Planning: The Foundation of Successful Management: True / False Questions

Chapter 05
Planning: The Foundation of Successful Management
True / False Questions
1. The career path that most resembles the traditional view of climbing the stairs in a corporate
hierarchy is called the linear career.
True False
2. A steady-state career entails a slow-but-steady growth in level of responsibility and compensation.
True False
3. A spiral career path depends on having jobs that, while fundamentally different, build on one
another.
True False
4. A transitory career path involves a series of alternating promotions and demotions.
True False
5. Planning helps managers to cope with events that can be predicted but is not particularly helpful
when conditions are uncertain.
True False
6. Planning occurs only at the highest levels of an organization, being done by top managers.
True False
5-1
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7. Planning and strategic management derive from an organization's mission and vision about itself.
True False
8. In this time of Internet connections and speedy-access computer databases, one typically has
complete information for planning and decision making.
True False
9. Planning gives you expectations against which you can compare your performance.
True False
10. According to Miles and Snow's basic strategy types, a defender protects its strong position in an
industry by constantly seeking new opportunities for growth.
True False
11. Facebook strives to be on the cutting edge of social media and is experiencing phenomenal
growth. It encourages what it calls a "hacker" mindset, always looking to break down the old in
favor of something better. Of Miles and Snow's basic strategy types, Facebook would be described
as a prospector.
True False
12. Microsoft has been accused of adapting competitors' products after those firms spent the
resources and took the risks to develop them. Companies with this strategy are known as analyzers
by Miles and Snow.
True False
13. Blockbuster Video was slow to adapt to the latest trends in its industry, such as DVD-by-mail and
movie downloads online. When it tried to incorporate the same into its business model, it was well
behind competitors like Netflix. Blockbuster might be defined as a defender, according to Miles and
Snow.
True False
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14. Eastman Kodak, though it actually invented the digital camera, was slow to move into the
production of this product as well as digital printers. Its continued reliance on traditional 35mm film
production and processing, which resulted in its bankruptcy, makes it a reactor according to Miles
and Snow.
True False
15. The process of a business cycling through decisions first to select products and markets, then about
producing and delivering the products, and finally to establish roles and processes is known as the
discovery cycle.
True False
16. The administrative part of the adaptive cycle focuses on establishing roles and organizational
processes.
True False
17. In an organization's approach to planning, its mission and vision statements should be created
once the strategic planning process is complete.
True False
18. Determining an organization's mission is the responsibility of top management and the board of
directors.
True False
19. A vision has a clear sense of the future and the actions needed to get there.
True False
20. A mission statement expresses what the organization should become and where it wants to go
strategically.
True False
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21. Amazon's statement in which it states its desire "to be the earth's most customer-centric company;
to build a place where people can come to find and discover anything they might want to buy
online" is a mission statement.
True False
22. Strategic planning determines goals for an organization for a period of 1-5 years.
True False
23. Tactical planning is done by first-line managers, who look forward to the next 1-8 weeks.
True False
24. Operational planning is normally performed by middle management.
True False
25. Decisions that are predictable, following a well-defined set of procedures, are typical of operational
planning.
True False
26. As part of the planning process, businesses set what are known as targets, which are specific
commitments to achieve measurable results within a stated period of time.
True False
27. An organization's goals arranged in a hierarchy from low level to high level can be termed a
means-end chain.
True False
28. Strategic goals focus on objectives for the organization as a whole.
True False
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29. Operational goals are set by middle managers and focus on the actions needed to achieve strategic
goals.
True False
30. The operating plan defines the course of action needed to achieve a stated goal.
True False
31. A marketing plan is an example of an action plan.
True False
32. The operating plan identifies clear targets such as revenues and cash flow.
True False
33. Southwest Airlines' goal of being highly profitable is a tactical goal.
True False
34. Southwest Airlines' goal of making arrival times more reliable is a tactical goal.
True False
35. Policies, procedures, and rules are types of single-use plans.
True False
36. A policy includes more specifics than does a rule.
True False
37. A procedure is a standing plan that outlines the response to particular problems or circumstances.
True False
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38. In single-use plans, a program is another name for a project.
True False
39. The U.S. government space program is an example of a single-use plan.
True False
40. SMART is an acronym that represents characteristics necessary to motivate employees in their
periodic reviews.
True False
41. The "R" in a SMART goal stands for "reachable."
True False
42. A bike messenger company that operates in the downtown area of a large city recently set the
following goal: "All deliveries should be completed as quickly as possible." This example meets the
criteria for a SMART goal.
True False
43. SMART goals that are challenging yet can be met within the available scope of time, equipment,
and financial support are known as attainable, the "A" in SMART.
True False
44. Because it is unrealistic for SMART goals to be accomplished overnight, they should have target
dates.
True False
45. MBO was developed by Frederick Taylor as part of scientific management.
True False
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46. The first step in an MBO program is for the manager to set objectives for her subordinate.
True False
47. The purpose of MBO is to motivate subordinates.
True False
48. Perpetuation objectives are one type of objective used in MBO.
True False
49. In MBO, objectives that employees fail to meet should be put aside for the next period in favor of
ones that they can achieve.
True False
50. In order for MBO to be successful, it must be implemented throughout the entire organization.
True False
51. Organizationwide, the best structure for objectives in MBO is known as a diversity pattern.
True False
52. Deadlines can help one concentrate the mind, in order to make decisions rather than put them off.
True False
53. In the planning/control cycle, part of the control process can be to improve future plans.
True False
54. The planning/control cycle has three planning steps and three control steps.
True False
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55. In the planning/control cycle, comparing the results with the plan is one of the control steps.
True False
56. In the planning/control cycle, carrying out the plan is one of the control steps.
True False
Multiple Choice Questions
57. A career that is upwardly mobile, with a number of jobs that are fundamentally different yet still
build on one another is known as a(n) ______ career.
A. steady-state
B. portfolio
C. spiral
D. inclining
E. linear
58. If you are happiest being a "hands-on" professional rather than becoming a manager, you may
prefer a(n) ______ career.
A. steady-state
B. portfolio
C. spiral
D. inclining
E. linear
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59. Planning is defined as
A. formulating a method to allocate resources effectively.

B. motivating employees.
C. coping with obstacles to past performance.
D. setting goals and deciding how to achieve them.
E. implementing strategic goals.
60. During which managerial function do you make a blueprint for action that describes what you need
to do to realize your goals?
A. Organizing
B. Leading
C. Controlling
D. Defining
E. Planning
61. Which of the following is one of the challenges of planning?
A. Assigning the right people to tasks.

