MGT Ch 9

Which of the following duties are primary responsibilities of a board of directors? (Check all that apply.)

Rigorously scrutinize strategic plans. Take control of the management succession process. Evaluate senior managers' performance.

Conflicts between controlling shareholders and minority shareholders are called principal-Blank______ conflicts.

principal

Which of the following has an indirect role as an external control mechanism?

the media

Which of the following would be the most likely to motivate employees to perform well on the job?

Being given the opportunity to lead a project

Which of the following is the agency theory perspective on CEO duality?

There should be a separation of power between the CEO and the chairman.

Boundaries and constraints play a valuable role in focusing Blank______.

a company's strategic priorities

Culture, rewards, and boundaries are key "levers" of Blank______ controls.

behavioral

Effective contemporary controls systems focus on Blank______.

constantly changing information

In a bureaucratic organization, Blank______.

desired behaviors can be specified in a detailed manner

One form of opportunistic behavior that managers exhibit is engaging in excessive product-market , which reduces their employment risk.

diversification

The leadership structure in which the CEO acts as both the chief executive officer and the chair of the board of directors is called CEO Blank______.

duality

Business groups are particularly dominant in which of the following?

emerging economies

Which of the following are characteristics of an effective reward system? (Check all that apply.)

enhances cohesion and commitment to goals reinforces basic core values. is perceived as "fair and equitable"

When controlling shareholders conduct activities that enrich the controlling shareholders at the expense of the minority shareholders, they are engaging in Blank______.

expropriation of minority shareholders

Government regulatory bodies, auditors, public activists, and the media are all Blank______ governance control mechanisms.

external

Which of the following provides external oversight of companies?

government regulatory bodies

The control process that continuously updates and challenges assumptions that underlie the organization's strategy is Blank______ control.

informational

The control system that addresses the assumptions that form the foundation of the organization is Blank______ control.

informational

The role of Blank______ control is to challenge the organization's beliefs and goals and to continuously monitor, test, and review strategies.

informational

Managers can reduce the need for organizational rules and regulations by hiring the right people, providing training, developing management role models, and creating Blank______ systems.

reward

Policies that specify who gets praised and recognized and why comprise the system.

reward or rewards

In today's complex competitive environment with weakened employee loyalties, the two levers of behavioral control that are the most effective are culture and

rewards or reward

For stable organizations with a largely unskilled workforce and a need to provide a consistent product or service, -based controls are the most important.

rule, regulation, or rule-based

Actions by large shareholders to protect their interests when they feel they are not receiving value maximization is called Blank______.

shareholder activism

Two means of monitoring the behavior of managers through corporate governance mechanisms are through a committed board of directors and Blank______.

shareholder activism

Corporate governance is the relationship among Blank______.

shareholders, managers, and the board of directors

The takeover constraint refers to the risk of being acquired by which of the following?

A hostile raider

______ deals with the relationship between principals (owners) and their agents (managers/employees).

Agency theory

______ are independent, certified professionals who verify the firm's books of accounts to unearth financial irregularities and ensure good accounting practices.

Auditors

______ are external control mechanisms that ensure that the firm's finances are in order and loan covenants are being followed.

Banks and analysts

Which one of the following is an attribute of effective short-term objectives?

Be specific and measurable

Which of the following statements about rewards systems are correct? (Check all that apply.)

Employees respond well to managerial praise and financial rewards. Employees feel rewarded when given new responsibilities. Employees often respond better over the long-term to nonfinancial motivators.

Which of the following statements are true regarding the role that culture plays? (Check all that apply.)

Employees who buy into a positive culture are less likely to exhibit selfish behavior. A strong culture can be more effective than the traditional rewards-and-threats system. Culture can lead to employees who are more engaged in their job and in the company as a whole.

True or false: A corporation's board of directors has little control over the amount bonuses and stock options that the corporation's CEO receives for his or her performance.

False

True or false: Research of boards of directors shows that simple restrictions, such as a requirement that a majority of the board members be outside directors, is enough to make the operations of the board effective.

False

Which of the following is the most likely to lead to superior financial performance of a company?

Good corporate governance

Which of the following are steps that organizations can take to evolve the organization from boundaries to rewards and culture? (Check all that apply.)

Hire the right people. Make training an important part of the organization. Develop a reward system that is clearly aligned with organizational goals.

Which of the following statements regarding informational control are correct? (Check all that apply.)

