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Chapter 10 Organizational Control, Change, and Innovation Answer Key

Multiple Choice Questions

41.

The process by which managers monitor and regulate the efficiency and effectiveness of the workers in an organization is called _____.

A. plannin g B. organizin g C. leadin g D. controlli ng E. coordinati ng Controlling is the process by which managers monitor and regulate the organization in order to determine if the organization is operating efficiently and effectively.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

42.

The formal monitoring, evaluation, and feedback systems that allow managers to determine if the organization's strategy and structure are working according to plans are known as _____ systems.

A. soci al B. routin e C. contr ol D. nonprogramm ed E. classic al Control systems are formal target-setting, monitoring, evaluation, and feedback systems that provide managers with information about whether the organization's strategy and structure are working efficiently and effectively.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

43.

Which of the following types of control allows managers to anticipate problems before they arise?

A. Feedforward control B. Concurrent control C. Feedback control D. Bureaucratic control E. Clan control Feedforward control is control that allows managers to anticipate problems before they arise.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

44.

During the input stage, managers use __________ control procedures to anticipate problems before they occur.

A. inp ut B. conversio n C. outp ut D. feedforwa rd E. feedbac k At the input stage, managers use feedforward control to anticipate problems before they arise so problems do not occur later during the conversion process. 45.

RST Consulting screens job applicants by viewing their résumés electronically and using several interviews to select highly skilled people. By doing so, the managers at RST consultin ensure that the wrong candidates are not picked for a particular job. This is an example of:

A. concurrent control. B. feedforward control. C. feedback control. D. bureaucratic control. E. clan control. Feedforward control is control that allows managers to anticipate problems before they arise.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

46.

Starling Manufacturing Inc. has carefully set up strict specifications for raw materials that are sourced from suppliers. It follows a three-step approval process to select new suppliers and ensures that they are aware of raw material specifications. This is an example of:

A. concurrent control. B. feedforward control. C. feedback control. D. bureaucratic control. E. clan control. Control and information systems are developed to measure performance at each stage in the process of transforming inputs into finished goods and services. At the input stage, managers use feedforward control to anticipate problems before they arise so problems do not occur later during the conversion process.

47.

Which of the following types of controls do managers use during the conversion stage to gain feedback on the conversion process?

A. Feedforward control B. Bureaucratic control C. Concurrent control D. Feedback control E. Clan control At the conversion stage, concurrent control gives managers immediate feedback on how efficiently inputs are being transformed into outputs so managers can correct problems as they arise.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

48.

Which of the following types of controls helps monitor the quality of goods or services provided during the production process?

A. Feedforward control B. Concurrent control C. Feedback control D. Bureaucratic control E. Clan control Concurrent control is at the heart of total quality management programs, in which workers are expected to constantly monitor the quality of the goods or services they provide at every step of the production process and inform managers as soon as they discover problems.

49.

Which of the following types of controls do managers use during the output stage of transforming raw materials into finished goods?

A. Behavioral control B. Concurrent control C. Bureaucratic control D. Feedforward control E. Feedback control At the output stage, managers use feedback control to provide information about customers' reactions to goods and services so corrective action can be taken if necessary.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

50.

An organization monitors the number of customer returns for each product model as a part of an attempt to recognize defective products. This is an example of:

A. feedforward control. B. concurrent control. C. clan control. D. feedback control. E. bureaucratic control. At the output stage, managers use feedback control to provide information about customers' reactions to goods and services so corrective action can be taken if necessary.

51.

Which of the following is the first step of the control process?

A. Measuring actual performance B. Comparing actual performance against chosen standards C. Evaluating the results of comparison D. Establishing the standards of performance E. Initiating corrective action At step 1 in the control process managers decide on the standards of performance, goals, or targets that they will use in the future to evaluate the performance of the entire organization or part of it.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

52.

Which of the following steps of the control process involves goal setting?

A. Measuring actual performance B. Comparing actual performance against chosen standards C. Evaluating the results of comparison D. Establishing the standards of performance E. Initiating corrective action At step 1 in the control process managers decide on the standards of performance, goals, or targets that they will use in the future to evaluate the performance of the entire organization or part of it.

53.

Which of the following can hurt the performance of an organization?

A. Adopting realistic performance standards B. Setting stretch goals for employees C. Establishing operating budgets that regulate how managers and workers attain their goals D. Using output controls to motivate managers and employees at different levels E. Focussing on only one standard instead of a hundred different standards The number of standards or indicators of performance that an organization’s managers use to evaluate efficiency, quality, and so on can run into the thousands or hundreds of thousands. If managers focus on just one standard (such as efficiency) and ignore others (such as determining what customers really want and innovating a new line of products to satisfy them), managers may end up hurting their organization’s performance.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

54.

Once managers have chosen the standards to evaluate performance, the next step in the control process is to:

A. compare actual performance against chosen standards of performance. B. initiate corrective action if the chosen standard is not being achieved. C. measure actual performance. D. evaluate the results of comparison. E. revise performance standards. Once managers have decided which standards or targets they will use to evaluate performance, the next step in the control process is to measure actual performance.

55.

Which of the following is true of measuring actual performance?

A. Managers can either evaluate output or behavior, never both. B. Outputs and behavior can be measured easily always. C. It is easy to measure outputs and behavior of complex, nonroutine activities. D. Outputs are easier to measure because they are more tangible and objective. E. Managers develop performance stands to measure behavior first and then outputs. In general, the more nonroutine or complex organizational activities are, the harder it is for managers to measure outputs or behaviors. Outputs, however, are usually easier to measure than behaviors because they are more tangible and objective.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

56.

