Principles of Management CLEP

Preparation of which of the following is the most logical first step in developing an annual operating plan? (A) A sales forecast by product (B) A production schedule by product (C) A flow-of-funds statement by product (D) A plant and equipment requirement forecast (E) A pro forma income statement and balance sheet

(A) A sales forecast by product

Which of the following is the primary purpose of the management-by-objectives (MBO) approach? (A) Aligning goal setting and planning (B) Creating a dynamic and complex work environment (C) Reducing employee resistance to change (D) Implementing standard operating procedures (E) Implementing a decision rule to respond to a designated problem

(A) Aligning goal setting and planning

What forecasting technique involves soliciting best-guesses and opinions from a broad variety of experts and then summing or averaging their responses? (A) Delphi technique (B) Group summation analysis (C) Oswald-Baker scenario assessment (D) Strategic averaging (E) Team thinking unanswered

(A) Delphi technique

Which of the following organizational designs groups employees by what they do? (A) Functional (B) Product (C) Geographic (D) Market (E) Authority-centered

(A) Functional

In accordance with Herzberg's 2-factor theory, which factor can demotivate but are not likely to motivate employees? (A) Hygiene factors (B) Motivational promoters (C) Motivators (D) Pressure factors (E) Barrier factors

(A) Hygiene factors

Which of the following is most commonly used to measure the total productivity of a company? (A) The ratio between total outputs and total inputs (B) The ratio between fixed costs and variable costs (C) The ratio between contribution margin and total revenue (D) The ratio between the break-even point and total output (E) The ratio between total inputs and total capital

(A) The ratio between total outputs and total inputs

Which of the following terms best describes leaders who guide or motivate their followers in the direction of established goals by stressing rewards and the consequences of not conforming to expectations? (A) Transactional (B) Transformational (C) Charismatic (D) People-oriented (E) Informal

(A) Transactional

The use of transactional leadership is based on the concept of which of the following? (A) Using rewards and coercive power (B) Stressing intrinsic motivators (C) Creating team-based goal setting (D) Using peer-based performance evaluations (E) Implementing employee involvement plans

(A) Using rewards and coercive power

Large organizations are likely to structure their work operations and personnel in any of the following ways EXCEPT (A) accounting (B) divisional (C) geographic (D) market (E) product

(A) accounting

Praise received from an employee's peers is best described as an example of (A) an extrinsic reward (B) an intrinsic reward (C) low valence (D) high instrumentality (E) high directive leadership

(A) an extrinsic reward

The process of discovering relationships and patterns in large amounts of data is called data (A) mining (B) clustering (C) encryption (D) networking (E) warehousing

(A) mining

The number of subordinates who directly report to a superior refers to the manager's (A) span of control (B) organizational role (C) organizational structure (D) chain of command (E) general staff

(A) span of control

The span of control most appropriate in a given organization is primarily influenced by which of the following? (A) Types of services or products being produced (B) Amount of supervision needed by subordinates (C) Amount of authority given to a supervisor (D) Number of hierarchical levels within the organization (E) Presence of work teams

(B) Amount of supervision needed by subordinates

According to equity theory, after an employee receives a reward for performance, what is the next step the employee takes in the motivation process? (A) Negotiating new valued rewards for the next performance period (B) Comparing the reward with a self-selected comparison group or person (C) Reducing productivity briefly while enjoying the earned reward (D) Expecting an increase in future rewards (E) Working harder than he or she did previously

(B) Comparing the reward with a self-selected comparison group or person

A home builder dominates a market by offering attractive options, higher quality, and value-added services. Which of the following competitive strategies has the homebuilder adopted? (A) Cost leadership (B) Differentiation (C) Price leadership (D) Generic (E) Organizing

(B) Differentiation

The manager most famous for developing the earliest model of management functions, which led to the modern POLC model we use today is: (A) Robert Decker (B) Henri Fayol (C) Abraham Maslow (D) Henry Ford (E) Peter Drucker

(B) Henri Fayol

Job enrichment can be an effective tool to achieve which of the following? (A) Better communication (B) Increased job responsibility (C) Improved work relations (D) Teamwork (E) Shared decision making

(B) Increased job responsibility

Which of the following practices enhances job content by building into the job more motivating factors such as responsibility, achievement, recognition, and personal growth, as advocated by Frederick Herzberg? (A) Job enlargement (B) Job enrichment (C) Job rotation (D) Job reengineering (E) Job intensification

(B) Job enrichment

The management process that involves motivating people to work hard to reach organizational goals is: (A) Planning (B) Leading (C) Controlling (D) Developing (E) Organizing