B. Determining the correct budget.
C. Measuring results with accuracy.
D. Finding the time to plan.
E. Motivating employees.
62. If you do not have all of the information for a complete plan, you should
A. make decisions based on what you have, since perfect information is rare.
B. wait until you can get that information to take action you know will be appropriate.
C. implement two or more courses of action simultaneously.
D. shrink the plan to limit its scope to only areas where you have good information.
E. disregard the plan and go with your intuition.
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63. Which of the following is a benefit of planning?
A. Planning allows you to spend little time preparing for the future.
B. Planning allows you to make all decisions without consulting superiors.
C. Planning helps you compare your results to your competitors'.
D. Planning helps the company to be spontaneous.
E. Planning helps you cope with uncertainty.
64. Which of the following is one of the organizational responses organizations make when confronted
with uncertainty, as identified by Miles and Snow?
A. Aggressor
B. Investigator
C. Reactor
D. Planner
E. Leader
65. A company that is an expert at producing and selling narrowly defined products or services, and
which does not tend to seek opportunities outside its present market is known by Miles and Snow
as a(n)
A. defender.
B. analyzer.
C. adaptor.
D. prospector.
E. reactor.
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66. When a firm responds to uncertainty in its environment as a(n) ________, its continual pursuit of
product and market innovation may lead to a loss of efficiency, but is likely to make competitors
nervous.
A. reactor
B. analyzer
C. defender
D. prospector
E. executor
67. In the current broadband environment, consumers are able to download products like music,
movies, and books. Netflix was aggressive in taking advantage of this fact, offering web streaming
and game console access to its customers before competitors. According to Miles and Snow, Netflix
would be a(n)
A. reactor.
B. prospector.
C. analyzer.
D. defender.
E. executor.
68. A company producing cameras and video cameras prefers to focus its resources on a fast imitation
program to reverse-engineer new features from competitors and add those, rather than
implementing truly inventive features. Miles and Snow would call this company a(n)
A. reactor.
B. prospector.
C. analyzer.
D. defender.
E. imitator.
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69. The adaptive cycle portrays businesses as continuously cycling through three kinds of business
decisions: entrepreneurial, ______, and administrative.
A. leadership
B. alignment
C. organization
D. production
E. engineering
70. If a business lacks insight or fails to use the adaptive cycle properly, it is likely to be which of the
following?
A. A prospector
B. An analyzer
C. A defender
D. A reactor
E. An imitator
71. Which of the following is the correct order of planning steps within an organization?
A. Strategic planning, mission statement & vision statement, operational planning, tactical planning
B. Strategic planning, mission statement & vision statement, tactical planning, operational planning
C. Strategic planning, operational planning, mission statement & vision statement, tactical planning
D. Mission statement & vision statement, strategic planning, tactical planning, operational planning
E. Mission statement & vision statement, strategic planning, operational planning, tactical planning
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72. Which of the following comes LAST when an organization makes a plan?
A. operational planning
B. mission statement
C. strategic planning
D. tactical planning
E. vision statement
73. The statement which expresses the purpose of an organization is called a(n)
A. goal statement.
B. rationale statement.
C. vision statement.
D. intention statement.
E. mission statement.
74. Hilton Hotel's statement expressing its purpose as "to fill the earth with the light and warmth of
hospitality" is a(n)
A. vision statement.
B. intention statement.
C. goal statement.
D. mission statement.
E. rationale statement.
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75. McKesson Corp., a U.S. pharmaceutical distributor, has a(n) ________ statement, which is "to provide
comprehensive pharmacy solutions that improve productivity, profitability and result in superior
patient care and satisfaction."
A. purpose
B. vision
C. intention
D. goal
E. mission
76. Avon, the world's leading direct seller of beauty products, has a(n) ________ statement, which is "to
be the company that best understands and satisfies the product, service, and self-fulfillment needs
of women globally."
A. vision
B. intention
C. goal
D. mission
E. rationale
77. There are three levels of planning. Their order, from first to last, is
A. operational, tactical, and strategic.

B. strategic, operational, and tactical.
C. tactical, operational, and strategic.
D. tactical, strategic, and operational.
E. strategic, tactical, and operational.
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78. At which level of planning must managers be paying attention to the environment outside the
organization, be future oriented, and deal with uncertain and competitive conditions?
A. tactical
B. organizational
C. strategic
D. front-line
E. operational
79. Because of the frequency with which world competition and information technology alter
marketplace conditions, a company's ________ may have to be done closer to every 1 or 2 years than
every 5.
A. management planning
B. strategic planning
C. tactical planning
D. operational planning
E. implementation planning
80. Which level of management is most often engaged in tactical planning?
A. Working-level employees
B. First-line managers
C. Middle managers
D. Top managers
E. Consultants
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81. What is the time frame of an operational plan?
A. 2-10 years
B. 1-5 years
C. 6-24 months
D. 1-52 weeks
E. 1-90 days
82. Alita is participating with other division heads in a discussion about new international competition
for the firm and what the organization's goals should be for the next three years. She is
participating in
A. tactical planning.
B. strategic planning.
C. operational planning.
D. controlling.
E. writing a mission statement.
83. Executive management has recently decided to acquire a small company with a complementary
product line, so Craig, a marketing manager, is meeting with other managers to discuss how to
implement policies to support the acquisition over the next year. He is participating in
A. mission development.
C. controlling.
D. operational planning.
E. tactical planning.
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84. Portia is meeting with her subordinates to determine which workers from her department need
training in order to handle production increases expected during the next nine months. Portia is
involved in
A. vision development.
B. operational planning.
C. controlling.
D. tactical planning.
E. developing an MBO.
85. Which of the following is associated with operational planning?
A. Determining the overall direction of the organization.

B. Examining the environment outside of the organization.
C. Implementing policies and plans of top management.
D. Directing daily tasks of nonmanagerial personnel.
E. Making decisions under highly uncertain conditions.
86. Which of the following best represents the strategic planning time frame that Jeff Bezos of Amazon
prefers?
A. Six months or less

B. One to two years
C. Three to five years
D. Five to seven years
E. Ten to twenty years
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87. ________ goals are set by and for middle managers and focus on the actions needed to achieve
________ goals.
A. Strategic; operational
B. Tactical; strategic
C. Strategic; tactical
D. Tactical; operational
E. Operational; tactical
88. Cimarron Saddlery expects to improve profitability of the organization by 15% over the next three
years. This is an example of a(n)
A. supervision objective.
B. operational goal.
C. tactical goal.
D. maintenance objective.
E. strategic goal.
89. Managers at Cimarron Saddlery expect to meet profitability goals for the company by cutting costs
through a 70% increase in global sourcing of leather and other materials over the next two years.
This is an example of a(n)
C. tactical goal.
E. strategic goal.
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90. After setting goals, managers should next
A. prepare an action plan for accomplishing the goals.

