CIA Test Bank IV

Which of the following is considered a disadvantage of electronic communication? I. Information overload. II. Misrepresentation of feelings and emotions. III. Reduced transmission time. IV. Lack of paper trail. a. I and II only. b. II and IV only. c. I, II, and III only. d. I, II, III, and IV.

A. I and II Correct. Information overload and misrepresentation of feelings and emotions are considered drawbacks of electronic communication. Information overload, such as numerous electronic mail messages, may lead to lost time and inefficiencies, and is considered a drawback of electronic communication. II. Correct. Electronic mail cannot accurately convey the feeling and tone intended by the person initiating the communication and may be misinterpreted by the receiver. This is considered a drawback of electronic communication. III. Incorrect. Reduced transmission time is considered a positive result of electronic communication. IV. Incorrect. Electronic communication generally results in an adequate paper trail (such as saved "sent mail").

Which of the following is an indicator of interpersonal skills that are necessary for members of a team? I. Routinely keeps superiors, team members, and other appropriate parties informed of significant developments. II. Spends sufficient time cultivating contacts with peers to obtain timely information or resolve issues outside formal channels. III. Routinely assumes an appropriate amount of work or responsibility for group projects. a. I only. b. I and II only. c. II and III only. d. I, II, and III.

B. I, II. Correct. Items I and II are elements of interpersonal skills that include interaction, cooperation, and ability to deal with people. III. Incorrect. Item III is an element of team participation.

Which of the following is a basic force that drives industry competition and which, when combined with other competitive forces, determines the ultimate profit potential in the industry? I. Threat of new entrants. II. Bargaining power of suppliers. III. Favorable access to raw materials. IV. Product differentiation. a. I only. b. I and II only. c. III and IV only. d. I, II, III, and IV.

B. I, II. Correct. These are two of the five basic forces that drive industry competition. The others are bargaining power of buyers, threat of substitution, and rivalry among current competitors. III. Incorrect. Labor unrest and material shortages are short-run factors that affect access to raw materials and may therefore affect competition and profitability, but these are not among the five basic forces driving competition. IV. Incorrect. This is one of the six major sources of barriers to entry. The others are economies of scale, capital requirements, switching costs, access to distribution channels, and government policy.

The method of principled negotiation is based on which of the following principles? I. Separate the people from the problem. II. Focus on positions, not interests. III. Invent options for mutual gain. IV. Insist on using subjective criteria. a. I and II only. b. I and III only. c. I, II, and III only. d. II, III, and IV only.

B. I, III. Correct. The principled negotiation method is based on focusing on basic interests, mutually satisfying options, and fair standards. The basic principles include: · Separate the people from the problem. · Focus on interests, not positions. · Invent options for mutual gain. · Insist on using objective criteria. II, IV. Incorrect. See answers I and III.

Governments restrict trade in order to: I. Foster national security. II. Develop new industries. III. Protect declining industries. IV. Increase tax revenues. a. I and IV only. b. II and III only. c. I, II, and III only. d. II, III, and IV only.

C. I, II, III. Correct. The government normally restricts trade in order to foster national security, develop new industries, and protect declining industries. IV. Incorrect. Increasing tax revenues would not be an impetus for governments to restrict trade, because tax revenues would decrease with lessened trade.

Which of the following is a strategy that companies can use to stimulate innovation? I. Source from the most advanced suppliers. II. Establish employee programs that reward initiative. III. Identify best practice competitors as motivators. IV. Ensure that performance targets are always achieved. a. I only. b. II and IV only. c. I, II, and III only. d. I, II, III, and IV.

C. I, II, III. Correct. These strategies will challenge the organization to upgrade and improve and will also reward employees for innovation. IV. Incorrect. A focus only on performance outcomes will discourage employees from taking risks and hence hinder innovation.

Which of the following are conditions for a successful mentoring relationship? I. The relationship should be aimed at improvement of the mentee. II. The relationship should be based on growth of the mentee. III. The pairing of mentor and mentee should be voluntary. IV. Mentoring requires a positive work environment. a. I and II only. b. III and IV only. c. I, II, and III only. d. I, II, III, and IV.

C. I, II, and III I. Correct. Goals should include improved job performance and career potential. II. Correct. Growth, not creating dependency, is the desired outcome. III. Correct. Many mentoring programs failed when pairings were not voluntary. IV. Incorrect. Mentoring can be helpful in all work environments.

Which of the following costs does management need to consider when introducing a new product or substituting a new product for an existing one? I. Costs of retraining employees. II. Costs of acquiring new ancillary equipment. III. Write-offs due to undepreciated investment in old technology. IV. Capital requirements for changeover. a. I and III only. b. I, II, and IV only. c. II, III, and IV only. d. I, II, III, and IV.

D. I, II, III, IV. Correct. Costs that management should consider would include costs of retraining employees; costs of acquiring new ancillary equipment; write-offs of undepreciated investments in the old technology; capital requirements and research and development costs of the changeover; and costs of modifying interrelated stages of production or related aspects of the business.

A firm has a strategic business unit (SBU) that has a low market share in a high growth market. To maintain even this low share of the market requires the firm to commit a significant amount of cash. The firm might successfully adopt a build strategy for this unit if the: I. SBU shows a strong potential to grow and obtains a significant share of the market. II. Firm can finance its growth. III. Firm expects a short-term increase in cash flow. IV. Firm is willing to forego short-term earnings. a. I only. b. II and III only. c. III and IV only. d. I, II, and IV only.

D. I, II, IV. Correct. A firm may adopt a build strategy for this type of strategic business unit (SBU) if the SBU shows a strong potential to grow, if the firm is willing to forego short-term earnings and cash flow, and if the firm is willing and has the capacity to finance its growth. III. Incorrect. A firm that expects a short-term increase in cash flow may adopt either a divest or a harvest strategy but not a build strategy because this type of SBU needs a lot of cash flow to finance its growth.

Which of the following is a cultural aspect that typically makes international and intercultural communication more difficult? I. Long distances between sender and receiver. II. Body language. III. Language. IV. Attitude. V. Time. a. I and III only. b. II and V only. c. I, IV, and V only. d. II, III, IV, and V only.

D. II, III and IV II. Correct. Body language and other forms of non-verbal communication may have different meanings in different cultures. III. Correct. Language is frequently a cause of miscommunication because all parties may not have mastery of the language. IV. Correct. Attitudes, such as stereotypes, may cause misunderstandings. V. Correct. Time is a barrier to international communication because different cultures regard and use time differently. I. Incorrect. Communication difficulties due to long distances separating senders and receivers have been minimized by electronic communication such as electronic mail, fax, and teleconferencing.

Which of the following is true regarding groupthink? a. There is a tendency to conform to the majority's will and to ignore relevant individual input that is at variance with group opinion. b. The group is not required to reach consensus. c. The extent of groupthink is proportional to the size of the group. d. There are too many alternatives generated to facilitate decision making.

Solution: a a. Correct. Groupthink refers to the tendency to conform to the majority's will when there is individual input that is at variance with the group opinion. Groupthink is a concept that refers to faulty decision making in a group. Groups experiencing groupthink do not consider all alternatives, and they desire unanimity at the expense of quality decisions. Groupthink occurs when groups are highly cohesive and when they are under considerable pressure to make a quality decision. b. Incorrect. Consensus is desirable, even with groupthink. c. Incorrect. Groupthink is not limited to groups of only certain sizes, and the degree of groupthink is not in proportion to the group size. d. Incorrect. There are few or no alternatives addressed under groupthink.

Which of the following conflict resolution techniques has the goal of maintaining harmonious relationships by placing another's needs and concerns above one's own? a. Accommodation. b. Compromise. c. Collaboration. d. Avoidance.

a. Correct. Accommodation is a resolution technique that has the goal of maintaining harmonious relationships.

