative 8-1. Which of the following is an advantage of Yahoo’s organizational structure? a. the elimination of the constraints associated with the chain of command b. a flatter structure better able to respond to a static environment c. the elimination of resource duplication d. the ease with which top managers can specialize within one area 84. Narrative 8-1

A $100 million loss, plummeting advertising sales, a stock price that has fallen from an all-time high of $237 to less than $10 per share, and layoffs that cost 800 people their jobs, including the previous CEO. Welcome to Yahoo! At this once phenomenally successful company, so many basic things have gone wrong that the question is, where do you start to fix it?

One key problem is the organizational structure. With just 3,200 employees, Yahoo has 44 different business units. General Electric, with 300,000 employees, has only 13. Yahoo doesn’t have a direct sales unit—no one, it turns out, is responsible for cultivating customers because customer advertising dollars were being thrown at the company. Consequently, most orders took place via e-mail. Yahoo didn’t have to establish relationships with customers because customers came to it. Unfortunately, this led to arrogance. A potential customer said the message was, “Buy our stuff [meaning Yahoo’s advertising], and shut up.” Jeff Mallett, Yahoo’s former president, said, “We ran Yahoo to optimize market share. I make no apologies for that. If there was a company that didn’t get it [Internet advertising], we moved on very quickly.”

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Another problem was the overly creative, freewheeling, spontaneous company culture in which everyone, including the CEO, worked in cubicles, representing an overly informal culture with no controls. At Yahoo, employees played soccer in a large open space outside the company boardroom, even while the board was meeting. Furthermore, no one had an overall perspective of what was best for the entire company.

Consequently, unit managers would beg, borrow, and steal from the network (the overall company) to help their own properties. Beyond that, ideas were pursued without having to get anyone’s feedback or approval. Yahoo’s chief operating officer said, “Yahoo’s original mission was to grow as fast as you can and put things out there and see what works.” The more serious problem, he said, was that “nobody knew what would work.”

Yahoo was so informal, so unfocused, and so freewheeling that no one really worried about whether the company could charge for the services it provided and make a profit. “There was a fear,” said one manager, “that if all of our efforts were put into profit making, we’d starve research and development and lose our innovation.”

Refer to Narrative 8-1. One cause of the precipitous drop in the value of Yahoo’s stock was that too many unrelated decisions were being made by unrelated people in the company without any regard for what was best for the entire company. What would be one way to solve this problem? a. behavioural informality b. centralization of authority c. delegation d. employee empowerment 85. Narrative 8-1

A $100 million loss, plummeting advertising sales, a stock price that has fallen from an all-time high of $237 to less than $10 per share, and layoffs that cost 800 people their jobs, including the previous CEO. Welcome to Yahoo! At this once phenomenally successful company, so many basic things have gone wrong that the question is, where do you start to fix it?

One key problem is the organizational structure. With just 3,200 employees, Yahoo has 44 different business units. General Electric, with 300,000 employees, has only 13. Yahoo doesn’t have a direct sales unit—no one, it turns out, is responsible for cultivating customers because customer advertising dollars were being thrown at the company. Consequently, most orders took place via e-mail. Yahoo didn’t have to establish relationships with customers because customers came to it. Unfortunately, this led to arrogance. A potential customer said the message was, “Buy our stuff [meaning Yahoo’s advertising], and shut up.” Jeff Mallett, Yahoo’s former president, said, “We ran Yahoo to optimize market share. I make no apologies for that. If there was a company that didn’t get it [Internet advertising], we moved on very quickly.”

Another problem was the overly creative, freewheeling, spontaneous company culture in which everyone, including the CEO, worked in cubicles, representing an overly informal culture with no controls. At Yahoo, employees played soccer in a large open space outside the company boardroom, even while the board was meeting. Furthermore, no one had an overall perspective of what was best for the entire company.

Consequently, unit managers would beg, borrow, and steal from the network (the overall company) to help their own properties. Beyond that, ideas were pursued without having to get anyone’s feedback or approval. Yahoo’s chief operating officer said, “Yahoo’s original mission was to grow as fast as you can and put things out there and see what works.” The more serious problem, he said, was that “nobody knew what would work.”

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Yahoo was so informal, so unfocused, and so freewheeling that no one really worried about whether the company could charge for the services it provided and make a profit. “There was a fear,” said one manager, “that if all of our efforts were put into profit making, we’d starve research and development and lose our innovation.”

Refer to Narrative 8-1. Before restructuring, Yahoo was described as having an overly creative, freewheeling culture, a highly decentralized decision-making structure in which managers did what was best for their units rather than the entire company, and exhibited resistance to making a profit. Which kind of organization did the company have? a. mechanistic b. transformational c. organic d. synergistic Indicate whether the statement is true or false.

86. Organizational structure is the vertical and horizontal configuration of departments, authority, and jobs

within a company. a. True b. False 87. While organizational structure emphasizes the activities through which work gets done in the organization,

organizational process emphasizes jobs and their authority relationships. a. True b. False 88. All functionally departmentalized companies have the same functions. a. True b. False 89. The process view of an organization is typically very similar to the structural, hierarchical view of the

organization. a. True b. False 90. Functional departmentalization organizes work and workers into separate units responsible for particular

business functions or areas of expertise. a. True b. False 91. Departmentalization is a method of organizing work and workers into separate units responsible for

particular business functions or areas of expertise. a. True b. False Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 92. Cross-departmental coordination tends to be very easy in organizations with functional departmentalization. a. True b. False 93. Product departmentalization organizes work and workers into separate units responsible for particular kinds

of customers. a. True b. False 94. The two disadvantages associated with product departmentalization are costly duplication and difficulties

with cross-departmental coordination. a. True b. False 95. Under product departmentalization, it is easier for top managers to assess work-unit performance. a. True b. False 96. Matrix departmentalization is a hybrid structure in which two or more forms of departmentalization are used

together, such as the product and functional forms. a. True b. False 97. In matrix departmentalization, as in other forms of departmentalization, most employees report to a single

boss. a. True b. False 98. The coordination of departmental activities tends to be more difficult with the geographic approach to

departmentalization than with the other approaches. a. True b. False 99. The most common matrix combines customer and functional forms of departmentalization. a. True b. False 100. One reason that matrix organizations are difficult to manage is that the organizational structure violates the

principle of delegation of authority. a. True b. False 101. In a decentralized organization, workers closest to problems are authorized to make the decisions necessary

to solve the problems on their own. a. True Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations b. False 102. The term task description refers to the number, kind, and variety of tasks that individual workers perform

in doing their jobs. a. True b. False 103. Specialized jobs are characterized by simple, easy-to-learn steps, low variety, and much repetition. a. True b. False 104. In spite of the jobs’ disadvantages, companies continue to create and use specialized jobs because they are

economical. a. True b. False 105. Specialized jobs are generally inefficient. a. True b. False 106. Job enlargement and job enrichment mean essentially the same thing. a. True b. False 107. An organic organization is an organization characterized by broadly defined jobs and responsibility, loosely

defined, frequently changing roles, decentralized authority, and horizontal communication based on task knowledge. a. True b. False 108. An organic organization works best in a stable, unchanging business environment. a. True b. False 109. In reciprocal interdependence, work must be performed in succession because one group or job’s outputs

become the inputs for the next group or job. a. True b. False 110. competence, impact, and self-determination produce empowered employees who take active rather than

passive roles in their work. a. True b. False 111. A virtual organization is an organization that outsources noncore business activities to outside companies, Powered by Cognero

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suppliers, specialists, or consultants. a. True b. False 112. One advantage of virtual organization is that it allows member companies to share costs. a. True b. False 113. While the inter-organizational process revolves around a central company in modular organizations, a

virtual organization is part of a network in which many companies share skills, costs, capabilities, markets, and customers with one another. a. True b. False 114. The span of control is the vertical line of authority that clarifies who reports to whom throughout the

organization. a. True b. False 115. People higher in the chain of command directly exercise their right to give commands, take action, and

make decisions concerning activities occurring anywhere below them in the chain. a. True b. False 116. The chain of command has a core principle that is violated by matrix organizations. a. True b. False 117. A manager in human resources with a team of human resources advisors has both line and staff authority. a. True b. False 118. A manager in human resources with a team of human resources advisors operates within a line function. a. True b. False 119. Effective delegation first transfers authority to a staff member. a. True b. False 120. An intra-organizational process is a collection of activities that occur among companies to transform inputs

into outputs that customers value. a. True b. False Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 121. Effective delegation transfers accountability to a staff member. a. True b. False 122. Organizations have high centralization of authority when a customer service representative must contact

their manager to solve a problem. a. True b. False 123. Organizations should always seek to decentralize their operations. a. True b. False 124. The importance of standardization is a common reason to decentralize authority. a. True b. False 125. Unlike modular organizations, a disadvantage of virtual organizations is that once work has been

outsourced it can be difficult to control the quality of work done by network partners. a. True b. False

126. Describe what is meant by organizational structure and organizational process. How are these concepts

related to each other? How are they different from each other?

127. Explain what is meant by the term departmentalization. List the five traditional approaches to

departmentalization.

128. There is one common disadvantage associated with geographic, product, and customer departmentalization.

What is it? Explain how the functional and matrix forms avoid this disadvantage.

129. Identify the five traditional approaches to organizational structure. Which one is the best for use by a

company? Explain your answer.

130. Define authority. List the four dimensions by which it has traditionally been characterized in organizations.

131. Define standardization. How is this concept relevant to the degree of organizational centralization?

132. What is job specialization? Briefly explain its advantages and disadvantages.

133. What are the primary disadvantages of job specialization? How can job redesign be used to overcome these

disadvantages?

134. How do the mechanistic and organic approaches to organization design differ? Under what circumstances Powered by Cognero

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is each appropriate for use by a company?

135. List and briefly describe the two approaches that companies can use to redesign internal processes.

136. What is a modular organization? Briefly identify the advantages and disadvantages associated with this

organizational form.

137. Identify an organization that you know of and explain how and why its approach to organizational design

tends to fit better with either the traditional (structure) or contemporary (process) approaches to organizational design. Be sure to state whether your organizational example more closely fits the model of mechanistic or organic organizational design.

138. List and briefly identify each of the five traditional departmental structures. Explain which one tends to be

the most difficult to manage effectively.

139. Explain what is meant by authority. How can authority be centralized? How can it be decentralized?

Describe the circumstances under which centralization versus decentralization would be more desirable. If you were a manager in a large company, what particular challenge might you expect to face with regard to the use of decentralization?

140. What is an intra-organizational process? Identify the techniques that are being used by companies today to

change these processes. Evaluate the probable level of risk to a company in using each of these approaches.

141. Describe the virtual organization. Explain how the virtual organization could theoretically prove to be a

more formidable competitor than any of the other types of organizations in a highly complex, dynamic business environment.

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Chapter 8 - Designing Adaptive Organizations Answer Key 1. a 2. d 3. d 4. d 5. a 6. d 7. c 8. c 9. a 10. a 11. b 12. b 13. d 14. c 15. c 16. c 17. b 18. c 19. a 20. b 21. d 22. d 23. b 24. c 25. c Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 26. a 27. a 28. c 29. d 30. d 31. d 32. a 33. d 34. b 35. d 36. b 37. d 38. d 39. a 40. d 41. c 42. d 43. d 44. c 45. c 46. d 47. a 48. a 49. a 50. b 51. b Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 52. c 53. c 54. d 55. d 56. d 57. d 58. b 59. d 60. a 61. d 62. b 63. c 64. d 65. d 66. d 67. d 68. b 69. a 70. d 71. a 72. c 73. a 74. b 75. a 76. a Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 77. b 78. d 79. d 80. d 81. d 82. a 83. d 84. b 85. c 86. True 87. False 88. False 89. False 90. True 91. False 92. False 93. False 94. True 95. True 96. True 97. False 98. True 99. False 100. False 101. True 102. False Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations 103. True 104. True 105. False 106. False 107. True 108. False 109. False 110. True 111. False 112. True 113. True 114. False 115. False 116. True 117. True 118. False 119. False 120. False 121. True 122. True 123. True 124. False 125. False 126. Organizational structure is the traditional approach to organizational design. It refers to the vertical and

horizontal configuration of departments, authority, and jobs within a company. It is exemplified in the organizational chart. Organizational process, on the other hand, refers to the collection of activities that transform inputs into outputs that customers value. In contrast to traditional approaches to organizational Powered by Cognero

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structure, contemporary organizations are becoming more adaptive by redesigning their internal and external processes. The process view of a company, which focuses on how things get done, is very different from the hierarchical view of the company presented by its organization chart, which focuses on accountability, responsibility, and position within the chain of command.

127. Traditionally, organizational structures have been based on some form of departmentalization.

Departmentalization is a method of subdividing work and workers into separate organizational units that take responsibility for completing particular tasks. The five traditional approaches to departmentalization are functional, product, customer, geographic, and matrix.

128. The common disadvantage to many forms of departmentalization, which is not shared by the functional and

matrix forms, is duplication of resources. This disadvantage is shared by the product, customer, and geographic approaches to departmentalization, which typically duplicate functional departments such as human resources and sales in each of their divisions. Since the functional structure organizes workers around functions and does not have divisions, duplication never occurs. In the case of the matrix structure, duplication is avoided by assigning and reassigning workers from functional departments to different projects as they are needed.

129. The five traditional approaches to organizational structure are departmentalization based upon functional,

product, customer, geographic, and matrix approaches. There is no “best” approach to organizational structure.

Each structure has advantages and disadvantages. The form of departmentalization that is best depends upon the specific characteristics of the internal and external environments faced by the company. The company should select a structure that will maximize benefits through its advantages and minimize costs through its disadvantages. As the environment facing the company changes, the structure may also have to change.

130. Authority is the right to give commands, take action, and make decisions to achieve organizational

objectives. Traditionally, organizational authority has been characterized by the following dimensions: (1) chain of command, (2) line versus staff authority, (3) delegation of authority, and (4) degree of centralization.

131. Standardization means solving problems by consistently applying the same rules, procedures, and

processes. It is a parameter that is relevant to decisions regarding the level of centralization that is appropriate in an organization. Centralization of authority is the location of most authority at the upper levels of the organization. In a centralized organization, managers make most decisions, even the relatively small ones.

Decentralization is the location of a significant amount of authority in the lower levels of the organization.

Since decentralization is associated with faster decision making, more satisfied customers and employees, and better organizational performance, the key question is no longer whether companies should decentralize, but where they should decentralize. One rule of thumb is to stay centralized where standardization is important and to decentralize where standardization is unimportant.

132. Job specialization is a job composed of a small part of a larger task or process. Specialized jobs are

characterized by simple, easy-to-learn steps, low variety, and much repetition. In terms of advantages, specialized jobs are very economical. Once a job has been specialized, it takes little time to learn and master.

Consequently, when experienced workers quit or are absent, the company loses little productivity when replacing them with new employees. Because the work is designed to be simple, wages can remain low since attracting highly experienced, educated, or trained workers isn’t necessary. One clear disadvantage of specialized jobs is that, being so easy to learn, they quickly become boring. This, in turn, can lead to low job satisfaction and high absenteeism and employee turnover, all of which are costly to organizations.

133. Job specialization is a job composed of a small part of a larger task or process. Specialized jobs are Powered by Cognero

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characterized by simple, easy-to-learn steps, low variety, and much repetition. One clear disadvantage of specialized jobs is that, being so easy to learn, they quickly become boring. This, in turn, can lead to low job satisfaction and high absenteeism and employee turnover, all of which are costly to organizations.

Consequently, job redesign efforts have focused on modifying jobs to keep the benefits of specialized jobs but to reduce their obvious costs and disadvantages. Three methods—job rotation, job enlargement, and job enrichment—have been used to try to improve specialized jobs.

134. Mechanistic organizations are characterized by specialized jobs and responsibilities; precisely defined,

unchanging roles; and a rigid chain of command based on centralized authority and vertical communication.

They tend to focus on organizational structure. This type of organization works best in stable, unchanging business environments. By contrast, organic organizations are characterized by broadly defined jobs and responsibility, loosely defined, frequently changing roles, decentralized authority, and horizontal communication based on task knowledge. Organic organizations are more concerned with organizational processes than organizational structure. This type of organization works best in dynamic, changing business environments.

135. Companies can use re-engineering and empowerment to change their intra-organizational processes. Re-

engineering changes an organization’s orientation from vertical to horizontal through fundamental rethinking and radical redesign of business processes. Empowering workers means taking decision-making authority and responsibility from managers and giving it to workers. Empowered workers develop feelings of competence and self-determination, and believe their work to have meaning and impact.

136. Except for the core business activities that they can perform better, faster, and cheaper than others, modular

organizations outsource all remaining business activities to outside companies, suppliers, specialists, or consultants. The term modular is used because the business activities purchased from outside companies can be added and dropped as needed. Advantages include being less expensive to run and being able to focus on the core activities that they do best. Disadvantages include requirements for extremely close relationships with reliable suppliers and vendors, potential loss of control, and the threat of creating new competitors if the wrong business activities are outsourced.

137. The traditional approach to organization design is the organizational structure approach, which

emphasizes the vertical and horizontal configuration of departments, authority, and jobs within a company. It includes an emphasis on departmentalization, organizational authority, and job design. These organizational design techniques are methods better suited for mechanistic organizations, which are characterized by a focus on organizational structure, including specialized jobs and responsibilities, precisely defined, unchanging roles, and a rigid chain of command based on centralized authority and vertical communication. Such approaches to organization design are more appropriate to stable business environments of the past.

By way of contrast to this traditional approach, contemporary approaches to organization design focus on increasing organizational adaptability by redesigning the internal and external processes of organizations. An intra-organizational process is the collection of activities that transforms inputs into outputs that customers value. Companies use re-engineering and empowerment to redesign their internal organizational processes, as well as the approaches of modular or virtual organizations, when redesigning their external processes, or the ways they change to improve their interactions with those outside the company. These organization design techniques, with their emphasis on becoming more adaptive through process redesign, are more appropriate for organic organizations. Organic organizations are characterized by broadly defined jobs and responsibility; loosely defined, frequently changing roles; decentralized authority; and horizontal communication based on task knowledge. Because of its high level of adaptability, this type of organization works best in dynamic, changing Powered by Cognero

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business environments, which increasingly represent the type of environment in which today’s businesses compete.

Student examples should appropriately describe their specified organization as either (a) more mechanistically oriented, with an emphasis on organizational structure approaches such as departmentalization, organizational authority, and job design, or (b) more organically oriented, with an emphasis on internal or external organizational process approaches such as re-engineering, empowerment, and behavioural informality, or modular or virtual organizations. Concrete examples should be linked from their organizational case example to the specifics of either the traditional, mechanistic approach to organization design or to the contemporary, organic approaches to organization design. Answers based on company examples from the student’s outside reading or personal knowledge demonstrate a higher level of understanding of the material than simply restating one of the company examples provided in the text.

138. There are five traditional departmental structures: functional, product, customer, geographic, and matrix.

Functional departmentalization is based on the different business functions or expertise used to run a business.

Product departmentalization is organized according to the different products or services a company sells.

Customer departmentalization focuses its divisions on the different kinds of customers that companies have.

Geographic departmentalization is based on the different geographical areas or markets in which the company does business. Matrix departmentalization is a hybrid form that combines two or more forms of departmentalization, the most common being the product and functional forms.

The form that tends to be the most difficult to manage is the matrix form, as a result of several things that distinguish it from the other traditional forms of departmentalization. First, most employees report to two bosses, something that violates the principle of unity of command. Second, there tends to be much more crossfunctional interaction than in other forms of departmentalization, since it is common for matrix workers to be members of several ongoing project groups. Finally, because of the high level of cross-functional interaction, matrix departmentalization requires significant coordination between functional and product managers. In particular, these managers have the complex job of tracking and managing the multiple product and functional demands on employees’ time. The primary disadvantage of matrix departmentalization is the high level of coordination required to manage the complexity involved with running large, ongoing projects at various levels of completion. Matrix structures are notorious for confusion and conflict between project bosses, or between product and functional bosses. Disagreements or misunderstanding about project schedules, budgets, available resources, and the availability of employees with particular functional expertise are common. Another disadvantage is that matrix structures require much more management skill than the other forms of departmentalization.

139. Authority is the right to give commands, take action, and make decisions to achieve organizational

objectives. Centralization of authority is the location of most authority at the upper levels of the organization. In a centralized organization, managers make most decisions, even the relatively small ones. By contrast, decentralization is the location of a significant amount of authority in the lower levels of the organization. An organization is decentralized if it has a high degree of delegation at all levels. In a decentralized organization, workers closest to problems are authorized to make the decisions necessary to solve the problems on their own.

As a manager in a large company, you should expect to face the particular challenge that, although the use of decentralization has value in promoting organizational performance, it is not very widely used in such companies. Thus, your challenge would be to try to apply the latest management principles to reap the benefits of decentralization in an organizational culture that probably will not wholeheartedly endorse such an emphasis.

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Doing this could provide the opportunity for new managers to act as change agents, particularly if they are able to demonstrate significant improvements in results through the use of delegation and decentralization.

140. An intra-organizational process is the collection of activities that take place within an organization to

transform inputs into outputs that customers value. Today, companies are using re-engineering and empowerment to change their intra-organizational processes. Through fundamental rethinking and radical redesign of business processes, re-engineering changes an organization’s orientation from vertical to horizontal.

Re-engineering changes work processes by decreasing sequential and pooled interdependence, and by increasing reciprocal interdependence. Re-engineering promises dramatic increases in productivity and customer satisfaction, but has been criticized as simply an excuse to cut costs and lay off workers. Empowering workers means taking decision-making authority and responsibility from managers and giving it to workers.

Empowered workers develop feelings of competence and self-determination and believe that their work has meaning and impact.

These approaches appear to entail varying levels of risk for a company.

Empowerment is probably the safest approach since it parallels decentralization, which research has shown can lead to faster decisions, greater employee and customer satisfaction, and significantly better financial performance when standardization is not important.

The most risky approach is probably re-engineering. As an organizational design tool, re-engineering promises big rewards. However, it has come under severe criticism, too. The most serious complaint is that since it allows a few workers to do the work formerly done by many, re-engineering is simply a corporate code word for costcutting and worker layoffs. Likewise, for that reason, detractors claim that re-engineering hurts morale and performance. Today, even re-engineering gurus Hammer and Champy admit that about 70 percent of all reengineering projects fail because of the effects on people in the workplace.

141. A virtual organization is part of a network in which many companies share skills, costs, capabilities,

markets, and customers with one another. It is similar to the modular organization in that it represents a mechanism for managing inter-organizational processes (a collection of activities that take place among companies to transform inputs into outputs that customers value). It differs from modular organizations in that it represents a flexible network of companies; these other organizations manage an inter-organizational process through an emphasis on a single, central company. It is similar to a traditional organizational structure (such as the functional, product, customer, geographic, and matrix approaches) only in its attempt to manage process in order to transform inputs into outputs that customers value. Traditional organizational structures typically place their emphasis on mechanistic, structural considerations over process considerations. To the extent that they attempt to manage organizational process, they tend to focus on intra-organizational processes, that is, activities taking place within the organization.

As a result of its shared costs, expertise, flexibility, and adaptability, the virtual organization could prove to be a more formidable competitor than any of the other types of organizations in a highly complex, dynamic business environment. Competition in a highly complex, dynamic business environment will be won by the company that responds most quickly and effectively to any given threat or opportunity. The composition of the virtual organization lends itself to such response: it is always changing. Depending upon the needs of a customer (or the threats and opportunities posed by that dynamic business environment), different members of the network alliance can be called upon to solve a particular problem or provide a specific product or service. Because each member of the network alliance is the “best” at what it does, in theory, virtual organizations should provide better products and services in all respects. Their ability to share costs and respond fast and flexibly with the Powered by Cognero

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Chapter 8 - Designing Adaptive Organizations

highest level of creative expertise provides them with a theoretically much greater competitive advantage than either the modular or traditional organizational structures.

This potential, however, may or may not be realized because of the tremendous management complexity of virtual organizations. For example, once work has been outsourced, it can be difficult to control the quality of work done by network partners. The greatest disadvantage is that it requires tremendous managerial skills to make a network of independent organizations work well together, especially since their relationships tend to be shorter and task or project based. Virtual organizations are using various methods to solve this problem, including the use of a broker to create and assemble the knowledge, skills, and resources from different companies for outside parties, such as customers.

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Chapter 9 - Leading Teams

Indicate the answer choice that best completes the statement or answers the question.

1. According to the text, what is the term for a small number of people with complementary skills who hold

themselves mutually accountable for pursuing a common purpose, achieving performance goals, and improving interdependent activities? a. work team b. venture group c. semistructured team d. autonomous unit 2. A local hospital ran into a funding problem when it tried to build a new state-of-the-art pediatric unit. It then

asked a group of physicians, hospital volunteers, and administrative staff to develop and implement a plan to raise the necessary money. What is the term for this group of people with complementary skills? a. semistructured team b. autonomous unit c. work team d. functional department 3. How are organizations using teams to help increase customer satisfaction? a. They are instituting a system of increased formalization throughout the organization. b. They are creating problem-solving teams to study ways to improve customer satisfaction and make

recommendations for improvements to customer satisfaction. c. They are creating outsourcing opportunities that improve organizational effectiveness and efficiency by creating economies of scale to improve customer satisfaction. d. They are developing ideal solutions to organizational problems through the use of information management systems (most notably, expert systems) to improve customer satisfaction.

4. A manufacturing company of computer chips forecasts growth over the next 18 months. To prepare for its

human resource needs, it has undertaken a program for employees to learn the duties of all other functions in their department that are at their same level. What is this organization engaging in? a. mentoring b. cross-training c. a buddy system d. creation of team support systems 5. In contrast to traditional organizational structures where management is responsible for organizational

outcomes and performance, teams take direct responsibility for the products and services they produce, including which of the following? a. longevity b. quality c. price d. popularity Powered by Cognero

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Chapter 9 - Leading Teams 6. Increased customer satisfaction, improvements in product and service quality, increased job satisfaction, and

improved group decision making are all advantages of which of the following? a. decentralization b. organizational effectiveness c. teams d. cross-functional training 7. How do work teams help firms improve product and service quality? a. They allow departments to work independently of one another. b. They take direct responsibility for the quality of the products and services they produce. c. They fit well with traditional sequential development phases. d. They avoid problems associated with synergy.

8. Kevin is learning the functions for artwork, which is handled by Jenny, film, which is handled by Mark, and

printing, which is handled by David, so that he can complete any job that comes to the department. What is Kevin engaged in? a. cross-training b. job enlargement c. job specialization d. Venn training 9. E-Lab (the “E” stands for experience) has project teams perform field research for its clients. These project

teams are composed of students of theology, actors, and musicians as well as the more traditional marketing experts and statisticians. Each member of the group is trained to conduct observational research, interview clients, and understand the marketing impact of what he or she learns. What does E-Lab use to make its project teams more efficient? a. synergistic goals b. stretch goals c. cross-training d. vestibule training 10. A furniture manufacturer has a problem in its cutting department. Rather than trying to solve the problem

herself, the production manager employs a work team to review the entire cutting process. The work team is able to develop several creative ideas, select the best idea, and then implement it to resolve the problem. Which factor likely led to this solution? a. The team created internal competition among its members, which led to the development of better ideas. b. The manager was removed from the problem-solving process. c. The team was able to view the problem from multiple perspectives. d. The team took direct responsibility for service quality.

11. Why can teamwork be more satisfying than traditional work? a. Teamwork rarely allows team members to receive proprietary business information that is available Powered by Cognero

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Chapter 9 - Leading Teams

only to managers. b. Teamwork provides team members with routine and less challenging work opportunities. c. Teamwork does not pressure members to show their skill level. d. Teamwork gives workers unique leadership responsibilities, which enables them to build individual leadership skills.

12. What happens when teams are used properly and in the right settings? a. They help organizations focus on efficiency rather than on resolving customer complaints. b. They allow employees to pursue their own goals regardless of the organization’s goals. c. They instill a sense of independence and relief from relying on other workers to perform well. d. They increase customer satisfaction and service quality.

13. Stephen is the company owner’s son and thinks he can get away with not doing the work he is responsible

for. Other team members constantly cover for Stephen and complete the work for him. What does Stephen’s behaviour exemplify? a. self-limiting behaviour b. social loafing c. de-forming d. stonewalling 14. Spectrum Inc. received a large order from an important customer. Spectrum would not be able to meet the

shipping date under its current organization in operations. The operations manager organized a special team of workers she knew who worked well together. The order was completed and shipped on time. What was the key benefit that resulted from creating the team? a. groupthink b. job specialization c. effective management of diversity d. speed and efficiency in product development 15. What have many leading companies experienced as a result of making greater use of work teams? a. greater customer satisfaction b. increased employee lawsuits for wrongful dismissal c. improved speed and efficiency in hiring replacement workers d. improvements in outsourcing 16. Which statement describes an advantage that teams have over individuals in the decision-making process? a. Teams take longer to identify problems. b. Teams are able to view problems from narrow perspectives. c. Teams generate more commitment to making the decisions work. d. Teams generate fewer alternative solutions.

17. Which of the following is a potential disadvantage associated with the use of work teams?

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Chapter 9 - Leading Teams a. commitment to finding an ideal solution that does not exist b. initial high employee turnover c. lack of creativity in decision making d. decreased employee satisfaction 18. Which of the following is a disadvantage associated with the use of work teams? a. storming behaviour b. groupthink c. group negation d. outsourcing 19. Joanne found that when her team was smaller with just five members, everyone completed a lot of work.

Now that the team is made up of over 20 employees, the effort of each individual is not as high. What is this an example of? a. social loafing b. groupthink c. cross-training d. self-management 20. When can using teams be advantageous? a. when tasks are simple b. when tasks require multiple perspectives c. when synergy will complicate the problem solution process d. when the company has very limited resources 21. Which statement describes a circumstance under which teams should be used? a. Rewards are provided for individual effort and performance. b. Ample resources are available. c. Management will continue to monitor and influence how work gets done. d. The job can be done by people working independently.

22. What is the key to rewarding team behaviours and efforts? a. rewards should be provided for the entire team’s performance b. individual efforts should be rewarded c. someone taking the role of group leader gets the largest reward d. eward teams that work together in person only 23. Which of the following is a factor that leads people to withhold effort in teams? a. an important, meaningful decision must be made b. a functional decision-making climate c. the presentation of a non-persuasive argument Powered by Cognero

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Chapter 9 - Leading Teams d. the presence of someone with expertise 24. In which of the following is the least amount of team autonomy found? a. traditional work groups b. employee involvement teams c. semi-autonomous work groups d. self-managing teams 25. In which of the following is the highest level of team autonomy found? a. self-managing teams b. self-designing teams c. semi-autonomous work teams d. employee involvement teams 26. In what ways can teams be broadly classified? a. sectional or departmental b. local or national c. line or staff d. functional or cross-functional 27. The autonomy continuum shows how five kinds of teams differ in terms of autonomy. What is the correct

sequence, from low team autonomy to high team autonomy, in the autonomy continuum? a. traditional work groups, employee involvement teams, semi-autonomous work teams, self-managing teams, and self-designing teams b. traditional work groups, employee involvement teams, self-managing teams, semi-autonomous work teams, and self-designing teams c. traditional work groups, employee involvement teams, self-designing teams, self-directed teams, and self-managing teams d. traditional work groups, employee involvement teams, semi-autonomous work teams, self-managing teams, and self-designing teams 28. Which of the following should a member of a typical traditional work group expect to be responsible for? a. doing the work or executing the task b. giving advice and making suggestions to management c. making decisions and solving problems regarding major production/service tasks d. cross-training employees who are not part of the work team 29. Which of the following is the only type of responsibility given to traditional work groups? a. executing the task b. giving advice/making suggestions c. making decisions d. managing all major production tasks Powered by Cognero

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Chapter 9 - Leading Teams 30. Which of the following groups provide advice rather than having the authority to make decisions? a. self-designing teams b. employee involvement teams c. semi-autonomous work teams d. self-managing teams 31. NovoNordisk Canada, a division of global pharmaceutical giant NovoNordisk, has an employee

involvement team called TakeAction! that is a voluntary forum for sharing best practices across the company.

Which of the following describes what this team does? a. It determines who belongs to the team. b. It provides advice to management about areas that need change or improvements. c. It has the authority to solve problems related to marketing and manufacturing issues. d. It controls all of the major production tasks at NovoNordisk.

32. Magna International, a Canadian auto parts firm, is one of many subcontractors providing automobile parts

to Chrysler’s Jeep product line. Jeep began asking Magna to deliver more complex component configurations than it had been previously. Magna set up a semi-autonomous work team to develop new techniques for product assembly, configuration, and delivery. Which statement best describes what this work group did? a. It provided advice to the company’s functional departments. b. It controlled all of the major production tasks for manufacturing automotive parts. c. It controlled the design and membership of the team. d. It had the authority to solve problems related to correct configuration of automotive parts.

33. Which type of team manages and controls all of the major tasks of producing a product or service? a. project team b. self-managing team c. semi-autonomous work team d. cross-functional team 34. Which type of team has all the characteristics of a self-managing team but also controls and changes the

design of the team itself, the tasks it does, and how and when it does them, as well as the membership of the team? a. self-dedicated team b. self-designing team c. self-creating team d. self-developing team 35. Which kind of team not only provides advice and suggestions to management but also has limited authority

to make decisions and solve problems related to the major tasks required to produce a product or service? a. traditional work group b. employer-monitored group c. semi-autonomous work team Powered by Cognero

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Chapter 9 - Leading Teams d. employee-involvement group 36. Which statement accurately characterizes semi-autonomous work teams? a. semi-autonomous work teams are typically not cross-trained and therefore require more management

leadership. b. semi-autonomous work teams have low team autonomy, and often a culture will be created by the team member that shows the most initiative for leadership. c. semi-autonomous work teams can control and change the design of the team as members of the group change and the situations change. d. semi-autonomous work teams can make decisions and solve problems related to the major tasks of producing a good or service.

37. Candice is satisfied with the research that has been completed and moves the team more toward

development. She hires developers and ends the contract of several of the researchers. Which category of teams does Candice’s team fit into? a. self-designing teams b. sequentially interdependent teams c. semi-autonomous work teams d. self-managing teams 38. Jonathan is on a team responsible for the completion of a special project. He works with Anita from

accounting, Mark from marketing, and Opie from operations. What kind of team is Jonathan a part of? a. a cross-functional team b. an ad hoc team c. a semi-autonomous team d. a self-managing team 39. Trevor has a meeting this afternoon. He makes sure the video and speakers on his computer are working as

he prepares to meet with Tiina from Finland, Boris from the Czech Republic, and Naresh from India. What kind of team does Trevor belong to? a. a cross-functional team b. a project team c. a virtual team d. an international group 40. The job of the concepts managers at Starbucks is to use a cross-functional team to develop four to six new

beverages annually. Why does Starbucks use this type of team? a. Doing so allows the company to use employees from various departments with varying perspectives to address the task. b. Doing so creates a means for outsourcing new-product development. c. Doing so allows Starbucks to use an aggregated product plan. d. Doing so ensures that Starbucks will always have products in each stage of the product life cycle.

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Chapter 9 - Leading Teams 41. The construction of tunnels is one of the greatest challenges encountered during road construction. The

technique of tunnelling has not kept pace with the development of other technical fields. A team of tunnel experts from different geographic areas will develop road tunnel engineering principles and maintenance practices and the use of telecommunications and information technology. What type of team is this group of tunnel experts? a. self-directed team b. normative team c. virtual team d. multifunctional team 42. Which type of team is composed of employees from several different departments? a. multifunctional team b. normative team c. virtual team d. cross-functional team 43. Which of the following accurately characterizes virtual teams? a. Virtual teams are very inflexible. b. Virtual teams are very flexible. c. Virtual teams are semiautonomous. d. Virtual teams are autonomous.

44. The Calgary Fire Department was challenged by City Council and its new fire chief, Steve Dongworth, to

become more diverse and inclusive. Chief Dongworth appointed a deputy chief to lead this initiative to transform the fire department, which at present has a largely white, male demographic. The deputy chief’s team has a limited time to gather information and create a plan. What is this type of team called? a. a self-designing team b. a project team c. a virtual team d. a cross-functional team 45. Magna International, a Canadian auto parts firm, is one of many subcontractors providing automobile parts

to Chrysler’s Jeep product line. Jeep began asking Magna to deliver more complex component configurations than it had been previously. Magna set up a semi-autonomous work group to develop new techniques for product assembly, configuration, and delivery. In which of the following classifications would this group belong? a. ad hoc committee b. virtual team c. multifunctional team d. project team 46. Which of the following guidelines is useful for the successful management of virtual teams? a. Pick group members with diverse backgrounds and personalities.

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Chapter 9 - Leading Teams b. Help team members set clear boundaries between work and family spaces. c. Avoid asking the team members for their assessment of the team. d. Limit feedback.

47. Which of the following is created to complete a specific, one-time task within a limited time? a. a cross-functional team b. a project team c. a virtual team d. a self-managing team 48. What is the major drawback to the use of virtual teams? a. Members must learn to express themselves in new contexts. b. They are often inflexible since managers feel more control is required. c. There is an absence of autonomy when members are not physically present for meetings. d. There is too much autonomy, and social loafing often occurs.

49. Which of the following kinds of teams is always temporary? a. cross-functional team b. project team c. standing committee d. self-managing team 50. The group of medical specialists that work in the neonatal unit of a large teaching hospital have assumed

that they should explain to students why a specific procedure is being performed even though no hospital rule tells them to. Which term best applies to what the group has decided to follow? a. heuristic b. norm c. behavioural policy d. code of ethics 51. A group of workers decided that they would not wear blue jeans to work because such casual wear seemed

unprofessional. This informal agreement was made even though the office did not have a dress code. What did the workers create? a. a heuristic b. a norm c. a behavioural policy d. a code of ethics 52. What is the key difference among the different types of teams? a. the amount of autonomy they possess b. the number of team members c. the location of the team Powered by Cognero

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Chapter 9 - Leading Teams d. who the team reports to 53. Which of the following is an advantage associated with the use of project teams? a. stiffness b. increased communication barriers c. decreased cooperation among separate departments d. faster design process 54. What are informally agreed-on standards that regulate team behaviour? a. heuristics b. norms c. behavioural policies d. codes of ethics 55. E-Lab (the “E” stands for experience) has project teams perform field research for its clients. Project teams

at E-Lab have designed a new over-the-counter cold medicine by studying the process of how people get sick; they have helped create a new station wagon for a major carmaker; and they have helped backpack maker JanSport to design a completely new way of displaying its products in sporting goods stores. Which of the following likely characterizes E-Lab’s project teams? a. The teams are composed of employees from the same functional area. b. The teams are created to complete ongoing continuous projects. c. Team members are led by various departmental managers. d. Team members are flexible in their ability to move to another project.

56. Which of the following can team norms in an organization create? a. decreased outsourcing b. more trust in management c. less trust in management d. increased outsourcing 57. What is the term for the extent to which team members are attracted to a team and motivated to remain with

it? a. accommodation b. synergy c. autonomy d. cohesiveness 58. Which size of team usually provides the best performance? a. 2 to 3 b. 6 to 9 c. 15 to 20 d. more than 20 Powered by Cognero

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Chapter 9 - Leading Teams 59. Which of the following indicates a team is too small? a. The team is experiencing minority domination. b. The team has too much diversity. c. The team finds it difficult to generate solutions to problems. d. The team has no sense of responsibility.

60. Jodi belongs to a highly productive team of 10 members. The team has been together for many years. Each

member knows they can rely on any other member when help is needed. What in particular makes Jodi’s group highly productive? a. cohesion b. norms c. ethics d. size 61. Samantha and Jason often do not get along. Samantha feels Jason’s comments about work taking too long to

accomplish is a personal attack on her physical mobility issues. Sometimes Samantha becomes so angry she has to leave the office to cool down. What is this an example of? a. low cohesiveness b. cognitive conflict c. affective conflict d. undefined team norms 62. Leading coatings and paints manufacturer Akzo Nobel established a team made up of members from various

departments to increase plant availability and decrease plant downtime. The plant loses considerable time daily because the assembly line has to be cleaned whenever the production schedule calls for a different colour and so on to be produced. Which type of conflict does this cross-functional team need to avoid if it hopes to be successful? a. c-type b. affective c. behavioural d. cognitive 63. Jerome feels other team members do not listen to him because he did not graduate with a university degree

as they did. He becomes very sensitive when the team does not support his suggestions and often becomes very aggressive feeling he has to prove he is as capable as they are even without a university degree. What is this an example of? a. low cohesiveness b. cognitive conflict c. affective conflict d. undefined team norms 64. What is the best response to the statement “Group conflict is always bad”?

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Chapter 9 - Leading Teams a. Affective conflict is strongly associated with improvements in team performance. b. Both a-conflict and c-conflict are harmful, but b-conflict is not. c. All cognitive conflict is bad, but all affective conflict is beneficial to the group. d. Cognitive conflict is strongly associated with improvements in team performance.

65. Which type of conflict is most strongly associated with improvements in team performance? a. cognitive conflict b. horizontal conflict c. behavioural conflict d. vertical conflict 66. In which of the following is there a greater chance for minority domination? a. when teams get too large b. in cross-functional teams of any size c. in virtual teams d. when teams get too small 67. Which of the following is one of the recommendations for minimizing the occurrence of affective conflict

and “having a good fight”? a. Establish individual goals. b. Work with less, rather than more, information. c. Maintain a balance of power. d. Always resolve issues by consensus.

68. The manager wants to encourage cognitive conflict. According to the text, should she also push for a team

consensus? a. No, because consensus leads to sacrificing solutions. b. Yes, because consensus eliminates problems associated with minority domination. c. No, because requiring team consensus gives everyone on the team veto power. d. Yes, because requiring consensus typically leads to cognitive conflict.

69. Katherine is getting to know her teammates better. She finds that everyone is more productive during early

afternoons. She also knows which team members will likely try to get their way when decisions have to be made. What stage of development is Katherine’s team in? a. forming b. storming c. norming d. performing 70. Which of the following is one stage that teams pass through as they develop and grow, rather than decline? a. de-norming Powered by Cognero

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Chapter 9 - Leading Teams b. de-storming c. de-forming d. storming 71. The Calgary Fire Department was challenged by City Council and its new fire chief, Steve Dongworth, to

become more diverse and inclusive. Chief Dongworth appointed a deputy chief and a team to lead this initiative to transform the fire department, which at present has a largely white, male demographic. By which stage of team development will the group members have resolved petty differences, developed friendships, and established strong group cohesiveness? a. reforming b. storming c. norming d. forming 72. The Calgary Fire Department was challenged by City Council and its new fire chief, Steve Dongworth, to

become more diverse and inclusive. Chief Dongworth appointed a deputy chief and a team to lead this initiative to transform the fire department, which at present has a largely white, male demographic. At which stage of team development was this group at its inception? a. reforming b. storming c. norming d. forming 73. At which stage of team development does group cohesion tend to be relatively strong? a. storming b. norming c. forming d. conforming 74. At which stage of development has a team finally matured into a fully functioning team? a. norming b. de-norming c. performing d. conforming 75. Magna International, a Canadian auto parts firm, is one of many subcontractors providing automobile parts

to Chrysler’s Jeep product line. Jeep began asking Magna to deliver more complex component configurations than it had been previously. Magna set up a semi-autonomous work team to develop new techniques for product assembly, configuration, and delivery. What happened when the team reached the storming stage of team development? a. Team members began to work together and different personalities and work styles clashed. b. Team members engaged in brainstorming. c. Team members began to settle into their roles as team members.

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Chapter 9 - Leading Teams d. Team members began to be less comfortable with each other.

76. Which stage of team development provides team members with an opportunity to internalize what they have

learned and to set out new objectives and new norms as they move on to other tasks and assignments? a. storming b. de-forming c. de-storming d. de-norming 77. Which stage represents the final part of adjourning? a. the de-forming stage b. the de-norming stage c. the de-storming stage d. the storming stage 78. Which of the following allows team members to act quickly, and even experiment, with little fear of failure? a. localized synergy b. bureaucratic immunity c. strategic diversity d. organizational accommodation 79. If teams no longer have to go through the frustratingly slow process of multilevel reviews and sign-offs to

get management approval before making changes, what have they been granted? a. administrative reciprocity b. structural accommodation c. fast-track approval d. bureaucratic immunity 80. E-Lab (the “E” stands for experience) has project teams perform field research for its clients. One team had

to spend time riding in the back seat of a squad car, accompanying cops on drug raids, as part of research for a new communications device for police departments. Another team studied how people get sick with a cold to create a new over-the-counter cold remedy. Often, clients give team members extremely ambitious goals, which the team members initially have no idea how to solve. In other words, which of the following defines what project teams are given? a. temporal missions b. myopic visions c. proximity goals d. stretch goals 81. What is the term for the ability to change organizational structures, policies, and practices if it helps teams

meet their stretch goals? a. structural accommodation b. bureaucratic immunity Powered by Cognero

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Chapter 9 - Leading Teams c. structural immunity d. bureaucratic accommodation 82. Which of the following forces managers to throw away old, comfortable solutions and adopt radical

solutions they have never used before? a. bureaucratic immunity b. specific goals c. structural accommodation d. stretch goals 83. An indirect way of measuring someone's preference for teamwork is by assessing which of the following? a. the person's degree of individualism or collectivism b. the person's ability to be motivated by intrinsic factors c. the person's personal values and ethics d. the person's ability to be motivated by extrinsic factors 84. Someone who puts their own welfare and interests first and generally prefers independent tasks in which

they work alone is referred to as which of the following? a. autonomist b. selfish c. individualist d. collectivist 85. Which of the following is a factor that companies should carefully manage in order to increase the likelihood

that teams will succeed? a. the development of formalized rules and regulations b. bureaucratic immunity c. administrative reciprocity d. the use of synergy 86. Which of the following is a factor that should be taken into account when selecting people who are suited

for teamwork or for working on a particular team? a. individualist versus collectivist orientation b. bureaucratic versus participative management style c. team uniformity d. a preference for independence 87. Which term refers to the average amount of ability, experience, personality, or any other factor on a team? a. team diversity b. group synergy c. team level d. team conformity Powered by Cognero

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Chapter 9 - Leading Teams 88. E-Lab (the “E” stands for experience) has project teams perform field research for its clients. These project

teams are composed of students of theology, actors, and musicians as well as the more traditional marketing experts and statisticians. Which of the following do E-Lab teams benefit from? a. group norms b. team diversity c. aggregated creativity d. collectivism 89. The Calgary Fire Department was challenged by City Council and its new fire chief, Steve Dongworth, to

transform the fire department, which at present has a largely white, male demographic. What is the team trying to increase within the firefighting teams? a. group norms b. team diversity c. aggregated creativity d. collectivism 90. Most commonly, members of work teams receive training in which of the following? a. interpersonal skills b. technical training c. problem-solving skills d. conflict resolution skills 91. In which compensation system do companies share the financial value of performance gains, such as

productivity, cost savings, or quality, with their workers? a. skill-based pay b. gainsharing c. a draw account d. profit sharing 92. Josephine is part of a highly productive team. Members of the team come from different industries. They are

all professionals but some are engineers, some are accountants, and others are lawyers. What is high in this team that helps it to be so productive? a. team level b. diversity c. functional conflict d. collectivism 93. Which of the following is a method used for compensating employees for learning additional skills or

knowledge? a. hourly wages b. skill-based pay c. piecework pay Powered by Cognero

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Chapter 9 - Leading Teams d. retained earnings 94. What compensation plan works best in a relatively stable environment where employees can focus on

improving productivity, cost savings, or quality? a. skill-based pay b. gainsharing c. ownership plans d. profit sharing 95. Ontario-based DV Systems manufactures a range of air technology solutions. It rewards employees for the

number of basic skills they can perform rather than for the jobs to which they are assigned. This increases their flexibility and ability to schedule staff. Before it initiated this system, pay increases were based on longevity.

Which of the following does DV Systems use? a. hourly wages b. gainsharing c. retained earnings d. skill-based pay 96. British Columbia’s public auto insurance provider, ICBC, has implemented a program to reward unionized

employees for their contributions to improved financial performance. Which of the following is ICBC using? a. hourly wages b. gainsharing c. piecework pay d. retained earnings 97. Vanessa will move up to a higher pay wage with the salon she works for when she learns more about the

products the salon uses. What type of compensation is this an example of? a. gainsharing b. piecework c. hourly pay d. skill-based pay 98. In general, which of the following is most effective for self-managing and self-directing teams performing

complex tasks? a. piece-rate pay b. gainsharing c. nonfinancial reward d. skill-based pay 99. Narrative 9-1

The House of SHAN is a swimwear manufacturer based in Laval, Quebec. Designer Chantal Levesque has created a unique look for these pieces, which retail for as much as $550 each. In fact, The House of SHAN has Powered by Cognero

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Chapter 9 - Leading Teams

boutiques in Miami and the Hamptons. When managers asked their foreign distributors about the perceived need to outsource production and reduce costs, the distributors rejected that idea flatly—because other brands demonstrated more quality issues than the House of SHAN’s pieces.

The manufacturer is divided into three teams, all building on the corporate culture of talent, performance, and passion: a creation team, a production team, and a management team. Within the first two teams, the structure is quite flat, allowing craftspeople to work together to produce the innovative and high-quality garments the brand is known for. Nearly all the craftspeople are multi-skilled and capable of working at multiple roles within the team.

Refer to Narrative 9-1. What groups are being created at The House of SHAN to organize employees into? a. semistructured teams b. ad hoc committees c. work teams d. functional departments 100. Narrative 9-1

The House of SHAN is a swimwear manufacturer based in Laval, Quebec. Designer Chantal Levesque has created a unique look for these pieces, which retail for as much as $550 each. In fact, The House of SHAN has boutiques in Miami and the Hamptons. When managers asked their foreign distributors about the perceived need to outsource production and reduce costs, the distributors rejected that idea flatly—because other brands demonstrated more quality issues than the House of SHAN’s pieces.

The manufacturer is divided into three teams, all building on the corporate culture of talent, performance, and passion: a creation team, a production team, and a management team. Within the first two teams, the structure is quite flat, allowing craftspeople to work together to produce the innovative and high-quality garments the brand is known for. Nearly all the craftspeople are multi-skilled and capable of working at multiple roles within the team.

Refer to Narrative 9-1. What are the teams at The House of SHAN using? a. cross-training b. job enlargement c. job specialization d. Venn training 101. Narrative 9-1

The House of SHAN is a swimwear manufacturer based in Laval, Quebec. Designer Chantal Levesque has created a unique look for these pieces, which retail for as much as $550 each. In fact, The House of SHAN has boutiques in Miami and the Hamptons. When managers asked their foreign distributors about the perceived need to outsource production and reduce costs, the distributors rejected that idea flatly—because other brands demonstrated more quality issues than the House of SHAN’s pieces.

The manufacturer is divided into three teams, all building on the corporate culture of talent, performance, and passion: a creation team, a production team, and a management team. Within the first two teams, the structure is quite flat, allowing craftspeople to work together to produce the innovative and high-quality garments the brand is known for. Nearly all the craftspeople are multi-skilled and capable of working at multiple roles within the team.

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Chapter 9 - Leading Teams

Refer to Narrative 9-1. Which success factors are most relevant to the House of SHAN’s success in using teams? a. The tasks are complex and there is a strong purpose for the teams. b. The tasks are relatively independent and there is a strong purpose for the teams. c. The tasks are complex and there is effective management of the team interactions. d. The tasks are relatively independent and there is effective management of the team interactions.

102. Narrative 9-1

The House of SHAN is a swimwear manufacturer based in Laval, Quebec. Designer Chantal Levesque has created a unique look for these pieces, which retail for as much as $550 each. In fact, The House of SHAN has boutiques in Miami and the Hamptons. When managers asked their foreign distributors about the perceived need to outsource production and reduce costs, the distributors rejected that idea flatly—because other brands demonstrated more quality issues than the House of SHAN’s pieces.

The manufacturer is divided into three teams, all building on the corporate culture of talent, performance, and passion: a creation team, a production team, and a management team. Within the first two teams, the structure is quite flat, allowing craftspeople to work together to produce the innovative and high-quality garments the brand is known for. Nearly all the craftspeople are multi-skilled and capable of working at multiple roles within the team.

Refer to Narrative 9-1. Which of the following BEST describes The House of SHAN’s teams? a. they are employee-involvement groups b. they are semi-autonomous work teams c. they are self-designing teams d. they are a virtual team 103. Narrative 9-1

The House of SHAN is a swimwear manufacturer based in Laval, Quebec. Designer Chantal Levesque has created a unique look for these pieces, which retail for as much as $550 each. In fact, The House of SHAN has boutiques in Miami and the Hamptons. When managers asked their foreign distributors about the perceived need to outsource production and reduce costs, the distributors rejected that idea flatly—because other brands demonstrated more quality issues than the House of SHAN’s pieces.

The manufacturer is divided into three teams, all building on the corporate culture of talent, performance, and passion: a creation team, a production team, and a management team. Within the first two teams, the structure is quite flat, allowing craftspeople to work together to produce the innovative and high-quality garments the brand is known for. Nearly all the craftspeople are multi-skilled and capable of working at multiple roles within the team.

Refer to Narrative 9-1. A distributor has told House of SHAN that “We want you to produce 90 percent of your products within Canada, as we find your products are very high quality and have few defects.” Which of the following describes the distributor’s statement? a. it creates structural accommodation b. it ensures the team will not adjourn c. it ensures bureaucratic immunity d. it sets a specific team goal Powered by Cognero

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Chapter 9 - Leading Teams 104. Narrative 9-2

Canada’s Smartest Kitchen, at Holland College’s Culinary Institute of Canada, brings together a team of chefs, food stylists, chemists, and market researchers to help companies develop new food products for commercial use. Their value proposition is simple: “to inject value at any stage in a product’s pathway to market.” Their team receives rave reviews from clients for their skills, personality, and ideas. They were able to help one client, Gourmet Chef Packers, create a bonded lobster product that has multiple uses, along with two other lobster sauce products: a fond (or base sauce) and a glace (or glaze sauce) base.

Refer to Narrative 9-2. Which of the following is one advantage associated with the creation of such teams? a. social loafing b. self-limiting behaviour c. the avoidance of legal risks d. increased job satisfaction 105. Narrative 9-2

Canada’s Smartest Kitchen, at Holland College’s Culinary Institute of Canada, brings together a team of chefs, food stylists, chemists, and market researchers to help companies develop new food products for commercial use. Their value proposition is simple: “to inject value at any stage in a product’s pathway to market.” Their team receives rave reviews from clients for their skills, personality, and ideas. They were able to help one client, Gourmet Chef Packers, create a bonded lobster product that has multiple uses, along with two other lobster sauce products: a fond (or base sauce) and a glace (or glaze sauce) base.

Refer to Narrative 9-2.Why was Canada’s Smartest Kitchen able to make effective use of teams in this case? a. The group had a clear purpose. b. Rewards were available for individual performance. c. The job could be done by individuals working independently. d. The lack of resources made employees work more closely together.

106. Narrative 9-2

Canada’s Smartest Kitchen, at Holland College’s Culinary Institute of Canada, brings together a team of chefs, food stylists, chemists, and market researchers to help companies develop new food products for commercial use. Their value proposition is simple: “to inject value at any stage in a product’s pathway to market.” Their team receives rave reviews from clients for their skills, personality, and ideas. They were able to help one client, Gourmet Chef Packers, create a bonded lobster product that has multiple uses, along with two other lobster sauce products: a fond (or base sauce) and a glace (or glaze sauce) base.

Refer to Narrative 9-2. What kind of team did Canada’s Smartest Kitchen create? a. tactical b. peripheral c. cross-functional d. tangential 107. Narrative 9-2 Powered by Cognero

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Canada’s Smartest Kitchen, at Holland College’s Culinary Institute of Canada, brings together a team of chefs, food stylists, chemists, and market researchers to help companies develop new food products for commercial use. Their value proposition is simple: “to inject value at any stage in a product’s pathway to market.” Their team receives rave reviews from clients for their skills, personality, and ideas. They were able to help one client, Gourmet Chef Packers, create a bonded lobster product that has multiple uses, along with two other lobster sauce products: a fond (or base sauce) and a glace (or glaze sauce) base.

Refer to Narrative 9-2. Because Canada’s Smartest Kitchen teams vary from client to client, what must they do in the earliest stages of each engagement? a. reforming b. forming c. performing d. norming 108. Narrative 9-2

Canada’s Smartest Kitchen, at Holland College’s Culinary Institute of Canada, brings together a team of chefs, food stylists, chemists, and market researchers to help companies develop new food products for commercial use. Their value proposition is simple: “to inject value at any stage in a product’s pathway to market.” Their team receives rave reviews from clients for their skills, personality, and ideas. They were able to help one client, Gourmet Chef Packers, create a bonded lobster product that has multiple uses, along with two other lobster sauce products: a fond (or base sauce) and a glace (or glaze sauce) base.

Refer to Narrative 9-2. Team members are provided with access to the most current equipment, including some very specialized equipment that is rarely found outside the largest corporate and academic research facilities. By so doing, what were Canada’s Smartest Kitchen team members given? a. power-sharing b. administrative control c. group norms d. structural accommodation 109. Narrative 9-3

Standard Motor Products makes aftermarket auto parts (for repairs and replacement) that are sold by warehouse distributors such as Carquest and NAPA (National Automotive Parts Association) and auto parts retailers, including Advance Auto Parts and Auto-Zone. The aftermarket auto parts market is incredibly competitive, and companies that don’t continue to improve quickly lose market share and profits.

Right now, Standard Motor Products is struggling. Downtime—when machines aren’t running—is up significantly, and no production means no revenue generation. Productivity is also down, and costs are up.

Since Standard competes in an industry where the difference between a profit and a loss is three cents per hose, it can’t continue to incur rising costs. The company is already losing millions per year and is closing down money-losing production facilities.

Problem one is a top-down, authoritarian culture where managers pride themselves on being tough on workers.

The workforce is 50 percent unionized, with dissension between managers and workers. Problem two is that the Powered by Cognero

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Chapter 9 - Leading Teams

workers dislike one another. Language difficulties separate the four main cultures present. Negative feelings were so strong that when the company introduced English language classes, almost no one attended.

With their noise and nonstop pressure to keep costs low, quality high, and production on schedule, manufacturing plants are already challenging places to work. When miscommunication and dissension are added, the recipe for poor results sure to prompt a shutdown is complete.

So, in response to this situation, management decided to implement a team-based structure at one plant.

Managers gave the teams the highest level of autonomy. Consequently, the teams select their members and directly control all their tasks and how those tasks get done. To compensate employees, Standard Motor Products shares the financial value of performance gains, such as productivity, cost savings, or quality, with its workers. The company hands out cash awards each quarter, depending on how much it saves in terms of increased productivity, quality, returned products, and safety. In the first year of the program, the average annual award at this plant was $2,000 per employee.

Refer to Narrative 9-3. Which common disadvantage of teams would you expect the featured plant to have experienced when it introduced teams? a. lower customer satisfaction b. poor product quality c. initial high employee turnover d. inefficiency in new-product development 110. Narrative 9-3

Standard Motor Products makes aftermarket auto parts (for repairs and replacement) that are sold by warehouse distributors such as Carquest and NAPA (National Automotive Parts Association) and auto parts retailers, including Advance Auto Parts and Auto-Zone. The aftermarket auto parts market is incredibly competitive, and companies that don’t continue to improve quickly lose market share and profits.

Right now, Standard Motor Products is struggling. Downtime—when machines aren’t running—is up significantly, and no production means no revenue generation. Productivity is also down, and costs are up.

Since Standard competes in an industry where the difference between a profit and a loss is three cents per hose, it can’t continue to incur rising costs. The company is already losing millions per year and is closing down money-losing production facilities.

Problem one is a top-down, authoritarian culture where managers pride themselves on being tough on workers.

The workforce is 50 percent unionized, with dissension between managers and workers. Problem two is that the workers dislike one another. Language difficulties separate the four main cultures present. Negative feelings were so strong that when the company introduced English language classes, almost no one attended.

With their noise and nonstop pressure to keep costs low, quality high, and production on schedule, manufacturing plants are already challenging places to work. When miscommunication and dissension are added, the recipe for poor results sure to prompt a shutdown is complete.

So, in response to this situation, management decided to implement a team-based structure at one plant.

Managers gave the teams the highest level of autonomy. Consequently, the teams select their members and directly control all their tasks and how those tasks get done. To compensate employees, Standard Motor Powered by Cognero

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Chapter 9 - Leading Teams

Products shares the financial value of performance gains, such as productivity, cost savings, or quality, with its workers. The company hands out cash awards each quarter, depending on how much it saves in terms of increased productivity, quality, returned products, and safety. In the first year of the program, the average annual award at this plant was $2,000 per employee.

Refer to Narrative 9-3. What did the plant create when it decided to give its teams the highest level of autonomy? a. self-designing teams b. sequentially interdependent teams c. semi-autonomous work teams d. self-managing teams 111. Narrative 9-3

Standard Motor Products makes aftermarket auto parts (for repairs and replacement) that are sold by warehouse distributors such as Carquest and NAPA (National Automotive Parts Association) and auto parts retailers, including Advance Auto Parts and Auto-Zone. The aftermarket auto parts market is incredibly competitive, and companies that don’t continue to improve quickly lose market share and profits.

Right now, Standard Motor Products is struggling. Downtime—when machines aren’t running—is up significantly, and no production means no revenue generation. Productivity is also down, and costs are up.

Since Standard competes in an industry where the difference between a profit and a loss is three cents per hose, it can’t continue to incur rising costs. The company is already losing millions per year and is closing down money-losing production facilities.

Problem one is a top-down, authoritarian culture where managers pride themselves on being tough on workers.

The workforce is 50 percent unionized, with dissension between managers and workers. Problem two is that the workers dislike one another. Language difficulties separate the four main cultures present. Negative feelings were so strong that when the company introduced English language classes, almost no one attended.

With their noise and nonstop pressure to keep costs low, quality high, and production on schedule, manufacturing plants are already challenging places to work. When miscommunication and dissension are added, the recipe for poor results sure to prompt a shutdown is complete.

So, in response to this situation, management decided to implement a team-based structure at one plant.

Managers gave the teams the highest level of autonomy. Consequently, the teams select their members and directly control all their tasks and how those tasks get done. To compensate employees, Standard Motor Products shares the financial value of performance gains, such as productivity, cost savings, or quality, with its workers. The company hands out cash awards each quarter, depending on how much it saves in terms of increased productivity, quality, returned products, and safety. In the first year of the program, the average annual award at this plant was $2,000 per employee.

Refer to Narrative 9-3. At the plant, team members lead the teams and leadership rotates among the different team members. Each member on a team, not the management, takes a turn scheduling the team’s daily work, deciding what gets done, who does what, and ultimately taking responsibility for quality and timely production of automotive parts. What does this practice demonstrate the use of? a. structural accommodation Powered by Cognero

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Chapter 9 - Leading Teams b. administrative reciprocity c. structural immunity d. bureaucratic immunity 112. Narrative 9-3

Standard Motor Products makes aftermarket auto parts (for repairs and replacement) that are sold by warehouse distributors such as Carquest and NAPA (National Automotive Parts Association) and auto parts retailers, including Advance Auto Parts and Auto-Zone. The aftermarket auto parts market is incredibly competitive, and companies that don’t continue to improve quickly lose market share and profits.

Right now, Standard Motor Products is struggling. Downtime—when machines aren’t running—is up significantly, and no production means no revenue generation. Productivity is also down, and costs are up.

Since Standard competes in an industry where the difference between a profit and a loss is three cents per hose, it can’t continue to incur rising costs. The company is already losing millions per year and is closing down money-losing production facilities.

Problem one is a top-down, authoritarian culture where managers pride themselves on being tough on workers.

The workforce is 50 percent unionized, with dissension between managers and workers. Problem two is that the workers dislike one another. Language difficulties separate the four main cultures present. Negative feelings were so strong that when the company introduced English language classes, almost no one attended.

With their noise and nonstop pressure to keep costs low, quality high, and production on schedule, manufacturing plants are already challenging places to work. When miscommunication and dissension are added, the recipe for poor results sure to prompt a shutdown is complete.

So, in response to this situation, management decided to implement a team-based structure at one plant.

Managers gave the teams the highest level of autonomy. Consequently, the teams select their members and directly control all their tasks and how those tasks get done. To compensate employees, Standard Motor Products shares the financial value of performance gains, such as productivity, cost savings, or quality, with its workers. The company hands out cash awards each quarter, depending on how much it saves in terms of increased productivity, quality, returned products, and safety. In the first year of the program, the average annual award at this plant was $2,000 per employee.

Refer to Narrative 9-3. What could you expect plant management to give its team members when team building? a. cross-diversity training b. team mentoring c. training in interpersonal skills d. coaching skills 113. Narrative 9-3

Standard Motor Products makes aftermarket auto parts (for repairs and replacement) that are sold by warehouse distributors such as Carquest and NAPA (National Automotive Parts Association) and auto parts retailers, including Advance Auto Parts and Auto-Zone. The aftermarket auto parts market is incredibly competitive, and companies that don’t continue to improve quickly lose market share and profits.

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Chapter 9 - Leading Teams

Right now, Standard Motor Products is struggling. Downtime—when machines aren’t running—is up significantly, and no production means no revenue generation. Productivity is also down, and costs are up.

Since Standard competes in an industry where the difference between a profit and a loss is three cents per hose, it can’t continue to incur rising costs. The company is already losing millions per year and is closing down money-losing production facilities.

Problem one is a top-down, authoritarian culture where managers pride themselves on being tough on workers.

The workforce is 50 percent unionized, with dissension between managers and workers. Problem two is that the workers dislike one another. Language difficulties separate the four main cultures present. Negative feelings were so strong that when the company introduced English language classes, almost no one attended.

With their noise and nonstop pressure to keep costs low, quality high, and production on schedule, manufacturing plants are already challenging places to work. When miscommunication and dissension are added, the recipe for poor results sure to prompt a shutdown is complete.

So, in response to this situation, management decided to implement a team-based structure at one plant.

Managers gave the teams the highest level of autonomy. Consequently, the teams select their members and directly control all their tasks and how those tasks get done. To compensate employees, Standard Motor Products shares the financial value of performance gains, such as productivity, cost savings, or quality, with its workers. The company hands out cash awards each quarter, depending on how much it saves in terms of increased productivity, quality, returned products, and safety. In the first year of the program, the average annual award at this plant was $2,000 per employee.

Refer to Narrative 9-3. What is the team-based compensation at Standard Motor Products an example of? a. hourly wages b. gainsharing c. piecework pay d. retained earnings Indicate whether the statement is true or false.

114. A work team consists of a small number of people who gather together to discuss a common interest. a. True b. False 115. Companies are making greater use of teams because teams have been shown to increase (1) customer

satisfaction, (2) product and service quality, (3) employee job satisfaction, and (4) decision making. a. True b. False 116. In many industries, teams are growing in importance because they help organizations respond to specific

problems and challenges. a. True b. False Powered by Cognero

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Chapter 9 - Leading Teams 117. A company is engaged in cross-training. Individual team members teach other members how to do all or

most of the jobs they can perform. a. True b. False 118. In the decision-making process, teams can do a much better job than individuals in defining the problem

and generating alternative solutions. a. True b. False 119. The two significant disadvantages that teams and teamwork are prone to are initially high turnover and

legal risk. a. True b. False 120. It is appropriate to use teams in all types of situations. a. True b. False 121. The presence of someone with expertise in a group will often cause other group members to withhold

efforts. a. True b. False 122. Teams are typically required when tasks are complex, require multiple perspectives, or require repeated

interaction with others to complete. a. True b. False 123. Teams do not perform any better when offered extrinsic rewards. a. True b. False 124. Team members will withhold effort if they are unsure about their ability to contribute to discussions,

activities, or decisions. a. True b. False 125. Autonomy is the degree to which workers have the discretion, freedom, and independence to decide how

and when to accomplish their jobs. a. True b. False 126. The autonomy continuum shows how five kinds of teams differ in terms of autonomy. The correct

sequence from low team autonomy to high team autonomy is (1) traditional work groups, (2) employee Powered by Cognero

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involvement groups, (3) semi-autonomous work teams, (4) self-designing teams, and (5) self-managing teams. a. True b. False 127. Employee involvement teams not only provide advice and suggestions to management, but they also have

the authority to make decisions and solve problems related to the major tasks required to produce a product or service. a. True b. False 128. Self-designing teams have all the characteristics of self-managing teams, but they can also control and

change the design of the teams themselves, the tasks they do and how they do them, and who belongs to the teams. a. True b. False 129. Cross-functional teams are purposely composed of employees from different functional areas of the

organization. a. True b. False 130. Virtual teams are often, but not necessarily, temporary teams that are set up to accomplish a specific task. a. True b. False 131. Team norms are often associated with positive outcomes such as stronger organizational commitment,

more trust in management, and stronger job and organizational satisfaction. a. True b. False 132. One of the disadvantages of project teams is their lack of flexibility. a. True b. False 133. Norms are informally agreed-on standards that regulate team behaviour. They are valuable because they let

team members know what is expected of them. a. True b. False 134. Team norms may be associated with either positive or negative outcomes for the company. a. True b. False 135. Cohesiveness refers to the extent to which members of a team are experiencing job satisfaction. a. True Powered by Cognero

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Chapter 9 - Leading Teams b. False 136. Cognitive conflict is strongly associated with improvements in team performance, and affective conflict is

strongly associated with decreases in team performance. a. True b. False 137. Sincere attempts to reach agreement on a difficult issue can quickly deteriorate from cognitive to affective

conflict. a. True b. False 138. As teams develop and grow, they pass through three stages of development. These three stages are

perceived team, felt team, and manifest team. a. True b. False 139. Conflicts and disagreements often characterize the second stage of team development, which is called

“storming.” a. True b. False 140. Since teams that get stuck in the storming stage will be strained but productive, it is important for team

leaders to focus the team on balancing cognitive and affective conflict. a. True b. False 141. The last stage of team development, where decline is complete, is the de-forming stage. a. True b. False 142. Once teams have made it to the performing stage, they no longer need to fear a decline in performance. a. True b. False 143. To enhance work team effectiveness, managers should carefully set team goals and priorities, and take care

when selecting, training, and compensating team members. a. True b. False 144. Structural accommodation means giving teams the ability to change organizational structures, policies, and

practices if it helps them meet their stretch goals. a. True b. False Powered by Cognero

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Chapter 9 - Leading Teams 145. A preference for teamwork (i.e., collectivism), team level, and team diversity can help companies choose

the right team members. a. True b. False 146. Team normalization represents the variances or differences in ability, experience, personality, or any other

factor on a team. a. True b. False 147. To succeed, teams need significant training in leadership skills. a. True b. False 148. In general, gainsharing is most effective for self-managing and self-directing teams performing complex

tasks, while skill-based pay works best in relatively stable environments where employees can focus on improving the productivity, cost savings, or quality of their current work system. a. True b. False 149. In general, skill-based pay is most effective for managing the performance of self-managing and self-

directing teams. a. True b. False

150. What are work teams? Briefly comment on why work teams have become increasingly popular in business

since the mid to late 1980s.

151. Define cross-training. Briefly explain how cross-training can lead to increased job satisfaction.

152. What are the five guidelines managers use to determine whether teams should be used?

153. List the five types of teams on the team autonomy continuum. What is each team’s highest level of

responsibility (i.e., the highest level of task over which they have independent control)?

154. Identify the three special kinds of teams that can’t be easily categorized in terms of autonomy. For each of

these teams, identify the probability that it would be formed on a temporary or permanent basis.

155. What are project teams? List the advantages associated with their usage.

156. How does a team’s size influence its performance?

157. Explain what managers can do to effectively manage conflict in teams.

158. List the stages that teams pass through as they develop and grow as well as the stages of decline that may Powered by Cognero

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occur if teams are not managed properly once they achieve peak performance.

159. What are stretch goals? What four things must occur for stretch goals to effectively motivate teams?

160. List and briefly describe the three methods of compensating employees for team participation and

accomplishments.

161. Briefly identify the advantages and disadvantages of using teams. Describe a situation in which you or

someone you know worked in a team setting. Be sure to specify which of the general advantages and/or disadvantages of using teams were apparent in that situation.

162. Identify the key dimension on which teams differ. Define and describe the continuum of teams used by

companies along this dimension. If a manager had a high need for personal power and control, explain which of these types of teams the manager would probably be most happy working with in a managerial capacity, and how he or she might react to a proposal to introduce teams into the work unit.