B. propose changes to the goals of same-level managers to bring all into alignment.
C. supervise subordinates closely.
D. report failure to meet goals to superiors.
E. begin the planning process anew.
91. Southwest Airlines acquisition of rival AirTran Airways may have been responsible for a sharp
decline in on-time arrivals, which is one of Southwest's ________ goals, supporting a larger goal of
being highly profitable.
A. dependant
B. strategic
C. operational
D. facilities
E. tactical
92. One type of standing plan, the __________, outlines the general response to a designated problem
or situation.
A. policy
B. project
C. rule
D. procedure
E. program
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93. When White Castle specifies exactly how to dress a hamburger, including the order of the
condiments, this is called a
A. program.
B. policy.
C. rule.
D. procedure.
E. project.
94. Dayton Construction has a ________ for processing invoices, which includes coding them by job
number and construction phase, and matching them with the correct purchase order.
A. program.
B. policy.
C. rule.
D. procedure.
E. project.
95. Management instituted a new ______ in Yichao's workplace that "employees who are more than 15
minutes late to work without calling a supervisor will be given a written warning."
A. policy
B. rule
C. procedure
D. project
E. program
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96. A single-use plan encompassing a range of projects or activities is a(n)
A. program.
B. strategy.
C. series.
D. agenda.
E. mission.
97. NASA's Curiosity Rover, employed to investigate a large crater on Mars, is an example of a
A. policy.
B. rule.
C. project.
D. procedure.
E. program.
98. A SMART goal is one that is
A. specific, maintainable, affordable, realistic, and timely.

B. specific, measurable, attainable, results-oriented, and has target dates.
C. specific, maintainable, achievement-oriented, in real time, and timely.
D. specific, measurable, affordable, realistic, and has target dates.
E. specific, maintainable, aligned with other goals, realistic, and timely.
99. The goal to "improve the quality of customer service by instituting follow-up telephone calls this
month" is not a SMART goal because it is
A. unlikely to align with higher level goals.

B. not measurable.
C. too simplistic.
D. not results oriented.
E. unlikely to result in improvement to customer service.
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100. Kristi has been struggling with her weight, and one of her coworkers suggested that she make a
SMART goal for herself. Which of the following is the best example of a SMART goal for Kristi?
A. I want to lose a lot of weight.

B. I want to look better in a swimsuit.
C. I want to lose 20 pounds over the course of one calendar year.
D. I want to start losing weight soon.
E. I want to lose 30% of my body mass by next month.
101. In terms of difficulty, the best goals are
A. just beyond what is achievable, to maximize motivation.

B. easy to attain, so failure will not hurt morale.
C. challenging but realistic.
D. impossible to really reach, because they are meant only to be idealistic and inspirational.
E. easy or hard, since both work equally well.
102. MBO stands for
A. Management by Observation.
B. Management by Objectives.
C. Management by Ownership.
D. Management by Obligation.
E. Management by Organization.
103. The first step in the MBO process is to
A. determine rewards for meeting goals.

B. give a performance appraisal.
C. develop an action plan.
D. periodically review performance.
E. jointly set objectives.
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104. Sultan is a new manager, and he is using MBO for the first time with his subordinates. It is essential
for Sultan to
A. decide on goals for employees and clearly inform them of these goals.
B. ask the employee to commit the goals to memory.
C. set goals that are just out of the subordinate's reach.
D. reward employees when they meet objectives.
E. review an employee's performance once, at the end of the performance period.
105. Which of the following would best describe MBO?
A. It works at the highest levels of an organization.

B. It works at the lowest levels of an organization.
C. Its purpose is to motivate employees.
D. Its purpose is to control employees.
E. It effectively benchmarks HR practices against competitors.
106. Which of the following is a type of objective for MBO?
A. Profitability
B. Personal development
C. Market share
D. Social responsibility
E. Ethics
107. Productivity gains from MBO are higher when an organization has
A. top-management commitment.
B. few budget problems.
C. team rather than individual performance reviews.
D. union support.
E. nonmanagerial employee support.
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108. MBO works by cascading objectives down through the organization, and these objectives become
more ______ at lower levels of the organization.
A. measurable
B. challenging
C. results-oriented
D. attainable
E. specific
109. ______ help you ignore extraneous matters in favor of focusing on what's important, which is
realizing the goals on time and on budget.
A. Deadlines
B. Relationships
C. Changes
D. Networks
E. Options
110. The constant feedback loop of the ______ is designed to ensure plans stay headed in the right
direction.
A. means-end chain
B. planning/control cycle
C. control system
D. project management method
E. project planning sequence
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111. Improving future plans is part of which step in the planning/control cycle?
A. Making the plan.

B. Carrying out the plan.
C. Benchmarking against competitors.
D. Controlling the direction.
E. Updating the plan.
112. Jordan, a sales manager, met with his staff to discuss that they were only a third of the way to their
sales goal, but halfway through the sales period. He was looking for suggestions to improve
second-half performance. Which part of the planning/control cycle is Jordan doing?
A. Benchmarking against competitors.

B. Controlling the direction.
C. Making the plan.
D. Carrying out the plan.
113. Megan met with her supervisor for a formal review of her job performance over the past year.
Though Megan had agreed to complete five training modules during the course of the year, she
only did two. At this stage, which part of the planning/control cycle would be applicable to her
manager going forward?
A. Carry out the plan.

B. Improve feedback.
C. Correct deviations in the plan.
D. Benchmark against other employees.
E. Improve future plans.
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114. Apple has a plan to generate buzz for its new products by maintaining secrecy about them. Apple
has learned that strong measures are required to protect such mysteries, so it has enhanced its
security and even fired and sued employees for leaking news about the products. These efforts
would be considered which part of the planning/control cycle?
A. Making the plan.

C. Comparing results.
D. Taking corrective action.
E. Benchmarking competitors.
Essay Questions
115. In general, planning has many benefits. However, planning also has two cautions of which one must
be aware. Discuss these.
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116. List the four benefits of planning.
117. Miles and Snow suggest that organizations responding to uncertainty in the environment do so
with one of four approaches. Name and describe these approaches, and provide an example of
each.
118. Explain the different types of planning for the different levels of management. Include the typical
time frame for which each plan is created.
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119. Explain the difference between standing plans and single-use plans. Define the three types of
standing plans, the two types of single-use plans and give examples of each.
120. Define the components of the acronym SMART in goal setting. Provide an example of a SMART
goal and demonstrate that it meets all criteria.
121. What is MBO? Describe the process by which MBO is done as well as its purpose.
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122. Discuss the three things that must happen for MBO to be successful.
123. Describe the planning/control cycle.
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Chapter 05 Planning: The Foundation of Successful Management Answer
Key
True / False Questions
1. The career path that most resembles the traditional view of climbing the stairs in a corporate
hierarchy is called the linear career.
TRUE
The linear career resembles the traditional view of climbing the stairs in an organization's
hierarchy. That is, you move up the organization in a series of jobs, each of which entails more
responsibility and requires more skills.
AACSB: Analytic
Blooms: Understand
Learning Objective: 05-01 How do I tend to deal with uncertainty; and how can planning help?
Level of Difficulty: 2 Medium
Topic: Planning and Uncertainty
2. A steady-state career entails a slow-but-steady growth in level of responsibility and