When negotiating with an analytical personality, the negotiator should: a. Present facts and precedents in an organized manner. b. Push the other party for quick closure of negotiations. c. Focus on creating a bond with the other party. d. Include unimportant items in the proposal for bargaining.

a. Correct. An analytical person tends to be drawn to details and swayed by factual information. b. Incorrect. Pushing an analytical person may result in increased resistance. c. Incorrect. Analytical personalities make decisions based on facts rather than on emotions. d. Incorrect. The analytical person tends not to enjoy negotiation games as much as other personality types. If the other party believes the negotiator to be deceitful, they may be unwilling to cooperate or even stop negotiations altogether.

Keeping a conflict from surfacing at all is an example of following which conflict management strategy? a. Avoidance. b. Defusion. c. Containment. d. Confrontation.

a. Correct. An avoidance strategy aims to resolve the conflict by ignoring it or imposing a solution. It is appropriate if the conflict is trivial or if quick action is needed to prevent the conflict from arising. b. Incorrect. Under a defusion strategy, an attempt is made to deactivate the conflict and to cool the emotions involved. It is appropriate where a temporary measure is needed or when the groups have a mutually important goal. c. Incorrect. In a containment strategy, some conflict is allowed to surface but it is carefully contained by spelling out which issues are to be discussed and how are they to be resolved. d. Incorrect. In a confrontation strategy, all issues are brought out in the open and conflicting groups directly confront the issues and each other in an attempt to reach a mutually satisfactory solution.

During the introduction stage of an innovative product, sales growth is normally slow due to: a. Expensive sales promotion. b. High competition. c. Overproduction. d. Available alternatives.

a. Correct. At the introduction stage, expensive sales promotion needs to be undertaken in order to educate the consumer and develop market acceptance. b. Incorrect. At the introduction stage, competitors do not tend to enter in the product market. c. Incorrect. At the introduction stage, overproduction is unlikely and would not affect sales growth. d. Incorrect. At the introduction stage, not many alternatives are available.

In some regions of the world, business is conducted more often through personal relationship building than through legal contracts. This is an example of a: a. Cultural factor. b. Commercial factor. c. Technical factor. d. Legal factor.

a. Correct. Attitudes, tastes, behavior, and social codes are the components of the cultural factors. This is therefore an instance of a cultural factor. b. Incorrect. Distribution, customization, and responsiveness comprise the commercial factors. c. Incorrect. Standards, spatial presence, transportation, and languages constitute the technical factors. d. Incorrect. Regulation and national security issues constitute the legal factors.

Globalization assists in achieving economies of scale, which is a: a. Cost benefit. b. Timing benefit. c. Learning benefit. d. Arbitrage benefit.

a. Correct. Cost benefits are obtained from economies of scale owing to standardization of products and/or processes, as well as increased bargaining power over suppliers of raw materials, components, and services. b. Incorrect. Timing benefits are obtained due to coordinated approaches in product launching in the early stages of the product life cycle. c. Incorrect. Learning benefits accrue from the coordinated transfer of information, best practices, and people across subsidiaries. d. Incorrect. Arbitrage benefits accrue from the advantages that a global company can gain by using resources in one country for the benefit of a subsidiary in another country

A production team has worked well together for several years. However, severe arguments have recently occurred between two members of the team, and other members have begun to take sides, causing a negative effect on production performance. The best leadership style for the manager in this situation is: a. Directive. b. Supportive. c. Participative. d. Achievement-oriented.

a. Correct. Directive leadership provides the highest subordinate satisfaction when a team encounters substantive internal conflict. b. Incorrect. Supportive style is best when tasks are highly structured, and there is a low level of stress and strife. c. Incorrect. Participative style is most useful when subordinates feel that they control their own destinies. d. Incorrect. Achievement-oriented style is optimal for situations in which tasks are ambiguously structured.

Which of the following is an example of choosing which information is to be presented in order to ensure that the presenter is seen in the best possible light? a. Filtering. b. Selective perception. c. Emotion. d. Language choice.

a. Correct. Filtering involves the sender of a message manipulating information so that it will be seen more favorably by the receiver. b. Incorrect. Selective perception involves the receivers selectively interpreting what they see or hear based on their interests, background, experience, and attitudes. c. Incorrect. Emotions affect the interpretation of the message, not the contents. d. Incorrect. Choice of language involves the personal selection of words to communicate the same message without distorting it.

What is a primary disadvantage of forcing another party to accept terms in a negotiation? a. Damage of the relationship between the negotiators. b. Lack of achievement of the negotiator's goals. c. Increased time involved in reaching an agreement. d. Reduction in internal support for the negotiator's tactics.

a. Correct. In future negotiations, the forced opponent will be less likely to work with the negotiator to achieve mutual goals. Negotiations in which one or both parties feels they must win at the expense of the other party ultimately do not build a relationship of trust and cooperation. b. Incorrect. The negotiator has achieved the goals of this negotiation. c. Incorrect. Often a collaborative approach to a negotiation will take longer due to the time taken in understanding the other party's needs and concerns and then resolving the issue to the benefit of both parties. d. Incorrect. This may or may not be the case, depending on the organization's preferred style of negotiating.

Capacity expansion is also referred to as: a. Market penetration. b. Market development. c. Product development. d. Diversification.

a. Correct. Market penetration is growth of existing products and/or development of existing markets. b. Incorrect. Market development seeks new markets for current products. c. Incorrect. Product development involves launching new products to existing markets. d. Incorrect. Diversification is launching new products for new markets.

When performing a successful negotiation, a negotiator should: a. Understand the implications for both sides if the negotiation fails. b. Concentrate solely on the issues in the negotiation. c. Not deviate from stated positions. d. Depend on the initial research prepared for the negotiation.

a. Correct. Negotiators should assess the best alternatives for both themselves and the other parties to determine their relative strength in the negotiation process. If alternatives are not readily available or are unattractive, a party is under additional pressure to make the negotiation work. b. Incorrect. Issues outside of the conflict itself may impact the negotiations. c. Incorrect. Flexibility may assist the negotiator in identifying alternatives. d. Incorrect. Additional research may be required to fully understand the other party's alternatives to negotiation.

When initiating international ventures, an organization should consider cultural dimensions to prevent misunderstandings. Which of the following does not represent a recognized cultural dimension in a work environment? a. Self-control. b. Power distance. c. Masculinity versus femininity. d. Uncertainty avoidance.

a. Correct. Personal mastery or self-control is a personal dimension rather than a cultural one. b. Incorrect. Power distance is a cultural dimension referring to the extent to which power is distributed unequally among individuals. c. Incorrect. Masculinity versus femininity is a cultural dimension referring to the dominance of assertiveness and acquisition of things (labeled masculine) versus concern for people, feelings, and the quality of life (labeled feminine). d. Incorrect. The extent to which one feels threatened by ambiguous situations and avoids conflict is a cultural dimension called uncertainty avoidance.

The belief that successful leadership occurs when the leader's style matches the situation is the basis for: a. The contingency approach to leadership. b. The managerial-grid model of leadership. c. A behavioral approach to leadership. d. An achievement-oriented approach to leadership theories.

a. Correct. The contingency approach is based on the principle that there is no one best way of leadership. According to that principle, the effective leadership style or behavior depends on the situation requirements. Therefore, the leader's style has to be matched to the situation either by changing the leader or changing the leader's behavior. b. Incorrect. The managerial-grid model is based on the assumption that the team management style is the most effective regardless of the situation. It therefore does not fit with the contingency view of leadership. c. Incorrect. The behavioral approach does not focus on the situation or the match between the leader and the situation. Instead the focus is on identification of leadership behaviors. The issue of contingent behaviors (matching behaviors to the situation) is not central to the behavioral approach. d. Incorrect. An achievement-oriented approach involves setting challenging goals and is not contingent on the situation

The concurrent action of basic competitive forces as defined by Porter's model determines the: a. Long-term profitability and the competency intensity of the industry. b. Barriers that potential players must face to enter the industry. c. Rivalry within the industry. d. Strategy that a company should follow to achieve its objectives.

a. Correct. The impact of Porter´s five forces determines the competency intensity and the potential profitability of the industry, where the profitability is measured in terms of long-term return on capital invested. b. Incorrect. The entrance barrier is one of the five forces that should be measured to define the competency intensity and the potential profitability. c. Incorrect. Rivalry is one of the five forces that should be measured to define the competency intensity and the potential profitability. d. Incorrect. The analysis of the five forces is only one step in the definition of the strategy.