163. What are virtual teams? Speculate on their likely role in global organizations in the future.

164. What are norms? What is cohesiveness? Why is team size an important consideration? How should a

manager cope with team conflict? Specify how these characteristics are related to team performance.

165. Describe the four factors that companies can manage to make teams more effective. Specify which of these

four factors you feel is of greatest importance in enhancing team performance. Explain your rationale for your choice.

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Chapter 9 - Leading Teams Answer Key 1. a 2. c 3. b 4. b 5. b 6. c 7. b 8. a 9. c 10. c 11. d 12. d 13. b 14. d 15. a 16. c 17. b 18. b 19. a 20. b 21. b 22. a 23. d 24. a 25. b Powered by Cognero

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Chapter 9 - Leading Teams 26. d 27. d 28. a 29. a 30. b 31. b 32. d 33. b 34. b 35. c 36. d 37. a 38. a 39. c 40. a 41. c 42. d 43. b 44. b 45. d 46. b 47. b 48. a 49. b 50. b 51. b Powered by Cognero

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Chapter 9 - Leading Teams 52. a 53. d 54. b 55. d 56. b 57. d 58. b 59. c 60. a 61. c 62. b 63. c 64. d 65. a 66. a 67. c 68. c 69. a 70. d 71. c 72. d 73. b 74. c 75. a 76. d Powered by Cognero

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Chapter 9 - Leading Teams 77. a 78. b 79. d 80. d 81. a 82. d 83. a 84. c 85. b 86. a 87. c 88. b 89. b 90. a 91. b 92. b 93. b 94. b 95. d 96. b 97. d 98. d 99. c 100. a 101. a 102. b Powered by Cognero

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Chapter 9 - Leading Teams 103. d 104. d 105. a 106. c 107. b 108. d 109. c 110. a 111. d 112. c 113. b 114. False 115. True 116. True 117. False 118. True 119. False 120. False 121. True 122. True 123. False 124. True 125. True 126. False 127. False Powered by Cognero

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Chapter 9 - Leading Teams 128. True 129. True 130. True 131. True 132. False 133. True 134. True 135. False 136. True 137. True 138. False 139. True 140. False 141. True 142. False 143. True 144. True 145. True 146. False 147. False 148. False 149. True 150. Work teams consist of a small number of people with complementary skills who hold themselves mutually

accountable for pursuing a common purpose, achieving performance goals, and improving interdependent work processes. In many industries, teams are growing in importance because they help organizations respond to specific problems and challenges. While work teams are not the answer for every situation or organization, if the right teams are used properly and in the right settings, teams can dramatically improve company performance over more traditional management approaches and instill a sense of vitality in the workplace that is Powered by Cognero

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Chapter 9 - Leading Teams

otherwise difficult to achieve.

151. Cross-training refers to training team members in how to do all or most of the jobs performed by the other

team members. Since this procedure gives workers a chance to improve their skills, it is one of the reasons why teamwork can be more satisfying than traditional work, and it can lead to increased job satisfaction. The advantage for the organization is that cross-training allows teams to function normally when one member is absent or a team member quits or is transferred. The advantage for workers is that cross-training broadens their skills and makes them more capable while also making their work more varied and interesting.

152. Teams should be used (1) when there is a clear, engaging reason or purpose, (2) when the work requires

that people work together, (3) when rewards can be provided for both teamwork and team performance, (4) when ample resources can be provided, and (5) when teams can be given clear authority to manage and change how work gets done.

153. Autonomy is the key dimension that makes teams different. Traditional work groups (that execute tasks)

and employee involvement groups (that make suggestions) have the lowest levels of autonomy. semiautonomous work teams (that control major, direct tasks) have more autonomy, followed by self-managing teams (that control all direct tasks) and self-designing teams (that control membership and how tasks are done), which have the highest levels of autonomy.

154. These special kinds of teams are cross-functional teams, virtual teams, and project teams. Cross-functional

teams are purposely composed of employees from different functional areas of the organization. Crossfunctional teams can be used almost anywhere in an organization and are often used in conjunction with matrix and product organizational structures. They can also be used with either part-time or temporary team assignments, or they can be used with full-time, long-term teams. Virtual teams are groups of geographically and/or organizationally dispersed coworkers who use a combination of telecommunications and information technologies to accomplish an organizational task. Virtual teams can be employee involvement teams, selfmanaging teams, or nearly any kind of team discussed in this chapter. Virtual teams are often (but not necessarily) temporary teams that are set up to accomplish a specific task. Project teams are created to complete specific, one-time projects or tasks (such as developing new products or improving existing products) within a limited time. Since they work from beginning to end on a specific project, at which time they are disbanded, they are by definition temporary. When projects are finished, project team members either move on to the next project or return to their functional units.

155. Project teams are created to complete specific, one-time projects or tasks within a limited time. Project

teams are often used to develop new products, to significantly improve existing products, to roll out new information systems, or to build new factories or offices. Because project tasks are typically unique, project teams are often staffed by employees from different functional areas. One advantage of project teams is that drawing employees from different functional areas can reduce or eliminate communication barriers. In turn, free-flowing communication encourages cooperation among separate departments and typically speeds up the design process. Another advantage of project teams is their flexibility. When projects are finished, project team members either move on to the next project or return to their functional units. Because of this flexibility, project teams are often used with the matrix organizational designs.

156. There appears to be a curvilinear relationship between team size and performance. In other words, very

small or very large teams may not perform as well as moderately sized teams. For most teams, the right size is somewhere between six and nine members. Teams of this size are small enough for the team members get to know one another and for each member to have an opportunity to contribute in a meaningful way to the success Powered by Cognero

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of the team. However, they’re also large enough to take advantage of team members’ diverse skills, knowledge, and perspectives. By contrast, when teams get too large, team members find it difficult to get to know one another and may splinter into smaller subgroups, suffering from problems of social loafing, self-limiting behaviour, minority domination, or other logistical problems. Teams that are too small, with just a few people, may lack the diversity of skills and knowledge found in larger teams. Also, they are unlikely to gain the advantages of team decision making—that is, multiple perspectives, generating more ideas and alternative solutions, and stronger commitment—found in larger teams.

157. The key to dealing with team conflict is to maximize cognitive conflict, which focuses on issue-related

differences, and minimize affective conflict, the emotional reactions that occur when disagreements become personal rather than professional. It is important for managers to note that while cognitive conflict is helpful in teams because of its association with a willingness to examine, compare, and reconcile differences to produce the best possible solution, it can easily deteriorate into affective conflict if the discussion turns personal and tempers and emotions flare. Thus, six recommendations have been provided for minimizing the occurrence of affective conflict, or “having a good fight.” First, work with more, rather than less, information. Second, develop multiple alternatives to enrich debate. Third, establish common goals. Fourth, inject humour into the workplace. Fifth, maintain a balance of power by involving as many people as possible in the decision process.

And sixth, resolve issues without forcing a consensus.

158. As teams develop and grow, they pass through four stages of development: forming, storming, norming,

and performing. The performing stage typically represents peak performance for the team. However, after a period of time, if not managed well, performance may decline, as teams progress through the stages of denorming, de-storming, and de-forming. If teams are actively managed, decline is not inevitable. However, managers need to recognize that the forces at work in the de-norming, de-storming, and de-forming stages represent a powerful, disruptive, and real threat to teams that have finally made it to the performing stage.

159. Stretch goals are extremely ambitious goals that workers don’t know how to reach. They can be used to

motivate teams as long as those teams have (1) autonomy, (2) control over resources, (3) structural accommodation (the ability to change organizational structures, policies, and practices), and (4) bureaucratic immunity (the ability to make changes without first getting approval from managers or other parts of an organization).

160. The three methods of compensating employees for team participation and accomplishments are (1) skill-

based pay (a compensation system that pays employees for learning additional skills or knowledge), (2) gainsharing (a compensation system in which companies share the financial value of performance gains, such as productivity, cost savings, or quality, with their workers), and (3) nonfinancial rewards (which can range from vacation trips to T-shirts, plaques, and coffee mugs).

161. Four advantages are presented for the use of teams. These are as follows: (1) teams have been shown to

increase customer satisfaction (through the use of specific customer service teams as well as problem-solving teams); (2) teams have been shown to increase product and service quality (by allowing teams to take direct responsibility); (3) teams have been shown to improve group decision making (by bringing together people who possess different knowledge, skills, abilities, and experiences, allowing for multiple perspectives to be shared); and (4) teams have been shown to increase employee job satisfaction (through cross-training, providing unique opportunities, and providing leadership responsibilities).

While teams can produce significant improvements in these areas, using teams does not guarantee these positive outcomes. Teams and teamwork have three specific disadvantages. (1) Initially high turnover occurs because Powered by Cognero

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teams aren’t for everyone, and some workers will balk at the responsibility, effort, and learning required in team settings. (2) Social loafing is a behaviour in which team members withhold their efforts and fail to perform their share of the work—it is especially problematic in large groups. (3) Disadvantages of group decision making (groupthink, excessive time, poorly run meetings, domination by a few team members, and weak accountability) may occur, although teams also share many of the advantages (multiple perspectives, generation of more alternatives, and more commitment for implementation).

Student examples will often revolve around class assignments that were completed in small groups. As such, advantages desired would include increased product quality and problem solving, with the possibility of increased student satisfaction if the experience is a good one. However, given the widely differing levels of student motivation (as well as interpersonal skills) in any given classroom, many students will report bad experiences. Related disadvantages that may be cited include high turnover and social loafing, as well as excessive time, poorly run meetings, domination by a few team members, and poor accountability. Better answers will clearly provide enough background information on the situation, behaviours, and outputs involved to assess the degree of appropriateness of the examples cited.

162. Studies indicate that the amount of autonomy possessed by a team is the key dimension that makes teams

different from one another. Autonomy is the degree to which workers have the discretion, freedom, and independence to decide how and when to accomplish their jobs. A team autonomy continuum is presented in the text identifying five different kinds of teams, each with increasing levels of autonomy (i.e., decision-making authority). In order of increasing autonomy, these are (1) traditional work groups (groups composed of two or more people who work together to achieve a shared goal), which have the lowest level of autonomy—that is, they simply execute the task; (2) employee involvement groups, which are teams that provide advice or make suggestions to management concerning specific issues, but lack decision-making authority; (3) semiautonomous work teams, which have considerably more autonomy since they not only provide advice and suggestions to management, but also have the authority to make decisions and solve problems related to the major tasks required to produce a product or service; (4) self-managing teams, where team members manage and control all of the major tasks directly related to production of a product or service without first getting approval from management; and finally, at the highest level of autonomy (5) self-designing teams, which have all the characteristics of self-managing teams, but can also control and change the design of the teams themselves, the tasks they do and how they do them, and who belongs to the teams.

If a manager had a high need for personal power and control, it is likely that he or she would prefer to make decisions unilaterally, rather than delegate such authority to a team. Thus, it is most likely that such a manager would prefer to work with either traditional work groups or employee involvement groups since all information, problem-solving, and decision-making authority remains in his/her hands with both of these types of teams (i.e., the manager retains power and control). Such a manager is likely to resist the introduction of any of the other three types of teams to his/her work unit since each of them possesses significant decision-making authority, which directly reduces managerial power and control.

163. Virtual teams are groups of geographically and/or organizationally dispersed coworkers who use a

combination of telecommunications and information technologies to accomplish an organizational task. In other words, members of virtual teams rarely meet face to face. The idea of virtual teams is relatively new and has been made possible by advances in communications and technology, such as e-mail, the Internet, videoconferencing, and other products. Virtual teams can be employee involvement teams, self-managing teams, or nearly any kind of team discussed in Chapter 9. Virtual teams are often (but not necessarily) temporary teams that are set up to accomplish a specific task. The characteristics of virtual teams make them an Powered by Cognero

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excellent asset for use in global organizations, where individual workers may need to collaborate, but are separated by both time zones and great distances. Thus, it can be speculated that global organizations will make increasing use of virtual teams in an attempt to gain or maintain competitive advantage in the future.

The following paragraph applies the text description of virtual teams to the work context of global organizations to provide support for the above speculation, and represents a minimal approach to an acceptable answer to this question. Better answers will include this material, but go beyond it to give real or logical examples of virtual teams working effectively in global organizations, or to generate other applications and insights beyond those directly implied by the text.

The principal advantage of virtual teams is that they are very flexible. Employees can work with each other, regardless of physical location, time zone, or organizational affiliation. Thus, they are likely to become much more prevalent in global organizations, to overcome these barriers. Because the team members don’t meet in a physical location, one of the unique qualities of virtual teams is that it is much easier to include other key stakeholders, such as suppliers and customers. This can be a particularly strong advantage to a global organization, which potentially faces considerably greater diversity in both suppliers and customers. Plus, virtual teams have certain efficiency advantages over traditional team structures. Because the teammates do not meet face to face, the time commitment involved in participating in a virtual team is typically not as great as for a traditional team. Moreover, employees can fulfill the responsibilities of their virtual team membership from the comfort of their own offices, without the travel time or downtime typically required by “real” face-to-face meetings. This final advantage is a crucial factor for global organizations, where considerable travel time for face-to-face meetings is a very real and significant organizational cost.

164. Norms, cohesiveness, team size, and team conflict are all characteristics of work teams that have an impact

on team performance. Norms are informally agreed-on standards that regulate team behaviour, and they are valuable because they let team members know what is expected of them. Studies indicate that norms are one of the most powerful influences on work behaviour. Team norms are often associated with positive outcomes, such as stronger organizational commitment, more trust in management, and stronger job and organizational satisfaction. However, they can also influence team behaviour in negative ways. Research has shown that teams with negative norms strongly influenced their team members to engage in negative behaviours. Thus, norms may result in either increases or decreases in performance, and should be closely monitored by managers.

Cohesiveness is the extent to which team members are attracted to a team and motivated to remain in it. In general, cohesiveness is associated with positive organizational outcomes. For example, cohesive groups typically experience less turnover, more cooperative behaviour, and greater motivation to contribute to the team. Cohesive teams are consistently better-performing teams. Furthermore, cohesive teams quickly achieve high levels of performance. By contrast, teams low in cohesion take much longer to reach the same levels of performance. However, cohesiveness is not necessarily always good for performance. For example, there is always the possibility that a team could become so cohesive that its team goals become more important than organizational goals. Also, teams sometimes unite around negative goals and norms that are harmful rather than helpful to organizations. Thus, cohesiveness does not always enhance team performance.

There appears to be a curvilinear relationship between team size and performance. In other words, very small or very large teams may not perform as well as moderately sized teams. For most teams, the right size is somewhere between six and nine members. Teams of this size are cohesive and small enough for team members to get to know one another and contribute in a meaningful way, but are large enough to take advantage of team members’ diverse skills, knowledge, and perspectives.

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Conflict and disagreement are inevitable in most teams. The key to dealing with team conflict is to maximize cognitive conflict, which focuses on issue-related differences and is strongly associated with improvements in team performance, and minimize affective conflict, the emotional reactions that occur when disagreements become personal rather than professional. Affective conflict is strongly associated with decreases in team performance because it prevents teams from engaging in the kinds of activities that are critical to team effectiveness.

165. Companies can make teams more effective by (1) setting team goals and priorities, and managing how

work team members are (2) selected, (3) trained, and (4) compensated.

Team goals clarify team priorities by providing a clear focus and purpose. Since specific, challenging team goals regulate how hard team members work, they also reduce the incidence of social loafing. Team goals lead to much higher team performance 93 percent of the time. Extremely difficult stretch goals can be used to motivate teams as long as those teams have autonomy, control over resources, structural accommodation (the ability to change organizational structures, policies, and practices), and bureaucratic immunity (the ability to make changes without first getting approval from managers or other parts of an organization).

Not everyone is suited for teamwork. When selecting team members, companies should do three things. First, they should select people who have a preference for teamwork. While such collectivists are generally more desirable in teams, individualists may be appropriate if team diversity is desired. Second, companies should consider the importance of team level, which is the average level of ability, experience, personality, or any other factor on a team. Team level is used to guide selection of teammates when teams need a particular set of skills or capabilities to do their jobs well. Third, companies should consider team diversity, which represents the variances or differences in ability, experience, personality, or any other factor on a team. Team diversity is used to guide selection of teammates when teams are asked to complete a wide range of different tasks or when tasks are particularly complex.

Organizations that create work teams often underestimate the amount of training required to make teams effective. The organizations that successfully use teams provide thousands of hours of training to make sure that teams work effectively. The most common types of team training are for interpersonal skills, decision-making and problem-solving skills, conflict resolution, technical training to help team members learn multiple jobs (i.e., cross-training), and training for team leaders.

There are three methods of compensating employees for team participation and accomplishments: skill-based pay (a compensation system that pays employees for learning additional skills or knowledge), gainsharing (a compensation system in which companies share the financial value of performance gains, such as productivity, cost savings, or quality, with their workers), and nonfinancial rewards (which can range from vacation trips to T-shirts, plaques, and coffee mugs). In general, skill-based pay is most effective for self-managing and selfdirecting teams performing complex tasks. In these situations, the more each team member knows and can do, the better the whole team performs. By contrast, gainsharing works best in relatively stable environments where employees can focus on improving the productivity, cost savings, or quality of their current work system.

Nonfinancial rewards are especially effective when coupled with management recognition.

Many students will select team goals as the single factor of greatest importance in enhancing team performance.

The research indicating that they lead to much higher performance 93 percent of the time is a strong argument in favour of this position. However, depending upon particular assumptions and circumstances specified in an Powered by Cognero

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answer, a reasonable argument could be made for selection, training, or compensation. In essence, severe weaknesses or inadequacies in any of these areas have the potential for significantly reducing team performance. Thus, the specific content and logical arguments of student answers would need to be assessed for these options.

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Indicate the answer choice that best completes the statement or answers the question.

1. Diana works for a hospital. Her day started with posting a job opening for X-ray technicians. She then

reviewed the progress of a training program she organized for volunteers in the emergency department. Later in the day she will meet with the vice president of operations to determine which administrative employee should be promoted to a new management position that was created. What is Diana’s role with the hospital? a. functional resource planning b. human resource management c. workforce forecasting d. recruiting 2. What is the Canadian legal system based on? a. the Canadian Labour Code b. the Constitution Act of 1867 c. the British Colonial Law of 1803 d. the French Colonial Law of 1755 3. Pedra works in the HR department for a toy manufacturer. It is Pedra’s responsibility to determine the amount

of base pay for each position in the company and the range for which that pay can increase or decrease. Pedra is also responsible for putting in place the policies and procedures to be followed when employees leave the company. What role in the human resource management process is Pedra involved with? a. attracting qualified employees b. keeping qualified employees c. developing qualified employees d. selecting qualified employees 4. For which of the following reasons is it legal to NOT hire a 45-kg job candidate as a dock worker to move 30

kg boxes of produce? a. the four-fifths rule b. adverse impact rulings c. bona fide occupational qualifications (BFOQs) d. gender selectivity 5. Engineered Fabrics makes bladders for airplane gas tanks. In the event of a puncture, the bladder will prevent

the tank from exploding. The bladders must be defect-free. To check the bladders, company employees must be able to crawl into a 46 cm (18-inch) diameter hole in the bladder side and look for light leaks. Why is it legal to limit the weight and height of individuals working in quality control at this company? a. the four-fifths rule b. adverse impact rulings c. bona fide occupational qualifications (BFOQs) d. gender selectivity 6. Which of the following is an area addressed by employment standards acts?

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Chapter 10 - Managing Human Resource Systems a. non-monetary benefit equality b. pay equity c. pay equality d. performance-based pay 7. Pedro comes from a culture where people are shorter than most nations. Pedro was not selected for a job by a

security firm and later found out that the firm is against hiring people from his culture. What is this an example of? a. discrimination b. harassment c. workplace safety violations d. hostile work environment 8. Workplace safety is a primary responsibility of which department? a. marketing b. human resources (HR) c. upper management d. operations 9. The CEO of a large telecommunications company made an unwelcome sexual advance on his executive

assistant while they were travelling for work together. What is this an example of? a. bona fide harassment b. adverse impact discrimination c. demographic discrimination d. sexual harassment 10. Which federal law prohibits discrimination on a number of grounds? a. Canadian Charter of Rights and Freedoms b. Canadian Human Rights Act c. Canadian Labour Code d. Employment Equity Legislation 11. Darlene worked for nearly 20 years in a casino sports bar. She was an outstanding employee but was passed

over for promotions because the manager of the bar wanted male workers to have higher positions. What is this an example of? a. discrimination b. sexual harassment c. a hostile work environment d. deliberate negative reinforcement 12. The International Gay Rodeo Association (IGRA) began in 1976. By the end of the 1980s, gay rodeos were Powered by Cognero

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being held in a number of Canadian and U.S. cities. But IGRA is not exempt from concerns about discrimination. What is IGRA avoiding by allowing heterosexuals to participate in all IGRA events? a. bona fide harassment b. discrimination c. gender selectivity d. quid pro quo selectivity 13. Under what legislation have the Human Rights Commissions in each province and territory been

established? a. the Constitution Act of 1867 b. the Canadian Human Rights Act c. the Canadian Charter of Rights and Freedoms d. the Canadian Labour Code 14. Which of the following occurs when unwelcome and demeaning behaviour creates an intimidating, hostile,

and offensive work environment? a. sexual harassment b. hostile work environment c. adverse impact d. inhospitable work environment 15. What is the term for the form of workplace harassment in which employment outcomes, such as hiring,

promotion, or simply keeping one’s job, depend on whether an individual submits to sexual harassment? a. bona fide sexual harassment b. sexual harassment c. adverse impact sexual harassment d. hostile work environment 16. Timothy is suing the company he worked for. His manager criticized his work and consistently made sex-

related and gender-related “jokes” during performance reviews. What did Tim experience at this company? a. sexual harassment b. employment discrimination c. workplace harassment d. unfair compensation 17. Former female employees of a national real-estate brokerage firm claimed that they were subjected to lewd

remarks, unwanted groping, and sexual propositions by male coworkers. According to their attorney, “The firm created a frat-house culture and then failed to do anything about it.” Which of the following would this suit claim the women were victims of? a. unintentional discrimination b. a hostile work environment c. gender discrimination Powered by Cognero

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Chapter 10 - Managing Human Resource Systems d. quid pro quo sexual harassment 18. Which action should a company first take to ensure that sexual harassment laws are followed and not

violated? a. They should respond immediately when sexual harassment is reported. b. They should write a clear, understandable, strongly worded policy that is well publicized within the company. c. They should make sure it is acting in compliance with not only federal laws but also with local laws. d. They should respect the privacy of the accused and the accusers.

19. Karen has created a step-by-step routine to follow to complete her job properly. Karen first observes each

job function. She then records how each job affects other functions. Karen then compares her information to industry statistics about that job. What role does Karen fulfill for her company? a. job analysis b. job evaluation c. job specification d. job validation 20. In which of the following would bona fide occupational qualifications most likely be included? a. a job specification b. an employee assignment list c. a labour resource guide d. a job description 21. What are the two most important results of a job analysis? a. recruiting guidelines and selection boundaries b. job descriptions and job specifications c. rater training and selection validation d. employee-needs assessment and performance appraisal evaluation 22. Which of the following helps companies meet the legal requirement that their human resource decisions be

job related? a. job analyses, task evaluations, and employee-needs assessment b. job descriptions, external environments, and employee mapping c. job specifications, job analyses, and job descriptions d. task evaluations, task specializations, and external environments 23. When it recruits firefighters, the Calgary fire department identifies all the qualifications needed to become a

firefighter. What is this recruitment advertising actually an example of? a. a job specification b. a task inventory c. a labour resource guide Powered by Cognero

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Chapter 10 - Managing Human Resource Systems d. a job description 24. Which of the following is NOT information typically collected as part of a job analysis? a. work activities such as what workers do and how, when, and why they do it b. tools and equipment used to do the job c. context in which the job is performed d. comparable salaries of similar jobs in the industry 25. Which of the following must organizations do before beginning to recruit? a. They must advertise for job candidates. b. They must create a job description. c. They must conduct a job analysis. d. They must create a job specification.

26. Recruitment, selection, training, performance appraisals, and employee separations must be valid and

directly related to the important aspects of the job as identified by a careful job analysis. What are these factors said to be, in other words? a. employee related b. reliable c. concrete d. job related 27. Laurie is hiring for a position in her department. She creates a notice that is included in the company’s

internal circular and posted on the general bulletin board for all employees to see. What did Laurie create? a. job advertisement b. job review c. job posting d. job analysis 28. Which of the following is an internal recruiting method? a. employee referrals b. career paths c. walk-ins d. employment services 29. Which of the following is an external recruiting method? a. advertising b. career paths c. job posting d. needs-assessment implementations 30. What is a key benefit derived from recruiting via Internet job sites, such as Indeed.com?

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Chapter 10 - Managing Human Resource Systems a. Internet recruiting targets specific age groups. b. The Internet allows companies to quickly reach large numbers of people. c. The company that is recruiting will receive applications only from qualified people. d. Internet recruiting targets potential applicants that are college or university educated.

31. Which of the following ensures that new applicants are provided with sufficient information to arrive at an

informed decision, including the positive and negative aspects of a new job? a. realistic job interviews b. realistic job previews c. job analysis d. specific job previews 32. Virginia works in the human resources department of a pharmaceutical company. Virginia is reviewing the

skills of current managers to determine whether any have both formal business and biochemistry education.

Based on her findings, Virginia will know if she can promote one of the current managers to a new position or will have to look outside of the company. What part of the human resource management process is Virginia involved with? a. selection b. performance appraisal c. training d. HR planning 33. A study in the construction industry found that when equipment is stolen from building sites, workers are the

culprits 82 percent of the time. If background checks reduced employee thievery over time and throughout the industry, what could be said about this selection process? a. It is validated. b. It is EEOC certified. c. It is legally authorized. d. It is corroborated.

34. What potential problem do résumés pose for companies? a. Applicants put false information on résumés. b. It is impossible to check the information provided on résumés. c. Employment laws apply to job application forms and résumés. d. Potential employees typically create generic résumés that do not pertain to specific jobs that are

available.

35. Deirdre works in human resources. She is comparing past tests given to the operations workers when they

were hired and comparing the test results to their actual performance. What activity is Deirdre engaged in? a. selection b. validation c. compensation Powered by Cognero

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Chapter 10 - Managing Human Resource Systems d. recruiting 36. What are the first selection devices most job applicants encounter when they seek a job? a. Internet sites and trade shows b. recruitment centres and Internet sites c. interviews and job application letters d. application forms and résumés 37. Which procedures are used to verify the truthfulness and accuracy of information that applicants provide

about themselves and to uncover negative, job-related information not provided by applicants? a. integrity checks b. background checks c. recruitment evaluation procedures d. biographical data assessments 38. What legal problem may employers encounter in seeking, providing, or using employment references as part

of the selection process? a. defamation charges b. adverse impact lawsuits c. product liability lawsuits d. accusations of disparate discrimination 39. From which type of selection information would employers receive the greatest benefit if their goal is to

stop employee theft? a. résumés b. performance appraisals c. job descriptions d. background checks 40. Estimates of losses in the HAZMAT driver workforce could vary from 2 percent to 20 percent as a result of

new federal regulations requiring that all drivers be fingerprinted and each set of fingerprints checked to see whether the driver has a criminal record. This new requirement will cause a worsening problem for the already over-extended workforce. What does this requirement call for? a. an integrity check b. a background check c. a recruitment evaluation procedure d. a biographical data assessment 41. Which of the following is a computerized system for gathering, analyzing, storing, and disseminating

information related to the HRM process? a. employee management system (EMS) b. selection and validation system (SVS) Powered by Cognero

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Chapter 10 - Managing Human Resource Systems c. human resource information system (HRIS) d. human resource management system (HRMS) 42. Harpreet, HR Manager of Loblaws, is in the process of gathering information on 65 different job applicants

to decide who should be offered the Director of Operations role they recently posted. What process is Harpreet engaged in? a. gathering b. recruiting c. selection d. validation 43. An employer is interested in an applicant for a position in the company. The candidate has an excellent

résumé and interviewed well. However, the background check came back neutral. Past employers have provided very basic information such as start date, position, and end date. What should the employer do next? a. hire an employee within the company b. conduct a criminal record check c. hire the applicant based on résumé and interview strengths d. hire the next favoured candidate 44. All job applicants for a position in an interior design company were given 10 swatches of fabrics of different

colours and textures, 30 different paint chips, and 6 different floor treatments and told to select the best fabric, paint, and floor treatment for an office that would also be used as a guest room. What type of selection test did the design company use? a. biotesting b. cognitive ability testing c. environmental sensitivity testing d. aptitude testing 45. What is another term for aptitude tests? a. specific ability tests b. cognitive ability tests c. personality tests d. work sample tests 46. Which type of test accurately predicts job performance in almost all kinds of jobs? a. specific ability tests b. cognitive ability tests c. personality tests d. achievement tests 47. A perennial problem of teacher education programs is to select the highest-quality candidates and to deny

admission to those unsuited to work in schools. One suggested method is to ask applicants a series of questions about their experiences with siblings, how they deal with stress, their attitude toward procrastination, and ways Powered by Cognero

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that they like to have fun. What is the term for what this method gathers? a. background data b. validation material c. work situation assessments d. biodata 48. According to the text, if an employer was to use only one type of selection test, what would be the one to

use? a. achievement tests b. personality tests c. cognitive ability tests d. work sample tests 49. Which of the following is a direct (rather than an indirect) measure of job applicants’ capabilities to do the

job? a. creativity tests b. cognitive ability tests c. personality tests d. work sample tests 50. Which type of interview uses only standardized, job-related interview questions that are prepared ahead of

time and asked of all candidates? a. formalized b. structured c. semistructured d. informal 51. What is the primary advantage of the structured interview? a. the amount of background information it reveals b. its ability to substitute for biodata c. comparing applicants is easier because they are all asked the same questions d. its validity 52. Which type of job interview might be used when the applicant's cover letter reveals the applicant had spent

three years working in Africa to convince parents to allow their children to take polio vaccine? a. canned b. semi-structured c. tangential d. creative 53. Which of the following activities provides opportunities for employees to develop the job-specific skills,

experience, and knowledge they need to do their jobs or improve their performance?

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Chapter 10 - Managing Human Resource Systems a. supervising b. directing c. training d. mentoring 54. Which type of interviewing typically leads to much more accurate hiring decisions—that is, correctly

predicting which job applicants will perform better and therefore should be hired? a. structured b. unstructured c. scripted d. formalized 55. Which training method is most appropriate for imparting information or knowledge to trainees? a. group discussions b. lectures and planned readings c. role playing d. case studies 56. Which training method is most appropriate when the objective of training is practising, learning, or changing

behaviours? a. group discussions b. planned readings and lectures c. role playing d. case studies 57. Which of the following is a disadvantage associated with Internet training? a. its increased popularity b. an increase in employee stress c. a decrease in workplace productivity d. the cost of equipment and technology 58. What is the final step in the training process? a. plan the next training session b. conduct the training c. evaluate the training d. pay for the training 59. Which of the following is TRUE with respect to performance appraisals? a. Most employees and managers intensely dislike the performance appraisal process. b. Performance appraisals can be used as a basis for compensation, but not as a basis for determining

who needs further training. c. Since performance appraisal is only a marginally important human resource process, any problems Powered by Cognero

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associated with it do not affect the organization overall. d. Legally, a disgruntled employee cannot sue an employer on the basis of a dissatisfactory performance appraisal.

60. Which of the following is an example of a subjective performance measure? a. behavioural observation scales b. sales quotas c. production rate d. revenues 61. Which of the following asks raters to rate the frequency with which workers perform specific actions

representative of the job dimensions that are critical to successful job performance? a. behavioural observation scales b. observational research studies c. performance rating scales d. objective performance measures 62. Which of the following is a common type of rating error that managers are prone to in the performance

appraisal process? a. standard deviation b. descriptive bias error c. 80/20 error d. central tendency error 63. Which type of error did the manager commit when she rated all of her subordinates as above-average in all

performance areas? a. central tendency error b. validity error c. leniency error d. halo error 64. Which of the following is an example of an objective performance evaluation? a. performance analyses b. behavioural observation scales c. cognitive ability scales d. rejection rates 65. In which performance appraisal process is feedback obtained from the boss, subordinates, peers and

coworkers, and the employees themselves? a. 360-degree feedback b. performance appraisal iteration c. reciprocal appraisal Powered by Cognero

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Chapter 10 - Managing Human Resource Systems d. grapevine appraisal 66. Which practice is recommended to managers to improve traditional performance appraisal feedback

sessions? a. combining developmental feedback and administrative feedback b. strengthening the grading aspect of performance appraisals c. basing performance appraisal feedback sessions on self-appraisals d. using outsourcing 67. Which of the following is an attractive aspect of 360-degree feedback? a. 360-degree feedback is most effective when used to train performance raters. b. 360-degree feedback provides feedback from peer workers only. c. With the 360-degree feedback approach, feedback comes from a variety of sources. d. Employees do not provide feedback about their own efforts in the 360-degree feedback approach.

68. Which of the following determines the worth of each job by establishing the market value of the knowledge,

skills, and requirements needed to perform it? a. work performance scales b. job evaluations c. job analyses d. pay variability charts 69. What term refers to both the financial and nonfinancial rewards organizations give employees in exchange

for their work? a. wages b. value-added dimension c. compensation d. salaries 70. Which of the following is an example of a pay variability decision used to motivate employee performance? a. salary b. hierarchical pay c. wage d. stock options 71. What does the acronym ESOP stand for? a. equitable stock option plan b. employee stock ownership plan c. employee salary option plan d. equity in salary organizational plan 72. One reason items manufactured in Southeast Asia can be imported into Canada so cheaply is that workers Powered by Cognero

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are paid a small amount of money for each item produced. Which type of pay plan do manufacturers operating in Southeast Asia use? a. real-time pay b. compressed pay c. piecework d. batch processing 73. After 27 years of working for a high-end autobody shop, Joe decided to retire. What is this an example of? a. voluntary separation b. involuntary separation c. functional turnover d. dysfunctional turnover 74. What should managers do to minimize the problems inherent in firing employees? a. Before firing employees, managers should give them a chance to change their behaviour and

improve. b. Managers should keep moving an unproductive employee to different positions until they become productive. c. Managers should never fire employees in private. d. While written records are not necessary, managers should verbally report the reason for the firing to the human resource department.

75. Sharron Grant-Burton was a marketing director for Covenant Care, an owner of skilled-nursing and assisted-

living facilities. During a discussion of the fairness of the company’s bonus structure with other marketing directors, Grant-Burton said she did not receive a bonus because her executive director “did not believe in them.” Several days later, Grant-Burton was fired and told she had been terminated for several unspecified reasons, including her comments about bonuses. What is this an example of? a. de-employment b. wrongful discharge c. reactive termination d. regressive turnover 76. What can be done to provide a positive aspect to downsizing? a. split the organization’s common stock b. alert the remaining employees of the reality that they may lose their jobs soon as well c. create an outplacement program to help the affected employees find alternative work d. establish a tall organizational structure as quickly as possible 77. Which of the following provides employment counselling services for employees faced with downsizing? a. outplacement services b. reassessment services c. employee outsourcing Powered by Cognero

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Chapter 10 - Managing Human Resource Systems d. employee restructuring 78. Raymond was given several opportunities to improve his level of work before he was let go by the company.

What is this an example of? a. voluntary separation b. involuntary separation c. functional turnover d. dysfunctional turnover 79. Vanessa is a top performer at a personal care products distributor. Vanessa is leaving to join a more

established company that offers a wider range of products. What is this an example of? a. de-employment b. dysfunctional turnover c. reactive turnover d. regressive turnover 80. Following a challenging couple of years, many high-performing, tenured employees in the oil and gas sector

in Canada are leaving the sector to start new businesses and try new opportunities. This is likely to lead to staff shortages in the coming years. What does the departure of the current oil and gas workers exemplify? a. de-employment b. dysfunctional turnover c. reactive turnover d. regressive turnover 81. A company conducts a series of simulations and hires trained observers to evaluate applicants to help

determine the best candidate for a managerial position. What is this an example of? a. on-the-job evaluations b. biodata evaluations c. assessment centres d. performance centre services 82. A company that listens to customer complaints and surveys employees and managers is performing which

step in the training process? a. work sample tests b. needs assessment c. selecting training methods d. evaluating training 83. Firms perform needs assessments in order to do which of the following? a. identify training objectives and evaluate training b. identify who does (and doesn’t) need training and evaluate training c. evaluate training and select the training methods Powered by Cognero

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Chapter 10 - Managing Human Resource Systems d. identify who does (and doesn’t) need training and select the training methods 84. What does the acronym ERIP stand for? a. Employee Retirement Information Planning b. Early Retirement Incentive Program c. Education for Realistic Implementation Planning d. Education for Retirement Information Planning 85. ERIPs have posed problems for some employers—such as the University of Waterloo, which saw more than

300 faculty and staff leave. What are HR departments doing to combat the problems? a. seeking volunteers for ERIP b. planning for functional turnover c. implementing phased retirement options d. increasing pension values over time 86. Scenario 10-1

Zachary Schneider saw a sign in the window of an Amy’s Ice Creams franchise operation. The sign said the company was looking for new employees. When he went in to ask for a job application, he was given a paper bag and told to do “something creative with it.” The test was to see whether the job applicant was suited to carrying out the chain’s mission: “To make people’s day.” This type of pre-employment assessment is not unusual. Gourmet grocery chain Central Market uses a four-page application form, which includes essay questions such as “Tell us about your favourite food experience.” If it seems an applicant is a good match for the company, then the applicant is asked to make a personal statement using items found in the grocery store and to participate with other applicants in a roundtable discussion.

Refer to Scenario 10-1. The need for creative skills in order to work at Amy’s would have been developed for franchisees by the company’s HR department. What is the term for what HR developed? a. task specialization b. work empowerment norm c. job description d. job specification 87. Scenario 10-1

Zachary Schneider saw a sign in the window of an Amy’s Ice Creams franchise operation. The sign said the company was looking for new employees. When he went in to ask for a job application, he was given a paper bag and told to do “something creative with it.” The test was to see whether the job applicant was suited to carrying out the chain’s mission: “To make people’s day.” This type of pre-employment assessment is not unusual. Gourmet grocery chain Central Market uses a four-page application form, which includes essay questions such as “Tell us about your favourite food experience.” If it seems an applicant is a good match for the company, then the applicant is asked to make a personal statement using items found in the grocery store and to participate with other applicants in a roundtable discussion.

Refer to Scenario 10-1. Which recruiting technique did Amy’s use? a. internal recruiting b. establishing career paths Powered by Cognero

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Chapter 10 - Managing Human Resource Systems c. job posting d. external recruiting 88. Scenario 10-1

Zachary Schneider saw a sign in the window of an Amy’s Ice Creams franchise operation. The sign said the company was looking for new employees. When he went in to ask for a job application, he was given a paper bag and told to do “something creative with it.” The test was to see whether the job applicant was suited to carrying out the chain’s mission: “To make people’s day.” This type of pre-employment assessment is not unusual. Gourmet grocery chain Central Market uses a four-page application form, which includes essay questions such as “Tell us about your favourite food experience.” If it seems an applicant is a good match for the company, then the applicant is asked to make a personal statement using items found in the grocery store and to participate with other applicants in a roundtable discussion.

Refer to Scenario 10-1. Amy’s is convinced that how applicants respond to its request to do something creative with a brown paper bag accurately predicts how well job applicants will perform if hired. In other words, what does it believe its pre-employment assessment method to be? a. standardized b. valid c. efficient d. reliable 89. Scenario 10-1

Zachary Schneider saw a sign in the window of an Amy’s Ice Creams franchise operation. The sign said the company was looking for new employees. When he went in to ask for a job application, he was given a paper bag and told to do “something creative with it.” The test was to see whether the job applicant was suited to carrying out the chain’s mission: “To make people’s day.” This type of pre-employment assessment is not unusual. Gourmet grocery chain Central Market uses a four-page application form, which includes essay questions such as “Tell us about your favourite food experience.” If it seems an applicant is a good match for the company, then the applicant is asked to make a personal statement using items found in the grocery store and to participate with other applicants in a roundtable discussion.

Refer to Scenario 10-1. Which type of interview is most likely used at Central Market during the roundtable discussion? a. performance b. biodata c. unstructured d. semistructured 90. Narrative 10-1

At Domino’s Pizza, company-wide turnover is 158 percent. That means Domino’s must recruit, hire, and train 180,000 people a year just to fill its company’s 114,000 jobs. And with that much turnover, the company can’t consistently produce a quality product. Making and delivering one million pizzas each night, as Domino’s does, is not easy, especially if it is always working with inexperienced workers. Even a simple job like order taking has a learning curve when you’re taking 45 to 50 orders an hour. In fact, a new order taker usually requires 80 hours to become as reliable as an experienced one. Until they learn their jobs, new workers make lots of mistakes, such as getting orders wrong, giving out the wrong change, and showing up at customers’ homes with Powered by Cognero

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the wrong pizza.

Those mistakes are costly in two ways. First, if the order is wrong, late, or missing, customers get angry and may not do business with Domino’s again. According to a leading consumer satisfaction index, Domino’s ranks in the bottom half of fast-food companies. Second, to right those wrongs, Domino’s often says the pizza is free, and that hurts profits.

Turnover is costly in other ways. It costs time and money to find and hire new workers. Domino’s estimates that it costs $2,500 to replace each hourly worker who leaves and $20,000 to replace a store manager. New workers take time and money to train—each new worker spends the first 30 days in training, learning to take orders, handle the cash register, make pizza dough, and ultimately, how to make a pizza in less than a minute. Turnover costs Domino’s several hundred million dollars a year, or 15 to 20 percent of revenues! The question, of course, is what to do about it.

Robert Chabot owns a series of Domino’s franchise stores. He says it’s all about hiring people who want to do good work. Consequently, Chabot relies heavily on employee referrals to first identify good job applicants.

Chabot assumes that if current employees are satisfied with their jobs, they’ll tell others, and those people will, in turn, want to work for him. He also pays employees $25 for each person they recommend who gets hired and then stays for at least 90 days.

Domino’s has improved the screening and selecting of potential managers. Anyone who wants to manage a Domino’s store has to pass a 30-minute online test of their financial and management skills. If you’re not familiar with financial concepts such as “break-even” and “cash flow,” and you’re not sure how to handle poorly performing employees (hint: yelling and screaming isn’t the preferred answer), then you’re unlikely to pass the test.

Refer to Narrative 10-1. What does Robert Chabot use when he relies on employee referrals to first identify good job applicants? a. a reliable selection process b. internal recruiting c. functional recruiting d. external recruiting 91. Narrative 10-1

At Domino’s Pizza, company-wide turnover is 158 percent. That means Domino’s must recruit, hire, and train 180,000 people a year just to fill its company’s 114,000 jobs. And with that much turnover, the company can’t consistently produce a quality product. Making and delivering one million pizzas each night, as Domino’s does, is not easy, especially if it is always working with inexperienced workers. Even a simple job like order taking has a learning curve when you’re taking 45 to 50 orders an hour. In fact, a new order taker usually requires 80 hours to become as reliable as an experienced one. Until they learn their jobs, new workers make lots of mistakes, such as getting orders wrong, giving out the wrong change, and showing up at customers’ homes with the wrong pizza.

Those mistakes are costly in two ways. First, if the order is wrong, late, or missing, customers get angry and may not do business with Domino’s again. According to a leading consumer satisfaction index, Domino’s ranks in the bottom half of fast-food companies. Second, to right those wrongs, Domino’s often says the pizza is free, and that hurts profits.

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Turnover is costly in other ways. It costs time and money to find and hire new workers. Domino’s estimates that it costs $2,500 to replace each hourly worker who leaves and $20,000 to replace a store manager. New workers take time and money to train—each new worker spends the first 30 days in training, learning to take orders, handle the cash register, make pizza dough, and ultimately, how to make a pizza in less than a minute. Turnover costs Domino’s several hundred million dollars a year, or 15 to 20 percent of revenues! The question, of course, is what to do about it.

Robert Chabot owns a series of Domino’s franchise stores. He says it’s all about hiring people who want to do good work. Consequently, Chabot relies heavily on employee referrals to first identify good job applicants.

Chabot assumes that if current employees are satisfied with their jobs, they’ll tell others, and those people will, in turn, want to work for him. He also pays employees $25 for each person they recommend who gets hired and then stays for at least 90 days.

Domino’s has improved the screening and selecting of potential managers. Anyone who wants to manage a Domino’s store has to pass a 30-minute online test of their financial and management skills. If you’re not familiar with financial concepts such as “break-even” and “cash flow,” and you’re not sure how to handle poorly performing employees (hint: yelling and screaming isn’t the preferred answer), then you’re unlikely to pass the test.

Refer to Narrative 10-1. Which selection method is used to determine that prospective employees do not have a criminal record? a. assessment centre b. cognitive ability tests c. structured interviews d. background checks 92. Narrative 10-1

At Domino’s Pizza, company-wide turnover is 158 percent. That means Domino’s must recruit, hire, and train 180,000 people a year just to fill its company’s 114,000 jobs. And with that much turnover, the company can’t consistently produce a quality product. Making and delivering one million pizzas each night, as Domino’s does, is not easy, especially if it is always working with inexperienced workers. Even a simple job like order taking has a learning curve when you’re taking 45 to 50 orders an hour. In fact, a new order taker usually requires 80 hours to become as reliable as an experienced one. Until they learn their jobs, new workers make lots of mistakes, such as getting orders wrong, giving out the wrong change, and showing up at customers’ homes with the wrong pizza.

Those mistakes are costly in two ways. First, if the order is wrong, late, or missing, customers get angry and may not do business with Domino’s again. According to a leading consumer satisfaction index, Domino’s ranks in the bottom half of fast-food companies. Second, to right those wrongs, Domino’s often says the pizza is free, and that hurts profits.

Turnover is costly in other ways. It costs time and money to find and hire new workers. Domino’s estimates that it costs $2,500 to replace each hourly worker who leaves and $20,000 to replace a store manager. New workers take time and money to train—each new worker spends the first 30 days in training, learning to take orders, handle the cash register, make pizza dough, and ultimately, how to make a pizza in less than a minute. Turnover costs Domino’s several hundred million dollars a year, or 15 to 20 percent of revenues! The question, of course, Powered by Cognero

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Chapter 10 - Managing Human Resource Systems

is what to do about it.

Robert Chabot owns a series of Domino’s franchise stores. He says it’s all about hiring people who want to do good work. Consequently, Chabot relies heavily on employee referrals to first identify good job applicants.

Chabot assumes that if current employees are satisfied with their jobs, they’ll tell others, and those people will, in turn, want to work for him. He also pays employees $25 for each person they recommend who gets hired and then stays for at least 90 days.

Domino’s has improved the screening and selecting of potential managers. Anyone who wants to manage a Domino’s store has to pass a 30-minute online test of their financial and management skills. If you’re not familiar with financial concepts such as “break-even” and “cash flow,” and you’re not sure how to handle poorly performing employees (hint: yelling and screaming isn’t the preferred answer), then you’re unlikely to pass the test.

Refer to Narrative 10-1. What is Domino’s using when it asks those who want to manage a Domino’s store to pass a 30-minute online test of their financial and management skills? a. work performance testing b. aptitude testing c. affective skills testing d. cognitive ability testing 93. Narrative 10-1

At Domino’s Pizza, company-wide turnover is 158 percent. That means Domino’s must recruit, hire, and train 180,000 people a year just to fill its company’s 114,000 jobs. And with that much turnover, the company can’t consistently produce a quality product. Making and delivering one million pizzas each night, as Domino’s does, is not easy, especially if it is always working with inexperienced workers. Even a simple job like order taking has a learning curve when you’re taking 45 to 50 orders an hour. In fact, a new order taker usually requires 80 hours to become as reliable as an experienced one. Until they learn their jobs, new workers make lots of mistakes, such as getting orders wrong, giving out the wrong change, and showing up at customers’ homes with the wrong pizza.

Those mistakes are costly in two ways. First, if the order is wrong, late, or missing, customers get angry and may not do business with Domino’s again. According to a leading consumer satisfaction index, Domino’s ranks in the bottom half of fast-food companies. Second, to right those wrongs, Domino’s often says the pizza is free, and that hurts profits.

Turnover is costly in other ways. It costs time and money to find and hire new workers. Domino’s estimates that it costs $2,500 to replace each hourly worker who leaves and $20,000 to replace a store manager. New workers take time and money to train—each new worker spends the first 30 days in training, learning to take orders, handle the cash register, make pizza dough, and ultimately, how to make a pizza in less than a minute. Turnover costs Domino’s several hundred million dollars a year, or 15 to 20 percent of revenues! The question, of course, is what to do about it.

Robert Chabot owns a series of Domino’s franchise stores. He says it’s all about hiring people who want to do good work. Consequently, Chabot relies heavily on employee referrals to first identify good job applicants.

Chabot assumes that if current employees are satisfied with their jobs, they’ll tell others, and those people will, in turn, want to work for him. He also pays employees $25 for each person they recommend who gets hired and Powered by Cognero

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then stays for at least 90 days.

Domino’s has improved the screening and selecting of potential managers. Anyone who wants to manage a Domino’s store has to pass a 30-minute online test of their financial and management skills. If you’re not familiar with financial concepts such as “break-even” and “cash flow,” and you’re not sure how to handle poorly performing employees (hint: yelling and screaming isn’t the preferred answer), then you’re unlikely to pass the test.

Refer to Narrative 10-1. One new pay method Domino’s implemented to combat its problems is a storeprofitability bonus. On average, the store-profitability bonuses add 30 percent, or about $10,000, to the $32,000 base pay for the managers of Domino’s good-performing stores. What are these bonuses a form of? a. piecework pay b. hierarchical pay c. sales commission d. profit sharing 94. Narrative 10-2

The GoForth Institute was founded by Dr. Leslie McGeough, who left academia to focus on developing entrepreneurial training for small business owners. After years of studying entrepreneurs and small businesses, she realized that most small businesses fail—and that she had an answer. She launched the GoForth Institute to help entrepreneurs “know what they don’t know” about running a small business; she partnered with Community Futures, a network of non-profits that supports small businesses and entrepreneurs in rural communities. She identified cost, time, and impact as core values for her firm. As she puts it, “Entrepreneurs love to learn, but they aren’t interested in education that’s uninspiring or unaffordable.”

Refer to Narrative 10-2. How did Dr. McGeough identify the learning needs of small business owners? a. identifying performance deficiencies b. listening to customer complaints c. surveying managers d. formally testing skills and knowledge 95. Narrative 10-2

The GoForth Institute was founded by Dr. Leslie McGeough, who left academia to focus on developing entrepreneurial training for small business owners. After years of studying entrepreneurs and small businesses, she realized that most small businesses fail—and that she had an answer. She launched the GoForth Institute to help entrepreneurs “know what they don’t know” about running a small business; she partnered with Community Futures, a network of non-profits that supports small businesses and entrepreneurs in rural communities. She identified cost, time, and impact as core values for her firm. As she puts it, “Entrepreneurs love to learn, but they aren’t interested in education that’s uninspiring or unaffordable.”

Refer to Narrative 10-2. Which of the following did Dr. McGeough do to determine that entrepreneurs “aren’t interested in education that’s uninspiring or unaffordable”? a. performance appraisal b. aptitude tests c. needs assessment d. selecting training methods Powered by Cognero

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Chapter 10 - Managing Human Resource Systems 96. Narrative 10-2

The GoForth Institute was founded by Dr. Leslie McGeough, who left academia to focus on developing entrepreneurial training for small business owners. After years of studying entrepreneurs and small businesses, she realized that most small businesses fail—and that she had an answer. She launched the GoForth Institute to help entrepreneurs “know what they don’t know” about running a small business; she partnered with Community Futures, a network of non-profits that supports small businesses and entrepreneurs in rural communities. She identified cost, time, and impact as core values for her firm. As she puts it, “Entrepreneurs love to learn, but they aren’t interested in education that’s uninspiring or unaffordable.”

Refer to Narrative 10-2. Which form of training might Dr. McGeough have chosen due to her firm’s partnership with Community Futures? a. lectures b. case studies c. vestibule training d. computer-based learning 97. Narrative 10-2

The GoForth Institute was founded by Dr. Leslie McGeough, who left academia to focus on developing entrepreneurial training for small business owners. After years of studying entrepreneurs and small businesses, she realized that most small businesses fail—and that she had an answer. She launched the GoForth Institute to help entrepreneurs “know what they don’t know” about running a small business; she partnered with Community Futures, a network of non-profits that supports small businesses and entrepreneurs in rural communities. She identified cost, time, and impact as core values for her firm. As she puts it, “Entrepreneurs love to learn, but they aren’t interested in education that’s uninspiring or unaffordable.”

Refer to Narrative 10-2. What might be the most effective form of evaluating training as a marketing tool for the GoForth Institute? a. behaviour b. learning c. results d. reactions Indicate whether the statement is true or false.

98. Very few provinces have an employment or labour standards act that sets out items defined in the Canada

Labour Code. a. True b. False 99. Human resource management (HRM) is the process of finding, developing, and keeping the right people to

form a qualified workforce. a. True b. False 100. The only time that gender, age, religion, and so on can be used to make employment decisions is when they Powered by Cognero

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are considered a bona fide occupational qualification (BFOQ). a. True b. False 101. Federal and provincial employment laws apply only to selection decisions (i.e., hiring and promotion). a. True b. False 102. Human resources management ensures that the organization has the appropriate human resources to

implement its chosen strategy. a. True b. False 103. The federal government has laws that often mirror those of the provinces, but human rights, employment

standards, labour relations, health and safety, and employment equity, as well as other employment-related legislation, belongs to the ten provinces and three territories. a. True b. False 104. A manager of a shipping department is instructed to interview taller candidates since some inventory items

are stored on higher shelves. This is an example of adverse impact on cultures with traits of shortness. a. True b. False 105. Assessment centres use extensive surveys to determine an applicant’s personal background and life

experience to predict future behaviour. a. True b. False 106. The hostile work environment form of sexual harassment occurs when employment outcomes, such as

hiring, promotion, or simply keeping one’s job, depend on whether an individual submits to being sexually harassed. a. True b. False 107. Full compliance with federal law is enough to ensure that an organization cannot incur liability in sexual

harassment complaints. a. True b. False 108. Job analysis is a purposeful and systematic process for collecting information on the important work-

related aspects of a job. a. True b. False

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Chapter 10 - Managing Human Resource Systems 109. A job specification summarizes the basic tasks, duties, and responsibilities of a job, and a job description

summarizes the qualifications needed to successfully perform the job. a. True b. False 110. Job analyses, job descriptions, and job specifications help companies meet the legal requirement that their

human resource decisions be job related. a. True b. False 111. If the training objective is to develop analytical and problem-solving skills, then on-the-job training, role

playing, and vestibule training should be used. a. True b. False 112. Validation is the process of determining how well a selection test or procedure predicts future job

performance. a. True b. False 113. Background checks can be used to verify the truthfulness and accuracy of information that applicants

provide about themselves. a. True b. False 114. Cognitive ability tests are also called “aptitude tests.” a. True b. False 115. If an HR manager were allowed to use just one selection test, cognitive ability tests would be the one to

use. a. True b. False 116. Since interviews are especially good at assessing applicants’ interpersonal skills, they work especially well

together with cognitive ability tests, where the combination leads to even better selection decisions than using either alone. a. True b. False 117. Training provides opportunities for employees to develop the job-specific skills, experience, and

knowledge they need to do their jobs or improve their performance. a. True b. False

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Chapter 10 - Managing Human Resource Systems 118. To choose the best training method, a company should consider such factors as the number of people to be

trained, the cost of training, and the objectives of the training. a. True b. False 119. Behavioural observation scales (BOS) ask raters to rate the frequency with which workers perform specific

behaviours representative of the job dimensions that are critical to successful job performance. a. True b. False 120. In setting their pay structures, companies use a procedure known as performance assessment, which

determines the worth of each job by determining the market value of the knowledge, skills, and requirements needed to perform it. a. True b. False 121. Piecework, sales commission, profit sharing, employee stock ownership plans, and stock options are

common pay variability options. a. True b. False 122. Wrongful discharge is a legal doctrine that requires a manager to have the approval of the human resource

manager to terminate employees. a. True b. False 123. Once a company finishes the downsizing process, it should never need to downsize again. a. True b. False 124. Employee turnover is always bad for an organization. a. True b. False 125. Dysfunctional turnover is the loss of high-performing employees due to unplanned downsizing. a. True b. False 126. Federal employment laws are relatively unchanging. a. True b. False 127. The Canadian Charter of Rights and Freedoms requires equal pay for equal work. a. True b. False Powered by Cognero

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Chapter 10 - Managing Human Resource Systems 128. Employment-related laws apply only to selection decisions. a. True b. False 129. Workplace safety acts are administered by boards appointed by the provincial and territorial governments. a. True b. False 130. Internal recruiting reduces start-up time and costs, and helps improve employee commitment, morale, and

motivation. a. True b. False 131. One method that internal recruiting uses is career paths, or planned sequences of advancement within an

organization. a. True b. False 132. Succession planning means organizations should help their employees become more promotable—even if

they might leave the organization as a result. a. True b. False 133. Recruiting from universities and colleges is a form of internal recruiting. a. True b. False 134. Job analysis information can be collected by having job incumbents and/or supervisors complete

questionnaires, by direct observation, by interviews, by diary methods, or by filming employees as they perform their jobs. a. True b. False 135. Realistic job previews set out only the positive aspects of the job and organization. a. True b. False 136. Needs assessments identify employees’ learning needs and should never be used to determine which

employees shouldn’t attend training. a. True b. False 137. Needs assessments may identify employees’ training needs on the basis of age and gender. a. True Powered by Cognero

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Chapter 10 - Managing Human Resource Systems b. False 138. Employees should be sent to training even if they don’t need it in order to maximize use of classroom seats

in a training program. a. True b. False 139. Case studies are an appropriate training tool to learn job behaviours. a. True b. False 140. Training should be evaluated using measurements of trainees’ behaviour changes and learning. a. True b. False 141. The four methods of evaluating training include reactions, learning, behaviour, and results. a. True b. False 142. In 360-degree feedback, feedback comes from three sources: the boss, subordinates, as well as peers and

coworkers. a. True b. False 143. Managers should deliver administrative and developmental feedback at the same time. a. True b. False 144. Self-appraisals are an important source of performance feedback. a. True b. False 145. Phased retirement is beneficial to companies, because it allows them to reduce salaries and other costs. a. True b. False

146. Identify the employee characteristics that are protected by federal employment anti-discrimination laws

(i.e., the characteristics upon which employers are not legally allowed to discriminate). Specify which human resource management decisions these laws affect.

147. Explain how job analysis is related to recruiting. Be sure to specify how it helps an organization to meet a

basic legal requirement for human resource management.

148. Distinguish between sexual harassment and a hostile work environment.

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Chapter 10 - Managing Human Resource Systems 149. Differentiate between internal and external recruiting. Provide two examples of each.

150. Explain how a human resource department defines selection. List the four common categories of selection

procedures used by companies. Specify which of these four generally does the best job of predicting applicants’ future job performance.

151. Identify and describe the three kinds of job interviews. Which type works best as a selection tool?

152. Identify two common problems that occur during the performance appraisal process. Recommend one

approach for avoiding each of these problems.

153. List and briefly define the three basic kinds of compensation decisions.

154. Identify two things that managers can do to minimize the problems inherent in terminating employees.

155. Explain the nature and intent of federal employment law. Identify the circumstances under which protected

characteristics such as gender, age, or religion can be used as the basis for employment decisions as well as the circumstances under which a company may be found guilty of illegal discrimination. Define the relationship between the federal, provincial, and territory employment laws and governing bodies.

156. What is sexual harassment? What is a hostile work environment? Specify steps that companies can take to

make sure that sexual harassment laws are followed and not violated. Give one example of possible sexual harassment that you have heard or read about, and explain which of the steps just described could have averted or resolved that situation more effectively.

157. What is selection? Discuss the common selection procedures, including pros and cons of using each.

158. What is a performance appraisal? What are performance appraisals used for? How can a manager

accurately measure job performance?

159. List and explain the three basic kinds of compensation decisions. Give two examples of what is involved in

making each kind of compensation decision. What is a job evaluation? Which kind(s) of compensation decisions are job evaluations directly related to?

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Chapter 10 - Managing Human Resource Systems Answer Key 1. b 2. b 3. b 4. c 5. c 6. b 7. a 8. b 9. d 10. b 11. a 12. b 13. a 14. b 15. b 16. a 17. b 18. a 19. a 20. a 21. b 22. c 23. a 24. d 25. c Powered by Cognero

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Chapter 10 - Managing Human Resource Systems 26. d 27. c 28. b 29. a 30. b 31. b 32. d 33. a 34. a 35. b 36. d 37. b 38. a 39. d 40. b 41. c 42. c 43. b 44. d 45. a 46. b 47. d 48. c 49. d 50. b 51. c Powered by Cognero

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Chapter 10 - Managing Human Resource Systems 52. b 53. c 54. a 55. b 56. c 57. d 58. c 59. a 60. a 61. a 62. d 63. c 64. d 65. a 66. c 67. c 68. b 69. c 70. d 71. b 72. c 73. a 74. a 75. b 76. c Powered by Cognero

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Chapter 10 - Managing Human Resource Systems 77. a 78. b 79. b 80. b 81. c 82. b 83. d 84. b 85. c 86. c 87. d 88. b 89. d 90. d 91. d 92. b 93. d 94. a 95. c 96. d 97. c 98. False 99. True 100. True 101. False 102. False Powered by Cognero

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Chapter 10 - Managing Human Resource Systems 103. True 104. True 105. False 106. False 107. False 108. True 109. False 110. True 111. False 112. True 113. True 114. False 115. True 116. True 117. True 118. True 119. True 120. False 121. True 122. False 123. False 124. False 125. False 126. False 127. False Powered by Cognero

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Chapter 10 - Managing Human Resource Systems 128. False 129. True 130. True 131. True 132. True 133. False 134. True 135. True 136. False 137. False 138. False 139. False 140. False 141. True 142. False 143. False 144. True 145. True 146. According to federal employment law, employers may not discriminate in employment decisions on the

basis of gender, sexual orientation, age, religion, colour, national origin, race, or disability. The intent is to make these factors irrelevant in employment decisions. These laws govern the entire human resource management process, including selection decisions (i.e., hiring and promotion), as well as all training and development activities, performance appraisals, terminations, and compensation decisions.

147. Recruiting is the process of developing a pool of qualified job applicants. The first step in recruiting is to

conduct a job analysis to collect information about the important work-related aspects of the job. The job analysis is then used to write a job description of basic tasks, duties, and responsibilities and to write job specifications indicating the knowledge, skills, and abilities needed to perform the job. Job analyses, descriptions, and specifications help companies meet the legal requirement that their human resource decisions be job-related.

148. Sexual harassment occurs when employment outcomes, such as hiring, promotion, or simply keeping one’s Powered by Cognero

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job, depend on whether an individual submits to being sexually harassed. By contrast, a hostile work environment occurs when unwelcome and demeaning sexually related behaviour creates an intimidating, hostile, and offensive work environment.

149. Recruiting is the process of finding qualified job applicants. Internal recruiting, or finding qualified job

applicants from inside the company, can be done through job posting and career paths. External recruiting, or finding qualified job applicants from outside the company, is done through advertising, employee referrals, walk-ins, outside organizations, employment services, special events, and Internet job sites.

150. Selection is the process of gathering information about job applicants to decide who should be offered a

job. The common selection procedures used by companies are (1) application forms and résumés, (2) references and background checks, (3) selection tests, and (4) interviews. Selection tests generally do the best job of predicting applicants’ future job performance.

151. In job interviews, company representatives ask job applicants job-related questions to determine whether

they are qualified for the job. There are several basic kinds of interviews: unstructured, structured, and semistructured. In unstructured interviews, interviewers are free to ask applicants anything they want, and studies show that they do. By contrast, with structured interviews, standardized interview questions are prepared ahead of time, so that all applicants are asked the same job-related questions. Semistructured interviews lie somewhere in between structured and unstructured interviews, with as much as 80 percent of the interview based upon structured questions and the remaining time left unstructured. Of these three types of interviews, structured interviews work best, because they ensure that all applicants are consistently asked the same situational, behavioural, background, or job-knowledge questions, making it easier to compare applicants.

152. Some of the problems associated with appraisals can be avoided by (1) accurately measuring job

performance, and (2) effectively sharing performance feedback with employees. Managers are prone to three kinds of rating errors: central tendency, halo, and leniency error, which pose a challenge to the accurate measurement of job performance. One way to minimize rating errors is to use better appraisal measures, such as objective measures of performance or behavioural observation scales. Another method is to directly train performance raters to minimize errors and more accurately rate the important dimensions of job performance.

One way to overcome the inherent difficulties in performance appraisal feedback is to provide 360-degree feedback, in which feedback is obtained from four sources: the boss, subordinates, peers and coworkers, and the employees themselves. Feedback tends to be more credible if heard from several sources. Traditional performance appraisal feedback sessions can be improved by separating developmental and administrative feedback, by basing feedback discussions on employee self-appraisals, and especially for managers, by having people discuss the feedback they received with executive coaches or the people who provided it.

153. There are three basic kinds of compensation decisions: pay level, pay variability, and pay structure. Pay-

level decisions are decisions about whether to pay workers at a level that is below, above, or at current market wages. Pay variability decisions are decisions concerning the extent to which employees’ pay varies with individual and organizational performance. Pay structure decisions are concerned with internal pay distributions, meaning the extent to which people in the company receive different levels of pay.

154. Getting fired is a terrible thing, but many managers make it even worse by bungling the firing process,

needlessly provoking the people who were fired, and unintentionally inviting lawsuits. There are several things managers can do to minimize the problems inherent in firing employees. First, in most situations discharge should not be the first option. Instead, employees should be given a chance to change their behaviour. When problems arise, employees should have ample warning and must be specifically informed as to the nature and Powered by Cognero

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seriousness of the trouble they’re in. After being notified, they should be given sufficient time to change. If the problems continue, the employees should again be counselled about their job performance, about what could be done to improve their performance, and the possible consequences if things don’t change. Second, employees should be terminated only for “just cause.” That is, termination decisions should be made on the basis of jobrelated factors, such as violating company rules or giving consistently poor performance.

155. Human resource management is subject to the following major federal employment laws: Constitution Act

(BNA) of 1867, Canadian Charter of Rights and Freedoms, Canadian Human Rights Act, Canada Labour Code, employment equity and pay equity legislation, as well as the Workers Compensation Act (Manitoba). It is important to understand that these laws govern the entire human resource management process, including selection decisions (i.e., hiring and promotion), as well as all training and development activities, performance appraisals, terminations, and compensation decisions.

The general result of this body of law, which is still evolving through court decisions, is that employers may not discriminate in employment decisions on the basis of gender, sexual orientation, age, religion, colour, national origin, race, or disability. The intent is to make these factors irrelevant in employment decisions. Stated another way, employment decisions should be based on factors that are “job related,” “reasonably necessary,” or a “business necessity” for successful job performance. Section 15a of the Canadian Charter of Rights and Freedoms prohibits discrimination based on race, creed, colour, religion, gender, sexual orientation, and so on.

The only time that gender, age, religion, and so on can be used to make employment decisions is when they are considered a bona fide occupational qualification (BFOQ).

The Human Rights Commissions in each province and territory have been established under the Canadian Human Rights Act. They are responsible for enforcing the Canadian Human Rights Act. The Canadian Human Rights Commission provides guidelines and support to the various provincial agencies. The various Human Rights Commissions investigate and hold hearings on issues relating to complaints under the various labour acts.

156. Sexual harassment is a form of discrimination in which unwelcome sexual advances, requests for sexual

favours, or other verbal or physical conduct of a sexual nature occurs. Sexual harassment occurs when employment outcomes, such as hiring, promotion, or simply keeping one’s job, depend on whether an individual submits to being sexually harassed. By contrast, a hostile work environment occurs when unwelcome and demeaning sexually related behaviour creates an intimidating, hostile, and offensive work environment.

To make sure that sexual harassment laws are followed, companies should (1) respond immediately when harassment is reported, (2) review existing policies and ensure they are up to date, clear, and understandable, (3) establish clear reporting procedures that indicate how, where, and to whom incidents of harassment can be reported, and (4) be aware that most provinces and many municipalities have their own employment-related laws and enforcement agencies.

Student examples of potential harassment will typically cover the gamut from mild to extreme. Better answers will specify one of the two legal definitions of harassment for the situation, and will clearly articulate steps from the recommended list that could have been taken to avert or resolve the situation more effectively.

157. Selection is the process of gathering information about job applicants to decide who should be offered a

job. The common selection procedures used by companies are (1) application forms and résumés, (2) references and background checks, (3) selection tests, and (4) interviews.

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Application forms and résumés are the most common selection devices. Unfortunately, because as many as onethird of job applicants falsify information on résumés, these procedures can sometimes be of little value when making hiring decisions. References and background checks can also be problematic, given that previous employers are reluctant to provide such information for fear of being sued for defamation. Selection tests generally do the best job of predicting applicants’ future job performance. In general, cognitive ability tests, work sample tests, biographical data, and assessment centres are the most valid tests, followed by personality tests and specific ability tests, which are still good predictors. Selection tests aren’t perfect predictors of job performance, but almost nothing predicts future job performance as well as selection tests. The three kinds of job interviews are unstructured, structured, and semi-structured interviews. Of these, structured interviews work best because they ensure that all applicants are consistently asked the same situational, behavioural, background, or job-knowledge questions.

158. A performance appraisal describes the process of assessing how well employees are doing at their jobs.

Performance appraisals are used for four broad purposes: making administrative decisions (e.g., pay increase, promotion, retention), providing feedback for employee development (e.g., performance, developing career plans), evaluating human resource programs (e.g., validating selection systems), and for documentation purposes (e.g., documenting performance ratings and decisions based on those ratings).

To minimize rating errors and improve the accuracy of job performance measures, two general approaches have been taken: improving performance appraisal measures themselves, and training performance raters to be more accurate. One way for companies to improve performance appraisals is to use as many objective performance measures as possible. Objective performance measures are measures of performance that are easily counted or quantified. But when objective measures aren’t available—and frequently they aren’t—subjective measures must be used instead. Subjective performance measures require that someone judge or assess a worker’s performance. The most common kind of subjective performance measure is the graphic rating scale (GRS). A popular alternative to graphic rating scales is the behavioural observation scale (BOS). A BOS requires raters to rate the frequency with which workers perform specific behaviours representative of the job dimensions that are critical to successful job performance. The second approach to improving the measurement of workers’ job performance is rater training, which trains performance appraisal raters in how to avoid rating errors and increase rating accuracy. Most effective in this regard is frame-of-reference training, in which a group of trainees learn how to conduct performance appraisals by watching a video of an employee at work. Next, they evaluate the performance of the person in the video. A trainer (i.e., subject matter expert) then shares their evaluations, and trainees’ evaluations are compared with the expert’s. The expert then explains their evaluations. This process is repeated until the differences in evaluations by trainees and evaluations by the expert are minimized. The logic behind frame-of-reference training is that by adopting the frame of reference used by an expert, trainees will be able to accurately observe, judge, and use the scale to evaluate performance of others.

159. There are three basic kinds of compensation decisions: pay level, pay variability, and pay structure. Pay-

level decisions are decisions about whether to pay workers at a level that is below, above, or at current market wages. Some companies choose to pay above-average wages to attract and keep employees. Above-market wages can attract a larger, more qualified pool of job applicants, increase the rate of job acceptance, decrease the time it takes to fill positions, and increase how long employees stay. Pay variability decisions are decisions concerning the extent to which employees’ pay varies with individual and organizational performance. Linking pay to organizational performance is intended to increase employee motivation, effort, and job performance.

Piecework, sales commission, profit sharing, employee stock ownership plans, and stock options are common pay variability options. Pay structure decisions are concerned with internal pay distributions, meaning the Powered by Cognero

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extent to which people in the company receive very different levels of pay. With hierarchical pay structures, there are big differences from one pay level to another. By contrast, with compressed pay structures, there are typically fewer pay levels and smaller differences in pay between pay levels. Pay is less dispersed and more similar across jobs in the company.