It deals with internal environment and the external strategic context. It considers assumptions that create the foundation for an organization's strategy. It reviews goal and strategies in the context of the current environment.

Which of the following statements regarding short-term objectives and actions plans are true? (Check all that apply.)

Short-term objectives should be specific, measurable, attainable, and challenging. Action plans play a critical role in implementing strategies. Organizations enhance their performance when objectives are difficult, yet achievable.

Which of the following are characteristics of a contemporary control system? (Check all that apply.)

The focus is on information that changes and may have strategic importance. The control system should spur ongoing discussion about underlying data and assumptions. The data generated are best interpreted and discussed in face-to-face meetings.

Which of the following is a way institutional investors engage in shareholder activism?

They act aggressively to protect and enhance their investments.

Which of the following are reasons incentives can go wrong in a company? (Check all that apply.)

They may lead to a dysfunctional outcome if the reward is too closely tied to an individual's work. They may cause issues between organizational departments due to differing goals. They can demotivate employees if compensation is not directly related to their actions.

Which of the following statements about external auditors are true? (Check all that apply.)

They often fail to catch accounting irregularities. They often have lucrative consulting contracts with the firms they audit.

The theory perspective on CEO duality is based on the separation of power.

agency

Managers consider both external and internal factors to determine how to achieve appropriate control over the individuals who work for the organization.

behavioral, behavior, behavorial, behavioural, or behaviorial

The duties of the Blank______ involve reviewing the organization's financial objectives and major strategies, providing advice to top management, and reviewing systems to ensure compliance with laws and regulations.

board of directors

The type of behavior control used in an organization is often based on internal and Blank______ controls.

external

Which of the following are defense tactics of businesses seeking to avoid hostile takeovers? (Check all that apply.)

greenmail golden parachutes poison pill

Which of the following result from differences in reward systems across organizational units? (Check all that apply.)

hoarding of information employees working at cross-purposes loss of cohesiveness

The two types of strategic control in the contemporary approach are Blank______.

informational and behavioral

The two central aspects of strategic control are Blank______ control and Blank______ control.

informational; behavioral

Which of the following is an external control mechanism in which shareholders dissatisfied with a firm's management sell their shares?

market for corporate control

Which of the following are external governance control mechanisms? (Check all that apply.)

market for corporate control banks and analysts auditors

Principal—principal conflicts are conflicts between controlling shareholders and Blank______ shareholders.

minority

A system of shared values and beliefs that shape a company's people, organizational structure, and control systems to produce behavioral norms is Blank______.

organizational culture

Which term describes a provision a company might adopt that makes it less attractive to someone attempting a hostile takeover?

poison pill

Public corporations must disclose financial information to government bodies such as the Securities and Exchange Commission.

regulatory or regulation

A system that focuses and motivates employee efforts on high-priority tasks is called a Blank______ system.

reward

Enhanced cohesion and reinforcement of basic core values are part of an effective Blank______ system.

reward

Rule-based controls are most appropriate for organizations that have which of the following? (Check all that apply.)

stable and predictable environments great need for consistency in product and services unskilled and interchangeable employees

The Blank______ approach to strategic control is sequential.

traditional

Agency theory is concerned with Blank______.

verifying agents' performance

Which of the following are components of the unity-of-command perspective on CEO duality? (Check all that apply.)

A CEO has a clear focus on both objectives and operations. A CEO can act more efficiently and effectively when holding both positions. Confusion and conflict between the CEO and chairman is eliminated.

Which of the following are ways that a board of directors can incentivize managers to make decisions that are in the company's shareholders' interest? (Check all that apply.)

By requiring CEOs become substantial owners of company stock By dismissing poor performing CEOs and other senior managers Through structured salaries, bonuses, and stock options to provide rewards for superior performance over a long-term horizon

Which of the following is the best description of the expropriation of minority shareholders?

Controlling shareholders have personal gains that exceed their losses from their firm's lowered performance

Which of the following statements regarding controls in a bureaucratic organization are correct? (Check all that apply.)

Controls depend on employees following a formalized set of rules and regulations. Employees are expected to complete their tasks in a specific manner.

Which of the following statements are true about the traditional approach to strategic control? (Check all that apply.)

It is also referred to as "single-loop" learning. It is based on a feedback loop comparing performance to a predetermined goal. It is often tied to an annual planning cycle.

Which of the following statements about CEO duality is true?