(B) Leading

Which of the following best describes the situation in which an employee arrives for work on time in order to avoid being placed on probation for a second time? (A) Positive reinforcement (B) Negative reinforcement (C) Extinction (D) Intermittent reinforcement (E) Cognitive learning

(B) Negative reinforcement

Under what circumstances is transactional leadership least likely to be effective? (A) Periods of stability (B) Periods of great change and uncertainty (C) Within a closely-knit group (D) When employees are poorly motivated (E) In an assembly-line production operation

(B) Periods of great change and uncertainty

Intrinsic rewards can be classified as rewards that do which of the following? (A) Allow the employee to establish flexible working hours. (B) Provide a sense of achievement and accomplishment. (C) Create work coordination among all employees. (D) Improve communication effectiveness. (E) Allow greater span of control.

(B) Provide a sense of achievement and accomplishment.

What piece of US law requires a corporation to publish a corporate code of ethics? (A) Knowles-Taylor Ethics Act of 1986 (B) Sarbanes-Oxley Act (C) Public Law 2782 on Corporate Ethics (D) Executive Order 27-82, "The Ethics Order" (E) The Foreign Corrupt Practices Act

(B) Sarbanes-Oxley Act

Which of the following describes the critical path in a Program Evaluation and Review Technique (PERT) process? (A) Parts that require the most costly materials (B) The most time-consuming sequence of events and activities (C) The shortest route to the project completion (D) The central guideline for quality control (E) The property insurance

(B) The most time-consuming sequence of events and activities

The practice in large companies of establishing autonomous divisions whose heads are entirely responsible for what happens in the division is referred to as (A) management by exception (B) decentralization of authority (C) delegation of authority (D) integration (E) informal organization

(B) decentralization of authority

Expectancy theory tells us that employees will only be motivated by a promised reward (A) if they cannot get a better promise elsewhere (B) if they expect to be able to achieve the goal and earn the reward (C) if they personally trust the manager who has promise the reward (D) if they have earned the reward in the past (E) if the reward depends only on their own hard work

(B) if they expect to be able to achieve the goal and earn the reward

The hierarchy of needs theory argues that deficiency needs must be met before the push to satisfy growth needs drives personal growth. The individual most commonly associated with this theory is (A) Peter Drucker (B) Henri Fayol (C) Abraham Maslow (D) Elton Mayo (E) F. W. Taylor

(C) Abraham Maslow

Which of the following management activities is most typically described as a controlling function? (A) Goal setting (B) Purchasing (C) Budgetary review (D) Staffing (E) Recruiting

(C) Budgetary review

Which of the following people is associated with the development of the Theory X and Theory Y model? (A) Abraham Maslow (B) Elton Mayo (C) Douglas McGregor (D) Frederick Taylor (E) Lillian Gilbreth

(C) Douglas McGregor

In the Generic Competitive Model, which of these would describe a competitor who concentrates on a small market niche and attempts to offer products to that niche at the lowest price? (A) Generic Cost Leader (B) Generic Differentiated Competitor (C) Focused Cost Leader (D) Focused Differentiated Competitor (E) Niche Price Competitor

(C) Focused Cost Leader

Which generic competitive strategy targets a very specific niche market and offers customers a unique set of product benefits? (A) Cost leadership (B) Focused cost leadership (C) Focused differentiation (D) Focused market strategy (E) Product development

(C) Focused differentiation

Which of the following best describes managerial ethics? (A) It is the social obligation that the individual manager has to fulfill. (B) It is a statement of the social responsibility of the organization. (C) It is the standard of conduct that guides a person's decisions and behavior. (D) It is the mission statement of the organization. (E) It is a behavior that conforms to legal principles of justice.

(C) It is the standard of conduct that guides a person's decisions and behavior.

The statement that describes an organization's reason for being is best described as: (A) Vision statement (B) Statement of purpose (C) Mission Statement (D) Operating goal (E) Strategic plan

(C) Mission Statement

Which of the following words is NOT a step in the management process? (A) Planning (B) Leading (C) Producing (D) Controlling (E) Organizing

(C) Producing

What curve shows the progress of sales of a new product from initial launch to final decline? (A) BCG Matrix (B) Product Adoption Curve (C) Product Life Cycle Curve (D) Product sales forecast (E) The Leaman Curve

(C) Product Life Cycle Curve

Which of these is a strategic planning tool that allows the assessment of an organization's strengths and weaknesses in responding to possible external events? (A) Strength assessment (B) Event Analysis Technique (EAT) (C) SWOT Analysis (D) Capacity Review (E) Strategic Assessment