As stated in the text, companies use job evaluation to set their pay structures. Job evaluation determines the worth of each job by determining the market value of the knowledge, skills, and requirements needed to perform it. After conducting a job evaluation, most companies try to pay the “going rate,” meaning the current market wage. Thus, as explained in the text, job evaluation is clearly related to pay-level decisions in this context. However, students who are thinking critically will realize that job evaluation is also used for pay structure decisions, which are concerned with internal pay distributions, or the extent to which people in the company receive very different levels of pay. Depending upon where a job is evaluated in comparison to all other jobs in the company, it will tend to be paid more or less (in addition to the preceding decision regarding market value).

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Chapter 11 - Managing Individuals and a Diverse Workforce

Indicate the answer choice that best completes the statement or answers the question.

1. What is the best way to describe diversity? a. Diversity exists in all organizations. b. Diversity exists only where there is affirmative action. c. Diversity exists when it is federally mandated. d. Diversity exists when there are a variety of demographic, cultural, and personal differences among

employees and customers.

2. Xerox Research Institute of Canada, in Mississauga, Ontario, has nearly 150 employees from 30 different countries.

What does this workplace illustrate? a. acculturation b. diversity c. affirmative action d. cultural organization 3. In addition to their employees, where else must organizations have variety in order to achieve diversity? a. in regulatory agencies’ inspectors b. in their customers c. in their external environments d. in their shareholders/investors 4. TD Financial Group supports its internal Women in Leadership Network, Pride at Work, and the Canadian Council for Aboriginal Business, among other organizations. What does TD’s support for these different organizations indicate that TD maintains a strong belief in? a. affirmative action b. diversity c. proactive segmentation d. multiculturalism 5. There is a common misconception that diversity and which of the following are the same? a. cultural advantage b. affirmative differentiation c. employment equity d. acculturation 6. Which of the following is a difference between diversity and employment equity? a. diversity focuses more narrowly on demographics b. employment equity is a process for actively creating diversity; however, diversity can exist even if

organizations don't take purposeful steps to create it c. there is no federal or provincial legislation to oversee employment equity, unlike diversity d. the general purpose of employment equity programs is to create a positive work environment; however, this is not the goal for diversity programs Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce 7. What is the term for the purposeful steps taken by an organization to create employment opportunities for minorities and women? a. discretionary diversity b. affirmative action c. organizational plurality d. cultural proaction 8. What is the fastest-growing population group in Canada? a. Japanese Canadians b. South Asian Canadians c. Chinese Canadians d. Americans 9. Which of the following is a punitive approach aimed at organizations that have not achieved specific gender

and race ratios in their workforces? a. employment equity b. affirmative action c. diversity d. surface-level action 10. Which of the following is NOT a purpose of employment equity? a. to encourage the establishment of working conditions free from barriers b. to seek to correct conditions of disadvantage in employment c. to promote the principle that special measures are not required to accommodate differences of

designated groups d. to protect white, non-Hispanic Americans 11. At events hosted by St. Francis Xavier University it is common to “acknowledge that we are in Mi’kma’ki, the ancestral and unceded territory of the Mi’kmaq People.” Which of the following has most likely influenced St. Francis Xavier to be culturally sensitive? a. affirmative action b. diversity c. proactive segmentation d. multiculturalism 12. What is the general purpose of diversity programs? a. to create a positive work environment b. to implement a market growth strategy c. to avoid internal recruiting d. to supplement hiring benchmarks 13. Which action can a medium-sized manufacturing company take if it wants to create a positive work environment in which every employee does his or her best work, and individual differences are respected and not ignored? a. It can remove the glass ceiling.

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Chapter 11 - Managing Individuals and a Diverse Workforce b. It can use internal loci of control. c. It can create a diversity program. d. It can narrow the span of management.

14. Which of the following is an ongoing planning process used by an employer to eliminate barriers in an

organization's employment procedures and to ensure appropriate representation of specific members of the workforce? a. affirmative action programs b. diversity programs c. code of ethics d. employment equity 15. Which program seeks to benefit both organizations and their employees by encouraging organizations to value all kinds of differences in their workforces? a. self-monitoring b. Charter of Rights and Freedoms c. ombudsperson d. diversity 16. Which of the following helps companies with cost savings by reducing turnover and decreasing

absenteeism? a. diversity b. good compensation plans c. employee morale programs d. decentralization 17. Why does diversity make good business sense? a. Diversity increases an organization’s retained earnings. b. Diversity helps companies attract and retain talented employees. c. Diversity makes individuals whole by returning them to the condition or place they would have been had it not been for discrimination. d. Diversity allows a company to act with economic responsibility.

18. Many managers and workers use dimensions of which of the following to form initial impressions and

categorizations of coworkers, supervisors, customers, or job applicants? a. visible diversity b. apparent diversity c. surface-level diversity d. deep-level diversity 19. What is the relationship between governments and diversity in the Canadian workplace? a. The provincial and federal government oversee diversity. b. The municipal and provincial governments oversee diversity. c. Neither the municipal nor the provincial governments oversee diversity.

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Chapter 11 - Managing Individuals and a Diverse Workforce d. Neither the provincial nor the federal governments oversee diversity.

20. While not always immediately known, sexual orientation and gender identity (often referred to as

LGBTQIA, meaning lesbian, gay, bisexual, transgender, queer and/or questioning, intersex, asexual and/or ally) may also be a form of which of the following? a. affirmative reaction b. discrimination c. deep-level diversity d. surface-level diversity 21. McKinsey & Company, a global consultancy firm, draws its consultants from more than 40 countries. A benefit of its global hiring is that it raises cultural sensitivity. “There’s an obligation to see things from other points of view,” says one McKinsey partner. In other words, in which way does global hiring benefit McKinsey & Company? a. It creates discrimination benchmarks. b. It improves the quality of problem solving. c. It eliminates glass ceilings. d. It requires the centralization of all marketing and human resource activities.

22. Long-time CTV news anchor Lisa LaFlamme was suddenly dismissed from her position at the television

network. She cited she was “blindsided” by the decision and her firing sparked significant controversy online, with many speculating that her age played a factor into the network's decision. What would this be referred to as? a. glass ceiling b. ageism c. affirmative action d. harassment 23. Which of the following occurs when an experienced worker is trained by a younger mentor? a. the bottom-up approach b. ageism c. reverse mentoring d. opposite mentoring 24. How does diversity help companies to grow? a. by creating discrimination benchmarks b. by improving the quality of problem solving c. by undoing targeting mistakes d. by requiring the centralization of all marketing and human resource activities 25. Sex discrimination and racial/ethnic discrimination are often associated with an invisible barrier that

prevents women and minorities from advancing to the top jobs in organizations. What is this invisible barrier referred to as? a. the infinite ceiling b. the glass wall Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce c. the glass ceiling d. the invisible ceiling 26. Which of the following consists of differences communicated through verbal and nonverbal behaviours, such as personality and attitudes that are learned only through extended interaction with others? a. organizational plurality b. behavioural diversity c. surface-level diversity d. deep-level diversity 27. What is the term for the degree to which group members are psychologically attracted to working with one another to accomplish a common objective? a. social integration b. norm cohesiveness c. social cohesiveness d. integrative focus 28. With surface-level diversity, differences are immediately observable, easy to measure, and which of the following? a. a negative way of bundling employees b. typically unchangeable c. culturally specific d. irrelevant to work behaviour 29. A Canadian firm discovered that some of its team members felt their personal space was being invaded by some of its Brazilian and Egyptian nationals, who were comfortable with more intimate ideas of personal space. Which of the following does the discovery pertain to? a. organizational plurality b. behavioural diversity c. surface-level diversity d. deep-level diversity 30. The government of Newfoundland and Labrador has an initiative in place to target workers between ages 55 and 64 to ensure their skills are meeting the emerging needs of provincial employers. Which kind of surface-level diversity is the provincial government hoping to achieve? a. age b. attitudinal c. belief d. ethnic 31. Due to a significant economic downturn in Western Canada during the 1980s and early 1990s, many employers discovered that their employee composition resembled a “two-humped camel.” Their workers were either over 50 or under 30, because firms had done little hiring during that time frame. What was needed to get these two groups to respect each other’s work abilities? a. discrimination heterogeneity b. social integration Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce c. organizational plurality d. acculturation 32. When Suzanne Pogell wanted to learn to sail, she could find no one to teach her because men were the ones who sailed, and women were their crew. She finally did convince someone to teach her to sail, and after mastering sailing, she started an all-woman sailing school, called Womanship, as a sole proprietorship. What were the male sailors who would not teach Pogell focusing on? a. organizational plurality b. behavioural diversity c. surface-level diversity d. deep-level diversity 33. Recently, the cable television networks have bombarded viewers with a variety of shows based on teams coming in to redecorate homes and gardens in a short time frame. These teams are typically made up of men and women of different ethnic backgrounds, ages, and physical capabilities. What is the term for the way they work so well with one another to accomplish the redecorating goal? a. discrimination heterogeneity b. social integration c. organizational plurality d. acculturation 34. Why would some companies prefer older workers over younger workers if older workers cost more? a. Younger workers today have very little promise of developing the required skills. b. Even though older workers have higher levels of absenteeism, they work more efficiently than younger workers. c. The older workers may exercise poor judgment but they are more loyal than younger workers. d. Older workers can cost companies less than younger workers by showing better judgment, caring about the quality of work, and being less likely to quit, come in late, or miss work.

35. What can companies do to achieve gender equality in hiring? a. They can limit skills and knowledge testing. b. They can increase the number of prerequisites listed in a job posting. c. They can use a diverse interview panel. d. They can use unstructured interviews.

36. Which of the following is the glass ceiling most closely associated with? a. cultural diversity b. participative management, delegation, and autonomy c. sex, racial, and ethnic discrimination d. broad spans of management, decentralization, and flat organizational structures 37. When Suzanne Pogell wanted to learn to sail, she could find no one to teach her because men were the ones who sailed, and women were their crew. She finally did convince someone to teach her to sail, and after mastering sailing, she started an all-woman sailing school, called Womanship, as a sole proprietorship. By creating her own business, Pogell overcame a type of problem while creating a different version of the same problem. What type of problem was it?

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Chapter 11 - Managing Individuals and a Diverse Workforce a. disability discrimination b. external locus of control c. age discrimination d. sex discrimination 38. What does the Mining Association of British Columbia’s hiring of Karina Briño as its president show that the organization avoids, thereby allowing women to rise to leadership positions? a. an organizational roadblock b. a diversity bottleneck c. a missing key d. a glass ceiling 39. Which barrier prevents women and minorities from advancing to the top jobs in organizations? a. organizational roadblock b. diversity bottleneck c. missing key d. glass ceiling 40. When Betsey Bernard became president of AT&T, she credited her rise to top management to her mother, who showed her that a woman could work and have a family, and to Eunice Assani, a woman who indoctrinated Bernard with a love of continuous development. What role was played by both Bernard’s mother and Assani? a. mentor b. benchmark c. glass shatterer d. gender analyst 41. Which action should a company take in order to ensure that women have the same opportunities for development and advancement as men? a. It should use only unstructured interviews during the hiring process. b. It should use passive change agents. c. It should change the organization’s mission statement. d. It should develop mentoring programs.

42. Which of the following might account for the disparities between the percentages of Canadian visible minorities in the general population and their smaller representation in management positions? a. federal government diversity regulations b. racial or ethnic discrimination in the workplace c. watchdog advocacy groups d. parliamentary lobbying 43. To address racism and racial injustice in an organization, companies should do which of the following? a. They should eliminate selection and promotion criteria. b. They should establish programs to foster career growth and development for racially diverse

employees. c. They should use autonomous hiring programs.

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Chapter 11 - Managing Individuals and a Diverse Workforce d. They should use a discrimination ombudsman.

44. Which bill added gender identity and expression to the list of prohibited grounds of discrimination in the

Canadian Human Rights Act? a. Bill G-16 b. Bill C-19 c. Bill C-16 d. Bill C-20 45. Which of the following is something a company can do to make sure LGBTQ individuals have the same

opportunities as others? a. create reverse mentoring programs b. abolish the glass ceiling c. connect LGBTQ employees to mentors and create employee resource groups d. not ask individuals to identify their sexual orientation or gender identity 46. What should organizations do to make sure that people with disabilities have the same opportunities as everyone else? a. Organizations should make only desk jobs available for employees with disabilities. b. Organizations should commit to reasonable workplace accommodations. c. Organizations should actively avoid recruiting workers with disabilities. d. Organizations should not acknowledge the disabilities that employees may have.

47. Finnish-based Assa Abloy is the world’s biggest manufacturer of locks. It makes both Yale and Chubb brand locks. It has become a part of a national program in which employers are encouraging workers to continue working as long as they are physically able. To help its aging workers, the lock maker has provided them with magnifying lenses that give them the vision acuity they need to work on the small parts within a lock. What are these lenses an example of? a. a workplace accommodation b. job enrichment c. management reciprocity d. task re-engineering 48. Changing work schedules, reassigning jobs, and acquiring or modifying equipment are all examples of

which of the following? a. workplace accommodations b. disability supports c. disability accommodations d. workplace crutches 49. Jean-Marie has excellent keyboarding skills and works entering data for a marketing research firm. Jean-Marie is also vision impaired. In order to perform his job, Jean-Marie needs a computer monitor that produces oversized print so he can read it. What is the providing of the monitor to facilitate Jean-Marie’s job performance an example of? a. a workplace accommodation b. job enrichment c. management reciprocity Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce d. task re-engineering 50. What is the term for an individual’s tendency to respond to situations and events in a predetermined manner? a. disposition b. personality c. motivation d. locus of control 51. What is the term for the relatively stable set of behaviours, attitudes, and emotions displayed over time that makes people different from one another? a. disposition b. personality c. motivation d. self-concept 52. Teresa is the publicity manager at a large charity organization. She is very outgoing and mingles well in fundraising events. She loves being around people as she finds interaction with others really energizes her. Which Big Five Personality Dimension does Teresa exhibit? a. emotional stability b. extraversion c. agreeableness d. openness to experience 53. Howard, the president of a dynamic technology company, wishes to promote a relatively new executive, Patricia, to become the company’s vice president. In crisis situations, Patricia remains calm and makes others around her maintain control to overcome whatever problem they are facing. Which Big Five Personality Dimension does Patricia exhibit? a. extraversion b. conscientiousness c. emotional stability d. openness to experience 54. What is the term for the degree to which someone is cooperative, polite, flexible, forgiving, good-natured, tolerant, and trusting? a. conscientiousness b. emotional stability c. agreeableness d. locus of control 55. What is the term for the degree to which someone is organized, hardworking, responsible, persevering, thorough, and achievement-oriented? a. conscientiousness b. agreeableness c. emotional stability d. locus of control

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Chapter 11 - Managing Individuals and a Diverse Workforce 56. For which of the following positions would the hiring organization be most likely to require someone who has a high degree of emotional stability? a. car mechanic b. landscape designer c. 911 operator d. electrician 57. What does it mean to be conscientious with respect to the Big Five Personality Dimensions? a. the degree to which someone is organized, hardworking, responsible, and achievement-oriented b. the degree to which someone is curious and broad-minded c. the degree to which someone is active and gregarious d. the degree to which someone is cooperative, flexible, good-natured, tolerant, and trusting 58. Which Big Five dimension allows people to respond well under stress? a. conscientiousness b. openness to experience c. agreeableness d. emotional stability 59. An Ontario-based family restaurant plans on opening a catering business as a way to grow its business in the Frenchspeaking areas of the country. Which dimension of personality would employees need in this situation? a. empathy b. credibility c. openness to experience d. extraversion 60. Which of the following jobs would most likely require someone who has a high degree of extraversion? a. wholesale plant nursery operator b. salesperson c. market researcher d. bookkeeper 61. A leading executive search firm suggests that successful CEOs tend to rely less on expertise than on curiosity. What do these CEOs have a high degree of in terms of the Big Five Personality Dimensions? a. openness to experience b. conscientiousness c. agreeableness d. extraversion 62. Which Big Five personality measure has the greatest impact on behaviour in organizations? a. conscientiousness b. agreeableness c. emotional stability d. extraversion Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce 63. Which of the following paradigms has the primary benefit of generally bringing about equal treatment of employees and increasing demographic diversity? a. the discrimination and fairness paradigm b. the access and legitimacy paradigm c. the learning and effectiveness paradigm d. the personal and integration paradigm 64. What is the most commonly used paradigm for managing diversity? a. the discrimination and fairness paradigm b. the access and legitimacy paradigm c. the learning and effectiveness paradigm d. the personal and integration paradigm 65. Which of the following is a paradigm for managing diversity? a. the paradigm of organizational diversity b. the accessibility paradigm c. the learning and effectiveness paradigm d. the affirmative action paradigm 66. Which of the following paradigms for managing diversity is similar to the business growth advantage of diversity? a. the discrimination and fairness paradigm b. the access and legitimacy paradigm c. the learning and effectiveness paradigm d. the personal and integration paradigm 67. Prime Minister Justin Trudeau adopted the motto “Diversity is Canada’s strength.” He suggested that

“Canada has succeeded—culturally, politically, [and] economically—because of our diversity.” Which paradigm for managing diversity does the Trudeau government most likely support? a. the discrimination and fairness paradigm b. the access and legitimacy paradigm c. the learning and effectiveness paradigm d. the cultural and stereotype paradigm 68. Consider a work environment where (1) each member is empowered to contribute in a way that maximizes the benefits to the organization, customers, and self, and (2) the individuality of each member is respected by not segmenting or polarizing people on the basis of their membership in a particular group. What is the term to describe this work environment? a. organizational plurality b. deep-level diversity c. positive affectivity d. social integration 69. Toronto Metropolitan University has numerous programs in support of diversity, including programs in

lesbian and gay history, programs for internationally trained physicians, and the Viola Desmond Awards for Black women. The purpose of its diversity program is to integrate deep-level differences into the university Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce

culture. Which paradigm does Toronto Metropolitan University use? a. learning and effectiveness b. reward and equality c. access and legitimacy d. equality and support 70. Which paradigm for managing diversity not only takes into account surface-level diversity but also focuses on integrating deep-level diversity differences, such as personality, attitudes, beliefs, and values, into the work of the organization? a. the discrimination and fairness paradigm b. the access and legitimacy paradigm c. the learning and effectiveness paradigm d. the cultural and stereotype paradigm 71. Which of the following is organizational plurality consistent with? a. the commonality and integration paradigm b. the determination and fairness paradigm c. the learning and effectiveness paradigm d. the access and legitimacy paradigm 72. Which of the following is an example of a diversity principle that will help managers do a better job of managing company diversity programs? a. Ignore group differences. b. Set realistic goals so all employees are motivated to work their hardest. c. Tailor opportunities to groups, not individuals. d. Strengthen leadership accountability and capability for diversity.

73. What are the two basic types of diversity training programs? a. mentoring and role playing b. organizational plurality and individual autonomy c. role playing and computer simulation d. awareness training and skills-based training 74. Toronto Metropolitan University offers workshops on equity, diversion, and inclusion with an emphasis on

interactive conversations. Which basic type of diversity training does Toronto Metropolitan University use? a. diversity audits b. awareness training c. skills-based diversity training d. diversity mentoring 75. A recent news article in an Alberta newspaper highlighted the fact that Alberta’s government-appointed boards were not ethnically and gender diverse. Which of the following sources of information did the newspaper rely upon? a. a diversity comparison b. a diversity audit c. an employee-oriented attitudinal review Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce d. an individual SWOT analysis 76. What is the term for a formal assessment that measures employee and management attitudes, investigates the extent to which people are advantaged or disadvantaged with respect to hiring and promotions, and reviews companies’ diversityrelated policies and procedures? a. diversity comparison b. diversity audit c. employee-oriented attitudinal review d. individual SWOT analysis 77. In the nursing home industry, there is a growing pool of older workers who on their own may not be capable of performing physically demanding, labour-intensive work. By matching two younger workers with an older one, more job opportunities for older workers are created. Furthermore, this pairing could be a significant advantage in nursing homes where an older worker may have more sensitivity to aging problems. What is this type of mentoring called? a. awareness training b. coaching c. diversity pairing d. social integration 78. Malcolm will be working in the China division for his company. To prepare him for the different cultural experience, Malcolm is working with Ming, a Chinese Canadian immigrant, for the next several weeks. What is this an example of? a. diversity pairing b. diversity audits c. awareness training d. role playing 79. Which of the following actions best represents the principle of enabling equality of opportunity through

fairness and transparency? a. promoting flexible work options b. training and developing a diverse staff c. allowing job candidates to demonstrate job qualifications beyond traditional experiences d. using software tools to limit bias in recruitment efforts 80. Companies use all EXCEPT which of the following for training top executives to better manage diversity? a. diversity audits b. plurality experiences c. diversity pairing d. minority experiences 81. Narrative 11-1 Unilever has operations in 150 countries. Recently, Unilever took 100 of these top managers on a jungle retreat to Costa Rica. To the dismay of Unilever’s chair, no women were in the group. Upon investigation, he learned that only one woman had even been invited. As the retreat progressed, its participants commented on the richness of diversity in nature and how for anything to grow, there needs to be diversity. These comments caused Unilever’s chair to establish an executive committee to examine practical ways to overcome barriers to women’s promotion. They decided to avoid setting numerical targets because they encourage positive discrimination and instead examined recruitment and promotion Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce practices.

Refer to Narrative 11-1. Why is Unilever’s initiative an example of a diversity program? a. It is a punitive approach to employee relations. b. It is done voluntarily. c. It has been dictated by affirmative action legislation. d. It is designed to compensate for past discrimination.

82. Narrative 11-1 Unilever has operations in 150 countries. Recently, Unilever took 100 of these top managers on a jungle retreat to Costa Rica. To the dismay of Unilever’s chair, no women were in the group. Upon investigation, he learned that only one woman had even been invited. As the retreat progressed, its participants commented on the richness of diversity in nature and how for anything to grow, there needs to be diversity. These comments caused Unilever’s chair to establish an executive committee to examine practical ways to overcome barriers to women’s promotion. They decided to avoid setting numerical targets because they encourage positive discrimination and instead examined recruitment and promotion practices.

Refer to Narrative 11-1. What are the potential benefits of this diversity program? a. growth in domestic sales b. the improvement in supplier relationships c. increased independent work d. the ability to attract and retain a better workforce 83. Narrative 11-1 Unilever has operations in 150 countries. Recently, Unilever took 100 of these top managers on a jungle retreat to Costa Rica. To the dismay of Unilever’s chair, no women were in the group. Upon investigation, he learned that only one woman had even been invited. As the retreat progressed, its participants commented on the richness of diversity in nature and how for anything to grow, there needs to be diversity. These comments caused Unilever’s chair to establish an executive committee to examine practical ways to overcome barriers to women’s promotion. They decided to avoid setting numerical targets because they encourage positive discrimination and instead examined recruitment and promotion practices.

Refer to Narrative 11-1. Which type of diversity did the retreat in Costa Rica reveal a need to be concerned about? a. surface-level b. affirmative action c. peripheral d. discriminatory 84. Narrative 11-1 Unilever has operations in 150 countries. Recently, Unilever took 100 of these top managers on a jungle retreat to Costa Rica. To the dismay of Unilever’s chair, no women were in the group. Upon investigation, he learned that only one woman had even been invited. As the retreat progressed, its participants commented on the richness of diversity in nature and how for anything to grow, there needs to be diversity. These comments caused Unilever’s chair to establish an executive committee to examine practical ways to overcome barriers to women’s promotion. They decided to avoid setting numerical targets because they encourage positive discrimination and instead examined recruitment and promotion practices.

Refer to Narrative 11-1. After studying the problem, the executive committee discovered that the company recruited the same number of men and women, but women were not being promoted to the top management positions. Which of the following probably existed?

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Chapter 11 - Managing Individuals and a Diverse Workforce a. an executive box b. an impervious chain of management c. a missing ladder rung d. a glass ceiling 85. Narrative 11-1 Unilever has operations in 150 countries. Recently, Unilever took 100 of these top managers on a jungle retreat to Costa Rica. To the dismay of Unilever’s chair, no women were in the group. Upon investigation, he learned that only one woman had even been invited. As the retreat progressed, its participants commented on the richness of diversity in nature and how for anything to grow, there needs to be diversity. These comments caused Unilever’s chair to establish an executive committee to examine practical ways to overcome barriers to women’s promotion. They decided to avoid setting numerical targets because they encourage positive discrimination and instead examined recruitment and promotion practices.

Refer to Narrative 11-1. Which paradigm was Unilever managing diversity through by encouraging the promotion of more women to top management positions to better match the diversity of its stakeholders? a. equity and legitimacy b. access and fairness c. equity and fairness d. access and legitimacy 86. Narrative 11-1 Unilever has operations in 150 countries. Recently, Unilever took 100 of these top managers on a jungle retreat to Costa Rica. To the dismay of Unilever’s chair, no women were in the group. Upon investigation, he learned that only one woman had even been invited. As the retreat progressed, its participants commented on the richness of diversity in nature and how for anything to grow, there needs to be diversity. These comments caused Unilever’s chair to establish an executive committee to examine practical ways to overcome barriers to women’s promotion. They decided to avoid setting numerical targets because they encourage positive discrimination and instead examined recruitment and promotion practices.

Refer to Narrative 11-1. Which paradigm would Unilever need to use to focus on deep-level diversity? a. equity and legitimacy b. access and fairness c. equity and fairness d. learning and effectiveness 87. Narrative 11-2 Women working in certain occupational groups at Canada Post were systematically underpaid for nearly 20 years, according to a Supreme Court of Canada ruling in 2011. Women tended to work in clerical roles, whereas men tended to work in postal operations roles (letter carriers, mail handlers, and mail sorters). The Public Service Alliance of Canada argued that the principle of equal pay for equal work wasn’t being followed. Canada Post has implemented a Human Resources and Compensation Committee to ensure it complies fully with its myriad accountabilities. Unfortunately, it’s not clear that Canada Post has addressed all the inequities within its organization, as another pay equity review, this time involving rural and urban carriers, has launched.

Refer to Narrative 11-2. If Canada Post sought to hire women into postal operations roles in proportion to their representation in the applicant pool, what is the relevant concept at play? a. employment equity Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce b. access and legitimacy paradigm c. glass ceiling d. learning and effectiveness paradigm 88. Narrative 11-2 Women working in certain occupational groups at Canada Post were systematically underpaid for nearly 20 years, according to a Supreme Court of Canada ruling in 2011. Women tended to work in clerical roles, whereas men tended to work in postal operations roles (letter carriers, mail handlers, and mail sorters). The Public Service Alliance of Canada argued that the principle of equal pay for equal work wasn’t being followed. Canada Post has implemented a Human Resources and Compensation Committee to ensure it complies fully with its myriad accountabilities. Unfortunately, it’s not clear that Canada Post has addressed all the inequities within its organization, as another pay equity review, this time involving rural and urban carriers, has launched.

Refer to Narrative 11-2. About 80 percent of Canada Post’s postal operations workforce is male—and these are often higher-paid roles. Additionally, the postal operations workforce provides a more direct route to supervisory and managerial roles within Canada Post. What does this indicate Canada Post may have had? a. an organizational roadblock b. a diversity bottleneck c. a missing key d. a glass ceiling 89. Narrative 11-2 Women working in certain occupational groups at Canada Post were systematically underpaid for nearly 20 years, according to a Supreme Court of Canada ruling in 2011. Women tended to work in clerical roles, whereas men tended to work in postal operations roles (letter carriers, mail handlers, and mail sorters). The Public Service Alliance of Canada argued that the principle of equal pay for equal work wasn’t being followed. Canada Post has implemented a Human Resources and Compensation Committee to ensure it complies fully with its myriad accountabilities. Unfortunately, it’s not clear that Canada Post has addressed all the inequities within its organization, as another pay equity review, this time involving rural and urban carriers, has launched.

Refer to Narrative 11-2. Which of the following will be implemented with the addition of the Human Resources and Compensation Committee? a. a discrimination and fairness paradigm b. an access and legitimacy paradigm c. a learning and effectiveness paradigm d. a cultural stereotype paradigm 90. Narrative 11-2 Women working in certain occupational groups at Canada Post were systematically underpaid for nearly 20 years, according to a Supreme Court of Canada ruling in 2011. Women tended to work in clerical roles, whereas men tended to work in postal operations roles (letter carriers, mail handlers, and mail sorters). The Public Service Alliance of Canada argued that the principle of equal pay for equal work wasn’t being followed. Canada Post has implemented a Human Resources and Compensation Committee to ensure it complies fully with its myriad accountabilities. Unfortunately, it’s not clear that Canada Post has addressed all the inequities within its organization, as another pay equity review, this time involving rural and urban carriers, has launched.

Refer to Narrative 11-2. Based on the fact that Canada Post has had continued complaints about pay inequity, what does this suggest about its chosen diversity paradigm?

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Chapter 11 - Managing Individuals and a Diverse Workforce a. It applies the discrimination and fairness paradigm. b. It applies the access and legitimacy paradigm. c. It applies the learning and effectiveness paradigm. d. It has achieved organizational plurality.

Indicate whether the statement is true or false.

91. The fastest-growing racial group in Canada is South Asian. a. True b. False 92. Diversity exists in organizations when there are a variety of demographic, cultural, and personal differences only among the customers who do business there. a. True b. False 93. The purpose of employment equity is to achieve equality in the workplace so that no person shall be denied employment opportunities. a. True b. False 94. Diversity is required by law for all private employers. a. True b. False 95. Employment equity and affirmative action are not only fundamentally different, but they also differ in purpose, practice, and the reactions they produce. a. True b. False 96. Diversity helps companies to save money by reducing turnover and decreasing absenteeism. a. True b. False 97. Affirmative action makes good business sense in terms of cost savings, the ability to attract and retain talent, and business growth. a. True b. False 98. Surface-level diversity refers to differences such as age, gender, race/ethnicity, and physical disabilities that are observable, typically unchangeable, and easy to measure. a. True b. False 99. Research has shown that performance capabilities decline with age. a. True Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce b. False 100. The glass ceiling is the so-called invisible barrier that prevents women and minorities from advancing to the top jobs in organizations. a. True b. False 101. Mentoring programs in companies generally do not help women to advance in their careers. a. True b. False 102. Persons with disabilities continue to face challenges with employment in terms of finding work, seeking

workplace accommodations, and advancing in their careers. a. True b. False 103. There has been little direct evidence of racial or ethnic discrimination in the workplace in recent years. a. True b. False 104. A person with a disability is defined as a person with an activity limitation or participation restriction

associated with a physical or mental condition or health problem. a. True b. False 105. Studies show that as long as companies make reasonable accommodations for disabilities, people with

disabilities perform their jobs just as well, have better safety records, and are not any more likely to be absent or quit their jobs. a. True b. False 106. The Big Five dimensions of personality are autonomy, manipulation, empathy, locus of control, and

affectivity. a. True b. False 107. If managed properly, the shift from surface- to deep-level diversity can result in reduced prejudice and conflict, and lead to stronger social integration. a. True b. False 108. Conscientiousness is the degree to which someone is cooperative, polite, flexible, forgiving, good-natured, tolerant, and trusting. a. True b. False Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce 109. The primary benefit of the discrimination and fairness paradigm is that it generally brings about fairer

treatment of employees and increases diversity. a. True b. False 110. The three different methods or paradigms for managing diversity are the discrimination and fairness paradigm, the access and legitimacy paradigm, and the learning and effectiveness paradigm. a. True b. False 111. The learning and effectiveness paradigm for managing diversity focuses on the acceptance and celebration of differences, so that the diversity within the company matches the diversity found among primary stakeholders, such as customers, suppliers, and local communities. a. True b. False 112. Among the paradigms for managing diversity, only the learning and effectiveness paradigm focuses on integrating deep-level diversity differences in addition to dealing with surface-level diversity. a. True b. False 113. The first benefit of the learning and effectiveness diversity paradigm is that it values common ground. a. True b. False 114. The two basic types of diversity training are cultural training and attitude-based diversity training. a. True b. False 115. Activity-based diversity training teaches employees the practical skills they need for managing a diverse workforce, such as flexibility and adaptability, negotiation, problem solving, and conflict resolution. a. True b. False 116. All organizations are required to submit employment equity statistics annually to the federal government. a. True b. False 117. In diversity pairing, people of different ages, cultural backgrounds, sexes, or ethnicities are paired for

mentoring. a. True b. False 118. Equity, diversity, and inclusion (EDI) efforts have become an urgent priority among Canadian employers. a. True b. False Powered by Cognero

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119. What is diversity? Briefly explain why it is an important issue for contemporary business.

120. What is employment equity and how does it fundamentally differ from diversity?

121. Why does diversity make good business sense?

122. How is surface-level diversity different from deep-level diversity?

123. List and briefly describe the four types of discrimination commonly associated with surface-level diversity. Which of those typically produce the so-called glass ceiling?

124. What is the definition of a person with a disability? How does a disability result in disability

discrimination? Give examples of actions employers can take to avoid such discrimination.

125. List the Big Five Personality Dimensions. How does an understanding of these dimensions benefit managers?

126. What is organizational plurality? Define the paradigm for managing diversity with which it is associated.

127. Briefly identify and provide an example of the likely content for each of the two basic types of diversity training programs.

128. Compare employment equity in Canada and affirmative action in the United States. Explain why affirmative action and employment equity tend to create more controversy than diversity. Explain which approach you personally feel is fairer, and why.

129. List and describe the five diversity principles, or action areas for managing diversity. Provide examples for

each.

130. Differentiate between sexual orientation and gender identity discrimination and comment on the

pervasiveness of both in the workplace. Give an example of one situation that you are acquainted with that could be construed as an example of sexual orientation or gender identity discrimination. What can companies do to make sure LGBTQ individuals have the same opportunities as others?

131. Differentiate between surface-level diversity and deep-level diversity, and describe the extent to which different required government and voluntary company programs might address diversity management in each of these areas.

132. What are the Big Five Personality Dimensions? Explain the significance of the Big Five Personality Dimensions.

Specify how one of more of those dimensions might be used to select or place applicants for employment in a particular job or company.

133. Identify the three different methods or paradigms for managing diversity. Specify which level of diversity each paradigm focuses on. Explain which approach you personally believe will make the greatest contribution to helping Canadian companies manage diversity more effectively in the future.

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Chapter 11 - Managing Individuals and a Diverse Workforce Answer Key 1. d 2. b 3. b 4. b 5. c 6. b 7. b 8. b 9. b 10. d 11. b 12. a 13. c 14. d 15. d 16. a 17. b 18. c 19. d 20. d 21. b 22. b 23. c 24. b 25. c Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce 26. d 27. a 28. b 29. d 30. a 31. b 32. c 33. b 34. d 35. c 36. c 37. d 38. d 39. d 40. a 41. d 42. b 43. b 44. c 45. c 46. b 47. a 48. a 49. a 50. a 51. b Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce 52. b 53. c 54. c 55. a 56. c 57. a 58. d 59. c 60. b 61. a 62. a 63. a 64. a 65. c 66. b 67. b 68. a 69. a 70. c 71. c 72. d 73. d 74. b 75. b 76. b Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce 77. c 78. a 79. d 80. b 81. b 82. d 83. a 84. d 85. d 86. d 87. a 88. d 89. a 90. a 91. True 92. False 93. True 94. False 95. True 96. True 97. False 98. True 99. False 100. True 101. False 102. True Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce 103. False 104. True 105. True 106. False 107. True 108. False 109. True 110. True 111. False 112. True 113. True 114. False 115. False 116. False 117. True 118. True 119. Diversity means variety. Therefore, diversity exists in organizations when there are a variety of demographic, cultural, and personal differences among the people who work there and the customers who do business there. Diversity is an important issue for contemporary business because of the changing composition of the Canadian population. Exhibit 11.1 shows the percentage of visible minority groups in Canada. Most notably, South Asians will increase by the highest percentage. The workforce of the future will be older and more Asian. Since similar changes will, by definition, be occurring among Canadian consumers, companies need to learn to manage diversity both to manage their workforces more effectively and to maintain their competitive advantage among an increasingly diverse customer base.

120. Employment equity is a planning process for achieving equality in all aspects of employment for four designated groups in Canada: women, Aboriginal peoples, persons with disabilities, and members of visible minorities. In contrast, diversity exists in organizations where a variety of demographic, cultural, and personal differences exist among the people who work there and the customers who do business there. Employment equity focuses more narrowly on demographics (gender, race, physical disabilities), whereas diversity more broadly includes demographic as well as cultural and personal differences.

121. Diversity makes good business sense in at least three ways. First, it can provide significant cost savings (by reducing turnover, decreasing absenteeism, and avoiding lawsuits). Second, since diversity begets more diversity, it can be particularly helpful in attracting and retaining talented workers, who often prefer to work for companies that treat their Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce employees well. Finally, diversity can help to drive business growth and stimulate innovation by (1) improving marketplace understanding regarding the needs of companies’ increasingly diverse customer bases and (2) enhancing the quality of problem solving that occurs among their more diverse groups of employees.

122. The dimension by which surface-level diversity can be differentiated from deep-level diversity is direct observability.

Surface-level diversity is defined as differences such as age, gender, race/ethnicity, and physical disabilities that are observable, typically unchangeable, and easy to measure. On the other hand, deep-level diversity refers to differences communicated through verbal and nonverbal behaviours, such personality and attitudes, that are learned only through extended interaction with others—that is, they are neither readily nor directly observable in a brief period of time. Thus, the factor that differentiates between surface-level diversity and deep-level diversity is the extent to which the differences can be obviously determined and agreed upon by different observers in a brief period of interaction.

123. Age, sex, sexual orientation and gender identity, race or ethnicity, and mental or physical abilities can all

impact surface-level diversity in an organization. Age discrimination means treating people differently (e.g., in hiring and firing, promotion, and compensation decisions) because of their age. Sex discrimination means treating people differently because of their sex. Sexual orientation discrimination means treating people differently based on their sexual orientation. Gender identity discrimination occurs when people are treated differently because of their gender identity. Racial and ethnic discrimination means treating people differently because of their race or ethnicity. A disability is a mental or physical impairment that substantially limits one or more major life activities. Disability discrimination thus means treating people differently because of their disabilities. The glass ceiling refers to the so-called invisible barrier that prevents women and minorities from advancing to the top jobs in organizations. As such, it is typically associated with sex and race/ethnicity discrimination as opposed to age or disability discrimination.

124. A disability is a mental or physical impairment that substantially limits one or more major life activities.

Disability discrimination means treating people differently because of their disabilities. What can companies do to make sure that people with disabilities have the same opportunities as everyone else? Beyond educational efforts to address incorrect stereotypes and expectations, a good place to start is to make a commitment to reasonable workplace accommodations, such as changing work schedules, reassigning jobs, acquiring or modifying equipment, or providing assistance when needed. Companies should also actively recruit qualified workers with disabilities.

125. In the last decade, personality research conducted in different cultures, different settings, and different languages indicated that there are five basic dimensions of personality that account for most of the differences in peoples’ behaviours, attitudes, and emotions. These dimensions also predict several different aspects of behaviour related to work performance. The Big Five Personality Dimensions are extraversion, emotional stability, agreeableness, conscientiousness, and openness to experience.

126. Organizational plurality is a work environment where (1) each member is empowered to contribute in a way that maximizes the benefits to the organization, customers, and themselves, and (2) the individuality of each member is respected by not segmenting or polarizing people on the basis of their membership in a particular group. It is associated with the learning and effectiveness paradigm, which focuses on integrating deep-level diversity differences such as personality, attitudes, beliefs, and values into the actual work of the organization.

127. There are two basic types of diversity training programs. Awareness training is designed to raise

employees’ awareness of diversity issues, such as the dimensions of gender and race/ethnicity, and to get employees to challenge underlying assumptions or stereotypes they may have about others. Calgary-based energy company Suncor developed an Aboriginal awareness training program for its employees to help raise awareness about the history, experiences, and cultures of Indigenous Peoples in Canada. By contrast, skillsPowered by Cognero

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based diversity training teaches employees the practical skills they need for managing a diverse workforce, such as flexibility and adaptability, negotiation, problem solving, and conflict resolution. Sun Life Canada introduced an app-based diversity and inclusion tool to help the company achieve its diversity goals, including having women in 50 percent of VP-level positions and above globally, and underrepresented minorities in 25 percent of VP-level roles and above in North America by 2025. The tool offers Sun Life employees a series of learning experiences including articles, YouTube videos, and quizzes, followed by post-learning group discussions.

128. The distinction between employment equity in Canada and affirmative action in the United States is as

follows. Affirmative action refers to the purposeful steps taken by an organization to create employment opportunities for women and minorities; it includes programs that compensate for past discrimination, which was widespread before affirmative action legislation was passed. Affirmative action is required by law for private employers with 50 or more employees, and organizations that fail to uphold these laws may be required to hire, promote, or give back pay to those not hired or promoted; reinstate those who were wrongly terminated; pay legal fees and court costs for those who bring charges against them; and/or take other actions that make individuals whole by returning them to the condition or place they would have been had it not been for discrimination. Thus, affirmative action is basically a punitive approach aimed at organizations that have not achieved specific gender and race ratios in their workforces.

In Canada, the term employment equity was introduced when the Employment Equity Act first passed in 1984 to describe a planning process for achieving equality in all aspects of employment for four designated groups in Canada: women, Indigenous Peoples, persons with disabilities, and members of visible minorities. The Employment Equity Act was proactive in nature in that the intent was to prevent discrimination and attempt to address systemic issues.

Despite the overall success of affirmative action and employment equity in making workplaces much fairer than they used to be, some argue that these programs only establish surface-level diversity and give unfair and unconstitutional preferential treatment to women and minorities at the expense of other employees, a view accepted by some courts in the US. Diversity exists in organizations where a variety of demographic, cultural, and personal differences exist among the people who work there and the customers who do business there. Employment equity is a process for actively creating diversity; however, diversity can exist even if organizations don’t take purposeful steps to create it.

Students’ evaluations of whether employment equity or affirmative action is fairer could be strongly argued in either direction, depending upon the clarification provided for their definitions of the terms. That is, both affirmative action and diversity programs, in real-life practice, tend to differ substantially from textbook definitions. In general, the better student answers will clarify the assumptions and terminology employed, and will make clear arguments based on the impact of these programs on a wider sphere of individuals beyond themselves (or, in the context of previous chapter material, demonstrate a higher level of moral reasoning).

129. The five action areas for managing diversity include: (1) ensure the representation of diverse talent, (2)

strengthen leadership accountability and capability for diversity, (3) enable equality of opportunity through fairness and transparency, (4) promote openness and tackle discrimination, and (5) foster belonging through support for diversity. Each is explained in more detail below, with examples (students may provide their own, similar examples for each).

(1) Advancing the diversity of executive and management roles is an essential driver of diversity and inclusion and can help to fix the “broken rungs” of the corporate ladder that may exist. To do so, organizations will want Powered by Cognero

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to incorporate diversity into human resource planning to help ensure hiring and career advancements are fair.

This may include reaching beyond traditional recruiting channels and qualifications to help in accessing diverse talent. Further, companies may want to set targets for diverse representation, integrating a strategic workforce planning approach to long-term plans.

(2) Not only should companies hold their leadership team to account for advancing diversity initiatives within the organization, but they should also look for managers to be role models and exhibit inclusive leadership behaviour. This could include advocating for inclusion and diversity on their teams, promoting flexible work options, and conscious inclusion of diverse team members.

(3) Companies should focus on ensuring that a level playing field exists with respect to hiring as well as advancement and career opportunities. For some companies, that could mean using software tools to limit bias in recruitment efforts, offering mentorship programs, and access to leadership training.

(4) Companies praised for their diversity efforts uphold a zero-tolerance policy for discriminatory behaviour such as bullying or harassment, and they work toward identifying and addressing microaggressions through awareness training. Programs like these can help promote openness among diverse employees and contribute to a more positive corporate culture by shifting attitudes and behaviours.

(5) The goal is to create a culture where employees feel that they can bring their full selves to work and contribute their unique talents, and that their talents are valued by their managers and the wider organization.

Managers can help support this action by communicating their commitment to diversity and supporting employee resource groups to help foster a sense of community and belonging 130. Sexual orientation indicates an individual’s attraction to people of the same and/or different sex.

Sexual orientation discrimination occurs when people are treated differently because of their sexual orientation. Gender identity discrimination occurs when people are treated differently because of their gender identity. Through Bill C-16, gender identity and expression were added to the list of prohibited grounds of discrimination in the CHRA. Research conducted by the Canadian Centre for Diversity and Inclusion found that 30 percent of LGBTQ employees in Canada reported having experienced discrimination in the workplace (compared to only 3 percent of non-LGBTQ employees). A Canadian study found that 57 percent of respondents said they are not fully out at work and 22 percent are worried about a hostile work environment; 15 percent worry about losing out on career opportunities, and 10 percent are worried about their personal safety.

Companies can start by including sexual orientation and gender identity in non-discrimination and equal opportunity policies. Organizations can reduce the isolation that LGBTQ employees often feel at work by connecting LGBTQ employees to mentors and creating employee resource groups where LGBTQ employees can learn from and support each other. Most organizations are unable to track whether LGBTQ employees are treated fairly because they don’t ask employees about LGBTQ status. Companies can fix this by giving LGBTQ employees the opportunity to confidentially identify their sexual orientation or gender identity as part of the normal gathering of demographic information.

131. Surface-level diversity is what most managers mean when they refer to diversity. It consists of differences that are immediately observable, typically unchangeable, and easy to measure, such as race/ethnicity, culture, gender, national origin, age, religion, regional origin, and mental or physical disabilities. This is the level of diversity that affirmative action and other government anti-discrimination programs are directed at. Since independent observers can usually agree Powered by Cognero

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Chapter 11 - Managing Individuals and a Diverse Workforce on the dimensions of surface-level diversity, they are quite conducive to the types of legal evaluation and monitoring required by law and governmental regulation. Thus, employment equity and anti-discrimination programs can be helpful for the management of surface-level diversity.

Deep-level diversity consists of differences communicated through verbal and nonverbal behaviours that are learned only through extended interaction with others. Examples of deep-level diversity include personality differences, attitudes, beliefs, and values. As people in diverse workplaces get to know one another, the initial focus on surface-level differences such as age, race/ethnicity, gender, and physical capabilities is replaced by deeper, more accurate knowledge of coworkers.

If managed properly, the shift from surface- to deep-level diversity can accomplish two things. First, coming to know and understand each other better can result in reduced prejudice and conflict. Second, it can lead to stronger social integration.

Social integration is the degree to which group members are psychologically attracted to working with one another to accomplish a common objective, or “working together to get the job done.” Government programs typically do not address this second level of diversity. However, properly managed, innovative company programs developed voluntarily in order to use diversity to gain a competitive advantage can work very effectively to manage deep-level diversity to the benefit of the company.

132. For years, personality researchers studied thousands of different ways to describe people’s personalities.

However, in the last decade, personality research conducted in different cultures, different settings, and different languages indicated that there are five basic dimensions of personality that account for most of the differences in peoples’ behaviours, attitudes, and emotions. The significance of this discovery is that it provides a reliable, valid, generally accepted approach to personality traits for use in making employment decisions. In particular, research on these dimensions has shown them to have a significant impact on various components of work behaviour. The Big Five Personality Dimensions are extroversion, emotional stability, agreeableness, conscientiousness, and openness to experience. These different dimensions are differentially related to work behaviour and should be taken into account when selecting employees and placing them in jobs in order to maximize the probability of employee satisfaction and good performance.

Extroversion is the degree to which someone is active, assertive, gregarious, sociable, talkative, and energized by others. In contrast to extroverts, introverts are less active, prefer to be alone, and are shy, quiet, and reserved.

For the best results in the workplace, introverts and extroverts should be correctly matched to their jobs.

Extroversion is related to performance in jobs that require significant interaction with others. Emotional stability is the degree to which someone is not angry, depressed, anxious, emotional, insecure, and excitable.

People who are emotionally stable respond well to stress, while emotionally unstable people become distraught, tearful, self-doubting, and anxious. Emotional stability is particularly important for high-stress jobs, such as police work, firefighting, emergency medical treatment, or piloting planes. Agreeableness is the degree to which someone is cooperative, polite, flexible, forgiving, good-natured, tolerant, and trusting. Basically, agreeable people are easy to work with and be around, while disagreeable people are distrusting and difficult to work with and be around. Quite logically, a number of companies have made general attitude or agreeableness the most important factor in their hiring decisions. Conscientiousness is the degree to which someone is organized, hardworking, responsible, persevering, thorough, and achievement oriented. Conscientiousness is perhaps the most important factor of the Big Five to select job applicants for, because conscientious workers tend to be higher performers on virtually any job. Openness to experience is the degree to which someone is curious, broadminded, and open to new ideas, things, and experiences; is spontaneous; and has a high tolerance for ambiguity.

Most companies need people with personalities both strong and weak in terms of openness to experience.

People in marketing, advertising, research, or other creative jobs need to be curious, open to new ideas, and spontaneous. By contrast, openness to experience is not particularly important to accountants, who need to consistently apply stringent rules and formulas to make sense out of complex financial information.

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Chapter 11 - Managing Individuals and a Diverse Workforce 133. There are several different methods or paradigms for managing diversity: the discrimination and fairness paradigm, the access and legitimacy paradigm, and the learning and effectiveness paradigm. The discrimination and fairness paradigm, which is the most common method of approaching diversity, focuses on equal opportunity, fair treatment, recruitment of minorities, and strict compliance with the equal employment opportunity laws. In this case, the focus of diversity is only on the surface-level diversity dimensions of gender, race, and ethnicity. The access and legitimacy paradigm focuses on the acceptance and celebration of differences, so that the diversity within the company matches the diversity found among primary stakeholders, such as customers, suppliers, and local communities. The primary benefit of this approach is that it establishes a clear business reason for diversity—that is, facilitating business growth by paralleling population diversity in order to gain access to differentiated market segments. However, like the discrimination and fairness paradigm, it does no more than focus on the surface-level diversity dimensions of gender, race, and ethnicity.

Furthermore, employees who are assigned responsibility for customers and stakeholders on the basis of their gender, race, or ethnicity may eventually feel frustrated and exploited. Only the learning and effectiveness paradigm focuses on integrating deep-level diversity differences such as personality, attitudes, beliefs, and values into the actual work of the organization. Under this approach, people are valued not only on the basis of surface-level diversity (e.g., gender and race/ethnicity), but also for all of their knowledge, skills, abilities, and experiences.

Many students will cite the learning and effectiveness paradigm as the one most likely to make the greatest contribution to helping Canadian companies manage diversity more effectively in the future, because of its four clear benefits over the other two approaches in benefiting not only the company, but individual persons (as opposed to broad categories of people in what might be perceived as unfair advantage). More specifically, the benefits of the learning and effectiveness approach are as follows: (1) it values common ground and lets the organization internalize differences among employees so that it learns and grows because of them; (2) it makes a distinction between individual and group differences, and thus promotes a better understanding of diversity and an organization’s people by treating them as individuals and realizing that not all members of a particular group want the same things at work; (3) because the focus is on individual differences, the learning and effectiveness paradigm is less likely to encounter the conflict, backlash, and divisiveness sometimes associated with diversity programs that focus just on group differences; and finally, (4) unlike the other diversity paradigms that simply focus on the value of being different (primarily in terms of surface-level diversity), there is a focus on bringing different talents and perspectives together (i.e., deep-level diversity) to make the best organizational decisions and to produce innovative, competitive products and services.

Some students might identify either of the other two paradigms as potentially most beneficial. Depending upon the rationale provided, this could be done quite legitimately. For example, one might argue that the discrimination and fairness paradigm, with its emphasis on legal compliance and resulting enhancement of fair treatment and demographic diversity, should be considered the potentially greatest contributor since it provides relatively easy-to-follow steps to ensure a minimal level of effective diversity management that can be used in small businesses, where most people are employed anyway. Another perspective would be that the access and legitimacy paradigm is most likely to be institutionalized within company culture and lead to long-term effects, since it is tied to bottom-line success in the marketplace. Answers should be evaluated based upon the appropriateness of the assumptions made and the logic of the realistic benefits argued to be accrued in the future.

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Chapter 12 - Motivation

Indicate the answer choice that best completes the statement or answers the question.

1. According to the text, what is the set of forces that initiates, directs, and makes people persist in their efforts to accomplish a goal? a. attitude b. self-management c. persistence d. motivation 2. Which of the following is composed of the initiation of effort, direction of effort, and persistence of effort? a. compliance b. self-management c. motivation d. performance 3. Initiation, direction, and persistence are at the heart of motivation and lead to which of the following? a. leadership skill b. creativity c. performance d. valence 4. What type of function is job performance with respect to motivation, ability, and situational constraints? a. circular b. multiplicative c. nonlinear d. additive 5. Asa and Ruby both sell insurance. Asa is married, has three children, and a new house. Ruby is single and has recently purchased a new Lexus. According to the text, which statement about needs should be correct? a. Asa and Ruby will be motivated by the same needs. b. Asa can be motivated through need, and Ruby cannot. c. Ruby has no needs. d. Asa and Ruby are motivated by unmet needs.

6. A sales manager has carefully selected the members of two sales teams, team A and team B, so that they have almost identical skills and abilities. Both are assigned potential customers in the same industry. Both groups are offered the same rewards. Team A consistently performs better than team B. What does this tell you about performance and motivation according to the text? a. The level of ability has no impact on performance. b. Team B can be more motivated than Team A but perform at a lower level. c. Team A has higher motivation than Team B and therefore performs better. d. Team A has the same level of motivation as Team B but still performs better.

7. Which of the following would a glass of water and shelter from a snowstorm be? a. intangible motivators Powered by Cognero

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Chapter 12 - Motivation b. perceptional drives c. motivational cues d. lower-order needs 8. What are the three needs identified in McClelland’s Learned Needs Theory? a. achievement, relatedness, and growth b. existence, relatedness, and growth c. affiliation, growth, and power d. power, achievement, and affiliation 9. What are the two basic needs categories, on the basis of research evidence? a. tangible and intangible needs b. physiological and psychological needs c. higher-order and lower-order needs d. extrinsic and intrinsic needs 10. Curtis Savage is the co-founder of a small Alberta-based chain of retail stores called Evoolution. The chain targets “foodies” and carries eclectic lines of olive oils, balsamic vinegars, and other complementary products. Savage would like to expand Evoolution. According to McClelland’s Learned Needs Theory, what does Savage have a need for? a. achievement b. esteem c. growth d. self-actualization 11. According to Alderfer’s ERG Theory, what is the lowest-order need? a. existence b. relatedness c. physiological need d. ego-related need 12. Stephen has a young family and is happy to have a stable job. However, he finds that his pay is not keeping up with increasing expenses at home. There does not seem to be opportunities for him to earn more. What will the inability to cover expenses create in Stephen? a. tension b. high levels of creativity c. sacrificing acquisition d. problem-solving efficiency 13. Marketers often appeal to consumers’ needs as defined by Maslow’s hierarchy. Schlage, a lock manufacturer, shows how much protection its locks provide. Clorox developed several types of wipes to eliminate concerns about infectious germs. Which of Maslow’s needs are both marketers appealing to? a. achievement b. belongingness c. safety d. physiological needs Powered by Cognero

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Chapter 12 - Motivation 14. Candice is surprised that her production team is not performing at a higher level. While the company imposed a pay freeze, Candice thought that creating some additional social events would result in higher output. What does this reveal about needs? a. In all situations, higher-order order needs can be used to motivate. b. The importance of lower-order needs is identified by all needs theories. c. The relative importance of the various needs may change over time in a predictable pattern. d. Higher-order needs will generally not motivate people as long as lower-order needs remain 15. A group of actors gather to read the critical reviews of the new play they presented to audiences last night. Which type of reward are the actors looking for? a. extrinsic b. psychological c. assigned d. intangible 16. A law firm in Montreal, Delegatus Legal Services, ensures all its team members, regardless of their education, are treated equally. This helps the firm recruit talent that might not otherwise seek them out. Which type of reward is Delegatus using? a. extrinsic b. physiological c. assigned d. intrinsic 17. Which of the following is an example of extrinsic rewards? a. intangible rewards b. bonuses, trophies, and plaques c. a sense of accomplishment at the conclusion of a difficult assignment d. rewards associated with performing a task for its own sake 18. Which of the following is an example of an extrinsic reward? a. a sense of achievement b. a feeling of responsibility c. a salary increase d. pride from accomplishing a difficult task 19. Which rewards are associated with performing a task or activity for its own sake? a. extrinsic rewards b. intrinsic rewards c. motivational rewards d. physiological rewards 20. Which of the following is an example of an intrinsic reward? a. a bonus b. a contest prize Powered by Cognero

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Chapter 12 - Motivation c. a sense of achievement d. a trophy 21. What can managers do to motivate employees to increase their efforts? a. They can rely on the innate value of extrinsic rewards. b. They can satisfy higher-order needs first. c. They can learn what employees’ unmet needs are and address them. d. They can expect employees’ needs to remain stable.

22. What practical steps can a manager take to motivate employees to increase their efforts? a. Determine how other companies within the industry are satisfying employees’ needs. b. Satisfy employees’ lower-order needs before attempting to satisfy higher-order needs. c. Expect employees’ needs to be stable. d. Gradually replace extrinsic rewards with intrinsic rewards that are less expensive.

23. Which of the following tenets says people will be motivated when they perceive they are being treated fairly? a. expectancy theory b. Maslow’s Hierarchy of Needs c. equity theory d. Alderfer’s ERG Theory 24. Which of the following is a basic component of equity theory? a. valences b. reinforcement c. referents d. instrumentality 25. In equity theory, what is the term for others with whom people compare themselves to determine whether they have been treated fairly? a. liaisons b. valence bearers c. mentors d. referents 26. What are the two basic kinds of inequity? a. performance and situational inequities b. under-reward and over-reward c. balanced and unbalanced rewards d. intrinsic and extrinsic inequities 27. In equity theory, employees first make an internal comparison in which they compare their outcomes to their inputs; they then make another comparison in which they compare their O/I ratio with the O/I ratio of a referent. Which kind of comparison is this? a. intangible b. higher level Powered by Cognero

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Chapter 12 - Motivation c. unpredictable d. external 28. According to equity theory, which of the following conditions can anger or frustrate employees if they perceive it? a. over-reward b. under-reward c. adverse instrumentality d. negative reinforcement 29. Which type of inequity occurs more frequently in theory than in practice? a. over-reward b. under-reward c. negative expectancy d. negative valence 30. According to the motivational model presented in the text, which of the following does perceived inequity directly affect? a. cultural synergy b. autonomy c. satisfaction d. rewards 31. Which statement describes one reaction of employees to try to restore equity when they perceive that they have been treated unfairly? a. They work harder due to feelings of guilt. b. They become more cooperative with fellow workers. c. They simply quit their jobs. d. They increase the level of energy and time they input into a project.

32. By which of the following means could workers restore equity, if they feel underpaid, by creating a union at their place of employment to attain higher wages? a. reducing inputs b. increasing outcomes c. changing the referent d. rationalizing inputs or outcomes 33. In some countries Olympic athletes are paid up to $25,000 for each gold medal, $15,000 for a silver medal, and $10,000 for a bronze medal. Since 1960, the Paralympics for athletes with a disability has been a part of the Olympic Games, yet often these athletes are paid 10 percent of what the Olympic athletes are paid, and Paralympic athletes are not allowed to participate in opening ceremonies. Paralympic athletes are angry at being treated unfairly. To achieve perceived equity, the Paralympic athletes are suing for fair treatment. By which means have Paralympic athletes decided to deal with inequity? a. rationalizing inputs b. changing the referent c. changing instrumentality Powered by Cognero

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Chapter 12 - Motivation d. increasing outcomes 34. Which of the following may an employee do when he or she uses leaving as a mechanism for restoring equity? a. The employee may work harder in an attempt to receive a promotion. b. The employee may become more cooperative with fellow workers. c. The employee may increase the number of monthly absences. d. The employee may become more productive.

35. Ford Kinzi is a truck driver for a furniture manufacturer. He has tried every technique he can think of to convince his boss that he deserves a raise. His boss has not responded to changes in inputs and outcomes. Kinzi has also tried to find a different referent and has tried rationalization. Which action should Kinzi take if he feels the company will never pay him what he deserves? a. He should use job enrichment. b. He should increase the job valence. c. He should leave the job. d. He should create intermittent outcome changes.

36. In equity theory, what is the term for the fairness of the process used to make reward allocation decisions? a. process objectivity b. procedural justice c. conventional wisdom d. altruism 37. What is the term for the perceived degree to which outcomes and rewards are fairly allocated? a. procedural justice b. distributive justice c. equity d. postconventional perception 38. What is often the first and only strategy that companies are willing to use to restore equity? a. increasing outcomes b. reducing inputs c. changing the referent d. encouraging rationalization 39. Which theory states that people will be motivated to the extent to which they believe that their efforts will lead to good performance, that good performance will be rewarded, and that they are offered attractive rewards? a. reinforcement theory b. equity theory c. expectancy theory d. goal-setting theory 40. Some countries pay their Olympic athletes up to $25,000 for each gold medal, $15,000 for a silver medal, and $10,000 for a bronze medal. Since 1960, the Paralympics for athletes with a disability has been an integral part of the Olympic Games, yet these athletes receive only 10 percent of what the Olympic athletes are paid, and Paralympic athletes are not Powered by Cognero

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Chapter 12 - Motivation allowed to participate in opening ceremonies. What will the athletes’ degree of motivation be to win a Paralympics medal if they believe their efforts will NOT be fairly rewarded? a. low valence b. strong expectancy c. weak expectancy d. high valence 41. According to a survey done on teaching evaluations, engineering students consider the improvement of teaching to be the most important outcome of the evaluation process. What is the degree of motivation to fill out a teaching evaluation form if the engineering students believe their efforts will lead to better teaching? a. low valence b. weak expectancy c. high expectancy d. high valence 42. The town of Lunenburg, Nova Scotia, has been designated a UNESCO World Heritage Site because it’s perhaps the best surviving example of a British colonial settlement in North America. Imagine that the provincial government is instituting a marketing campaign to motivate tourists to spend their vacation dollars in Lunenburg. What is the degree of motivation the preservation of the colonial settlement will have in attracting tourists who want to learn more about their heritage? a. low valence b. strong expectancy c. low performance value d. high valence 43. According to expectancy theory, which of the following affects the conscious choices that people make about their motivation? a. equity, value-added, and instrumentality b. valence, expectancy, and instrumentality c. expectancy, reinforcement, and instrumentality d. instrumentality, equity, and expectancy 44. According to expectancy theory, which of the following must be high in order for people to be highly motivated? a. value added b. reinforcement usage c. instrumentality d. equity 45. According to a survey done on teaching evaluations, students’ motivation to participate is significantly affected by their expectation that they will provide meaningful feedback. In other words, if they are going to expend the thought and effort to fill out evaluation forms, these questions apply: (1) Is the form designed to gather meaningful information? (2) Do the students have enough information to form a meaningful opinion about the instruction? What are these students concerned with? a. valence b. reciprocity c. expectancy Powered by Cognero

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Chapter 12 - Motivation d. instrumentality 46. According to a survey done on teaching evaluations, engineering students consider the improvement of teaching to be the most important outcome of the evaluation process. In terms of expectancy theory, what is the term for the likelihood that students feel their inputs on the evaluations will lead directly to improved instruction? a. valence b. reciprocity c. expectancy d. instrumentality 47. On the television series Lost, a group of survivors sincerely believed that if they built a raft, they could float on it out into a shipping lane and be rescued. In terms of expectancy theory, what was the raft builders’ mindset? a. low degree of instrumentality b. low valence c. potential for over-reward d. high level of expectancy 48. What is the term for the perceived relationship between effort and performance? a. valence b. equity c. expectancy d. synergy 49. In expectancy theory, what is the term for the perceived relationship between performance and rewards? a. valence b. reciprocity c. expectancy d. instrumentality 50. How can managers use expectancy theory to motivate employees? a. They can assign specific, challenging goals. b. They can make all rewards equal in value. c. They can avoid over-reward and under-reward. d. They can gather information to find out what employees want from their jobs.

51. According to reinforcement theory, what is behaviour a function of? a. its perception b. its environment c. its consequences d. conscious choices 52. What is the process of changing behaviour by changing the consequences that follow behaviour? a. consequential modification b. behavioural substantiation c. valence manipulation Powered by Cognero

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Chapter 12 - Motivation d. reinforcement 53. What is the term for the cause-and-effect relationships between the performance of specific behaviour and specific consequences? a. reinforcement temporality effects b. reinforcement contingencies c. reinforcement schedules d. consequences of reinforcement 54. What are the primary ways for creating reinforcement contingencies in organizations? a. extrinsic rewards and the schedules of reinforcement b. extrinsic and intrinsic rewards c. perceptions of equity and reward desirability d. situational motivators 55. What are the two parts of reinforcement? a. reinforcement temporality and reinforcement administration b. positive reinforcement and negative reinforcement c. continuous reinforcement and intermittent reinforcement d. reinforcement contingencies and schedules of reinforcement 56. The town of Lunenburg, Nova Scotia, has been designated a UNESCO World Heritage Site because it’s perhaps the best surviving example of a British colonial settlement in North America. Imagine that the provincial government is instituting a marketing campaign to motivate tourists to spend their vacation dollars in Lunenburg. Imagine if tourists visiting Lunenburg were motivated to never visit there again because they found all the buildings boarded up and rundown. What would occur in terms of reinforcement theory? a. instrumentality b. punishment c. goal acceptance d. contingency feedback 57. Which of the following is a type of reinforcement contingency? a. teamwork b. extinction c. under-reward d. over-reward 58. Driving in heavy traffic makes Hal anxious and sometimes angry. He leaves home earlier than usual one morning and doesn’t run into heavy traffic. He leaves home earlier again the next morning, and again he avoids heavy traffic. His behaviour of leaving home earlier is strengthened by the consequence of the avoidance of heavy traffic. What kind of reinforcement has occurred? a. negative reinforcement b. extinction c. punishment d. positive reinforcement Powered by Cognero

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Chapter 12 - Motivation 59. Which of the following strengthens behaviour—that is, increases its frequency? a. positive reinforcement b. negative reinforcement and extinction c. positive reinforcement and extinction d. negative reinforcement and punishment 60. Users of the RBC WestJet MasterCard earn money toward the purchase of WestJet services every time they use this credit card to make purchases. The earnings increase the more times the credit card is used. Which of the following are RBC and WestJet using? a. under-reward b. punishment c. positive reinforcement d. negative reinforcement 61. Which of the following is also called avoidance learning? a. positive reinforcement b. negative reinforcement c. punishment d. extinction 62. The reinforcement strategy in which a positive consequence is no longer allowed to follow a previously reinforced behaviour is referred to as which of the following? a. positive reinforcement b. negative reinforcement c. punishment d. extinction 63. Excessive speed is a major cause of road crashes in Saskatchewan. The Saskatchewan government started a pilot project using cameras to catch speeders, but it has access to only a limited number of cameras and there are many areas where speeding is a problem. Following a period where only warnings were issued, substantial fines are now being handed out to people who get caught speeding. According to reinforcement theory, what are Saskatchewan officials using to control speeding? a. avoidance learning b. expectancy modification c. negative reinforcement d. punishment 64. Workplace injuries cost billions every year. Safety needs to become a practice, not just a theory. The goal of developing safety consciousness within the workforce requires continuous reinforcement at every organizational level.

Which statement explains what this means? a. No consequences should be delivered until reinforcement can be handed out to everyone. b. A consequence must be delivered following every instance of behaviour. c. Consequences should be delivered following a variable reinforcement schedule. d. Consequences should be delivered following an average number of behaviours.

65. What is the term for the set of rules regarding reinforcement contingencies, such as which behaviours will be Powered by Cognero

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Chapter 12 - Motivation reinforced, which consequences will follow those behaviours, and the timeline by which those consequences will be delivered? a. contingency of reinforcement b. instrumentality of reinforcement c. schedule of reinforcement d. expectancy of reinforcement 66. British Columbia has a carbon tax on gasoline of 11.05 cents per litre, making its average price per litre of gasoline among the highest in the country. In terms of reinforcement theory, which kind of reinforcement schedule is being used? a. variable ratio b. fixed punishment c. continuous d. intermittent 67. A manufacturer of modular housing gives each employee a monthly $300 bonus if he or she is neither absent nor late to work for the entire month. There are no excused absences. What type of reinforcement occurs when a parent with a hospitalized child loses their bonus? a. negative reinforcement b. extinction c. punishment d. intermittent reinforcement 68. British Columbia has a carbon tax on gasoline of 11.05 cents per litre, making its average price per litre of gasoline among the highest in the country. In terms of reinforcement theory, what is the B.C. government trying to use to get people to change their gasoline usage habits? a. avoidance learning b. expectancy modification c. negative reinforcement d. punishment 69. The number of people who play high-stakes poker is increasing as a result of a number of cable television shows featuring professional poker players vying for $100,000 pots. In terms of reinforcement theory, which kind of reinforcement schedule motivates the behaviour of these card players? a. variable ratio b. fixed ratio c. fixed interval d. variable interval 70. Many restaurants review their employees’ wages on a quarterly basis, with nominal raises offered pending acceptable performance. Which kind of reinforcement schedule is being used? a. variable ratio b. fixed ratio c. fixed interval d. variable interval 71. Which of the following is a category of reinforcement schedules?

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Chapter 12 - Motivation a. instrumental b. contiguous c. variable interval d. adjacent 72. In which type of reinforcement schedule does a consequence follow every instance of a behaviour? a. continuous b. intermittent c. variable interval d. fixed ratio 73. In which type of reinforcement schedule do consequences follow a behaviour only after a certain amount of time has elapsed? a. fixed interval b. variable interval c. fixed ratio d. variable ratio 74. In which type of reinforcement schedule are consequences delivered after a specific number of behaviours? a. fixed interval b. continuous interval c. fixed ratio d. intermittent interval 75. In which type of reinforcement schedule do consequences follow a behaviour after different times, some shorter and some longer around a specified average time? a. fixed interval b. variable interval c. fixed ratio d. variable ratio 76. Which type of reinforcement schedule tends to produce weaker results than the other types of reinforcement schedules when it comes to reinforcing behaviour in organizational settings? a. continuous b. fixed ratio c. interval d. variable ratio 77. Recently, an ad agency manager noticed her employees have shown an unwillingness to work as a team. She decided to use reinforcement to encourage more team cohesiveness. Which of the following is the best advice on how to motivate her team with reinforcement theory? a. Avoid intermittent reinforcement scheduling. b. Administer punishment on an intermittent schedule. c. Choose a complicated reinforcement schedule so the employees will be surprised when rewarded. d. Don’t reinforce the wrong behaviours.

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Chapter 12 - Motivation 78. What should a manager do first when using reinforcement theory to motivate workers? a. Evaluate critical behaviour. b. Identify critical, observable performance-related behaviour. c. Analyze motivational cues. d. Measure the value of existing extrinsic and intrinsic rewards.

79. For punishment to work (i.e., to weaken the frequency of undesirable behaviours without creating a backlash), the punishment must be strong enough to stop the undesired behaviour. How must punishment be administered? a. subjectively b. physiologically c. objectively, impersonally, contingently, and quickly d. through need deprivation 80. Which reinforcement schedule may be the best choice for managers in terms of simplicity and effectiveness? a. continuous b. fixed ratio c. variable ratio d. fixed interval 81. Which of the following is a target, objective, or result that someone tries to accomplish? a. a vision b. a motivational drive c. a goal d. a mission 82. Which theory says that people will be motivated to the extent to which they accept specific, challenging objectives and receive feedback that indicates their progress toward goal achievement? a. equity theory b. goal-setting theory c. reward theory d. expectancy theory 83. The British Columbia government introduced a carbon tax in 2008, which was designed to reduce carbon emissions by 33 percent by 2020. The government implemented a price on fuels for both personal and corporate users. Which of the following defines what the government had in mind? a. mission b. motivational drive c. goal d. vision 84. What is the term for the extent to which people consciously understand and agree to goals? a. goal specificity b. goal difficulty c. goal acceptance Powered by Cognero

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Chapter 12 - Motivation d. goal congruity 85. Own the Podium, an organization devoted to supporting Canada’s Olympic and Paralympic athletes, set a goal for Canada to be a world leader in high-performance sport at the Olympic and Paralympic games. What does this goal lack? a. goal congruity b. goal specificity c. goal integrity d. goal acceptance 86. According to management expert Bill Roche, results from goal setting can virtually be guaranteed, but only if “you have first won the hearts and minds of your workers. When they are on board with the goal—they agree that it is important and can be done—you really will get dramatic improvement.” Which of the following is Roche describing? a. goal recognition b. goal congruity c. goal specificity d. goal acceptance 87. The goal of the Apollo moon flight was to put a man on the moon. According to Charles Garfield, who worked at NASA on the Apollo mission, the flight was off-course 90 percent of the time between the Earth and the moon. Which of the following did Apollo likely use to enable it to make rapid course corrections? a. performance feedback b. goal congruity c. goal specificity d. goal difficulty 88. Which of the following is a basic component of goal-setting theory? a. goal difficulty b. goal congruity c. goal specificity d. goal generality 89. What is the term for the extent to which goals are detailed, exact, and unambiguous? a. goal specificity b. goal difficulty c. goal acceptance d. goal clarity 90. Which idea is goal acceptance most similar to? a. goal congruity b. goal commitment c. goal valence d. goal expectancy 91. Which of the following must goals do for the goal-setting theory to work? a. Goals must focus employees’ attention on critical aspects of their jobs.

