chapter 8

Which one of the following would be a legal and ethical source of business intelligence? A) Competitors' financial data B) Information provided by a former employee C) Memos found in a business's trash D) Posts on social media

A) Competitors' financial data

________ involves the theft of proprietary materials or trade secrets by any means. A) Corporate espionage B) Business intelligence C) Data mining D) Data aggregation

A) Corporate espionage

Which one of the following is true of the impact of formal planning on organizational performance? A) Formal planning is associated with positive financial results. B) Organizations that formally plan invariably outperform those that don't plan. C) The amount of planning done is more important to high performance than the quality of planning and implementation. D) Companies can start seeing the impact of formal planning on performance about a year after starting the planning process.

A) Formal planning is associated with positive financial results.

________ is a process of setting mutually-agreed upon goals and using those goals to evaluate employee performance. A) Management by objectives B) Management by walking around C) Management by observation D) Management by exception

A) Management by objectives

Which one of the following is the best indicator of an organization's real goals? A) Organizational members' actions B) Mission statement C) Annual reports D) Stock valuation

A) Organizational members' actions

Which one of the following statements is true regarding an organization's plans? A) Plans can differ based on time frame. B) Almost all plans are strategic plans. C) Strategic plans may result in unethical behaviors by employees. D) Long-term success is ensured if managers emphasize operational plans.

A) Plans can differ based on time frame.

Which of these sources can managers ethically use to gather information about their competitors? A) Press releases, annual reports, Internet searches. B) Press releases, private detectives, industry studies. C) Fired employees, posing as a potential customer. D) Searching through a firm's trash, annual reports

A) Press releases, annual reports, Internet searches

As managers plan, they develop both goals and plans. A) T B) F

A) T

In an uncertain environment, managers should develop plans that are specific, but flexible. A) T B) F

A) T

In traditional goal setting, goals set by top managers flow down through the organization and become subgoals for each organizational area. A) T B) F

A) T

Planning provides direction to managers and non-managers alike. A) T B) F

A) T

Studies indicate that doing a good job planning and implementing those plans plays a bigger part in high performance than does how much planning is done. A) T B) F

A) T

The commitment concept says that plans should extend far enough to meet those commitments made when the plans were developed. A) T B) F

A) T

The standard procedure to be followed by the human resources department of a company when initiating disciplinary action against an employee is an example of a standing plan. A) T B) F

A) T

When organizational members are more actively involved in planning, the probability that the plan will be used increases. A) T B) F

A) T

When uncertainty is high and managers must be flexible in order to respond to unexpected changes, directional plans are preferable. A) T B) F

A) T

Which one of the following is the first step in MBO? A) The organization's overall objectives and strategies are formulated. B) Unit managers collaboratively set specific objectives for their units with their managers. C) Action plans are specified and agreed upon by managers and employees. D) Major objectives are allocated among divisional and departmental units.

A) The organization's overall objectives and strategies are formulated.

Which one of the following is among the reasons why managers should plan? A) When work activities are coordinated around plans, inefficiencies become obvious. B) Uncertainty can be eliminated and the organization can be insulated from change with planning. C) Planning eliminates the need to set goals. D) Planning eliminates the need to measure work effort.

A) When work activities are coordinated around plans, inefficiencies become obvious

A standing plan is ________. A) an ongoing plan that provides guidance for activities performed repeatedly B) a plan that stands in place of a preferred plan in case of the failure of the latter C) a one-time plan specifically designed to meet the needs of a unique situation D) a flexible plan that sets out general guidelines for company strategy

A) an ongoing plan that provides guidance for activities performed repeatedly

Todd Miller, CEO of Miller's Grocery, has determined that all stores should be well maintained both inside and out. This is an example of a ________. A) directional plan B) specific plan C) financial goal D) social goal

A) directional plan

Technology makes it ________. A) easier to conduct environmental scanning B) more challenging to conduct environmental scanning due to the amount of information C) harder to keep up with any changes a competitor makes D) easier to engage in unethical data collection