(C) SWOT Analysis

Which of the following models classifies products as stars, question marks, cash cows, or dogs? (A) Porter's five forces model (B) Theory X (C) The Boston Consulting Group Matrix (D) Theory Y (E) Kanban

(C) The Boston Consulting Group Matrix

Very tightly-coupled control requires close constant feedback and frequent management corrections. What perception can this produce among employees? (A) confidence in management (B) a sense of belonging and trust (C) a sense of distrust and micromanagement (D) that management is keeping secrets from employees (E) that management is unaware of what is going on in the organization unanswered

(C) a sense of distrust and micromanagement

If a manager announces a casual-dress policy on Fridays and then comes to work dressed casually on the following Friday, this is an example of (A) planning (B) organizing (C) leading (D) controlling (E) negative reinforcement

(C) leading

McGregor's Theory Y states that workers (A) naturally dislike work and avoid it when possible (B) have lower capacity for intrinsic motivation than do managers (C) naturally enjoy work and see it as a source of fulfillment and satisfaction (D) should be monitored closely while performing critical tasks (E) naturally distrust managers and seek independence

(C) naturally enjoy work and see it as a source of fulfillment and satisfaction

The ratio of output to input gives a measure of (A) proficiency (B) effectiveness (C) productivity (D) operations management (E) quality control

(C) productivity

Frederick Taylor is considered a pioneer in the school of management referred to as the (A) management process school (B) empirical school (C) scientific management school (D) behaviorist school (E) social system school

(C) scientific management school

The break even point is defined as the level of production at which (A) fixed costs are covered by revenue (B) variable costs are covered by revenue (C) total revenue is sufficient to cover total costs (D) marginal revenue equals marginal cost (E) the law of diminishing returns is activated

(C) total revenue is sufficient to cover total costs

A performance-appraisal method that utilizes evaluation information from supervisors, employees, and coworkers is known as (A) paired-comparison feedback (B) programmed-feedback decision (C) behaviorally anchored rating scale (D) 360-degree feedback (E) graphic rating scale

(D) 360-degree feedback

Which of the following is the primary concern of employees responsible for strategic planning in a company? (A) Monitoring daily cash flow (B) Determining the contribution each subunit should make to the overall corporation (C) Determining how to accomplish specific tasks with available resources (D) Determining how to pursue long-term goals with available resources (E) Preparing the annual statement

(D) Determining how to pursue long-term goals with available resources

Which competitive strategy from Porter's generic model uses unique product aspects to convince customers to pay a higher price? (A) Cost leadership (B) Focused cost leadership (C) Focused marketing (D) Differentiated competition (E) Advertising model

(D) Differentiated competition

What economic principle describes the reduction of unit costs that come when the number of units produced is increased? (A) Economic return (B) Econometric analysis (C) Economic development (D) Economies of scale (E) Competitive advantage

(D) Economies of scale

According to Maslow, the need to feel genuinely respected by peers, both in and out of the work environment, is included in which of the following need classifications? (A) Physiological (B) Safety (C) Stability (D) Esteem (E) Self-actualization

(D) Esteem

Who among the following was important in the scientific management field for promoting motion studies? (A) Max Weber (B) Henri Fayol (C) Abraham Maslow (D) Frank and Lillian Gilbreth (E) Henry Ford

(D) Frank and Lillian Gilbreth

What piece of US law requires a corporation to publish a corporate code of ethics? (A) ISO 9000 (B) ISO 10000 (C) ISO 12000 (D) ISO 14000 (E) ISO 16000

(D) ISO 14000

Which of the following is the most accurate description of a grapevine in an organization? (A) It is a constant source of disruptive information. (B) It follows the chain of command. (C) It can be suppressed once it is recognized. (D) It plays an important role in organizations. (E) Most managers believe that it is a positive source of information.

(D) It plays an important role in organizations.