compensation.
FALSE
The steady-state career is almost the opposite of a linear career: You discover early in life that
you're comfortable with a certain occupation and you stay with it. Or you accept a promotion
for a while, decide you don't like the responsibility, and take a step down.
AACSB: Analytic
Blooms: Understand
5-30
3. A spiral career path depends on having jobs that, while fundamentally different, build on one
another.
TRUE
The spiral career is, like the linear career, upwardly mobile. However, on this career path, you
would have a number of jobs that are fundamentally different yet still build on one another,
giving you more general experience and the skills to advance in rank and status.
AACSB: Analytic
Blooms: Understand
4. A transitory career path involves a series of alternating promotions and demotions.
FALSE
If you favor the transitory career path, you're the kind of person who doesn't want the
responsibility that comes with promotion. You're a free spirit who likes the variety of experience
that comes with continually shifting sideways from job to job or place to place (or you're afraid
of making the commitment to doing any one thing).
AACSB: Analytic
Blooms: Understand
5-31
5. Planning helps managers to cope with events that can be predicted but is not particularly helpful
when conditions are uncertain.
FALSE
Planning is coping with uncertainty by formulating future courses of action to achieve specified
results.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
6. Planning occurs only at the highest levels of an organization, being done by top managers.
FALSE
Planning covers not only strategic planning (done by top managers) but also tactical planning
(done by middle managers) and operational planning (done by first-line managers).
AACSB: Analytic
Blooms: Understand
7. Planning and strategic management derive from an organization's mission and vision about
itself.
TRUE
Planning and strategic management derive from an organization's mission and vision about
itself, as shown in Figure 5.1.
AACSB: Analytic
Blooms: Understand
5-32
8. In this time of Internet connections and speedy-access computer databases, one typically has
complete information for planning and decision making.
FALSE
Despite modern technology, many occurrences prevent complete gathering of facts. Often you
may have to "go with what you've got" and make a decision based on a plan that is perhaps
only three-quarters complete.
AACSB: Analytic
Blooms: Understand
9. Planning gives you expectations against which you can compare your performance.
TRUE
How well is your work going in an organization? You won't know unless you have some way of
checking your progress. That's why you need to have some expectations of what you're
supposed to do, or in other words, a plan.
AACSB: Analytic
Blooms: Understand
5-33
10. According to Miles and Snow's basic strategy types, a defender protects its strong position in an
industry by constantly seeking new opportunities for growth.
FALSE
Defenders are expert at producing and selling narrowly defined products or services. They do
not tend to seek opportunities outside their present markets. They devote most of their
attention to making refinements in their existing operations, such as slashing prices.
AACSB: Analytic
Blooms: Understand
11. Facebook strives to be on the cutting edge of social media and is experiencing phenomenal
growth. It encourages what it calls a "hacker" mindset, always looking to break down the old in
favor of something better. Of Miles and Snow's basic strategy types, Facebook would be
described as a prospector.
TRUE
Prospectors are aggressive companies focused on developing new products or services and in
seeking out new markets, rather than waiting for things to happen.
AACSB: Analytic
Blooms: Apply
Level of Difficulty: 3 Hard
5-34
12. Microsoft has been accused of adapting competitors' products after those firms spent the
resources and took the risks to develop them. Companies with this strategy are known as
analyzers by Miles and Snow.
TRUE
Analyzers let other organizations take the risks of product development and marketing and then
imitate what seems to work best. For years, Microsoft has been accused of taking this approach.
AACSB: Analytic
Blooms: Understand
13. Blockbuster Video was slow to adapt to the latest trends in its industry, such as DVD-by-mail
and movie downloads online. When it tried to incorporate the same into its business model, it
was well behind competitors like Netflix. Blockbuster might be defined as a defender, according
to Miles and Snow.
FALSE
The Reactor is passive and reactive, making adjustments only when finally forced to by
environmental pressures. In the worst cases, they are so incapable of responding fast enough
that they suffer massive sales losses and are even driven out of business.
AACSB: Analytic
Blooms: Apply
5-35
14. Eastman Kodak, though it actually invented the digital camera, was slow to move into the
production of this product as well as digital printers. Its continued reliance on traditional 35mm
film production and processing, which resulted in its bankruptcy, makes it a reactor according to
Miles and Snow.
TRUE
The Reactor is passive and reactive, making adjustments only when finally forced to by
environmental pressures. In the worst cases, they are so incapable of responding fast enough
that they suffer massive sales losses and are even driven out of business.
AACSB: Analytic
Blooms: Apply
15. The process of a business cycling through decisions first to select products and markets, then
about producing and delivering the products, and finally to establish roles and processes is
known as the discovery cycle.
FALSE
The adaptive cycle portrays businesses as continuously cycling through decisions about three
kinds of business problems: (1) entrepreneurial (selecting and making adjustments of products
and markets), (2) engineering (producing and delivering the products), and (3) administrative
(establishing roles, relationships, and organizational processes).
AACSB: Analytic
Blooms: Understand
5-36
16. The administrative part of the adaptive cycle focuses on establishing roles and organizational
processes.
TRUE
The adaptive cycle portrays businesses as continuously cycling through decisions about three
kinds of business problems: (1) entrepreneurial (selecting and making adjustments of products
and markets), (2) engineering (producing and delivering the products), and (3) administrative
(establishing roles, relationships, and organizational processes).
AACSB: Analytic
Blooms: Understand
17. In an organization's approach to planning, its mission and vision statements should be created
once the strategic planning process is complete.
FALSE
According to Figure 5.2, an organization should express its mission and vision, and from these
are derived the strategic plans.
AACSB: Analytic
Blooms: Understand
Learning Objective: 05-02 What are mission and vision statements; and what are three types of planning and goals?
Topic: Fundamentals of Planning
5-37
18. Determining an organization's mission is the responsibility of top management and the board of
directors.
TRUE
Determining the mission is the responsibility of top management and the board of directors. It is
up to them to formulate a mission statement, which expresses the purpose of the organization.
AACSB: Analytic
Blooms: Understand
19. A vision has a clear sense of the future and the actions needed to get there.
TRUE
A vision is a long-term goal describing "what" an organization wants to become. It is a clear

sense of the future and the actions needed to get there.
AACSB: Analytic
Blooms: Remember
20. A mission statement expresses what the organization should become and where it wants to go
strategically.
FALSE
An organization's mission statement identifies the goods or services it provides and will provide.
A vision statement expresses what the organization should become, where it wants to go
strategically.
AACSB: Analytic
Blooms: Remember
5-38
21. Amazon's statement in which it states its desire "to be the earth's most customer-centric
company; to build a place where people can come to find and discover anything they might
want to buy online" is a mission statement.
FALSE
Vision statements answer the question, "What do we want to become?" or "Where do we want
to go?" Here is Amazon's statement: "Our vision is to be earth's most customer-centric
company; to build a place where people can come to find and discover anything they might
want to buy online."
AACSB: Analytic
Blooms: Understand
22. Strategic planning determines goals for an organization for a period of 1-5 years.
TRUE
Using their mission and vision statements, top managers do strategic planning. They determine
what the organization's long-term goals should be for the next 1-5 years with the resources they
expect to have available.
AACSB: Analytic
Blooms: Remember
5-39
23. Tactical planning is done by first-line managers, who look forward to the next 1-8 weeks.
FALSE
Tactical planning is determining what contributions middle managers and their departments or
similar work units can make with their given resources during the next 6-24 months.
AACSB: Analytic
Blooms: Remember
24. Operational planning is normally performed by middle management.
FALSE
Strategic priorities and policies are passed down to middle managers, who must do tactical
planning. Operational planning is done by first-line managers.
AACSB: Analytic
Blooms: Remember
25. Decisions that are predictable, following a well-defined set of procedures, are typical of
operational planning.
TRUE
According to Figure 5.3, operational planning helps to direct daily tasks of nonmanagerial
personnel, and decisions are often predictable, following a well-defined set of routine
procedures.
AACSB: Analytic
Blooms: Understand
5-40
26. As part of the planning process, businesses set what are known as targets, which are specific
commitments to achieve measurable results within a stated period of time.
FALSE
A goal, also known as an objective, is a specific commitment to achieve a measurable result