A) easier to conduct environmental scanning

A manager's analysis of the external environment can be improved by ________, which involves screening information to detect emerging trends. A) environmental scanning B) environmental activism C) critical path analysis D) social screening

A) environmental scanning

The commitment concept says that plans should ________. A) extend far enough to meet those commitments made when the plans were developed B) be done for as long a time period as possible C) be done for as short a time period as possible D) not commit to specifically meeting the goals made when the plans were developed

A) extend far enough to meet those commitments made when the plans were developed

Plans that encompass only the production or the sales goals of a company are termed ________ plans. A) operational B) strategic C) informal D) financial

A) operational

Bill has been working his plan for about three months. He is now discussing his progress with Jim, his supervisor. If Bill and Jim are using the MBO planning process, this discussion is called ________. A) performance feedback B) redirection of goals C) advise and adjust D) the milestone checkpoint

A) performance feedback

When uncertainty is high, plans should be ________ and ________. A) specific; flexible B) directional; standing C) short-term; directional D) general; informal

A) specific; flexible

An organization's ________ goals are official statements of what an organization says, and what it wants its stakeholders to believe its goals are. A) stated B) real C) authentic D) implicit

A) stated

Distinguish between the stated and the real goals of an organization. Illustrate the difference with an example.

An organization's stated goals are official statements of what an organization says, and what it wants its stakeholders to believe, its goals are. However, stated goals-which can be found in an organization's charter, annual report, public relations announcements, or in public statements made by managers-are often conflicting and influenced by what various stakeholders think organizations should do. Such statements are vague and probably better represent management's public relations skills than being meaningful guides to what the organization is actually trying to accomplish. It shouldn't be surprising then to find that an organization's stated goals are often irrelevant to what actually goes on. If you want to know an organization's real goals-those goals an organization actually pursues-observe what organizational members are doing. Actions define priorities. For example, a company may publicly commit to increasing worker participation in management, while actually practicing a hierarchical, top-down approach. Knowing that real and stated goals may differ is important for recognizing what you might otherwise think are inconsistencies.

Which of the following is an example of a single-use plan? A) Affirmative action hiring policies of a company. B) A plan developed to install a new computer network. C) The procedure to be followed for firing low-performing employees. D) A plan developed to ensure worker safety at the company's facilities.

B) A plan developed to install a new computer network.

________ refers to gathering information about competitors that allows managers to anticipate competitors' actions rather than merely react to them. A) Due diligence B) Competitor intelligence C) Data aggregation D) Value analysis

B) Competitor intelligence

What plans are preferable when uncertainty is high in the business environment? A) Standing plans B) Directional plans C) Operational plans D) Long-term plans

B) Directional plans

Directional plans are clearly defined and leave no room for interpretation. A) T B) F

B) F

Environmental scanning involves monitoring the firm's pollution emissions. A) T B) F

B) F

In the management by objectives (MBO) process of goal setting, goals are ambiguous, giving managers and employees more flexibility to respond to changing conditions. A) T B) F

B) F

Most businesses have only the single goal of making profits. A) T B) F

B) F

Planning helps managers eliminate uncertainty and insulates organizations from change. A) T B) F

B) F

Planning is concerned with how objectives are to be accomplished, not what is to be accomplished. A) T B) F

B) F

Several research studies have conclusively proven that planning organizations always outperform non-planning organizations. A) T B) F

B) F

Stated goals are those that an organization actually pursues. A) T B) F

B) F

Strategic goals focus exclusively on the financial performance of the organization. A) T B) F

B) F

The number of years used to define short-term and long-term plans has increased considerably because of the greater environmental certainty businesses have today. A) T B) F

B) F

The presence of planning inhibits the ability of departments and individuals to work together or organizations to move. A) T B) F

B) F

Which aspect of planning refers to documents that outline how results are to be achieved? A) Goals B) Plans C) Objectives D) Performance guidelines

B) Plans

________ plans apply to the entire organization and establish the organization's overall goals. A) Departmental B) Strategic C) Operational D) Long-term

B) Strategic

Which one of the following is true of the traditional approach to planning? A) Plans are developed by organizational members at the various levels. B) This approach makes managerial planning thorough, systematic, and coordinated. C) Plans created through this method are seldom written down. D) Formal planning departments are rarely used in this approach.

