Chapter 11

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

** How efficiently an organization is using its resources

What is an operating budget?

A blueprint that states how managers intend to use organizational resources to achieve organizational goals efficiently

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

Current ratio

Which of the following steps of the organizational change process includes identifying obstacles to change?

Deciding on the change to make

What is the most immediate and potent form of behavior control?

Direct supervision

Which of the following is a mechanism of behavior control?

Direct supervision

_____ allows managers to become personally involved with their subordinates and mentor them.

Direct supervision

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

Establishing the standards of performance

Which of the following types of change is gradual, incremental, and narrowly focused?

Evolutionary change

An important characteristic of management by objectives is its non-participatory nature.

False

Behavior control tends to be the first type of control that managers at all levels use to evaluate performance.

False

In practice, managers can only measure the actual outputs that result from the behavior of their members and not the behaviors themselves.

False

The first step in the control process is to evaluate results in terms of performance standards.

False

The least powerful form of behavior control is direct supervision of a subordinate by a manager.

False

When you divide the organization's current assets by its current liabilities, the result is known as the times-covered ratio of the organization.

False

With bottom-up change, the emphasis is on making the changes quickly and dealing with problems as they arise; it is revolutionary in nature.

False

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

Focussing on only one standard instead of a hundred different standards

Which of the following describes stretch goals?

Goals that are specific and difficult but not out of reach

According to Lewin's force-field theory, what must an organization do to change?

Increase the forces for change and reduce resistance to change

Which of the following is true of direct supervision?

It is an expensive form of behavior control.

Which of the following is true of evolutionary change?

It is narrowly focused.

Which of the following is true of clan control?

It serves a dual function of keeping organizational members goal-directed while open to new opportunities.

Which of the following is an important reason for subordinates to participate in goal setting?

It strengthens subordinates' commitment to achieving goals and meeting budgets.

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

Liquidity ratios

Which of the following provides a framework to monitor progress toward achieving goals?

Management by objectives

Which of the following is true of the control process?

Managers can easily take corrective action when reasons for poor performance are identified.

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

Operating margin

_____ is the movement of an organization away from its present state toward some preferred future state to increase its efficiency and effectiveness.

Organizational change

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

Quick ratio

Which of the following cannot be measured easily?

The creativity of a research engineer

Which of the following is true of bureaucratic control and standardization?

Too many rules can stop employees from thinking for themselves.

As a part of the controlling process, managers monitor and evaluate the organization's strategy to see if it is working.

True

Assessing the need for change calls for two important activities: recognizing that there is a problem and identifying its source.

True

Bureaucratic control is control by means of a comprehensive system of rules and standard operating procedures.

True

The final step in the control process is to evaluate the results and bring about change as appropriate.

True

When managers personally supervise subordinates, they lead by example and help subordinates develop and increase their own skill levels.

True

When is an organization in a state of inertia?

When the forces are evenly balanced

According to the force-field theory:

a wide variety of forces arise from the way an organization operates that make organizations resistant to change.

The first step managers must take to manage change effectively is to:

assess the need for change.

The process of comparing one company's performance on specific dimensions with the performance of other high performing organizations is called benchmarking.

benchmarking

A change that is gradual, in which managers at all levels work together to develop a detailed plan for change, is called a(n) __________.

bottom-up change

Control by means of a comprehensive system of rules and standard operating procedures (SOPs) is known as:

bureaucratic control.

The control exerted on individuals and groups in an organization by shared values, norms, standards of behavior, and expectations is called:

clan control.

Once managers have measured actual performance, they should:

compare actual performance to the standards.

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.

control

As regional manager of KIM Corp., Dwight, is given an operating budget of $1 million for that financial year and is evaluated on the basis of the amount of goods produced based on that budget. Dwight's performance is evaluated on a(n):

expense budget approach.

Financial information provides managers with all the information required to measure the four building blocks of competitive advantage.

false

Output control and behavior control are appropriate for the most important and significant organizational activities.

false

The subjectivity of financial measures of performance is the reason why managers use them to measure the efficiency and effectiveness of their organizations.

false

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:

feedback control.

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:

feedforward control.

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:

feedforward control.

The final step in the control process is to:

initiate corrective action.

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

leverage ratio

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

measure actual performance.

An organization is said to be highly leveraged if it uses more debt than equity to finance its ongoing operations.

true

Control helps managers respond more effectively to customers.

true

Organizational culture functions as a kind of control system.

true