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Chapter 12 - Motivation b. Goals must create calm behaviour. c. Goals must create a relief between the current state and the desired state. d. Goals must be truly accepted by at least one worker.

92. Which of the following should managers who use goal-setting theory do to motivate employees? a. They should look for and correct obvious performance inequities. b. They should reduce employees’ inputs. c. They should make sure workers truly accept organizational goals. d. They should avoid the use of empowerment.

93. Which of the following must workers do to truly accept organizational goals? a. They must respond to an autocratic management style. b. They must trust management. c. They must not require any more training in order to achieve the goal. d. They must operate outside the organizational communication channel.

94. Rose is setting new and challenging targets for her sales group to achieve. When she presents these targets to the group, she will focus on showing them how they can be achieved and the added bonus from hitting these targets. She wants to leave the meeting knowing each member of the group will be dedicated to achieving these new targets. Which component of goal-setting theory is Rose focusing on? a. goal specificity b. goal difficulty c. goal acceptance d. goal feedback 95. When can feedback lead to stronger motivation and effort? a. when feedback supports a country club style of management, which offers freedom of action b. when feedback encourages employees to set higher, more difficult goals after the initial goals are accomplished c. when feedback allows managers to offer criticism without seeming to do so d. when feedback creates a direct relationship between goal congruity and higher-level needs 96. Dylan is working diligently to achieve the highest marks possible in his last year of high school. He is striving to be accepted into one of the top schools in Ontario that has a special program that combines business with science. What is the source of Dylan’s hard work? a. strategic planning b. tactical implementation c. motivation d. communications 97. Refer to Narrative 12-1. According to which of the following theories is the motivation for women athletes to perform at the top of their ability less than that for men? a. equity theory b. reinforcement theory c. goal-setting theory Powered by Cognero

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Chapter 12 - Motivation d. theory of procedural justice 98. Refer to Narrative 12-1. According to equity theory, what are media coverage, access, promotion, and institutional support for female athletes all examples of? a. referents b. valences c. expectancies d. outcomes 99. Refer to Narrative 12-1. According to equity theory, what do female athletes likely feel about the outcomes for male athletes? a. They likely feel male athletes are over-rewarded. b. They likely feel male athletes are intrinsically rewarded. c. They likely feel male athletes are under-rewarded. d. They likely feel male athletes are extrinsically rewarded.

100. Refer to Narrative 12-1. Which of the following terms is used to describe how female athletes view male athletes? a. valence bearers b. instrumental participants c. referents d. mentors 101. Refer to Narrative 12-1. Which kind of inequity are female athletes experiencing? a. adverse valence b. negative instrumentality c. under-reward d. negative outcome 102. Refer to Narrative 12-2. Which term is used to describe providing service discounts to employees? a. extrinsic reward b. absolute reinforcement c. valence motivator d. intrinsic reward 103. Refer to Narrative 12-2. According to which theory would employees at Bell likely believe they are being treated unfairly? a. expectancy theory b. trait theory c. goal-setting theory d. equity theory 104. Refer to Narrative 12-2. Apparently, discounted services appeal to the employees who receive them. Which of the following best describes these benefits? a. low instrumentality b. high valence Powered by Cognero

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Chapter 12 - Motivation c. high over-reward value d. low valence 105. Refer to Narrative 12-2. According to reinforcement theory, which of the following defines the practice of giving employee discounts? a. high instrumentality b. reinforcement on a variable ratio schedule c. positive reinforcement d. equitable reinforcement 106. Refer to Narrative 12-3. Paying high salaries and offering a generous benefits package indicate that Wegmans is using needs theory. Which needs are being satisfied? a. lower order b. psychological c. belonging d. growth 107. Refer to Narrative 12-3. Part-time workers at Wegmans such as cashiers and baggers, most of whom are high-school students, can earn a scholarship bonus (for good grades) of $6,000 over their four years of high school. Which type of reward are these bonuses examples of? a. extrinsic b. psychological c. assigned d. intrinsic 108. Refer to Narrative 12-3. Which of the following do Wegmans managers increase in their employees by the company investing so heavily in employee training and then empowering employees to make decisions? a. goal setting b. valence c. expectancy d. instrumentality 109. Refer to Narrative 12-3. Which of the following is Wegmans using by offering scholarship bonuses for part-time workers? a. over-rewarding b. positive reinforcement c. positive extinction d. under-rewarding 110. Refer to Narrative 12-3. The goal at Wegmans is to create “telepathic customer service.” Employees are allowed, even encouraged, to do anything they need to do to satisfy customers. Chefs at Wegmans have gone to customers’ homes to fix incorrect food orders. Which traits are these chefs exhibiting, in terms of goal-setting theory? a. goal recognition b. goal congruity c. goal specificity Powered by Cognero

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Chapter 12 - Motivation d. goal acceptance

Indicate whether the statement is true or false.

111. Motivation is the set of forces that initiates, directs, and makes people persist in their efforts to accomplish a goal. a. True b. False 112. According to the text, Performance = Motivation × Ability. a. True b. False 113. Job performance is an additive function of motivation, ability, and situational constraints. a. True b. False 114. Companies use extrinsic rewards to motivate people to perform four basic behaviours: join the organization, regularly attend their jobs, perform their jobs well, and stay with the organization. a. True b. False 115. Herzberg introduced the motivator–hygiene theory to differentiate between motivators (adequate working conditions, job security) and hygienes (growth and esteem needs). a. True b. False 116. When using equity theory to motivate employees, managers can reduce employees’ inputs. a. True b. False 117. Needs are defined in the text as the physical requirements that must be met to ensure survival. a. True b. False 118. The use of need satisfaction theories to determine what motivates employees is not a straightforward task because different theories have identified different needs categories. a. True b. False 119. According to McClelland’s Learned Needs Theory, people are motivated by a need for power, achievement, and affiliation. a. True b. False Powered by Cognero

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Chapter 12 - Motivation 120. Once lower-order needs are satisfied, it is difficult to predict which higher-order needs will motivate behaviour. a. True b. False 121. An intrinsic reward is a reward associated with performing a task or activity for its own sake. a. True b. False 122. In general, extrinsic rewards are more important to workers than intrinsic rewards. a. True b. False 123. The attractive power of pay and benefits as a reward to motivate workers is strong from recruitment to retirement and doesn’t decline over time. a. True b. False 124. According to equity theory, objective reality, rather than employee perceptions, determines employee motivation. a. True b. False 125. The basic components of equity theory are outcomes, instrumentality, and valence. a. True b. False 126. The two kinds of inequity are under-reward and over-reward. a. True b. False 127. Over-reward frequently causes inequity. a. True b. False 128. Rationalizing or distorting inputs or outcomes may be used when other ways to restore equity aren’t available. a. True b. False 129. Distributive justice refers to the perceived fairness of the process used to make reward allocation decisions. a. True b. False 130. Expectancy theory describes motivation as primarily an unconscious process. a. True b. False 131. According to expectancy theory, instrumentality is strong when employees believe that improved performance will Powered by Cognero

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Chapter 12 - Motivation lead to more and better rewards. a. True b. False 132. The four kinds of reinforcement contingencies are positive reinforcement, negative reinforcement, punishment, and extinction. a. True b. False 133. Both negative reinforcement and punishment weaken behaviour—that is, decrease its frequency. a. True b. False 134. Research shows that interval-based reinforcement schedules produce the best results. a. True b. False 135. Punishment is also called avoidance learning. a. True b. False 136. For punishment to work, the punishment must be strong enough to stop the undesired behaviour and must be administered objectively, impersonally, consistently and contingently, and quickly. a. True b. False 137. Goal specificity is the extent to which a goal is hard or challenging to accomplish. a. True b. False 138. One of the simplest, most effective ways to motivate workers is to give them specific, challenging goals that they accept. a. True b. False 139. For goal-setting theory to motivate employees, managers must provide frequent, specific, performance-related feedback. a. True b. False 140. Expectancy theory says that people will be motivated at work when they perceive that they are being treated fairly. a. True b. False 141. Expectancy theory requires managers to understand individual employees’ motivations. a. True Powered by Cognero

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Chapter 12 - Motivation b. False 142. Organizational factors tend to work against motivating employees using expectancy theory. a. True b. False 143. The statement “hard work will be rewarded,” in conjunction with the concept of empowerment, is a function of expectancy. a. True b. False 144. Empowered workers will take active roles in their work. a. True b. False 145. Reinforcement theory tries to change behaviour by changing the motivations associated with the behaviour. a. True b. False 146. Reinforcement contingencies are the cause-and-effect relationships between the performance of specific behaviours and specific consequences. a. True b. False 147. Two kinds of reinforcement schedules are fixed or variable. a. True b. False 148. With a variable interval reinforcement schedule, consequences are delivered following a specific number of behaviours. a. True b. False 149. Interval-driven reinforcement schedules produce superior results to continuous reinforcement schedules. a. True b. False 150. Acknowledgment of employees’ actions is a frequently used component of reinforcement schedules. a. True b. False

151. Briefly explain the following equation: Job Performance = Motivation × Ability × Situational Constraints.

152. Briefly explain the relationship between need satisfaction and motivation.

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Chapter 12 - Motivation 153. Give an example of one well-known needs theory. Be sure to identify the needs described by that theory.

154. Distinguish between extrinsic and intrinsic rewards. Which are most important to workers in general?

155. Define equity theory. List its basic components and give one example of each of these components.

156. Briefly identify the two types of inequities. What are the accompanying psychological reactions of the person perceiving each type of inequity?

157. Differentiate between distributive and procedural justice. Briefly explain how each relates to motivating with equity theory.

158. Define expectancy theory. Identify the theory’s three key concepts.

159. Compare and contrast the basic model of job performance with the expectancy model of motivation.

160. Briefly identify the ways in which managers can use expectancy theory to motivate employees.

161. What are reinforcement contingencies? How are reinforcement contingencies related to behaviour?

162. How can managers use reinforcement theory to motivate their employees?

163. Describe goal-setting theory. Briefly identify the theory’s basic components.

164. Identify the four things that the basic model of work motivation suggests managers can use to motivate employees, and explain how each of these strategies might be used to motivate a 55-year-old tenured professor, whose teaching performance has become very weak over the past three years. Briefly explain the relevance of the basic formulation of the relationship between performance and motivation to the analysis that you provide. Be sure to clarify any assumptions that you are making.

165. Define equity theory. Identify the five ways in which people try to restore equity when they perceive that they have been treated unfairly. Describe a circumstance in which you or someone you know experienced inequity in a work situation, and explain the actions you (or that person) took to restore equity.

166. Explain expectancy theory. Use the concepts and principles from this theory to illustrate how you personally chose to work harder (or less hard) in a particular course because of your perceptions regarding the probable results (i.e., degree of payoff) of your level of effort in that course at that point in your life.

167. What is the relationship between reinforcement and reinforcement theory? Describe how reinforcement contingencies and schedules of reinforcement affect behaviour.

168. Imagine that you have just been elected chair of a campus committee that is trying to raise $100,000 in scholarship funding for youths with disabilities. Your committee is composed of 15 college instructors, students, and staff with an additional 25 community volunteers who have agreed to provide ideas and labour in the fundraising effort. Explain how you, in your role as chair, would use the principles of goal-setting theory to achieve your committee’s goal.

169. Explain the relationship posited by the text between motivation and job performance. Use examples from your readings or experiences to indicate how one or more of the specific motivational models described in this chapter might integrate with the industrial psychology model to provide a fuller understanding of work performance. Cite three Powered by Cognero

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Chapter 12 - Motivation implications for managers based upon your analysis.

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Chapter 12 - Motivation Answer Key 1. d 2. c 3. c 4. b 5. d 6. c 7. d 8. d 9. c 10. a 11. a 12. a 13. c 14. d 15. a 16. d 17. b 18. c 19. b 20. c 21. c 22. b 23. c 24. c 25. d Powered by Cognero

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Chapter 12 - Motivation 26. b 27. d 28. b 29. a 30. c 31. c 32. b 33. d 34. c 35. c 36. b 37. b 38. a 39. c 40. a 41. d 42. d 43. b 44. c 45. c 46. d 47. d 48. c 49. d 50. d 51. c Powered by Cognero

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Chapter 12 - Motivation 52. d 53. b 54. a 55. d 56. b 57. b 58. a 59. a 60. c 61. b 62. d 63. d 64. b 65. c 66. c 67. c 68. d 69. a 70. c 71. c 72. a 73. a 74. c 75. b 76. c Powered by Cognero

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Chapter 12 - Motivation 77. d 78. b 79. c 80. a 81. c 82. b 83. c 84. c 85. b 86. d 87. a 88. c 89. a 90. b 91. a 92. c 93. b 94. c 95. b 96. c 97. a 98. d 99. a 100. c 101. c 102. a Powered by Cognero

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Chapter 12 - Motivation 103. d 104. b 105. c 106. a 107. a 108. c 109. b 110. d 111. True 112. False 113. False 114. True 115. False 116. False 117. False 118. True 119. True 120. True 121. True 122. False 123. False 124. False 125. False 126. True 127. False Powered by Cognero

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Chapter 12 - Motivation 128. True 129. False 130. False 131. True 132. True 133. False 134. False 135. False 136. True 137. False 138. True 139. True 140. False 141. True 142. True 143. False 144. True 145. False 146. True 147. True 148. False 149. False 150. False 151. Job performance is frequently represented by this equation: Job Performance = Motivation × Ability × Situational Constraints. In this formula, job performance is how well someone performs the requirements of the job, motivation is the degree to which someone works hard to do the job well, ability is the degree to which workers possess the knowledge, skills, and talent needed to do a job well, and situational constraints are factors beyond the control of individual employees, such as tools, policies, and resources that have an effect on job performance. Since job performance is a Powered by Cognero

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Chapter 12 - Motivation multiplicative function of motivation times ability times situational constraints, job performance will suffer if any one of these components is weak. Thus, motivation is only one of three factors influencing performance, and it can be overpowered by significant weaknesses in one or both of the other two components, thereby reducing performance in spite of high levels of motivation.

152. Needs are the physical or psychological requirements that must be met to ensure survival and well-being. When needs are not met, people experience an internal state of tension. But once a particular need is met, it no longer motivates.

When this occurs, people become satisfied and are then motivated by other unmet needs. Studies generally show that there are only two general kinds of needs—lower-order needs and higher-order needs—and that higher-order needs will not motivate people as long as lower-order needs remain unsatisfied.

153. The Needs Classification of Different Theories box on p. 255 shows needs from three well-known needs theories.

Maslow’s Hierarchy of Needs suggests that people are motivated by physiological (food, water, and shelter), safety (physical and economic), belongingness (friendship, love, social interaction), esteem (achievement and recognition), and self-actualization (realizing one’s full potential) needs. Alderfer’s ERG Theory collapses Maslow’s five needs into three: existence (safety and physiological needs), relatedness (belongingness), and growth (esteem and self-actualization).

McClelland’s Learned Needs Theory suggests that people are motivated by the need for affiliation (to be liked and accepted), the need for achievement (to accomplish challenging goals), or the need for power (to influence others).

154. Extrinsic rewards are tangible and visible to others and are given to employees contingent on the performance of specific tasks or behaviours. External agents (managers, for example) determine and control the distribution, frequency, and amount of extrinsic rewards, such as pay, company stock, benefits, and promotions. By contrast, intrinsic rewards are the natural rewards associated with performing a task or activity for its own sake. For example, aside from the external rewards management offers for doing something well, employees often experience a sense of interest and enjoyment from the activities or tasks they perform. Examples of intrinsic rewards include a sense of accomplishment or achievement, a feeling of responsibility, the chance to learn something new or interact with others, or simply the fun that comes from performing an interesting, challenging, and engaging task. A number of surveys suggest that both extrinsic and intrinsic rewards are important. One survey found that the most important rewards were pay, benefits, and job security/organizational financial stability (all extrinsic rewards) and respectful treatment of employees, trust in senior management, relationships with immediate supervisors, and the chance to use one’s skills and abilities in your work (all intrinsic rewards).

155. Equity theory says that people will be motivated at work when they perceive that they are being treated fairly. The basic components of equity theory are inputs, outcomes, and referents. Inputs are the contributions employees make to the organization. Inputs include education and training, intelligence, experience, effort, number of hours worked, and ability.

Outcomes are the rewards employees receive in exchange for their contributions to the organization. Outcomes include pay, fringe benefits, status symbols, job titles and assignments, and even the leadership style of their superiors. And since perceptions of equity depend on how you are being treated compared to others, referents are others with whom people compare themselves to determine whether they have been treated fairly. Usually, people choose to compare themselves to referents who hold the same or similar jobs, or are otherwise similar to themselves in some way, such as in gender, race, age, or tenure.

156. There are two kinds of inequity: under-reward and over-reward. Under-reward occurs when a referent’s O/I ratio (i.e., outcome/input ratio) is better than the employee’s O/I ratio (i.e., the employee is treated worse than the referent).

Under-reward leads to anger or frustration. Over-reward occurs when a referent’s O/I ratio is worse than the employee’s O/I ratio (i.e., the referent is treated worse than the employee). Over-reward can lead to guilt, but only when the level of over-reward is extreme.

157. Equity theory focuses on distributive justice, the degree to which outcomes and rewards are fairly distributed or allocated. However, procedural justice, the fairness of the process used to make reward allocation decisions, is just as important. Procedural justice matters because even when employees are unhappy with their outcomes (e.g., low pay), Powered by Cognero

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Chapter 12 - Motivation they’re much less likely to be unhappy with company management if they believe that the procedures used to allocate outcomes were fair. Also, if employees perceive that their outcomes are unfair (i.e., distributive injustice), but that the decisions and procedures leading to those outcomes were fair (i.e., procedural justice), they are much more likely to seek constructive ways of restoring equity, such as discussing these matters with their manager. In contrast, if employees perceive both distributive and procedural injustice, they may resort to more destructive tactics, such as withholding effort, absenteeism, tardiness, or even sabotage and theft.

158. Expectancy theory says that people will be motivated to the extent to which they believe that their efforts will lead to good performance (expectancy, or the perceived relationship between effort and performance), that good performance will be rewarded (instrumentality, or the perceived relationship between performance and rewards), and that they are offered attractive rewards (rewards with a positive valence, which is the attractiveness or desirability of various rewards or outcomes).

159. The basic model of job performance can be represented by this equation: Job Performance = Motivation × Ability × Situational Constraints. The expectancy model of motivation can be represented by the equation Motivation = Valence × Instrumentality × Expectancy. In both cases, a multiplicative relationship between relevant variables is posited to determine a specific outcome. The common multiplicative relationship means that a decline in any one of the variables will lead to an overall decline in the specific outcome (i.e., performance or motivation). While the relationship among component variables is the same in both models, the focus and components differ significantly between the models. The industrial psychology model focuses on overall performance, with motivation as one of three components. It is thus a more general model. The expectancy model focuses on motivation and simply assumes that performance will follow the predicted motivational outcome. Further, the expectancy model emphasizes perceptions of all three of its component factors, while the industrial psychology model potentially includes perceptual effects in its motivational component, but emphasizes objective reality in the ability and situational constraint components.

160. Managers can use expectancy theory to motivate workers by systematically gathering information to find out what employees want from their jobs, by linking rewards to individual performance in a way that is clear and understandable to employees, and by empowering employees to make decisions, which will increase their expectancies that hard work and efforts will lead to good performance.

161. Reinforcement contingencies are the cause-and-effect relationships between the performance of specific behaviours and specific consequences. The four kinds of reinforcement contingencies are positive reinforcement, negative reinforcement, punishment, and extinction. Positive reinforcement strengthens behaviour (i.e., increases its frequency) by following behaviours with desirable consequences. Negative reinforcement strengthens behaviour by withholding an unpleasant consequence when employees perform a specific behaviour. By contrast, punishment weakens behaviour (i.e., decreases its frequency) by following behaviours with undesirable consequences. Extinction is a reinforcement strategy in which a positive consequence is no longer allowed to follow a previously reinforced behaviour. By removing the positive consequence, extinction weakens the behaviour, making it less likely to occur. Thus, reinforcement contingencies act to either strengthen or weaken a behaviour over time.

162. Managers can use reinforcement theory to motivate workers by following five steps (identify, measure, analyze, intervene, and evaluate critical performance-related behaviours); not reinforcing the wrong behaviours; correctly administering punishment (objectively, impersonally, consistently, contingently, quickly, and only when no other viable alternative exists, while explaining the appropriate behaviour and the reasons for the punishment); and choosing a reinforcement schedule, such as continuous reinforcement, that balances simplicity and effectiveness.

163. Goal-setting theory says that people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement. The basic components of goal-setting theory are goal specificity, goal difficulty, goal acceptance, and performance feedback. Goal specificity is the extent to which goals are detailed, exact, and unambiguous. Goal difficulty is the extent to which a goal is hard or challenging to accomplish. Goal acceptance is the extent to which people consciously understand and agree to goals. Performance Powered by Cognero

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Chapter 12 - Motivation feedback is information about the quality or quantity of past performance and indicates whether progress is being made toward the accomplishment of a goal.

164. The basic model of motivation suggests that managers can motivate employees by (1) asking them what their needs are, (2) satisfying lower-order needs first, (3) expecting people’s needs to change, and (4) satisfying higher-order needs through intrinsic rewards. Effective answers to this question can be provided in a variety of ways. One example is provided below. In general, better student answers will provide a workable diagnostic and intervention plan within realistic budgetary and policy guidelines.

(1) Identify the professor’s needs. Get to know the professor’s interests and tastes so that rewards can be individualized to give the employee what is desired. Asking the professor what he/she would like in return for effective performance can help to identify need deficiencies that might not be apparent. In many cases, simply recognizing and praising effective performance can be a strong motivator. (2) Satisfy lower-order needs first. Ascertain that the working conditions and compensation for the professor are able to satisfy his/her lower-order needs. In practice, this means providing the equipment, training, and knowledge to create a safe workplace free of physical risks, paying employees well enough to provide financial security, and offering a benefits package that will protect employees and their families through good medical coverage and health and disability insurance. If pay and benefits at the school have not kept pace with inflation and/or market levels, this may be a significant source of perceived inequity for the professor. Similarly, if specific equipment is needed to perform effectively and the school’s budget will not allow the purchase, situational constraints may be hindering performance. (3) Expect people’s needs to change. Given the fact that this is a relatively recent performance problem that has developed over the past three years, with satisfactory performance prior to that time (this is an assumption, based upon the professor’s tenure status), it is likely that something has changed in the interim. This change could be in the professor’s needs or in the reward structure at the institution. Either way, old motivational strategies will rarely work indefinitely. Advice at this step is similar to that at step 1, identify the professor’s needs, and develop strategies to provide acceptable rewards to the professor within the realistic constraints of budget and policy at the university. Finally, (4) Create opportunities for employees to satisfy higher-order needs. Intrinsic rewards, such as accomplishment, achievement, learning something new, and interacting with others, are the natural rewards associated with performing a task or activity for its own sake. And with the exception of influence (power), intrinsic rewards correspond very closely to higher-order needs that are concerned with relationships (belongingness, relatedness, and affiliation) and challenges and accomplishments (esteem, self-actualization, growth, and achievement). Therefore, one way for managers to meet employees’ higher-order needs is to create opportunities for employees to experience intrinsic rewards by providing challenging work, encouraging employees to take greater responsibility for their work, and giving employees the freedom to pursue tasks and projects they find naturally interesting. For the professor in question, a joint goal-setting plan for performance improvement based upon changes in work responsibilities might be effective. For example, if the professor has become bored teaching the same courses year after year, he or she may be invigorated by the opportunity to develop a new course in an area of personal interest.

In industrial psychology, job performance is frequently represented by this equation: Job Performance = Motivation × Ability × Situational Constraints. Since job performance is a multiplicative function of motivation times ability times situational constraints, job performance will suffer if any one of these components is weak. In the present case, we can probably assume that the professor has the ability to teach effectively since tenure was awarded. (However, a thorough analysis of causes of the professor’s performance decline might consider possible disability effects on performance.) Most likely, the performance decline is a result of problems with either or both motivation and situational constraints. Examples of both are provided in the analysis above.

165. Equity theory says that people will be motivated at work when they perceive that they are being treated fairly. The basic components of equity theory are inputs (the contributions employees make to the organization), outcomes (the rewards employees receive in exchange for their contributions), and referents (others with whom people compare themselves to determine if they have been treated fairly). After an internal comparison in which employees compare their outcomes to their inputs, they then make an external comparison in which they compare their O/I ratio with the O/I ratio of a referent, a person who works in a similar job or is otherwise similar. When their O/I ratio is equal to the referent’s O/I ratio, employees perceive that they are being treated fairly. But when their O/I ratio is different from their referent’s O/I ratio, they perceive that they have been treated inequitably or unfairly. There are two kinds of inequities, under-reward Powered by Cognero

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Chapter 12 - Motivation and over-reward. Under-reward occurs when a referent’s O/I ratio is better than the employee’s O/I ratio, and is the far more common type of inequity in organizations. Under-reward leads to anger or frustration. Over-reward occurs when a referent’s O/I ratio is worse than the employee’s O/I ratio. Over-reward can lead to guilt, but only when the level of overreward is extreme. When employees perceive that they have been treated inequitably (i.e., under-rewarded), they may try to restore equity by (1) reducing inputs (decreasing or withholding their efforts), (2) increasing outcomes (asking for a raise or other adjustments to the reward system), (3) rationalizing inputs or outcomes (making mental or emotional adjustments in their comparisons), (4) changing the referent (comparing themselves to someone else), or (5) leaving (quitting, transferring, or increasing absenteeism).

Student examples will typically deal with experiences of under-reward that are dealt with by increasing outcomes, leaving, or reducing inputs. Perceptive students might identify circumstances involving rationalization and/or changing the referent, but this is more the exception than the rule. Effective examples should specify the inputs and outcomes for both the student and the referent, and clearly identify the means used to resolve the inequity.

166. One of the hardest things about motivating people is that rewards that are attractive to some employees are unattractive to others. Expectancy theory says that people will be motivated to the extent to which they believe that their efforts will lead to good performance, that good performance will be rewarded, and that they are offered attractive rewards. This emphasis on personally attractive rewards highlights the role of perceptions and expectations in this motivational theory.

Expectancy theory holds that three factors affect the conscious choices people make about their motivation: valence, expectancy, and instrumentality. Valence is simply the attractiveness or desirability of various rewards or outcomes. The higher the valence for the individual, the higher the effort that individual will put forth. Expectancy is the perceived relationship between effort and performance. When expectancies are strong, employees believe that their hard work and efforts will result in good performance, so they work harder. By contrast, when expectancies are weak, employees figure that no matter what they do or how hard they work, they won’t be able to perform their jobs successfully, so they don’t work as hard. Instrumentality is the perceived relationship between performance and rewards. When instrumentality is strong, employees believe that improved performance will lead to more and better rewards, and they will choose to work harder. When instrumentality is weak, employees don’t believe that better performance will result in more or better rewards, so they will choose not to work as hard. Expectancy theory holds that for people to be highly motivated, all three variables—valence, expectancy, and instrumentality—must be high. So if any one of these factors declines, overall motivation will decline, too.

Student examples should clarify the levels of their expectancy (e.g., if I work hard, I will be able to perform well in this course), instrumentality (e.g., if I perform well, I will receive a grade of A or B), and valence (e.g., I need a grade of A or B to raise my GPA). In cases where students were not motivated to work hard, clear reasons for this lack of motivation should be presented in terms of expectancy theory. For example, low expectancy (e.g., extremely high job and school workload/stress will combine to reduce the effectiveness of efforts), low instrumentality (e.g., ambiguous or arbitrary grading criteria such that grades are determined by something other than good performance), and/or low valence (e.g., working hard will take time away from my job search during my last semester at school, and the job search is more important than the grade in this course). Obviously, students could provide effective answers to this question in a variety of ways.

167. Reinforcement theory says that behaviour is a function of its consequences, that behaviours followed by positive consequences (i.e., reinforced) will occur more frequently, and that behaviours followed by negative consequences, or not followed by positive consequences, will occur less frequently. More specifically, reinforcement is the process of changing behaviour by changing the consequences that follow behaviour. Reinforcement has two parts: reinforcement contingencies and schedules of reinforcement.

Reinforcement contingencies are the cause-and-effect relationships between the performance of specific behaviours and specific consequences. The four kinds of reinforcement contingencies are positive reinforcement, negative reinforcement, Powered by Cognero

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Chapter 12 - Motivation punishment, and extinction. Positive reinforcement strengthens behaviour (i.e., increases its frequency) by following behaviours with desirable consequences. Negative reinforcement strengthens behaviour by withholding an unpleasant consequence when employees perform a specific behaviour. By contrast, punishment weakens behaviour (i.e., decreases its frequency) by following behaviours with undesirable consequences. Extinction is a reinforcement strategy in which a positive consequence is no longer allowed to follow a previously reinforced behaviour. By removing the positive consequence, extinction weakens the behaviour, making it less likely to occur. Thus, reinforcement contingencies act to either strengthen or weaken a behaviour over time.

A schedule of reinforcement is the set of rules regarding reinforcement contingencies, such as which behaviours will be reinforced, which consequences will follow those behaviours, and the schedule by which those consequences will be delivered. There are two categories of reinforcement schedules: continuous and intermittent. With continuous reinforcement schedules, a consequence follows every instance of a behaviour. By contrast, with intermittent reinforcement schedules, consequences are delivered after a specified or average time has elapsed or after a specified or average number of behaviours has occurred. There are four types of intermittent reinforcement schedules. Two of these are based on time and are called “interval reinforcement schedules,” while the other two, known as ratio schedules, are based on behaviours. With fixed interval reinforcement schedules, consequences follow a behaviour only after a fixed time has elapsed. With variable interval reinforcement schedules, consequences follow a behaviour after different times, some shorter and some longer, that vary around a specified average time. With fixed ratio reinforcement schedules, consequences are delivered following a specific number of behaviours. Finally, with variable ratio reinforcement schedules, consequences are delivered following a different number of behaviours, sometimes more and sometimes less, that vary around a specified average number of behaviours.

The effects of schedules of reinforcement are described in terms of the question, which reinforcement schedules work best? In this context, we see that schedules are evaluated in terms of their ability to promote rapid learning or to maintain behaviour after it is learned and avoid extinction. In the past, the standard advice was to use continuous reinforcement when employees were learning new behaviours, since reinforcement after each success leads to faster learning. Likewise, the standard advice was to use intermittent reinforcement schedules to maintain behaviour after it is learned, since intermittent rewards are supposed to make behaviour much less subject to extinction. However, except for interval-based systems, which usually produce weak results, there is little difference between the effectiveness of continuous reinforcement, fixed ratio, or variable ratio schedules. In organizational settings, all three produce consistently large increases over noncontingent reward schedules. Thus, the primary effect of reinforcement schedules on behaviour is to maintain learned responses and prevent extinction.

Reinforcement contingencies and schedules of reinforcement thus have differential effects on behaviour. While reinforcement contingencies act to either strengthen or weaken a behaviour over time, and are thus crucial to learning and changing employee behaviour, the primary effect of reinforcement schedules on behaviour is to maintain learned responses and prevent extinction. Here, the focus is on maintaining performance at consistent levels, rather than changing behaviour.

168. A goal is a target, objective, or result that someone tries to accomplish. Goal-setting theory says that people will be motivated to the extent to which they accept specific, challenging goals and receive feedback that indicates their progress toward goal achievement. The basic components of goal-setting theory are goal specificity, goal difficulty, goal acceptance, and performance feedback. Goal specificity is the extent to which goals are detailed, exact, and unambiguous.

Goal difficulty is the extent to which a goal is hard or challenging to accomplish. Goal acceptance is the extent to which people consciously understand and agree to goals. Performance feedback is information about the quality or quantity of past performance and indicates whether progress is being made toward the accomplishment of a goal. Managers can use goal-setting theory to motivate workers by assigning specific, challenging goals, making sure workers truly accept organizational goals, and providing frequent, specific performance-related feedback.

The principles of goal-setting theory could be applied in numerous ways to this question. One possible answer is outlined below. Better student answers will clearly articulate the concepts, principles, and research results of goal-setting theory in an integrated plan, and provide a concrete justification as to why that plan could be expected to succeed.

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Chapter 12 - Motivation In my role as Chair of the Fundraising Committee, I would apply goal-setting theory by developing a concrete fundraising plan in consultation with the 15 members of my committee. The plan would be comprised of a series of integrated specific, detailed, unambiguous, measurable and challenging subgoals, which have been endorsed and agreed upon by the members of my committee. Through this participative goal-setting process, I would increase trust and understanding, and thus goal acceptance. Again, in consultation with the membership, I would set up clear timetables for the accomplishment of various stages of the fundraising process and collect regular data on the progress of all members toward achieving their individual subgoals. This progress data would be fed back to the individual members in weekly meetings, as well as distributed in aggregate form to all individuals interested in our efforts and the wider campus community. As individual subgoals are met, I would encourage members to set even more challenging goals for the following weeks’ fundraising efforts. The regular use of feedback would let all of our participants know whether they need to increase their efforts or change their strategies in order to achieve their goals. Through this regular use of frequent, performance-related feedback, members of my committee would be able to easily track their progress toward goal completion, thus remaining enthusiastic and on-target in their performance.

169. Industrial psychologists view job performance as a multiplicative function of three separate sets of variables, frequently represented by this equation: Job Performance = Motivation × Ability × Situational Constraints. In this view, job performance refers to how well someone performs the requirements of the job, motivation refers to the degree to which someone works hard to do the job well, ability refers to the degree to which workers possess the knowledge, skills, and talent needed to do a job well, and situational constraints refers to factors beyond the control of individual employees, such as tools, policies, and resources that have an effect on job performance. Since job performance is a multiplicative function of motivation times ability times situational constraints, job performance will suffer if any one of these components is weak (e.g., a zero in any variable reduces the whole equation to zero). Thus, motivation is only one of three factors influencing performance, and it can be overpowered by significant weaknesses in one or both of the other two components, thereby reducing performance in spite of high levels of motivation.

Students could go in many directions with the remaining two components of this question, and no effort will be made here to enumerate all of the possibilities. An acceptable answer will accomplish two things: (1) relate specific components of one or more of the motivational models mentioned in the chapter (e.g., Maslow, Alderfer, McClelland, equity, expectancy, reinforcement, or goal-setting theory) to one or more specific components of the industrial psychology motivation/performance model; and (2) cite one or more logical and appropriate implications of this analysis for the practising manager. Better answers will typically involve greater detail in the analysis and application of motivational models and provide more insightful and original implications for managers.

One possible approach to this portion of the question is presented below: Lyle graduated from college and took an entry-level position manning the phone banks at an investment firm. Since he enjoyed working with people more than he enjoyed working the phones, he took the opportunity to volunteer for numerous committee assignments in addition to his phone responsibilities, which he thought would improve his standing in the company. However, during his first-year performance review he was told for the first time that while his voluntary committee work was appreciated, he had not yet “proven himself” in the phone bank. To his dismay, Lyle saw many of the friends that he entered the company with receive promotions, while he was told to keep up his efforts in the phone bank for another year. Lyle was so frustrated by this experience that he quit his job and went back to school full time to earn his MBA. This example can be related to both expectancy theory and equity theory, as well as the industrial psychology model. In terms of expectancy theory, Lyle thought that with his voluntary committee work, he was performing an additional service that the company placed high value on. He saw this as additional work that he was performing above and beyond the call of duty. When the expected rewards did not materialize, Lyle experienced inequity (i.e., he felt that his inputs were higher than those of his friends, who did not volunteer, yet they got better outcomes through promotion). As a result, Lyle decided to leave the organization as a way of dealing with the inequity. From his immediate supervisor’s perspective, Lyle’s performance was not strong enough to justify promotion. The industrial psychology model is helpful in analyzing Powered by Cognero

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Chapter 12 - Motivation this situation. It appears that Lyle had high levels of motivation (i.e., he wanted to perform well and be promoted, as described in the preceding analysis), and he had the ability needed to perform the job (his basic work on the phones was acceptable). The major problem seems to lie in situational constraints. In particular, Lyle never clarified with his supervisor how helpful the volunteer committee work would be to his advancement. While Lyle saw it as extra effort above and beyond the call of duty, his boss saw it as a distraction from his main responsibilities as an entry-level employee. This example demonstrates how important it can be to integrate the performance analysis of the industrial psychology model with the motivational analysis of motivation theories. As pointed out in the text, performance (and success) is influenced by more than just motivation. Thus, when evaluating the causes of poor performance, managers must look beyond motivational questions to consider both questions of ability (e.g., is more training required?) and situational constraints (e.g., is coaching necessary to promote role clarity?). In this case, Lyle’s supervisor could have spoken to Lyle earlier to indicate that he was spending too much of his time on volunteer activities and that he should concentrate more on perfecting his performance on the phones if interested in promotion at the end of his first year.

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Chapter 13 - Leadership

Indicate the answer choice that best completes the statement or answers the question.

1. Which of the following is defined by effective managers as the process of influencing others to achieve group or organizational goals? a. management b. leadership c. interpersonal influence d. supervision 2. Which of the following is a major concern of managers (as opposed to leaders)? a. maintaining the status quo b. inspiring and motivating others c. taking a long-term view d. promoting change 3. One criticism of the television industry is the networks’ desire to maintain ratings by thinking in terms of next week’s programming. The networks are also more concerned with how to get high program ratings than achieving the ratings through giving viewers time to become acquainted with high-quality programs. Problem solving in terms of show placement or guest stars seems to be more important than inspiring great television innovations. What does this criticism assume? a. Doing the right thing is more important than doing things right in the television industry. b. The television industry benefits from strong leadership. c. Long-term strategy is more important than tactics in the television industry. d. The television industry has a shortage of effective leadership.

4. Which of the following is a major concern of leaders (as opposed to managers)? a. controlling and limiting the choices of others b. solving problems so that work can be done c. preserving the status quo d. inspiring and motivating others 5. GE Canada hires many new graduates each year into its leadership development programs. What will new graduates learn as part of the programs? a. how to take a short-term perspective b. how to inspire and motivate employees to embrace the status quo c. how to do things right d. how to be creative, take risks, and make decisions about doing the right thing 6. A department store in Quebec blamed its recent financial problems on many factors, including poor inventory management and a weak economy. The store has tried to solve the problem through short-term price reductions, firings and early retirements, and store closings. The CEO has not tried to motivate employees to create long-term solutions to the problems facing them. Which statement most likely defines the CEO? a. The CEO is a true leader. b. The CEO is more interested in doing the right things than in doing things right. c. The CEO tends to focus on organizational visions, missions, goals, and objectives rather than organizational efficiency and productivity.

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Chapter 13 - Leadership d. The CEO is more than likely a manager rather than a leader.

7. When Richard Baker went to work for Hudson’s Bay Company (HBC), he immediately began to make drastic changes in the company’s structure and product lines. He envisioned a newly relevant company with a wide range of digital and retail properties. He inspired and motivated his employees to change. Which statement best defines Baker? a. Baker would be characterized as a leader. b. Baker emphasized means rather than ends. c. Baker acted as a builder rather than an architect. d. Baker would be characterized as a manager.

8. Joyce is revamping her company's vision and mission, and is working out a five-year strategy based on the direction she feels the company should be headed. What is Joyce’s role in the company? a. leader b. manager c. supervisor d. worker 9. The basis of which theory of leadership is formed by relatively stable characteristics, such as abilities, psychological motives, or consistent patterns of behaviour? a. situational theory b. behavioural theory c. trait theory d. expectancy theory 10. According to which theory are successful leaders "not like other people"? a. the University of Michigan perspective b. the trait theory c. the situational approach to leadership d. the motivational approach to leadership 11. Which theory of leadership is also called the “great person” theory? a. trait theory b. behavioural theory c. situational theory d. path–goal theory 12. Which trait refers to high levels of effort and is characterized by achievement, motivation, ambition, energy, tenacity, and initiative? a. desire to lead b. motivational cues c. drive d. self-confidence 13. Which of the following traits refers to the extent to which leaders are truthful with others? a. honesty Powered by Cognero

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Chapter 13 - Leadership b. self-confidence c. emotional stability d. charisma 14. Oftentimes when an individual is running for a local political office, he or she promises to consider each issue, make decisions that are good for the entire community, and reduce taxes. When the individual assumes office, he or she is often unable to carry through on political promises. Which trait does this conflict with? a. honesty b. integrity c. empathy d. charisma 15. Which trait in a leader is manifested as decisive and assertive behaviour that tends to gain others’ confidence? a. emotional stability b. integrity c. self-confidence d. drive 16. Which trait refers to the tendency of leaders to remain even-tempered and consistent in their outlook and the way they treat others, even when things go wrong? a. honesty b. integrity c. emotional stability d. self-confidence 17. Lisa manages the brokers of a financial company. Each day brings a new series of challenges, particularly when the financial markets are in decline. The brokers become overwhelmed with client needs. Lisa is able to remain focused and calm while acting quickly to meet the needs of clients. Her brokers pick up on this, which helps them to remain calm and in control to get their jobs done. What trait of a leader does Lisa exhibit? a. honesty b. integrity c. emotional stability d. self-confidence 18. Which of the following best describes successful business leaders? a. Successful leaders prefer to follow but will lead when called upon to do so. b. Successful leaders have emotional intelligence. c. Successful leaders have general knowledge about business. d. Successful leaders prefer independence.

19. Which of the following has research at three universities confirmed as behaviours central to successful leadership? a. initiating structure and consideration b. initiating structure and job-centred leadership c. employee-centred leadership and consideration d. concern for production and job-centred leadership Powered by Cognero

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Chapter 13 - Leadership 20. What is another term for considerate leadership behaviour? a. initiating structure behaviour b. participative management c. job-centred leadership d. employee-centred leadership 21. Which of the following refers to the degree to which a leader structures the roles of followers by setting goals, giving directions, setting deadlines, and assigning tasks? a. job structure b. job-centred leadership c. initiating structure d. concern for production 22. What is the term for the extent to which a leader is friendly, approachable, and supportive and shows concern for employees? a. initiating structure b. job-centred leadership c. consideration d. concern for production 23. Canadian Armed Forces leadership manuals reveal the importance of military leaders being friendly with and showing concern for their troops. Research shows this leadership behaviour positively influences soldiers’ health and their ability to adapt to stressful environments. Which characteristic are effective military leaders showing? a. achievement b. charisma c. consideration d. initiating structure 24. Dave Mowat, former CEO of ATB Financial in Alberta, once said to his leaders, “Show team members you respect and trust them and be worthy of their trust in you. You’ll be amazed at how simple things can become.” Which characteristic is best embodied by this quote? a. achievement b. charisma c. consideration d. initiating structure 25. Employees working in a high-volume quick service restaurant have posters near their workspace demonstrating the correct way to assemble and package sandwiches for customers. What leadership style does this demonstrate? a. achievement b. charisma c. consideration d. initiating structure 26. Canadian university hockey coaches design every facet of practices, set goals for their players, determine schedules, and even direct all of plays during the games. What do these coaches rate high in?

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Chapter 13 - Leadership a. achievement b. consideration c. charisma d. initiating structure 27. Athleta, owned by Gap Inc., is a fast-growing activewear brand targeted to women and men looking for active and casualwear. Athleta’s CEO Mary Beth Laughton relies on her employees to locate new trends. Laughton almost daily consults with her employees for suggestions on what the stores should carry. She relies on their input before making inventory decisions and treats her employees as equals. What is Laughton demonstrating? a. achievement-orientation b. consideration c. charisma d. initiating structure 28. What is another term for initiating structure leadership behaviour? a. considerate leader behaviour b. employee-centred leadership c. concern for people d. concern for production 29. Which type of leader behaviour is a CEO who tours company plants to meet and talk to employees at all levels in order to better understand their concerns and feelings demonstrating? a. consideration b. leader formalization c. autonomy d. reciprocity 30. Research shows that while initiating structure has an impact primarily on job performance, consideration has an impact primarily on which of the following? a. job variety b. job satisfaction c. motivational drive d. worker synergy 31. What two basic leader behaviours central to successful leadership can leaders adopt? a. initiating structure and consideration b. initiating structure and concern for production c. consideration and honesty d. concern for production and honesty 32. Task-oriented leaders do well in which of the following situations? a. when leader–member relations are good, task structure is low, and position power is weak b. when leader–member relations are poor, task structure is high, and position power is strong c. when leader–member relations are poor, task structure is high, and position power is weak d. when leader–member relations are good, task structure is high, and position power is strong Powered by Cognero

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Chapter 13 - Leadership 33. Which of the following is the best leadership style for all situations? a. team management b. middle-of-the-road management c. authority-compliance d. one that varies to suit the circumstances 34. A successful sports coach has to schedule structured practices, emphasize careful planning, and assign tasks. He also has to show the players that he genuinely cares about them as people. According to the Blake/Mouton grid, how would a good coach’s management be characterized? a. as authority-compliance b. as country club management c. as middle-of-the-road management d. as team management 35. Leaders using an authority-compliance leadership style have which of the following? a. high concern for both people and production b. high concern for production, low concern for people c. high concern for people, low concern for production d. low concern for people and production 36. Jonah, CEO of Starlite Productions, spends most of his time making sure he's creating a friendly and enjoyable work environment. Unfortunately, due to his lack of focus on production and performance, the business is starting to suffer.

According to the Blake/Mouton leadership grid, what type of leadership style does Jonah have? a. laissez-faire b. laid back c. impoverished d. country club 37. Which leadership theory assumes that leadership styles are consistent and difficult to change, therefore leaders must be placed in or matched to a situation that fits their leadership style? a. situational leadership theory b. leader–member relations theory c. Fiedler's contingency theory d. position power theory 38. Which of the following is an example of a situational theory of leadership? a. stimulus-response theory b. trait theory c. Fiedler’s contingency theory d. equity theory of leadership 39. Which leadership theory is concerned with employee participation? a. path–goal theory b. normative decision theory Powered by Cognero

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Chapter 13 - Leadership c. trait theory d. the status quo theory of leadership 40. W.L. Gore is the company that created Gore-Tex, among many other innovative products. Gore employees (known as “associates”) don’t have titles or bosses in the traditional sense. Instead, associates make commitments to work on projects that they believe are most worthy of their time. At Gore, few leaders are appointed; leaders simply emerge as needed by the other employees or the project itself. Which theory of leadership does Gore more than likely adhere to? a. contingency theory b. normative theory c. strategic theory d. trait theory 41. In Fiedler’s contingency theory, what is the term for the degree to which leaders are able to hire, fire, reward, and punish workers? a. situational favourableness b. leader–member relations c. task structure d. position power 42. In Fiedler’s contingency theory, what is the term for the degree to which a particular circumstance either permits or denies a leader the chance to influence the behaviour of group members? a. situational favourableness b. leader–member relations c. task structure d. position power 43. In an effort to remain competitive, the Bombardier executive team has executed mass layoffs over the past few years, bringing its global workforce down to 13,000 employees total. Under Fiedler’s contingency theory, what would Bombardier’s employees see the executive team having? a. an emphasis on initiating structure b. a relationship orientation c. weak position power d. strong position power 44. Which approach to implementing Fiedler’s contingency theory in the workplace has proven effective? a. accurately assessing and matching leaders to situations b. teaching managers how to change situational favourableness c. adopting an arbitrary definition of situations d. hiring only supervisors with appropriate leadership traits 45. Shin has taken on a new team within the TD Call Centre in Markham, Ontario, and so far she has received feedback that her employees have established a lot of trust and respect for her as their new manager. Which of the following has Shin developed? a. low situational favourableness b. strong leader–member relations Powered by Cognero

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Chapter 13 - Leadership c. strong task structure d. strong position power 46. Which theory states leaders need to adjust their leadership styles to match followers’ readiness? a. situational contingency theory b. situational leadership theory c. contingency theory d. path–goal theory 47. Performance readiness is the ability and willingness to take responsibility for directing one’s behaviour at work.

Readiness is composed of which of the following two components? a. initiating structure and consideration b. stamina and drive c. job readiness and psychological readiness d. mental and physical readiness 48. According to Hersey and Blanchard’s situational leadership theory, at which level of readiness is someone who is confident, willing, and able to take responsibility for guiding their own work? a. R1 b. R2 c. R3 d. R4 49. According to situational leadership theory, what are the four different leadership styles? a. telling, selling, belonging, and directing b. informing, selling, involving, and delegating c. telling, selling, participating, and delegating d. informing, selling, participating, and delegating 50. Which leadership style involves two-way communication and psychological support to encourage followers to “own” or “buy into” particular ways of doing things? a. participating b. delegating c. selling d. telling 51. According to which of the following do leaders need to make clear how followers can achieve organizational goals, take care of problems that prevent followers from achieving goals, and then find more and varied rewards to motivate followers who achieve those goals? a. Fiedler’s contingency theory b. the Blake/Mouton leadership grid c. the Vroom–Yetton–Jago normative decision model d. the path–goal theory 52. Which of the following is NOT a leadership style identified in the path-goal theory of leadership?

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Chapter 13 - Leadership a. directive b. supportive c. participative d. charismatic 53. According to the path–goal theory of leadership, which type of leadership lets employees know precisely what is expected of them, gives them specific guidelines for performing tasks, schedules work, sets standards of performance, and makes sure that people follow standard rules and regulations? a. people-oriented leadership b. supportive leadership c. participative leadership d. directive leadership 54. According to the path–goal theory of leadership, which type of leadership involves being friendly and approachable to employees, showing concern for them and their welfare, treating them as equals, and creating a friendly climate? a. directive leadership b. supportive leadership c. participative leadership d. achievement-oriented leadership 55. Hunter Harrison came out of retirement to run Calgary-based Canadian Pacific Railway and turn it around. He implemented an operating model called “precision railroading” and was noted as having “the drive and ability to persuade your team to make [precision railroading] happen.” Which of the following would Harrison likely have done? a. He would have shown friendliness to his employees. b. He would have told employees precisely what he expected them to do. c. He would have used employees’ inputs before making decisions. d. He would have assumed his employees would take responsibility and put forth extraordinary effort.

56. People enjoyed working for Peter Herrndorf, the former CEO of the National Arts Centre in Ottawa, because he was approachable, showed concern for their needs, and encouraged them to focus on excellence and live up to the “National” in the organization’s name. According to path–goal theory, what was Herrndorf’s leadership style? a. directive b. achievement-oriented c. employee-centred d. supportive 57. According to the path–goal theory of leadership, which of the following is similar to considerate leader behaviour? a. directive leadership b. supportive leadership c. participative leadership d. achievement-oriented leadership 58. When Leon was hired to manage the distribution centre, his supervisor advised him that, if he wanted to be a successful leader, he should adopt these practices: “Do things that satisfy followers today or will lead to future rewards or satisfaction,” and “Offer employees something unique and valuable beyond what they’re experiencing or can already do for themselves.” Which leadership theory does Leon’s supervisor apparently believe to be best?

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Chapter 13 - Leadership a. the trait theory of leadership b. strategic leadership c. the path-goal theory d. the theory of initiating structure 59. Under the leadership of Hunter Harrison, Canadian Pacific Railway (CP) business performance improved because employees knew exactly what was expected of them—whatever Harrison wanted to happen, he made happen. In terms of path–goal theory, which leadership style did Harrison use to improve CP’s profitability? a. an achievement-oriented style b. a supportive style c. a charismatic style d. a directive style 60. According to the path–goal theory, which type of leadership involves consulting employees for their suggestions and input before making decisions? a. directive leadership b. supportive leadership c. participative leadership d. consultative leadership 61. Which of the following would subordinate satisfaction and subordinate performance be examples of in the path-goal theory of leadership? a. leadership stimuli b. subordinate contingencies c. environmental contingencies d. outcomes 62. Which of the following is an example of an environmental contingency in path-goal theory? a. locus of control b. subordinate experience c. perceived ability d. task structure 63. Isabelle Hudon, executive chair of Sun Life Financial Quebec, establishes ambitious goals for her employees and is confident that her employees will be able to achieve these goals. Which type of leadership is Hudon exhibiting in terms of path-goal theory? a. participative b. achievement-oriented c. delegating d. empowering 64. Guled turned an unprofitable car dealership into a top-performing business in three months by “creating a

culture of fear,” according to union officials, and setting challenging goals for the sales staff. Which leadership style was Guled using, based on his high expectations for his employees? a. achievement-oriented Powered by Cognero

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Chapter 13 - Leadership b. supportive c. charismatic d. democratic 65. Which of the following describes an organization’s set of procedures, rules, and policies? a. formal authority system b. perceived ability c. locus of authority d. procedural authority system 66. According to the path-goal theory, which type of leadership involves setting challenging goals, having high expectations of employees, and displaying confidence that employees will assume responsibility and put forth extraordinary effort? a. directive leadership b. supportive leadership c. participative leadership d. achievement-oriented leadership 67. Zara’s houseware line, “Zara Home,” is a fast-growing segment of its business. Nawal Zeroual, Head of

Retail for Zara Canada, relies on her employees to locate new trends. Zeroual consults almost daily with her employees for suggestions on what the stores should carry. She relies on their input before making inventory decisions. Which style of leadership does Zeroual use? a. achievement-oriented b. autonomous c. charismatic d. participative 68. Wendy is very happy to have Dave as her new manager in the shipping department. She knows she can count on Dave when orders pile up. He gets out of his office and helps his staff, showing he really cares about them. Which path-goal leadership style does Dave exhibit? a. directive b. supportive c. participative d. achievement-oriented 69. Which of the following is NOT one of the three kinds of contingencies related to subordinates? a. authority b. perceived ability c. locus of control d. experience 70. Toronto Maple Leafs coach Sheldon Keefe regularly tinkers with line combinations and adjusts ice time for

players depending on his views of what the players and the team need. What is Keefe doing in terms of the normative decision theory?

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Chapter 13 - Leadership a. making consultative decisions b. using a telling leadership style c. making autocratic decisions d. using a selling leadership style 71. In many organizations, sales managers develop company-wide sales forecasts by asking members of the sales force to decide how much growth they anticipate in their individual sales territories. Sales managers then take the input from the individual salespeople and create company-wide sales forecasts based on the information supplied by their subordinates.

In the normative decision model, which decision-making style would this be an example of? a. consultative b. group c. autocratic d. participative 72. Which of the following is an example of a rule used within normative decision theory to increase decision quality? a. the subordinate conflict rule b. the goal congruence rule c. the worker readiness rule d. the commitment requirement rule 73. Which of the following leadership theories uses a decision tree to determine the appropriate level of participation by subordinates in decision making? a. Fiedler’s contingency theory b. the Blake/Mouton leadership grid c. the path-goal theory d. Vroom-Yetton-Jago’s normative decision model 74. What is the term for the ability to anticipate, envision, maintain flexibility, plan, and work with others to initiate change that will create a positive future for the organization? a. strategic leadership b. initiating leadership c. vision congruence d. progressive leadership 75. Trucking companies are facing labour shortages and unprecedented worker mobility. There is a need for leaders who will do more than simply manage or direct drivers, owner-operators, and the staff that supports them. Instead, leaders need to inspire, coach, encourage, and guide. They need to earn consensus by working as part of the team, providing resources to get the job done, then getting out of the way and letting their people perform. Which types of leaders do they need to be? a. strategic b. transactional c. directive d. autonomous 76. Which of the following is leadership that creates a positive image of the future that motivates organizational members and provides direction for future planning and goal setting?

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Chapter 13 - Leadership a. visionary leadership b. supportive leadership c. transactional leadership d. achievement-oriented leadership 77. Toronto Metropolitan University’s Abdullah Snobar notes that “being based in Canada, we have all the

ingredients we need—from capital to talent—to become the most innovative country in the world. If we become too comfortable with the advancements we’ve made, we’ll stop challenging the status quo, which is a driver in taking an innovative idea and turning it into a reality.” Which of the following does Snobar seem to be an example of? a. a leadership substitute b. a trait leader c. a leadership neutralizer d. a visionary leader 78. What are the two types of visionary leadership? a. tactical leadership and charismatic leadership b. charismatic leadership and transformational leadership c. tactical leadership and transactional leadership d. transformational leadership and transactional leadership 79. Which type of leader is able to articulate a clear vision for the future based on strongly held values or

morals? a. strategic leader b. charismatic leader c. autocratic leader d. participative leader 80. In The Science of Good and Evil, the author outlines his meeting with the founders of Google. He describes them as visionary leaders. Which of the following best describes the founders’ primary goal for being in business? a. to get rich b. to show off their intelligence and expertise c. to create a positive image of the future d. to have as much free time as possible 81. Which of the following is NOT true about followers of charismatic leaders? a. they are more committed b. they are better performers c. they are more likely to trust their leader d. they may not work as hard 82. Former Calgary mayor Naheed Nenshi won the World Mayor Prize in 2014, regularly polled over 65

percent approval ratings, and introduced an initiative he called “3 Things for Canada” to celebrate Canada’s 150th anniversary. What must Nenshi have used to create the strong relationships between himself and his Powered by Cognero

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Chapter 13 - Leadership

supporters who were willing to do “3 Things for Canada”? a. transactional leadership b. a leadership neutralizer c. charismatic leadership d. trait leadership 83. Which of the following refers to the behavioural tendencies and personal characteristics of leaders who create exceptionally strong relationships between themselves and their followers? a. consideration leadership b. charismatic leadership c. transactional leadership d. transformational leadership 84. Which of the following is a decision rule to increase decision acceptance? a. commitment probability rule b. quality rule c. leader information rule d. problem structure rule 85. Which of the following is NOT one of the components of transformational leadership? a. idealized influence b. inspirational motivation c. intellectual stimulation d. collective consideration 86. Which type of leader encourages followers to be creative and innovative, to question assumptions, and to

look at problems and situations in new ways even if their ideas are different from the leader’s ideas? a. visionary b. transactional c. transformational d. participative 87. Which type of visionary leader generates awareness and acceptance of a group’s purpose and mission and gets employees to see beyond their own needs and self-interests for the good of the group? a. ethical charismatic b. unethical charismatic c. transformational d. transactional 88. Deepak Chopra took over Canada Post in 2011; under his leadership, Canada Post worked to adjust to

shifting expectations and declining mail volumes by implementing new technologies and working with ecommerce partners such as Shopify. What type of leader was Chopra? a. transformational Powered by Cognero

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Chapter 13 - Leadership b. substitute c. participative d. transactional 89. Anthony is the team leader of a design group for a high-tech firm. Anthony is the leader because of his ability to make team members understand that focusing on achieving the group’s objectives will lead to higher personal gains in the long run. He has been able to turn groups comprised of independent workers with little cohesion into a well-functioning team with high cohesion. What kind of leadership does Anthony provide? a. charismatic leadership b. empowerment leadership c. transformational leadership d. transactional leadership 90. Which of the following is a component of transformational leadership? a. idealized influence b. supportive influence c. delegation of responsibilities d. transferring of authority 91. When transformational leaders pay special attention to followers' individual needs by creating learning

opportunities and accepting and tolerating individual differences, this is referred to as which of the following? a. idealized influence b. intellectual stimulation c. intellectual consideration d. individualized consideration 92. Avril was able to get her employees to see beyond their own personal needs and self-interest for the good of

the group. What type of leader is Avril? a. transformational b. charismatic c. ethical d. transactional 93. As CEO of UPS, Carol Tome is transforming the company from a package delivery service to a logistics

expert so it can serve as a traffic manager for corporations across North America. As a transformational manager, what is Tome doing? a. insisting that her employees do the right thing b. creating opportunities for rewards c. using intellectual stimulation to encourage her employees to take innovative approaches to problem

solving d. encouraging her employees to depend on information technology as the basis for decision making 94. Which of the following is based on an exchange process in which followers are rewarded for good performance and punished for poor performance?

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Chapter 13 - Leadership a. visionary leadership b. leadership empowerment c. transformational leadership d. transactional leadership 95. In which component of transformational leadership do leaders pay special attention to followers’ needs by creating learning opportunities, accepting and tolerating differences, encouraging two-way communication, and listening well? a. idealized influence b. inspirational motivation c. intellectual stimulation d. individualized consideration 96. Which leadership style is most likely to rely on positive and negative reinforcement? a. transformational leadership b. charismatic leadership c. participative leadership d. transactional leadership 97. What have research results shown when comparing transformational and transactional leadership? a. Transformational leadership is much more effective, on average, than transactional leadership. b. Transactional leadership is much more effective, on average, than transformational leadership. c. Transformational and transactional leadership are both equally effective. d. Transformational leadership tends to emerge from transactional leadership.

98. Narrative 13-1 Gary Davenport is the former president of the CIO Association of Canada. He’s learned to ignore one bit of advice he’s frequently heard: “Work with what you have.” Davenport doesn’t accept that view. He subscribes to the philosophy that calls for “having the right people on the bus and the right people in the right seats on the bus.” As Davenport moved from senior leadership role to senior leadership role across organizations, he articulated who he was and what he believed in to establish expectations with his senior leadership teams.

Refer to Narrative 13-1. Which of the following seems most important to Davenport? a. situational favourableness b. initiating structure c. position power d. goal commitment 99. Narrative 13-1 Gary Davenport is the former president of the CIO Association of Canada. He’s learned to ignore one bit of advice he’s frequently heard: “Work with what you have.” Davenport doesn’t accept that view. He subscribes to the philosophy that calls for “having the right people on the bus and the right people in the right seats on the bus.” As Davenport moved from senior leadership role to senior leadership role across organizations, he articulated who he was and what he believed in to establish expectations with his senior leadership teams.

Refer to Narrative 13-1. Which of the following defines Davenport’s ability to hire and reward his senior leadership team? a. employee orientation Powered by Cognero

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Chapter 13 - Leadership b. position power c. goal specificity d. instrumentality 100. Narrative 13-1 Gary Davenport is the former president of the CIO Association of Canada. He’s learned to ignore one bit of advice he’s frequently heard: “Work with what you have.” Davenport doesn’t accept that view. He subscribes to the philosophy that calls for “having the right people on the bus and the right people in the right seats on the bus.” As Davenport moved from senior leadership role to senior leadership role across organizations, he articulated who he was and what he believed in to establish expectations with his senior leadership teams.

Refer to Narrative 13-1. Which of the following best seems to describe Davenport’s leadership style, according to path–goal theory? a. directive leadership b. supportive leadership c. participative leadership d. achievement-oriented leadership 101. Narrative 13-1 Gary Davenport is the former president of the CIO Association of Canada. He’s learned to ignore one bit of advice he’s frequently heard: “Work with what you have.” Davenport doesn’t accept that view. He subscribes to the philosophy that calls for “having the right people on the bus and the right people in the right seats on the bus.” As Davenport moved from senior leadership role to senior leadership role across organizations, he articulated who he was and what he believed in to establish expectations with his senior leadership teams.

Refer to Narrative 13-1. Which of the following leadership styles should Davenport be using, according to path-goal theory? a. directive leadership b. supportive leadership c. participative leadership d. achievement-oriented leadership 102. Narrative 13-2

Agi, a newly appointed CEO of a large pharmaceuticals company, began her tenure by firing the entire management committee. A few months later she fired two of her hand-picked senior executives because they were “plotting to diminish her authority” and did not want to follow her orders unquestioningly.

Refer to Narrative 13-2. Due to the key leadership behaviour Agi uses, it is obvious that she is less concerned about her employees’ job satisfaction. What is Agi likely most concerned about? a. worker synergy b. motivational cues c. job performance d. worker responsiveness 103. Narrative 13-2

Agi, a newly appointed CEO of a large pharmaceuticals company, began her tenure by firing the entire Powered by Cognero

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Chapter 13 - Leadership

management committee. A few months later she fired two of her hand-picked senior executives because they were “plotting to diminish her authority” and did not want to follow her orders unquestioningly.

Refer to Narrative 13-2. In terms of Fiedler’s contingency theory, what was Agi most concerned with establishing? a. situational favourableness b. consideration c. locus of power d. goal commitment 104. Narrative 13-2

Agi, a newly appointed CEO of a large pharmaceuticals company, began her tenure by firing the entire management committee. A few months later she fired two of her hand-picked senior executives because they were “plotting to diminish her authority” and did not want to follow her orders unquestioningly.

Refer to Narrative 13-2. In terms of situational favourableness, which of the following did Agi demonstrate? a. high leader–member relations b. high initiating structure c. high goal commitment d. high power position 105. Narrative 13-2

Agi, a newly appointed CEO of a large pharmaceuticals company, began her tenure by firing the entire management committee. A few months later she fired two of her hand-picked senior executives because they were “plotting to diminish her authority” and did not want to follow her orders unquestioningly.

Refer to Narrative 13-2. Which leadership style is Agi using to improve the company's profitability? a. the achievement-oriented style b. the supportive style c. the charismatic style d. the directive style 106. Narrative 13-3

Darryl Sutter, former professional ice hockey player and current head coach of the Calgary Flames, has built an impressive legacy for himself in the world of hockey. In addition to the Flames, Sutter has served as the head coach of the Chicago Blackhawks, San Jose Sharks, and Los Angeles Kings. He coached the Kings to Stanley Cup championships in 2012 and 2014. Recently, he celebrated a huge career milestone with 700 wins and is now tied with Mike Babcock as the 10th most winningest head coaches in NHL history. Don Cherry once described Sutter as “an inspirational figure who is capable of motivating inferiorly skilled teams into overcoming more talented opponents.” Sutter's teams are built in the mould of his career as a player: physical, aggressive, willing to fight, and exhibiting a strong work ethic. He demands these values from his players and has been willing to bench or trade players who do not meet his expectations. Brad Treliving, GM of the Calgary Flames, once stated “I think [Sutter] is one of the best coaches our game has seen. You look at the success he’s had in every place that he’s been, you look at his ability to instil an identity … Like I said then, what he does so well, I thought was exactly what our team needed.”

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Chapter 13 - Leadership

Refer to Narrative 13-3. By describing Sutter as an “inspirational figure,” which of the following is Don Cherry using to define Sutter? a. trait theory b. path-goal theory c. motivation decision theory d. contingency theory 107. Narrative 13-3

Darryl Sutter, former professional ice hockey player and current head coach of the Calgary Flames, has built an impressive legacy for himself in the world of hockey. In addition to the Flames, Sutter has served as the head coach of the Chicago Blackhawks, San Jose Sharks, and Los Angeles Kings. He coached the Kings to Stanley Cup championships in 2012 and 2014. Recently, he celebrated a huge career milestone with 700 wins and is now tied with Mike Babcock as the 10th most winningest head coaches in NHL history. Don Cherry once described Sutter as “an inspirational figure who is capable of motivating inferiorly skilled teams into overcoming more talented opponents.” Sutter's teams are built in the mould of his career as a player: physical, aggressive, willing to fight, and exhibiting a strong work ethic. He demands these values from his players and has been willing to bench or trade players who do not meet his expectations. Brad Treliving, GM of the Calgary Flames, once stated “I think [Sutter] is one of the best coaches our game has seen. You look at the success he’s had in every place that he’s been, you look at his ability to instil an identity … Like I said then, what he does so well, I thought was exactly what our team needed.”

Refer to Narrative 13-3. Which statement best describes why Sutter is an example of a leader? a. Sutter gives his players complete freedom. b. Sutter is fortunate to have self-motivated players. c. Sutter expects the best from his players. d. Sutter’s players automatically respect him because he is the head coach.

108. Narrative 13-3

Darryl Sutter, former professional ice hockey player and current head coach of the Calgary Flames, has built an impressive legacy for himself in the world of hockey. In addition to the Flames, Sutter has served as the head coach of the Chicago Blackhawks, San Jose Sharks, and Los Angeles Kings. He coached the Kings to Stanley Cup championships in 2012 and 2014. Recently, he celebrated a huge career milestone with 700 wins and is now tied with Mike Babcock as the 10th most winningest head coaches in NHL history. Don Cherry once described Sutter as “an inspirational figure who is capable of motivating inferiorly skilled teams into overcoming more talented opponents.” Sutter's teams are built in the mould of his career as a player: physical, aggressive, willing to fight, and exhibiting a strong work ethic. He demands these values from his players and has been willing to bench or trade players who do not meet his expectations. Brad Treliving, GM of the Calgary Flames, once stated “I think [Sutter] is one of the best coaches our game has seen. You look at the success he’s had in every place that he’s been, you look at his ability to instil an identity … Like I said then, what he does so well, I thought was exactly what our team needed.”

Refer to Narrative 13-3. Sutter has built a team around him that will require him to be able to set goals, give directions, and assign tasks. What does Sutter excel in? a. behaving with consideration b. creating instrumentality Powered by Cognero

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Chapter 13 - Leadership c. using decision rules d. initiating structure 109. Narrative 13-3

Darryl Sutter, former professional ice hockey player and current head coach of the Calgary Flames, has built an impressive legacy for himself in the world of hockey. In addition to the Flames, Sutter has served as the head coach of the Chicago Blackhawks, San Jose Sharks, and Los Angeles Kings. He coached the Kings to Stanley Cup championships in 2012 and 2014. Recently, he celebrated a huge career milestone with 700 wins and is now tied with Mike Babcock as the 10th most winningest head coaches in NHL history. Don Cherry once described Sutter as “an inspirational figure who is capable of motivating inferiorly skilled teams into overcoming more talented opponents.” Sutter's teams are built in the mould of his career as a player: physical, aggressive, willing to fight, and exhibiting a strong work ethic. He demands these values from his players and has been willing to bench or trade players who do not meet his expectations. Brad Treliving, GM of the Calgary Flames, once stated “I think [Sutter] is one of the best coaches our game has seen. You look at the success he’s had in every place that he’s been, you look at his ability to instil an identity … Like I said then, what he does so well, I thought was exactly what our team needed.”

Refer to Narrative 13-3. Some describe Sutter’s coaching style as tough but fair, but he always displays confidence in his players. The values he demands from his players and willingness to bench players who don’t meet his high expectations signals he is most likely which type of leader? a. achievement-oriented b. participative c. supportive d. autonomous 110. Narrative 13-3

Darryl Sutter, former professional ice hockey player and current head coach of the Calgary Flames, has built an impressive legacy for himself in the world of hockey. In addition to the Flames, Sutter has served as the head coach of the Chicago Blackhawks, San Jose Sharks, and Los Angeles Kings. He coached the Kings to Stanley Cup championships in 2012 and 2014. Recently, he celebrated a huge career milestone with 700 wins and is now tied with Mike Babcock as the 10th most winningest head coaches in NHL history. Don Cherry once described Sutter as “an inspirational figure who is capable of motivating inferiorly skilled teams into overcoming more talented opponents.” Sutter's teams are built in the mould of his career as a player: physical, aggressive, willing to fight, and exhibiting a strong work ethic. He demands these values from his players and has been willing to bench or trade players who do not meet his expectations. Brad Treliving, GM of the Calgary Flames, once stated “I think [Sutter] is one of the best coaches our game has seen. You look at the success he’s had in every place that he’s been, you look at his ability to instil an identity … Like I said then, what he does so well, I thought was exactly what our team needed.”

Refer to Narrative 13-3. Given Sutter’s ability to motivate inferiorly skilled teams into overcoming more talented opponents and instill an “identity” within the team, which of the following could he be classified as? a. an entrepreneur b. a transformational leader c. a transactional leader d. a leader ombudsman Powered by Cognero

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Chapter 13 - Leadership 111. Narrative 13-3

Darryl Sutter, former professional ice hockey player and current head coach of the Calgary Flames, has built an impressive legacy for himself in the world of hockey. In addition to the Flames, Sutter has served as the head coach of the Chicago Blackhawks, San Jose Sharks, and Los Angeles Kings. He coached the Kings to Stanley Cup championships in 2012 and 2014. Recently, he celebrated a huge career milestone with 700 wins and is now tied with Mike Babcock as the 10th most winningest head coaches in NHL history. Don Cherry once described Sutter as “an inspirational figure who is capable of motivating inferiorly skilled teams into overcoming more talented opponents.” Sutter's teams are built in the mould of his career as a player: physical, aggressive, willing to fight, and exhibiting a strong work ethic. He demands these values from his players and has been willing to bench or trade players who do not meet his expectations. Brad Treliving, GM of the Calgary Flames, once stated “I think [Sutter] is one of the best coaches our game has seen. You look at the success he’s had in every place that he’s been, you look at his ability to instil an identity … Like I said then, what he does so well, I thought was exactly what our team needed.”