It is one of the most controversial issues in corporate governance.

What are reasons for emphasizing culture and rewards in a system of behavior controls? (Check all that apply.)

Organizations are downsizing and faced with an increased need to coordinate across boundaries. There are no long-term contacts between the organization and its key employees. The competitive environment is complex and unpredictable.

Which of the following are part of the traditional approach sequence? (Check all that apply.)

Performance is measured against the predetermined set of goals. Strategies are formulated and goals are set by top management. Strategies are implemented.

Which of the following are appropriate conditions for using the traditional approach to strategic control? (Check all that apply.)

The environment is relatively simple. The environment is stable. Goals and objectives can be measured with certainty.

______ is one external mechanism that provides a solution to opportunistic behavior by managers.

The market for corporate control

True or false: A strong culture can be a primary source of competitive advantage.

True

In the traditional approach to strategic control, control is based on Blank______.

comparing actual performance to a predetermined goal

Which of the following is an effective technique for maintaining organizational culture?

storytelling

Which of the following are attributes of an effective board of directors? (Check all that apply.)

Directors rigorously evaluate senior managers, the company's strategic plan, and new senior management hires. Directors are actively involved. Directors provide strong oversight.

Which of the following statements about creating and maintaining a strong organizational culture are true? (Check all that apply.)

Storytelling is a way to reinforce an organization's culture. A strong commitment by leaders is critical to maintaining a strong organizational culture. A strong organizational culture takes time to cultivate.

True or false: Unity-of-command advocates believe that a CEO can act more efficiently and effectively when holding the positions both of CEO and chairman of the board.

True

Agency theory is concerned with resolving which of the following problems that can occur in agency relationships? (Check all that apply.)

conflict between the goals of the principals and agents differences in the attitudes of principals and agents regarding risk difficulty in verifying what the agent is actually doing

Informational and behavioral control are two types of control in the Blank______ approach to strategic control.

contemporary

Shareholder activism and an involved and committed board of directors are mechanisms of Blank______.

corporate governance

The relationship between various participants, including shareholders and management, in determining the direction and performance of corporations is called Blank______.

corporate governance

A mechanism created to allow different parties to contribute capital, expertise, and labor for the benefit of each party is called a(n) Blank______.

corporation

In a(n) Blank______, shareholders have limited liability as well as limited involvement with the business' operations.

corporation

The set of unwritten standards of acceptable behavior in an organization is called organizational

culture

Which of the following are examples of how managers can exhibit opportunistic behavior? (Check all that apply.)

Taking on excessive product-market diversification through corporate acquisitions Shirking responsibilities Engaging in on-the-job consumption by spending large sums on executive luxuries

An example of the role that public activists have played as an external control mechanism is pressuring companies to refuse to deal in valuable minerals known as minerals, which rebel groups trade to buy weapons.

conflict

Which of the following has a fiduciary duty to ensure that the company is run consistently with the long-term interests of the business owners or shareholders and to act as an intermediary between the shareholders and management?

board of directors

Hiring the right people, training, management role models, and rewards are part of evolving from Blank______ to culture.

boundaries

The three elements of behavioral control are culture, rewards, and Blank______.

boundaries

A set of firms that, though legally independent, are bound together by informal and formal ties and are accustomed to taking coordinated action are known as Blank______.

business groups

Which of the following actions that can have a positive influence on the dynamics of the boards of directors? (Check all that apply.)

choosing directors who have time to dedicate to their duties on the board building in the right expertise on the board

Informational control and behavioral control are two central aspects of Blank______ control.

strategic

The risk of being acquired by a hostile raider is often referred to as the Blank______ and deters opportunistic behavior by management.

takeover constraint

The traditional approach is the most appropriate approach when Blank______.

the objectives can be measured, goals are simple, and the environment is stable

Which of the following statements are true regarding the role that good corporate governance plays on the decision to invest in companies? (Check all that apply.)

The premium is larger for firms in countries where corporate governance is highly valued. Positive governance practices often lead to superior financial performance. Major institutions often choose to purchase stock of companies known for their good corporate governance practices.

Which of the following statements about stock analysts are true? (Check all that apply.)

They are often more optimistic than they should be and do not often make "sell" recommendations. They conduct ongoing studies of the firms they follow. They make recommendations to their clients to buy, hold, or sell.

Rules that specify behaviors that are acceptable and unacceptable are called Blank______.

boundaries and constraints