Which of the following factors would encourage entry into an existing market? a. Governmental subsidy for new investors b. High product differentiation, principally produced by trademarks c. Knowledge of the industry, with high investments in development d. Low exit fixed costs

a. Correct. The subsidies for new players weaken the entrance barriers of the industry, allowing new players to get into the industry and producing a higher rivalry among more competitors. b. Incorrect. The differentiation of products is considered an entrance barrier that discourages potential new players to get into the industry (because they are incapable of offering a comparable product) while protecting the industry's profitability. c. Incorrect. The learning period of the industry is an asset that new players must acquire. This cost in some cases becomes extremely high and may discourage new players from entering the industry. d. Incorrect. Low exit fixed costs produce an easy exit players when they decide to leave the industry, but exit costs would not particularly encourage entry of new players.

A leader who explains decisions and provides opportunity for clarification is described as having which type of leadership style? a. Selling. b. Telling. c. Participating. d. Delegating.

a. Correct. This is a description of a selling style of leadership. b. Incorrect. A telling leadership style provides specific instructions and closely supervises performance. c. Incorrect. A participating leadership style encourages the sharing of ideas and facilitates decision making. d. Incorrect. A delegating leadership style turns over responsibility for decisions and implementation.

Which of the following is a social trend affecting an organization? a. Changes in the labor markets. b. Tougher legislation to protect the environment. c. Rising inflation. d. Replacements for steel in cars and appliances.

a. Correct. This is a social trend. b. Incorrect. This is a political trend where the government is involved. c. Incorrect. Inflation is connected with the economy; hence, this is an economic trend. d. Incorrect. This represents a technological trend.

A project coordinator for a large capital project used a brainstorming session of the senior project managers to decide how to get the project back on schedule. A disadvantage of this approach is that: a. Responsibility for the decision will be unclear. b. Only situational factors will be addressed. c. Creativity will be decreased. d. Diversity of views will be decreased.

a. Correct. This is one of the major disadvantages of group decision making. b. Incorrect. This tendency does not depend on the fact that the problem is approached through group decision making. c. Incorrect. An advantage of group decision making through brainstorming is that creativity is increased. d. Incorrect. An advantage of group decision making through brainstorming is that it increases the diversity of views.

While negotiating a contract with a supplier's representative, a manager encounters unexpected resistance. The manager should first: a. Attempt to determine the reason behind the resistance. b. Stop the meeting and address the representative's concerns privately. c. Restate the manager's position regarding the issue. d. Determine the representative's views and requirements by researching the supplier.

a. Correct. Without knowing the reason for the resistance, the negotiator is unable to effectively counter it. For example, knowing whether the other party is concerned about the overall issue or a particular piece will impact the negotiator's response. b. Incorrect. Generally, a resolution should be attempted at the time. Only if one or both parties to the negotiation need additional time to evaluate new information or calm down should a break be taken. c. Incorrect. The negotiator should first work with the other party to determine the cause of disagreement. d. Incorrect. Research regarding the other party should occur prior to the initial negotiation meeting.

Multinational companies are better poised to manage their overseas tax liability by: a. Declaring lower profits in countries with lower taxation levels. b. Declaring higher profits in countries with lower taxation levels. c. Charging higher prices for components in countries with lower taxation levels. d. Charging lower prices for components in countries with higher taxation levels.

a. Incorrect. Declaring lower profits in countries with lower taxation will not achieve the tax objective. b. Correct. Declaring higher profits in countries with lower tax levels will reduce tax liability. c. Incorrect. Charging higher prices will reduce both income and tax liability, which is not the optimum situation. d. Incorrect. Lower prices will cause higher earnings and higher tax liability.

A manufacturing company produces plastic utensils for a particular market segment at the lowest possible cost. The company is pursuing a cost: a. Leadership strategy. b. Focus strategy. c. Differentiation strategy. d. Containment strategy.

b. Correct. A cost focus strategy aims to be a cost leader for a particular market segment. a. Incorrect. Cost leadership is being the lowest-cost producer in the industry as whole. c. Incorrect. Cost differentiation aims at providing a product at different costs in different market segments. d. Incorrect. Cost containment aims at controlling costs related to a particular product or market.

Which of the following is the best measure of productivity to use to evaluate several departments in a large retail store? a. Number of customers served per employee per day. b. Revenue per square foot. c. Number of units sold per department per day. d. Average number of units stocked per month per department.

b. Correct. A critical output of interest is revenue per square foot. The floor space in the store is a limited resource whose productivity should be analyzed a. Incorrect. This is not the best measure to use. For example, a department that sells books may serve a lot of customers or sell many units, but that does not mean that it is more productive than a department that sells furniture. c. Incorrect. See answer "a". d. Incorrect. The number of items stocked in a given department says nothing about productivity.

A matrix organization would be most appropriate for a: a. Company operating a set of geographically dispersed telephone call centers that provide technical support. b. Company that starts several complex, multidisciplinary engineering and construction projects each year. c. Retail company that sells to customers through multiple stores, located in shopping malls, as well as through a Web site and mailed catalogs. d. Company that provides temporary staffing to a wide variety of commercial and governmental agencies.

b. Correct. A matrix organization that would assign specialists as needed to various projects would be appropriate for such a company. a. Incorrect. Individuals assigned to work in one call center would have only one supervisor, who would be located in that call center. c. Incorrect. While multi-channel sales requires coordination, there is no reason to believe that staff would be moved from one sales channel to another for project work, or that they would report to two different supervisors. d. Incorrect. Temporary staff do not report to any manager within a temporary agency - they simply work for a wide variety of employers, who have full authority. They are not necessarily specialized staff, and if not needed, they are simply not paid.

When compared to individuals, groups have advantages and disadvantages for decision making. Which of the following is true regarding group decisions? Advantage (A) Disadvantage (D) a. A - Increased personal accountability D - Disagreements do not surface because of pressures to conform b. A - Increased acceptance of a decision by participants D - More time needed to arrive at a decision c. A- Less time needed to arrive at a decision D - Lack of personal accountability d. A - Increased diversity of expertise D -Reduced acceptance of decision by participants

b. Correct. An advantage of group decision making is that those who participated in a group process are more likely to accept and support the group's decisions. A disadvantage is that it takes more time to arrive at a decision in a group, compared to an individual making a decision. a. Incorrect. Group decisions lead to a lack of personal accountability.

The opportunity for cost reductions would be greatest in which stage of the product life cycle? a. Introduction stage. b. Growth stage. c. Maturity stage. d. Decline stage.

b. Correct. As long as an individual is a Certified Internal Auditor, he or she should be guided by the profession's Code of Ethics in addition to the organization's code of conduct. Rule of Conduct 2.2 of the IIA Code of Ethics would preclude such a gift because it could be presumed to have influenced the individual's decision. a. Incorrect. Acceptance of the gift could easily be presumed to have impaired independence and thus would not be acceptable. c. Incorrect. See answer "b". d. Incorrect. See answer "b". Further, there is not sufficient information given to judge possible violations of the organization's code of conduct. However, the action could easily be perceived as a kickback.