within a stated period of time.
AACSB: Analytic
Blooms: Remember
27. An organization's goals arranged in a hierarchy from low level to high level can be termed a
means-end chain.
TRUE
Goals are arranged in a hierarchy known as a means-end chain because, in the chain of
management, the accomplishment of low-level goals is the means leading to the
accomplishment of high-level goals or ends.
AACSB: Analytic
Blooms: Remember
5-41
28. Strategic goals focus on objectives for the organization as a whole.
TRUE
Strategic goals are set by and for top management and focus on objectives for the organization
as a whole.
AACSB: Analytic
Blooms: Remember
29. Operational goals are set by middle managers and focus on the actions needed to achieve
strategic goals.
FALSE
Tactical goals are set by and for middle managers and focus on the actions needed to achieve
strategic goals.
AACSB: Analytic
Blooms: Remember
30. The operating plan defines the course of action needed to achieve a stated goal.
FALSE
The goal should be followed by an action plan, which defines the course of action needed to
achieve the stated goal, such as a marketing plan or sales plan. The operating plan, which is
typically designed for a 1-year period, defines how you will conduct your business based on the
action plan; it identifies clear targets such as revenues, cash flow, and market share.
AACSB: Analytic
Blooms: Remember
5-42
31. A marketing plan is an example of an action plan.
TRUE
A goal should be followed by an action plan, which defines the course of action needed to
achieve the stated goal, such as a marketing plan or sales plan.
AACSB: Analytic
Blooms: Understand
32. The operating plan identifies clear targets such as revenues and cash flow.
TRUE
The operating plan, which is typically designed for a 1-year period, defines how you will conduct
your business based on the action plan; it identifies clear targets such as revenues, cash flow,
and market share.
AACSB: Analytic
Blooms: Remember
5-43
33. Southwest Airlines' goal of being highly profitable is a tactical goal.
FALSE
The strategic goal of top managers of Dallas-based Southwest Airlines is to ensure that the
airline is highly profitable, following the general strategy of (a) keeping costs and fares down, (b)
offering a superior on-time arrival record, and (c) keeping customers happy.
AACSB: Analytic
Blooms: Understand
34. Southwest Airlines' goal of making arrival times more reliable is a tactical goal.
TRUE
How do you make arrival times more reliable? To achieve this second tactical goal, middle
managers did away with guaranteed seat reservations before ticketing, so that no-shows won't
complicate (and therefore delay) the boarding process. Passengers paying more for "business
select" are now the exception.
AACSB: Analytic
Blooms: Understand
35. Policies, procedures, and rules are types of single-use plans.
FALSE
Standing plans consist of policies, procedures, and rules.
AACSB: Analytic
Blooms: Remember
5-44
36. A policy includes more specifics than does a rule.
FALSE
A rule is a standing plan that designates specific required action. A policy is a standing plan that
outlines the general response to a designated problem or situation with few specifics.
AACSB: Analytic
Blooms: Understand
37. A procedure is a standing plan that outlines the response to particular problems or
circumstances.
TRUE
A procedure (or standard operating procedure) is a standing plan that outlines the response to
particular problems or circumstances.
AACSB: Analytic
Blooms: Remember
38. In single-use plans, a program is another name for a project.
FALSE
Single-use plans can be programs or projects. A program is a single-use plan encompassing a

range of projects or activities. A project is a single-use plan of less scope and complexity than a
program.
AACSB: Analytic
Blooms: Remember
5-45
39. The U.S. government space program is an example of a single-use plan.
TRUE
A program is a single-use plan encompassing a range of projects or activities. Example: The U.S.
government space program had several projects, including the space shuttle project and the
Hubble Telescope project.
AACSB: Analytic
Blooms: Remember
40. SMART is an acronym that represents characteristics necessary to motivate employees in their
periodic reviews.
FALSE
The five characteristics of a good goal are represented by the acronym SMART. A SMART goal is
one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates.
AACSB: Analytic
Blooms: Remember
Learning Objective: 05-03 What are SMART goals and MBO and how can they be implemented?
Topic: Promoting Goal Setting: Setting SMART Goals and Management by Objectives
5-46
41. The "R" in a SMART goal stands for "reachable."
FALSE
The five characteristics of a good goal are represented by the acronym SMART. A SMART goal is
one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates.
AACSB: Analytic
Blooms: Remember
42. A bike messenger company that operates in the downtown area of a large city recently set the
following goal: "All deliveries should be completed as quickly as possible." This example meets
the criteria for a SMART goal.
FALSE
A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target
dates. The example is not measurable.
AACSB: Analytic
Blooms: Apply
5-47
43. SMART goals that are challenging yet can be met within the available scope of time, equipment,
and financial support are known as attainable, the "A" in SMART.
TRUE
dates. Goals should be challenging, of course, but above all they should be realistic and
attainable. It may be best to set goals that are quite ambitious so as to challenge people to
meet high standards. Always, however, the goals should be achievable within the scope of the
time, equipment, and financial support available.
AACSB: Analytic
Blooms: Understand
44. Because it is unrealistic for SMART goals to be accomplished overnight, they should have target
dates.
TRUE
dates. Goals should specify the target dates or deadline dates when they are to be attained. For
example, it's unrealistic to expect an airline to improve its on-time arrivals by 10% overnight.
However, you could set a target date, say 3 to 6 months away, by which this goal is to be
achieved.
AACSB: Analytic
Blooms: Understand
5-48
45. MBO was developed by Frederick Taylor as part of scientific management.
FALSE
First suggested by Peter Drucker in 1954, MBO has spread largely because of the appeal of its
emphasis on converting general objectives into specific ones for all members of an organization.
AACSB: Analytic
Blooms: Understand
46. The first step in an MBO program is for the manager to set objectives for her subordinate.
FALSE
In the first step of MBO, you sit down with your manager and the two of you jointly set
objectives for you to attain. It's necessary to have back-and-forth negotiation to make the
objectives practicable.
AACSB: Analytic
Blooms: Remember
47. The purpose of MBO is to motivate subordinates.
TRUE
The purpose of MBO is to motivate rather than control subordinates.
AACSB: Analytic
Blooms: Understand
5-49
48. Perpetuation objectives are one type of objective used in MBO.
FALSE
There are three types of objectives in MBO: improvement objectives, personal development
objectives, and maintenance objectives (see Table 5.2).
AACSB: Analytic
Blooms: Understand
49. In MBO, objectives that employees fail to meet should be put aside for the next period in favor
of ones that they can achieve.
FALSE
Failure to meet MBO objectives can be addressed by redefining the objectives for the next 6- or
12-month period, or even by taking stronger measures, such as demotion.
AACSB: Analytic
Blooms: Understand
50. In order for MBO to be successful, it must be implemented throughout the entire organization.
TRUE
The MBO program has to be put in place throughout the entire organization. That is, it cannot
be applied in just some divisions and departments; it has to be done in all of them.
AACSB: Analytic
Blooms: Understand
5-50
51. Organizationwide, the best structure for objectives in MBO is known as a diversity pattern.
FALSE
MBO works by cascading objectives down through the organization; that is, objectives are
structured in a unified hierarchy, becoming more specific at lower levels of the organization. Top
managers set general organizational objectives, which are translated into divisional objectives,
which are translated into departmental objectives. The hierarchy ends in individual objectives set
by each employee.
AACSB: Analytic
Blooms: Understand
52. Deadlines can help one concentrate the mind, in order to make decisions rather than put them
off.
TRUE
Deadlines can help you keep your eye on the "big picture" while simultaneously paying attention
to the details that will help you realize the big picture. Deadlines can help concentrate the mind,
so that you make quick decisions rather than put them off.
AACSB: Analytic
Blooms: Understand
5-51
53. In the planning/control cycle, part of the control process can be to improve future plans.
TRUE
In the planning/control cycle, controlling the direction of planning can be accomplished by