B) This approach makes managerial planning thorough, systematic, and coordinated.

Which one of the following is a problem associated with traditional goal setting? A) Top level managers tend to define the organization's goals in very narrow terms. B) Transition of strategic goals into departmental, team, and individual goals is difficult. C) It can result in the formation of a means-ends chain. D) Goals set are invariably easily accomplished.

B) Transition of strategic goals into departmental, team, and individual goals is difficult.

The effect of planning on managers is that it forces them to ________. A) generate higher profits B) anticipate and respond to change C) eliminate uncertainty D) work at cross purposes

B) anticipate and respond to change

Organizational plans can be classified on the basis of their ________. A) usefulness B) frequency of use C) suitability D) attainability

B) frequency of use

Competitive intelligence refers to ________. A) the collective intelligence of a firm's primary competitors B) gathering information about competitors to help you anticipate their actions C) reacting to competitor strategies as they unfold in the market D) gathering information about your competitors by any possible means

B) gathering information about competitors to help you anticipate their actions

Short-term plans are those covering ________ or less. A) three years B) one year C) six months D) five years

B) one year

Operational plans are usually ________. A) short term, directional, and standing B) short term, specific, and standing C) long term, directional, and single use D) long term, specific, and standing

B) short term, specific, and standing

When making editorial decisions for his newspaper, the owner/editor mostly picks issues that are in line with his political beliefs and those that his advertisers approve of despite his publicly stated goal "to be a champion for free speech and for the development of the community." This indicates that ________. A) the company's strategic goals do not leave any room for interpretation B) the company's stated goals are not its real goals C) the company's goals are directional in nature D) the company's financial goals derive from its strategic goals

B) the company's stated goals are not its real goals

Which one of the following is an example of a standing plan? A) A retail chain's plan to counter the entry of a new competitor. B) A plan developed to address a sudden, unanticipated surge in demand. C) A fire escape policy establishing practices to be followed in an emergency. D) A plan to cope with radical changes in the political environment.

C) A fire escape policy establishing practices to be followed in an emergency.

Which one of the following reflects the way goals are used in an MBO program? A) Goals are used to prepare financial budgets for each unit. B) Goals are used to broadly set the direction subject to encourage interpretation by individual managers. C) Apart from being used to ensure that employees are doing what they are supposed to be doing, goals are used as a motivating tool for employees. D) Goals are used to compare organizational performance year over year.

C) Apart from being used to ensure that employees are doing what they are supposed to be doing, goals are used as a motivating tool for employees.

Which one of the following statements is true of competitive intelligence as a means of environmental scanning? A) The Competitive Espionage Act makes it a crime in the United States to engage in competitive intelligence. B) It is unethical to use competitive intelligence to make strategic business decisions. C) Competitive intelligence is ethical if competitor-related information is collected from sources accessible and available to the public. D) Buying competitors' products and asking their own employees to evaluate them to learn about new technical innovations is an example of the unethical practices followed in competitive intelligence.

C) Competitive intelligence is ethical if competitor-related information is collected from sources accessible and available to the public.

Mr. Slabaugh wants to formulate a plan that lays out general guidelines for his employees and leaves room for interpretation. Which one of the following types of plans would best suit his requirement? A) Informal B) Specific C) Directional D) Standing

C) Directional

________ planning dominates managers' planning efforts at lower levels of the organization. A) Strategic B) Organization-wide C) Operational D) Directional

C) Operational

________ involves defining the organization's goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate work activities. A) Execution B) Logistics C) Planning D) Operations

C) Planning

Which one of the following is the last step in MBO? A) Progress toward objectives is periodically reviewed, and feedback is provided. B) The organization's overall objectives and strategies are formulated. C) Successful achievement of objectives is reinforced by performance-based rewards. D) Action plans are implemented.