Which of the following cannot be measured easily?

A. The creativity of a research engineer B. An employee's ability to meet deadlines C. The success of a product D. An employee's adherence to rules E. The money spent on organizational resources When an organization and its members perform complex, nonroutine activities that are intrinsically hard to measure, it is more challenging for managers to measure outputs or behavior. It is impossible for a manager to measure how creative an engineer or scientist is by watching his or her actions.

57.

Once managers have measured actual performance, they should:

A. revise accepted standards. B. compare actual performance to the standards. C. establish the standards of performance. D. initiate corrective action. E. develop goals and objectives. Once managers have measured actual performance, they should compare actual performance to the standards. During step 3, managers evaluate whether-and to what extent-performance deviates from the standards of performance chosen in step 1 of the control process.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

58.

Which of the following is true of the control process?

A. Managers can easily take corrective action when reasons for poor performance are identified. B. Outputs and behavior can be measured easily always. C. It is easy to measure the outputs and behavior of complex, nonroutine activities. D. Managers should never revise performance standards to a lower level. E. Managers develop performance standards to measure behavior first and then outputs. If performance is too low and standards were not reached, or if standards were set so high that employees could not achieve them, managers must decide whether to take corrective action. It is easy to take corrective action when the reasons for poor performance can be identified—for instance, high labor costs.

59.

The final step in the control process is to:

A. initiate corrective action. B. measure actual performance. C. establish the standards of performance. D. compare actual performance to the standards. E. establish targets. The final step in the control process is to evaluate the results and bring about change as appropriate.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

60.

Which of the following is true of the control process?

A. It is difficult to take corrective action when reasons for poor performance are identified. B. It is always easy to measure outputs and behavior. C. It is easy to measure outputs and behavior of complex, nonroutine activities. D. Realistic standards reduce the gap between actual performance and desired performance. E. Managers develop performance stands to measure behavior first and then outputs. The final step in the control process is to evaluate the results and bring about change as appropriate. Whether or not performance standards have been met, managers can learn a great deal during this step. Adopting more realistic standards can reduce the gap between actual performance and desired performance.

61.

Why is return on investment (ROI) the most commonly used financial performance measure?

A. It measures how far profits can decline before managers cannot meet interest changes. B. It measures how efficiently managers are collecting revenues from customers to pay expenses. C. It shows whether organizations can pay claims of short-term creditors without selling inventory. D. It measures how efficiently managers are turning inventory over. E. It allows managers of one organization to compare performance with that of other organizations. Return on investment (ROI), an organization's net income before taxes divided by its total assets, is the most commonly used financial performance measure because it allows managers of one organization to compare performance with that of other organizations.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

62.

Which of the following financial measures is a result of dividing a company's operating profit by its sales revenues?

A. Gross profit margin B. Return on investment C. Net profit D. Operating margin E. Operating costs Operating margin is calculated by dividing a company's operating profit (the amount it has left after all the costs of making the product and running the business have been deducted) by sales revenues.

63.

Which of the following can be inferred from calculating a company's operating margin?

A. An organization’s competitive advantage B. How efficiently an organization is using its resources C. Whether the organization has the resources available to meet the claims of short-term creditors D. How efficiently managers are turning inventory over E. How efficiently managers are collecting revenue from customers Operating margin is calculated by dividing a company’s operating profit by sales revenues. This measure tells managers how efficiently an organization is using its resources; every successful attempt to reduce costs will be reflected in increased operating profit, for example.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

64.

Which of the following financial ratios measures the ability of the organization to pay its short-term debts?

A. Leverage ratios B. Liquidity ratios C. Activity ratios D. Profit ratios E. Inventory turnover ratios Liquidity ratios measure how well managers have protected organizational resources to be able to meet short-term obligations.

65.

Which type of financial ratio is computed by dividing the organization's present assets by its present liabilities?

A. Inventory turnover ratio B. Days sales outstanding ratio C. Profit ratio D. Current ratio E. Debt-to-assets ratio The current ratio (current assets divided by current liabilities) tells managers whether they have the resources available to meet the claims of short-term creditors.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

66.

_____ shows whether an organization can pay claims of short-term creditors without selling inventory.

A. Quick ratio B. Current ratio C. Days sales outstanding ratio D. Inventory turnover ratio E. Profit ratio The current ratio (current assets divided by current liabilities) tells managers whether they have the resources available to meet the claims of short-term creditors. The quick ratio shows whether they can pay these claims without selling inventory.

67.

The times-covered ratio, which measures the degree to which managers use debt or equity to finance ongoing operations, is a type of _____.

A. current ratio B. liquidity ratio C. leverage ratio D. activity ratio E. profit ratio Leverage ratios, such as the debt-to-assets ratio and the times-covered ratio, measure the degree to which managers use debt or equity to finance ongoing operations.

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

68.

Which type of financial ratio measures how well the managers of an organization are creating value from the organization's assets?

A. Leverage ratios B. Liquidity ratios C. Profit ratios D. Current ratios E. Activity ratios Activity ratios show how well managers are creating value from organizational assets.

69.

Which of the following describes stretch goals?

A. Goals at one level that are not in sync with goals set at other levels of the organization B. Goals that subordinates set for themselves C. Goals that are specific and difficult but not out of reach D. Goals that are set low and are easy to achieve E. Goals set at an impossibly high level The best goals are specific, difficult goals—goals that challenge and stretch managers’ ability but are not out of reach and do not require an impossibly high expenditure of managerial time and energy. Such goals are often called stretch goals.

© 2016 by McGraw-Hill Education. This is proprietary material solely for a...