taking corrective action in two ways: by correcting deviations in the plan being carried out, or by
improving future plans.
AACSB: Analytic
Blooms: Understand
Learning Objective: 05-04 How does the planning/control cycle help keep a manager's plans headed in the right direction?
Topic: The Planning/Control Cycle
54. The planning/control cycle has three planning steps and three control steps.
FALSE
The planning/control cycle has two planning steps and two control steps (see Figure 5.5).
AACSB: Analytic
Blooms: Understand
55. In the planning/control cycle, comparing the results with the plan is one of the control steps.
TRUE
In Figure 5.5, the two control steps are (1) control the direction by comparing the results with the
plan; and (2) control the direction by correcting deviations or improving future plans.
AACSB: Analytic
Blooms: Remember
5-52
56. In the planning/control cycle, carrying out the plan is one of the control steps.
FALSE
In Figure 5.5, the two planning steps are (1) make the plan, and (2) carry out the plan.
AACSB: Analytic
Blooms: Remember
Multiple Choice Questions
57. A career that is upwardly mobile, with a number of jobs that are fundamentally different yet still
build on one another is known as a(n) ______ career.
A. steady-state
B. portfolio
C. spiral
D. inclining
E. linear
The spiral career is, like the linear career, upwardly mobile. However, on this career path, you
would have a number of jobs that are fundamentally different yet still build on one another,
giving you more general experience and the skills to advance in rank and status.
AACSB: Analytic
Blooms: Remember
5-53
58. If you are happiest being a "hands-on" professional rather than becoming a manager, you may
prefer a(n) ______ career.
A. steady-state
B. portfolio
C. spiral
D. inclining
E. linear
The steady-state career is actually fairly commonplace: Sales representatives, computer

programmers, or physicians, for example, may decide they are happy being "hands-on"
professionals rather than managers.
AACSB: Analytic
Blooms: Understand
59. Planning is defined as
A. formulating a method to allocate resources effectively.

B. motivating employees.
C. coping with obstacles to past performance.
D. setting goals and deciding how to achieve them.
E. implementing strategic goals.
Planning is defined as setting goals and deciding how to achieve them.
AACSB: Analytic
Blooms: Remember
5-54
60. During which managerial function do you make a blueprint for action that describes what you
need to do to realize your goals?
A. Organizing
B. Leading
C. Controlling
D. Defining
E. Planning
Planning is coping with uncertainty by formulating future courses of action to achieve specified
results. When you make a plan, you make a blueprint for action that describes what you need to
do to realize your goals.
AACSB: Analytic
Blooms: Understand
61. Which of the following is one of the challenges of planning?
A. Assigning the right people to tasks.

B. Determining the correct budget.
C. Measuring results with accuracy.
D. Finding the time to plan.
E. Motivating employees.
Planning requires you to set aside time to do it, and it will require your time and some of your
subordinates'.
AACSB: Analytic
Blooms: Understand
5-55
62. If you do not have all of the information for a complete plan, you should
A. make decisions based on what you have, since perfect information is rare.
B. wait until you can get that information to take action you know will be appropriate.
C. implement two or more courses of action simultaneously.
D. shrink the plan to limit its scope to only areas where you have good information.
E. disregard the plan and go with your intuition.
A plan need not be perfect to be executable. While you shouldn't shoot from the hip in making
decisions, often you may have to "go with what you've got" and make a decision based on a
plan that is perhaps only three-quarters complete.
AACSB: Analytic
Blooms: Understand
63. Which of the following is a benefit of planning?
A. Planning allows you to spend little time preparing for the future.
B. Planning allows you to make all decisions without consulting superiors.
C. Planning helps you compare your results to your competitors'.
D. Planning helps the company to be spontaneous.
E. Planning helps you cope with uncertainty.
There are four benefits to planning: (1) planning helps you check on your progress. (2) Planning
helps you coordinate activities. (3) Planning helps you think ahead. (4) Planning helps you cope
with uncertainty.
AACSB: Analytic
Blooms: Understand
5-56
64. Which of the following is one of the organizational responses organizations make when
confronted with uncertainty, as identified by Miles and Snow?
A. Aggressor
B. Investigator
C. Reactor
D. Planner
E. Leader
Scholars Raymond E. Miles and Charles C. Snow suggest that organizations adopt one of four
approaches when responding to uncertainty in their environment. They become Defenders,
Prospectors, Analyzers, or Reactors.
AACSB: Analytic
Blooms: Understand
65. A company that is an expert at producing and selling narrowly defined products or services, and
which does not tend to seek opportunities outside its present market is known by Miles and
Snow as a(n)
A. defender.
B. analyzer.
C. adaptor.
D. prospector.
E. reactor.
Defenders are expert at producing and selling narrowly defined products or services. They do
not tend to seek opportunities outside their present markets.
AACSB: Analytic
Blooms: Remember
5-57
66. When a firm responds to uncertainty in its environment as a(n) ________, its continual pursuit of
product and market innovation may lead to a loss of efficiency, but is likely to make competitors
nervous.
A. reactor
B. analyzer
C. defender
D. prospector
E. executor
Prospectors focus on developing new products or services and in seeking out new markets,
rather than waiting for things to happen. The continual product and market innovation has a
price: Such companies may suffer a loss of efficiency. Nevertheless, their focus on change can
put fear in the hearts of competitors.
AACSB: Analytic
Blooms: Understand
5-58
67. In the current broadband environment, consumers are able to download products like music,
movies, and books. Netflix was aggressive in taking advantage of this fact, offering web
streaming and game console access to its customers before competitors. According to Miles
and Snow, Netflix would be a(n)
A. reactor.
B. prospector.
C. analyzer.
D. defender.
E. executor.
A company described as "aggressive" is often a Prospector organization. Prospectors focus on