A backward integration strategy is most appropriate when the firm's current suppliers are: a. Highly reliable. b. Not reliable. c. Geographically dispersed. d. Geographically concentrated.

b. Correct. Backward integration is appropriate when the firm's current suppliers are unreliable. a. Incorrect. There is no need of backward integration if the firm's current suppliers are highly reliable. c. Incorrect. Backward integration is a form of vertical integration that involves the purchase of suppliers in order to reduce dependency. The location of the suppliers is not an issue. d. Incorrect. See answer "c".

Which of the following statements best describes a market synergy? a. Technology transfer from one product to another. b. Bundling of products distributed through the same channels. c. Production of multiple products at one facility. d. Use of complementary management skills to achieve entry into a new market

b. Correct. Bundling of products, distribution through the same distribution channels, or usage of the same sales force are examples for market synergies. a. Incorrect. Technology transfer constitutes technology synergy. c. Incorrect. The production of multiple products at one production facility is an example of cost synergy. d. Incorrect. Using complementary management skills is an example of management synergy.

An employee's need for self-actualization would be met by: a. Attractive pension provisions. b. Challenging new job assignments. c. Good working conditions. d. Regular positive feedback.

b. Correct. Challenging new job assignments would meet an employee's self-actualization needs. a. Incorrect. Attractive pension provisions would meet an employee's physiological needs. c. Incorrect. Good working conditions would meet an employee's physiological needs. d. Incorrect. Regular positive feedback would meet an employee's esteem needs.

During the growth stage of the product life cycle: a. Quality of products is poor. b. Quality of products continuously improves. c. There is little difference between competing products. d. Quality of products becomes more variable and products are less differentiated.

b. Correct. During growth stage of the product life cycle, product reliability becomes more important. A, C, D. Maturity stage

Which of the following is the most significant reason that domestic governments and international organizations seek to eliminate cartels? a. Increased sales prices reduce the amount of corporate tax revenues payable to the government. b. True competition keeps prices as low as possible, thus increasing efficiency in the marketplace. c. Small businesses cannot survive or grow without government protection. d. The economic stability of developing countries depends on a global free market.

b. Correct. Governments and international organizations seek to protect consumers and the health of the domestic and global economy through anti-cartel efforts. a. Incorrect. Because an increased sales price would raise corporate profits, the tax revenue lost through eliminating cartel activity would serve as a disincentive to government anti-cartel efforts. c. Incorrect. Although the effect of cartel activities may be harmful to small businesses, the greatest impact is on the overall economy. d. Incorrect. While a free market may contribute to the stability of developing countries' economies, this does not provide a compelling reason for domestic anti-cartel efforts in industrialized countries.

In which of the following situations would a narrower span of control be more appropriate? a. Managers do not spend a great deal of time on planning or strategic management. b. Managers must spend a great deal of time coordinating with other managers. c. Subordinates work in the same area, rather than being geographically dispersed. d. Work performed by subordinates is substantially identical.

b. Correct. If substantial coordination were required, a manager would benefit from reduced supervision requirements. In addition, increased coordination implies that the work performed by subordinates is not standardized. a. Incorrect. If substantial planning were required, a manager would benefit from reduced supervision requirements. Also, increased planning implies a changing environment, where work of subordinates will be changing over time, requiring significant managerial work for training. c. Incorrect. Geographically dispersed subordinates would justify a narrow span of control. d. Incorrect. With very similar work, subordinates can train one another, provide backup if one subordinate is not present, and verify one another's work. In addition, work procedures are relatively easy to document and a manager can be knowledgeable about the work of everyone doing something similar.

Just-in-time production: a. Reduces the dependency on suppliers. b. Reduces the cost of implementing new strategies. c. Decreases production facility flexibility. d. Increases the need for a dependable workforce.

b. Correct. JIT production can reduce the cost of implementing new strategies. a. Incorrect. Just-in-time (JIT) production can increase dependency on suppliers. c. Incorrect. JIT production will increase the flexibility of production facilities. d. Incorrect. JIT production would not affect the need to for a dependable workforce.

Following a decision to change the composition of several work teams, management encounters significant resistance to the change from members of the teams. The most likely reason for the resistance is: a. Possible inefficiencies of the new arrangement. b. The breakup of existing teams. c. Understaffing for the tasks involved. d. The selection of a more costly approach to performing the assigned tasks.

b. Correct. Members of cohesive work groups often exert pressure to resist changes that threaten to break up the group. a. Incorrect. Complaints about "why it will not work" virtually always represent an "acceptable" roadblock to a plan that has unacceptable behavioral consequences. c. Incorrect. Issues of under- or over-staffing for a task represent symptoms of resistance to change, but not the actual or root cause of the problem. d. Incorrect. Citing cost factors also represents an "acceptable" rationale to block the implementation of a new approach.

Which of the following is vital to maintaining team empowerment? a. Provide structure to team members. b. Monitor progress and offer timely feedback on performance. c. Reduce authority of the team when mistakes are made. d. Avoid tension and conflict within the team.

b. Correct. Monitoring and feedback are vital to maintaining the right level of empowerment. a. Incorrect. Team members seek structure at the beginning of team development, before empowerment. c. Incorrect. A tolerance for problems and mistakes is part of empowerment. d. Incorrect. Tension and conflict are a normal part of team development.

Which of the following is generally true regarding a manager's span of control? a. Narrow spans of control are typically found in flat organizations, which have few hierarchical levels. b. An organization with narrow spans of control needs more managers than one with wider spans of control. c. Wider spans of control mean higher administrative expense and less selfmanagement. d. Wider spans of control help ensure good internal controls and policy compliance throughout an organization.

b. Correct. Narrow spans of control mean that the ratio of those supervised (subordinates) to those performing the supervision (managers) is lower. a. Incorrect. Narrow spans of control are typically found in tall organizations with many more levels. c. Incorrect. Narrow spans of control result in higher administrative expense and less selfmanagement. d. Incorrect. Wider spans of control allow subordinates more discretion.

Which of the following strengthens and increases acceptable behavior by termination or withdrawal of undesirable consequences? a. Positive reinforcement. b. Negative reinforcement. c. Reward. d. Punishment.

b. Correct. Negative reinforcement strengthens the response and increases the probability of repetition of avoiding undesirable consequences of any action. a. Incorrect. Positive reinforcement strengthens and increases behavior by the presentation of a desirable consequence. c. Incorrect. A reward is simply something that the person who presents it deems to be desirable. d. Incorrect. Negative reinforcement strengthens and increases behavior while punishment weakens and decreases behavior.

Nationalism, expropriation, and terrorism are best categorized as examples of: a. Economic risk. b. Political risk. c. Operational risk. d. Environmental risk.

b. Correct. Political risk is the likelihood that political forces will cause changes in the country's business environment that will hurt the profit and other goals of the company. Nationalism, expropriation, and terrorism are all examples of political risk. a. Incorrect. Economic risk is the likelihood that economic mismanagement will cause changes in the country's business environment that will hurt the profit and other goals of the company. c. Incorrect. Operational risk is uncertainty of non-financial events that may result in failure of the organization and related financial losses. d. Incorrect. Environmental risk is the uncertainly and severity of the impact of potential environmental hazards.

Which of the following traits is the most important in order to succeed as a project manager? a. Budgeting and accounting knowledge. b. People management skills, such as conflict resolution and negotiation. c. Statistical analysis and process design experience. d. Strategic management tools and training.

b. Correct. Projects are outside the normal organizational hierarchy or chain of command, so a project leader cannot rely on direct authority to accomplish what must be done by the various parts of an organization that are participating in a project. a. Incorrect. Projects are ad hoc and temporary, and most challenges involve people and technical/technology issues. c. Incorrect. Statistical analysis and process design are skills that, if necessary in a project, would be employed by a subordinate, not the project manager. d. Incorrect. Strategic management is long-term, broad-based, and starts with relatively few constraints other than existing resources organization-wide, while project management is shorter-term and focused on a project that has been approved with specific resources.