C) Successful achievement of objectives is reinforced by performance-based rewards.

How can managers effectively plan when the external environment is continually changing? A) They should discontinue formal planning. B) They should set general, but rigid plans. C) They should be ready to change directions if environmental conditions warrant. D) They should continue to follow the set organizational plans as persistence will eventually pay.

C) They should be ready to change directions if environmental conditions warrant.

Which one of the following is an assumption associated with traditional goal setting? A) Employees will be more motivated to try to attain goals that they helped set. B) Clarity and specificity are preserved as the goals filter down through organizational levels. C) Top managers know what is best because they see the "big picture." D) Managers and employees together develop goals.

C) Top managers know what is best because they see the "big picture."

If top management set a goal that each store in the company should have sales equal to or greater than $100 per square foot per day, this would be an example of ________. A) a strategic plan B) a directional plan C) a financial goal D) a strategic goal

C) a financial goal

An organization's mission states that it "is committed to reducing its environmental footprint"; but its facilities do not comply with statutory environmental regulations. This is an instance of how ________. A) strategic goals help shape financial goals B) long-term goals differ from short-term goals C) an organizations stated goals need not be its real goals D) a company's real goals are derived from its mission statement

C) an organizations stated goals need not be its real goals

A problem associated with traditional goal setting is that ________. A) the narrowly defined goals inhibit a manager's ability to interpret them B) the high degree of reliance on employees for developing goals is not suited to many situations C) clarity is lost as the goals make their way down from the top of the organization to lower levels D) it promotes the growth of a flatter organizational structure and threatens organizational efficiency

C) clarity is lost as the goals make their way down from the top of the organization to lower levels

Many businesses ________ help firms engage in environmental scanning. A) illegally monitor public information to B) will monitor competitors to C) collect and sell data that can D) unethically

C) collect and sell data that can

Long-term plans are defined as those with a time frame beyond ________. A) seven years B) one year C) five years D) three years

C) five years

Strategic plans are usually ________. A) short term, directional, and standing B) short term, specific, and standing C) long term, directional, and single use D) long term, specific, and standing

C) long term, directional, and single use

The commitment concept states that the more the current plans affect future commitments, the ________. A) shorter the time horizon to implement the plans. B) faster management needs to finalize and adopt the plans. C) longer the time frame for which management should plan. D) less control management has over timing.

C) longer the time frame for which management should plan.

One example of competitive intelligence occurs in professional sports where ________ A) coaches hire people to watch the practices of opponents B) team managers hire experts to help read lips to determine the play C) reporters ask questions to determine next week's game strategy D) most teams combine scouting reports and other analytics

C) reporters ask questions to determine next week's game strategy

Environmental scanning refers to an organization's ________. A) social consciousness with regard to sustainability B) adoption of tools to measure its carbon footprint C) screening vast amounts of information to detect trends D) ability to focus solely on potential political change.

C) screening vast amounts of information to detect trends

Top executives are mainly involved in ________ planning. A) functional B) operational C) strategic D) departmental

C) strategic

In ________, goals set by top managers flow down through the organization and become subgoals for each organizational area. A) management by objectives B) management by observation C) traditional goal setting D) traditional planning

C) traditional goal setting

Nike, Inc. is a sportswear and equipment manufacturer that serves a multitude of sports disciplines. Which one of the following statements from Nike would be the best example of a strategic goal? A) A ten percent increase in average annual sales. B) A seven percent increase in average annual income. C) Achieving a return on investment of 17 percent. D) Accelerating growth through focused execution.

D) Accelerating growth through focused execution.

When formal planning fails to lead to higher performance, which one of the following is most likely to be the reason for the failure? A) A participative style of planning was used. B) Managers were allowed too much autonomy. C) The company emphasized the control function over other functions. D) External forces constrain managers' options.