developing new products or services and in seeking out new markets, rather than waiting for
things to happen.
AACSB: Analytic
Blooms: Apply
5-59
68. A company producing cameras and video cameras prefers to focus its resources on a fast
imitation program to reverse-engineer new features from competitors and add those, rather
than implementing truly inventive features. Miles and Snow would call this company a(n)
A. reactor.
B. prospector.
C. analyzer.
D. defender.
E. imitator.
Analyzers take a "me too" response to the world. Analyzers let other organizations take the risks
of product development and marketing and then imitate (or perhaps slightly improve on) what
seems to work best.
AACSB: Analytic
Blooms: Apply
69. The adaptive cycle portrays businesses as continuously cycling through three kinds of business
decisions: entrepreneurial, ______, and administrative.
A. leadership
B. alignment
C. organization
D. production
E. engineering
Miles and Snow introduced the idea of the adaptive cycle, which portrays businesses as
continuously cycling through decisions about three kinds of business problems: (1)
entrepreneurial (selecting and making adjustments of products and markets), (2) engineering,
and (3) administrative (establishing roles, relationships, and organizational processes).
AACSB: Analytic
5-60
Blooms: Understand
70. If a business lacks insight or fails to use the adaptive cycle properly, it is likely to be which of the
following?
A. A prospector
B. An analyzer
C. A defender
D. A reactor
E. An imitator
As one scholar points out, "With enough cycles and insight, a given business becomes a very
good, comprehensively aligned Prospector, Analyzer, or Defender. If a business lacks insight, or
if it fails to take advantage of alignment opportunities afforded by the adaptive cycle, it will be
an incongruent, poorly performing Reactor."
AACSB: Analytic
Blooms: Understand
5-61
71. Which of the following is the correct order of planning steps within an organization?
A. Strategic planning, mission statement & vision statement, operational planning, tactical
planning
B. Strategic planning, mission statement & vision statement, tactical planning, operational
planning
C. Strategic planning, operational planning, mission statement & vision statement, tactical
planning
D. Mission statement & vision statement, strategic planning, tactical planning, operational
planning
E. Mission statement & vision statement, strategic planning, operational planning, tactical
planning
According to Figure 5.2, the correct order of the steps is mission statement & vision statement,
strategic planning, tactical planning, and operational planning.
AACSB: Analytic
Blooms: Understand
72. Which of the following comes LAST when an organization makes a plan?
A. operational planning
B. mission statement
C. strategic planning
D. tactical planning
E. vision statement
According to Figure 5.2, the correct order of the steps is mission statement & vision statement,
strategic planning, tactical planning, and operational planning.
AACSB: Analytic
Blooms: Understand
5-62
73. The statement which expresses the purpose of an organization is called a(n)
A. goal statement.
B. rationale statement.
C. vision statement.
D. intention statement.
E. mission statement.
A mission statement expresses the purpose of the organization.
AACSB: Analytic
Blooms: Remember
74. Hilton Hotel's statement expressing its purpose as "to fill the earth with the light and warmth of
hospitality" is a(n)
A. vision statement.
B. intention statement.
C. goal statement.
D. mission statement.
E. rationale statement.
A mission statement expresses the purpose of the organization. The mission statement for
Hilton Hotels, a large company, reads: "To fill the earth with the light and warmth of hospitality."
AACSB: Analytic
Blooms: Understand
5-63
75. McKesson Corp., a U.S. pharmaceutical distributor, has a(n) ________ statement, which is "to
provide comprehensive pharmacy solutions that improve productivity, profitability and result in
superior patient care and satisfaction."
A. purpose
B. vision
C. intention
D. goal
E. mission
A mission statement expresses the purpose of the organization. Whether the organization is for-
profit or nonprofit, the mission statement identifies the goods or services the organization
provides and will provide. Sometimes it also gives the reasons for providing them (to make a
profit or to achieve humanitarian goals, for example).
AACSB: Analytic
Blooms: Apply
76. Avon, the world's leading direct seller of beauty products, has a(n) ________ statement, which is
"to be the company that best understands and satisfies the product, service, and self-fulfillment
needs of women globally."
A. vision
B. intention
C. goal
D. mission
E. rationale
A vision statement expresses what the organization should become, where it wants to go
strategically.
AACSB: Analytic
5-64
Blooms: Apply
77. There are three levels of planning. Their order, from first to last, is
A. operational, tactical, and strategic.

B. strategic, operational, and tactical.
C. tactical, operational, and strategic.
D. tactical, strategic, and operational.
E. strategic, tactical, and operational.
The order of planning is strategic, then tactical, and then operational.
AACSB: Analytic
Blooms: Remember
78. At which level of planning must managers be paying attention to the environment outside the
organization, be future oriented, and deal with uncertain and competitive conditions?
A. tactical
B. organizational
C. strategic
D. front-line
E. operational
According to Figure 5.3, strategic planning includes long-term decisions about the overall
direction of the organization. Managers need to pay attention to the environment outside the
organization, be future oriented, and deal with uncertain and highly competitive conditions.
AACSB: Analytic
Blooms: Understand
5-65
79. Because of the frequency with which world competition and information technology alter
marketplace conditions, a company's ________ may have to be done closer to every 1 or 2 years
than every 5.
A. management planning
B. strategic planning
C. tactical planning
D. operational planning
E. implementation planning
Strategic planning determines what the organization's long-term goals should be for the next 1-
5 years with the resources they expect to have available. Today, because of the frequency with
which world competition and information technology alter marketplace conditions, a company's
strategic planning may have to be done closer to every 1 or 2 years than every 5.
AACSB: Analytic
Blooms: Understand
80. Which level of management is most often engaged in tactical planning?
A. Working-level employees
B. First-line managers
C. Middle managers
D. Top managers
E. Consultants
The strategic priorities and policies are then passed down to middle managers, who must do
tactical planning.
AACSB: Analytic
5-66
Blooms: Remember
81. What is the time frame of an operational plan?
A. 2-10 years
B. 1-5 years
C. 6-24 months
D. 1-52 weeks
E. 1-90 days
First-line managers do operational planning, which means they determine how to accomplish
specific tasks with available resources within the next 1-52 weeks.
AACSB: Analytic
Blooms: Remember
5-67
82. Alita is participating with other division heads in a discussion about new international
competition for the firm and what the organization's goals should be for the next three years.
She is participating in
A. tactical planning.
C. operational planning.
D. controlling.
E. writing a mission statement.
According to Figure 5.3, strategic planning includes long-term decisions about overall direction
of organization. Managers need to pay attention to environment outside the organization, be
future oriented, and deal with uncertain and highly competitive conditions.
AACSB: Analytic
Blooms: Apply
83. Executive management has recently decided to acquire a small company with a complementary
product line, so Craig, a marketing manager, is meeting with other managers to discuss how to
implement policies to support the acquisition over the next year. He is participating in
A. mission development.
C. controlling.
D. operational planning.
E. tactical planning.
Tactical planning is done by middle management to determine what contributions their