Refer to Narrative 13-3. Sutter’s players respect their head coach’s abilities, trust him to do what is best for the team, and generally like him as a person despite the tough love they often receive on the bench. In terms of situational favourableness, which of the following influences Sutter’s leadership ability? a. strong position power b. empowerment c. low task structure d. good leader–member relations 112. Narrative 13-4 When Mark Hurd stepped into his role as the new CEO, Hewlett-Packard (HP) was the 11th largest company in the United States, but struggling financially. Under the previous CEO, Carly Fiorina, HP had paid $19 billion to acquire Compaq Computers, but then incurred more than $10 billion in expenses to integrate Compaq into HP. Expenses rose too much, revenues and market share rose too little, and HP earned profits far below its competition. A number of other significant problems were apparent as well, notably HP’s strategic vision, which Fiorina had repeatedly described as “digital, virtual, mobile, personal.” While this watchword sounded good, no one was quite clear what it meant. A third problem was HP’s confusing business structure, which blurred lines of accountability and slowed decision making. For example, HP salespeople reported to people in four or more divisions, such as sales, printing, computing, and corporate. A fourth problem was HP’s reward system, which was so complex in its calculation that no one understood how their performance affected their bonuses. The most worrisome problem, though, was the deep sense of distrust that pervaded HP, from first-level employees all the way to the boardroom.

Mark Hurd did many things to correct these problems. First, he and his management team set three-year financial targets.

After specifying those goals, they worked backward to determine the financial goals for each part of the company. Indeed, that process was a key part in deciding to lay off 14,500 employees. Those layoffs, which saved the company $1.9 billion a year, helped HP to maintain its $3.5 billion a year budget for product research and development.

Next, Hurd decided to follow Fiorina’s strategic plans for HP but recast the strategy into specifics—selling big businesses everything for IT, including some services as well as hardware. Hurd then began tackling key operational and implementation issues such as the company’s confusing business structure and its complicated bonus system. Hurd divided the sales force three ways, so that sales, printers, and corporate now have dedicated salespeople who do nothing but sell and service their products. A new, simpler bonus plan links bonuses to the performance of the HP division and to the company as a whole.

Finally, Hurd began to address the distrust at HP. He frequently calls people three or four levels down in the company to Powered by Cognero

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Chapter 13 - Leadership ask them specific operational questions about how things did or did not get done. He also regularly sits in on divisional reviews of performance, something that Fiorina never did. And then, to make sure things get done, Hurd holds his managers and staffers accountable for following up. Managers and employees appreciate that Hurd is willing to help them do their jobs. Dave Booth, senior vice president for sales, says he can now call Hurd’s office direct with an urgent customer request instead of going through channels.

Refer to Narrative 13-4. According to contingency theory, which leadership characteristic was Mark Hurd showing when he decided to lay off 14,500 employees? a. consideration b. autonomy c. locus of control d. position power 113. Narrative 13-4 When Mark Hurd stepped into his role as the new CEO, Hewlett-Packard (HP) was the 11th largest company in the United States, but struggling financially. Under the previous CEO, Carly Fiorina, HP had paid $19 billion to acquire Compaq Computers, but then incurred more than $10 billion in expenses to integrate Compaq into HP. Expenses rose too much, revenues and market share rose too little, and HP earned profits far below its competition. A number of other significant problems were apparent as well, notably HP’s strategic vision, which Fiorina had repeatedly described as “digital, virtual, mobile, personal.” While this watchword sounded good, no one was quite clear what it meant. A third problem was HP’s confusing business structure, which blurred lines of accountability and slowed decision making. For example, HP salespeople reported to people in four or more divisions, such as sales, printing, computing, and corporate. A fourth problem was HP’s reward system, which was so complex in its calculation that no one understood how their performance affected their bonuses. The most worrisome problem, though, was the deep sense of distrust that pervaded HP, from first-level employees all the way to the boardroom.

Mark Hurd did many things to correct these problems. First, he and his management team set three-year financial targets.

After specifying those goals, they worked backward to determine the financial goals for each part of the company. Indeed, that process was a key part in deciding to lay off 14,500 employees. Those layoffs, which saved the company $1.9 billion a year, helped HP to maintain its $3.5 billion a year budget for product research and development.

Next, Hurd decided to follow Fiorina’s strategic plans for HP but recast the strategy into specifics—selling big businesses everything for IT, including some services as well as hardware. Hurd then began tackling key operational and implementation issues such as the company’s confusing business structure and its complicated bonus system. Hurd divided the sales force three ways, so that sales, printers, and corporate now have dedicated salespeople who do nothing but sell and service their products. A new, simpler bonus plan links bonuses to the performance of the HP division and to the company as a whole.

Finally, Hurd began to address the distrust at HP. He frequently calls people three or four levels down in the company to ask them specific operational questions about how things did or did not get done. He also regularly sits in on divisional reviews of performance, something that Fiorina never did. And then, to make sure things get done, Hurd holds his managers and staffers accountable for following up. Managers and employees appreciate that Hurd is willing to help them do their jobs. Dave Booth, senior vice president for sales, says he can now call Hurd’s office direct with an urgent customer request instead of going through channels.

Refer to Narrative 13-4. Critics say that Fiorina’s weakness as CEO was that she focused too much on leadership and not enough on which of the following? a. specificity b. goal commitment c. management Powered by Cognero

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Chapter 13 - Leadership d. autonomy 114. Narrative 13-4 When Mark Hurd stepped into his role as the new CEO, Hewlett-Packard (HP) was the 11th largest company in the United States, but struggling financially. Under the previous CEO, Carly Fiorina, HP had paid $19 billion to acquire Compaq Computers, but then incurred more than $10 billion in expenses to integrate Compaq into HP. Expenses rose too much, revenues and market share rose too little, and HP earned profits far below its competition. A number of other significant problems were apparent as well, notably HP’s strategic vision, which Fiorina had repeatedly described as “digital, virtual, mobile, personal.” While this watchword sounded good, no one was quite clear what it meant. A third problem was HP’s confusing business structure, which blurred lines of accountability and slowed decision making. For example, HP salespeople reported to people in four or more divisions, such as sales, printing, computing, and corporate. A fourth problem was HP’s reward system, which was so complex in its calculation that no one understood how their performance affected their bonuses. The most worrisome problem, though, was the deep sense of distrust that pervaded HP, from first-level employees all the way to the boardroom.

Mark Hurd did many things to correct these problems. First, he and his management team set three-year financial targets.

After specifying those goals, they worked backward to determine the financial goals for each part of the company. Indeed, that process was a key part in deciding to lay off 14,500 employees. Those layoffs, which saved the company $1.9 billion a year, helped HP to maintain its $3.5 billion a year budget for product research and development.

Next, Hurd decided to follow Fiorina’s strategic plans for HP but recast the strategy into specifics—selling big businesses everything for IT, including some services as well as hardware. Hurd then began tackling key operational and implementation issues such as the company’s confusing business structure and its complicated bonus system. Hurd divided the sales force three ways, so that sales, printers, and corporate now have dedicated salespeople who do nothing but sell and service their products. A new, simpler bonus plan links bonuses to the performance of the HP division and to the company as a whole.

Finally, Hurd began to address the distrust at HP. He frequently calls people three or four levels down in the company to ask them specific operational questions about how things did or did not get done. He also regularly sits in on divisional reviews of performance, something that Fiorina never did. And then, to make sure things get done, Hurd holds his managers and staffers accountable for following up. Managers and employees appreciate that Hurd is willing to help them do their jobs. Dave Booth, senior vice president for sales, says he can now call Hurd’s office direct with an urgent customer request instead of going through channels.

Refer to Narrative 13-4. Which form of leadership is Hurd using in doing a better job of implementing Fiorina’s strategy? a. strategic leadership b. visionary leadership c. managerial leadership d. supportive leadership 115. Narrative 13-4 When Mark Hurd stepped into his role as the new CEO, Hewlett-Packard (HP) was the 11th largest company in the United States, but struggling financially. Under the previous CEO, Carly Fiorina, HP had paid $19 billion to acquire Compaq Computers, but then incurred more than $10 billion in expenses to integrate Compaq into HP. Expenses rose too much, revenues and market share rose too little, and HP earned profits far below its competition. A number of other significant problems were apparent as well, notably HP’s strategic vision, which Fiorina had repeatedly described as “digital, virtual, mobile, personal.” While this watchword sounded good, no one was quite clear what it meant. A third problem was HP’s confusing business structure, which blurred lines of accountability and slowed decision making. For example, HP salespeople reported to people in four or more divisions, such as sales, printing, computing, and corporate. A Powered by Cognero

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Chapter 13 - Leadership fourth problem was HP’s reward system, which was so complex in its calculation that no one understood how their performance affected their bonuses. The most worrisome problem, though, was the deep sense of distrust that pervaded HP, from first-level employees all the way to the boardroom.

Mark Hurd did many things to correct these problems. First, he and his management team set three-year financial targets.

After specifying those goals, they worked backward to determine the financial goals for each part of the company. Indeed, that process was a key part in deciding to lay off 14,500 employees. Those layoffs, which saved the company $1.9 billion a year, helped HP to maintain its $3.5 billion a year budget for product research and development.

Next, Hurd decided to follow Fiorina’s strategic plans for HP but recast the strategy into specifics—selling big businesses everything for IT, including some services as well as hardware. Hurd then began tackling key operational and implementation issues such as the company’s confusing business structure and its complicated bonus system. Hurd divided the sales force three ways, so that sales, printers, and corporate now have dedicated salespeople who do nothing but sell and service their products. A new, simpler bonus plan links bonuses to the performance of the HP division and to the company as a whole.

Finally, Hurd began to address the distrust at HP. He frequently calls people three or four levels down in the company to ask them specific operational questions about how things did or did not get done. He also regularly sits in on divisional reviews of performance, something that Fiorina never did. And then, to make sure things get done, Hurd holds his managers and staffers accountable for following up. Managers and employees appreciate that Hurd is willing to help them do their jobs. Dave Booth, senior vice president for sales, says he can now call Hurd’s office direct with an urgent customer request instead of going through channels.

Refer to Narrative 13-4. What did Hurd need to do early on in his role of CEO to improve the performance of his management team? a. He needed to initiate structure. b. He needed to improve situations. c. He needed to implement position power. d. He needed to initiate change.

116. Narrative 13-4 When Mark Hurd stepped into his role as the new CEO, Hewlett-Packard (HP) was the 11th largest company in the United States, but struggling financially. Under the previous CEO, Carly Fiorina, HP had paid $19 billion to acquire Compaq Computers, but then incurred more than $10 billion in expenses to integrate Compaq into HP. Expenses rose too much, revenues and market share rose too little, and HP earned profits far below its competition. A number of other significant problems were apparent as well, notably HP’s strategic vision, which Fiorina had repeatedly described as “digital, virtual, mobile, personal.” While this watchword sounded good, no one was quite clear what it meant. A third problem was HP’s confusing business structure, which blurred lines of accountability and slowed decision making. For example, HP salespeople reported to people in four or more divisions, such as sales, printing, computing, and corporate. A fourth problem was HP’s reward system, which was so complex in its calculation that no one understood how their performance affected their bonuses. The most worrisome problem, though, was the deep sense of distrust that pervaded HP, from first-level employees all the way to the boardroom.

Mark Hurd did many things to correct these problems. First, he and his management team set three-year financial targets.

After specifying those goals, they worked backward to determine the financial goals for each part of the company. Indeed, that process was a key part in deciding to lay off 14,500 employees. Those layoffs, which saved the company $1.9 billion a year, helped HP to maintain its $3.5 billion a year budget for product research and development.

Next, Hurd decided to follow Fiorina’s strategic plans for HP but recast the strategy into specifics—selling big businesses everything for IT, including some services as well as hardware. Hurd then began tackling key operational and Powered by Cognero

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Chapter 13 - Leadership implementation issues such as the company’s confusing business structure and its complicated bonus system. Hurd divided the sales force three ways, so that sales, printers, and corporate now have dedicated salespeople who do nothing but sell and service their products. A new, simpler bonus plan links bonuses to the performance of the HP division and to the company as a whole.

Finally, Hurd began to address the distrust at HP. He frequently calls people three or four levels down in the company to ask them specific operational questions about how things did or did not get done. He also regularly sits in on divisional reviews of performance, something that Fiorina never did. And then, to make sure things get done, Hurd holds his managers and staffers accountable for following up. Managers and employees appreciate that Hurd is willing to help them do their jobs. Dave Booth, senior vice president for sales, says he can now call Hurd’s office direct with an urgent customer request instead of going through channels.

Refer to Narrative 13-4. There was a deep sense of distrust at HP when Hurd replaced Fiorina as CEO. Which leadership behaviour did Hurd need to use to help improve the situation? a. participative leadership b. locus of control c. leader–member relations d. consideration

Indicate whether the statement is true or false.

117. Leadership is the process of influencing others to achieve group or organizational goals. a. True b. False 118. One difference between managers and leaders is that managers focus on visions, missions, goals, and objectives, and leaders focus solely on productivity and efficiency. a. True b. False 119. The primary difference between leaders and managers is that leaders are concerned with doing the right thing, and managers are concerned with doing things right. a. True b. False 120. Whereas managers tend to have a short-term perspective, leaders tend to have a long-term perspective. a. True b. False 121. According to trait theory, all effective leaders possess a similar set of traits or characteristics. a. True b. False 122. Since there are no consistent trait differences between leaders and nonleaders, or between effective and ineffective leaders, trait theory is wrong. a. True b. False Powered by Cognero

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Chapter 13 - Leadership 123. The leadership trait of integrity refers to the extent to which leaders do what they said they will do. a. True b. False 124. As a leader behaviour, initiating structure is the degree to which a leader structures the roles of followers by setting goals, giving directions, setting deadlines, and assigning tasks. a. True b. False 125. As a leader behaviour, consideration refers to the extent to which leaders do what they said they will do. a. True b. False 126. Initiating structure leader behaviour has also been referred to as “job-centred leadership” and “concern for production.” a. True b. False 127. Consideration leader behaviour has also been referred to as “concern for people” and “employee-centred leadership.” a. True b. False 128. While consideration primarily affects subordinates’ job performance, initiating structure primarily affects subordinates’ job satisfaction. a. True b. False 129. Researchers at Ohio and Texas universities believe leaders can simultaneously be considerate and initiate

structure because consideration and initiating structure are independent behaviours. a. True b. False 130. The four major situational leadership theories all assume that the effectiveness of any leadership style (the way a leader generally behaves toward followers) depends on the situation. a. True b. False 131. There is no such thing as a “best” leadership style for all situations and employees. a. True b. False 132. Fiedler’s contingency theory is based on the assumption that leaders are capable of adapting and adjusting their leadership styles to fit the demands of different situations. a. True b. False Powered by Cognero

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Chapter 13 - Leadership 133. Fiedler’s contingency theory states that in order to maximize work group performance, leaders must be matched to the situation that best fits their leadership style. a. True b. False 134. In Fiedler’s contingency theory, there are two situational factors that determine the favourability of a

situation: leader–member relations and task structure. a. True b. False 135. Fiedler’s contingency theory has been successfully used to place leaders in appropriate situations where they can perform most efficiently. a. True b. False 136. Task-oriented leaders do well under unfavourable and favourable situations. a. True b. False 137. In general, as people become more “ready” and thus more willing and able to guide their own behaviour,

leaders should become less relationship-oriented and more task-oriented. a. True b. False 138. Directive leadership is a leadership style in which leaders set challenging goals, have high expectations of employees, and display confidence that employees will assume responsibility and put forth extraordinary effort. a. True b. False 139. As described in path–goal theory, directive leadership is similar to the key leadership behaviour of

initiating structure. a. True b. False 140. Job readiness is the amount of knowledge, skill, ability, and experience people have to perform their jobs. a. True b. False 141. Within the path-goal model, the achievement-oriented and participative leadership styles directly parallel the key leadership behaviours of initiating structure and consideration, respectively. a. True b. False 142. The normative decision theory helps leaders decide how much employee participation should be used when making decisions. a. True Powered by Cognero

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Chapter 13 - Leadership b. False 143. According to normative decision theory, using the right degree of employee participation improves the quality of decisions and the extent to which employees accept and are committed to decisions. a. True b. False 144. Strategic leadership is defined as the ability to think strategically and create a strategic plan for an organization. a. True b. False 145. Transformational leadership is leadership that generates awareness and acceptance of a group’s purpose and mission, and gets employees to see beyond their own needs and self-interest for the good of the group. a. True b. False 146. While transformational leaders use visionary and inspirational appeals to influence followers, transactional leadership is based on an exchange process. a. True b. False 147. People with a moderate style (who can be somewhat relationship-oriented or somewhat task-oriented) tend

to do fairly well in all situations because they can adapt (or change) their behaviour to suit the situation. a. True b. False 148. Task-oriented leaders do well in unfavourable situations, those in which leaders are disliked, tasks are

unstructured, and the leader doesn’t have the power to hire, fire, reward, and punish. a. True b. False 149. People with an internal locus of control prefer a directive leadership style. a. True b. False 150. Path-goal theory specifies that leader behaviours should duplicate followers’ work environments. a. True b. False 151. When formal authority is high, according to the path-goal theory, directive leadership is inappropriate. a. True b. False 152. The normative decision theory model of leader behaviour divides decisions into three categories: autocratic, consultative, or group. a. True Powered by Cognero

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Chapter 13 - Leadership b. False 153. The leader information rule suggests using an autocratic decision style when the leader has more information than do subordinates. a. True b. False 154. Charismatic leaders often act differently in public (e.g., speeches and meetings) than they do in private. a. True b. False 155. One way to increase decision quality is to use the commitment requirement rule. a. True b. False

156. Define leadership and management. Explain how leaders and managers approach their jobs differently.

157. List and briefly identify four of the eight traits that differentiate leaders from non-leaders.

158. What is the difference between honesty and integrity? How is each relevant to effective leadership?

159. What are the two key leader behaviours that are central to successful leadership? How does each typically influence subordinates?

160. List the four major situational theories of leadership. How do they differ in terms of what each assumes

about the adaptability of leadership style (i.e., a leader’s ability to change his or her leadership style in different situations)?

161. What are the assumptions of Fiedler’s contingency theory? What needs to be done in order to make this theory practical for use in the workplace?

162. Define directive and supportive leadership and describe each leadership style.

163. Briefly describe the value of the normative decision theory to the practising manager.

164. Identify and define the components of visionary leadership.

165. Briefly explain the difference between transformational and transactional leadership.

166. What is the difference between a leader and a manager? What is the relative importance of leaders and

managers to the success of organizations today? In your own words, describe what it means when an organization is underled and overmanaged and give an example of what this might look like in practice.

167. What does management research say about who leaders are and what leaders do? Comment on the best leadership style for all situations and employees. Provide an example of a leader that you know of or have worked with, and explain Powered by Cognero

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Chapter 13 - Leadership how this individual demonstrates some of the typical characteristics and behaviours identified by management research as typical of leaders.

168. Identify and describe Fiedler’s contingency theory. Explain how this approach might be particularly valuable to an experienced manager in selecting among several job offers for managerial positions in different organizational situations.

169. Compare and contrast charismatic and transformational leadership. Explain why ethical transgressions are less likely among transformational leaders than they are among charismatic leaders.

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Chapter 13 - Leadership Answer Key 1. b 2. a 3. d 4. d 5. d 6. d 7. a 8. a 9. c 10. b 11. a 12. c 13. a 14. b 15. c 16. c 17. c 18. b 19. a 20. d 21. c 22. c 23. c 24. c 25. d Powered by Cognero

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Chapter 13 - Leadership 26. d 27. b 28. d 29. a 30. b 31. a 32. d 33. d 34. d 35. b 36. d 37. c 38. c 39. b 40. a 41. d 42. a 43. d 44. a 45. b 46. b 47. c 48. d 49. c 50. c 51. d Powered by Cognero

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Chapter 13 - Leadership 52. d 53. d 54. b 55. b 56. d 57. b 58. c 59. d 60. c 61. d 62. d 63. b 64. a 65. a 66. d 67. d 68. b 69. a 70. c 71. a 72. b 73. d 74. a 75. a 76. a Powered by Cognero

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Chapter 13 - Leadership 77. d 78. b 79. b 80. c 81. d 82. c 83. b 84. a 85. d 86. c 87. c 88. a 89. c 90. a 91. d 92. a 93. c 94. d 95. d 96. d 97. a 98. a 99. b 100. d 101. c 102. c Powered by Cognero

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Chapter 13 - Leadership 103. a 104. d 105. d 106. a 107. c 108. d 109. a 110. b 111. d 112. d 113. c 114. a 115. a 116. d 117. True 118. False 119. True 120. True 121. True 122. False 123. True 124. True 125. False 126. True 127. True Powered by Cognero

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Chapter 13 - Leadership 128. False 129. True 130. True 131. True 132. False 133. True 134. False 135. True 136. False 137. False 138. False 139. True 140. True 141. False 142. True 143. True 144. False 145. True 146. True 147. True 148. True 149. False 150. False 151. True 152. True 153. False Powered by Cognero

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Chapter 13 - Leadership 154. False 155. False 156. Leadership is the process of influencing others to achieve group or organizational goals. Management is the process of getting work done through others. Leaders are different from managers. The primary difference is that leaders are concerned with doing the right things, while managers are concerned with doing things right. Furthermore, managers have a short-term focus and are concerned with the status quo, with means rather than ends, and with solving others’ problems.

By contrast, leaders have a long-term focus, are concerned with change, with ends rather than means, and with inspiring and motivating others to solve their own problems.

157. Recent evidence shows that successful leaders are not like other people and are indeed different from the

rest of us. More specifically, leaders are different from non-leaders on the following traits: drive, the desire to lead, honesty/integrity, self-confidence, emotional stability, cognitive ability, and knowledge of the business.

Drive refers to high levels of effort and is characterized by achievement, motivation, ambition, energy, tenacity, and initiative. Desire to lead refers to a preference to be in charge and influence others. Honesty refers to being truthful with others, while integrity refers to doing what you say you will do. Self-confidence refers to believing in one’s abilities. Emotional stability means that individuals remain even-tempered and consistent in their outlook and in the way they treat others even when things go wrong. Leaders also have emotional intelligence— the ability of people to recognize their own and other people's emotions. Cognitive ability refers to the capacity to analyze large amounts of seemingly unrelated, complex information and see patterns or opportunities or threats where others might not see them. Finally, knowledge of the business means that individuals understand the key technological decisions and concerns facing their companies.

158. Honesty means being truthful with others, and is a cornerstone of leadership. Without honesty, leaders

won’t be trusted. But with it, subordinates are willing to overlook other flaws. Jeff Bezos says, “If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, ‘Look, I know we disagree on this, but will you gamble with me on it? Disagree and commit?’” He cites the example of a new Amazon Studios TV show that he didn’t like, but which was still approved for funding. He told the team his negative view. They had a completely different opinion and wanted to go ahead. Bezos was honest, and people respect that; he wasn’t just going with the flow. He also demonstrated that his honesty would not impede others.

Integrity is the extent to which leaders do what they said they will do. Leaders may be honest and have good intentions, but if they don’t consistently deliver on what they promise, they won’t be trusted.

159. Research has identified two key leadership behaviours, which form the basis for many leadership theories.

These key behaviours are initiating structure and consideration. Initiating structure is defined as the degree to which a leader structures the roles of followers by setting goals, giving directions, setting deadlines, and assigning tasks. Research demonstrates that this behaviour primarily improves subordinate job performance.

Consideration, on the other hand, is defined as the extent to which a leader is friendly, approachable, supportive, and shows concern for employees. Research indicates that this behaviour primarily improves subordinate job satisfaction.

160. The four major situational leadership theories are Fiedler’s contingency theory, Hersey and Blanchard’s

Situational Leadership theory, House’s path–goal theory, and Vroom–Yetton–Jago’s normative decision model.

These theories all assume that the effectiveness of any leadership style, the way a leader generally behaves toward followers, depends on the situation. Accordingly, there is no one “best” leadership style. These theories differ in one significant way. Fiedler’s contingency theory assumes that leadership styles are consistent and Powered by Cognero

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difficult to change. Therefore, leaders must be placed in or “matched” to a situation that fits their leadership style. The other situational theories assume that leaders are capable of adapting and adjusting their leadership styles to fit the demands of different situations.

161. Fiedler’s theory assumes that leaders are effective when their work groups perform well, that leaders are unable to change their leadership styles, that leadership styles must be matched to the proper situation, and that favourable situations permit leaders to influence group members. Since Fiedler assumes that leaders are incapable of changing their leadership styles, the key is to accurately measure and match leaders to situations or to teach leaders how to change situational factors. While matching or placing leaders in appropriate situations works well, “re-engineering situations” to fit leadership styles hasn’t because of the complexity of the model, which people find difficult to understand. Thus, the real key to practicality seems to be appropriately measuring managers’ leadership styles and then properly matching them to situations.

162. The two leadership styles within path-goal theory that parallel the key leadership behaviours of initiating structure and consideration are directive leadership and supportive leadership. Directive leadership involves letting employees know precisely what is expected of them, giving them specific guidelines for performing tasks, scheduling work, setting standards of performance, and making sure that people follow standard rules and regulations. Supportive leadership involves being friendly and approachable to employees, showing concern for them and their welfare, treating them as equals, and creating a friendly climate.

163. The normative decision theory (also known as the “Vroom-Yetton-Jago model”) helps leaders decide how much employee participation (from none to letting employees make the entire decision) should be used when making decisions.

Using the right degree of employee participation improves the quality of decisions and the extent to which employees accept and are committed to decisions. Since this approach has been described as the best supported of all leadership theories, it offers an extremely valuable template to managers to use in determining the extent of participative management in any given circumstance. It can thus increase managerial effectiveness.

164. Visionary leadership creates a positive image of the future that motivates organizational members and provides direction for future planning and goal setting. There are two types of visionary leadership, charismatic and transformational leadership. Charismatic leadership is characterized by a strong, confident, dynamic personality that attracts followers, enables the creation of strong bonds, and inspires followers to accomplish the leader’s vision.

Transformational leadership goes beyond charismatic leadership by generating awareness and acceptance of a group’s purpose and mission and by getting employees to see beyond their own needs and self-interest for the good of the group.

165. Transformational leadership refers to leadership that generates awareness and acceptance of a group’s purpose and mission and gets employees to see beyond their own needs and self-interest for the good of the group. Transformational leaders transform their organizations by getting their followers to accomplish more than they intended and even more than they thought possible. A distinction needs to be drawn between transformational leadership and transactional leadership.

While transformational leaders use visionary and inspirational appeals to influence followers, transactional leadership is based on an exchange process, in which followers are rewarded for good performance and punished for poor performance.

When leaders administer rewards fairly and offer followers the rewards that they want, followers will often reciprocate with effort. However, transactional leaders often over rely on discipline or threats to bring performance up to standards.

While doing this may work in the short run, it’s much less effective in the long run. The result, studies consistently show, is that transformational leadership is much more effective, on average, than transactional leadership.

166. Leadership is the process of influencing others to achieve group or organizational goals, while management

refers to getting work done through others. Leaders are different from managers. The primary difference is that leaders are concerned with doing the right things, while managers are concerned with doing things right. That is, leaders focus on visions, missions, goals, and objectives, while managers focus solely on productivity and efficiency. Managers see themselves as preservers of the status quo, while leaders see themselves as promoters of change, as challengers of the status quo in that they encourage creativity and risk taking. Furthermore, Powered by Cognero

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Chapter 13 - Leadership

managers have a short-term focus and are concerned with means rather than ends, and with solving others’ problems. By contrast, leaders have a long-term focus and are concerned with ends rather than means, and with inspiring and motivating others to solve their own problems. While leaders are different from managers, in practice, organizations need them both. Managers are critical to getting out the day-to-day work and leaders are critical to inspiring employees and setting the organization’s long-term direction. The key issue is the extent to which organizations are properly led or properly managed. Most organizations are underled and overmanaged, in that they do not pay enough attention to solving long-term problems effectively and adapting to their environments, while they pay too much attention to the bureaucratic details of productivity and efficiency within the existing status quo.

When organizations are underled and overmanaged, they do not pay enough attention to doing the right thing, and they pay too much attention to doing things right. This means that organizations often get too focused on the details (or too “in the weeds”) and often fail to stop and remember the bigger picture or organizational purpose. Other important facets of the organization are often overlooked in this case, such as employee engagement and motivation. For example, a manager trying to motivate employees using sales metrics (e.g., net profit) will receive compliance, but they may not generate the same long-term commitment and enthusiasm as a leader painting an exciting vision for the future and connecting the actions of the employee to the organization’s purpose.

167. Management research has attempted to identify the typical characteristics of leaders for many years through an approach known as trait theory, which has also been referred to as the “great person” theory. Trait theory is one way to describe who leaders are. Trait theory says that effective leaders possess a similar set of traits or characteristics. Traits are relatively stable characteristics, such as abilities, psychological motives, or consistent patterns of behaviour. Until recently, studies indicated that trait theory was wrong, that there were no consistent trait differences between leaders and nonleaders, or between effective and ineffective leaders. However, more recent evidence shows that “successful leaders are not like other people,” that successful leaders are indeed different from the rest of us. More specifically, leaders are different from nonleaders on the following traits: drive, the desire to lead, honesty/integrity, self-confidence, emotional stability, cognitive ability, and knowledge of the business.

These traits may be defined as follows. Drive refers to high levels of effort and is characterized by achievement, motivation, ambition, energy, tenacity, and initiative. Desire to lead refers to a preference to be in charge and influence others. Honesty refers to being truthful with others, while integrity refers to doing what you say you will do. Selfconfidence refers to believing in one’s abilities. Emotional stability means that individuals remain even-tempered and consistent in their outlook and in the way they treat others even when things go wrong. Cognitive ability refers to the capacity to analyze large amounts of seemingly unrelated, complex information and to see patterns or opportunities or threats where others might not see them. Finally, knowledge of the business means that individuals understand the key technological decisions and concerns facing their companies.

However, traits aren’t enough for successful leadership. Leaders who have these traits (or many of them) must behave in ways that encourage people to perform appropriately. That is, leaders must do certain things. They must perform behaviours or take actions to influence others to achieve group or organizational goals. Two key leader behaviours have been identified through hundreds of studies, which, in turn, evaluated hundreds of leader behaviours. These studies identified two key leadership behaviours, which form the basis for many leadership theories. These key behaviours are initiating structure and consideration. Initiating structure is defined as the degree to which a leader structures the roles of followers by setting goals, giving directions, setting deadlines, and assigning tasks. Research demonstrates that this behaviour primarily improves subordinate performance. Consideration, on the other hand, is defined as the extent to which a leader is friendly, approachable, and supportive and shows concern for employees. Research indicates that this behaviour primarily improves subordinate satisfaction.

While different theorists and researchers have argued for years over what the “best” leadership style is, the research has Powered by Cognero

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Chapter 13 - Leadership demonstrated that there is no “best” combination of these behaviours. The “best” leadership style depends on the situation.

In other words, no one leadership behaviour or combination of leadership behaviours works well across all situations and employees.

Student examples should clearly identify the presence of several of the typical leadership traits and should also specify circumstances in which the leader functioned by using either or both initiating structure and consideration behaviour.

Better answers will provide clear descriptions of leaders demonstrating a variety of the relevant traits. They will specify concrete situational examples for the two dimensions of leadership behaviour.

168. Fiedler’s contingency theory is one of four situational theories of leadership, which all assume that the

effectiveness of any leadership style (i.e., the way a leader generally behaves toward followers) depends on the situation. Fiedler’s theory assumes that leaders are effective when their work groups perform well, that leaders are unable to change their leadership styles, that leadership styles must be matched to the proper situation, and that favourable situations permit leaders to influence group members. There are two basic leadership styles, relationship-oriented leadership and task-oriented leadership. Situational favourableness occurs when leaders can influence followers, and it is determined by leader–member relations, task structure, and position power. In general, relationship-oriented leaders are better leaders under moderately favourable situations, while taskoriented leaders are better leaders in highly favourable and unfavourable situations. Since Fiedler assumes that leaders are incapable of changing their leadership styles, the key is to accurately measure and match leaders to situations or to teach leaders how to change situational factors. Of course, the theory won’t work as well if leaders are attempting to change situational factors to fit their perceived leadership style rather than their real leadership style.

The implications of the research on this model for an experienced manager selecting among several job offers is potentially straightforward. Since the manager is experienced, he or she should be able to get an accurate assessment of leadership style. Once the manager has self-identified as either a task- or relationship-oriented leader, the next step would be to assess the situational favourability in each of the potential new managerial positions, by assessing or estimating leader–member relations, task structure, and position power in each job.

The manager should then select the position with the favourableness level that most closely matches his/her leadership style according to Fiedler’s effectiveness criteria, since the research cited above demonstrates that matching leaders to situations works well, while reengineering situations does not.

169. Charismatic and transformational leadership are the two kinds of visionary leadership, which are, in

essence, leadership styles that allow leaders to achieve strategic leadership. Strategic leadership is the ability to anticipate, envision, maintain flexibility, think strategically, and work with others to initiate changes that will create a positive future for an organization. It represents the fourth approach to leadership (after traits, behaviours, and situational theories).

Strategic leadership requires visionary, charismatic, and transformational leadership. Visionary leadership creates a positive image of the future that motivates organizational members and provides direction for future planning and goal setting. It is manifest in terms of either charismatic or transformational leadership styles.

Charismatic leaders have strong, confident, dynamic personalities that attract followers, enable them to create strong bonds, and inspire followers to accomplish the leader-set vision. Followers of charismatic leaders work harder, are more committed and satisfied, are better performers, and are more likely to trust their leaders.

Transformational leadership goes beyond charismatic leadership by generating awareness and acceptance of a group’s purpose and mission and by getting employees to see beyond their own needs and self-interest for the good of the group. The four components of transformational leadership are charismatic leadership or idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration.

It is the first of these components that explains why ethical transgressions are less likely among Powered by Cognero

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transformational leaders than they are among charismatic leaders. Charismatic leadership or idealized influence means that transformational leaders act as role models for their followers. Because transformational leaders put others’ needs ahead of their own and share risks with followers, they are admired, respected, and trusted, and followers want to emulate them. Thus, in contrast to purely charismatic leaders, transformational leaders can be counted on to do the right thing and maintain high standards for ethical and personal conduct.

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Chapter 14 - Managing Communication

Indicate the answer choice that best completes the statement or answers the question.

1. A manager tells the staff that an important meeting will be held in the afternoon. One employee interprets this

to mean the manager is unhappy with the group’s performance. Another employee interprets this to mean they may be receiving a bonus for their good work. What is this an example of? a. the grapevine b. perceptual interpretations c. communication delays d. perceptual filters 2. What is the last step in the perception process? a. interpretation b. retention c. attention d. organization 3. What is the term for the process of noticing or becoming aware of particular stimuli in the perception

process? a. retention b. organization c. interpretation d. attention 4. Which term is used to describe the process of remembering interpreted information, in the perception process? a. apprehension b. organization c. interpretation d. retention 5. Bonnie can be very loud and boisterous especially during lunch breaks. Connie feels Bonnie acts this way because she craves attention likely due to a childhood in which she received very little attention. What are Connie’s thoughts about Bonnie an example of? a. perception filters b. selective perception c. closure d. attribution theory 6. What is the term for the process by which individuals attend to, organize, interpret, and retain information from their environments? a. active hearing b. passive listening c. perception d. apprehension 7. Why do people exposed to the same information often disagree about what they saw or heard?

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Chapter 14 - Managing Communication a. defensive biases b. feedback variables c. differences in communication media d. perceptual filters 8. What are perceptual filters influenced by? a. stimulus-based differences b. physiology-based differences c. situation-contextual differences d. personality-based differences 9. Which of the following steps is part of the basic perception process? a. conceptualization b. organization c. analysis d. communication 10. What are the steps in the perception process, in order? a. retention, interpretation, attention, organization b. attention, organization, interpretation, retention c. organization, attention, interpretation, retention d. retention, organization, attention, interpretation 11. What is the term for the process of incorporating new information into your existing knowledge, in the perception process? a. comprehension b. organization c. interpretation d. retention 12. What is the term for the process of attaching meaning to new knowledge, in the perception process? a. attention b. organization c. interpretation d. definition 13. What is the term for the tendency to fill in gaps of missing information by assuming that what we don’t know is consistent with what we already know? a. selective perception b. paralanguage c. closure d. defensive bias 14. Marathon runner Mariah Li noticed the San Diego Zoo was prohibiting people in motorized wheelchairs from viewing the zoo’s baby panda and saw nothing wrong with this policy. Tully Smythe, who is wheelchair-bound, saw the notice and Powered by Cognero

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Chapter 14 - Managing Communication felt he was being discriminated against because he could not use his wheelchair to access the panda site. What does this scenario provide examples of? a. selective perception b. destructive feedback c. faulty closure d. selective retention 15. Robin has postponed getting her ears pierced for years even though she loves to wear earrings and is convinced that jewellery manufacturers will not continue to produce clip-on earrings. When Robin was told that her favourite store would no longer stock Coret brand clip-on earrings, she assumed that Coret was no longer producing clip-on earrings, even though that was not the case. What led to Robin’s incorrect assumption? a. selective perception b. upward communication c. closure d. defensive bias 16. Mike is a big fan of all kinds of sports. As he walked past the snack-room bulletin board, he was excited to notice the company was sponsoring a softball team. Non-athletic Kenneth walks by the same bulletin board at least three times every day and has yet to see the softball notice. Why did Mike see the notice but Kenneth did not? a. selective perception b. paralanguage c. faulty closure d. selective retention 17. What is the term for the tendency to notice and accept objects and information consistent with our values, beliefs, and expectations while ignoring or screening out or not accepting inconsistent information? a. selective perception b. paralanguage c. closure d. attribution 18. The retired founder of L. L. Bean spent much of his time sitting on a set of stairs where he could watch customers coming and going to his store. He typically dressed in old pants, well-worn flannel shirts, and a pair of muddy boots.

Customers assumed he was a derelict. Those who recognized him thought of him as a real character. Why was he seen differently by different people? a. attribution b. a defensive bias c. a reactive bias d. selective perception 19. Clyde is a hunter and a member of the National Firearms Association (NFA), and proudly displays its decal on his truck. When he glimpsed a window decal on Don’s car, he thought, “Hey, Don is a member of NFA, too.” Clyde correctly filled in the words on the decal by relating the shape and colour of the decal to the decal he was familiar with. What did Clyde use to fill in missing information? a. a reactive bias b. closure Powered by Cognero

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Chapter 14 - Managing Communication c. selective reception d. paraperception 20. According to attribution theory, which of the following makes managers more likely to accredit workers’ problems or failures to internal causes than to external causes? a. closure b. the defensive bias c. the self-serving bias d. the fundamental attribution error 21. According to attribution theory, what are the two general reasons, or attributions, we use to explain people’s behaviour? a. formalized and non-formalized attributions b. self-serving and defensive attributions c. objective and subjective attributions d. internal and external attributions 22. According to attribution theory, to which of the following causes does the defensive bias make workers more likely to attribute their performance problems? a. situational causes b. personal causes c. an internal locus of control d. the absence of unity of command 23. Which of the following states that we all have a basic need to understand and explain the causes of other people’s behaviour? a. attribution theory b. behavioural reflection theory c. theory of causality d. principle of consideration 24. Renovation of a street and sidewalk was supposed to be finished in October. Wet weather prolonged the rebuilding until the middle of December. Local retailers blamed the city for low holiday sales. Why would you agree with this analysis of why sales were poor? a. You’re experiencing the halo effect. b. You don’t believe in attribution theory. c. You’re having a defensive bias. d. You’re having a reactive bias.

25. Lopez was injured at work when a warehouse shelving unit fell on him. According to attribution theory, what would his coworkers be guilty of if they assumed the accident was due to the shelves being improperly anchored to the wall? a. fundamental attribution error b. reactive perception error c. error of culpability d. defensive bias Powered by Cognero

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Chapter 14 - Managing Communication 26. Karl was injured at work when a shelving unit fell on him. According to attribution theory, what would his employer be committing if he thought Karl was completely responsible for the accident because Karl was trying to reach an item on a high shelf by climbing on the shelving unit rather than using a ladder? a. a fundamental attribution error b. a reactive perception error c. an error of culpability d. a proactive perceptual error 27. Which of the following terms is used to describe the experience of someone likely to take any negative

criticism of their department personally and get defensive? a. empowerment bias b. error of culpability c. self-serving bias d. reactive error of perception 28. When things go wrong in the workplace, workers are more likely to attribute their problems to external causes. What are managers more likely to attribute those same workers’ problems to? a. to intrinsic reinforcers b. to internal causes c. to defensive bias d. to self-serving bias 29. What is the term for the tendency to overestimate our value by attributing successes to ourselves (internal causes) and attributing failures to others or the environment (external causes)? a. closure b. defensive bias c. self-serving bias d. the fundamental attribution error 30. In the model of the communication process, what occurs when a message is put into a written, verbal, or symbolic form that can be recognized and understood by the receiver? a. encoding b. decoding c. transmission d. feedback 31. What was Ellis Jacob, chief executive of Cineplex, engaged in when he explained to shareholders and the media why Cineplex was merging with Famous Players? a. encoding b. feedback preparation c. feedforward d. selective filtering 32. In the model of the communication process, what makes senders aware of possible miscommunications and enables them to continue communicating until the receiver understands the intended message?

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Chapter 14 - Managing Communication a. encoding b. noise c. transmission d. feedback 33. The crew renovating the downtown area accidentally dug up the sidewalk belonging to the First Methodist Church because they understood that all sidewalks were to be replaced. The crew was supposed to replace only city-owned sidewalks. In terms of the communication process, what did the crew members engage in? a. selective perception b. decoding c. improper encoding d. negative feedback 34. The construction manager of a multi-residential development in Toronto’s downtown core instructed his

crew to replace the sidewalks. Unfortunately, after the crew dug up all the sidewalks they learned they were supposed to replace only city-owned sidewalks. In terms of the communication process, what did the construction manager do improperly? a. decode the message b. encode the message c. provide feedback about the message d. understand the jargon of the message 35. What term can be used to describe anything that interferes with the transmission of the intended message? a. downward communication b. noise c. upward communication d. obstruction 36. Jax was on a Microsoft Teams meeting with two of his colleagues and suggested that they should “take this

offline” because the issue at hand was clearly not going to be resolved on the call. He then said he thinks they should “pivot” their sales approach for the upcoming month. What is Jax using? a. decoding b. jargon c. slang d. noise 37. In which of the following situations can noise occur? a. When the sender is certain what message to communicate. b. When the message is clearly encoded. c. When the wrong communication channel is chosen. d. When the message is received and decoded properly.

38. What are the three formal communication channels in organizations? a. downward, horizontal, and upward Powered by Cognero

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Chapter 14 - Managing Communication b. hierarchical, functional, and organizational c. horizontal, upward, and hierarchical d. functional, organizational, and downward 39. When Scotiabank, one of Canada’s largest financial service providers, wanted to develop a customer-

focused sales and service culture, it avoided information overload by limiting the number of communication platforms used. Top management developed the main messages, which were consistently communicated to all levels of employees throughout the organization. Which type of communication channel is this an example of? a. downward b. upward c. horizontal d. formal 40. Which type of communication was Dieter Zetsche, chief executive of DaimlerChrysler, engaged in when he

explained to unionized employees why the company had to reduce its health-care coverage for employees? a. upward b. dyadic c. horizontal d. downward 41. What is the term for the system of official channels that carry organizationally approved messages and information? a. downward communication channel b. upward communication channel c. horizontal communication channel d. formal communication channel 42. Hot Topic is a clothing chain targeted to the alternative teen demographic. Hot Topic’s CEO relies on her

employees to locate new trends and consults almost daily with her employees for suggestions on what the stores should carry. After attending an Insane Clown Posse concert, an employee suggested the stores should carry Faygo soda (the kind the band sprays on audience members during a concert). Which type of communication was the employee’s suggestion an example of? a. upward b. dyadic c. horizontal d. downward 43. Scotiabank, one of Canada’s largest financial service providers, wants to develop a customer-focused sales

and service culture. The sales and marketing teams are working collaboratively and cooperatively to determine which communication platforms to prioritize with their customers. Which type of communication is likely being used? a. upward b. dyadic c. horizontal d. downward Powered by Cognero

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Chapter 14 - Managing Communication 44. W.L. Gore is the company that created Gore-Tex, among many other innovative products. Gore employees

(known as “associates”) don’t have titles or bosses in the traditional sense. Instead, associates make commitments to work on projects that they believe are most worthy of their time and work with people at the same level to solve problems. What type of communication is the company encouraging? a. upward b. dyadic c. horizontal d. downward 45. The news provided by the military to soldiers serving in Vietnam was sometimes censored. Ambitious GIs put to use the abundance of available military communications equipment and became Vietnam’s underground radio pirates for uncensored news and music. Advice, information, and support not communicated by upper echelon military personnel were passed on to soldiers in the field through their field radios. Which type of communication channel would this be an example of? a. downward b. upward c. formal d. informal 46. Jamie tells his coworkers he overheard his supervisor telling another supervisor that salaries were going to be frozen.

What is this an example of? a. downward communication b. upward communication c. informal communication d. horizontal communication 47. Which of the following is a strategy for dealing with the grapevine? a. start the grapevine to make employees talk about topics managers want them to talk about b. ignore the grapevine and let employees enjoy this type of communication c. prohibit the grapevine and ensure employees understand this d. embrace the grapevine and keep employees informed 48. What is the term for a kind of one-on-one communication used by managers to improve an employee’s on-the-job performance or behaviour? a. downward guidance b. coaching c. counselling d. leading 49. Which of the following best defines coaching? a. a method commonly used to improve how managers communicate with their subordinates b. a kind of one-on-one communication primarily used by managers in exit interviews c. communication used to improve an employee’s on-the-job performance or behaviour d. a multilevel communication method that is used in place of negative reinforcement Powered by Cognero

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Chapter 14 - Managing Communication 50. Jennifer has spent a week with Raul, a new employee, to show Raul how to perform his duties and the kind of behaviour expected by management from all employees. What has Jennifer been engaged in with Raul? a. coaching b. leading c. counselling d. directing 51. What is the term for communication with someone about non-job-related issues that may be affecting or interfering with the person’s performance? a. coaching b. leading c. counselling d. directing 52. What term describes facial expressions and changes in one’s tone when speaking? a. communication channels b. perceptual errors c. verbal communication d. nonverbal communication 53. During a job interview, the interviewee is trying to deceive the interviewer if their hand is often used to

cover their mouth during speech. Less obvious but also a sign of deception is a single finger to the mouth or (with men) the mustache stroke. Movements of the body and face are referred to as which of the following? a. proxemics b. kinesics c. paralanguage d. semiotics 54. When Lilah saw her guest wrinkling her nose, she realized that she should have changed the litter in her cat’s box.

Which communication method is nose wrinkling an example of? a. proxemics b. kinesics c. paralanguage d. semiotics 55. Which of the following terms refers to movements of the body and face in nonverbal communication? a. kinesics b. proxemics c. paralanguage d. pseudo-language 56. Which term refers to a voice’s pitch, rate, tone, volume, and speaking pattern (i.e., use of silences, pauses, or hesitations)? a. verbal communication b. proxemics Powered by Cognero

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Chapter 14 - Managing Communication c. paralanguage d. pseudo-language 57. For some time, researchers have known that deceptive answers have a slower onset than honest ones. When faced with a threatening question, one may either hesitate or pause before a deceptive response. When contrasted with quick responses to other questions, this behaviour might suggest deception. Researchers have found that vocal pitch rises measurably in deceptive responses. Which of the following are these behaviours examples of that would help an interviewer evaluate a job applicant in an interview? a. proxemics b. body language c. nonverbal communication d. semiotics 58. Rose knew by the shrillness of her teacher’s voice that she was really in trouble and would probably be placed in afterschool detention. What did Rose’s teacher use to communicate her dismay with Rose? a. proxemics b. body language c. nonverbal communication d. semiotics 59. Jaspreet always communicates important information with his team via email or through the Microsoft

Teams chat. What does Jaspreet clearly prefer using? a. written communication b. upward communication c. horizontal communication d. oral communication 60. Clarissa is unable to do her job efficiently because her supervisor comes into her office every 15 minutes or

so to ask irrelevant questions that could be sent in an email. What is Clarissa experiencing a problem with? a. undefinable noise b. the communication medium chosen c. accepting feedback d. encoding and decoding 61. In which of the following cases would written communication be preferable to oral communication? a. when immediate feedback is needed b. when messages are complex and ambiguous c. when messages are emotion laden d. when messages are very straightforward 62. Which statement makes an accurate comparison between hearing and listening? a. Hearing and listening are synonyms. b. Hearing is the act of perceiving sounds, while listening is the act of making a conscious effort to hear. c. Hearing and listening both require paralanguage during communication transmission. d. Listening is passive, and hearing is active.

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Chapter 14 - Managing Communication 63. What can be said about managers with better listening skills?? a. They often lack technical and conceptual skills. b. They are not rated any differently than mangers with poor listening skills by their employees. c. They are no more likely to be promoted than managers with poor listening skills. d. They are rated as better managers by their employees.

64. Which technique assumes half the responsibility for successful communication by actively giving the speaker nonjudgmental feedback that shows you have accurately heard what was said? a. hearing b. dyadic communication c. active listening d. empathetic listening 65. Today, an assembly line worker at a GM plant in St. Catharines, Ontario starts at about $25 an hour,

working up to the top rate of $40 an hour over time. However, they no longer have access to a defined-benefit pension plan, and have a less-secure pension called a defined-contribution plan. How should plant managers engage with employees who feel stressed by these imposed changes? a. empathetic listening b. positive feedback c. reactive communication d. dyadic communication 66. Which of the following is a technique of understanding the speaker’s perspective and personal frame of reference and giving feedback that conveys that understanding to the speaker? a. reflective hearing b. symbiotic listening c. active listening d. empathetic listening 67. What should you do to be a better active listener? a. evaluate the message as you hear it b. engage in immediacy behaviours c. listen only for content d. make no eye contact with the speaker 68. The CEO of a large telecommunications company stated he has very little faith that his team will ever be

customer- or product-centric. What is this an example of? a. reactive criticism b. invalid feedback c. demotivational feedback d. destructive feedback 69. Rubylyn is a very enthusiastic person who has been hired to work as the personal assistant for an event planner. At first, Rubylyn was a distraction to her supervisor because she was always interrupting him and asking him if he wanted Powered by Cognero

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Chapter 14 - Managing Communication anything. After a discussion with the event planner, Rubylyn better understood what her job entailed and became a valued employee. Which of the following did her supervisor likely provide? a. valid feedback b. constructive feedback c. proactive criticism d. conduit reconstruction 70. What is the key to empathetic listening? a. clarify responses b. show desire to understand and to reflect feelings c. paraphrase d. summarize 71. Which of the following should managers first recognize when communicating feedback one-on-one to employees? a. Feedback can be constructive or destructive. b. Feedback can be bureaucratic or participative. c. Feedback can be regulated or unregulated. d. Feedback can be formalized or unformalized.

72. What is the term for feedback that is disapproving without any intention of being helpful and that almost always causes a negative or defensive reaction in the recipient? a. unsolicited feedback b. bureaucratic feedback c. destructive feedback d. administrative feedback 73. What is the term for feedback that is intended to be helpful, corrective, and/or encouraging, and is aimed at correcting performance deficiencies and motivating employees? a. empathetic feedback b. participative feedback c. solicited feedback d. constructive feedback 74. When McDonald’s Canada announced all-day breakfast at many of its locations, they cited “thousands of

tweets” as part of their motivation for making the change. What type of feedback did McDonald’s receive from guests? a. empathetic feedback b. participative feedback c. motivational feedback d. constructive feedback 75. Which of the following must feedback be for it to be considered constructive rather than destructive? a. focused on general behaviour b. immediate Powered by Cognero

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Chapter 14 - Managing Communication c. influenced by situational contexts d. personality-oriented 76. Which of the following best describes empathetic listening? a. asking for clarification b. summarizing what the speaker has said c. giving feedback that conveys understanding d. engaging in problem identification 77. Which of the following communication channels plays an important role in both one-on-one and organization-wide communication? a. email b. televised speeches/ meetings c. videotaped speeches/ meetings d. corporate talk shows 78. Which of the following promotes collaborative discussion via participant comments and through document

sharing and editing? a. real-time broadcasting b. Internet grapevines c. corporate talk shows d. discussion channels and chat rooms 79. What is the term for the withholding of information about company problems or issues by employees? a. organizational silence b. organizational filtering c. negative grapevining d. lower-level filtering 80. During a performance review, Ahmed's manager informed him that in the past 6 months he's been absent or

late 20 different times. What type of feedback is Ahmed's manager delivering? a. coaching feedback b. problem feedback c. specific feedback d. immediate feedback 81. Announcements, speeches, and meetings made to smaller in-person audiences and livestreamed to the wider

company are referred to as which of the following? a. real-time livestream b. discussion channels c. organization-wide broadcasting d. real-time broadcasting Powered by Cognero

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Chapter 14 - Managing Communication 82. An IndustryWeek survey of 845 line managers from diverse organizations found that only 29 percent of first-

level supervisors thought their organization encouraged employees to express opinions openly. What do the overwhelming majority of these supervisors most likely engage in? a. organizational silence b. organizational filtering c. negative grapevining d. lower-level filtering 83. When does organizational silence occur? a. when an organization is about to engage in a leveraged buyout b. when an organization refuses to answer customer complaints c. when employees are advised to not discuss company issues with the news media d. when employees believe that telling managers about problems will not make a difference 84. Which of the following is a phone number that anyone in the company can call anonymously to leave

information for management? a. company hotlines b. grapevine hotline c. social hotline d. gossip line 85. Jasmine continues to observe her manager acting flirtatiously with her friend at work and has even overhead

him make a few sex-related comments toward her friend. She knows that he's doing this with other employees in the organization, however she chooses to ignore the behaviour and assumes HR will catch him eventually.

What is this known as? a. bystander silence b. the bystander effect c. the hotline effect d. survey feedback 86. Which type of meetings between top managers and lower-level employees represents one of the best ways

for top managers to hear what others think and feel? a. grapevine meetings b. social networking c. frequent informal meetings d. frequent formal meetings 87. Narrative 14-1 Urban legends and Internet scams are a real problem for some businesses. In 1997, Gerber Baby Foods was flooded with one million letters and 80,000 phone calls from parents responding to an email about a phony class-action lawsuit.

Another urban legend about a Costa Rican flesh-eating bacteria that affected banana shipments cost that industry more than $30 million in 1999. More recently, Procter & Gamble (P&G) had to deal with claims that its Febreze product contained Agent Orange, a dangerous chemical. Many companies choose to ignore these myths created by angry customers or rabble-rousers, but experts believe that doing so is the worst possible action to take. Instead, companies Powered by Cognero

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Chapter 14 - Managing Communication should do everything possible to reassure their customers.

Refer to Narrative 14-1. Personality-, psychology-, and experience-based differences determine how consumers respond to Internet scams. Which of the following also contributes to their responses? a. conceptual screens b. perceptual filters c. attitudinal derivation d. conceptual decoding 88. Narrative 14-1 Urban legends and Internet scams are a real problem for some businesses. In 1997, Gerber Baby Foods was flooded with one million letters and 80,000 phone calls from parents responding to an email about a phony class-action lawsuit.

Another urban legend about a Costa Rican flesh-eating bacteria that affected banana shipments cost that industry more than $30 million in 1999. More recently, Procter & Gamble (P&G) had to deal with claims that its Febreze product contained Agent Orange, a dangerous chemical. Many companies choose to ignore these myths created by angry customers or rabble-rousers, but experts believe that doing so is the worst possible action to take. Instead, companies should do everything possible to reassure their customers.

Refer to Narrative 14-1. An angry P&G consumer created the initial email message and started the rumour about Febreze.

What component of the communication process did the customer use? a. physical stimuli b. intranets c. encoding d. decoding 89. Narrative 14-1 Urban legends and Internet scams are a real problem for some businesses. In 1997, Gerber Baby Foods was flooded with one million letters and 80,000 phone calls from parents responding to an email about a phony class-action lawsuit.

Another urban legend about a Costa Rican flesh-eating bacteria that affected banana shipments cost that industry more than $30 million in 1999. More recently, Procter & Gamble (P&G) had to deal with claims that its Febreze product contained Agent Orange, a dangerous chemical. Many companies choose to ignore these myths created by angry customers or rabble-rousers, but experts believe that doing so is the worst possible action to take. Instead, companies should do everything possible to reassure their customers.

Refer to Narrative 14-1. Which of the following would email users who received the email about P&G’s Febreze have used to understand the message? a. physical stimuli b. intranets c. encoding d. decoding 90. Narrative 14-1 Urban legends and Internet scams are a real problem for some businesses. In 1997, Gerber Baby Foods was flooded with one million letters and 80,000 phone calls from parents responding to an email about a phony class-action lawsuit.

Another urban legend about a Costa Rican flesh-eating bacteria that affected banana shipments cost that industry more than $30 million in 1999. More recently, Procter & Gamble (P&G) had to deal with claims that its Febreze product contained Agent Orange, a dangerous chemical. Many companies choose to ignore these myths created by angry Powered by Cognero

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Chapter 14 - Managing Communication customers or rabble-rousers, but experts believe that doing so is the worst possible action to take. Instead, companies should do everything possible to reassure their customers.

Refer to Narrative 14-1. Some top managers encourage subordinates to do everything in their power to assure customers that Internet myths about their companies are false. What are the managers engaging in? a. downward communication b. information diffusion c. upward communication d. grapevine establishment 91. Narrative 14-1 Urban legends and Internet scams are a real problem for some businesses. In 1997, Gerber Baby Foods was flooded with one million letters and 80,000 phone calls from parents responding to an email about a phony class-action lawsuit.

Another urban legend about a Costa Rican flesh-eating bacteria that affected banana shipments cost that industry more than $30 million in 1999. More recently, Procter & Gamble (P&G) had to deal with claims that its Febreze product contained Agent Orange, a dangerous chemical. Many companies choose to ignore these myths created by angry customers or rabble-rousers, but experts believe that doing so is the worst possible action to take. Instead, companies should do everything possible to reassure their customers.

Refer to Narrative 14-1. Which term can be used to describe the Internet, through which urban legends are transmitted? a. information conduit b. communication medium c. information medium d. transfer channel 92. Narrative 14-2 Canadian tea retailer David’s Tea has struggled with its growth plans, suffering turnover in the C-suite (the most senior leadership group of the company), but one thing remains constant: the company regularly reaches out to customers to find out what they’re looking for. Nearly all new product ideas come directly from customers through an in-store feedback program, and are tried out over a season to minimize risk.

One customer described his experience at a David’s Tea as exceptional. When he went into a David’s Tea store to ask for a “Japanese tea,” the store associate started probing and asking what type of tea the customer wanted: sencha, gyokuro, or genmaicha, which are all varieties of Japanese tea. Once he’d finished probing, he offered several different varieties of tea to the customer. The associate benefited from extensive training on varieties of tea, which is provided to all new associates when they start.

Refer to Narrative 14-2. Which step of the communication process is involved when the store associate seeks clarification on what the customer means by “Japanese tea”? a. encoding b. channelling c. feedback d. sending 93. Narrative 14-2 Canadian tea retailer David’s Tea has struggled with its growth plans, suffering turnover in the C-suite (the most senior leadership group of the company), but one thing remains constant: the company regularly reaches out to customers to find Powered by Cognero

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Chapter 14 - Managing Communication out what they’re looking for. Nearly all new product ideas come directly from customers through an in-store feedback program, and are tried out over a season to minimize risk.

One customer described his experience at a David’s Tea as exceptional. When he went into a David’s Tea store to ask for a “Japanese tea,” the store associate started probing and asking what type of tea the customer wanted: sencha, gyokuro, or genmaicha, which are all varieties of Japanese tea. Once he’d finished probing, he offered several different varieties of tea to the customer. The associate benefited from extensive training on varieties of tea, which is provided to all new associates when they start.

Refer to Narrative 14-2. What step in the communication process must the customer complete when the store associate offers several different varieties of tea to choose from? a. encoding b. channelling c. feedback d. decoding 94. Narrative 14-2 Canadian tea retailer David’s Tea has struggled with its growth plans, suffering turnover in the C-suite (the most senior leadership group of the company), but one thing remains constant: the company regularly reaches out to customers to find out what they’re looking for. Nearly all new product ideas come directly from customers through an in-store feedback program, and are tried out over a season to minimize risk.

One customer described his experience at a David’s Tea as exceptional. When he went into a David’s Tea store to ask for a “Japanese tea,” the store associate started probing and asking what type of tea the customer wanted: sencha, gyokuro, or genmaicha, which are all varieties of Japanese tea. Once he’d finished probing, he offered several different varieties of tea to the customer. The associate benefited from extensive training on varieties of tea, which is provided to all new associates when they start.

Refer to Narrative 14-2. Which type of communication is the David’s Tea in-store customer feedback program an example of? a. upward b. informal c. horizontal d. downward 95. Narrative 14-2 Canadian tea retailer David’s Tea has struggled with its growth plans, suffering turnover in the C-suite (the most senior leadership group of the company), but one thing remains constant: the company regularly reaches out to customers to find out what they’re looking for. Nearly all new product ideas come directly from customers through an in-store feedback program, and are tried out over a season to minimize risk.

One customer described his experience at a David’s Tea as exceptional. When he went into a David’s Tea store to ask for a “Japanese tea,” the store associate started probing and asking what type of tea the customer wanted: sencha, gyokuro, or genmaicha, which are all varieties of Japanese tea. Once he’d finished probing, he offered several different varieties of tea to the customer. The associate benefited from extensive training on varieties of tea, which is provided to all new associates when they start.

Refer to Narrative 14-2. All new associates are provided with training on the varieties of tea sold by DavidsTea. Which type of communication is this an example of?

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Chapter 14 - Managing Communication a. informal b. formal c. upward d. horizontal 96. Narrative 14-2 Canadian tea retailer David’s Tea has struggled with its growth plans, suffering turnover in the C-suite (the most senior leadership group of the company), but one thing remains constant: the company regularly reaches out to customers to find out what they’re looking for. Nearly all new product ideas come directly from customers through an in-store feedback program, and are tried out over a season to minimize risk.

One customer described his experience at a David’s Tea as exceptional. When he went into a David’s Tea store to ask for a “Japanese tea,” the store associate started probing and asking what type of tea the customer wanted: sencha, gyokuro, or genmaicha, which are all varieties of Japanese tea. Once he’d finished probing, he offered several different varieties of tea to the customer. The associate benefited from extensive training on varieties of tea, which is provided to all new associates when they start.

Refer to Narrative 14-2. Which of the following did the store associate who sold the customer Japanese teas engage in? a. involuntary listening b. active hearing c. passive listening d. empathetic listening 97. Narrative 14-2 Canadian tea retailer David’s Tea has struggled with its growth plans, suffering turnover in the C-suite (the most senior leadership group of the company), but one thing remains constant: the company regularly reaches out to customers to find out what they’re looking for. Nearly all new product ideas come directly from customers through an in-store feedback program, and are tried out over a season to minimize risk.

One customer described his experience at a David’s Tea as exceptional. When he went into a David’s Tea store to ask for a “Japanese tea,” the store associate started probing and asking what type of tea the customer wanted: sencha, gyokuro, or genmaicha, which are all varieties of Japanese tea. Once he’d finished probing, he offered several different varieties of tea to the customer. The associate benefited from extensive training on varieties of tea, which is provided to all new associates when they start.

Refer to Narrative 14-2. Which type of feedback is David’s Tea looking for when it seeks customer feedback in-store? a. valid b. motivational c. constructive d. participative

Indicate whether the statement is true or false.

98. Across all industries, having poor communication skills is the single most important reason why people do

not advance in their chosen career. a. True b. False Powered by Cognero

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Chapter 14 - Managing Communication 99. Communication is the process of transmitting information from one person or place to another. a. True b. False 100. Due to perceptual filtering, people exposed to the same information will often disagree about what they saw or heard. a. True b. False 101. In the perception process, apprehension is the process of remembering interpreted information. a. True b. False 102. Perception is the process by which individuals attend to, organize, interpret, and retain information from their environments. a. True b. False 103. In the perception process, interpretation is the process of incorporating new memories with old memories and creating the ability to recall both. a. True b. False 104. Selective perception is the tendency to notice and accept objects and information consistent with our values, beliefs, and expectations, and screen out or not accept inconsistent information. a. True b. False 105. According to attribution theory, the two general reasons, or attributions, we use to explain people’s behaviour are primary attribution and secondary attribution. a. True b. False 106. The resistance bias is the tendency for people to perceive themselves as personally and situationally similar to someone who is having difficulty or trouble, and therefore, to use external attributions to explain the person’s behaviour. a. True b. False 107. When things go wrong in the workplace, workers are more likely to perceive events and explain behaviour using an external attribution, and managers are more likely to make an internal attribution. a. True b. False 108. The self-serving bias is the tendency to overestimate our value by attributing successes to ourselves (internal causes) and attributing failures to others or the environment (external causes). a. True b. False Powered by Cognero

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Chapter 14 - Managing Communication 109. In the model of the communication process, decoding may result in faulty communication as a result of perceptual filters on the receiver’s part. a. True b. False 110. Feedback is not necessary in the communication process when the sender and receiver are both confident that they understand each other. a. True b. False 111. Jargon is a form of noise that interferes with communication in the workplace. a. True b. False 112. Horizontal communication flows among managers and workers who are at the same organizational level. a. True b. False 113. Another name for the informal communication channel is the “grapevine.” a. True b. False 114. One recommendation for managers wishing to improve formal communication is to decrease reliance on downward communication. a. True b. False 115. The two kinds of one-on-one communication are mentoring and vestibule training. a. True b. False 116. Nonverbal communication plays a role in management only when it supports or reinforces a verbal message. a. True b. False 117. In nonverbal communication, the term body language is used to refer to the pitch, rate, tone, volume, and speaking pattern—that is, use of silences, pauses, or hesitations—of one’s voice. a. True b. False 118. When it comes to improving communication, managers must manage one-on-one communication while also managing organization-wide communication. a. True b. False 119. As a general rule, managers prefer written communication over oral communication.

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Chapter 14 - Managing Communication a. True b. False 120. Managers with better listening skills are rated as better managers by their employees and are much more likely to be promoted. a. True b. False 121. Listening is an example of a voluntary behaviour. a. True b. False 122. Paraphrasing is reviewing the speaker's main points or emotions, while summarizing is restating what has

been said in your own words. a. True b. False 123. In communicating feedback to employees, managers need to recognize that feedback can be constructive or

destructive. a. True b. False 124. Company hotlines, survey feedback, frequent informal meetings, and surprise visits are ways of overcoming organizational silence. a. True b. False 125. Frequent, informal meetings between top managers and lower-level employees are one of the best ways for top managers to hear what others feel and think. a. True b. False 126. Some organizations have established internal departments or social media listening centres to monitor

social media conversations online. a. True b. False 127. Email is not convenient for making quick announcements and providing information to members across the

organization. a. True b. False 128. Discussion channels and chat rooms facilitate organization-wide communication. a. True b. False Powered by Cognero

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Chapter 14 - Managing Communication 129. A survey of executives found that 85 percent had at some point kept quiet when they saw a serious problem

at work. a. True b. False

130. List and briefly define the four parts of the perception process.

131. Briefly define perceptual filters. How do perceptual filters have an impact on the perception process?

132. Define attribution theory. Within your definition, be sure to define the two types of attributions that people typically make.

133. Briefly identify the difference between the formal and informal communication channels in an organization.

134. Distinguish between coaching and counselling.

135. Briefly explain why it is important for managers to understand nonverbal communication.

136. Briefly differentiate between active listening and empathetic listening.

137. Define constructive and destructive feedback, and briefly describe the impact when a manager uses each of these to communicate with a work group.

138. Briefly identify the three categories of knowledge and skill that a manager should have in order to manage one-onone communication effectively.

139. What is organizational silence? Why does it occur? What should managers do about it?

140. Explain how a student’s perception process and perceptual filters could complicate the communication process for the registrar’s staff at a university which is trying to implement an unpopular change in policy requiring the payment of an additional fee to drop classes after the first week (where no fee has been charged for this drop prior to the change). The registrar has placed notification of the change in the student registration newspaper, as an email message to all students, and on posters across the campus.

141. Assume that you have just accepted your first job upon graduation from college. You are working as the supervisor of a group of manufacturing workers in a company that has had some financial problems. Workers have complained about being unfairly blamed for financial losses associated with the production process, and your predecessor quit as a result of grievances filed against him by his subordinates. Explain how you can use your understanding of attribution theory to be more effective in your personal perception of the causes of problems in your work unit, and in your personal communications about those problems to your new subordinates.

142. Identify and briefly describe the different kinds of communication channels in organizations. Specify the things that managers should know about using these channels in order to maximize their managerial effectiveness.

143. What are the two reasons why companies use organization-wide communication? Define three types of organizationwide communication. Give an example of the effective or ineffective use of each type of communication. Using the material from Chapter 14 of the text, explain why the example was particularly effective or ineffective.

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Chapter 14 - Managing Communication

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Chapter 14 - Managing Communication Answer Key 1. d 2. b 3. d 4. d 5. d 6. c 7. d 8. d 9. b 10. b 11. b 12. c 13. c 14. a 15. c 16. a 17. a 18. d 19. b 20. d 21. d 22. a 23. a 24. c 25. d Powered by Cognero

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Chapter 14 - Managing Communication 26. a 27. c 28. b 29. c 30. a 31. a 32. d 33. b 34. b 35. b 36. b 37. c 38. a 39. a 40. d 41. d 42. a 43. c 44. c 45. d 46. c 47. d 48. b 49. c 50. a 51. c Powered by Cognero

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Chapter 14 - Managing Communication 52. d 53. b 54. b 55. a 56. c 57. c 58. c 59. a 60. b 61. d 62. b 63. d 64. c 65. a 66. d 67. b 68. d 69. b 70. b 71. a 72. c 73. d 74. d 75. b 76. c Powered by Cognero

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Chapter 14 - Managing Communication 77. a 78. d 79. a 80. c 81. d 82. a 83. d 84. a 85. b 86. c 87. b 88. c 89. d 90. a 91. b 92. c 93. d 94. a 95. b 96. d 97. c 98. True 99. True 100. True 101. False 102. True Powered by Cognero

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Chapter 14 - Managing Communication 103. False 104. True 105. False 106. False 107. True 108. True 109. True 110. False 111. True 112. True 113. True 114. True 115. False 116. False 117. False 118. True 119. False 120. True 121. True 122. False 123. True 124. True 125. True 126. True 127. False Powered by Cognero

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Chapter 14 - Managing Communication 128. True 129. True 130. Perception is the process by which individuals attend to, organize, interpret, and retain information from their environments. Attention is the process of noticing or becoming aware of particular stimuli. Organization is the process of incorporating new information (from the stimuli that you notice) into your existing knowledge. Interpretation is the process of attaching meaning to new knowledge. Finally, retention is the process of remembering interpreted information.

131. Perceptual filters are the personality-, psychology-, or experience-based differences that influence people to ignore or pay attention to particular stimuli. Perceptual filters affect each part of the perception process—attention, organization, interpretation, and retention—by affecting which stimuli are attended to, how that information is incorporated into our existing knowledge (as well as the meaning attached to it), and what we’re likely to remember. Because of filtering, people exposed to the same information will often disagree about what they saw or heard.

132. Attribution theory says that we all have a basic need to understand and explain the causes of other people’s behaviour. In other words, we need to know why people do what they do. According to attribution theory, we use two general reasons, or attributions, to explain people’s behaviour: an internal attribution (in which behaviour is thought to be voluntary or under the control of the individual) and an external attribution (in which behaviour is thought to be involuntary and outside of the control of the individual).