D) External forces constrain managers' options.

Which one of the following statements is true of traditional goal setting? A) Traditional goal setting assumes that employees know best and employs a bottom-up approach to setting organizational goals. B) Evaluation of performance is carried out concurrently with the flow of goals through the organization. C) Goals defined narrowly by top managers need to be made more directional as they flow down through the organization. D) Managers at each level define goals and apply their own interpretations and biases as they make them more specific.

D) Managers at each level define goals and apply their own interpretations and biases as they make them more specific.

________ plans are clearly defined and leave no room for interpretation. A) Directional B) Stated C) Long-term D) Specific

D) Specific

When is the traditional top-down approach to planning most likely to be effective? A) When lower level employees develop plans. B) When the plans focus on developing a large number of plans and carefully documenting them. C) When the management avoids the use of a formal planning department. D) When plans are developed that can actually be used by organizational members.

D) When plans are developed that can actually be used by organizational members.

Goals are different from plans because ________. A) goals identify specific steps that the organization needs to achieve, and plans identify the overall mission of the organization B) goals describe financial objectives, and plans describe objectives related to social responsibility C) goals are important only for small companies, and plans are important only for large companies D) goals are desired outcomes, and plans describe how those outcomes will be accomplished

D) goals are desired outcomes, and plans describe how those outcomes will be accomplished

Bonnie is discussing with her subordinate, Julie, the types of projects Julie would like to work on in the coming year. They are setting goals and determining what success would look like. Bonnie and Julie are engaged in ________. A) performance planning B) strategic planning C) management by observation D) management by objectives

D) management by objectives

The rapid pace of technological change suggests that manager ________. A) can do little now given the future uncertainty B) should not worry about long range plans C) should not commit large sums of money to long-term projects D) need to be very flexible

D) need to be very flexible

Robert Downs, owner of a new community newspaper in his home town of Corning, New York, has set the following goal for his company: "To be a champion for free speech and for the development of the community." This goal constitutes the ________ goal of the company. A) informal B) operational C) financial D) strategic

D) strategic

Williamson is the owner of a small company that sells corporate gifts through an online store. Business has slowed down in recent months and he realizes that the organization must move in a different direction if it is to survive. He has reset some of the company's overall goals and wants to develop a plan to achieve those goals. He is anticipating the business environment to be volatile for the next few years. Considering the above information, it can be determined that his plan must be _______, ________, and ________. A) operational; directional; rigid B) informal; unwritten; flexible C) strategic; general; rigid D) strategic; directional; flexible

D) strategic; directional; flexible

Most companies' plans can be classified as either ________ or ________. A) strategic; financial B) operational; tactical C) social; economic D) strategic; operational

D) strategic; operational

When lower-level managers and employees are involved in the planning process, ________. A) the documents they create are rarely reviewed B) the plans take on a life of their own C) their job satisfaction increases but productivity suffers D) they see the plans as more than just something written down on paper

D) they see the plans as more than just something written down on paper

Business intelligence is the same thing as competitor intelligence

FALSE

Competitive intelligence is the same thing as corporate espionage.

FALSE

General economic news has almost no value to managers since the firm cannot influence economic activity.

FALSE

Mergers between two competitors really have no impact on your business.

FALSE

Much competitor intelligence is available from public sources, but it is illegal to use it to gain a competitive advantage.

FALSE

One good way to gain competitive advantage is to spread inaccurate information about your firm.

FALSE

Patent reports can provide a firm with information on social changes.

FALSE

In a short essay, define management by objectives (MBO) and list four elements of this type of goal setting.

Management by objectives (MBO) is a management system in which specific performance goals are jointly determined by employees and their managers, progress toward accomplishing these goals is periodically reviewed, and rewards are allocated on the basis of this progress. Rather than using goals only as controls, MBO uses them to motivate employees as well. Management by objectives consists of four elements: goal specificity, participative decision making, an explicit time period, and performance feedback. Its appeal lies in its focus on employees working to accomplish goals they have had a hand in determining.