What aspect of job design involves adding tasks to a job to make it more variable and more interesting? (A) Job enhancement (B) Job expansion (C) Job inflation (D) Job enlargement (E) Job enrichment

(D) Job enlargement

Which type of decision typically involves extensive data collection and detailed analysis? (A) Programmed decision (B) Critical decision (C) Time-sensitive decision (D) Non-programmed decision (E) group decision

(D) Non-programmed decision

Which of the following pairs of functions of management are most closely interdependent? (A) Staffing and organizing (B) Staffing and controlling (C) Planning and leading (D) Planning and controlling (E) Disciplining and recruiting

(D) Planning and controlling

A manager decides to lay off 10 percent of the workforce and justifies the action by noting that 90 percent still have jobs and the company will remain solvent. This manager has utilized which of the following views of ethics? (A) Rights view of ethics (B) Theory of justice view of ethics (C) Integrative social contracts view of ethics (D) Utilitarian view of ethics (E) Golden rule view of ethics

(D) Utilitarian view of ethics

A type of control device for assessing the progress of planned activities and the expenditure of resources allocated to their accomplishments is referred to as (A) a strategic plan (B) an organizational chart (C) a tactical plan (D) a budget (E) a proposal

(D) a budget

A large span of control throughout an organization invariably results in (A) low morale (B) high morale (C) an excess workload for each manager (D) a flat (horizontal) organizational structure (E) a tall (vertical) organizational structure

(D) a flat (horizontal) organizational structure

Which organizational approach is most to provide standardization and efficiency/lower cost? (A) Decentralized (B) Informal (C) Geographic (D) Virtual (E) Centralized

(E) Centralized

Which of the following should be the first step in a decision-making process? (A) Implementing a decision (B) Assigning the problem to qualified personnel (C) Considering all alternatives (D) Knowing when to decide (E) Defining the problem

(E) Defining the problem

Which of the following best illustrates informal organization? (A) Line authority, such as that of the field marshal and battalion commander in the military (B) Staff authority, such as that of personnel or cost control in manufacturing (C) Functional authority, such as corporate supervision of the legal aspect of pension plans in branch plants (D) Groupings based on position titles (E) Groupings based on such factors as technical ability, seniority, and personal influence

(E) Groupings based on such factors as technical ability, seniority, and personal influence

Which of the following is NOT an external environment force on an organization? (A) Sociocultural trends (B) Technology (C) Economy (D) Political trends (E) Human resources

(E) Human resources

Decentralization tends to be encouraged by which of the following business trends? I. Product diversification II. Telecommuting III. Geographical expansion of operations (A) I only (B) II only (C) III only (D) I and III only (E) I, II, and III

(E) I, II, and III

Which of the following is NOT an input, according to equity theory? (A) Effort (B) Experience (C) Education (D) Seniority (E) Pay Incentives

(E) Pay Incentives

In Michael Porter's five forces model of global environmental scanning, which of the following is one of the five forces? (A) Sociocultural factors (B) Inflation (C) Technology transfer (D) Material artifacts of culture (E) Power of suppliers

(E) Power of suppliers

Which of the following control techniques is most likely to emphasize the importance of time? (A) Break-even charts (B) Physical standards (C) Quality circles (D) Variable budgeting (E) Program Evaluation and Review Technique (PERT)

(E) Program Evaluation and Review Technique (PERT)

Which of the following is a quantitative technique that can be used to predict employee performance based on such factors as education, seniority, job-related skills, and job satisfaction? (A) Time-series analysis (B) Econometric modeling (C) Sales force composition (D) Econometric indicators (E) Regression modeling

(E) Regression modeling

The preparations that a small town might make for a visit by the President of the United States would be considered what type of plan? (A) Strategic (B) Directional (C) Standing (D) Long-term (E) Single-use

(E) Single-use

Which of the following basic leadership styles most closely matches the "high structure, low consideration" of the Ohio State leadership studies? (A) Country club (B) Team (C) Selling (D) Relationship motivated (E) Telling

(E) Telling

Which type of leadership depends on the possession of a "magnetic" personality and the ability to attract followers based on your personal characteristics? (A) Transactional (B) Participative (C) Laissez-faire (D) Group-dominant (E) Transformational

(E) Transformational

Which of the following theories of motivation states that people are demotivated by rewards that are perceived as unfair? (A) Expectancy theory (B) Hierarchy of needs theory (C) Justice theory (D) Theory X (E) equity theory

(E) equity theory

Professional Management

- Recognized management as learned skills - Allowed workers a role in decisions - Managers were taught, not born

Henri Fayol 1888

Administrative Management - Developed 14 points for management - still relevant today • Described 5 functions of management Founder of "modern" management

In marketing, the demand for a product is directly influenced by: -Customers' desire for a product -Customers' ability to obtain a product -Both customers' desire for a product and customers' ability to obtain a product -Availability of a product

Both customers' desire for a product and customers' ability to obtain a product

A market in which product availability exceeds demand is called a: -Black market -Seller's market -Free market -Buyer's market