133. There are two general types of communication channels in organizations: formal and informal. The formal communication channel is the system of official channels that carry organizationally approved messages and information, and consists of three channels: downward communication, upward communication, and horizontal communication.

Organizational objectives, rules, policies, procedures, instructions, commands, and requests for information are all transmitted via the formal communication system or “channel.” The second general type of communication channel in organizations is the informal communication channel. This channel, sometimes called the “grapevine,” is the transmission of messages from employee to employee outside of formal communication channels. This is the place in which rumours and bits of information are shared as employees try to find out what is going on and how it might affect them or others.

The most basic difference between these two channels is that messages in the formal channel are organizationally approved, whereas those in the informal channel may or may not be organizationally approved.

134. Coaching and counselling are both examples of one-on-one communication. Coaching is communicating with someone for the direct purpose of improving the person’s on-the-job performance or behaviour, while counselling is communicating with someone about non-job-related issues that may be affecting or interfering with the person’s performance. Thus, the basic difference between the two is that coaching deals directly with on-the-job behaviour or issues, while counselling deals directly with non-job-related issues.

135. Nonverbal communication is any communication that doesn’t involve words. Nonverbal communication and messages almost always accompany verbal communication, and may support and reinforce the verbal message or contradict it. Researchers have estimated that as much as 93 percent of any message is transmitted nonverbally, with 55 percent coming from body language and facial expressions and 38 percent coming from tone and pitch of voice. And since many nonverbal cues are unintentional, receivers often consider nonverbal communication to be a more accurate representation of what senders are really thinking and feeling. Since nonverbal communication is so informative, especially when it contradicts verbal communication, managers need to learn how to monitor and control their nonverbal behaviour.

136. Active listening means assuming half the responsibility for successful communication by actively giving the speaker nonjudgmental feedback that shows you have accurately heard what was said. It is characterized by the strategies of clarifying responses, paraphrasing, summarizing, and evaluating or criticizing the message only after it has been accurately received. Empathetic listening means understanding the speaker’s perspective and personal frame of reference Powered by Cognero

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Chapter 14 - Managing Communication and giving feedback that conveys that understanding to the speaker. Empathetic listening goes beyond active listening because it depends on our ability to set aside our own attitudes or relationships to be able to see and understand things through someone else’s eyes. It relies for success on the additional strategies of showing desire to understand and reflecting feelings.

137. Managers need to recognize that feedback can be constructive or destructive. Destructive feedback is disapproving without any intention of being helpful and almost always causes a negative or defensive reaction in the recipient.

Surprisingly, some managers don’t realize that they’re giving people destructive feedback. By contrast, constructive feedback is intended to be helpful, corrective, and/or encouraging. It is aimed at correcting performance deficiencies and motivating employees. In order for feedback to be constructive rather than destructive, it must be immediate, focused on specific behaviours, and problem oriented.

138. One-on-one communication can be more effectively managed by doing three things: (1) choosing the right communication medium (oral or written, as appropriate to the circumstances); (2) being a good listener (including active listening and empathetic listening as appropriate to the manager’s communication goal); and (3) giving effective feedback (where constructive feedback is immediate, focused on specific behaviours, problem-oriented, and less likely to promote defensiveness than destructive feedback.

139. Organizational silence refers to a situation in which employees withhold information about organizational

problems or issues. It occurs when employees believe that telling management about problems won’t make a difference or that they’ll be punished for sharing such information. Fortunately, company hotlines, survey feedback, frequent informal meetings, and surprise visits are ways of overcoming organizational silence.

Company hotlines are phone numbers that anyone in the company can anonymously call or text, or an app that anyone can use, to anonymously leave information for upper management. Survey feedback is information collected by survey from organizational members that is then compiled, disseminated, and used to develop action plans for improvement. Many organizations make use of survey feedback by surveying their managers and employees several times a year. Frequent, informal meetings between top managers and lower-level employees are one of the best ways for top managers to hear what others feel and think. Another way for managers to get an accurate picture of what others feel and think is to pay surprise visits to various parts of the organization. These visits should not just be surprise inspections but should be used as opportunities to encourage meaningful upward communication from those who normally don’t get a chance to communicate with upper management.

140. Communication is the process of transmitting information from one person or place to another. One the other hand, perception is the process by which individuals attend to, organize, interpret, and retain information from their environments. Since both are based upon information, perception is a key part of communication and often becomes a key obstacle to effective communication, as in this example.

Perception operates through a maze of perceptual filters, which are the personality-, psychology-, or experience-based differences that influence people to ignore or pay attention to particular stimuli. Because of filtering, people exposed to the same information will often disagree about what they saw or heard. In this policy change example, we can expect students and registrar’s staff to have very different perceptions regarding the publicity of the new policy as well as its actual content.

Perceptual filters affect each part of the perception process: attention, organization, interpretation, and retention. Attention is the process of noticing or becoming aware of particular stimuli. Because of perceptual filters, people attend to some stimuli and not others. (Students, who are hurt by the new policy, are less likely to notice relevant publicity, while registrar staff, who are implementing the new policy, are more likely to perceive any such publicity.) Organization is the process of incorporating new information (from the stimuli that you notice) into your existing knowledge. Because of perceptual filters, we are more likely to incorporate new knowledge that is consistent with what we already know or Powered by Cognero

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Chapter 14 - Managing Communication believe. Students are likely to believe that such fee increases are unwarranted and to interpret their “sudden” implementation as a tactical move to speed through implementation. Interpretation is the process of attaching meaning to new knowledge. Because of perceptual filters, our preferences and beliefs strongly influence the meaning we attach to new information (e.g., a student thinking, “This can’t apply to me”). Finally, retention is the process of remembering interpreted information. In other words, retention is what we recall and commit to memory after we have perceived something. Of course, perceptual filters also affect retention, that is, what we’re likely to remember in the end. Again, the student will be less likely to retain the (unpleasant) change in policy, whereas the registrar’s staff, faced with student complaints upon payment demand for the new drop fee, will cite numerous examples of publicity that the student “should have seen.”

Two of the most common perception problems in organizations are manifestations of perceptual filtering: selective perception and closure. Selective perception is the tendency to notice and accept objects and information consistent with our values, beliefs, and expectations, while ignoring or screening out or not accepting inconsistent information. This process would lead students to screen out the unpopular change and registrar’s staff to notice it at every opportunity. Once we have initial information about a person, event, or process, closure is the tendency to fill in the gaps where information is missing, that is, to assume that what we don’t know is consistent with what we already know. Thus, students with partial information about a change would expect no negative impact on themselves, while registrar’s staff would fill in the details that they already know.

In all of these ways, the nature of the perceptual process sets up an inherent conflict between the registrar’s staff (who are convinced that they have adequately publicized the change and that students should know by now) and the students (who feel that this is just another example of their arbitrary mistreatment by the university administration).

141. Attribution theory says that we all have a basic need to understand and explain the causes of other people’s behaviour. In other words, we need to know why people do what they do. According to attribution theory, we use two general reasons, or attributions, to explain people’s behaviour: an internal attribution (in which behaviour is thought to be voluntary or under the control of the individual), and an external attribution (in which behaviour is thought to be involuntary and outside the control of the individual).

Perception-based differences can lead to differences in the attributions (internal or external) that managers and workers make when explaining workplace behaviour. In general, workers are more likely to explain behaviour from a defensive bias (the tendency for people to perceive themselves as personally and situationally similar to someone who is having difficulty or trouble), in which they attribute problems to external causes (i.e., the situation). Managers, on the other hand, tend to commit the fundamental attribution error (the tendency to ignore external causes of behaviour and to attribute other people’s actions to internal causes), thus attributing problems to internal causes (i.e., the worker’s oversight or error). Consequently, when things go wrong, it’s common for managers to blame workers and for workers to blame the situation or context in which they do their jobs. Finally, this problem is compounded by a self-serving bias that leads people to attribute successes to internal causes and failures to external causes. So when workers receive negative feedback from managers, they can become defensive and emotional and not hear what their managers have to say.

In the present example, you are a new, inexperienced supervisor of an already dissatisfied group of workers, where those workers may expect to be unfairly blamed for problems or mistakes. You need to keep in mind that these workers are more likely to identify situational causes for any performance problems that they exhibit and that you will have a tendency to assume that such problems are the result of worker mistakes or oversights. Thus, you need to temper your judgments by carefully discussing the possible causes of performance problems with your subordinates, and only identifying personal causes when the evidence clearly points to this. (That is, don’t jump on your subordinates and blame them for poor performance at the first hint of a problem.) If you use appropriate, supportive communication techniques in this process, you are less likely to threaten your subordinates’ positive self-image and will thus avoid defensive, emotional encounters with them. In a context of rational communication, the true reasons for performance problems can be identified and rectified, thus preserving your relationship with your subordinates and enhancing your unit’s productivity (not to mention your prestige as a new supervisor!).

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Chapter 14 - Managing Communication 142. There are two general types of communication channels in organizations: formal and informal. The formal communication channel is the system of official channels that carry organizationally approved messages and information.

Organizational objectives, rules, policies, procedures, instructions, commands, and requests for information are all transmitted via the formal communication system or “channel.”

There are three formal communication channels: downward communication, upward communication, and horizontal communication. Downward communication flows from higher to lower levels in an organization. Downward communication is used to issue orders down the organizational hierarchy, to give organizational members job-related information, to give managers and workers performance reviews from upper managers, and to make clear organizational objectives and goals, and to dispel rumours. Upward communication flows from lower levels to higher levels in an organization. Upward communication is used to give higher-level managers feedback about operations, issues, and problems; to help higher-level managers assess organizational performance and effectiveness; to encourage lower-level managers and employees to participate in organizational decision making; and to give those at lower levels the chance to share their concerns with higher-level authorities. Horizontal communication flows among managers and workers who are at the same organizational level. Horizontal communication helps facilitate coordination and cooperation between different parts of a company and allows coworkers to share relevant information. It also helps people at the same level resolve conflicts and solve problems without involving high levels of management.

In order to maximize their effectiveness with formal communication channels, managers should understand the basic nature and functions of these channels as just described. In addition, they should follow four recommendations: (1) decrease reliance on downward communication, (2) increase chances for upward communication by increasing personal contact with lower-level managers and workers, (3) encourage much greater use of horizontal communication, and (4) be aware of the problems associated with downward, upward, and horizontal communication.

The second general type of communication channel in organizations is the informal communication channel. This channel, which is sometimes called the “grapevine,” is the transmission of messages from employee to employee outside of formal communication channels. The grapevine arises out of curiosity, that is, the need to know what is going on in an organization and how it might affect you or others. To satisfy this curiosity, employees need a consistent supply of relevant, accurate, in-depth information about who is doing what and what changes are occurring within the organization.

In order to maximize their effectiveness with informal communication channels, managers need to understand the inevitability of the grapevine. They must realize that they cannot “manage” the grapevine by withholding information or punishing those who share information with others. The grapevine abhors a vacuum, and in the absence of information from company management, rumours and anxiety will flourish. A better strategy is to embrace the grapevine to keep employees informed about possible changes and strategies. But in addition to using the grapevine to communicate with others, managers should not overlook the fact that the grapevine can be a tremendous source of valuable information and feedback. In fact, information flowing through organizational grapevines is estimated to be 75 percent to 95 percent accurate.

143. The purpose of organization-wide communication is twofold: (1) to allow managers to effectively

communicate to a larger number of people throughout the organization (i.e., to get the message out); and (2) to allow managers to make themselves accessible (i.e., to hear what employees throughout their organizations are feeling and thinking).

“Getting the message out” is facilitated by email, discussion channels and chat rooms, and real-time broadcasting. Such communication is extremely simple in the case of email, where with the click of a button managers can send an email message to everyone in the company via email distribution lists. Email offers a convenient and quick way to make announcements, provide information, and send files and documents easily to members across the organization.

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Chapter 14 - Managing Communication

Discussion channels and chat rooms use Web- or app-based communication tools to hold department or team discussions. Team room channels are often restricted to team members working together, while private discussions are typically invitation-only for teams or for one-to-one work sessions. Discussion channels and chat rooms, all of which are standard features in platforms like Slack, Microsoft Teams, or Google Chat, allow the sharing of expertise, avoid duplicating solutions already discovered by others, and provide a historical database for people dealing with particular problems. They promote collaborative discussion via participant comments and through document sharing and editing.

Real-time broadcasting allows speeches and meetings made to smaller in-person audiences to be livestreamed to broader company audiences and stored on demand for subsequent viewing and interactive discussion. Broadcast voice mail and Yammer are examples of real-time broadcasting.

Regarding the second purpose of organization-wide communication, managers need to overcome organizational silence (a situation in which employees withhold information about organizational problems or issues because they believe that telling management about problems won’t make a difference or that they’ll be punished for sharing such information)—managers need to find ways to hear what others feel and think. They can do this through anonymous company hotlines, survey feedback, frequent informal meetings, surprise visits, and social media. All of these techniques help managers improve reception by hearing what others in the organization feel and think. Company hotlines are phone numbers that anyone in the company can call or text, or an app that anyone can use, to anonymously leave information for management. Survey feedback is information collected by survey from organizational members that is then compiled, disseminated, and used to develop action plans for improvement. Frequent, informal meetings between top managers and lower-level employees are one of the best ways for top managers to hear what others feel and think. Surprise visits should be used as opportunities to encourage meaningful upward communication from those who normally don’t get a chance to communicate with upper management. Finally, monitoring social media like Twitter, Facebook, and LinkedIn for online content created by people outside the company can be a good way to find out what others are saying or thinking about your organization or its products or actions.

Student examples should clearly be manifestations of organization-wide communication, as opposed to one-onone or small-group communication. Original examples derived from personal experience, conversations with others, or other outside sources demonstrate a higher level of understanding of the text material than examples drawn directly from the textbook. Better answers will clearly use the chapter material to justify why the example given was particularly effective or ineffective.

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Chapter 15 - Control

Indicate the answer choice that best completes the statement or answers the question.

1. What does the basic control process begin with? a. benchmarking or keystoning b. the establishment of clear standards of performance c. the comparison of actual performance to expected performance d. problem identification 2. What is the term for the regulatory process of establishing standards that will achieve organizational goals, comparing actual performance to those standards, and then, if necessary, taking corrective action to restore performance to those standards? a. implementation b. goal setting c. control d. suboptimization 3. What does ISO stand for? a. International Open Standards b. International Standards Online c. International Organization for Standardization d. International Optional Standards 4. What criteria are a basis of comparison for measuring the extent to which organizational performance is satisfactory or unsatisfactory? a. standards b. potentials c. autonomous goals d. degrees of centralization 5. Which ISO certification creates a standard for quality assurance and customer satisfaction in manufacturing

and highlights safety standards? a. ISO 90 b. ISO 9001 c. ISO 12000 d. ISO 900 6. The Canadian Hemp Trade Alliance works with Canadian hemp producers to sell and market their products

outside Canada. The organization determines its success in the international market by comparing its 2022 annual exporting data with the data gathered in 2016. What is provided by the 2016 exporting data? a. an autonomous measurement b. a standard c. a value ratio d. a dependence measurement Powered by Cognero

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Chapter 15 - Control 7. If SNC-Lavalin scales back its financial projections for the rest of the year as a result of two oil and gas

projects underperforming, what were these financial projections for the company? a. autonomous measurements b. standards c. value ratios d. dependence measurements 8. How may companies determine standards? a. by benchmarking other companies b. by implementing vertical loading c. by using outsourcing d. by taking corrective action 9. Canada made a commitment to resettle thousands of Syrian immigrants, but didn’t provide a target processing

time for refugee screening and settlement processes. Which of the following should Canada implement for refugee screening and settlement processes? a. autonomous measurements b. standards c. value ratios d. dependence measurements 10. A trucking company can gather data on how its competitors deal with total accidents, numbers of high-severity accidents by type, missed deliveries, spills, driver out-of-service by type, and vehicle out-of-service by type, and use this information to improve its own safety record. Which of the following allows a trucking company to not only compare its safety performance with that of other companies but also adopt those practices found to be superior? a. benchmarking b. data decentralization c. information processing d. mirroring 11. When Marriott Hotels decided to improve the quality of service it offered its customers, it asked special corporate guests to comment on the good and bad issues of their stay, and also to tell what the competition was doing better than Marriott. Marriott acted accordingly. Which of the following did Marriott use? a. benchmarking b. data decentralization c. information processing d. mirroring 12. A chain of specialty fashion stores has interviewed a sample of its female customers and learned that, on average, a customer can be expected to visit the store every two weeks looking for new merchandise. As a result, the chain has new merchandise delivered daily. If items have not been sold after a month on display at the store, the items are removed from the store to either be sold at another location or returned to the manufacturer. Through which of the following was the chain of stores able to set this standard? a. evaluating the standard’s capacity to enable goal achievement b. benchmarking competitors c. listening to customers Powered by Cognero

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Chapter 15 - Control d. outsourcing 13. How is the control process best described? a. it is standardized, periodic, and cybernetic b. it is flexible, intermittent, and automated c. it is standardized, periodic, and robotic d. it is continuous, dynamic, and cybernetic 14. What characteristic makes control a cybernetic process? a. It has a feedback loop. b. It is an intermittent process. c. It is the first management function. d. It uses automated benchmarks.

15. What are the three basic control methods? a. feedback control, feedforward control, and symmetry control b. feedforward control, dynamic control, and symmetry control c. concurrent control, feedback control, and feedforward control d. feedforward control, presumptive control, and dynamic control 16. A manufacturer of automatic locking devices for vehicles shipped 20,000 devices to a car manufacturer that was unable to use them because of a design flaw. Which type of control would the device manufacturer be using if it waited until the parts were returned before determining the reason for the defect? a. feedforward b. feedback c. balanced d. dynamic 17. Through a customer survey, Earl’s restaurants discovered customers preferred antibiotic-free beef, and

identified that they couldn’t source all their meat from a single Canadian supplier. Which type of control did Earl’s use by discovering they couldn’t source all their meat from a single Canadian supplier? a. feedforward b. feedback c. concurrent d. stasis 18. A flight accident in February 2017 killed two Mount Royal University flight instructors. Which type of

control did the Transportation Safety Board and Mount Royal University use by gathering information about how the instructors died so as to prevent a recurrence? a. concertive b. normative c. feedback d. concurrent

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Chapter 15 - Control 19. A car manufacturer ordered 20,000 window assemblies from a supplier. To make sure the assemblies were made to specifications, the supplier of the window assemblies shipped a sample to the car manufacturer for testing. Which type of control is this practice an example of? a. feedback control b. contiguous control c. suboptimal control d. feedforward control 20. Which type of control is a method of gathering information about performance deficiencies after they occur? a. feedback b. dynamic c. concurrent d. feedforward 21. Which type of control is a method of gathering information about performance deficiencies as they occur? a. feedback b. simultaneous c. concurrent d. feedforward 22. Which type of control is a method of gathering information about performance deficiencies before they occur? a. feedback b. dynamic c. pre-emptive d. feedforward 23. Which approach to control monitors inputs rather than outputs? a. feedforward control b. feedback control c. concurrent control d. dynamic control 24. Which type of costs are associated with implementing or monitoring control? a. cybernetic b. heuristic c. regulation d. benchmarked 25. The City of Edmonton uses a “proof of payment” system on its LRT system, where random checks are performed by transit peace officers. Fare evaders are issued a significant fine. What does this scenario best illustrate? a. outsourced corollary b. inadvertent significance c. involuntary result d. regulation costs Powered by Cognero

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Chapter 15 - Control 26. McDonald’s fast-food restaurants have a well-designed training program for all new employees. Each new employee is supposed to learn how to perform standardized tasks required to maintain McDonald’s service quality. Due to labour shortages in some areas, though, new employees begin work as soon as they are hired and do not receive any off-the-job training. What does this nonconformity to standards create? a. ambiguous group norms b. motivational grapevines c. negative benchmarks d. control loss 27. To determine whether control is worthwhile, managers need to carefully assess which of the following? a. regulation costs b. customer flows c. channelization d. synergy 28. Which of the following occurs when behaviour and work procedures do not conform to standards? a. serendipitous consequences that accompany decreased supervision b. problems with trade barriers c. cybernetic feasibility d. control loss 29. Imagine a manufacturer that has a 99 percent error-free production rate and decides it wants 100 percent error-free production. What must its management examine to determine whether the costs of increased controls outweigh the benefits of error-free production? a. cybernetic costs b. benchmarks c. financial ratios d. regulation costs 30. What is the term for the extent to which it is possible to implement each step in the control process? a. control feasibility b. cybernetic feasibility c. a quasi-control assessment d. a balanced scorecard assessment 31. According to the text, which of the following factors can help managers to determine whether more control is possible? a. task downsizing b. cybernetic feasibility c. outsourcing d. channelization 32. In a large corporation, male employees of the controller’s department are required to have their suit jackets

on when they are in any common areas of the building, otherwise they will be written up. What is this an example of?

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Chapter 15 - Control a. bureaucratic control b. self-control c. concertive control d. normative control 33. In which top-down type of control do managers try to influence employee behaviour by rewarding or punishing employees for compliance or noncompliance with organizational policies, rules, and procedures? a. bureaucratic control b. normative control c. concertive control d. objective control 34. Which of the following is true about companies that rely on bureaucratic control? a. The companies have no contingency plans. b. The companies rely on group norms rather than formalized rules and regulations. c. The companies value their human resources above all others. d. The companies are highly resistant to change.

35. When the local fast-food restaurant manager caught an employee giving free food to his friends, she fired him on the spot. When an employee stayed late after work one night to help a woman start her car, the manager rewarded him. Which type of control did the restaurant manager use in these two instances? a. bureaucratic control b. objective control c. self-control d. autocratic control 36. Which of the following controls tends to be relied upon by organizations that are highly resistant to change and slow to respond to customers and competitors? a. behaviour b. bureaucratic c. subjective d. normative 37. What are the two types of objective controls that managers use? a. output and input b. administrative and participative c. participative and organizational d. behaviour and output 38. A sales manager requires each member of his sales force to make three calls per day on current customers, to call on two potential customers every week, and to sell a minimum of $10,000 worth of merchandise weekly. Which control method is the sales manager using? a. normative b. market-oriented c. industrial betterment Powered by Cognero

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Chapter 15 - Control d. objective 39. Behaviour control regulates workers’ actions and routines on the job. Which kind of control measures the results of their efforts? a. input control b. bureaucratic control c. normative control d. output control 40. Marriott’s top management decided that there was a need for a serious effort to “put democracy back in the company” and make employees feel “involved in the success of the company.” Managers adopted the theme “Ladies and Gentlemen serving Ladies and Gentlemen.” This was the rule employees were told to use when dealing with customers. Employees asked special corporate guests to comment on the good and bad aspects of their stay, and also to tell what the competition was doing better than Marriott. The employees then acted accordingly. Which of the following controls did Marriott adopt? a. autonomous controls b. concertive controls c. normative controls d. corrective controls 41. Don is the president of one of the fastest growing logistics companies in Canada. When asked what his secret is, Don states he creates a culture of hard work. He informally rewards employees for starting early in the morning and leaving later at night and also working part of every weekend. What kind of control does Don use to help grow his company? a. objective control b. behavioural control c. normative control d. output control 42. Which type of control is associated with autonomous work groups? a. objective b. normative c. behaviour d. concertive 43. Remy admits to being a less than productive worker in the past. However, now that he has joined a new team, working hard only when the boss is around and taking it easy when she is not is frowned upon by his fellow workers. What type of control has led to the change in Remy’s level of work? a. concertive b. normative c. corrective d. feedback 44. Instead of individual salespeople calling on its business customers, Cedartree Tech uses sales teams composed of marketing personnel, engineers, human resource personnel, and buyer–seller liaisons. The sales team is given complete responsibility for developing long-term partnering relationships with each customer. Which of the following kinds of controls would the company’s sales managers most likely approve?

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Chapter 15 - Control a. human resource control b. participative control c. self-control d. concertive control 45. Rafe’s manager has instructed Rafe and his fellow workers to develop a daily theme, such as patience, empathy, and kindness. Each day, the workers are to emphasize the theme as they work with customers, suppliers, and one another.

Which kind of control system is Rafe’s manager using? a. self-control b. human resource control c. non-administrative control d. output control 46. Which term refers to a control method that encourages managers to look beyond traditional measures to evaluate four different perspectives on company performance? a. optimization b. customer churn c. balanced scorecard d. customer defection 47. Which of the following is one of the four perspectives measured in the balanced scorecard approach to control? a. financial perspective b. policies and procedures perspective c. management perspective d. supply chain perspective 48. A provider of computer technical support is using the balanced scorecard approach to control. Which of the following would the provider look at? a. digital engagement levels with customers b. inventory levels c. its supply of parts d. policies and procedures 49. What can be said about the perspectives of the balance scorecard? a. The customer perspective is the most important in the control process. b. The company’s analysis of its controllable environment is most important to the company’s success. c. The innovation and learning perspective is the most important in the control process. d. The perspectives examined by the balanced scorecard approach are of equal importance to a company’s success.

50. Sheila wants a team of workers that really care for each other where each worker will go out of their way to help another worker. Sheila has created this feeling amongst the workers by the level of care she shows for each worker. What kind of control is Sheila using to create a commitment of caring for one another amongst her workers? a. bureaucratic control b. normative control Powered by Cognero

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Chapter 15 - Control c. concertive control d. self-control 51. In which of the following situations should normative controls be used? a. when cause-and-effect relationships are clear b. when workers have been taught self-control skills c. when responsibility for task accomplishment is given to autonomous work groups d. when organizational culture, values, and beliefs are strong 52. In all RBC branches, the dress code is business casual except on Fridays, when employees are permitted to

wear jeans. If an employee wears jeans any other day of the week, they risk being sent home from their shift.

What kind control is this an example of? a. bureaucratic control b. normative control c. concertive control d. input control 53. Which of the following occurs when performance improvement is attained in one part of an organization, but only at the expense of decreased performance in another part? a. suboptimization b. control loss c. cybernetic infeasibility d. feedforward control 54. The Royal Tyrell Museum in Drumheller, Alberta, restricts access to its collections to “legitimate researchers affiliated with a recognized institution.” However, this has the effect of making it harder for primary and secondary school programming to function. Which of the following is being created by this use of control? a. suboptimization b. control loss c. cybernetic infeasibility d. feedforward control 55. What is one advantage that the balanced scorecard has over traditional control processes that rely solely on financial measures? a. The balanced scorecard encourages control delegation. b. The balanced scorecard eliminates problems with regulation costs. c. The balanced scorecard minimizes the chances of suboptimization. d. The balanced scorecard allows companies to determine the ideal control methods.

56. What is a result from using the balanced scorecard approach to control? a. The approach forces managers at each level of the company to set specific goals and measure performance in each of four areas. b. The approach places greatest priority on the most important aspect of control: the financial perspective. c. The approach maximizes the chances of suboptimization. d. The approach looks only at factors within a company’s controllable environment.

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Chapter 15 - Control 57. Which of the following would managers use when implementing the financial perspective? a. financial ratios b. customer defections c. employee turnover d. value analyses 58. Which measure is used to assess performance in the traditional control systems used at most companies? a. financial and accounting b. customer c. value/quality d. quality/profit 59. Which of the following does the traditional approach to controlling financial performance examine? a. financial ratios b. customer defections c. supplier records d. employee absenteeism 60. Liz is the treasurer of a manufacturing company. Liz arranged financing for a plant expansion. She and the company’s controller are comparing the additional sales from higher production capacity against the costs of financing the expansion and the expenses to support the additional capacity. What are Liz and the controller evaluating? a. balanced scorecard b. EVA c. feedback control d. MVA 61. When it comes to finances, what is the one simple question that the balanced scorecard focuses on? a. How do we look to our shareholders? b. How are we performing for our customers? c. Are we making a profit? d. What is the bottom line?

62. Why is economic value added (EVA) so important? a. EVA demonstrates the importance of a business or subset of a business to customers. b. EVA makes managers and employees at all levels pay much closer attention to how they run their

segment of the business. c. EVA causes managers and employees to maintain the status quo. d. EVA determines whether a business or unit of a business is a star, question mark, cash cow, or dog, and the necessary action to follow.

63. Which of the following are used to track a business's liquidity, efficiency, and profitability over time as

compared to other businesses in its industry? a. balance sheets Powered by Cognero

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Chapter 15 - Control b. financial ratios c. liquidity ratios d. EVA 64. An article on public libraries contained the following statement: “The balanced scorecard helps organize and

run the library according to a specific strategic plan, while demonstrating the library’s value to the community as a whole.” When dealing with the customer area of the balanced scorecard, the article advised librarians to use customer surveys. Why might surveys be a poor strategy to use? a. The use of surveys could create information overload. b. Customer surveys are never reliable. c. Stakeholders should not be involved in the creation of a balanced scorecard. d. Customer surveys are typically misleadingly positive.

65. Theresa is comparing customer data between the previous three years and the current year to determine how many customers have left and the rate at which customers are leaving. What activity is Theresa engaged in? a. determining the potential for customer churn b. measuring customer loyalty c. analyzing customer defections d. measuring the competition’s performance 66. According to the balanced scorecard approach to control, which of the following is much more likely to have a positive effect on a company’s bottom line than an analysis of customer satisfaction? a. an analysis of the competition b. an analysis of budgets c. an analysis of competitive value d. an analysis of customer defection 67. What are the three ways that quality is typically defined and measured? a. profitability, customer satisfaction, conformance to expectations b. value, customer satisfaction, and conformance to expectations c. profitability, reliability, and conformance to expectations d. excellence, value, and conformance to expectations 68. An article on public libraries contained the following statement: “The balanced scorecard helps organize and run the library according to a specific strategic plan, while demonstrating the library’s value to the community as a whole.” The same article advised librarians to ask, “At what activities must we excel?” What area of the balanced scorecard was the article then referring to? a. the financial perspective b. the policies and procedures perspective c. the customer perspective d. the internal perspective 69. What question do managers ask for the internal perspective of the balanced scorecard? a. What must we excel at? b. How do we provide value to our stakeholders?

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Chapter 15 - Control c. What is the bottom line? d. How important is customer satisfaction?

70. What is the term for a performance assessment whereby companies identify which customers are leaving and the rate at which customers are leaving? a. customer subjectivity b. customer satisfaction c. customer defection d. customer objectivity 71. An article on public libraries contained the following statement: “The balanced scorecard helps organize and run the library according to a specific strategic plan, while demonstrating the library’s value to the community as a whole.” In which area of the balanced scorecard did the article advise librarians to ask, “How can the library continue to improve and create value?” a. the financial perspective b. the policies and procedures perspective c. the customer perspective d. the innovation and learning perspective 72. An article on public libraries contained the following statement: “The balanced scorecard helps organize and run the library according to a specific strategic plan, while demonstrating the library’s value to the community as a whole.”

Standards suggested to use with one area of the balanced scorecard include how quickly and effectively a new service can be offered and how the training staff responds to its introduction. Which area of the scorecard would this be? a. the financial perspective b. the policies and procedures perspective c. the customer perspective d. the innovation and learning perspective 73. Which type of quality goal is a company emphasizing when its managers must simultaneously control excellence, price, durability, or other features of a product or service that customers strongly associate with it? a. excellence b. value c. conformance to expectations d. profitability 74. Jägermeister liqueur is the only product made by its manufacturer. The company is carefully evaluating what it learned in becoming such a success to see whether it could use the same strategy to expand its international market.

Which perspective of the balanced scorecard is the liqueur manufacturer emphasizing? a. the financial perspective b. the policies and procedures perspective c. the customer perspective d. the innovation and learning perspective 75. According to the text, which level of waste minimization produces the greatest minimization of waste? a. waste prevention and reduction b. waste recycle and reuse Powered by Cognero

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Chapter 15 - Control c. waste treatment d. waste disposal 76. Several extended-stay hotel chains ask guests to hang their towels so they can be reused as a way to help the environment. Which stage of waste minimization does this request reflect? a. waste prevention and reduction b. waste recycle and reuse c. waste treatment d. waste disposal 77. Process modification and material/product substitution are two strategies used for waste prevention and reduction.

What is the third? a. collective reuse b. modification of organizational culture c. process diversification d. good housekeeping 78. Narrative 15-1 Pacific Western Brewing Company is a microbrewery in Prince George, B.C. It produces Ironhorse full-flavoured lager, a dark beer called Pacific Schwarzbock, and several other beers. Its owner Kazuko Komatsu believes the brewery’s competitive advantage comes from having hired an experienced German brewmaster, Henrik Braun, to oversee the production of its beers. The brewmaster checks all of the ingredients before they are mixed together to make sure that each component is of the highest possible quality and rejects those that are not. After the beer has brewed, the brewmaster runs several tests on the beer to check for taste and clarity and throws out barrels that are cloudy and/or bitter.

Refer to Narrative 15-1. Which classical management function is the brewmaster in charge of? a. leading b. organizing c. motivating d. controlling 79. Narrative 15-1 Pacific Western Brewing Company is a microbrewery in Prince George, B.C. It produces Ironhorse full-flavoured lager, a dark beer called Pacific Schwarzbock, and several other beers. Its owner Kazuko Komatsu believes the brewery’s competitive advantage comes from having hired an experienced German brewmaster, Henrik Braun, to oversee the production of its beers. The brewmaster checks all of the ingredients before they are mixed together to make sure that each component is of the highest possible quality and rejects those that are not. After the beer has brewed, the brewmaster runs several tests on the beer to check for taste and clarity and throws out barrels that are cloudy and/or bitter.

Refer to Narrative 15-1. What does the brewmaster use to determine the quality of the beer by comparing its clarity to that of the finest beer? a. standards b. benchmarks c. motivational cues d. informational cues Powered by Cognero

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Chapter 15 - Control 80. Narrative 15-1 Pacific Western Brewing Company is a microbrewery in Prince George, B.C. It produces Ironhorse full-flavoured lager, a dark beer called Pacific Schwarzbock, and several other beers. Its owner Kazuko Komatsu believes the brewery’s competitive advantage comes from having hired an experienced German brewmaster, Henrik Braun, to oversee the production of its beers. The brewmaster checks all of the ingredients before they are mixed together to make sure that each component is of the highest possible quality and rejects those that are not. After the beer has brewed, the brewmaster runs several tests on the beer to check for taste and clarity and throws out barrels that are cloudy and/or bitter.

Refer to Narrative 15-1. Which type of control does the brewmaster use when he tests the raw materials? a. concurrent b. incipient c. feedforward d. introductory 81. Narrative 15-1 Pacific Western Brewing Company is a microbrewery in Prince George, B.C. It produces Ironhorse full-flavoured lager, a dark beer called Pacific Schwarzbock, and several other beers. Its owner Kazuko Komatsu believes the brewery’s competitive advantage comes from having hired an experienced German brewmaster, Henrik Braun, to oversee the production of its beers. The brewmaster checks all of the ingredients before they are mixed together to make sure that each component is of the highest possible quality and rejects those that are not. After the beer has brewed, the brewmaster runs several tests on the beer to check for taste and clarity and throws out barrels that are cloudy and/or bitter.

Refer to Narrative 15-1. Which type of control does the brewmaster use when he tests the beer to see how it tastes? a. simultaneous b. feedback c. concurrent d. reactive 82. Narrative 15-1 Pacific Western Brewing Company is a microbrewery in Prince George, B.C. It produces Ironhorse full-flavoured lager, a dark beer called Pacific Schwarzbock, and several other beers. Its owner Kazuko Komatsu believes the brewery’s competitive advantage comes from having hired an experienced German brewmaster, Henrik Braun, to oversee the production of its beers. The brewmaster checks all of the ingredients before they are mixed together to make sure that each component is of the highest possible quality and rejects those that are not. After the beer has brewed, the brewmaster runs several tests on the beer to check for taste and clarity and throws out barrels that are cloudy and/or bitter.

Refer to Narrative 15-1. To maintain the reputations of the brewery and the brewmaster, the company typically destroys about 8 percent of its production because the beer is not of a high enough quality. Which type of control is this an example of? a. objective control b. concertive control c. bureaucratic control d. sacrificing control 83. Narrative 15-1 Powered by Cognero

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Chapter 15 - Control Pacific Western Brewing Company is a microbrewery in Prince George, B.C. It produces Ironhorse full-flavoured lager, a dark beer called Pacific Schwarzbock, and several other beers. Its owner Kazuko Komatsu believes the brewery’s competitive advantage comes from having hired an experienced German brewmaster, Henrik Braun, to oversee the production of its beers. The brewmaster checks all of the ingredients before they are mixed together to make sure that each component is of the highest possible quality and rejects those that are not. After the beer has brewed, the brewmaster runs several tests on the beer to check for taste and clarity and throws out barrels that are cloudy and/or bitter.

Refer to Narrative 15-1. The company is considering using the balanced scorecard to evaluate performance. What will the balanced scorecard provide as an integrated system? a. maximizing the possibility of suboptimization b. making only production managers responsible for ensuring a positive impact on the scorecard c. measuring five different perspectives of organizational performance d. examining performance from a financial perspective as well as other perspectives 84. Refer to Narrative 15-1. What can be said about the areas of the brewery’s activities that will be evaluated by using the balanced scorecard? a. The innovation and learning perspective of the balanced scorecard examines such activities as how quickly the brewery can get a new beer to market. b. The balanced scorecard does not examine the brewery’s financial performance. c. The stakeholder perspective of the balanced scorecard looks at the brewery’s code of ethics. d. Like the income statement, the balanced scorecard simply provides a snapshot of the brewery’s performance.

85. Narrative 15-2

The Alberta Motor Association (AMA) suffered significant losses due to fraud. The organization’s vicepresident of information technology was charged with fraud for allegedly misappropriating as much as $8.2 million. AMA “has reviewed its financial processes and has put in place additional controls to prevent any future incidents of this type.” The fraud was discovered when the alleged perpetrator advised AMA that he had hurt his leg, and needed to work more from home; unfortunately, he didn’t attend required meetings, which triggered a meeting with the organization’s chief operating officer and was placed on disability leave.

Refer to Narrative 15-2. Which traditional management function was AMA not using effectively prior to its discovery of fraudulent activities? a. implementation b. goal setting c. control d. suboptimization 86. Narrative 15-2

The Alberta Motor Association (AMA) suffered significant losses due to fraud. The organization’s vicepresident of information technology was charged with fraud for allegedly misappropriating as much as $8.2 million. AMA “has reviewed its financial processes and has put in place additional controls to prevent any future incidents of this type.” The fraud was discovered when the alleged perpetrator advised AMA that he had hurt his leg, and needed to work more from home; unfortunately, he didn’t attend required meetings, which triggered a meeting with the organization’s chief operating officer and was placed on disability leave.

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Chapter 15 - Control Refer to Narrative 15-2. It appears that the control method AMA believed it should have used was one that focused on whether rules and policies were being followed. Which of the following defines this approach? a. bureaucratic control b. objective control c. suboptimization d. self-control 87. Narrative 15-2

The Alberta Motor Association (AMA) suffered significant losses due to fraud. The organization’s vicepresident of information technology was charged with fraud for allegedly misappropriating as much as $8.2 million. AMA “has reviewed its financial processes and has put in place additional controls to prevent any future incidents of this type.” The fraud was discovered when the alleged perpetrator advised AMA that he had hurt his leg, and needed to work more from home; unfortunately, he didn’t attend required meetings, which triggered a meeting with the organization’s chief operating officer and was placed on disability leave.

Refer to Narrative 15-2. Which of the following best describes why AMA should consider the implementation of the balanced scorecard? a. to eliminate the need for restructuring b. to maximize benchmarking opportunities c. to track internal and external environmental changes d. to minimize the chances of suboptimization 88. Narrative 15-2

The Alberta Motor Association (AMA) suffered significant losses due to fraud. The organization’s vicepresident of information technology was charged with fraud for allegedly misappropriating as much as $8.2 million. AMA “has reviewed its financial processes and has put in place additional controls to prevent any future incidents of this type.” The fraud was discovered when the alleged perpetrator advised AMA that he had hurt his leg, and needed to work more from home; unfortunately, he didn’t attend required meetings, which triggered a meeting with the organization’s chief operating officer and was placed on disability leave.

Refer to Narrative 15-2. Which of the following best describes the likely control mechanisms in place within AMA? a. concertive control b. output control c. normative control d. self-control 89. Narrative 15-3

Despite 30 straight years of increased revenues and profits, Walgreens found itself facing intense competition from Costco, Walmart, and CVS. However, the biggest and newest threat to Walgreens’ business was mailorder prescription sales managed by pharmacy benefit managers (PBMs), who work closely with companies, insurers, and health maintenance organizations to reduce pharmaceutical costs, which have been increasing an Powered by Cognero

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average of 13 percent per year. With Costco’s rock-bottom prices, Walmart’s incredible volume-based purchasing power, and PBMs’ ability to sell brand-name drugs and generic drugs 27 percent and 53 percent cheaper than traditional drug stores, according to a government study, Walgreens knew it had to tightly control its expenses to continue to be competitive.

In terms of efficiency, it costs Walgreens less to fill a prescription order (i.e., fulfillment costs) than any other retailer in the business. PBMs, however, can still fill a prescription for half as much as Walgreens. To get its fulfillment costs down, Walgreens reduced its pharmaceutical inventory supply from 68 days (that is, if Walgreens quit ordering pharmaceuticals, it would be able to fill prescriptions for 68 days before running out) to 41 days. This reduction saves the company nearly $2 billion a year.

Other steps to reduce expenses include no longer accepting American Express cards at Walgreens stores. Every time a customer uses an American Express card to make a payment, the store pays American Express a fee of 2.05 percent. By contrast, Visa and MasterCard charge 1.55 percent. While the difference seems small, the savings amount to $50,000 on every $10 million of sales, which can add up quickly given Walgreens’ $40 billion in annual sales. Finally, Walgreens keeps costs low in its stores with one of the best employee retention rates in the industry. Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm, says, “Their pharmacists don’t turn over, which increases consumer trust in the pharmacist. The retention rate of store and district managers is also high. This is such an advantage.” Walgreens is also using technicians who are paid $16 an hour to fill more prescriptions. While pharmacists, who are paid $42 an hour, still review all filled prescriptions, using technicians who are paid $16 an hour to fill more prescriptions clearly reduces expenses.

Walgreens started its “Advantage 90” program, which it now offers through its mail-order system and its stores.

Walgreens believes that Advantage 90 will help it take sales away from other PBMs and from other retail pharmacies, which have higher fulfillment costs. Advantage 90 is now used by 150 companies, including Southwest Airlines, and Walgreens’ CEO maintains that it is cheaper than mail-order PBMs. Refer to Narrative 15-3. If you managed a pharmacy chain that was trying to compete with Walgreens, which of the following should you use to determine ways to improve business efficiency? a. benchmarking b. data decentralization c. information processing d. mirroring 90. Narrative 15-3

Despite 30 straight years of increased revenues and profits, Walgreens found itself facing intense competition from Costco, Walmart, and CVS. However, the biggest and newest threat to Walgreens’ business was mailorder prescription sales managed by pharmacy benefit managers (PBMs), who work closely with companies, insurers, and health maintenance organizations to reduce pharmaceutical costs, which have been increasing an average of 13 percent per year. With Costco’s rock-bottom prices, Walmart’s incredible volume-based purchasing power, and PBMs’ ability to sell brand-name drugs and generic drugs 27 percent and 53 percent cheaper than traditional drug stores, according to a government study, Walgreens knew it had to tightly control its expenses to continue to be competitive.

In terms of efficiency, it costs Walgreens less to fill a prescription order (i.e., fulfillment costs) than any other Powered by Cognero

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retailer in the business. PBMs, however, can still fill a prescription for half as much as Walgreens. To get its fulfillment costs down, Walgreens reduced its pharmaceutical inventory supply from 68 days (that is, if Walgreens quit ordering pharmaceuticals, it would be able to fill prescriptions for 68 days before running out) to 41 days. This reduction saves the company nearly $2 billion a year.

Other steps to reduce expenses include no longer accepting American Express cards at Walgreens stores. Every time a customer uses an American Express card to make a payment, the store pays American Express a fee of 2.05 percent. By contrast, Visa and MasterCard charge 1.55 percent. While the difference seems small, the savings amount to $50,000 on every $10 million of sales, which can add up quickly given Walgreens’ $40 billion in annual sales. Finally, Walgreens keeps costs low in its stores with one of the best employee retention rates in the industry. Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm, says, “Their pharmacists don’t turn over, which increases consumer trust in the pharmacist. The retention rate of store and district managers is also high. This is such an advantage.” Walgreens is also using technicians who are paid $16 an hour to fill more prescriptions. While pharmacists, who are paid $42 an hour, still review all filled prescriptions, using technicians who are paid $16 an hour to fill more prescriptions clearly reduces expenses.

Walgreens started its “Advantage 90” program, which it now offers through its mail-order system and its stores.

Walgreens believes that Advantage 90 will help it take sales away from other PBMs and from other retail pharmacies, which have higher fulfillment costs. Advantage 90 is now used by 150 companies, including Southwest Airlines, and Walgreens’ CEO maintains that it is cheaper than mail-order PBMs. Refer to Narrative 15-3. Walgreens elected to reduce expenses by no longer accepting American Express cards at Walgreens stores. During which step of the control process did this decision occur? a. performing a situational analysis b. taking corrective action c. benchmarking d. minimizing suboptimization 91. Narrative 15-3

Despite 30 straight years of increased revenues and profits, Walgreens found itself facing intense competition from Costco, Walmart, and CVS. However, the biggest and newest threat to Walgreens’ business was mailorder prescription sales managed by pharmacy benefit managers (PBMs), who work closely with companies, insurers, and health maintenance organizations to reduce pharmaceutical costs, which have been increasing an average of 13 percent per year. With Costco’s rock-bottom prices, Walmart’s incredible volume-based purchasing power, and PBMs’ ability to sell brand-name drugs and generic drugs 27 percent and 53 percent cheaper than traditional drug stores, according to a government study, Walgreens knew it had to tightly control its expenses to continue to be competitive.

In terms of efficiency, it costs Walgreens less to fill a prescription order (i.e., fulfillment costs) than any other retailer in the business. PBMs, however, can still fill a prescription for half as much as Walgreens. To get its fulfillment costs down, Walgreens reduced its pharmaceutical inventory supply from 68 days (that is, if Walgreens quit ordering pharmaceuticals, it would be able to fill prescriptions for 68 days before running out) to 41 days. This reduction saves the company nearly $2 billion a year.

Other steps to reduce expenses include no longer accepting American Express cards at Walgreens stores. Every Powered by Cognero

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time a customer uses an American Express card to make a payment, the store pays American Express a fee of 2.05 percent. By contrast, Visa and MasterCard charge 1.55 percent. While the difference seems small, the savings amount to $50,000 on every $10 million of sales, which can add up quickly given Walgreens’ $40 billion in annual sales. Finally, Walgreens keeps costs low in its stores with one of the best employee retention rates in the industry. Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm, says, “Their pharmacists don’t turn over, which increases consumer trust in the pharmacist. The retention rate of store and district managers is also high. This is such an advantage.” Walgreens is also using technicians who are paid $16 an hour to fill more prescriptions. While pharmacists, who are paid $42 an hour, still review all filled prescriptions, using technicians who are paid $16 an hour to fill more prescriptions clearly reduces expenses.

Walgreens started its “Advantage 90” program, which it now offers through its mail-order system and its stores.

Walgreens believes that Advantage 90 will help it take sales away from other PBMs and from other retail pharmacies, which have higher fulfillment costs. Advantage 90 is now used by 150 companies, including Southwest Airlines, and Walgreens’ CEO maintains that it is cheaper than mail-order PBMs. Refer to Narrative 15-3. Walgreens’ implementation of a mail-order pharmacy business is only one change that it will need to make as it contends with increasing costs and new competition. Which of the following describes this statement’s implication of the nature of control? a. synergistic b. static c. reciprocal d. cybernetic 92. Narrative 15-3

Despite 30 straight years of increased revenues and profits, Walgreens found itself facing intense competition from Costco, Walmart, and CVS. However, the biggest and newest threat to Walgreens’ business was mailorder prescription sales managed by pharmacy benefit managers (PBMs), who work closely with companies, insurers, and health maintenance organizations to reduce pharmaceutical costs, which have been increasing an average of 13 percent per year. With Costco’s rock-bottom prices, Walmart’s incredible volume-based purchasing power, and PBMs’ ability to sell brand-name drugs and generic drugs 27 percent and 53 percent cheaper than traditional drug stores, according to a government study, Walgreens knew it had to tightly control its expenses to continue to be competitive.

In terms of efficiency, it costs Walgreens less to fill a prescription order (i.e., fulfillment costs) than any other retailer in the business. PBMs, however, can still fill a prescription for half as much as Walgreens. To get its fulfillment costs down, Walgreens reduced its pharmaceutical inventory supply from 68 days (that is, if Walgreens quit ordering pharmaceuticals, it would be able to fill prescriptions for 68 days before running out) to 41 days. This reduction saves the company nearly $2 billion a year.

Other steps to reduce expenses include no longer accepting American Express cards at Walgreens stores. Every time a customer uses an American Express card to make a payment, the store pays American Express a fee of 2.05 percent. By contrast, Visa and MasterCard charge 1.55 percent. While the difference seems small, the savings amount to $50,000 on every $10 million of sales, which can add up quickly given Walgreens’ $40 billion in annual sales. Finally, Walgreens keeps costs low in its stores with one of the best employee retention rates in the industry. Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and Powered by Cognero

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investment banking firm, says, “Their pharmacists don’t turn over, which increases consumer trust in the pharmacist. The retention rate of store and district managers is also high. This is such an advantage.” Walgreens is also using technicians who are paid $16 an hour to fill more prescriptions. While pharmacists, who are paid $42 an hour, still review all filled prescriptions, using technicians who are paid $16 an hour to fill more prescriptions clearly reduces expenses.

Walgreens started its “Advantage 90” program, which it now offers through its mail-order system and its stores.

Walgreens believes that Advantage 90 will help it take sales away from other PBMs and from other retail pharmacies, which have higher fulfillment costs. Advantage 90 is now used by 150 companies, including Southwest Airlines, and Walgreens’ CEO maintains that it is cheaper than mail-order PBMs. Refer to Narrative 15-3. Which kind of control were Walgreens’ managers using when they responded to the threat of PBMs by creating Walgreens Health Initiatives, its own PBM business? a. concurrent b. intermittent c. feedback d. feedforward 93. Narrative 15-3

Despite 30 straight years of increased revenues and profits, Walgreens found itself facing intense competition from Costco, Walmart, and CVS. However, the biggest and newest threat to Walgreens’ business was mailorder prescription sales managed by pharmacy benefit managers (PBMs), who work closely with companies, insurers, and health maintenance organizations to reduce pharmaceutical costs, which have been increasing an average of 13 percent per year. With Costco’s rock-bottom prices, Walmart’s incredible volume-based purchasing power, and PBMs’ ability to sell brand-name drugs and generic drugs 27 percent and 53 percent cheaper than traditional drug stores, according to a government study, Walgreens knew it had to tightly control its expenses to continue to be competitive.

In terms of efficiency, it costs Walgreens less to fill a prescription order (i.e., fulfillment costs) than any other retailer in the business. PBMs, however, can still fill a prescription for half as much as Walgreens. To get its fulfillment costs down, Walgreens reduced its pharmaceutical inventory supply from 68 days (that is, if Walgreens quit ordering pharmaceuticals, it would be able to fill prescriptions for 68 days before running out) to 41 days. This reduction saves the company nearly $2 billion a year.

Other steps to reduce expenses include no longer accepting American Express cards at Walgreens stores. Every time a customer uses an American Express card to make a payment, the store pays American Express a fee of 2.05 percent. By contrast, Visa and MasterCard charge 1.55 percent. While the difference seems small, the savings amount to $50,000 on every $10 million of sales, which can add up quickly given Walgreens’ $40 billion in annual sales. Finally, Walgreens keeps costs low in its stores with one of the best employee retention rates in the industry. Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm, says, “Their pharmacists don’t turn over, which increases consumer trust in the pharmacist. The retention rate of store and district managers is also high. This is such an advantage.” Walgreens is also using technicians who are paid $16 an hour to fill more prescriptions. While pharmacists, who are paid $42 an hour, still review all filled prescriptions, using technicians who are paid $16 an hour to fill more prescriptions clearly reduces expenses.

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Walgreens started its “Advantage 90” program, which it now offers through its mail-order system and its stores.

Walgreens believes that Advantage 90 will help it take sales away from other PBMs and from other retail pharmacies, which have higher fulfillment costs. Advantage 90 is now used by 150 companies, including Southwest Airlines, and Walgreens’ CEO maintains that it is cheaper than mail-order PBMs. Refer to Narrative 15-3. Which perspective of the balanced scorecard were Walgreens’ managers affecting when they changed how much inventory the company holds at a time? a. customer b. innovation and learning c. internal d. feedback

Indicate whether the statement is true or false.

94. When setting standards for benchmarking, the first step is to determine what to benchmark, then to identify

the companies against which to benchmark standards, and finally to collect data to determine other companies’ performance standards. a. True b. False 95. Control is achieved when behaviour and work procedures conform to standards, and company goals are accomplished. a. True b. False 96. The control process begins when managers set goals. a. True b. False 97. Companies may determine standards by evaluating their capacity to enable goal achievement, by listening to customers, by observing competitors, or by benchmarking other companies. a. True b. False 98. Benchmarking is the process of setting corporate norms. a. True b. False 99. Control is an intermittent activity that requires periodic attention from managers once or twice a month. a. True b. False 100. Feedback control is a mechanism for gathering information about performance deficiencies before they occur. a. True b. False 101. Concurrent control seeks to prevent or minimize performance deficiencies before they occur.

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Chapter 15 - Control a. True b. False 102. In self-control or self-management, leaders and managers should provide employees with clear boundaries

within which they may guide and control their own goals and behaviours. a. True b. False 103. Feedforward control provides information about performance deficiencies by monitoring inputs, not outputs. a. True b. False 104. Sometimes, the costs of control exceed its benefits. a. True b. False 105. Control loss usually has no effect on goal achievement. a. True b. False 106. Control loss occurs when behaviour and work procedures merely meet minimal acceptable standards, rather than exceeding those minimal standards. a. True b. False 107. Implementing controls is always worthwhile. a. True b. False 108. Cybernetic feasibility refers to the extent to which it is possible to implement each step in the control process. a. True b. False 109. While the bureaucratic control model is designed to make companies more efficient, effective, and fair, it frequently has the opposite effect. a. True b. False 110. The objective control approach to managerial control manifests itself as either behaviour control or output control. a. True b. False 111. In the behavioural approach to managerial control, a company’s widely shared values and beliefs guide workers’ behaviour and decisions. a. True b. False Powered by Cognero

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Chapter 15 - Control 112. Concertive control produces less stress for workers than bureaucratic control. a. True b. False 113. When self-control is used, leaders and managers provide workers with clear boundaries within which they may guide and control their own goals and behaviours. a. True b. False 114. The balanced scorecard approach to control emphasizes measurement of organizational performance in three equally important areas: finances, internal operations, and innovation and learning. a. True b. False 115. Generally, it does not matter which of the five approaches to managerial control an organization or individual manager chooses to employ. a. True b. False 116. The balanced scorecard method of control minimizes the chance of suboptimization. a. True b. False 117. Budgets are used to project costs and revenues, to prioritize and control spending, and to ensure that expenses don’t exceed available funds and revenues. a. True b. False 118. The term excessive value appropriated (EVA) refers to the amount by which profits (after expenses) exceed

the cost of capital in a given year. a. True b. False 119. One significant advantage of economic value added (EVA) is that it clearly specifies what specific actions managers should or should not take in order to improve financial performance. a. True b. False 120. Customer satisfaction surveys are an accurate and effective way to answer this balanced scorecard question: “How do customers see us?” a. True b. False 121. Balance sheets show what has happened to an organization's income, expenses, and net profit over a period

of time, whereas an income statement provides a snapshot of a company's financial position at a particular point in time.

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Chapter 15 - Control a. True b. False 122. The only dimension needed to measure quality is its conformance to expectations. a. True b. False 123. The three levels of waste minimization are waste disposal, waste reduction, and recycling. a. True b. False

124. List the steps in the basic control process. Explain how you would respond to the statement that follows: “Control is a process that should be employed intermittently.”

125. Define benchmarking. List the three steps in this process.

126. Explain the term cybernetic and its relevance to the control process.

127. Identify and briefly define the three basic control methods.

128. List and briefly identify the five methods that managers can use to achieve control in their organizations.

129. Some approaches to control tend to be more stressful for employees than others. Discuss how bureaucratic and concertive control influence workers.

130. Briefly describe the balanced scorecard approach to control. Explain how it differs from the traditional approach to control used in most companies.

131. How does financial control in the balanced scorecard approach differ from its use in the traditional approach to control?

132. In an effort to determine the effectiveness of their control system, how do most companies attempt to determine how they are seen by their customers? What is wrong with this technique?

133. Identify which of the four perspectives from the balanced scorecard approach the topic of waste minimization is related to. Specify the four levels of waste minimization in order (from that producing the greatest minimization to that producing the smallest minimization).

134. Describe the nature of the control process. Identify its basic steps, as well as the three basic methods of control.

Explain how specific policies and procedures related to grading used at a college or university could be seen as an example of the control process, and specify which method(s) of control your example(s) represent.

135. Compare and contrast the nature and operational basis of the five methods of control available to managers and organizations. Comment on whether it matters that a manager selects one method of control over another in a given set of circumstances.

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Chapter 15 - Control 136. Identify and explain the balanced scorecard approach to control. Specify its advantages, and explain how it differs from the traditional approach to control used in most companies. Comment on which approach—the traditional or balanced approach to control—is more likely to help a company adapt to a changing, competitive marketplace.

137. What is economic value added (EVA)? Why is it so important in comparison to the traditional approach to controlling financial performance?

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Chapter 15 - Control Answer Key 1. b 2. c 3. c 4. a 5. b 6. b 7. b 8. a 9. b 10. a 11. a 12. c 13. d 14. a 15. c 16. b 17. a 18. c 19. d 20. a 21. c 22. d 23. a 24. c 25. d Powered by Cognero

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Chapter 15 - Control 26. d 27. a 28. d 29. d 30. b 31. b 32. a 33. a 34. d 35. a 36. b 37. d 38. d 39. d 40. c 41. c 42. d 43. a 44. d 45. a 46. c 47. a 48. a 49. d 50. b 51. d Powered by Cognero

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Chapter 15 - Control 52. a 53. a 54. a 55. c 56. a 57. a 58. a 59. a 60. b 61. a 62. b 63. b 64. d 65. c 66. d 67. d 68. d 69. a 70. c 71. d 72. d 73. b 74. d 75. a 76. b Powered by Cognero

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Chapter 15 - Control 77. d 78. d 79. a 80. c 81. b 82. a 83. d 84. a 85. c 86. a 87. d 88. b 89. a 90. b 91. d 92. c 93. c 94. True 95. True 96. True 97. True 98. False 99. False 100. False 101. False 102. True Powered by Cognero

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Chapter 15 - Control 103. True 104. True 105. False 106. False 107. False 108. True 109. True 110. True 111. False 112. False 113. True 114. False 115. False 116. True 117. True 118. False 119. False 120. False 121. False 122. False 123. False 124. The basic regulatory process of control (1) begins with the establishment of clear standards of performance that will achieve organizational goals, (2) involves a comparison of actual performance to performance standards, (3) and identifies and corrects performance deviations. Control is thus a continuous, dynamic, cybernetic process, rather than a one-time achievement or result.

125. Benchmarking is the processes of identifying outstanding practices, processes, and standards in other

companies and adapting them to your company. In other words, benchmarking is the process of determining other companies’ standards. The three steps in benchmarking are (1) determining what to benchmark, (2) Powered by Cognero

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Chapter 15 - Control

identifying the companies against which to benchmark your standards, and (3) collecting data to determine other companies’ performance standards.

126. The term cybernetic takes its meaning from the Greek word kubernetes, which means “steersman,” that is,

one who steers or keeps on course. The control process in organizations is cybernetic because of the feedback loop in which actual performance is compared to standards to minimize or correct deviations from those standards. Maintaining control of organizational processes is thus an ongoing, dynamic, cybernetic process, since comparisons and adjustments are constantly made to keep the process “on track.”

127. The three basic control methods are feedback control (after-the-fact performance information, or gathering information about performance deficiencies after they occur), concurrent control (simultaneous performance information, or gathering information about performance deficiencies as they occur), and feedforward control (preventive performance information, or gathering information about performance deficiencies before they occur).

128. There are five methods that managers can use to achieve control in their organizations. Bureaucratic control is topdown control in which managers try to influence employee behaviour by rewarding or punishing employees for compliance or noncompliance with organizational policies, rules, and procedures. Objective control is the use of observable measures of employee behaviour (i.e., behaviour control) or the results of that behaviour (i.e., output control) to assess performance and influence behaviour. Normative control is the regulation of workers’ behaviour and decisions through widely shared organizational values and beliefs. Concertive control refers to the regulation of workers’ behaviour and decisions through work group values and beliefs, and is typically associated with the use of autonomous work groups.

Self-control (also called “self-management”) is a control system in which managers and workers control their own behaviour by setting their own goals, monitoring their own progress, and rewarding themselves for goal achievement.

129. The five methods that managers can use to achieve control in their organizations are bureaucratic, objective, normative, concertive, and self-control (also called “self-management”). Ironically, concertive control may lead to even more stress for workers to conform to expectations than bureaucratic control. Under bureaucratic control, most workers have to worry about pleasing only “the boss.” But with concertive control, they have to keep the rest of their team members satisfied with their behaviour. For example, one team member said, “I don’t have to sit there and look for the boss to be around; and if the boss is not around, I can sit there and talk to my neighbour or do what I want. Now the whole team is around me and the whole team is observing what I’m doing.” As well, with concertive control, team members have a second, much more stressful role to perform—that of making sure that their team members adhere to team values and rules.

130. In most companies, performance is measured using standard financial and accounting measures, such as

return on capital, return on assets, return on investments, cash flow, net income, and net margins. The balanced scorecard approach to control encourages managers to look beyond traditional financial measures to four different perspectives on company performance, as follows: how do we look to shareholders? (the financial perspective); how do customers see us? (the customer perspective); in what ways must we excel? (the internal perspective); and can we continue to improve and create value? (the innovation and learning perspective). Thus, the balanced scorecard approach includes the financial perspective of the traditional approach, but goes significantly beyond it in assessing additional perspectives relevant to overall company performance 131. The traditional approach to controlling financial performance focuses on measures such as analysis of financial ratios, cash flow, capital budgets, balance sheets, and income statements. Unfortunately, most managers don’t (but should) have a good understanding of these accounting tools. Sometimes, these tools simply provide too much information for the average manager to make sense of. On the other hand, the balanced scorecard focuses on one simple question when it comes to finances: How do we look to shareholders? One of the best ways to answer that question is through something called “economic value added.” Conceptually, economic value added (EVA) is fairly easy for managers and workers to understand. It is the amount by which profits (after expenses) exceed the cost of capital in a given year. It can be a more Powered by Cognero

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Chapter 15 - Control effective method of financial control for the long term, since, for a business to truly grow, its revenues must be large enough to cover both short-term costs (annual expenses and taxes) and long-term costs (the cost of borrowing capital from bondholders and shareholders).

132. Most companies try to answer the question “How do customers see us?” through the use of customer

satisfaction surveys that are often misleadingly positive. Most customers are reluctant to talk about their problems, and even very satisfied customers will leave to do business with competitors. Customer satisfaction surveys greatly overestimate the degree to which customers will buy from a company again. Thus, instead of using customer surveys, companies would be better off closely monitoring customer defections (i.e., by identifying which customers are leaving the company and measuring the rate at which they are leaving). In contrast to customer satisfaction surveys, customer defections and retention have a much greater effect on profits. Few managers realize the financial impact that even a low rate of customer defection can have on a business. In fact, retaining just 5 percent more customers per year can increase annual profits 25 to 100 percent.

Further, customers who have defected to other companies are much more likely than current customers to tell you what you are doing wrong. Finally, companies that understand why customers leave can not only take steps to fix ongoing problems, but can also identify which customers are likely to leave and make changes to prevent them from leaving.

133. The topic of waste minimization is related to the innovation and learning perspective from the balanced

scorecard approach. The four levels of waste minimization in order (from that producing the greatest minimization to that producing the smallest minimization) are (1) waste prevention and reduction, (2) waste recycle and reuse, (3) waste treatment, and (4) waste disposal.

134. Control is a regulatory process of establishing standards that will achieve organizational goals, and then measuring and maintaining performance at levels that meet those standards, and thereby achieve organizational goals. The first step in the control process is to set goals and performance standards. The second is to compare actual performance to performance standards. The better a company’s information and measurement systems, the easier it is to make these comparisons. The last step is to identify and correct performance deviations. However, control is a continuous, dynamic, cybernetic process, not a one-time achievement or result. Control requires frequent managerial attention to keep organizational processes “on course.”

The three basic control methods are feedback control (after-the-fact performance information, or gathering information about performance deficiencies after they occur), concurrent control (simultaneous performance information, or gathering information about performance deficiencies as they occur), and feedforward control (preventive performance information, or gathering information about performance deficiencies before they occur).

Grading procedures at colleges and universities are typically set up to evaluate student performance after the fact in individual courses, and take corrective action where necessary (such as putting a student on probation, or severing their relationship with the school if grades/performance drop too low). Thus, grading systems are typically an example of feedback control. The organizational goal that these systems are established for is twofold: (1) to provide feedback to students on their performance, in order to help them develop and maintain effective learning strategies, and (2) to ensure that graduates of the institution meet certain minimal performance (i.e., knowledge) standards. In addition, grades are used to recognize and reward exemplary performance, as, for example, in posting of a Dean’s or President’s list. High-quality critical thinking answers may go into considerably greater detail in this analysis, as it could be taken much further depending upon the procedures in effect at any individual school. For example, weak measurement systems in the form of unreliable or invalid testing and grading methods would reduce the accuracy of performance measurements and reduce the effectiveness of the whole system, perhaps by causing students to transfer to a different section of a course, or even a different school. If an institution lowers its grading standards to maintain enrollments in a competitive environment, alumni may reduce their donations if and when they become aware of the reduction in quality, and the consequent dilution of their personal academic reputations as graduates of the school.

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Chapter 15 - Control Some schools include early warning systems of grading, such as mid-semester grades for first-year students that allow them to adjust their behaviour or course load based upon feedback on their performance in all courses to date. Such a system could be construed as an example of a concurrent control system, since it is gathering information about performance deficiencies as they occur. Such a system is an improvement over feedback, since it attempts to eliminate or shorten the delay between performance and feedback about the performance. From the students’ perspective, such early warning grading systems give them important information about their progress in their courses (in terms of their grade earned to date), which can allow them to either drop a particularly difficult course that they are doing poorly in (to maintain an acceptable grade point average), or change their study strategy in order to increase their grade at the end of the semester.

To the extent that specific instructors/courses include multiple graded components and a clear mechanism for calculating how one is doing grade-wise throughout the course, we would have another example of a concurrent control system.

Better student answers will emphasize how such a system epitomizes organizational control by acting as a continuous, dynamic, cybernetic process to allow students to adjust their behaviour to stay on course toward good grades.

Other examples could also be appropriate responses to this question. (For example, it could be argued that more stringent selection procedures, which require a higher grade point average to declare or maintain a specific major, could be considered an example of feedforward control, which attempts to control performance deficiencies by monitoring inputs rather than outputs). Such creative examples should be evaluated in terms of their appropriate fit with the concepts of control. Better answers will clearly explain how the components and effects of the grading system described correspond conceptually to the components and effects of a control system, as explained in the text.

135. There are five methods of control available to managers and organizations: bureaucratic, objective, normative, concertive, and self-control (self-management). At the most basic level, all of these are examples of the regulatory process of control, which involves establishing standards that will achieve organizational goals, comparing actual performance to those standards, and then, if necessary, taking corrective action to restore performance to those standards. Within the five methods, there are some specific similarities and differences. Bureaucratic and objective controls are top-down, management- and measurement-based. Normative and concertive controls represent shared forms of control because they evolve from companywide or team-based beliefs and values. Self-control, or self-management, is a control system in which managers largely, but not completely, turn control over to the individuals.

Bureaucratic control is based on organizational policies, rules, and procedures. Objective controls are based on reliable measures of behaviour or outputs, and are frequently differentiated as either behaviour control or output control.

Normative control is based on strong corporate beliefs and careful hiring practices. Concertive control is based on the development of values, beliefs, and rules in autonomous work groups. Self-control is based on individuals setting their own goals, monitoring themselves, and rewarding or punishing themselves with respect to goal achievement.

The selection of particular methods of control to use under particular circumstances should not be a random matter. There are more or less appropriate circumstances for using each of these control methods. For example, bureaucratic control tends to be more appropriate when it is necessary to standardize operating procedures, and it is also necessary to establish limits. Behaviour control is appropriate to use when it is easier and more effective to measure what workers do than what they accomplish, and when clear cause–effect relationships between behaviour and work success are known. Output control is more effective when such cause–effect relationships are unclear, when it is easier and more effective to measure outputs than behaviour, and when it is possible to set clear goals and standards for worker output. Normative control tends to be more appropriate under circumstances when it is difficult to create good measures of worker behaviour and output, and organizational culture, values, and beliefs are strong. Concertive control should be considered when management desires a strong form of worker-based control and wants workers to take ownership of their behaviour and outputs while delegating responsibility for task accomplishment to autonomous work groups. Self-control is appropriate under circumstances when it is difficult to create good measures of worker behaviour and output, and when workers are intrinsically motivated to do their jobs well and have or are taught self-control and self-leadership skills. While student answers need not go into this level of detail on these contingencies for selecting one control method over another, they should demonstrate a general understanding of using a contingency approach to the selection of any given method.

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Chapter 15 - Control 136. In most companies, performance is measured using standard financial and accounting measures, such as

return on capital, return on assets, return on investments, cash flow, net income, and net margins. The balanced scorecard approach to control encourages managers to look beyond traditional financial measures to four different perspectives on company performance. These are as follows: (1) How do we look to shareholders? (the financial perspective); (2) How do customers see us? (the customer perspective); (3) In what ways must we excel? (the internal perspective); and (4) Can we continue to improve and create value? (the innovation and learning perspective). The balanced scorecard has advantages over traditional control processes that rely solely on financial measures. First, it forces managers at each level of the company to set specific goals and measure performance in each of the four areas. Second, it minimizes the chances of suboptimization, where the use of a specific control procedure improves performance in one area, but only at the expense of decreased performance in others.

The traditional approach to control, with its sole reliance on financial and accounting measures, may miss important factors in company performance until they become serious problems, and may well result in significant suboptimization and loss of competitive position. Since the balanced scorecard approach to control measures performance in terms of multiple, interrelated perspectives, all of which are likely to have a long-term impact on the company’s competitive position, it is much more likely to help a company adapt to a changing, competitive marketplace. For example, some of the ways that companies are currently using the balanced scorecard approach to enhance competitive position through effective control include economic value added (from the financial perspective), evaluating customer defections (from the customer perspective), assessing total quality management (from the internal perspective), and emphasizing new product development (from the innovation and learning perspective).

137. The traditional approach to controlling financial performance focuses on measures such as analysis of

financial ratios, cash flow, capital budgets, balance sheets, and income statements. For years, management textbooks have recommended that managers use these measures to monitor and control the financial performance of their companies. In reality, though, most managers don’t (but should) have a good understanding of accounting measures. Thus, controlling financial performance using such traditional approaches may be problematic because many experienced managers find them difficult to work with.

On the other hand, the balanced scorecard focuses on one simple question when it comes to finances: How do we look to shareholders? One of the best ways to answer that question is through something called “economic value added.” Conceptually, economic value added (EVA) is fairly easy for managers and workers to understand. It is the amount by which profits (after expenses) exceed the cost of capital in a given year. It is based on the simple idea that it takes capital to run a business, and capital comes at a cost. If a business is to truly grow, its revenues must be large enough to cover both short-term costs (annual expenses and taxes) and long-term costs (the cost of borrowing capital from bondholders and shareholders).

So why is EVA so important? First and most important, since it includes the cost of capital, it shows whether a business, division, department, or profit centre is really paying for itself. Second, because EVA can easily be determined for subsets of a company, such as divisions, regional offices, manufacturing plants, and sometimes even departments, it makes managers and employees at all levels pay much closer attention to how they run their segment of the business. Finally, unlike many kinds of financial controls, EVA doesn’t specify what should or should not be done to improve performance. Thus, it encourages managers and employees to be creative as they try to find ways to improve EVA performance.