Which of the following is not an appropriate approach to team building? a. Ensuring a balance of complementary team roles. b. Choosing members based on their need to improve their skills. c. Developing clear and shared values. d. Selecting team members based on how they are likely to relate to each other.

b. Correct. Skill development is not a recognized approach and should not be the driver in team building. a. Incorrect. Role definition is a recognized approach to team building. c. Incorrect. Values development is a recognized approach to team building. d. Incorrect. Interpersonal relations is a recognized approach to team building.

A manager in a government agency supervises a section of clerical employees who review license applications for approval or denial. The clerical jobs are well-defined procedurally and are subject to government regulations. In this situation, what is the best leadership style for the manager? a. Directive. b. Supportive. c. Participative. d. Achievement-oriented.

b. Correct. Supportive style is best when tasks are highly structured, and the authority relationships are clear and bureaucratic. a. Incorrect. Directive leadership provides the highest subordinate satisfaction when a team encounters substantive internal conflict. c. Incorrect. Participative style is most useful when subordinates feel that they control their own destinies. d. Incorrect. Achievement-oriented style is optimal for situations in which tasks are ambiguously structured.

Which of the following management orientations is characterized by an organization's efforts to adapt the product and marketing program to each local environment? a. Ethnocentric. b. Polycentric. c. Geocentric. d. Regiocentric.

b. Correct. The company adapts itself to the local environment under a polycentric orientation. Examples include various subsidiaries of a multinational corporation. a. Incorrect. Ethnocentrism is characterized by a home-country orientation. The company focuses on its domestic market and sees exports as secondary. c. Incorrect. Geocentrism is based on the assumption that similarities in the world can be incorporated to form a global strategy. d. Incorrect. Regiocentrism is based on the assumption that similarities in the region can be incorporated into business objectives or strategies

In the product life cycle, the first symptom of the decline stage is a decline in a: a. Firm's inventory levels. b. Product's sales. c. Product's production cost. d. Product's prices.

b. Correct. The sales of most product forms and brands eventually drop. The decline may be slow or rapid. This is the first symptom of the decline stage. a. Incorrect. Decline in inventory levels is not the first symptom of the decline stage as it will occur only when production need will decline as a result of decline in sales. Also, a decline in inventory levels could be a result of a change to just-in-time production. c. Incorrect. Decline in production may be due to plant technological reasons or due to unavailability of raw materials in any stage of the product life cycle. d. Incorrect. Alteration in prices is a marketing decision. This action may be taken in the maturity stage in order to compete in the market. It is not a symptom of the decline stage.

An employee is technically outstanding and works well with customers, but is not good at leading a team. To improve the employee's performance, the employee should be: a. Put in charge of the biggest project; the only way to learn is by performing the task. b. Put in charge of small projects with set milestones and a fully trained staff. c. Sent to school for management theory classes. d. Left alone and given assignments that accentuate personal strengths and avoid personal weaknesses.

b. Correct. The size of the project, the firm guidance of milestones, and the strength of a fully trained staff will help the employee to succeed. Also, the staff will help to train the employee, who should learn some skills from this project and be ready for a slightly more challenging project. a. Incorrect. The employee is unprepared for a major challenge. The employee will most likely fail, and feelings of failure discourage development. c. Incorrect. This could be somewhat helpful, but theory is less likely to develop the skills of leadership than experience in a good situation. d. Incorrect. This would avoid short-term problems but would not help the employee develop the skills needed to move ahead.

Which of the following statements regarding approaches to conflict resolution is correct? a. Forcing is a style of managing conflict where the relationship is given more importance than individual goals, and goals are conceded in order to preserve relationships. b. Withdrawing is a style of managing conflict where personal goals and relationships are relinquished. It is regarded as a temporary solution because the problem and conflict continue to reoccur. c. Smoothing occurs when goals are highly important while the relationship is of minor importance. Goals are achieved at any cost. d. Compromising highly values goals and relationships. Conflicts are viewed as problems to be solved, and negotiators seek a solution that both achieves goals and improves relationships.

b. Correct. The withdrawing or avoiding style is viewed as staying away from the issues over which the conflict is taking place and from the people involved in the conflict. It is believed that it is hopeless to try to resolve conflicts and that it is easier to withdraw than face conflict. a. Incorrect. This is the smoothing style, where goals are conceded in favor of harmony and because it is believed that conflicts damage relationships. c. Incorrect. This is the forcing style, where opponents are forced to accept the solution. There is no concern with the needs of other people and the negotiation does not care if the solutions are acceptable or not. d. Incorrect. This is the confronting style, where solutions are sought to satisfy both parties and maintain relationship. It is also described as a collaborating or win-win style. It involves the conflicting parties meeting face-to-face and collaborating to reach an agreement that satisfies both parties.

Among the nonfinancial rewards to an employee, a paid vacation trip can best be categorized as: a. Social reward. b. Token award. c. Visual/auditory reward. d. Manipulatables.

b. Correct. These are normally non-recurring awards, showing appreciation for the role of the employee; other similar examples are gift coupons, stock options, early time off with pay, or dinner and theater tickets. a. Incorrect. Social rewards normally include acknowledgement of employee achievement through actions such as solicitation of advice. c. Incorrect. Examples of visual or auditory awards include a private office, book-club discussions, or redecoration of the work environment. d. Incorrect. Examples of manipulatables are gifts, such as desk accessories, watches, trophies, clothing, or rings.

Job instructions, official memos, and procedures manuals are examples of which type of organizational communication? a. Upward. b. Downward. c. Lateral. d. Diagonal.

b. Correct. They are examples of downward communication.

Which of the following is a market-oriented definition of a business versus a productoriented definition of a business? a. We make air conditioners and furnaces. b. We supply energy. c. We produce movies. d. We sell clothing.

b. Correct. This is a market-oriented definition as opposed to the product-oriented definition of "we sell gasoline."

When a multinational firm decides to sell its products abroad, one of the risks that it faces is that the government of the foreign market could charge the firm with dumping, which occurs when: a. A product sells at different prices geographically. b. A firm charges less than it costs to make a product in order to enter and win market share. c. Lower quality versions of a product are sold abroad in order to be affordable. d. Transfer prices are set artificially high in order to minimize tax payments.

b. Correct. This is the definition of dumping. a. Incorrect. This is the definition of grey markets.

For a multinational firm, which of the following is a disadvantage of an ethnocentric staffing policy in which all key management positions are filled by parent-company nationals? a. It significantly raises the compensation, training, and staffing costs. b. It produces resentment among the firm's employees in host countries. c. It limits career mobility for parent-country nationals. d. It isolates headquarters from foreign subsidiaries.

b. Correct. This is the key disadvantage of an ethnocentric staffing policy. a. Incorrect. This is a key disadvantage of a geocentric staffing policy, not an ethnocentric policy. Although relocation costs and higher compensation are required for expatriate managers in the ethnocentric strategy, it allows overall compensation structure to follow the national levels in each country, reducing the overall staffing costs. c. Incorrect. An ethnocentric staffing policy strategy limits career mobility of host-country employees, not parent-company employees. d. Incorrect. This is a disadvantage of a polycentric staffing policy

Which of the following would be a source of global competitive advantage? a. Low fixed costs. b. Production economies of scale. c. Weak copyright protection. d. Intensive local service requirements.

b. Correct. To the extent that production of each unit is cheaper than the last, this favors large concentrated producers on a global scale. (The archetypal example is oil refining.) a. Incorrect. Low fixed costs generally imply weak barriers to entry and consequent ability of local competitors to effectively engage against a larger global firm. c. Incorrect. Weak copyright protection or intellectual property rights enforcement would enable small local competitors to produce efficiently, if illicitly, in the short term. d. Incorrect. To the extent that a product requires local service, this dilutes the advantage of being a large and efficient global competitor.