In a short essay, define planning and discuss the characteristics of formal planning as it is used in various organizations.

Planning involves defining the organization's goals, establishing an overall strategy for achieving those goals, and developing a comprehensive set of plans to integrate and coordinate organizational work. It is concerned with both ends and means. In formal planning, specific goals covering a period of years are defined. These goals are written and known to organizational members.

In a short essay, describe the different classifications of plans.

Strategic plans are plans that apply to the entire organization, establish the organization's overall goals, and seek to position the organization in terms of its environment. Plans that specify the details of how the overall goals are to be achieved are called operational plans. Strategic plans tend to cover a longer time frame and a broader view of the organization. Strategic plans also include the formulation of goals whereas operational plans define ways to achieve the goals. Also, operational plans tend to cover shorter time periods. We define long-term plans as those with a time frame beyond three years. Short-term plans are those covering one year or less. Specific plans are plans that are clearly defined and that leave no room for interpretation. They have clearly defined objectives. There's no ambiguity and no problem with misunderstanding. The drawbacks of specific plans are that they require clarity and a sense of predictability that often do not exist. When uncertainty is high and managers must be flexible inorder to respond to unexpected changes, directional plans are preferable. Directional plans are flexible plans that set out general guidelines. They provide focus but don't lock managers into specific goals or courses of action. However, the flexibility inherent in directional plans must be weighed against the loss of clarity provided by specific plans. A single-use plan is a one-time plan specifically designed to meet the needs of a unique situation. In contrast, standing plans are ongoing plans that provide guidance for activities performed repeatedly. Standing plans include policies, rules, and procedures.

Debriefing your own sales staff is a good way to glean information about competitors.

TRUE

Firms can monitor, and potentially influence, proposed legislative and political changes through the use of lobbyists.

TRUE

One planning tool that emerged from the video game industry is virtual reality.

TRUE

There is a fine line between what is legal and ethical and what is legal but unethical.

TRUE

In a short essay, discuss the three planning contingency factors that influence the choice of plans and illustrate how these factors influence planning.

Three contingency factors affect planning: level in the organization, degree of environmental uncertainty, and length of future commitments. The planner's level in the organization is likely to determine whether the plan is more strategic versus more operational. For the most part, operational planning dominates managers' planning at lower levels of the organization, while at upper levels, planning is more strategy oriented. Environmental uncertainty is the second contingency factor. When uncertainty is high, plans should be specific, but more flexible. Under these conditions, managers may sometimes need to abandon an existing plan in favor of a new one. Under low uncertainty, management is more likely to adhere to existing plans. Lastly, the time frame of existing plans is likely to influence new and emerging plans. The more current plans affect future commitments, the longer the time frame is for which managers must plan.

In a short essay, describe how managers can effectively plan when the external environment is continually changing.

n an uncertain environment, managers want to develop plans that are specific, but flexible. Although this may seem contradictory, it's not. To be useful, plans need some specificity, but the plans should not be cast in stone. Managers must recognize that planning is an ongoing process. The plans serve as a roadmap although the destination may be changing constantly due to dynamic market conditions. They should be willing to change directions if environmental conditions warrant. This flexibility is particularly important as plans are implemented. Managers must stay alert to environmental changes that could impact the effective implementation of plans and make changes as needed. Keep in mind, also, that it's important to continue formal planning efforts, even when the environment is highly uncertain, in order to see any effect on organizational performance. It's the persistence in planning efforts that contributes to significant performance improvement. It seems that, as with most activities, managers "learn to plan" and the quality of their planning improves when they continue to do it. Finally, effective planning in dynamic environments means flattening the organizational hierarchy as the responsibility for establishing goals and developing plans is shoved to lower organizational levels because there's little time for goals and plans to flow down from the top. Managers must train their employees in setting goals and establishing plans and then trust that they will do so.