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Chapter 15 - Control

In summary, we can say that EVA is the amount by which profits (after expenses) exceed the cost of capital in a given year. So, the more that return on capital exceeds the cost of capital, the better a company is using investors’ money. Since EVA is easy to understand and use, can be calculated for subsets of a business, and can motivate managers and workers to come up with creative solutions to the challenge of increasing its value, EVA can be a much more effective financial control tool than traditional measures. In essence, EVA motivates the entrepreneurial spirit in managers and gets them to think like small business owners.

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Chapter 16 - Managing Information in a Global World

Indicate the answer choice that best completes the statement or answers the question.

1. According to which of the following rules will the cost of computing drop by 50 percent as computer-

processing power doubles every 2 years? a. Moore’s law b. Gordon’s law c. the Peter principle d. the rule of e-commerce 2. Colin has been hired by a restaurant chain for a co-op term. The restaurant owner wants Colin to take the

sales results from each day for each location and create organized reports. The owner wants to make decisions but at the moment does not have the results in a form he can understand. What form are the sales results in that Colin will use to create organized reports? a. nonspecific information b. processed data c. raw data d. perceived knowledge 3. Chris was the first amongst the sales group to purchase a smartphone when they were introduced to the

market. This gave Chris an upper hand on other sales staff as he could stay in closer touch with current and potential customers and respond to their needs more quickly. What upper hand did the smartphone give Chris? a. first-mover advantage b. lower profits c. less market adaptability d. increased synergy 4. According to the text, where is information derived from? a. raw data b. perceived knowledge c. influential knowledge d. competitive data 5. Which term is best used to define Excel spreadsheets that list property assessment appeals in the city of

Toronto? a. a resource allocation table b. traditional knowledge c. raw data d. perceived knowledge 6. Why is information strategically important for organizations? a. Information can be used to obtain first-mover advantage. b. Information is derived from perceived knowledge, which limits its availability. c. Information cannot be used as a medium of exchange.

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Chapter 16 - Managing Information in a Global World d. Information creates suboptimization opportunities.

7. What is a key difference between raw data and information? a. information is not particularly useful to management when making decisions, contrary to raw data b. information is inexpensive, raw data is costly c. raw data has context, information does not d. information has context, raw data does not 8. Which of the following terms is best used to define a table showing the order frequencies as well as the

average dollar value of the orders of different segments of a catalogue retailer’s market? a. an MIS b. perceived knowledge c. raw data d. information 9. What did Research In Motion (later BlackBerry) do when they introduced the first mobile email device? a. They acquired a source of perceived knowledge. b. They created a tactical advantage. c. They created a first-mover advantage. d. They pioneered sales in the mobile phone industry.

10. Which question identifies a critical issue that companies need to address in order to sustain a competitive

advantage through information technology? a. Who will have access to the information technology? b. Will the purchase of the information technology be viewed as an expense or as an investment? c. Does the firm’s use of the information technology violate any ethical standards? d. Is the firm’s use of information technology difficult for another company to create or buy?

11. What is the key to sustaining a competitive advantage? a. making use of faster computers with more memory to improve operational efficiency and reduce

labour needs b. using information technology to continuously improve and support the business’s core functions c. making use of the Internet’s potential to reduce the reliance of managing and controlling internal data d. engaging the ability of the managers to delegate so they can focus on environmental scanning and strategic planning 12. In 1999, Waterloo, Ontario–based Research In Motion (later BlackBerry) introduced the first mobile email

device. Prior mobile devices only rarely allowed for two-way mobile textual communication. However, by late 2016 BlackBerry devices had effectively zero market adoption, having ceded ground to Android and Apple devices. What technology difficulty did BlackBerry have versus other mobile device manufacturers that hindered its growth rate? a. BlackBerry was unable to change raw data into useful information as well as its competitors could. b. The competitive advantage BlackBerry achieved from being first was not sustainable.

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Chapter 16 - Managing Information in a Global World c. BlackBerry lost its pioneering differential. d. Product diffusion rates were slow.

13. According to the resource-based view of information technology, what sustains competitive advantage? a. simplified technology b. continuous improvement from the use of raw data c. similar technology across the entire firm d. when information technology creates value 14. What are the two basic methods of capturing information? a. systematic and unsystematic b. planned and unplanned c. continuous and intermittent d. manual and electronic 15. Which of the following best describes the manual capture of information? a. fast and cheap b. slow and expensive c. low labour requirements d. highly accurate 16. A large metropolitan hospital wished to keep track of wheelchairs, gurneys, and other expensive equipment

that regularly disappeared from inventory because some hurried employee put it in a closet or elsewhere for safekeeping. What could the hospital use to locate and recover missing property? a. radio frequency identification (RFID) tags b. bar codes c. radio scanning systems d. electronic data interchanges 17. Cassie is able to send images from a trade magazine via email from her office in Ottawa to a team member

working in Japan. What is Cassie using to capture the images from the magazine? a. electronic data interchange b. document scanner c. radio frequency information digitizer (RFID) d. bar coding device 18. Peter used a photocopy of a sales report to capture the information into his computer so that he could make

changes to the report using his word processing software. What enabled Peter do this? a. electronic bar scanners b. optical numerical readers c. optical character recognition software d. radio frequency analogue systems Powered by Cognero

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Chapter 16 - Managing Information in a Global World 19. Which of the following generates ASCII text in the process of capturing information? a. bar codes b. electronic scanners c. optical character recognition software d. e-tools 20. Recalls are a fact of life for the food industry according to a senior vice-president of a large Canadian

supermarket chain. What technology should this company use to identify the location of products in its warehouse that have been recalled? a. RFID tags b. bar codes c. electronic scanners d. data warehouse 21. Ken owns a large financial planning and insurance company. He has records of over 1,000 clients and all of

the purchase decisions. Ken wants to determine if a relationship exists between financial planning decisions and insurance purchases made by his customers. What tool will help Ken accomplish this? a. information keystoning b. data mining c. data warehousing d. data outsourcing 22. Which type of data mining usually begins with the user telling the data mining software to look and test for

specific patterns and relationships in a data set? a. supervised b. specific c. comprehensive d. unsupervised 23. In which type of data mining does the user simply tell the data mining software to uncover whatever patterns

and relationships it can find in a data set? a. supervised b. specific c. comprehensive d. unsupervised 24. What are the two major types of data mining? a. supervised and unsupervised b. random and sequence c. affinity and association d. sequence and affinity Powered by Cognero

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Chapter 16 - Managing Information in a Global World 25. Health Canada could use data it has collected from millions of suspected drug-related adverse event reports

and other electronic medical information to identify a pattern of adverse drug events in a specific population.

The agency could then communicate this knowledge sooner to medical professionals and patients. Where would the data collected by Health Canada be held? a. Internet database b. competitive intelligence source c. data warehouse d. data extraction 26. Jim Rhoade thought he had a decent deal with State Farm for insurance coverage on his two cars and his

home, but a friend gave him a tip about lower premiums at Allstate. After contacting his local Allstate agent, Rhoade had slashed his annual auto premiums by $400 and his homeowner’s premium by the same amount.

That’s because, in addition to considering Rhoade’s record, Allstate took into account seemingly unrelated information from his credit report, such as whether he pays bills on time (he does) and whether there had ever been a claim on his home (there hadn’t). Allstate has discovered patterns that indicate that the better the credit report, the more likely the individual is to be a good risk for an insurer. Which type of pattern has Allstate discovered? a. sequence b. association c. predictive d. adjacency 27. By examining checkout data, supermarkets have learned that people who are buying non-alcoholic beer

typically also buy a bag of salty snacks. As a result of this finding, supermarkets often place displays of nonalcoholic beer near the chips and pretzel aisle. Which of the following activities would have helped supermarkets develop this strategy? a. optical scanning b. electronic data interchange c. bar coding d. data mining 28. By examining checkout data, supermarkets have learned that people who are buying non-alcoholic beer

often also buy a bag of salty snacks. Which pattern did the use of data mining lead to the discovery of? a. the sequential pattern b. the affinity pattern c. the predictive pattern d. the adjacency pattern 29. What is the definition of data mining? a. the automated, electronic capture of data b. the process of hypothesis testing in large databases c. the process of verifying known relationships in large amounts of data d. the process of discovering unknown patterns and relationships in large amounts of data Powered by Cognero

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Chapter 16 - Managing Information in a Global World 30. Anthony has been hired by Canada’s border services to analyze the number of people that have crossed the

border from Canada into the United States in 2022. Anthony is given records of all crossings. He takes the records and removes any duplicates so that a person that crosses the border multiple times is counted as just one person. He then runs the records through software to remove any mistakes. Where will all the records be stored once Anthony has finished? a. Internet databases b. competitive intelligence sources c. data warehouses d. data extractions 31. Kevin is hired by a fast food restaurant to determine why sales have started to decrease. Kevin finds that 30

percent of orders include something toasted. There is just one toaster that creates a bottleneck. Lines of cars build up at the drive thru service. Kevin sees potential customers driving in toward the restaurant turn away and go to a competing restaurant. What has Kevin discovered? a. chaos clusters b. non-sequential clusters c. rational clusters d. data clusters 32. When you purchase a book on Amazon.ca, as soon as you put your selection in the shopping cart you are

offered a series of other items that people who made the same purchase as you did also bought. Which pattern of data mining is Amazon.ca making use of? a. sequence b. association c. predictive d. adjacency 33. What occurs in data mining when two or more database elements occur together in a significant pattern, with

one of the elements preceding the other? a. data clusters b. affinity patterns c. association patterns d. sequence patterns 34. Which patterns can unsupervised data mining be used to recognize? a. association, affinity, and sequence b. adjacency, sequence, and predictive c. affinity, predictive, and association d. affinity, sequence, and predictive 35. Baseball management was trying to uncover matches and relationships in the data it had on first-time

patrons who purchased box stadium seats. It discovered that its sales increased by almost 100 percent in those Powered by Cognero

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seasons when it held an open house prior to the opening game and allowed people to see the box seats and examine the view of the stadium from those seats. Which pattern did the management discover, in terms of data mining? a. affinity b. sequence c. association d. adjacency 36. Where does data reside for data mining? a. data room b. data storage c. data library d. data warehouse 37. Scott works in the internal audit department of a government ministry. Scott’s primary role is to ensure the

data collected for audit is accurate and can be easily retrieved by the audit software the department uses. Scott must also ensure that only audit personnel can access the data. What role does Scott fulfill for the internal audit department? a. decryption b. roadblocking c. data insulation d. protecting information 38. For the purposes of data mining, which kind of pattern is the opposite of the association pattern? a. sequence b. adjacency c. predictive d. affinity 39. What happens to create a data cluster? a. Data clusters result from the use of internal data mining. b. Data clusters occur when a statistical technique is used for trend analysis. c. Data clusters result from samples used for statistical analyses. d. Data clusters occur when three or more database elements occur together in a significant way.

40. Tim is the IT security officer for an engineering firm. Tim must ensure customer records and pricing

formulas are not accessible by anyone outside the company. However, the firm wants the public to be able to easily surf its website to learn what services they provide. What layer of security will Tim place between the firm and the public to prevent outside access to customer records and pricing formulas? a. roadblocks b. firewalls c. hidden cameras Powered by Cognero

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Chapter 16 - Managing Information in a Global World d. locks 41. Which of the following is an example of a security problem that may threaten data and data networks? a. screen printing b. viruses c. mouse flashing d. mob flashing 42. Which two critical steps are required to make sure that data can be accessed by authorized users and no one

else? a. authentication and authorization b. authorization and empowerment c. delegation and authentication d. delegation and empowerment 43. Why do companies use firewalls? a. Firewalls are a way to protect hardware. b. Firewalls are in the form of software only. c. Firewalls prevent authorized use of data. d. Firewalls sit between the computers in internal and outside networks.

44. Which of the following can be taught to recognize specific data patterns, such as dates, costs, and product

numbers in files, reports, or data silos? a. intangible cookies b. software bots c. personal RFID tags d. individual bar codes 45. Although firewalls can protect personal computers and network services connected to the corporate network,

people away from their offices who interact with their company networks via the Internet face a safety risk.

Which of the following technologies has proven to be an inexpensive solution to this problem? a. safe software for logic (SSL) encryption b. virtual private networks c. local area networks d. firewall reassignment 46. Although firewalls can protect personal computers and network services connected to the corporate network,

people away from their offices who interact with their company networks via the Internet face a safety risk.

Which of the following technologies has proven to be a viable solution to this problem? a. safe software for logic (SSL) encryption b. firewall re-engineering c. secure sockets layer (SSL) encryption Powered by Cognero

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Chapter 16 - Managing Information in a Global World d. secure logistical LAN (SLL) encryption 47. What is the goal of an executive information system (EIS)? a. to replace the need for intuition in decision making b. to create a link among authorized data and network users c. to protect organizational data from hackers d. to provide accurate, complete, relevant, and timely information to managers 48. The establishment of which of the following is an information security procedure that encrypts Internet data

at both ends of the transmission process? a. cookie manipulators b. virtual private networks c. cookie managers d. firewall 49. Which of the following can public key encryption be used for? a. protecting files sent over the Internet b. eliminating hacking c. erasing cookie files d. setting up firewalls 50. What are the three kinds of information technology used by executives, managers, and workers inside a

company to access and share information? a. executive information systems, corporate portals, and intranets b. local area networks, extranets, and management information systems c. intranets, local area networks, and corporate portals d. expert systems, decision support system, and virtual private networks 51. What is the term for a private company network that allows employees to easily access, share, and publish

information using Internet software? a. LAN portal b. private company network (PCN) c. intranet d. electronic data sharing system 52. What is a hybrid of executive information systems and intranets? a. a corporate portal b. an extranet c. an expert system d. a virtual private network 53. Sarah sells advertising space for a fashion magazine. To schedule a client’s advertisement, Sarah is able to Powered by Cognero

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access the company’s media department when she is with the client. She can place the ad right into a magazine page so the client can see exactly what it will look like and where on the page it will be positioned. What technology does Sarah use to accomplish this? a. corporate portals b. extranets c. expert systems d. virtual private networks 54. Why do the large majority of companies now use intranets? a. Intranets are expensive but intuitive and easy to use. b. Intranets work across specific computers and operating systems. c. Intranets are built on Web models that existed a decade ago. d. Intranets help organizations retain staff.

55. Snyder’s of Hanover is the world’s second-biggest pretzel maker. A new development allows its more than

50 department heads and executive managers to use a Web browser to view sales results and distribution plans with a single click. It also helps executives size up cost-cutting opportunities on demand instead of waiting until the end of the quarter or year before ramping up production of a popular pretzel brand or paring distribution routes where necessary. What did Hanover develop? a. corporate portal b. extranet c. SSL network d. virtual private network 56. Which of the following is true regarding intranets? a. Companies use intranets to share information and to replace paper forms with online forms. b. Since the crash of the dot-coms, experts on how to install and use intranets are available. c. Intranets are not Web-based. d. Intranets do not use HTML. 57. Tanisha, a new hire at the City of Edmonton, logs into her work computer every morning and visits a

landing page that includes key company updates and information and a space to send recognition to her colleagues. What is Tanisha using? a. malware b. EIS c. the City's intranet d. the City's Internet 58. Which of the following uses internal and external sources of data to provide managers and executives with

the information they need to monitor and analyze organizational performance? a. an executive information system b. a managerial information service c. an expert system Powered by Cognero

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Chapter 16 - Managing Information in a Global World d. a decision support system 59. What are intranets? a. doors that allow managers to access transactions as they occur b. standardized protocols that are used to authenticate and authorize internal network users c. public networks that are used only for business-to-business transactions d. private company networks that allow employees to easily access, share, and publish information

using Internet software 60. During the COVID-19 pandemic, many restaurants removed their paper menus and instead had customers

scan a black-and-white pattern with their smartphone to access the menu. What is this pattern known as? a. QR code b. QB code c. BW code d. affinity code 61. Which of the following is true regarding intranets? a. Intranets require users to build a completely new network. b. Intranets are Web-based. c. Intranets have inherent security features. d. Intranets access internal corporate data only.

62. Through which of the following can a manufacturer of pharmaceuticals access information about its sales

and share new product information with drug store chains? a. electronic data interchange (EDI) b. bar scanners c. SSL interchanges d. intranets 63. What is the term for the direct electronic transmission of purchase and ordering information from one

company’s computer system to another company’s computer system? a. automated processing b. electronic data interchange c. transaction channelling d. data manipulation 64. Michelle is the owner of a large chain of successful department stores. One reason for her success comes

from the supply chain system. When a customer purchases an item from a store, the supplier is able to know immediately if the safe stock level has been reached. If it has, a shipment of product is sent immediately and directly to the store. This allows Michelle to dedicate more space to retail and less space to storage. What technology enables Michelle to have such a supply chain system? a. electronic data interchange b. corporate portal Powered by Cognero

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Chapter 16 - Managing Information in a Global World c. firewall d. intranet 65. Which of the following uses a standardized format to describe data from one company in such a way that

those data can automatically be read, understood, and processed by different computer systems in another company? a. extranets b. intranets c. Web services d. corporate portals 66. Which of the following allows companies to exchange information and conduct transactions by purposely

providing outsiders with direct, Web browser–based access to authorized parts of a company’s intranet? a. extranet b. virtual portal c. Web service d. corporate portal 67. What have companies that use electronic data interchange, extranets, and the Internet to gain a competitive

advantage experienced? a. decreased costs b. lower productivity c. worsening customer service d. faster authentication 68. The Canadian Derivatives Clearing Corporation (CDCC) issues notices and posts its operations manual and

its rules for its clearing members, who are external members of the CDCC. Which term best describes what the CDCC has built? a. extranet b. virtual portal c. Web service d. corporate portal 69. Why is knowledge important? a. Knowledge guarantees success. b. Knowledge resides in information. c. Knowledge is the understanding that one gains from information. d. Knowledge is easier to acquire than data and information.

70. Why would a company use a decision support system (DSS)? a. It speeds up and simplifies the acquisition of information. b. It only processes security data.

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Chapter 16 - Managing Information in a Global World c. It helps managers understand problems and potential solutions with sophisticated models. d. It can be used to replace all managerial decision making.

71. What benefit do companies receive from using a decision support system (DSS)? a. It is broad in scope. b. It speeds up and simplifies the acquisition of information. c. It permits managers to retrieve all kinds of information. d. It allows managers to better understand a problem and its potential solutions.

72. Just a teaspoon too much or too little of a single ingredient can turn a great cake into a mediocre cake. The

ability to know just how much to add, how long to stir, and how the cake should smell when cooked is a skill that a long-time baker would have. Which of the following can help others capture this specialized knowledge? a. electronic data interchanges b. pragmatic portals c. data mining d. expert systems 73. The University of Guelph is conducting research into how technology can support food production by

minimizing the inputs required for a given set of outputs, so that farmers can provide information about their specific circumstances and get feedback on how best to maximize yield. What type of system is the university building? a. electronic data interchange b. pragmatic portal c. data mining d. expert system 74. What is the term for an information system that helps managers understand problems and potential solutions

by acquiring and analyzing information with sophisticated models and tools? a. intranet b. executive information system c. expert system d. decision support system 75. Which of the following works by using a collection of “if–then” rules to sort through information and

recommend a course of action? a. an expert system b. a decision support system c. an executive information system d. a RAID system 76. Loblaws used infrared cameras to count the number of customers in its stores and waiting at checkout

registers. Which of the following characteristics of information does this best represent? a. accuracy Powered by Cognero

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Chapter 16 - Managing Information in a Global World b. completeness c. relevance d. timeliness 77. You know that the population of the Montreal Census Metropolitan Area (CMA) as of 2022 is 4,277,000.

However, your planning team prefers to use the number 4.0 million. What characteristic of information would you use to buttress your argument for using the unrounded number? a. relevance b. completeness c. accuracy d. timeliness 78. When an aircraft goes missing and its black box recorders are never found, which characteristic of

information is MOST affected? a. accuracy b. completeness c. relevance d. timeliness 79. Police departments across North America are increasingly turning to body-worn cameras to provide

evidence in volatile situations. Which characteristic of information is MOST LIKELY the reason departments are using body-worn cameras? a. relevance b. timeliness c. accuracy d. completeness 80. If you’ve been involved in an automobile accident and are transported to hospital with broken bones, why

might the paramedics not be interested in your complete medical history? a. The information isn’t accurate. b. The information isn’t complete. c. The information isn’t relevant. d. The information isn’t timely.

81. What is the term for the concept that information should pertain to the problems you’re trying to solve? a. relevance b. timeliness c. accuracy d. completeness 82. The advent of GPS-based tracking systems on transit fleets to provide real-time arrival and stop information

BEST represents which of the following concepts about information?

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Chapter 16 - Managing Information in a Global World a. Information should be timely. b. Information should be accurate. c. Information should be relevant. d. Information should be complete.

83. Many postsecondary institutions have a policy that final grades for a semester must be entered into the

system within a few days of completing the semester. Which concept regarding information is being reinforced with this policy? a. relevance b. timeliness c. accuracy d. completeness 84. Data brokers have become increasingly common as computing power increases. They often aggregate data

from multiple sources and repackage it for sale. Which type of information cost is being described here? a. retrieval b. storage c. processing d. acquisition 85. Many industry associations collect market research data. Companies use this market research data to fill in

gaps in their own data collection. What costs are associated with this data? a. processing b. acquisition c. communication d. retrieval 86. Which of the following terms BEST describes the cost to convert data into information? a. retrieval cost b. communication cost c. processing cost d. acquisition cost 87. “Metadata” reflects data about data—for example, whether or not you tend to search for “spring” in the

context of a coiled piece of metal or in the context of the season. What type of costs does Google incur in order to incorporate metadata into its search results? a. processing b. communication c. storage d. retrieval 88. What type of costs are associated with cooling server infrastructure?

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Chapter 16 - Managing Information in a Global World a. processing b. communication c. storage d. retrieval 89. Once data have been processed and stored, what costs are associated with using the information? a. processing b. acquisition c. storage d. retrieval 90. The costs of complying with privacy legislation are best represented by which type of information costs? a. processing b. retrieval c. storage d. communication 91. Which of the following describes an isolated data set that is difficult to obtain, combine, or use with other

company data? a. processing silo b. data silo c. data variety d. data disintegration 92. Which of the following costs involves transmitting information from one place to another? a. processing cost b. retrieval cost c. acquisition cost d. communication cost 93. Narrative 16-1

Take a look in your purse or wallet—do you see an Air Miles card? You and about 10 million Canadians have one. They can be used at stores including Shell, Sobeys, Rexall, and others. They work by recording your purchase history and uniquely linking it to your Air Miles program number. You can redeem the points you acquire for rewards in various forms.

Refer to Narrative 16-1. Which term can be used to describe an individual’s purchase history using Air Miles? a. information b. knowledge c. raw data d. mining statistics Powered by Cognero

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Chapter 16 - Managing Information in a Global World 94. Narrative 16-1

Take a look in your purse or wallet—do you see an Air Miles card? You and about 10 million Canadians have one. They can be used at stores including Shell, Sobeys, Rexall, and others. They work by recording your purchase history and uniquely linking it to your Air Miles program number. You can redeem the points you acquire for rewards in various forms.

Refer to Narrative 16-1. Where would the information Air Miles collects be stored? a. large mainframes b. data warehouses c. information mines d. knowledge adjacencies 95. Narrative 16-1

Take a look in your purse or wallet—do you see an Air Miles card? You and about 10 million Canadians have one. They can be used at stores including Shell, Sobeys, Rexall, and others. They work by recording your purchase history and uniquely linking it to your Air Miles program number. You can redeem the points you acquire for rewards in various forms.

Refer to Narrative 16-1. Air Miles collected purchase data information for itself and its sponsors, and then looked for behaviour patterns that could provide useful market information for its sponsors. What was Air Miles engaged in? a. environmental scanning b. prospect collecting c. electronic scanning d. data mining 96. Narrative 16-1

Take a look in your purse or wallet—do you see an Air Miles card? You and about 10 million Canadians have one. They can be used at stores including Shell, Sobeys, Rexall, and others. They work by recording your purchase history and uniquely linking it to your Air Miles program number. You can redeem the points you acquire for rewards in various forms.

Refer to Narrative 16-1. For which of the following would Air Miles use firewalls? a. to identify data patterns b. to protect its internal organizational network from hackers c. to offer security as one of its differential advantages d. to prevent anyone except parents with grocery shopping responsibilities from visiting the site 97. Narrative 16-1

Take a look in your purse or wallet—do you see an Air Miles card? You and about 10 million Canadians have one. They can be used at stores including Shell, Sobeys, Rexall, and others. They work by recording your purchase history and uniquely linking it to your Air Miles program number. You can redeem the points you acquire for rewards in various forms.

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Refer to Narrative 16-1. Air Miles created the first widespread loyalty program in Canada in 1992. Which of the following were they most likely hoping to gain? a. first-mover advantage b. market aggregation c. comparative promotional point d. differential benefit 98. Narrative 16-1

Take a look in your purse or wallet—do you see an Air Miles card? You and about 10 million Canadians have one. They can be used at stores including Shell, Sobeys, Rexall, and others. They work by recording your purchase history and uniquely linking it to your Air Miles program number. You can redeem the points you acquire for rewards in various forms.

Refer to Narrative 16-1. Air Miles data might show that a shopper regularly purchases grated cheese and tortilla chips at the same time. Which kind of pattern would be identified by these data? a. a sequence pattern b. a cluster pattern c. a stratified pattern d. an association pattern 99. Narrative 16-2

For more than a century, the city of London, England, has had the worst traffic in Europe. Half the time is spent at a standstill, and the average speed is 9 mph, down from 12 mph in 1903 when traffic consisted of horses and carriages. To improve traffic, London’s mayor has imposed a “Congestion Zone” fee of £5 per day for any vehicle that enters the eight square miles of central London between 7 a.m. and 6:30 p.m. on weekdays. Drivers who enter the zone but don’t pay are fined from £50 to £125.

First, 688 cameras were used in 203 locations to take accurate pictures of vehicles entering the zone. In general, the cameras are only 90 percent accurate in reading the licence plate numbers on the cars. But with 688 cameras in total, multiple pictures are taken of each car, and partial pictures of licence plates are matched with complete pictures, with the former discarded and the latter retained.

Next, the pictures from the cameras are sent via a dedicated fibre-optic cable to an “image management store.”

An “image management store” is basically a huge farm of networked, redundant servers. If one server goes down, multiple backup servers run live with the same data. Doing this was needed because the city anticipated processing one million pictures a day.

Once the pictures are snapped, transported via fibre-optic cable, and placed in the “image management store,” the next step is “reading” the licence plate in the picture, converting it to readable text, and matching licence plate records stored in government databases. Transport of London uses software that scans digitized documents into ASCII text and then matches and compares multiple pictures of the same licence plate. For example, imagine that a licence plate is 12345678 and that the congestion cameras get three partial pictures—12345, 34567, and 5678—and one complete picture, 12345678. The software has to interpret that all four pictures were of the same vehicle; then, it has to select the last picture, 12345678, not the partial pictures, when converting the Powered by Cognero

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picture to text. Finally, once the licence plate is converted to text, its number is then matched with an existing licence plate in a government database. At that point, “Congestion Zone” charges are linked with whoever owns the vehicle.

Refer to Narrative 16-2. The City of London located 688 cameras in 203 locations to take accurate pictures of vehicles entering its “Congestion Zone.” Multiple pictures are taken of each car, and partial pictures of licence plates are matched with complete pictures, with the former thrown out, and the latter retained. What would the cumulative store of all the photographs be classified as? a. information b. biometrics c. perceived knowledge d. raw data 100. Narrative 16-2

For more than a century, the city of London, England, has had the worst traffic in Europe. Half the time is spent at a standstill, and the average speed is 9 mph, down from 12 mph in 1903 when traffic consisted of horses and carriages. To improve traffic, London’s mayor has imposed a “Congestion Zone” fee of £5 per day for any vehicle that enters the eight square miles of central London between 7 a.m. and 6:30 p.m. on weekdays. Drivers who enter the zone but don’t pay are fined from £50 to £125.

First, 688 cameras were used in 203 locations to take accurate pictures of vehicles entering the zone. In general, the cameras are only 90 percent accurate in reading the licence plate numbers on the cars. But with 688 cameras in total, multiple pictures are taken of each car, and partial pictures of licence plates are matched with complete pictures, with the former discarded and the latter retained.

Next, the pictures from the cameras are sent via a dedicated fibre-optic cable to an “image management store.”

An “image management store” is basically a huge farm of networked, redundant servers. If one server goes down, multiple backup servers run live with the same data. Doing this was needed because the city anticipated processing one million pictures a day.

Once the pictures are snapped, transported via fibre-optic cable, and placed in the “image management store,” the next step is “reading” the licence plate in the picture, converting it to readable text, and matching licence plate records stored in government databases. Transport of London uses software that scans digitized documents into ASCII text and then matches and compares multiple pictures of the same licence plate. For example, imagine that a licence plate is 12345678 and that the congestion cameras get three partial pictures—12345, 34567, and 5678—and one complete picture, 12345678. The software has to interpret that all four pictures were of the same vehicle; then, it has to select the last picture, 12345678, not the partial pictures, when converting the picture to text. Finally, once the licence plate is converted to text, its number is then matched with an existing licence plate in a government database. At that point, “Congestion Zone” charges are linked with whoever owns the vehicle.

Refer to Narrative 16-2. What basic method of capturing information does the City of London use to identify and fine automobile drivers who enter the city’s “Congestion Zone”? a. manual b. intranet Powered by Cognero

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Chapter 16 - Managing Information in a Global World c. electronic d. virtual 101. Narrative 16-2

For more than a century, the city of London, England, has had the worst traffic in Europe. Half the time is spent at a standstill, and the average speed is 9 mph, down from 12 mph in 1903 when traffic consisted of horses and carriages. To improve traffic, London’s mayor has imposed a “Congestion Zone” fee of £5 per day for any vehicle that enters the eight square miles of central London between 7 a.m. and 6:30 p.m. on weekdays. Drivers who enter the zone but don’t pay are fined from £50 to £125.

First, 688 cameras were used in 203 locations to take accurate pictures of vehicles entering the zone. In general, the cameras are only 90 percent accurate in reading the licence plate numbers on the cars. But with 688 cameras in total, multiple pictures are taken of each car, and partial pictures of licence plates are matched with complete pictures, with the former discarded and the latter retained.

Next, the pictures from the cameras are sent via a dedicated fibre-optic cable to an “image management store.”

An “image management store” is basically a huge farm of networked, redundant servers. If one server goes down, multiple backup servers run live with the same data. Doing this was needed because the city anticipated processing one million pictures a day.

Once the pictures are snapped, transported via fibre-optic cable, and placed in the “image management store,” the next step is “reading” the licence plate in the picture, converting it to readable text, and matching licence plate records stored in government databases. Transport of London uses software that scans digitized documents into ASCII text and then matches and compares multiple pictures of the same licence plate. For example, imagine that a licence plate is 12345678 and that the congestion cameras get three partial pictures—12345, 34567, and 5678—and one complete picture, 12345678. The software has to interpret that all four pictures were of the same vehicle; then, it has to select the last picture, 12345678, not the partial pictures, when converting the picture to text. Finally, once the licence plate is converted to text, its number is then matched with an existing licence plate in a government database. At that point, “Congestion Zone” charges are linked with whoever owns the vehicle.

Refer to Narrative 16-2. Which kind of technology is used to turn the licence plate number captured by a photograph into readable text that matches licence plate records already stored in government databases? a. virtual private networks b. SSL encryption c. private encryption codes d. optical character recognition software Indicate whether the statement is true or false.

102. Moore’s law accounts for the rapid increase in power and reduction in both size and price of computer

equipment over the past 50 years. a. True b. False Powered by Cognero

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Chapter 16 - Managing Information in a Global World 103. Moore’s law refers to the prediction that every 2 years the cost of computing will drop by 50 percent as

computer-processing power doubles. a. True b. False 104. To sustain a competitive advantage using IT, companies need to ask themselves if the IT creates value for

the firm by lowering costs or providing a better product or service. a. True b. False 105. Raw data contain useful information that communicates a clear and readily understandable message to the

person for whom the data were gathered. a. True b. False 106. Information is useful when it is complete, accurate, relevant, and easy to understand. a. True b. False 107. The primary difference between raw data and information is that information has context. a. True b. False 108. Information has strategic importance for organizations because it can be used to obtain first-mover

advantage and to sustain a competitive advantage once it has been created. a. True b. False 109. Pioneering differential refers to the strategic advantage that companies earn by being the first in an industry

to use new information technology to substantially lower costs or to differentiate a product or service from competitors. a. True b. False 110. The first airline that was able to allow passengers to buy their plane tickets and reserve their seats online

had first-mover advantage. a. True b. False 111. The first company to gain first-mover advantage typically benefits from higher profits and larger market

share, but the company is not immune from competition. a. True b. False 112. According to the resource-based view of information technology, sustainable competitive advantage occurs Powered by Cognero

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when information technology adds value, is different across firms, and is difficult to create or acquire. a. True b. False 113. The key to sustaining a competitive advantage is using information technology to continuously improve

and support the core functions of a business. a. True b. False 114. The two basic methods of capturing information are continuous and periodic. a. True b. False 115. Bar codes and document scanners are common methods of electronically capturing data. a. True b. False 116. Association patterns are also called sequence patterns. a. True b. False 117. The term data mining refers to the process of discovering unknown patterns and relationships in large

amounts of data. a. True b. False 118. Unsupervised data mining is unethical. a. True b. False 119. Data mining typically splits a data set in half, finds patterns in one half, and then tests the validity of those

patterns by trying to find them again in the second half of the data set. a. True b. False 120. A data warehouse stores raw data that have been collected from a variety of sources for later use. a. True b. False 121. Protecting information is the process of ensuring that data are reliably and consistently retrievable in a

usable format for authorized users, but no one else. a. True b. False 122. The two activities necessary to properly secure data and data networks are the use of firewalls and antivirus Powered by Cognero

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software. a. True b. False 123. Double authentication is authentication based on what users know, such as a password, and what they have

in their possession, such as a secure ID card or key. a. True b. False 124. Data mining often reveals data clusters where three or more database elements occur together. a. True b. False 125. Data encryption transforms data into complex, scrambled digital codes that can be unencrypted only by

authorized users who possess unique decryption keys. a. True b. False 126. Virtual private networks and secure sockets layer (SSL) encryption perform basically the same function. a. True b. False 127. Firewalls can protect only personal computers and network servers connected to the corporate network. a. True b. False 128. Intranets are private company networks that allow employees to easily access, share, and publish

information using Internet software. a. True b. False 129. Three major types of information technology are used by executives, managers, and workers inside the

company to access and share information. They are executive information systems, intranets, and corporate portals. a. True b. False 130. Electronic data interchange (EDI), extranets, and the Internet have proven to provide such a competitive

advantage that managers are scrambling to find ways to use them in their own companies. a. True b. False 131. Electronic data interchange, or EDI, is the direct electronic transmission of purchase and ordering

information from one company’s computer system to another company’s computer system. a. True Powered by Cognero

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Chapter 16 - Managing Information in a Global World b. False 132. Data and information are the same as knowledge. a. True b. False 133. It is important to understand that DSS programs should not replace managerial decision making. a. True b. False 134. Extranets can be used to handle external organizational transactions with suppliers and distributors. a. True b. False 135. Most expert systems work by using a collection of “if–then” rules to sort through information and

recommend a course of action. a. True b. False 136. Information is useful when it is timely, accurate, and relevant. a. True b. False 137. Canada has emerged as a world centre for data retrieval. a. True b. False 138. Real-time streaming data from an airplane are more likely to be complete than a “black box” recorder. a. True b. False 139. Artificial intelligence and data mining can be used to retrieve relevant information from large data sets. a. True b. False 140. Financial records prepared 120 days after a period ends are considered timely. a. True b. False 141. Five kinds of costs are associated with information: acquisition, processing, retrieval, communication, and

storage. a. True b. False 142. Web services are another way for companies to directly and automatically transmit purchase and ordering Powered by Cognero

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data from one company’s computer system to another company’s computer system. a. True b. False 143. Processing cost is the cost of transmitting information from one place to another. a. True b. False 144. Storage cost is the cost of archiving information for later use and retrieval. a. True b. False 145. A common way to develop AI is to feed information into an AI system, have it analyze that information for

patterns, and then have the AI system make decisions, letting the system know when it was wrong or right. a. True b. False 146. Data silos often have high processing costs because of data variety—that is, data that are formatted or

structured in different ways. a. True b. False

147. What is first-mover advantage?

148. According to the resource-based view of information technology, what are the three critical issues that

companies need to address in order to sustain a competitive advantage through information technology?

149. Define data mining. Briefly describe the two general approaches to data mining.

150. What does it mean when someone says that an organization protects its information? Why is it important?

What are the basic steps to properly securing data and data networks?

151. Describe the two critical steps that can be used to ensure that an organization’s data can be accessed only

by authorized users.

152. Which type of personal computer security measure would salespeople who are on the road dealing with

customers’ questions want the company to use? Why? 153. What are intranets? How do intranets differ from the Internet and corporate portals?

154. Briefly distinguish between knowledge and information.

155. A master brewer knows the exact ingredients to add to make a dark beer, a lager, or an ale. He understands

the nuances of the fermentation process as well as when a batch reaches perfection. How can technology capture this specialized knowledge?

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Chapter 16 - Managing Information in a Global World 156. Define each characteristic that’s required for information to be useful, and provide an example of each.

157. Define each of the costs associated with useful information and provide an example of each.

158. Assume that, as a member of the student governing body at your college or university, you have unlimited

resources to tackle a challenge that has been posed to you by students, some faculty, and the administration at your school: develop a database that will allow students to identify the quality of instructors before signing up for their courses. Using this challenge as a running example, differentiate between raw data and information, and identify and discuss the value and costs of useful information as they apply to this challenge.

159. Discuss the issues, advantages, and risks associated with using information to gain or maintain strategic

advantage.

160. What are the two basic methods of capturing information? Comment on the advantages and disadvantages

of each.

161. What is data mining? Describe the two kinds of data mining. How can data mining be used to invade the

privacy of individuals, given the large amount of data that is collected and stored electronically on people in their everyday transactions?

162. Compare and contrast executive information systems, decision support systems, and expert systems.

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Chapter 16 - Managing Information in a Global World Answer Key 1. a 2. c 3. a 4. a 5. c 6. a 7. d 8. d 9. c 10. d 11. b 12. b 13. d 14. d 15. b 16. a 17. b 18. c 19. c 20. a 21. b 22. a 23. d 24. a 25. c Powered by Cognero

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Chapter 16 - Managing Information in a Global World 26. b 27. d 28. b 29. d 30. c 31. d 32. b 33. d 34. d 35. b 36. d 37. d 38. c 39. d 40. b 41. b 42. a 43. d 44. b 45. b 46. c 47. d 48. b 49. a 50. a 51. c Powered by Cognero

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Chapter 16 - Managing Information in a Global World 52. a 53. a 54. c 55. a 56. a 57. c 58. a 59. d 60. a 61. b 62. a 63. b 64. a 65. c 66. a 67. a 68. a 69. c 70. c 71. d 72. d 73. d 74. d 75. a 76. a Powered by Cognero

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Chapter 16 - Managing Information in a Global World 77. c 78. b 79. d 80. c 81. a 82. a 83. b 84. d 85. b 86. c 87. a 88. c 89. d 90. b 91. b 92. d 93. c 94. b 95. d 96. b 97. a 98. d 99. d 100. c 101. d 102. True Powered by Cognero

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Chapter 16 - Managing Information in a Global World 103. True 104. True 105. False 106. False 107. True 108. True 109. False 110. True 111. True 112. True 113. True 114. False 115. True 116. False 117. True 118. False 119. True 120. False 121. True 122. False 123. False 124. True 125. True 126. True 127. True Powered by Cognero

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Chapter 16 - Managing Information in a Global World 128. True 129. True 130. True 131. True 132. False 133. True 134. True 135. True 136. False 137. True 138. True 139. True 140. False 141. True 142. True 143. False 144. True 145. True 146. True 147. First-mover advantage is the strategic advantage that companies earn by being the first in an industry to use

new information technology to substantially lower costs or to differentiate a product or service from competitors.

148. According to the resource-based view of information technology, companies need to address three critical

issues in order to sustain a competitive advantage through information technology. First, does the information technology create value for the firm by lowering costs or providing a better product or service? Second, is the information technology the same or different across competing firms? Third, is the firm’s use of information technology difficult for another company to create or buy?

149. Data mining is a form of information processing which discovers unknown patterns and relationships in

data. As such, data mining transforms raw data into meaningful information that can be used for business Powered by Cognero

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decision making. There are two general approaches to data mining: supervised and unsupervised. Supervised data mining looks and tests for specific patterns and relationships in a data set that have been specified by managers. In contrast, unsupervised data mining attempts to uncover whatever patterns and relationships it can find in a data set. It specifically looks for four general kinds of data patterns: association/affinity patterns, sequence patterns, predictive patterns, and data clusters.

150. Protecting information is the process of ensuring that data are reliably and consistently retrievable in a

usable format for authorized users, but no one else. Protecting information is necessary because of the numerous security threats to data and data security, such as attacks by hackers and keystroke monitoring. In these ways people inside and outside of companies can steal or destroy company data. There are numerous steps to properly securing data and data networks. Some of the most important are using firewalls, antivirus software for PCs and e-mail servers, data encryption, and virtual private networks.

151. One step is authentication—that is, making sure the users are who they claim to be. The other step is

authorization—that is, granting authenticated users approved access to data, software, and systems.

152. Salespeople and other employees outside the company network would prefer either a virtual private

network (VPN) or secure sockets layer (SSL) encryption. Both protect data and software from unauthorized users.

153. Intranets are private company networks that allow employees to easily access, share, and publish

information using Internet software. Intranet websites are just like external websites, but the firewall separating the internal company network from the Internet permits only authorized internal access.

Corporate portals are a hybrid of executive information systems and intranets: while an EIS provides managers and executives with the information they need to monitor and analyze organizational performance, and intranets help companies distribute and publish information and forms within the company, corporate portals allow company managers and employees to access customized information and complete specialized transactions using a Web browser.

154. Data and information are not the same as knowledge. Knowledge is the understanding that one gains from

information, and it’s important to realize that it does not reside in information. Knowledge resides in people.

That’s why companies hire consultants, or why family doctors refer patients to specialists.

155. Expert systems can be used to capture this specialized knowledge. By creating a collection of “if–then”

statements, even those without the brewer’s years of experience can create a worthy beer.

156. Information should be accurate, complete, relevant, and timely. [Student examples may be from the text or

from their personal experience.]

157. Useful information comes with acquisition, processing, storage, retrieval, and communication costs.

[Student examples may be from the book or from their personal experience.]

158. Raw data are facts and figures. Raw data don’t become information until they are in a form that can affect

decisions and behaviour. For information to be useful, it has to be reliable and valid (accurate), of sufficient quantity (complete), pertinent to the problems you’re facing (relevant), and available when you need it (timely).

In terms of the student’s challenge, raw data (numbers and perhaps comments) from student and peer evaluations of faculty would need to be processed in order to ensure their reliability and validity (i.e., that they Powered by Cognero

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truly reflect teaching performance). The processed data would have to cover all professors in all courses (completeness and relevance), and be available for examination by students shortly before registration for the upcoming semester (timeliness).

In terms of the student’s challenge, there is technology that would allow students to evaluate every professor in every course and have this data immediately transferred to a school intranet, which could be accessed by authorized users to allow students to identify the quality of instructors before signing up for their courses.

However, such a project would be very expensive, and in the real world, would probably encounter resistance from the faculty. The costs of acquiring, processing, storing, retrieving, and communicating this information would have to be weighed against the value of this information in enhanced student satisfaction (or dissatisfaction, when not everyone can get into the best professor’s classes) as well as its impact on faculty morale. The impact on student satisfaction and faculty morale might be considered further costs and values in the consideration of this project.

159. According to the resource-based view of information technology, companies need to address three critical

issues in order to sustain a competitive advantage through information technology. First, does the information technology create value for the firm by lowering costs or providing a better product or service? If an information technology doesn’t add value, then investing in it would put a firm at a competitive disadvantage to companies that choose information technologies that do add value. Second, is the information technology the same or different across competing firms? If all the firms have access to the same information technology and use it in the same way, then no firm has an advantage over another (i.e., there is competitive parity). Third, is the firm’s use of information technology difficult for another company to create or buy? If so, then the firm has established a sustainable competitive advantage over competitors through information technology. If not, then the competitive advantage is just temporary, and competitors should eventually be able to duplicate the advantages the leading firm has gained from information technology.

Information has strategic importance for organizations because it can be used to obtain first-mover advantage and to sustain a competitive advantage once it has been created. First-mover advantage is the strategic advantage that companies earn by being the first in an industry to use new information technology to substantially lower costs or to differentiate a product or service from competitors. While first-mover advantage typically leads to above average profits and market share, it doesn’t immunize a company from competition.

However, sustaining a competitive advantage through information technology is not easy to do. Competitors can and do come up with strategies to neutralize the initial competitive advantage gained by the first mover.

Furthermore, because new information technology always costs more when it is new, first-mover strategies are typically much more expensive than adopting a technology after it has been established (and prices have fallen).

This means that a company that establishes first-mover advantage and then loses it can lose substantial amounts of money and market share. In many instances, these losses can put the company that had first-mover advantage out of business.

160. There are two basic methods of capturing information, manual and electronic. Manual capture of

information is a labour-intensive process by which data are recorded and entered by hand into a data storage device. One advantage of manual capture is that it can easily be used to enter data for which no automated electronic system exists. The problem with manual capture of information is that it is slow, expensive, and often inaccurate. Consequently, companies are relying more on electronic capture, in which data are electronically recorded and entered into electronic storage devices.

Bar codes and document scanners are common methods of electronically capturing data. Bar codes represent numerical data by varying the thickness and pattern of vertical bars. The primary advantage that bar codes offer Powered by Cognero

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is that the data they represent can be read and recorded in an instant with a handheld or pen-type scanner.

However, the necessary data must be presented in bar code form in order to use this technique rather than manual entry. Thus, management must develop a plan and mechanism for using bar codes for data entry. This necessity might be considered a disadvantage.

Because they are inexpensive and easy to use, document scanners, which convert printed text and pictures into digital images, have become an increasingly popular method of electronically capturing data. However, text that has been digitized cannot be searched or edited like the regular text in your word-processing software.

Therefore, companies can use optical character recognition software to scan and convert original or digitized documents into ASCII text (American Standard Code for Information Interchange). ASCII text can be searched, read, and edited in standard word-processing, e-mail, desktop publishing, database management, and spreadsheet software. Thus, the advantage of scanners and optical character recognition software is that much data entry can be done electronically, but the disadvantage is that human monitoring and interaction may still be necessary to ensure the reliability of the process, since the process is not foolproof.

161. Data mining is a new form of information processing, which discovers unknown patterns and relationships

in data. It is a promising tool that can be used to help managers dig out from under the avalanche of data that companies collect every day. Data mining transforms large bodies of raw data into meaningful information that can be used for business decision making. The data typically come from a data warehouse, which stores huge amounts of data that have been prepared for data mining analysis by being cleaned of errors and redundancy.

There are two general approaches to data mining: supervised and unsupervised. Supervised data mining looks and tests for specific patterns and relationships in a data set that have been specified by managers. In contrast, unsupervised data mining attempts to uncover whatever patterns and relationships it can find in a data set. It specifically looks for four general kinds of data patterns: association/affinity patterns (which occur when two or more database elements tend to occur together in a significant way), sequence patterns (which occur when two or more database elements occur together in a significant pattern, but with one of the elements preceding the other), predictive patterns (which identify database elements that are different), and data clusters (which occur when three or more database elements occur together—that is, cluster—in a significant way).

The preceding portion of this answer was drawn directly from the text. Students may take a variety of approaches to explaining how data mining could potentially be used to invade the privacy of individuals, given the large amount of data that is collected and stored electronically on people in their everyday transactions.

Better answers will specify the types of data collected on individuals, the sources of that information, and how companies might use the techniques of data mining—especially unsupervised data mining—to identify relationships that could allow those companies to know more about individuals than those individuals consciously know about themselves. For example, through the use of such information, companies could develop marketing approaches that might be significantly more effective and much less obvious than traditional approaches. In this way, some might argue, the free choice of consumers could be violated. Obviously, there are numerous directions in which students could go with this answer. The key to a good answer is anchoring realistic speculation about invasion of privacy in the techniques and potential of data mining as described in the text.

162. In addition to capturing, processing, and protecting information, information technology is used in

organizations for accessing and sharing information. This is done in three different ways: internal access and sharing of information, external access and sharing of information, and sharing of knowledge and expertise.

Executive information systems, decision support systems, and expert systems are all examples of information Powered by Cognero

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technology that companies are using in an attempt to gain a competitive advantage in the marketplace by accessing and sharing information. However, the three types of systems serve two different purposes. Executive information systems are one of two types of information technology used by executives, managers, and workers for the internal access and sharing of information (the other information technology used for this purpose is an intranet). An executive information system (EIS) uses internal and external sources of data to provide managers and executives the information they need to monitor and analyze organizational performance. The goal of EIS is to provide accurate, complete, relevant, and timely information to managers.

As noted above, another way in which companies take advantage of the accessing and sharing of information is through the sharing of knowledge and expertise. This is the category of use into which decision support systems and expert systems fall. Companies have begun using two information technologies—decision support systems and expert systems—to capture and share the knowledge of consultants, specialists, and experts with other managers and workers.

Unlike executive information systems which speed up and simplify the acquisition of information, decision support systems (DSS) help managers understand problems and potential solutions by acquiring and analyzing information with sophisticated models and tools. Furthermore, unlike EIS programs that are broad in scope and permit managers to retrieve all kinds of information about a company, DSS programs are usually narrow in scope and targeted toward helping managers solve specific kinds of problems. DSS programs have been developed to help managers pick the shortest and most efficient routes for delivery trucks, to pick the best combination of stocks for investors, and to schedule the flow of inventory through complex manufacturing facilities. DSS programs don’t replace managerial decision making; they improve it by furthering managers’ and workers’ understanding of the problems they face and the solutions that might work. The ability to analyze “what if” scenarios is a key capability of all DSS systems. They help managers to determine what outcomes would likely be under different conditions, or as a result of different managerial decisions.

Expert systems are created by capturing the specialized knowledge and decision rules used by experts and experienced decision makers. They permit nonexpert employees to draw on this expert knowledge base to make decisions. Most expert systems work by using a collection of “if–then” rules to sort through information and recommend a course of action. Decisions made using the expert system are more likely to be effective than those made by the less experienced, nonexpert employee since the database of specialized knowledge and decision rules is taken into account by the expert system.

In conclusion, both decision support systems and expert systems help managers solve more specific types of problems through the sharing of knowledge and expertise. On the other hand, executive information systems, which emphasize internal access and sharing of information, provide more general information to managers, who use it with wider discretion to monitor and identify threats or opportunities facing the organization.

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Indicate the answer choice that best completes the statement or answers the question.

1. What measure of performance indicates how efficiently goods and services are produced? a. reliability b. performance accountability c. productivity d. TQM 2. At their core, companies are systems that combine inputs, such as labour, raw materials, capital, and

knowledge, to produce finished products or services. Which term best describes the type of system a company is? a. organizational b. production c. social d. predictable 3. What is the correct relationship among productivity, outputs, and inputs? a. productivity = (inputs/outputs) b. productivity = [(inputs × outputs)/100] c. outputs = (productivity/inputs) d. productivity = (outputs/inputs) 4. Why is productivity so important? a. Productivity is a ratio of benefits to costs (i.e., benefits divided by costs). b. For companies, higher productivity can lead to higher costs. c. Higher productivity can lead to lower costs for the company and lower prices for consumers. d. Productivity decreases make products more affordable.

5. Why is productivity important to countries? a. Productivity matters because it produces a higher standard of living. b. Greater productivity results in lower wages. c. Productivity increases supply and reduces demand for products. d. Productivity reduces taxation.

6. Which type of productivity is a measure of performance that indicates how much of a particular kind of input it takes to produce an output? a. breakdown b. segregated c. unifactor d. partial 7. The CEO of a company that manufactures maple wooden cutting boards has determined that it takes two hours of labour, a planer, a sander, an electric saw, and $5.67 to make one maple cutting board from a piece of maple lumber 46 cm square and 5 cm thick. Which type of productivity has the CEO determined about his company in order to compare its operation with that of its competition?

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Chapter 17 - Managing Service and Manufacturing Operations a. integrated b. multifactor c. segregated d. functional 8. Which type of productivity shows how much labour, capital, materials, and energy it takes to create an output? a. temporal b. multifactor c. functional d. continuous 9. Which type of productivity was the manager of a sign manufacturer interested in when determining how much glass tubing was needed to produce a neon sign for a casino? a. composite b. multifactor c. partial d. breakdown 10. Nesha is determining levels of efficiency at different times of the year. She is reviewing the contract work costs, supplier purchases, re-tooling to adjust capacity, and utility bills between high and low seasons. What kind of productivity is Nesha reviewing? a. labour productivity b. partial productivity c. integrated productivity d. multifactor productivity 11. As a result of advances in robotics design and artificial intelligence we are at the beginning of another surge

in automation, this one driven by which of the following? a. robots b. RFID chips c. biometrics d. the Internet of things 12. Which of the following uses robots to automate routine, highly repetitive, low-complexity or single-purpose

tasks? a. intelligent automation b. process automation c. robot automation d. collaborative automation 13. When iPhone users ask Siri to tell them the current outside temperature, they are using which of the

following? a. intelligent automation b. process automation Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations c. collaborative recognition d. intelligent recognition 14. Which of the following puts robots and workers side by side? a. intelligent recognition b. process automation c. social automation d. multi-automation 15. How is quality best defined? a. a product or service free of deficiencies, or one that satisfies customers’ needs b. a product that customers perceive as free of deficiencies c. any product made from error-free components d. a product produced according to a sacrificing design plan 16. Eleanor is deciding between two spas to schedule a massage, facial, and pedicure. Which of the following

will she most likely base her decision on? a. service reliability b. validity c. responsiveness d. homogeneity 17. Roger is comparing battery life from several battery suppliers. What is Roger evaluating? a. reliability b. assurance c. durability d. responsiveness 18. Which term can be used to describe a product that is easy to maintain and fix? a. reliable b. serviceable c. durable d. tangible 19. Dylan wishes to purchase an electric keyboard to take with him to college residence when he lives away from home.

He is reading reviews of several brands. A key factor in his decision is which company will be able to help the fastest should his keyboard require repair. What feature of the keyboard is important to Dylan? a. reliable b. serviceable c. responsive d. consistent 20. SKF Canada, a firm that specializes in pumps for the oil and gas industry, recently refitted pumps at a

refinery to reduce the chance of mechanical breakdowns and extend the time between services. Which Powered by Cognero

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characteristic of product quality is described by refitting the pumps? a. reliability b. serviceability c. responsiveness d. consistency 21. Robin Subaru centrifugal pumps combine a powerful overhead-cam engine, heavy-duty construction, and reliable performance for dewatering in light construction, flood control, homeowner, firefighting, and irrigation applications. The pumps are also designed for durability. Which statement best describes these pumps? a. The pumps break down frequently. b. The pumps demonstrate a short time frame between necessary maintenance. c. The pumps must be sent back to the manufacturer for repair. d. The pumps have a high mean time before product failure.

22. Massey Ferguson, a division of AGCO Corp., has introduced two new front-cut mowers designed to provide a high level of serviceability. Which statement best describes the mowers? a. The mowers demonstrate a long time frame between necessary maintenance. b. The mowers must be sent back to the manufacturer for repair. c. The mowers are easy to repair. d. The mowers have a high mean time before product failure.

23. What determines a product’s quality? a. reliability, homogeneity, and durability b. tangibility, validity, and homogeneity c. serviceability, tangibility, and validity d. durability, reliability, and serviceability 24. Which quality characteristic can be applied to both goods and services? a. reliability b. serviceability c. durability d. homogeneity 25. Judy is arranging the end of year party at a restaurant for the company’s employees. Judy considered a new restaurant but decided to make a reservation at the one she has used in the past since she has never been disappointed. What characteristic of the restaurant keeps Judy returning? a. reliability b. assurance c. responsiveness d. tangibility 26. An article addressed to nurses who work in intensive care said, “Patients may feel isolated or ostracized from those around them, including medical staff, because of their condition or appearance. Practices affirming the patient’s intrinsic value and individual personality will be critical to establishing trust and rapport.” Providing which of the following is one method to affirm a patient’s intrinsic value?

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Chapter 17 - Managing Service and Manufacturing Operations a. empathy b. serviceability c. durability d. homogeneity 27. In terms of service quality characteristics, which of the following terms can be used to describe a major newspaper that provides news of interest to its readers, consistently at the same time and place daily? a. proactive b. responsive c. durable d. reliable 28. Oktavia has decided to change hair salons and, as she is very picky about her haircuts, wants to find a salon

she can feel confident with and one where the stylists are knowledgeable and trustworthy. Which service quality is Oktavia most concerned about? a. reliability b. empathy c. durability d. responsiveness 29. What do studies clearly show customers care more about than anything else when buying services? a. responsiveness b. assurance c. reliability d. tangibles 30. What is ISO 14000? a. ISO 14000 provides ISO certification for service providers. b. ISO 14000 is a series of five international standards for achieving consistency in quality management and quality assurance in companies throughout the world. c. ISO 14000 is a series of international standards for managing, monitoring, and minimizing an organization’s harmful effect on the environment. d. ISO 14000 is the interim ISO certification that is granted in the event that ISO 9000 certification is temporarily withdrawn.

31. Which of the following is true regarding ISO 9000 certification? a. It is a series of 12 international standards. b. It is used for measuring and monitoring security techniques for information technology. c. It is a series of five international standards. d. Companies must be an industrial service organization to be certified.

32. Which of the following may cause a company's ISO certification to be suspended or cancelled? a. The company produces inconsistent quantity of product. b. The company replaces some of its manufacturing capability with service delivery.

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Chapter 17 - Managing Service and Manufacturing Operations c. The company fails a periodic audit following their initial certification. d. The company’s profit declines.

33. Which of the following sets standards for managing and monitoring security techniques for information

technology? a. ISO 25000 b. ISO 27000 c. ISO 14000 d. There is no ISO certification related to information technology.

34. Which of the following develops and publishes standards that facilitate the international exchange of goods

and services? a. ISO b. the Blanchard Award c. the Herzberg Award for Excellence d. kanban certification 35. Which of the following is one of the principles that characterize TQM? a. third party certification b. delegation c. participative management d. customer focus and satisfaction 36. Which of the following is one of the principles that characterize TQM? a. teamwork b. organizational dialogue c. the equity theory d. autonomy 37. In TQM terms, which of the following is an organizational goal to provide products or deliver services that meet or exceed customers’ expectations? a. market response b. customer satisfaction c. market focus d. positive framing 38. Ideal Brake Parts, a Canadian manufacturer of brake parts, is at the forefront of the replacement brake industry as a result of its ongoing commitment to continuous product improvement and its uncompromising dedication to providing customers with the most advanced, premium quality product technology through teamwork. In other words, which of the following is Ideal Brake Parts committed to? a. a bureaucratic structure b. total quality management c. winning ISO 8000 certification d. implementing an MRP program Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 39. What does TQM state a company’s primary goals should be? a. Earning profits and customer focus should always be a company’s primary goals. b. Quality levels and customer satisfaction should be a company’s primary goals. c. Customer focus and customer satisfaction should be a company’s primary goals. d. Quality levels and earning profits should be a company’s primary goals.

40. A purchasing manager chooses to procure 95 percent of the main raw material the company needs from one supplier.

The supplier knows the company’s products extremely well, is always friendly and professional to deal with, and if anything goes wrong, takes care of the problem right away. What does the purchasing manager value most in the supplier? a. empathy b. level of assurance c. the supplier’s prices d. the supplier’s friendliness 41. Donna runs a printing company and has called her press supplier. The supplier is having difficulty locating a repair company for the press. What problem exists with the press? a. product failure b. TQM c. assurance d. serviceability 42. What is total quality management (TQM)? a. TQM is an integrated organization-wide strategy for improving product and service quality. b. TQM is a specific technique used to reposition a company’s product so as to justify higher prices. c. TQM is based on four mutually reinforcing principles: customer focus, customer satisfaction, participative management, and delegation. d. TQM was developed and is monitored by the International Organization of Standards to monitor employee satisfaction.

43. What is the best way to describe what TQM is? a. an overall approach to management b. a tool c. a quality technique d. a quality standard 44. Total quality management (TQM) saved Xerox from bankruptcy when it was badly beleaguered by its Japanese rivals.

What would TQM have brought to Xerox to save it from bankruptcy? a. Every Xerox employee, from the top to the bottom, became focused on meeting or exceeding its

customers’ expectations. b. The company became committed to satisfying its shareholders. c. Xerox managers focused on financial goals, using budgets and financial statement ratios to guide their decisions. d. Xerox adopted a cost-cutting philosophy 45. Which of the following is continuous improvement typically associated with?

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Chapter 17 - Managing Service and Manufacturing Operations a. low morale and reduced customer satisfaction b. a reduction in variation and higher customer satisfaction c. batch processing and a broad chain of command d. a flat organizational structure and a broad chain of command 46. Xerox is a firm believer in total quality management (TQM). Anne Mulcahy, the former president of Xerox, was quoted as saying, “TQM may help employees figure out how to solve a specific problem. But the really big payoff comes when they share that solution with others.” Which characteristic of TQM was Mulcahy promoting in her statement? a. continuous improvement b. variation elimination c. teamwork d. market focus 47. Many organizations rely on teaming as a key to their productivity and credit their use of teams with performance improvements, such as increased efficiency, improved participation and innovation, error reduction, quality improvement, increased responsiveness, cost-effectiveness, better customer service, and improved employee satisfaction. Which of the following is this statement illustrating? a. the importance of benchmarking b. the prevalence of ISO certification c. how restructuring leads to stakeholder satisfaction d. how teamwork can result in total quality management 48. Leon is the quality control officer at a furniture manufacturing firm. Leon is searching for a new supplier of plastic strips that line the edges of most of their office desks. The current supplier’s recent orders have provided strips with too many deviations from specifications in the original purchase agreement. What characteristic of the plastic strips is Leon unhappy with? a. performance breakdown b. underperformance measure c. aberration d. variation 49. Raquel is the new CEO of a technology company. Raquel has changed the focus of the company from pure profit orientation to a customer orientation. Each employee, regardless of their position in the company, conducts their tasks with the customer’s needs in mind. What has Raquel brought to this company? a. autonomy b. autocratic management c. TQM d. MBO 50. Which of the following is a data-driven approach and methodology that strives to eliminate defects from

products and services with a goal of having no more than 3.4 defects per million units or procedures? a. continuous improvement b. Six Sigma c. Quality Sigma d. TQM Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 51. Which of the following is a difference between goods and services? a. Services are produced, but goods are performed. b. Goods are intangible, but services are tangible. c. Goods can be collected and stored, but services are perishable and unstorable. d. Quality can be easily assessed for services, but not for goods.

52. Which of the following is the driving factor behind the service–profit chain? a. employee satisfaction b. service capability c. internal service quality d. high value service 53. One key assumption in the service business is that success depends on how well employees deliver their services to customers. However, which of the following does the service–profit chain assume success depends on? a. the availability of factors of production b. autocratic management c. a high degree of centralization d. employee satisfaction 54. The Liquor Control Board of Ontario (LCBO) has installed new checkout stands, which will allow its

employees to serve customers from a variety of sitting and/or standing positions. In the new service paradigm, which factor did service managers at the LCBO take into consideration when installing the new stands? a. technology that supports frontline workers b. investment in customers c. revamped recruiting and training practices d. compensation linked to performance 55. Which of the following is NOT a factor that drives profitability in the new service paradigm? a. technology that supports frontline workers b. investment in technology c. revamped recruiting and training practices d. compensation linked to performance 56. Connie is the president of a gift baskets company. She is quite happy with the sales manager she hired

earlier in the year. Connie has noticed more customers calling to say how pleased they are with the baskets prepared for them. She has also noticed many customers placing subsequent orders. What has the new sales manager brought to Connie’s company? a. MBO b. high-value service c. delegation d. autonomy Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 57. This is a description of what happened to a patron at a station of the United Kingdom’s Royal Mail (the equivalent of Canada Post): “In the 15 minutes I waited in line, during which I shuffled forward one yard and two places, I had ample opportunity to watch what the other three staff were doing. They were busy all right, but the main task was counting each stamp in their folders. In this vital work, two of the three were overseen by another member of staff. There was no eye contact with the waiting customers.” Which of the following does the Royal Mail need to engage in, assuming that this experience is typical? a. service recovery b. process integration c. manufacturing flexibility d. just-in-time manufacturing 58. What is the term for restoring customer satisfaction to strongly dissatisfied customers? a. service recovery b. service enhancement c. customer focus d. customer re-engineering 59. The United Kingdom’s Royal Mail (the equivalent of Canada Post) needed to transform the image its customers had of it. A key part of the transformation was to permanently pass decision-making authority and responsibility to its workforce and allow them to develop and implement their ideas on how to improve performance and service to customers.

According to one manager, “We understand now that people who work here care as much as managers do about the business.” Which of the following did the Royal Mail use to improve its image? a. downsizing b. a taller organizational structure c. synergy d. service recovery 60. What does service recovery restore for the company? a. Service recovery restores customer satisfaction to strongly dissatisfied customers. b. Service recovery restores focus on financial goals. c. Service recovery restores cost consciousness in sales staff. d. Service recovery restores a focus on cutting waste.

61. Mackenzie is the new operations manager of an auto specialty company. Mackenzie reflects on how production is different at this company vs where he last worked. In his previous company, the production schedule was steady and predictable as large quantities of a few products were produced. At this new company, each client has a different requirement and work doesn’t begin until the client’s needs are defined. What type of operation does Mackenzie now manage? a. assemble-to-order b. make-to-order c. make-to-stock d. assemble-to-stock 62. With respect to service recovery, empowering workers means which of the following? a. Giving authority to employees to support higher-level managers when making operating decisions. b. Encouraging employees to become competitive against each other, vying for promotions.

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Chapter 17 - Managing Service and Manufacturing Operations c. Giving service employees the authority and responsibility to make decisions that immediately solve

customer problems. d. Giving service employees the ability to negotiate terms with both suppliers and customers.

63. Chris has started his own computer manufacturing company. Realizing each of his customers will have different specifications, he creates an inventory of the basic computer platform then adds storage, memory, and other components as specified by each customer. What type of operation does Chris have at his company? a. assemble-to-stock b. assemble-to-order c. make-to-order d. make-to-stock 64. In which of the following operations does the lowest degree of processing occur? a. assemble-to-stock b. assemble-to-order c. make-to-order d. make-to-stock 65. Manufacturing operations can be classified according to which of the following after a customer order is

received? a. amount of processing or assembly that occurs b. flexibility of processing c. production time d. scope of operations 66. Canadian magazine publishers have seen significant newsstand sales declines in the past few years, with weekly celebrity-focused and women’s magazines seeing the biggest declines. Which type of operation did the celebrity-focused and women’s magazine publishers use, in terms of the amount of processing? a. assemble-to-order operation b. make-to-order operation c. make-to-stock operation d. assemble-to-stock operation 67. Which type of operation is most dependent on the accuracy of sales forecasts? a. assemble-to-stock operations b. assemble-to-order operations c. make-to-order operations d. make-to-stock operations 68. The Globe and Mail publishes different editions across Canada, including editions for Atlantic Canada, the Prairies, and Ottawa/Quebec, which contain much of the same content but include region-specific content. Which type of operation does the newspaper publisher use in terms of the amount of processing? a. make-to-order operation b. assemble-to-stock operation c. make-to-stock operation Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations d. assemble-to-order operation 69. Pamela makes cloth dolls, which she sells to friends and relatives. She has more than 200 m of fabric, 100 m of ribbon, a box of 500 wiggle eyes, stuffing, 20 dolls in various stages of completion, and 15 completed dolls. Which of the following terms best describes this list of items? a. raw materials b. component materials c. finished products d. inventory 70. Inventory is the amount and number of parts, finished products, and which of the following that the

company has in its possession? a. finished goods b. work-in-process c. component parts d. raw materials 71. With a just-in-time inventory system, which of the following arrive from suppliers just as they are needed at

each stage of production? a. supplier materials b. nonrenewable materials c. component parts d. shelving 72. Two basic measures of inventory are inventory turnover and average aggregate inventory. What is the third? a. inventory depreciation b. inventory amortization c. weeks of supply d. multifactor inventory 73. Hattie Cao operates Peachy Keen and sells her products through catalogue orders. Cao produces and sells seven kinds of peach pies, three kinds of peach cakes, two kinds of peach cookies, and a peach salsa. She normally keeps 250 jars of salsa in stock, but she noticed today that she has more than 500 bottles in her inventory. Cao decided to reduce her inventory by lowering her price. Her plan to get rid of excessive inventory was so successful that she found herself sold out in just a couple of days. Which of the following did Cao experience? a. a loss of amortization b. negative sales c. a stockout d. an aggregated turnover 74. Hattie Cao operates Peachy Keen and sells her products through catalogue orders. Cao produces and sells

seven kinds of peach pies, three kinds of peach cakes, two kinds of peach cookies, and a peach salsa. She normally keeps 250 jars of salsa in stock, but she noticed today that she has more than 500 bottles in her inventory. If Cao wanted to know if she was carrying too much or too little inventory, what could she do? a. She could compare her average aggregate inventory with the industry average for aggregate Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations

inventory. b. She could compare her weeks of supply with competitors. c. She could compare inventory turnover with her leading competitor. d. She could send out the salsa as a free sample to potential customers.

75. What is the term for the number of times per year that a company sells or replaces its average inventory? a. stock rollover b. average aggregate inventory c. the average inventory replacement cycle d. inventory turnover 76. Mass distributors lower prices substantially to sell increased volumes of hardware products. What costs would hardware stores have to manage when maintaining larger-than-needed inventories by including them as overhead? a. containment costs b. stockout costs c. holding costs d. amortization costs 77. Transaction costs to replace inventory and the loss of customers’ goodwill are referred to as which of the

following costs? a. customer retention b. stockout c. sales commission d. amortization 78. What kind of costs are downtime and lost efficiency? a. ordering costs b. setup costs c. holding costs d. stockout costs 79. What kind of costs include costs associated with data entry, obtaining bids, and determining when and how

much inventory to order? a. ordering costs b. setup costs c. holding costs d. stockout costs 80. Rhett Butler Trucking is a viable bulk carrier providing just-in-time (JIT) transportation for both chemical and dry bulk products throughout the United States and into Canada. Which of the following makes an accurate statement about the companies that use this transport carrier? a. These companies expect the chemical and dry bulk products to be delivered as they are needed by the production line. b. These companies cannot continue operations when a stockout occurs.

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Chapter 17 - Managing Service and Manufacturing Operations c. These companies have high inventory turnover rates. d. These companies use a master production schedule to control service recovery costs.

81. A company that embroiders T-shirts, baseball caps, and backpacks uses 15,000 plain T-shirts annually. The optimal order quantity is 500 shirts. The company embroiders about 150 shirts daily. Which calculations would indicate that the company should place an order approximately every three days? a. materials requirement planning b. just-in-time inventory management c. break-even d. economic order quantity 82. Which of the following is a well-known technique for managing inventory? a. progressive inventory management (PIM) b. stock out avoidance (SOA) c. materials requirement planning (MRP) d. excess inventory movement (EIM) 83. The Okotoks-based maker of CattleBoyZ’s barbecue sauces uses 3,000 bottles annually. The optimal order quantity for bottles is 300. The company fills about 150 bottles daily. How often should the manufacturer place an order for more bottles? a. once a week b. twice a week c. every two days d. every day 84. What is materials requirement planning (MRP) used with? a. MRP is used with inventory mining. b. MRP is used with dependent demand systems. c. MRP is used with tickets that indicate when to reorder various inventory items. d. MRP is used with independent demand systems.