A milk-producing company acquires its own dairy farms to supply milk. The growth strategy adopted by the company can be identified as: a. Horizontal integration. b. Vertical integration. c. Concentric diversification. d. Conglomerate diversification.

b. Correct. Vertical integration occurs when a company becomes its own supplier or distributor. a. Incorrect. Horizontal integration may be described as adding new products to existing markets or new markets to existing products. c. Incorrect. Concentric diversification occurs when a company adds new products which have technological synergies with the existing products. d. Incorrect. Conglomerate diversification means making new products for an entirely new class of customers.

Cross-training of employees in various functions is an example of job: a. Enlargement. b. Rotation. c. Enrichment. d. Redesign.

b. Correct. When work is becoming too routine, such training keeps staff from becoming bored. a. Incorrect. Job enlargement involves expanding a job horizontally. c. Incorrect. Job enrichment involves the vertical expansion of a job, to allow the worker to control planning, execution, and work evaluation. d. Incorrect. Job variety is not a work redesign option but rather a function of the job.

Which of the following would increase understanding of a complex and ambiguous situation confronted by an organization? I. Brainstorming. II. Polling. III. Lateral thinking. a. I only. b. I and III only. c. II and III only. d. I, II, and III.

b. I and III only I. Correct. By encouraging groups to identify novel or unusual contributions, brainstorming helps make all of the elements of a problem and its resolution visible. III. Correct. Lateral thinking explores different ways of looking at an issue, thereby increasing the likelihood of finding better solutions. II. Incorrect. By identifying views without further analysis, polling does not increase understanding of a complex situation.

A team member who focuses on the overall perspective and reminds others of the vision, mission, or goal of the team informally assumes the role of a: a. Contributor. b. Collaborator. c. Communicator. d. Challenger.

c. Correct. A communicator is a people-oriented member, is process-driven, and is an effective listener who plays the role of a facilitator and a consensus builder. a. Incorrect. A contributor is a task-oriented team member who provides the team with good technical information and data and pushes the team to set high-performance goals. b. Incorrect. A collaborator binds the whole team and is open and flexible to new ideas, willing to work outside the defined role, and willing to share the recognition and credit with other team members. d. Incorrect. A challenger is candid and open, questions the team goals, is willing to disagree with the team leader, and encourages well-conceived risk taking.

Globalization and localization are shaping the competitive structure of industries. The scenario contributing to the most competitive environment is when: a. Global forces dominate. b. Local forces dominate. c. Mix of global and local forces dominate. d. Neither global nor local forces dominate.

c. Correct. Competitiveness cannot be achieved without achieving the benefits of global Integration and coordination as well as the benefits of localization, which include flexibility, proximity, and quick response time. a. Incorrect. When global forces dominate, local adaptation and responsiveness are ignored. b. Incorrect. When local forces dominate, efficiency, speed, arbitrage, and learning are ignored. d. Incorrect. When neither of the forces dominates, a competitive positioning cannot at all be attained.

Which of the following represents the most significant impediment to merging customer databases across international boundaries? a. Response time. b. Taxation issues. c. Privacy regulations. d. Backup and recovery.

c. Correct. Country-specific privacy laws can be very stringent about customer data crossing borders. a. Incorrect. Response time is not a significant issue. b. Incorrect. Taxation is not the most significant issue. d. Incorrect. Backup and recovery are not significant impediments.

The price charged on a consistent basis for a specific product would most likely be lowest during which stage of the product life cycle? a. Introduction stage. b. Growth stage. c. Maturity stage. d. Decline stage.

c. Correct. During the maturity stage, competition is at its greatest, and costs are at their lowest; thus, prices would be at their lowest. a. Incorrect. During the introduction stage, there is little or no competition, so prices are at their highest. Also, costs are high in the introduction stage. b. Incorrect. During the growth stage, prices will be lower than during the introduction stage, but not as low as during the maturity stage. Costs are dropping and competitors are being added, but costs are not at their minimum and competitors are not at their maximum d. Incorrect. During the decline stage, there are few competitors, so prices can be raised. In addition, costs are on the rise because volume is declining.

Which of the following is an example of an efficiency measure? a. The rate of absenteeism. b. The goal of becoming a leading manufacturer. c. The number of insurance claims processed per day. d. The rate of customer complaints.

c. Correct. Efficiency is the ratio of effective output to the input required to achieve it. Insurance claims processed per day measures the output (claims processed) to the input (a day's work). a. Incorrect. This is not an efficiency measure because there is not any comparison of input to output. b. Incorrect. This is an example of effectiveness, not efficiency. d. Incorrect. This is not an efficiency measure because there is not any comparison of input to output.

An internal audit department adopts a training posture that provides training to management on fraud awareness, including an overview of the corporate fraud policy and hotline. This training posture best demonstrates that the internal audit department is taking which of the following leadership roles? a. Pathfinding, which focuses on "What is our purpose and how will we achieve it?" b. Aligning, which focuses on "How do we align systems and processes to achieve our purpose?" c. Empowering, which focuses on "How do we cultivate our people to have the right authority, responsibility, and commitment to help us best achieve our purpose?" d. Modeling, which focuses on "How do we demonstrate the values to convince others to follow us and take responsibility for achieving our purpose?"

c. Correct. Empowering is the best answer because fraud awareness training as noted in the question provides individuals with the information and guidance that they need to take responsibility and commit to tasks required to achieve a purpose. Fraud awareness training makes sure that they know the policy and know how to report suspected issues. a. Incorrect. Pathfinding addresses establishment of purpose, mission, and/or vision. b. Incorrect. While fraud awareness could be deemed part of the alignment process, it is not the best answer because it is only one component of an overall fraud program. d. Incorrect. Training does not involve modeling the behavior.

Which of the following describes a source of communication breakdown which occurs within an organization due to a sense of superiority by members of a particular culture over another? a. Perceptual problem. b. Stereotyping. c. Ethnocentrism. d. Uncertainty avoidance.

c. Correct. Ethnocentrism leads people to believe that they are best in every thing regardless of the topic under discussion. This spirit is promoted through the value structures and nationalistic spirit of the people. a. Incorrect. Perceptual problems stem from differences in each person's interpretation of reality. b. Incorrect. Stereotyping is a tendency to perceive another person as belonging to a particular or single class or category. d. Incorrect. Uncertainty avoidance refers to the extent to which people feel threatened by ambiguous situations and the degree to which they try to avoid these situations.

Which of the following is not characteristic of a mature industry environment? a. Consolidation. b. Competitive interdependence. c. Falling demand. d. Strategic focus on deterring entry of new competitors into the marketplace.

c. Correct. Falling demand is characteristic of declining industries. a. Incorrect. Consolidation is characteristic of a mature industry environment. b. Incorrect. Competitive interdependence is characteristic of a mature industry environment. d. Incorrect. Strategic focus on deterring entry of new competitors into the marketplace is characteristic of a mature industry environment

Which of the following is not an advantage of decentralization? a. Decisions are more easily made. b. Motivation of managers increases. c. Greater uniformity in decisions is achieved. d. Problems can be resolved immediately.

c. Correct. Increased uniformity in decisions is an advantage of centralization. a. Incorrect. Ease of decision making is an advantage of decentralization. b. Incorrect. Increase in managers' motivation is an advantage of decentralization. d. Incorrect. Immediacy of problem resolution is an advantage of decentralization.