Buyer's market

Which of the following countries is not part of NAFTA? United States Canada China Mexico

China

Program Evaluation and Review Technique (PERT)

Critical Path = 12 days

Data Tools Data mining = Discovers relationships in large amounts of data Regression Modeling = Quantitative tool to predict future events

Data mining = Discovers relationships in large amounts of data Regression Modeling = Quantitative tool to predict future events

A consumer's credit score is directly influenced by which of the following factors? - Debt repayment history - Employment history over the last five years - Marital status - Income level

Debt repayment history

Project Management

Getting something done in the short term, as quickly and effectively as possible

SWOT Analysis Strengths Weaknesses Opportunities Threats

Internal Factors: Strengths What you can do better than your competitors Weaknesses What you do worse than your competitors External Factors: Opportunities Things that could help you in the future Threats Things that could hurt you in the future

Decision Types Programmed = Non-Programmed =

Lower risk and always made in the same way Higher risk and require deep analysis before making

Sales Forcasting Plan C

Never Guess Alone Delphi Technique - Really just a method of improved guessing. Ask a number of people to guess, then average their results. All forecasts are actually guesses about the future. We cannot eliminate the uncertainty

Which of the following is not a responsibility of the Securities and Exchange Commission (SEC)? Investigating insider trading Setting interest rates Regulating securities Processing applications for initial public offerings (IPOs)

Setting interest rates

Sales Forecasting Plan B

Simulation - Uses a computer model to test the results of a decision before it hits the real word. Simulations can be very complex or very simple.

Which of the following is not a part of Maslow's hierarchy of needs? Safety Self-actualization Esteem Supply and demand

Supply and demand This hierarchy is part of Maslow's theory that once people satisfy basic needs like food, water, and physical security, they begin to pursue needs higher up the hierarchy, like social acceptance, self-esteem, and self-actualization.

Strategic Management

The development of a strategy and the use of it in planning longterm

An employee earns $2,000.00 per month in gross pay, but pays $104.36 for health insurance, 9% in federal taxes, 3% for state taxes, and 2% for local taxes. What is the employee's net pay? $1,720.00 $1,615.64 $2,000.00 $1,630.25

The employee's net pay, or total take-home pay after deductions, is $1,630.25. This is calculated by first subtracting the employee's health insurance, which is pre-tax, from the gross pay of $2,000 ($2,000 - $104.36 = $1,895.64) and then subtracting the employee's taxes (totaling 14% of $1,895.64, or $265.39) to yield $1,630.25.

Competitive Advantage

The first step in developing strategy and a strategic plan The thing that makes your organization uniquely competitive

A command economy is characterized by: - Businesses commanding all aspects of the economy - The government controlling prices and production - A moderate amount of government intervention in the economy - A laissez-faire approach by the government

The government controlling prices and production A command economy (also known as a planned economy) is characterized by the government controlling nearly all aspects of the economy, including prices and production. This type of economy is traditionally associated with Communist economies where prices, wages and production quotas are set by the government. The other answer choices are all incorrect because they imply some form of private sector autonomy.

Rational =

Tries to Optimize based on all available data and analysis

Bounded Rational =

Tries to Satisfice based on the first working solution that comes

The Sarbanes-Oxley Act of 2002: - Vastly reduced the financial reporting obligations that corporations face - Deregulated public utilities - Was intended to fight corporate and accounting fraud - Reduced tariffs on trade among North American countries

Was intended to fight corporate and accounting fraud

Upon which organization does the international community primarily rely to deal with claims of unfair protectionism by one country against another? - North Atlantic Treaty Organization (NATO) - World Trade Organization (WTO) - International Red Cross (IRC) - Organization of Petroleum Exporting Countries (OPEC)

World Trade Organization (WTO)

1933 - Elton Mayo

decides that employees' informal relationships affect how they perform.

Cost leadership

is a battle for scale where having the lowest cost is your only competitive advantage

Scientific Management

studying workers to find the most efficient ways of doing things and then teaching people those techniques Pioneered by Frederick Taylor • Tried to improve productivity • Useful in manufacturing and mining • Frank & Lillian Gilbreth conducted time and motion studies • Measured the time it took for workers to perform an action

Porter's 5 Forces

• Increased Buyer or Seller power • Arrival of new competitors • Development of substitutes • Intensifying rivalry

Externals

• Markets • Economies • Societies • Technologies • Competitors • Governments

Human Relations Movement

• Recognized the limitations of Scientific Management • Explained how social factors affect performance - Behaviorist school • Famous for the "Hawthorne Studies"