85. What are the three key parts of materials requirement planning (MRP)? a. the aggregate inventory, suppliers’ invoices, and bills of lading b. inventory records, trend analyses, and production schedules c. the master production schedule, the bill of materials, and inventory records d. suppliers’ invoices, distribution schedules, and bills of lading 86. Which ticket-based system indicates when to reorder inventory? a. an MRP system b. a just-in-time system c. kanban d. an independent demand system 87. Which inventory management situation involves independent demand systems? a. JIT Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations b. EOQ c. MRP d. IRR 88. Which type of manufacturing operation is most flexible? a. job shop b. line-flow production c. continuous-flow production d. make-to-stock 89. A production process that purifies water for bottling is an example of which type of manufacturing operation? a. job shop b. line-flow production c. continuous-flow production d. batch production 90. A commissary kitchen best represents which form of production? a. job shop b. line-flow production c. continuous-flow production d. batch production 91. Which of the following production environments would you expect to be the most flexible? a. a Johnson & Johnson pharmaceutical factory b. furniture production for IKEA c. cola production for Coca-Cola d. automobile production for Ford 92. Which of the following is the best example of a continuous rate production process? a. paint production for Sherwin-Williams b. a 4,000 square foot production factory for chemotherapy drugs c. cola production for Coca-Cola d. a soup kitchen 93. Which of the following best represents Bombardier’s manufacturing process for its small corporate/private jets? a. make-to-stock production b. line-flow production c. continuous production d. batch production 94. Narrative 17-1

Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony have begun turning to North America to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations

high-quality consumer electronics products—such as camcorders and TVs—by the millions, it’s a different story in industries with short product cycles and factories that must build what customers order instead of churning out products in anticipation of demand. Japan’s great strength—repetitive manufacturing—is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead, the North American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand.

Refer to Narrative 17-1. Which of the following is most likely one of the primary methods used to measure inventory in the Japanese-based firms operating in North America? a. inventory turnover b. inventory equity c. stock liability d. aggregated equity 95. Narrative 17-1

Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony have begun turning to North America to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high-quality consumer electronics products—such as camcorders and TVs—by the millions, it’s a different story in industries with short product cycles and factories that must build what customers order instead of churning out products in anticipation of demand. Japan’s great strength—repetitive manufacturing—is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead, the North American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand.

Refer to Narrative 17-1. What is the unique characteristic of the JIT system? a. The system cannot be used with batch processing. b. The system makes parts available at the plant as needed. c. The system determines the EOQ and maintains it. d. The system creates independent demand systems.

96. Narrative 17-1

Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony have begun turning to North America to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high-quality consumer electronics products—such as camcorders and TVs—by the millions, it’s a different story in industries with short product cycles and factories that must build what customers order instead of churning out products in anticipation of demand. Japan’s great strength—repetitive manufacturing—is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead, the North American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand.

Refer to Narrative 17-1. What was present in North American companies that were taking over Japanese operations? a. The North American companies are able to make effective use of kanbans. b. Because North American companies are more concerned about stockouts, they are less efficient.

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Chapter 17 - Managing Service and Manufacturing Operations c. Both the Japanese and the North American companies rely on independent demand systems to determine inventory requirements. d. The North American companies have higher holding costs.

97. Narrative 17-1

Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony have begun turning to North America to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high-quality consumer electronics products—such as camcorders and TVs—by the millions, it’s a different story in industries with short product cycles and factories that must build what customers order instead of churning out products in anticipation of demand. Japan’s great strength—repetitive manufacturing—is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead, the North American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand.

Refer to Narrative 17-1. Which type of manufacturing operation are North Americans who manufacture NEC, Fujitsu, and Sony products using? a. raw-to-order b. make-to-stock c. raw-to-stock d. make-to-order 98. Narrative 17-2 Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power initial car quality survey. With $6.6 billion in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s former chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.

The challenge for Chung was to get his managers to put quality, not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colours—a tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant chief to paint all bolts and screws black and ordered workers not to release any car unless all was orderly under the hood.

He then publicly declared that Hyundai would produce higher-quality cars than Toyota by 2008, and that Hyundai would produce the best quality cars in the auto industry.

Today, each workweek starts with a demanding three-hour meeting attended by managers, engineers, designers, and suppliers. In his large boardroom, Chung displays Hyundai cars on rotating turntables or mechanical lifts—whatever is required for those in attendance to see up close what problems need to be fixed. Hyundai managers now measure everything. Hundreds of charts on the walls of every Hyundai factory measure the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. The quality department at Hyundai has grown from 100 to 1,000 people, who now report directly to CEO Chung.

All employees share their ideas about how to improve quality because Chung communicated to workers that their ideas were critical and welcomed. To prove it, he rewarded them with bonuses averaging $150 per employee. At one Hyundai factory, workers have suggested 25,000 ideas for improving quality, 30 percent of which have been implemented in the factory. For instance, a worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations different-sized spare tire covers. Though it may sound trivial, using the same spare tire cover for both cars saves Hyundai $100,000 a year.

Hyundai addresses customer complaints as quickly as possible, and these quick responses to customer complaints have had dramatic results, such as reducing Hyundai Santa Fe’s score in J.D. Power’s initial car quality survey from 149 problems per 100 cars to 93 problems per 100 cars in just one year.

Finally, if the greatly improved quality isn’t enough to convince prospective buyers to buy a Hyundai, the company believes that its 5-year/100,000 km warranty may be enough. The longest, most comprehensive warranty in the auto industry shows the confidence the company has in its cars. And those extensive warranties probably won’t cost Hyundai much either, as the improved quality of its cars has cut the cost of warranty repairs, which are paid for by headquarters, by 35 percent over the last three years.

Refer to Narrative 17-2. Hyundai’s generous warranty means that the company will assume responsibility for the costs of all repairs for five years or until the car has been driven an astounding 100,000 km. To which quality-related service characteristics does the Hyundai warranty show a commitment? a. assurance b. durability c. service recovery d. serviceability 99. Narrative 17-2 Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power initial car quality survey. With $6.6 billion in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s former chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.

The challenge for Chung was to get his managers to put quality, not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colours—a tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant chief to paint all bolts and screws black and ordered workers not to release any car unless all was orderly under the hood.

He then publicly declared that Hyundai would produce higher-quality cars than Toyota by 2008, and that Hyundai would produce the best quality cars in the auto industry.

Today, each workweek starts with a demanding three-hour meeting attended by managers, engineers, designers, and suppliers. In his large boardroom, Chung displays Hyundai cars on rotating turntables or mechanical lifts—whatever is required for those in attendance to see up close what problems need to be fixed. Hyundai managers now measure everything. Hundreds of charts on the walls of every Hyundai factory measure the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. The quality department at Hyundai has grown from 100 to 1,000 people, who now report directly to CEO Chung.

All employees share their ideas about how to improve quality because Chung communicated to workers that their ideas were critical and welcomed. To prove it, he rewarded them with bonuses averaging $150 per employee. At one Hyundai factory, workers have suggested 25,000 ideas for improving quality, 30 percent of which have been implemented in the factory. For instance, a worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but different-sized spare tire covers. Though it may sound trivial, using the same spare tire cover for both cars saves Hyundai $100,000 a year.

Hyundai addresses customer complaints as quickly as possible, and these quick responses to customer complaints have had dramatic results, such as reducing Hyundai Santa Fe’s score in J.D. Power’s initial car quality survey from 149 Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations problems per 100 cars to 93 problems per 100 cars in just one year.

Finally, if the greatly improved quality isn’t enough to convince prospective buyers to buy a Hyundai, the company believes that its 5-year/100,000 km warranty may be enough. The longest, most comprehensive warranty in the auto industry shows the confidence the company has in its cars. And those extensive warranties probably won’t cost Hyundai much either, as the improved quality of its cars has cut the cost of warranty repairs, which are paid for by headquarters, by 35 percent over the last three years.

Refer to Narrative 17-2. When Chung Mong Koo, as Hyundai’s former chairman and CEO, visited a Hyundai plant, he strode onto the factory floor and demanded to look under the hood of a Sonata sedan. He didn’t like it when he saw loose wires, tangled hoses, and bolts painted four different colours. This car was not being built the way it was designed, and its manufacturing flaws resulted in it not working as it was supposed to. Therefore, which of the following did Hyundai have a problem with? a. responsiveness b. assurance c. tangibles d. reliability 100. Narrative 17-2 Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power initial car quality survey. With $6.6 billion in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s former chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.

The challenge for Chung was to get his managers to put quality, not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colours—a tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant chief to paint all bolts and screws black and ordered workers not to release any car unless all was orderly under the hood.

He then publicly declared that Hyundai would produce higher-quality cars than Toyota by 2008, and that Hyundai would produce the best quality cars in the auto industry.

Today, each workweek starts with a demanding three-hour meeting attended by managers, engineers, designers, and suppliers. In his large boardroom, Chung displays Hyundai cars on rotating turntables or mechanical lifts—whatever is required for those in attendance to see up close what problems need to be fixed. Hyundai managers now measure everything. Hundreds of charts on the walls of every Hyundai factory measure the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. The quality department at Hyundai has grown from 100 to 1,000 people, who now report directly to CEO Chung.

All employees share their ideas about how to improve quality because Chung communicated to workers that their ideas were critical and welcomed. To prove it, he rewarded them with bonuses averaging $150 per employee. At one Hyundai factory, workers have suggested 25,000 ideas for improving quality, 30 percent of which have been implemented in the factory. For instance, a worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but different-sized spare tire covers. Though it may sound trivial, using the same spare tire cover for both cars saves Hyundai $100,000 a year.

Hyundai addresses customer complaints as quickly as possible, and these quick responses to customer complaints have had dramatic results, such as reducing Hyundai Santa Fe’s score in J.D. Power’s initial car quality survey from 149 problems per 100 cars to 93 problems per 100 cars in just one year.

Finally, if the greatly improved quality isn’t enough to convince prospective buyers to buy a Hyundai, the company Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations believes that its 5-year/100,000 km warranty may be enough. The longest, most comprehensive warranty in the auto industry shows the confidence the company has in its cars. And those extensive warranties probably won’t cost Hyundai much either, as the improved quality of its cars has cut the cost of warranty repairs, which are paid for by headquarters, by 35 percent over the last three years.

Refer to Narrative 17-2. In every Hyundai factory, hundreds of wall charts track the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. What is the company measuring to maintain quality? a. variation b. synergy c. entropy d. process autonomy 101. Narrative 17-2 Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power initial car quality survey. With $6.6 billion in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s former chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.

The challenge for Chung was to get his managers to put quality, not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colours—a tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant chief to paint all bolts and screws black and ordered workers not to release any car unless all was orderly under the hood.

He then publicly declared that Hyundai would produce higher-quality cars than Toyota by 2008, and that Hyundai would produce the best quality cars in the auto industry.

Today, each workweek starts with a demanding three-hour meeting attended by managers, engineers, designers, and suppliers. In his large boardroom, Chung displays Hyundai cars on rotating turntables or mechanical lifts—whatever is required for those in attendance to see up close what problems need to be fixed. Hyundai managers now measure everything. Hundreds of charts on the walls of every Hyundai factory measure the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. The quality department at Hyundai has grown from 100 to 1,000 people, who now report directly to CEO Chung.

All employees share their ideas about how to improve quality because Chung communicated to workers that their ideas were critical and welcomed. To prove it, he rewarded them with bonuses averaging $150 per employee. At one Hyundai factory, workers have suggested 25,000 ideas for improving quality, 30 percent of which have been implemented in the factory. For instance, a worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but different-sized spare tire covers. Though it may sound trivial, using the same spare tire cover for both cars saves Hyundai $100,000 a year.

Hyundai addresses customer complaints as quickly as possible, and these quick responses to customer complaints have had dramatic results, such as reducing Hyundai Santa Fe’s score in J.D. Power’s initial car quality survey from 149 problems per 100 cars to 93 problems per 100 cars in just one year.

Finally, if the greatly improved quality isn’t enough to convince prospective buyers to buy a Hyundai, the company believes that its 5-year/100,000 km warranty may be enough. The longest, most comprehensive warranty in the auto industry shows the confidence the company has in its cars. And those extensive warranties probably won’t cost Hyundai much either, as the improved quality of its cars has cut the cost of warranty repairs, which are paid for by headquarters, by 35 percent over the last three years.

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Chapter 17 - Managing Service and Manufacturing Operations Refer to Narrative 17-2. Which of the following is Hyundai demonstrating by addressing customer complaints as quickly as possible—even in the middle of a model year? a. assurance b. empathy c. responsiveness d. serviceability 102. Narrative 17-2 Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power initial car quality survey. With $6.6 billion in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s former chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.

The challenge for Chung was to get his managers to put quality, not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colours—a tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant chief to paint all bolts and screws black and ordered workers not to release any car unless all was orderly under the hood.

He then publicly declared that Hyundai would produce higher-quality cars than Toyota by 2008, and that Hyundai would produce the best quality cars in the auto industry.

Today, each workweek starts with a demanding three-hour meeting attended by managers, engineers, designers, and suppliers. In his large boardroom, Chung displays Hyundai cars on rotating turntables or mechanical lifts—whatever is required for those in attendance to see up close what problems need to be fixed. Hyundai managers now measure everything. Hundreds of charts on the walls of every Hyundai factory measure the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. The quality department at Hyundai has grown from 100 to 1,000 people, who now report directly to CEO Chung.

All employees share their ideas about how to improve quality because Chung communicated to workers that their ideas were critical and welcomed. To prove it, he rewarded them with bonuses averaging $150 per employee. At one Hyundai factory, workers have suggested 25,000 ideas for improving quality, 30 percent of which have been implemented in the factory. For instance, a worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but different-sized spare tire covers. Though it may sound trivial, using the same spare tire cover for both cars saves Hyundai $100,000 a year.

Hyundai addresses customer complaints as quickly as possible, and these quick responses to customer complaints have had dramatic results, such as reducing Hyundai Santa Fe’s score in J.D. Power’s initial car quality survey from 149 problems per 100 cars to 93 problems per 100 cars in just one year.

Finally, if the greatly improved quality isn’t enough to convince prospective buyers to buy a Hyundai, the company believes that its 5-year/100,000 km warranty may be enough. The longest, most comprehensive warranty in the auto industry shows the confidence the company has in its cars. And those extensive warranties probably won’t cost Hyundai much either, as the improved quality of its cars has cut the cost of warranty repairs, which are paid for by headquarters, by 35 percent over the last three years.

Refer to Narrative 17-2. A worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but different-sized spare tire covers. How does using the same spare tire cover for both cars save Hyundai $100,000 a year and increase the company’s productivity? a. It decreases confusion. b. It gets the same output for fewer inputs.

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Chapter 17 - Managing Service and Manufacturing Operations c. It increases inventory of only one item. d. It gets more inputs for more outputs.

103. Narrative 17-2 Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power initial car quality survey. With $6.6 billion in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s former chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.

The challenge for Chung was to get his managers to put quality, not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colours—a tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant chief to paint all bolts and screws black and ordered workers not to release any car unless all was orderly under the hood.

He then publicly declared that Hyundai would produce higher-quality cars than Toyota by 2008, and that Hyundai would produce the best quality cars in the auto industry.

Today, each workweek starts with a demanding three-hour meeting attended by managers, engineers, designers, and suppliers. In his large boardroom, Chung displays Hyundai cars on rotating turntables or mechanical lifts—whatever is required for those in attendance to see up close what problems need to be fixed. Hyundai managers now measure everything. Hundreds of charts on the walls of every Hyundai factory measure the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. The quality department at Hyundai has grown from 100 to 1,000 people, who now report directly to CEO Chung.

All employees share their ideas about how to improve quality because Chung communicated to workers that their ideas were critical and welcomed. To prove it, he rewarded them with bonuses averaging $150 per employee. At one Hyundai factory, workers have suggested 25,000 ideas for improving quality, 30 percent of which have been implemented in the factory. For instance, a worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but different-sized spare tire covers. Though it may sound trivial, using the same spare tire cover for both cars saves Hyundai $100,000 a year.

Hyundai addresses customer complaints as quickly as possible, and these quick responses to customer complaints have had dramatic results, such as reducing Hyundai Santa Fe’s score in J.D. Power’s initial car quality survey from 149 problems per 100 cars to 93 problems per 100 cars in just one year.

Finally, if the greatly improved quality isn’t enough to convince prospective buyers to buy a Hyundai, the company believes that its 5-year/100,000 km warranty may be enough. The longest, most comprehensive warranty in the auto industry shows the confidence the company has in its cars. And those extensive warranties probably won’t cost Hyundai much either, as the improved quality of its cars has cut the cost of warranty repairs, which are paid for by headquarters, by 35 percent over the last three years.

Refer to Narrative 17-2. In which area are many of the repetitive Japanese manufacturing firms weak, in terms of the characteristics of quality service? a. reliability b. empathy c. responsiveness d. tangibles 104. Narrative 17-2 Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power initial car quality survey. With $6.6 billion in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company’s first-ever loss, Hyundai’s former chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company.

The challenge for Chung was to get his managers to put quality, not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colours—a tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant chief to paint all bolts and screws black and ordered workers not to release any car unless all was orderly under the hood.

He then publicly declared that Hyundai would produce higher-quality cars than Toyota by 2008, and that Hyundai would produce the best quality cars in the auto industry.

Today, each workweek starts with a demanding three-hour meeting attended by managers, engineers, designers, and suppliers. In his large boardroom, Chung displays Hyundai cars on rotating turntables or mechanical lifts—whatever is required for those in attendance to see up close what problems need to be fixed. Hyundai managers now measure everything. Hundreds of charts on the walls of every Hyundai factory measure the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. The quality department at Hyundai has grown from 100 to 1,000 people, who now report directly to CEO Chung.

All employees share their ideas about how to improve quality because Chung communicated to workers that their ideas were critical and welcomed. To prove it, he rewarded them with bonuses averaging $150 per employee. At one Hyundai factory, workers have suggested 25,000 ideas for improving quality, 30 percent of which have been implemented in the factory. For instance, a worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but different-sized spare tire covers. Though it may sound trivial, using the same spare tire cover for both cars saves Hyundai $100,000 a year.

Hyundai addresses customer complaints as quickly as possible, and these quick responses to customer complaints have had dramatic results, such as reducing Hyundai Santa Fe’s score in J.D. Power’s initial car quality survey from 149 problems per 100 cars to 93 problems per 100 cars in just one year.

Finally, if the greatly improved quality isn’t enough to convince prospective buyers to buy a Hyundai, the company believes that its 5-year/100,000 km warranty may be enough. The longest, most comprehensive warranty in the auto industry shows the confidence the company has in its cars. And those extensive warranties probably won’t cost Hyundai much either, as the improved quality of its cars has cut the cost of warranty repairs, which are paid for by headquarters, by 35 percent over the last three years.

Refer to Narrative 17-2. Which of the following is a manufacturing operation in which a company builds what clients order rather than what it thinks clients should buy? a. make-to-order b. assemble-to-order c. make-to-stock d. line-flow order Indicate whether the statement is true or false.

105. At their core, companies are production systems that combine inputs, such as labour, raw materials, capital, and knowledge, to produce outputs, such as finished goods or services. a. True b. False Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 106. Higher productivity is good not only for individual companies that achieve it, but also for the countries in which they do business. a. True b. False 107. Managing the daily production of goods and services, or inventory management, is a key part of a

manager's job. a. True b. False 108. The lower the labour cost per unit of output, or the less labour time it takes to produce a unit of output, the

higher the labour productivity. a. True b. False 109. ISO standards help make products and systems compatible so they fit and work well with each other,

ensure that safety issues are addressed, and allow the sharing of technological know-how and best practices. a. True b. False 110. Managers should use only multifactor productivity, as it is the most reliable. a. True b. False 111. Two common measures of productivity are extrinsic productivity and intrinsic productivity. a. True b. False 112. Extrinsic productivity indicates how much labour, capital, materials, and energy it takes to produce an output. a. True b. False 113. Labour productivity is a frequently used example of extrinsic productivity. a. True b. False 114. The easier it is to maintain a working product or fix a broken product, the more reliable that product is. a. True b. False 115. Product failure means that products can't be repaired, only replaced. a. True b. False 116. Studies clearly show that customers care more about responsiveness than anything else when buying services.

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Chapter 17 - Managing Service and Manufacturing Operations a. True b. False 117. The five characteristics that typically distinguish a quality service are reliability, tangibles, responsiveness, assurance, and empathy. a. True b. False 118. The single characteristic of service quality that is most important to customers is empathy. a. True b. False 119. ISO 9000 is a series of five international standards for achieving consistency in quality management and quality assurance because they ensure that companies carefully document the steps they take to create and improve product quality. a. True b. False 120. ISO 14000 is a series of international standards for managing, monitoring, and minimizing an organization’s harmful effects on the environment. a. True b. False 121. The ISO 9000 and 14000 standards publications are specific and are used for manufacturing firms of high knowledge products and services only. a. True b. False 122. Total quality management (TQM) is an integrated organization-wide strategy for improving product and service quality. a. True b. False 123. ISO 9000 standards describe how to make better products. a. True b. False 124. In TQM, customer focus and satisfaction, continuous improvement, and teamwork mutually reinforce each other to improve quality throughout a company. a. True b. False 125. The first step in the service–profit chain is external service quality or the quality of treatment that employees receive from a company’s internal service providers. a. True b. False Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 126. The purpose of service recovery is to restore customer satisfaction to strongly dissatisfied customers. a. True b. False 127. It costs 10 times as much to find a new customer as it does to keep an existing customer. a. True b. False 128. All manufacturing operations produce physical goods. a. True b. False 129. Manufacturing operations are classified according to the depth of their inventory stock. a. True b. False 130. Make-to-stock operations are highly dependent on the accuracy of sales forecasts. a. True b. False 131. Inventory is defined as the number of finished products that a company has in its possession either in the factory, in warehouses, or on delivery vehicles. a. True b. False 132. Stockout is the situation when a company runs out of finished products. a. True b. False 133. The three basic measures of inventory are average aggregate inventory, weeks of supply, and inventory turnover. a. True b. False 134. In general, the lower the number of inventory turns, the more efficiently the marketing department is operating. a. True b. False 135. The four kinds of costs incurred with inventory maintenance are ordering costs, setup costs, transaction costs, and stockout costs. a. True b. False 136. To effectively manage inventory, a manager should use EOQ formulas when inventory levels are independent, and JIT and MRP when inventory levels are dependent on the number of products to be produced. a. True b. False Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 137. Assuming the optimal order quantity of integrated circuits for a manufacturer of security timers is 1,000, and the company uses 55 circuits daily, the manufacturer should place an order approximately every 10 days. a. True b. False 138. Economic order quantity is intended for use with independent demand systems. a. True b. False 139. In a manufacturing operation, cost per unit produced tends to decline as flexibility increases. a. True b. False 140. A restaurant chain’s commissary kitchen is most likely to follow a job shop production process. a. True b. False 141. A job shop production process is well-suited to a business that has many unique customers. a. True b. False

142. Define productivity. Provide an everyday example of a measure of productivity that consumers sometimes use in deciding which car to purchase.

143. Define the two common measures of productivity used by managers. Specify the circumstances under which each should be used.

144. List and describe the three ways in which work can be automated with robots.

145. There are two ways to define quality. Describe both of them.

146. Make a list of the characteristics that define quality for goods. Then, make a second list of characteristics that define quality for services. Why do these lists differ? Why does one characteristic appear on both lists?

147. Briefly explain the difference between ISO 9000 certification and the ISO 14000 certification.

148. What types of public recognition are given to companies that demonstrate the highest probability that they are consistent producers of high-quality goods or services, and what is the process of receiving and maintaining that recognition?

149. Briefly describe total quality management (TQM).

150. Manufacturing processes are classified according to the amount of processing or assembly that occurs after receiving an order from a customer. Briefly describe the three types of manufacturing processes.

151. List and briefly identify the three basic measures of inventory that managers use to keep inventory costs from Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations becoming too large.

152. Briefly identify the three different methods of inventory management. Specify the circumstances under which each should be used.

153. List and briefly identify the four primary classifications of manufacturing operations with respect to manufacturing flexibility, and identify one example of each.

154. Briefly explain how production and productivity relate to the financial success of companies as well as the countries in which the companies are located. Given the nature of today’s global economy, comment on how these relationships might be particularly important in developing (as opposed to industrialized) countries, where the industrial base and standard of living are low.

155. What is quality? List and define three characteristics of quality for goods and for services. Explain why these characteristics are different for goods and services; then, identify the one dimension that is common in both lists. Finally, specify a good or service that you were very dissatisfied with during the past year, and explain which of these quality dimensions the good or service was deficient on.

156. Describe the changes that many service organizations are making to enhance the process of service recovery. Give an example of such a change that could enhance service recovery for dissatisfied students at your college or university.

157. What is inventory? Explain the potential costs associated with it. Briefly describe the systems of inventory management that are available to managers to control these costs, and specify which method of inventory management is best.

158. Explain why operations management is potentially relevant to every employee in every organization in the 21st century.

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Chapter 17 - Managing Service and Manufacturing Operations Answer Key 1. c 2. b 3. d 4. c 5. a 6. d 7. b 8. b 9. c 10. d 11. a 12. b 13. d 14. c 15. a 16. a 17. c 18. b 19. b 20. a 21. d 22. c 23. d 24. a 25. a Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 26. a 27. d 28. a 29. c 30. c 31. c 32. c 33. b 34. a 35. d 36. a 37. b 38. b 39. c 40. b 41. d 42. a 43. a 44. a 45. b 46. c 47. d 48. d 49. c 50. b 51. c Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 52. c 53. d 54. a 55. b 56. b 57. a 58. a 59. d 60. a 61. b 62. c 63. b 64. d 65. a 66. c 67. d 68. d 69. d 70. d 71. c 72. c 73. c 74. a 75. d 76. c Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 77. b 78. b 79. a 80. a 81. d 82. c 83. c 84. b 85. c 86. c 87. b 88. a 89. c 90. d 91. d 92. b 93. b 94. a 95. b 96. d 97. d 98. a 99. d 100. a 101. c 102. b Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 103. c 104. a 105. True 106. True 107. False 108. True 109. True 110. False 111. False 112. False 113. False 114. False 115. True 116. False 117. True 118. False 119. True 120. True 121. False 122. True 123. False 124. True 125. False 126. True 127. True Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations 128. True 129. False 130. True 131. False 132. True 133. True 134. False 135. False 136. True 137. False 138. True 139. False 140. False 141. True 142. Productivity is a measure of performance that indicates how efficiently goods and services are produced.

The fewer inputs it takes to create an output (or the greater the output from one input), the higher the productivity. For example, a car’s gas mileage is a common measure of productivity. A car that gets 35 km (output) per litre (input) is more productive and fuel efficient than a car that gets 18 km per litre.

143. Two common measures of productivity are partial productivity and multifactor productivity. Partial productivity indicates how much of a particular kind of input it takes to produce an output. Partial productivity assesses how efficiently companies use only one input, such as labour, when creating outputs. Multifactor productivity is an overall measure of productivity that assesses how efficiently companies use all the inputs it takes to make outputs. More specifically, multifactor productivity indicates how much labour, capital, materials, and energy it takes to produce an output. In general, managers should use multifactor productivity to directly compare their overall level of productivity to that of their competitors, and partial productivity measures to analyze the contributions of individual components to that overall productivity.

144. Work can be automated with robots through robotic process automation, intelligent recognition, and

collaborative/social robotics. Process automation is using robots to automate routine, highly repetitive, low complexity, or single-purpose tasks. Process automation works well in manufacturing facilities where a robot is dedicated to one task or a limited set of tasks; it also works well in the automation of data collection and processing. Intelligent recognition is using automation programming to recognize and react to patterns of speech, written language, and images. When you say, “Hey Google,” or “Hey Siri,” to your smartphone, followed by a command, you are using intelligent recognition automation. Collaborative/social automation is using robots to automate tasks while working directly with or near people.

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Chapter 17 - Managing Service and Manufacturing Operations 145. The American Society for Quality gives two meanings for quality. First, quality can mean a product or

service free of deficiencies, such as the number of problems per 100 cars. Second, quality can mean the characteristics of a product or service that satisfy customer needs. In this sense, today’s cars are of higher quality than the cars of 20 years ago because of the additional standard features (power brakes and steering, Bluetooth, power windows and locks, rear defrosters, heated seats, etc.).

146. Quality products usually possess three characteristics: reliability, serviceability, and durability. Quality service means reliability, tangibles, responsiveness, assurance, and empathy. These lists differ because products are physical things that last for determinate periods of time and can break down. Services, on the other hand, are consumed the minute they are performed and cannot be repaired—only repeated. The one dimension that is common in both of these lists is reliability, which is essentially the degree to which the product or service functions as expected. Since the purchase of a product or service is essentially an exchange of money for some predictable outcome (either a physical thing or a specific type or level of behaviour from a service provider), this basic dimension is crucially important to the exchange process, and thus appears on both lists. Students may appropriately provide different rationales regarding why the dimension of reliability appears on both lists.

147. ISO 9000 is a series of five international standards for achieving consistency in quality management and

quality assurance in companies throughout the world. ISO 14000 is a series of international standards for managing, monitoring, and minimizing an organization’s harmful effects on the environment.

148. The ISO 9000 and 14000 standards publications are general and can be used for manufacturing any kind of product or delivering any kind of service. The ISO 9000 standards don’t describe how to make a better-quality car, computer, or widget. Instead, they describe how companies can extensively document (and thus standardize) the steps they take to create and improve the quality of their products. ISO 9000 certification is increasingly becoming a requirement for doing business with many companies.

To become ISO certified, a process that can take months, a company must show that it is following its own procedures for improving production, updating design plans and specifications, keeping machinery in top condition, educating and training workers, and satisfactorily dealing with customer complaints. Once a company has been certified as ISO 9000 compliant, an accredited third party will issue an ISO 9000 certificate that the company can use in its advertising and publications. Continued ISO 9000 certification is not guaranteed, however. Accredited third parties typically conduct periodic audits to make sure the company is still following quality procedures. If it is not, its certification is suspended or cancelled.

149. Total quality management (TQM) is an integrated organization-wide strategy for improving product and service quality. TQM is not a specific tool or technique; rather, it is a philosophy or overall approach to management, which is based on three mutually reinforcing principles: customer focus and satisfaction, continuous improvement, and teamwork.

TQM suggests that the entire organization be focused on meeting customer needs by making products or delivering services that meet or exceed customers’ expectations, in a collaborative environment that is constantly assessing and improving the processes and procedures used to create those products and services.

150. Make-to-order operations have the highest degree of processing, in which assembly doesn’t begin until products are ordered. The next-highest degree of processing occurs in assemble-to-order operations, in which pre-assembled modules are combined after orders are received to produce semicustomized products. The lowest degree of processing occurs in make-to-stock operations, in which, on the basis of sales forecasts, standard parts are ordered and assembled before orders occur.

151. Three basic measures of inventory are average aggregate inventory, weeks of supply, and inventory turnover.

Because of day-to-day differences in inventories, companies often measure average aggregate inventory, which is the average overall inventory during a particular time period. Inventory is also measured in terms of weeks of supply, meaning Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations the number of weeks it would take for a company to run out of its current supply of inventory. Finally, inventory turnover is the number of times per year that a company sells or “turns over” its average inventory.

152. Companies meet the basic goals of inventory management (avoiding stockouts and reducing inventory without hurting daily operations) through economic order quantity (EOQ) formulas, just-in-time (JIT) inventory systems, and materials requirement planning (MRP). Economic order quantity (EOQ) formulas are intended for use with independent demand systems, in which the level of one kind of inventory does not depend on another. By contrast, JIT and MRP are used with dependent demand systems, in which the level of inventory depends on the number of finished units to be produced. The best inventory management results are obtained when each technique is used under the appropriate circumstances.

153. Four basic types of operations include continuous-flow production, line-flow production, batch production, and job shops. In continuous-flow production, products are produced continuously rather than discretely. In line-flow production, processes are pre-established, occur in a serial or linear manner, and are dedicated to making one type of product. By contrast, batch production involves the manufacture of large batches of different products in standard lot sizes. Finally, job shops are small manufacturing operations that handle special manufacturing processes or jobs. [Student examples may leverage the chapter or may provide their own insight.]

154. At their core, organizations are production systems. Companies combine inputs, such as labour, raw materials, capital, and knowledge, to produce outputs in the form of finished products or services. Productivity is a measure of performance that indicates how many inputs it takes to produce or create an output. The fewer inputs it takes to create an output (or the greater the output from one input), the higher the productivity. For companies, higher productivity (that is, doing more with less) results in lower costs. In turn, lower costs can lead to lower prices, higher market share, and higher profits. For countries, productivity matters because it produces a higher standard of living. One way productivity leads to a higher standard of living is through increased wages. When companies can do more with less, they can raise employee wages without increasing prices or sacrificing normal profits. Being able to offer higher wages also helps the company by attracting and retaining good workers. Rising income stemming from increased productivity creates numerous other benefits, including increased charitable giving and increased medical coverage for employees. Finally, productivity also increases the standard of living by making products more affordable. Thus, increased productivity helps companies lower costs, which can lead to lower prices, higher market share, and higher profits, while increased productivity helps countries by leading to higher wages, lower product prices, and a higher standard of living.

155. In its most general sense, quality can have two meanings. The American Society for Quality defines the term quality as either a product or service free of deficiencies, or as the characteristics of a product or service that satisfy customer needs. In discussing quality, it is important to note the basic difference between products and services. Products are physical things that last for determinate periods of time and can break down. Services, on the other hand, are consumed the minute they are performed and cannot be repaired—only repeated. Thus, different quality dimensions are used to define quality for products and services.

Quality products usually possess three characteristics: reliability, serviceability, and durability. A breakdown occurs when a product quits working or doesn’t do what it was designed to do. Many companies define product reliability in terms of the average time between breakdowns. Serviceability refers to how easy or difficult it is to fix a product. The easier it is to maintain a working product or fix a broken product, the more serviceable that product is. Product failure means that products can’t be repaired, they can only be replaced. Thus, durability is a quality characteristic that applies to products that can’t be repaired. Durability is defined as the mean time to failure.

Since services are typically performed by service providers and differ from products as described above, the following five characteristics are typically used to distinguish a quality service: reliability, tangibles, responsiveness, assurance, and empathy. Service reliability is the ability to consistently perform a service well. Studies clearly show that reliability matters more to customers than anything else when buying services. The term tangibles refers to the appearance of the offices, equipment, and personnel involved with the delivery of a service. Responsiveness is the promptness and Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations willingness with which service providers give good service. Assurance is the confidence that service providers are knowledgeable, courteous, and can be trusted. Empathy is the extent to which service providers give individual attention and care to customers’ concerns and problems.

The one dimension that is common in both of these lists is reliability, which is essentially the degree to which the product or service functions as expected. Student examples should appropriately comment on deficiencies from the product or service characteristic lists, and may demonstrate varying levels of insight and understanding.

156. When mistakes are made and customers have become dissatisfied with the service received, service

businesses must switch from the process of service delivery to the process of service recovery, that is, restoring customer satisfaction to strongly dissatisfied customers. Sometimes, service recovery requires service employees to not only fix whatever mistake was made, but also perform service acts that delight highly dissatisfied customers by far surpassing their expectations of fair treatment. Unfortunately, when mistakes occur, service employees typically don’t have the discretion to resolve customer complaints. Now, however, many companies are empowering their service employees. With respect to service recovery, empowering workers means giving service employees the authority and responsibility to make decisions that immediately solve customer problems.

Most colleges and universities are highly bureaucratic institutions characterized by multiple levels of red tape, resulting in many student complaints. Thus, students should have little difficulty identifying examples of things that could be done differently to enhance service recovery. Better answers will take into account both the students’ needs and desires, and the university’s need for overall quality control, and will provide realistic recommendations that would prove workable in a real-world situation. Such answers should clearly explain how a specific service worker is being empowered to make a specific level of decision in order to (reasonably and realistically) surpass the expectations of a dissatisfied student.

157. Inventory is the amount and number of raw materials, parts, and finished products that a company has in its possession. Maintaining an inventory incurs four kinds of costs: ordering (costs associated with ordering inventory, such as data entry and phone calls), setup (costs of downtime and lost efficiency that occur with machinery), holding (costs of keeping inventory until it is used or sold), and stockout (costs incurred when a company runs out of a product, including transaction costs to replace inventory and the loss of customers’ goodwill). The combination of these costs for a company can be enormous.

To control these costs, companies measure and track inventory in three ways: average aggregate inventory, weeks of supply, and turnover. Companies meet the basic goals of inventory management—avoiding stockouts and reducing inventory without hurting daily operations—through economic order quantity (EOQ) formulas, just-in-time (JIT) inventory systems, and materials requirement planning (MRP). EOQ formulas minimize holding and ordering costs by determining how much and how often inventory should be ordered. By having parts arrive just when they are needed at each stage of production, JIT systems attempt to minimize inventory levels and holding costs. JIT systems often depend on proximity, shared information, and the Japanese system of kanban. MRP precisely determines the production schedule, production batch sizes, and the ordering of inventories needed to complete final products. The three key parts of MRP systems are the master production schedule, the bill of materials, and inventory records.

There is no best method of inventory management. The different methods are designed to be used under different circumstances. Economic order quantity (EOQ) formulas are intended for use with independent demand systems, in which the level of one kind of inventory does not depend on another. By contrast, JIT and MRP are used with dependent demand systems, in which the level of inventory depends on the number of finished units to be produced. The best inventory management results will be obtained when each technique is used under the appropriate circumstances.

158. This question is not directly addressed in the chapter. As such, this test question is one that some students might find particularly challenging, since it requires recall, analysis, and synthesis of the chapter material in order to arrive at a creative and original conclusion. While there could be many possible responses to this item, one suggested approach is Powered by Cognero

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Chapter 17 - Managing Service and Manufacturing Operations outlined below: Operations management deals with managing the daily production of goods and services in organizations. Since virtually all work organizations exist to produce either goods or services, all employees work in organizations for which operations management is relevant. Given the increasingly competitive global environment facing businesses in the 21st century, effectiveness in the management of operations is one significant factor that can cause a company to gain (or lose) a competitive advantage. Thus, employees are likely to have to adjust their performance and work behaviour over time to assist in the overall management of operations in their organization, and they will likely personally feel the effects of the organization’s overall degree of success in operations management (e.g., through pay and morale increases and/or increased job security if the company is successful, or through pay cuts, increased workloads, and/or layoffs if the company is not).

Better answers will go on to integrate specific components of the chapter material to illustrate how these aspects of operations management are crucially important to competitive success in the 21st century marketplace, and how these aspects of operations management link back to the experience of individual workers. Logical and appropriate topics to discuss include productivity and quality (which are easily linked to both marketplace success and individual worker experience), as well as differences in operations management between service and manufacturing organizations (e.g., relevance of the service–profit chain in service organizations versus processing, flexibility, and inventory issues in manufacturing organizations). Since the question material is not directly covered in the chapter, the use of examples from within the text discussion to appropriately support the student’s thesis should be seen as part of a high-quality answer.

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Chapter 18 - History of Management

Indicate the answer choice that best completes the statement or answers the question.

1. Anthony was a skilled woodworker whose exquisite handiwork was sought after by many for custom furniture.

However, due to the invention of cutting machines and processes, the need for Anthony’s skills decreased quickly. Which period of time did Anthony exist in? a. 1650–1750 b. 1750–1900 c. 1900–1950 d. 1950–2000 2. How did the Industrial Revolution change jobs and organizations? a. Managers realized the importance of synergistic tasks. b. Managers realized the importance of customer relations. c. Low-paid, unskilled workers running machines began to replace high-paid, skilled artisans. d. Skilled jobs were performed in homes rather than in factories.

3. William used to allow his packaging employees freedom to prepare custom orders as they liked, and each had their own way of packing boxes. A consultant was hired and William’s department became more efficient when the packagers learned and followed a specific packaging process. Which type of management influenced the change in William’s department? a. contingency management b. scientific management c. bureaucratic management d. information management 4. Beverly is unhappy with her production supervisor. Beverly would normally finish 200 products per shift but she is purposely finishing less than 100 by working at a much slower pace. What is this an example of? a. job loitering b. roadblocking c. lagging d. soldiering 5. What is Frederick Taylor famous for? a. developing time and motion studies b. being first to define the functions of managers c. developing the 14 principles of management d. creating the principles of scientific management 6. Kathy is the production manager for a computer assembly company. Kathy is evaluating her best workers so that their assembly methods can be formalized and documented for all workers to follow. Which goal of scientific management is Kathy pursuing? a. making sure that workers did not consider their work boring or repetitive b. eliminating conflict between workers and management c. finding the one best way to perform each task d. finding different ways to motivate workers Powered by Cognero

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Chapter 18 - History of Management 7. Patrick rewards his best production workers and treats all workers fairly. When Patrick encouraged all production staff to model the most efficient ones, he rewarded the entire department when their production numbers increased. To which human relations approach is this most closely related? a. using group dynamics to ensure that organizational goals are met b. employing Gantt charts to monitor productivity c. finding the one best way for doing each task d. dividing the work and the responsibility equally between management and workers 8. Karl spent a morning evaluating his production staff and recorded their movements with a stopwatch. He realized he could reduce the distance workers walked to complete a process by simply changing the direction of flow of the product.

Which element of Frank and Lillian Gilbreth’s work is this an example of? a. They used motion studies to eliminate unnecessary or repetitive motions from work. b. They proved the effectiveness of nonfinancial motivators in convincing workers to strive for organizational goals. c. They realized how the principles of sociology applied to worker performance. d. They identified the four functions managers perform.

9. Which management theorist would most likely have used his understanding of how work is done to help surgeons eliminate unnecessary motions, operate more efficiently, and save more lives by closely studying how surgeries were performed? a. Henri Fayol b. Chester Barnard c. Frederick Taylor d. Frank Gilbreth 10. Which management theorist would most likely have said, “The greatest waste in the world comes from needless, illdirected, and ineffective motions”? a. Frederick Taylor b. Frank Gilbreth c. Henri Fayol d. Chester Barnard 11. A contractor assessed an overdue job. As he looked at the job site, he saw one worker moving bricks by carrying two at a time from where they were unloaded to where they were needed. He saw another climbing up a ladder with a few shingles, climbing down to get more, and then repeating the process. What approach could the contractor use to determine how the workers could perform their tasks more efficiently? a. time and motion studies b. resource assessments c. workload analyses d. systems analyses 12. Caroline is the trade show supervisor for a furniture manufacturer. Caroline and her staff have 12 hours to set up the booth’s walls, flooring, lighting, and signage before the sample furniture arrives. Caroline uses a whiteboard to illustrate to her staff the order that the booth will be constructed in and the time each part must be completed by. What type of chart did Caroline most likely use to guide her staff? a. organizational chart Powered by Cognero

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Chapter 18 - History of Management b. Gantt chart c. flow chart d. decision chart 13. In which of the following situations would a Gantt chart be appropriate to use? a. determining parcel weights before shipping to customers b. installing a local area network for a computer system c. rebuilding communities destroyed by a hurricane d. evaluating employees 14. Qualification-based hiring, chain of command, division of labour, and impartial application of rules and

procedures are elements that characterize which of the following? a. group dynamics theory b. systems management c. contingencies d. bureaucracies 15. According to Weber, how is bureaucracy defined? a. organization based on the theory of behavioural reinforcement b. determination of an individual’s power base within an organization through political connections c. exercise of control on the basis of knowledge, expertise, or experience d. reliance on scheduled, periodic corrective actions to operate most efficiently 16. Anthony’s new business is growing rapidly and his staff has increased from just he and his wife to over 50 full-time workers. In order to create structure, Anthony gives each employee specific work processes, assigned objectives, and one manager each employee reports to. Which element of bureaucratic organization is Anthony working on? a. chain of command b. division of labour c. impartial application of rules and procedures d. recorded in writing 17. What is the intention of bureaucracy as defined by Weber? a. to achieve an organization’s goal in the most efficient way possible b. to create sustainable, nonfinancial motivation tools c. to provide managers with the tools needed to adapt to different situations d. to create synergy within the organization’s departments 18. Which of the following ideas is associated with Max Weber’s bureaucratic management? a. the development of cohesive work groups b. span of management c. conflict as something beneficial d. chain of command 19. Who is best known for developing the 5 functions of managers and the 14 principles of management?

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Chapter 18 - History of Management a. Henri Fayol b. Max Weber c. Frank Gilbreth d. Elton Mayo 20. Which management theorist drew on his own experiences as a CEO to create his theory of management? a. Elton Mayo b. Frederick Taylor c. Henri Fayol d. Max Weber 21. Which type of management is Henri Fayol responsible for developing? a. bureaucratic b. administrative c. operations d. contingency 22. Which management theorist would most likely have said, “The success of an enterprise generally depends much more on the administrative ability of its leaders than on their technical ability”? a. Henri Fayol b. Mary Parker Follett c. Max Weber d. Lillian Gilbreth 23. Richard and his wife, Eleanor, run a training company. Staff would ask either Richard or Eleanor for guidance depending on who was available to speak to. A problem occurred when a staff member was given direction from Eleanor that conflicted with what Richard had told them. Since that occurrence, each staff member reports to either Richard or Eleanor, but not both. Which of Henri Fayol’s principles is this an example of? a. unity of direction b. centralization c. vertical authority d. unity of command 24. Rose believes her employees will be more productive if she pays attention to how they feel and creates a family atmosphere within her company. Which approach to management is Rose most aligned with? a. scientific b. human relations c. administrative d. systems 25. Which of the following statements represents a tenet of human relations management? a. Success follows from strict adherence to the chain of command principle. b. Effective managers must be able to perform all four managerial functions simultaneously. c. Success depends on treating workers well. d. Efficiency equals organizational success.

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Chapter 18 - History of Management 26. Which of the following management theorists helped develop human relations management? a. Max Weber b. Mary Parker Follett c. Henri Fayol d. Henry Gantt 27. A recent union–management conflict was at a stalemate for months and then settled by an arbitrator. With

the help of the arbitrator, both parties were able to indicate their preferences and work together to find an alternative, creative solution that meets the needs of both parties. According to Mary Parker Follett, what is another term for this? a. collaborative conflict resolution b. integrative conflict resolution c. domination resolution d. coercion 28. TRX Inc. and its box supplier could not agree on a new price. The raw material cost to manufacture boxes increased and the supplier needed a new contract with its customers. TRX knew it was the supplier’s number one customer and planned to refuse any price increase. However, to maintain a long-term relationship, TRX settled on a price just below the supplier’s initial increase. Both companies were happy with the new contract. What would Mary Parker Follett call this conflict settlement? a. mediation conflict resolution b. arbitrary conflict resolution c. cognitive conflict resolution d. integrative conflict resolution 29. Which statement represents one of Mary Parker Follett’s beliefs about management? a. Rules and procedures should be applied without favouritism. b. Group dynamics produce positive peer pressure. c. Conflict can be beneficial. d. Pay should be performance based.

30. Mary Parker Follett is known for developing ideas regarding constructive conflict, also known as which of

the following? a. cognitive conflict b. integrative conflict c. mediation d. facilitation 31. According to Mary Parker Follett, which of the following flows from job knowledge and experience rather

than position? a. coercion b. authority c. intelligence Powered by Cognero

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Chapter 18 - History of Management d. conflict resolution ability 32. Which statement characterizes integrative conflict resolution? a. A third party’s decision settles the conflict. b. Both parties work together to create an alternative solution that includes shared preferences and integrates interests. c. Both parties involved agree to give up something. d. Both parties in the conflict are coerced into accepting a less-than-optimal solution.

33. Which of the following ideas is most closely related to Mary Parker Follett’s writings about management? a. Effective management is based on 14 principles. b. Assigning tasks to those best qualified will improve efficiency and effectiveness. c. Leadership should be based on knowledge, expertise, or experience. d. Integration is the most effective approach to conflict resolution.

34. Which management theorist said, “As conflict is here in this world, as we cannot avoid it, we should, I think, use it to work for us. Instead of condemning it, we should set it to work for us”? a. Frederick Taylor b. Henri Fayol c. Henry Gantt d. Mary Parker Follett 35. Which management theorist is best known for his/her role in the Hawthorne Studies? a. Elton Mayo b. Chester Barnard c. Mary Parker Follett d. Frank Gilbreth 36. Willis initiates communication between two team leaders and their team to discuss the best practices on meeting production targets. The leaders are able to both improve production from increased efficiency. According to the Hawthorne studies, what has led to this increase in production? a. member cohesiveness b. realistic work quotas c. important work d. merit-based promotion 37. Which behaviour did Elton Mayo witness during the Bank Wiring Room phase of the Hawthorne Studies? a. group dissonance b. soldiering c. rate busting d. lagging behaviour 38. Which management theorist provided managers with a better understanding of the effect that group social interactions and employee satisfaction have on individual and group performance? a. Elton Mayo Powered by Cognero

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Chapter 18 - History of Management b. Chester Barnard c. Henri Fayol d. Max Weber 39. Which term did Chester Barnard define as “a system of consciously coordinated activities or forces of two or more persons”? a. bureaucracy b. department c. organization d. administration 40. Which statement relates most closely to Chester Barnard’s ideas of management? a. People should be hired based on their qualifications to do a job well. b. The best way to handle conflict is through integration. c. The crew working on the construction of a new church is an example of an organization. d. Human factors related to work are less important than physical conditions.

41. Daniel is a new employee in a meat processing plant’s accounting department. Daniel’s supervisor is pleased that Daniel has joined her department. Every directive she gives Daniel, he follows right away without question. What would Chester Bernard say Daniel’s behaviour is an example of? a. zone of authority b. zone of understanding c. zone of acceptance d. zone of indifference 42. When will employees be indifferent to managerial directives or orders? a. When the directives or orders are misunderstood. b. When their purpose is consistent with the purpose of the organization. c. When management has unrealistic expectations. d. When managers do not care about the personal interests of workers.

43. Which of the following management theorists believed that workers ultimately grant managers their authority? a. Chester Barnard b. Max Weber c. Mary Parker Follett d. Elton Mayo 44. Amanda is a manager within a furniture manufacturing company. Amanda negotiates raw material purchases from suppliers, ensures her production teams meet quotas, and final products meet standards set by upper management. What type of manager is Amanda? a. operations manager b. resource manager c. systems manager d. bureaucratic manager Powered by Cognero

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Chapter 18 - History of Management 45. Which of the following is an example of a commonly used operations management tool? a. closed systems b. open systems c. scheduling systems d. synergy systems 46. Who is responsible for initiating the now common practice of manufacturing most products using standardized, interchangeable parts? a. Henri Fayol b. Eli Whitney c. Chester Barnard d. Frederick Taylor 47. Joyce is a manager at a hard goods distribution company. An example of Joyce’s responsibility is to ensure that the sales staff is aware of customers that the accounting department has identified as having problems paying their invoices.

What type of management does Joyce engage in? a. administrative management b. management science c. information management d. operations management 48. Manufacturers today purchase raw materials so that just enough inventory is on hand to produce the product in small batches. Which management approach is this practice most closely related to? a. systems management b. information management c. operations management d. contingency management 49. What term is used to describe the amount and number of raw materials, parts, and finished products that a company has in its possession? a. supplies b. material resources c. inventory d. physical resources 50. Janice is a manager with an international finance company. One of Janice’s responsibilities is to ensure the stock brokers in the company are aware of the Canadian dollar value against foreign currencies on an hourly basis. What type of manager is Janice? a. systems manager b. information manager c. operations manager d. contingency manager 51. What does a systems view of management allow managers to do? a. help managers make sense of complexity inside and outside of their organizations Powered by Cognero

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Chapter 18 - History of Management b. help managers effectively manage employee attendance and increase employee engagement c. help managers communicate efficiently with employees and colleagues d. help managers store and retrieve all types of information 52. What is a set of interrelated elements or parts that function as a whole called? a. a synergistic graph b. a dependency c. a relationship d. a system 53. XBC Inc. is a utility monopoly. Since it does not have competitors, XBC has had little incentive to change the way it does business. This has caused XBC to become out of sync with customers who wish to receive more automated information such as online account information and internet billing. Which system best describes how XBC operates? a. covert system b. closed system c. synergistic subsystem d. open system 54. Which of the following types of systems are organizations that interact with their environments and depend on them for survival? a. covert systems b. open systems c. synergistic subsystems d. closed systems 55. What occurs when 1 + 1 = 3? a. an open system b. synergy c. entropy d. reciprocity 56. Which statement describes what happens when synergy occurs? a. Workers deliberately slow down their pace or restrict their work outputs. b. Productivity increases as a result of workers’ beliefs that management cares about them. c. Two or more subsystems working together produce more than if they were working apart. d. A system of consciously coordinated activities or forces is created by an organization.

57. Which of the following is an example of a closed system? a. an isolated ranch in Alberta b. a company’s highly secure accounting system c. the National Art Gallery d. Canada Post 58. Which type of entity are the Toronto Raptors basketball team, the University of British Columbia, Blue Cross, and Apple?

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Chapter 18 - History of Management a. entropic systems b. open systems c. closed systems d. synergistic subsystems 59. Kraft Foods has created five global product divisions—beverages, snacks, cheese and dairy, convenience meals, and grocery. It also has two marketing divisions—one for North America and the other for everywhere else. According to the systems approach to management, what are these seven divisions examples of? a. work units b. functional systems c. closed systems d. subsystems 60. Jennifer has 25 years of experience in management and has just completed a study of the history of management.

Jennifer understands that no one theory of management works in all situations. Which approach to management does Jennifer most likely follow? a. operations management b. information management c. systems management d. contingency management 61. Teresa applied the human relations theory of management to motivate her team to increase sales by 8 percent. She then applied the scientific management theory to match customer accounts to the appropriate salesperson. What overall approach to management does Teresa most likely follow? a. operations management b. information management c. systems management d. contingency management 62. Dr. Murray has improved the efficiency of his dental office. Originally, his two dental hygienists could each serve seven patients per day; however, he added a coordinator to greet patients and handle non-hygiene functions normally handled by the hygienists. This initiative enabled the two hygienists to handle 10 patients each per day. What did Dr. Murray create? a. an open system b. a closed system c. synergy d. bureaucracy 63. Patrick is considered one of the most effective managers within the company he works for. The company’s president has observed that Patrick changes the way he manages for different situations and the different needs and agendas of the people involved. Which type of management does Patrick display at work? a. operations management b. systems management c. information management d. contingency management Powered by Cognero

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Chapter 18 - History of Management 64. Which of the following is an advantage of the systems approach to management? a. It simplifies the management process by supporting the principle of unity of command. b. It allows managers to reward workers on the basis of their performance. c. It forces managers to create coordinated communication. d. It forces managers to view their organization as part of a whole.

65. Which of the following represents the belief that the most effective management theory or idea depends on the kinds of problems or situations managers are facing at a particular time and place? a. the human relations approach b. administrative management c. the contingency approach d. bureaucratic management 66. On Saturday, the manager of Tony’s Pizza had to deal with an employee with a hangover, a missing server, and an unusually large number of customers. Monday was a slow day, and an employee fell asleep behind the prep table. Both employees came to work not ready to work their hardest. Which management tenet would indicate that the manager should treat these two employees differently? a. principles of bureaucratic management b. contingency approach to management c. principles of administrative management d. human relations approach to management 67. Management jobs and careers, and management as a field of study, did not exist prior to how many years

ago? a. 130 years ago b. 100 years ago c. 75 years ago d. 50 years ago 68. Evidence of information management dates back to what location and time period? a. China, in about 800 AD. b. France, in about 1900 AD. c. Ancient Sumer, in about 8000–3000 BCE. d. Egypt, in about 4000 BCE. 69. Scenario 18-1 As the day-shift supervisor at the steel plant, you summon the six college students who are working for you this summer doing odd jobs. You walk them across the plant to a field where the company stores scrap metal “leftovers.” The area, about the size of a football field, is stacked with organized piles of metal. You explain that everything they see has just been sold.

You point out that railroad tracks divide the field into parallel sectors, like the lines on a football field, so that each stack of metal is no more than 4 m from a track. Each stack contains 390 pieces of metal. Each piece weighs 42 kg and is about a metre long; it’s just over 10 cm wide and 10 cm deep. You tell the students that, working as a team, they are to pick up each piece, walk up a ramp to the railroad car positioned next to each stack, and then neatly position and stack the metal for shipment. A forklift cannot be used because the metal is not on wooden pallets (the pallets would be crushed). The Powered by Cognero

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Chapter 18 - History of Management only way to get the metal into the rail cars is for the students to carry it.

Based on an old report from the last time the company sold some of the metal, you understand that over an eight-hour shift, workers typically loaded 30 to 31 pieces of metal parts per hour. At that pace, though, it will take your six students six weeks to load all of the metal; it must, however, be shipped in two weeks. So, without more workers (there’s a hiring freeze) and without forklifts, all of the metal has to be loaded by hand by these six workers in two weeks.

Refer to Scenario 18-1. What advice should you, as the shift supervisor at the steel plant in charge of the six college students, take from the teachings of Frederick Taylor? a. Look at how the task assigned influences the organizational goals. b. Scientifically train, teach, and develop these employees to help them reach their full potential. c. Use time and motion studies to create the most efficient work methodology. d. Rely on qualification-based hiring.

70. Scenario 18-1 As the day-shift supervisor at the steel plant, you summon the six college students who are working for you this summer doing odd jobs. You walk them across the plant to a field where the company stores scrap metal “leftovers.” The area, about the size of a football field, is stacked with organized piles of metal. You explain that everything they see has just been sold.

You point out that railroad tracks divide the field into parallel sectors, like the lines on a football field, so that each stack of metal is no more than 4 m from a track. Each stack contains 390 pieces of metal. Each piece weighs 42 kg and is about a metre long; it’s just over 10 cm wide and 10 cm deep. You tell the students that, working as a team, they are to pick up each piece, walk up a ramp to the railroad car positioned next to each stack, and then neatly position and stack the metal for shipment. A forklift cannot be used because the metal is not on wooden pallets (the pallets would be crushed). The only way to get the metal into the rail cars is for the students to carry it.

Based on an old report from the last time the company sold some of the metal, you understand that over an eight-hour shift, workers typically loaded 30 to 31 pieces of metal parts per hour. At that pace, though, it will take your six students six weeks to load all of the metal; it must, however, be shipped in two weeks. So, without more workers (there’s a hiring freeze) and without forklifts, all of the metal has to be loaded by hand by these six workers in two weeks.

Refer to Scenario 18-1. As shift supervisor, you need to motivate the students to work much, much harder than they have been all summer, to move them beyond the leisurely pace and job assignments they have gotten used to. Bear in mind the idea that management is responsible for paying workers fairly for their work. Who stated, “A fair day’s pay for a fair day’s work” and is the management theorist that the above scenario most closely relates to? a. Max Weber b. Frederick Taylor c. Mary Parker Follett d. Frank Gilbreth 71. Scenario 18-1 As the day-shift supervisor at the steel plant, you summon the six college students who are working for you this summer doing odd jobs. You walk them across the plant to a field where the company stores scrap metal “leftovers.” The area, about the size of a football field, is stacked with organized piles of metal. You explain that everything they see has just been sold.

You point out that railroad tracks divide the field into parallel sectors, like the lines on a football field, so that each stack of metal is no more than 4 m from a track. Each stack contains 390 pieces of metal. Each piece weighs 42 kg and is about a metre long; it’s just over 10 cm wide and 10 cm deep. You tell the students that, working as a team, they are to pick up Powered by Cognero

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Chapter 18 - History of Management each piece, walk up a ramp to the railroad car positioned next to each stack, and then neatly position and stack the metal for shipment. A forklift cannot be used because the metal is not on wooden pallets (the pallets would be crushed). The only way to get the metal into the rail cars is for the students to carry it.

Based on an old report from the last time the company sold some of the metal, you understand that over an eight-hour shift, workers typically loaded 30 to 31 pieces of metal parts per hour. At that pace, though, it will take your six students six weeks to load all of the metal; it must, however, be shipped in two weeks. So, without more workers (there’s a hiring freeze) and without forklifts, all of the metal has to be loaded by hand by these six workers in two weeks.

Refer to Scenario 18-1. What advice from Henri Fayol’s teachings should you take to improve productivity with the six college students? a. Eliminating bottlenecks is the key to job effectiveness. b. Coordination is the key to job effectiveness. c. The principle of division of work will get the job done more efficiently. d. Always follow the chain of command.

72. Scenario 18-1 As the day-shift supervisor at the steel plant, you summon the six college students who are working for you this summer doing odd jobs. You walk them across the plant to a field where the company stores scrap metal “leftovers.” The area, about the size of a football field, is stacked with organized piles of metal. You explain that everything they see has just been sold.

You point out that railroad tracks divide the field into parallel sectors, like the lines on a football field, so that each stack of metal is no more than 4 m from a track. Each stack contains 390 pieces of metal. Each piece weighs 42 kg and is about a metre long; it’s just over 10 cm wide and 10 cm deep. You tell the students that, working as a team, they are to pick up each piece, walk up a ramp to the railroad car positioned next to each stack, and then neatly position and stack the metal for shipment. A forklift cannot be used because the metal is not on wooden pallets (the pallets would be crushed). The only way to get the metal into the rail cars is for the students to carry it.

Based on an old report from the last time the company sold some of the metal, you understand that over an eight-hour shift, workers typically loaded 30 to 31 pieces of metal parts per hour. At that pace, though, it will take your six students six weeks to load all of the metal; it must, however, be shipped in two weeks. So, without more workers (there’s a hiring freeze) and without forklifts, all of the metal has to be loaded by hand by these six workers in two weeks.

Refer to Scenario 18-1. What advice from the teachings of Mary Parker Follett should you apply to your relations with the six college students? a. Embrace any conflict that arises within the group as a result of having to complete the additional

work. b. Use group dynamics to complete collaborative tasks more efficiently and effectively. c. Monitor soldiering during group activities because it is a disruptive practice and can limit the group’s decision-making ability. d. Use monetary rewards to provide motivation to groups experiencing conflict.

73. Scenario 18-1 As the day-shift supervisor at the steel plant, you summon the six college students who are working for you this summer doing odd jobs. You walk them across the plant to a field where the company stores scrap metal “leftovers.” The area, about the size of a football field, is stacked with organized piles of metal. You explain that everything they see has just been sold.

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Chapter 18 - History of Management You point out that railroad tracks divide the field into parallel sectors, like the lines on a football field, so that each stack of metal is no more than 4 m from a track. Each stack contains 390 pieces of metal. Each piece weighs 42 kg and is about a metre long; it’s just over 10 cm wide and 10 cm deep. You tell the students that, working as a team, they are to pick up each piece, walk up a ramp to the railroad car positioned next to each stack, and then neatly position and stack the metal for shipment. A forklift cannot be used because the metal is not on wooden pallets (the pallets would be crushed). The only way to get the metal into the rail cars is for the students to carry it.

Based on an old report from the last time the company sold some of the metal, you understand that over an eight-hour shift, workers typically loaded 30 to 31 pieces of metal parts per hour. At that pace, though, it will take your six students six weeks to load all of the metal; it must, however, be shipped in two weeks. So, without more workers (there’s a hiring freeze) and without forklifts, all of the metal has to be loaded by hand by these six workers in two weeks.

Refer to Scenario 18-1. Which approach to management is most applicable to the manager’s problem with the metal and other raw materials? a. contingency management b. systems management c. operations management d. administrative management

Indicate whether the statement is true or false.

74. The earliest recorded instance of information management dates to circa 8000 to 3000 BCE. a. True b. False 75. For most of humankind’s history, people have commuted to work. a. True b. False 76. After the Industrial Revolution, jobs mostly occurred in large, formal organizations where hundreds of people worked under one roof. a. True b. False 77. Frederick Taylor was the father of systems management. a. True b. False 78. One of Taylor’s management principles concerned how workers should be selected. a. True b. False 79. According to the principles of scientific management, work and the responsibility for the work should be divided equally between workers and management. a. True b. False 80. Frank and Lillian Gilbreth studied the psychology of groups.

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Chapter 18 - History of Management a. True b. False 81. A time study allows each task or job to be broken down into separate motions. Once this is done, then unnecessary or repetitive motions can be eliminated. a. True b. False 82. A Gantt chart can be used to track informal communication paths. a. True b. False 83. Weber’s concept of bureaucratic management supported qualification-based hiring and merit-based promotion. a. True b. False 84. According to Weber’s bureaucratic management, people should lead by virtue of their rational-legal authority. a. True b. False 85. According to bureaucratic management principles, those higher in the chain of command do not have the right to give commands, take action, and make decisions about activities occurring anywhere below them in the chain. a. True b. False 86. One limitation of bureaucratic management is that managers emphasize punishment for noncompliance much more than reward for compliance to bring about changes in behaviour. a. True b. False 87. Henri Fayol classified management functions into five categories. a. True b. False 88. According to Fayol’s 14 principles of management, esprit de corps is a source of major organizational conflict. a. True b. False 89. Human relations management focuses on managers’ roles and authority. a. True b. False 90. Mary Parker Follett believed that managers could best deal with conflict through compromise. a. True b. False Powered by Cognero

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Chapter 18 - History of Management 91. The point of integrative conflict resolution is to have both parties indicate their preferences and then work together to find an alternative that meets the needs of both. a. True b. False 92. Elton Mayo was one of the first researchers to focus on studying human relations management. a. True b. False 93. The Hawthorne Studies proved that financial incentives were not necessarily the most important motivator for workers. a. True b. False 94. According to Chester Barnard, for many managerial requests or directives, there is a zone of indifference in which managers don’t really care whether the request is met or the directive is performed. a. True b. False 95. Technological management involves managing the daily production of goods and services. a. True b. False 96. One of the most commonly used operations management tools is cognitive mapping to better understand the psychology of the workers. a. True b. False 97. Eli Whitney’s ideas for increasing production have greatly influenced today’s manufacturing process using standardized, interchangeable parts. a. True b. False 98. A systems approach to management encourages managers to view each division as a separate, vital organism. a. True b. False 99. According to the systems approach to management, an open system can function without interacting with its environment. a. True b. False 100. One advantage of a systems view of management is that it forces managers to be aware of how the environment affects specific parts of the organization. a. True b. False Powered by Cognero

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Chapter 18 - History of Management 101. The contingency approach to management holds that there is not one best way to manage an organization. a. True b. False 102. Building the pyramid of King Khufu was as complex as some of today’s modern management tasks. a. True b. False 103. Gantt discovered that workers performed best when they learned their jobs on their own. a. True b. False 104. Henri Fayol’s theories form the basis for describing the functions of management as planning, organizing, leading, and controlling. a. True b. False 105. Chester Barnard argued that workers are more likely to carry out tasks when they are congruent with the purpose of the organization. a. True b. False 106. Information has become more expensive over time, since it’s increasing in volume and amount. a. True b. False 107. Communication mechanisms have remained relatively static over the past 150 years. a. True b. False

108. How did the Industrial Revolution change jobs and organizations?

109. Describe how managers approached management before the development of scientific management.

110. List the four principles of scientific management.

111. What did Henri Fayol mean when he argued that “the success of an enterprise generally depends much more on the administrative ability of its leaders than on their technical ability”?

112. What principles did the Hawthorne Studies demonstrate to be true?

113. When will people generally be indifferent to managerial directives or orders?

114. Differentiate between closed systems and open systems.

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Chapter 18 - History of Management 115. Discuss Mary Parker Follett’s ideas regarding constructive conflict.

116. What did the Hawthorne Studies prove about groups? What kind of experiment can you create to prove that Mayo’s results are true?

117. What advantages does the systems approach to management offer that other approaches do not?

118. How is your ability to be a manager influenced by accepting the contingency approach to management as the most effective way to manage?

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Chapter 18 - History of Management Answer Key 1. b 2. c 3. b 4. d 5. d 6. c 7. a 8. a 9. d 10. b 11. a 12. b 13. c 14. d 15. c 16. b 17. a 18. d 19. a 20. c 21. b 22. a 23. d 24. b 25. c Powered by Cognero

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Chapter 18 - History of Management 26. b 27. b 28. d 29. c 30. a 31. b 32. b 33. d 34. d 35. a 36. a 37. b 38. a 39. c 40. c 41. d 42. b 43. a 44. a 45. c 46. b 47. c 48. c 49. c 50. b 51. a Powered by Cognero

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Chapter 18 - History of Management 52. d 53. b 54. b 55. b 56. c 57. b 58. b 59. d 60. d 61. d 62. c 63. d 64. d 65. c 66. b 67. a 68. c 69. b 70. b 71. c 72. a 73. c 74. True 75. False 76. True Powered by Cognero

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Chapter 18 - History of Management 77. False 78. True 79. True 80. False 81. False 82. False 83. True 84. True 85. False 86. True 87. False 88. False 89. False 90. False 91. True 92. True 93. True 94. False 95. False 96. False 97. True 98. False 99. False 100. True 101. True 102. True Powered by Cognero

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Chapter 18 - History of Management 103. False 104. True 105. True 106. False 107. False 108. First, thanks to the availability of power and numerous inventions, low-paid, unskilled labourers began to replace high-paid, skilled artisans. Whereas artisans made entire goods by hand, the new production system was based on a division of labour. Second, instead of being performed in fields, homes, or small shops, jobs occurred in large formal organizations where hundreds of people worked under one roof.

109. It can best be described as “seat of the pants” management. Decisions were made haphazardly without any

systematic study, thought, or collection of information. There were no procedures for standardizing operations and no standards by which to judge whether performance was good or bad; nor was there any follow-up to determine whether productivity or quality actually improved when changes were made.

110. (1) “Develop a science” for each element of work. Study it. Analyze it. Determine the “one best way” to do the work.

(2) Scientifically select, train, teach, and develop workers to help them reach their full potential. (3) Cooperate with employees to ensure implementation of the scientific principles. (4) Divide the work and the responsibility equally between management and workers.

111. Fayol was referring to the need of managers to perform the four functions of management in order to be

successful. They needed to be able to plan, organize, lead, and control. How a manager performs these functions—not their technical skills—determines the manager’s success.

112. Elton Mayo is best known for his role in the Hawthorne Studies at the Western Electric Company. In the first stage of the Hawthorne Studies, production went up because the increased attention paid to the workers in the study and their development into a cohesive work group led to significantly higher levels of job satisfaction and productivity. In the second stage, productivity dropped because the workers had already developed strong negative norms, in which individuals who worked faster than the rest of the team or cooperated with management were ostracized or “binged.” The Hawthorne Studies demonstrated that workers’ feelings and attitudes affected their work, that financial incentives weren’t necessarily the most important motivator for workers, and that group norms and behaviour play a critical role in individuals at work.

113. People will generally be indifferent to managerial directives or orders if they (1) are understood, (2) are consistent with the purpose of the organization, (3) are compatible with the people’s personal interests, and (4) can be carried out by those people.

114. Whereas closed systems can function without interacting with their environment, nearly all organizations should be viewed as open systems that interact with their environments and depend on them for survival.

115. Follett is known for developing ideas regarding constructive conflict (also called cognitive conflict).

Unlike most people, who view conflict as bad, Follett believed that conflict could be beneficial and that it should be embraced—there is a constructive way to deal with conflict. Follett believed that the best way to deal with conflict was not domination, where one side wins and the other loses, nor was it compromise, where each Powered by Cognero

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Chapter 18 - History of Management

side gives up some of what they want; rather, it was integration. Integrative conflict resolution is an approach in which both parties deal with the conflict by indicating their preferences and then working together to find an alternative that meets the needs of both.

116. The Hawthorne Studies proved the importance of understanding group dynamics. Students’ answers to the second part of this question will vary. Their answers should describe the creation of two different work groups. One group will be given lots of attention, and the other group will be ignored. They should record the behaviours of members of both groups to show how important group norms are to work efficiency.

117. First, a systems view of management forces managers to view their organizations as part of and subject to the competitive, economic, social, technological, and legal/regulatory forces in their environments. Second, it forces managers to be aware of how the environment affects specific parts of the organization. Third, because of the complexity and difficulty of trying to achieve synergies between different parts of the organization, the systems view encourages managers to focus on better communication and cooperation within the organization. Finally, this view makes managers acutely aware that good internal management of the organization may not be enough to ensure survival. Survival also depends on making sure that the organization continues to satisfy critical environmental stakeholders, such as shareholders, employees, customers, suppliers, governments, and local communities.

118. The contingency approach to management precisely states that there are no universal management theories

and that the most effective management theory depends on the kinds of problems or situations that managers or organizations are facing at a particular time. One practical implication of the contingency approach is that management is much harder than it looks. A second implication of the contingency approach is that managers need to spend more time analyzing problems, situations, and employees before taking action to fix them.

Finally, it means that as you learn about management ideas and practices, you need to pay attention to qualifying phrases such as “usually,” “in these situations,” “for this to work,” and “under these circumstances.”

Doing so will help you identify the key contingencies and make you a better manager.

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