When firms compete in different geographical locations or have multiple product lines that do not necessarily overlap, the most effective way of responding to an aggressive move by a competitor without directly triggering destructive moves and countermoves is to: a. Mislead the competitor into taking or not taking an action. b. Make a prior announcement of intended moves. c. Initiate a move in the market where the competitor is strong. d. Initiate direct aggressive moves.

c. Correct. Initiating a move in the market where the competitor is strong is a cross-parry. Crossparry is an effective way to indirectly signal displeasure and raise the threat of more serious retribution. a. Incorrect. Misleading other firms into taking or not taking an action to benefit the firm is a bluff. Bluff is a form of market signal that is not intended to be carried out. b. Incorrect. Market signal by a competitor that provides a direct or indirect indication of its intentions, motives, goals, or internal situation, is an indirect means of communicating in the market place and an essential input in competitor analysis. d. Incorrect. Direct aggressive moves are aimed at reducing the performance of significant competitors or threaten their goals and is likely to cause a counter move.

The opportunity for franchising comes from the ability to: a. Develop products. b. Differentiate products. c. Standardize products. d. Diversify products.

c. Correct. Standardizing products means to maintain the same product or standardize the production, operations, and facilities in different locations or markets. This standardization provides the opportunity for franchising. a. Incorrect. Developing products involves adding more value or features to the existing product. The opportunity for franchising is based on standardization of products. b. Incorrect. Differentiating products implies that the products are to be different in different markets. This is not generally the basis for franchising. d. Incorrect. Diversifying products means to deal in different, either related or unrelated, products. Franchising is usually based on standardization, rather than differentiation, of products.

In which of the following industry environments are franchising and horizontal mergers commonly used strategies? a. Emerging industries. b. Declining industries. c. Fragmented industries. d. Mature industries.

c. Correct. Strategies such as chaining, franchising, and horizontal mergers are commonly used in fragmented industries, because there are low barriers to entry. Companies in fragmented industries face many opportunities for differentiation but each opportunity for competitive advantage is small.

Which of the following actions taken by management would not be effective in motivating an employee to superior performance? a. Job enlargement. b. Job enrichment. c. Job security. d. Job rotation.

c. Correct. The absence of job security would lead to dissatisfaction but its presence would not lead to superior performance or job satisfaction. a. Incorrect. Job enlargement is a horizontal extension of the job, in order to span a larger part of the total production work. b. Incorrect. Job enrichment is a vertical extension of the job, in order to build greater responsibility, breadth of work, and challenge into a job. d. Incorrect. Job rotation would result in greater satisfaction because the employee has a greater understanding of the work process.

Which of the following theories includes the assertion that employees may be motivated by achievement of acceptance or esteem in the workplace? a. Equity theory. b. Expectancy theory. c. Needs hierarchy theory. d. Goal-setting theory.

c. Correct. The need theory suggests that employees have needs that they are motivated to satisfy in the workplace. a. Incorrect. The equity theory focuses on the balance between inputs and outcomes. b. Incorrect. The basis of the expectancy theory is that employees are only motivated to provide inputs if they believe a given level of outcome will result. d. Incorrect. The goal-setting theory is based upon the belief that employees have desires and aspirations, which result in goals that direct their behavior.

The three major factors favoring globalization are: a. Cultural, commercial, technical. b. Flexibility, proximity, adaptability. c. Political, technological, social. d. Ambition, positioning, organization.

c. Correct. These factors favor globalization by reducing trade barriers, reducing cost of coordination, increasing economies of scale, and encouraging standardization and global branding. a. Incorrect. These are the driving forces for localization, not globalization. b. Incorrect. These are the three benefits of localization. d. Incorrect. These are the determinants of a global business strategy.

Conflict arising as a result of a sales manager making delivery promises to customers that are incompatible with the low inventory levels maintained by the production manager is an example of which of the following types of interpersonal conflict? a. Personal differences. b. Information deficiency. c. Role incompatibility. d. Environmental stress.

c. Correct. This results from intra-individual role conflict and intergroup conflict as a result of functional responsibilities of managers that are interdependent in an interfunctional organization. a. Incorrect. These normally arise due to differences in upbringing, cultural and family traditions and socialization process. This source of conflict often becomes highly emotional and takes on moral overtures. b. Incorrect. This results from communication breakdown in the organization. This source of conflict is not emotionally charged, and once corrected, there is little resentment. d. Incorrect. These are amplified by a stressful environment where there exists scarce or shrinking resources, downsizing, competitive pressures, or high degrees of uncertainty.

Which of the following scenarios illustrates an organization that has become out of balance by focusing too much on efficiency rather than effectiveness? a. The job is not completed and resources are wasted. b. The job is completed but resources are wasted. c. The job is not completed but resources are not wasted. d. The job is completed and resources are not wasted.

c. Correct. This scenario illustrates an organization out of balance by focusing too much on efficiency. a. Incorrect. This scenario illustrates an organization out of balance by having no focus on either effectiveness or efficiency. b. Incorrect. This scenario illustrates an organization out of balance by focusing too much on effectiveness. d. Incorrect. This scenario illustrates an organization perfectly balancing efficiency and effectiveness.

In which of the following situations would organizational politics most likely have a significant impact? a. When space allocations are made according to objective criteria. b. When the budget allows for generous salary increases for all employees. c. When promotions are based on an employee's attitude. d. When performance outcomes are clearly stated and objective.

c. Correct. Use of subjective criteria, such as attitude, rather than objective criteria, such as job performance, allows organizational politics to have a greater impact. a. Incorrect. Use of objective criteria minimizes the potential impact of organization politics. b. Incorrect. When all employees benefit, organizational politics would have less impact than if decisions were being made that benefited some employees and not others. d. Incorrect. See answer "a".

Added-value negotiation is characterized by: a. One party approaching another with a proposal. b. A series of offers and counteroffers between the negotiating parties. c. One party approaching another with several proposals. d. One party quickly conceding to the demands of the other.

c. Correct. When using added-value negotiation techniques, the initiating party always offers several alternatives for negotiation so that the parties may reach a mutually beneficial solution. a. Incorrect. Traditional negotiation begins when one party approaches another with a proposal that suits their own needs, but when using added-value negotiation, the first party initiating negotiation will provide several proposals. b. Incorrect. Added-value negotiations avoid offers and counteroffers by focusing on mutually beneficial solutions. d. Incorrect. When using added-value negotiation techniques, neither party will concede to the demands of the other. Instead, added-value negotiators should make their best offer at the onset of negotiations.

Which of the following is an effective active listening technique? I. Summarizing. II. Clarifying. III. Evaluating. IV. Empathizing a. I and IV only. b. II and III only. c. I, II, and IV only. d. I, II, III, and IV.

c. I, II and IV I. Correct. Summarizing brings the discussion into focus and clarifies priorities. II. Correct. Clarifying content or process helps others explore the problem and make their ideas more concrete. IV. Correct. Empathizing shows that the listener understands how the other person feels and encourages them to express their feelings. III. Incorrect. Evaluating may curtail the presentation of views and lead another person to believe that the listener's mind is already made up.

Which of the following steps works against effective listening? a. Listening for the emotion in the situation. b. Asking good questions. c. Listening to the steps to reach a solution. d. Helping the speaker to complete the point.

d. Correct. By interrupting the speaker, even with good intentions, the listener may inhibit further communication and may be jumping to unwarranted conclusions. a. Incorrect. Listening for emotions enables the detection of strong emotions inhibiting rational problem resolution and the likelihood of consensus. b. Incorrect. Asking thoughtful questions shows that one is listening deeply and encourages people to arrive at their own solutions. c. Incorrect. Listening to how a person is solving the problem allows the provision of comments on process as well as content.

Which of the following is not an effective principle for guiding a manager's use of leadership techniques? a. Serve as a model of the behaviour expected from others. b. Value accountability. c. Value differences. d. Follow written procedures at all times.

d. Correct. Focusing on internal process is a habit of administration and not of leadership. a. Incorrect. Recursive leadership is important to gaining trust. b. Incorrect. This ensures high-value activities. c. Incorrect. Seeking synergies from diversity is an effective leadership habit.

Which of the following statements is true regarding organizational objectives? a. Objectives are not needed in order to set targets and direction. b. Objective setting is often a result of negotiation. c. Objectives are general statements of direction in line with a goal. d. Objectives need not be continually updated to reflect environmental changes.

d. Correct. Objectives need to be continually updated to reflect the environmental changes. a. Incorrect. Objectives are vital to target setting and establishing a sense of direction, without which unnecessary time and cost are incurred. b. Incorrect. Objective setting very often involves negotiation. c. Incorrect. Objectives are more precise statements of direction.

One of the keys to successfully redesigning jobs is: a. Creating autonomous work teams. b. Enlarging jobs by adding more tasks similar to those being performed. c. Rotating workers to different jobs to provide them with variety. d. Changing the content of jobs so that they fit workers' need for growth.

d. Correct. One of the major principles of successful job design and redesign is to take into account employee needs and skills and match them with jobs, or change their jobs to fit those needs and skills. a. Incorrect. Autonomous work teams are only one type of job enrichment and are not applicable in many situations. b. Incorrect. While enlarging jobs to add different tasks may be a motivating factor, adding more similar tasks does not fundamentally redesign jobs and may be demotivating if existing tasks are difficult or boring. c. Incorrect. Rotation does not fundamentally redesign jobs.

In the Boston Consulting Group (BCG) growthshare matrix, which strategy in the matrix describes large generation of cash and heavy investment needed to grow and maintain competitive positioning but net cash flow is usually modest? a. Cash cows. b. Question marks. c. Dogs. d. Stars.

d. Correct. Stars describe a business with a strong competitive position in the industry. The industry is robust and SBUs are highly attractive. Net cash flow is modest since investment is heavy although stars generate large amounts of cash. a. Incorrect. A cash cow generates more cash than it requires, providing funds to the corporation to invest in other ventures. b. Incorrect. Question marks deserve attention to determine if the venture is viable or not. The business is located in a growing industry but has not achieved a strong competitive position. c. Incorrect. Dogs describe a business situated in a low growth or declining industry and if not positioned strongly will be

The key component of an organization configured as a professional bureaucracy is the: a. Strategic apex. b. Technostructure. c. Line administration. d. Operating core.

d. Correct. The operating core is the key in a professional bureaucracy because of the emphasis on standardized skills. Professional bureaucracy engages people with standardized skill sets and allows them to function in an unsupervised manner. a. Incorrect. The role of strategic apex through direct supervision is limited, due to standardized skills in a professional bureaucracy. b. Incorrect. Technostructure's role of setting rules and procedures is limited, due to standardized skills in a professional bureaucracy. c. Incorrect. Line management's role of administering is limited, due to standardized skills in a professional bureaucracy.

A network organizational structure is one in which: a. An employee reports to two supervisors. b. Authority and responsibility are concentrated at the top of the organization. c. Labor is specialized. d. Major business functions are subcontracted to third-party providers.

d. Correct. The subcontracting of major business functions to others is a feature of network structures. a. Incorrect. This is a distinguishing feature of a matrix structure. b. Incorrect. This is a characteristic of centralization. c. Incorrect. This is a characteristic of bureaucracy.

After three years of steadily decreasing profits in spite of increased sales and a growing economy, which of the following is the preferred course of action for a chief executive officer to take? a. Set a turnaround goal of significantly increasing profits within two months. b. Reduce staff by 10 percent in every unit. c. Reduce staff in the nonvalue-adding functions by 20 percent. d. Encourage innovation at all levels and use an early retirement program to reduce staff size.

d. Correct. This is a long-term solution which contains the elements needed to counter organizational decline. a. Incorrect. This response illustrates two of the characteristics of organizational decline: increased centralization of decision making and lack of long-term planning. The exclusive emphasis on short-term results is likely to be counterproductive. b. Incorrect. Another characteristic of organizational decline is nonprioritized cuts. Downsizing, by itself, rarely turns a company around. c. Incorrect. This is too crude a method of prioritizing cuts. Reducing staff disproportionately in control functions could have disastrous consequences.

Teams may be built by all the following methods except: a. Participating in a series of outdoor challenges. b. Incorporating a number of interdependent roles. c. Rating group effectiveness. d. Exerting direct pressure on dissenters.

d. Correct. This is a symptom of groupthink. a, b, c. team building

Which of the following can be a limiting factor associated with group decision making? a. Groups generally do not analyze problems in enough depth. b. It is very difficult to get individuals to accept decisions made by groups. c. Groups have a difficult time identifying the important components of decision making. d. Accountability is dispersed when groups make decisions

d. Correct. This is potentially a major problem associated with group decision making. When accountability is dispersed, it is often lost. That is why the group usually only provides advice and a particular person, such as an audit manager, makes the final decision, thus becoming accountable. a. Incorrect. Groups may actually analyze problems in greater depth. b. Incorrect. Acceptance of decisions may actually be enhanced because participants usually view outcomes as "ours" rather than "theirs." c. Incorrect. Groups may actually do a better job of identifying important components.

Which of the following indicates a highperformance team? a. Pride in the team leader. b. Quick agreement on the first proposed solution for problems facing the team. c. Cautiousness in risk-taking. d. Commitment to personal growth of team members.

d. Correct. This mutual support is characteristic of high-performance teams. a. Incorrect. High-performance teams recognize the value of all members. b. Incorrect. This reflects a lack of diversity characteristic of groupthink. c. Incorrect. Individuals tend to be more risk-averse than as teams.

Which of the following is the leadership style in which the leader and the followers make decisions on the basis of consensus? a. Autocratic. b. Benevolent authoritative. c. Consultative. d. Participative.

d. Correct. Under the participative style, the leader and followers make the decision on a democratic basis through consensus and the superiors have complete confidence in their subordinates. a. Incorrect. Under the autocratic style, managers impose decisions on their subordinates. b. Incorrect. Under the benevolent authoritative style, the manager makes all the decisions but believes that the subordinates have to be motivated by rewards and that leadership is by a condescending form of the master-servant relationship. c. Incorrect. Under the consultative style, the manager confers with the subordinates and takes their views into account, makes the final decision.

The alignment of managerial goals with organizational goals usually requires: I. Assigning responsibility for activities. II. Delegating the authority to perform necessary tasks. III. Establishing accountability. IV. Measuring and evaluating performance. a. I and IV only. b. I, II, and III only. c. II, III, and IV only. d. I, II, III, and IV.

d. I, II, III, IV. Correct. All are required to align managerial goals with organizational goals.

A 360-degree performance appraisal typically requires inputs from: I. Employees who are subordinates. II. Employees in other business units. III. Peers and teammates. IV. Customer satisfaction data. a. I and IV only. b. I, II, and III only. c. II, III, and IV only. d. I, II, III, and IV.

d. I, II, III, IV. Correct. All are typical inputs for a 360-degree performance appraisal process.

Departmentalization may be performed by: I. Function. II. Product. III. Geography. a. I only. b. II only. c. I and II only. d. I, II, and III.

d. I, II, III. Correct. Departmentalization may be performed by function, product, or geography.

Which of the following is a management approach to motivating employees? I. Providing performance feedback. II. Presenting opportunities for responsibility. III. Satisfying personal needs. a. III only. b. I and II only. c. II and III only. d. I, II, and III.

d. I, II, and III I. Correct. Performance feedback is an important part of goal-based approaches to motivating employees. II. Correct. Presenting opportunities for responsibilities will motivate employees by helping them meet the need for achievement. III. Correct. Satisfying personal needs is a method of motivating employees.