departments or similar work units can make with their given resources during the next 6-24
months.
AACSB: Analytic
5-68
Blooms: Apply
84. Portia is meeting with her subordinates to determine which workers from her department need
training in order to handle production increases expected during the next nine months. Portia is
involved in
A. vision development.
B. operational planning.
C. controlling.
D. tactical planning.
E. developing an MBO.
Operational planning is done by first-line management to determine how to accomplish specific

tasks with available resources within the next 1-52 weeks.
AACSB: Analytic
Blooms: Apply
5-69
85. Which of the following is associated with operational planning?
A. Determining the overall direction of the organization.

B. Examining the environment outside of the organization.
C. Implementing policies and plans of top management.
D. Directing daily tasks of nonmanagerial personnel.
E. Making decisions under highly uncertain conditions.
According to Figure 5.3, operational planning is done by first-line management and directs the
daily tasks of nonmanagerial personnel. Decisions are often predictable, following routine
procedures.
AACSB: Analytic
Blooms: Understand
86. Which of the following best represents the strategic planning time frame that Jeff Bezos of
Amazon prefers?
A. Six months or less

B. One to two years
C. Three to five years
D. Five to seven years
E. Ten to twenty years
Back in 1997, Bezos warned stockholders that "[i]t's all about the long term. We may make
decisions and weigh trade-offs differently than some companies." Most top managers do
strategic planning on a one- to three-year time line. Bezos is very long term, operating on a 10-
to 20-year time line.
AACSB: Analytic
Blooms: Understand
5-70
87. ________ goals are set by and for middle managers and focus on the actions needed to achieve
________ goals.
A. Strategic; operational
B. Tactical; strategic
C. Strategic; tactical
D. Tactical; operational
E. Operational; tactical
strategic goals.
AACSB: Analytic
Blooms: Remember
88. Cimarron Saddlery expects to improve profitability of the organization by 15% over the next
three years. This is an example of a(n)
C. tactical goal.
E. strategic goal.
Strategic goals are set by and for top management and focus on objectives for the organization
as a whole.
AACSB: Analytic
Blooms: Apply
5-71
89. Managers at Cimarron Saddlery expect to meet profitability goals for the company by cutting
costs through a 70% increase in global sourcing of leather and other materials over the next two
years. This is an example of a(n)
C. tactical goal.
E. strategic goal.
strategic goals.
AACSB: Analytic
Blooms: Apply
90. After setting goals, managers should next
A. prepare an action plan for accomplishing the goals.

B. propose changes to the goals of same-level managers to bring all into alignment.
C. supervise subordinates closely.
D. report failure to meet goals to superiors.
E. begin the planning process anew.
The goal should be followed by an action plan, which defines the course of action needed to
achieve the stated goal, such as a marketing plan or sales plan.
AACSB: Analytic
Blooms: Understand
5-72
91. Southwest Airlines acquisition of rival AirTran Airways may have been responsible for a sharp
decline in on-time arrivals, which is one of Southwest's ________ goals, supporting a larger goal
of being highly profitable.
A. dependant
B. strategic
C. operational
D. facilities
E. tactical
strategic goals.
AACSB: Analytic
Blooms: Understand
92. One type of standing plan, the __________, outlines the general response to a designated
problem or situation.
A. policy
B. project
C. rule
D. procedure
E. program
A policy is a standing plan that outlines the general response to a designated problem or
situation.
AACSB: Analytic
Blooms: Remember
5-73
93. When White Castle specifies exactly how to dress a hamburger, including the order of the
condiments, this is called a
A. program.
B. policy.
C. rule.
D. procedure.
E. project.
particular problems or circumstances. Example: White Castle specifies exactly how a hamburger
should be dressed, including the order in which the mustard, ketchup, and pickles are applied.
AACSB: Analytic
Blooms: Understand
94. Dayton Construction has a ________ for processing invoices, which includes coding them by job
number and construction phase, and matching them with the correct purchase order.
A. program.
B. policy.
C. rule.
D. procedure.
E. project.
particular problems or circumstances.
AACSB: Analytic
Blooms: Apply
5-74
95. Management instituted a new ______ in Yichao's workplace that "employees who are more than
15 minutes late to work without calling a supervisor will be given a written warning."
A. policy
B. rule
C. procedure
D. project
E. program
A rule is a standing plan that designates specific required action.
AACSB: Analytic
Blooms: Apply
96. A single-use plan encompassing a range of projects or activities is a(n)
A. program.
B. strategy.
C. series.
D. agenda.
E. mission.
A program is a single-use plan encompassing a range of projects or activities.
AACSB: Analytic
Blooms: Remember
5-75
97. NASA's Curiosity Rover, employed to investigate a large crater on Mars, is an example of a
A. policy.
B. rule.
C. project.
D. procedure.
E. program.
The Curiosity Rover is one project in the government's space program.
AACSB: Analytic
Blooms: Apply
98. A SMART goal is one that is
A. specific, maintainable, affordable, realistic, and timely.

B. specific, measurable, attainable, results-oriented, and has target dates.
C. specific, maintainable, achievement-oriented, in real time, and timely.
D. specific, measurable, affordable, realistic, and has target dates.
E. specific, maintainable, aligned with other goals, realistic, and timely.
dates.
AACSB: Analytic
Blooms: Remember
5-76
99. The goal to "improve the quality of customer service by instituting follow-up telephone calls this
month" is not a SMART goal because it is
A. unlikely to align with higher level goals.

B. not measurable.
C. too simplistic.
D. not results oriented.
E. unlikely to result in improvement to customer service.
Whenever possible, goals should be measurable, or quantifiable. Some goals such as those
concerned with improving quality are not precisely quantifiable. In that case, something on the
order of "Improve the quality of customer relations by instituting 10 follow-up telephone calls
every week" will do. You can certainly quantify how many follow-up phone calls were made.
AACSB: Analytic
Blooms: Apply
100. Kristi has been struggling with her weight, and one of her coworkers suggested that she make a
SMART goal for herself. Which of the following is the best example of a SMART goal for Kristi?
A. I want to lose a lot of weight.

B. I want to look better in a swimsuit.
C. I want to lose 20 pounds over the course of one calendar year.
D. I want to start losing weight soon.
E. I want to lose 30% of my body mass by next month.
A SMART goal is specific, measurable, attainable, results-oriented, and has target dates. Only
choice C has all of these characteristics.
AACSB: Analytic
Blooms: Apply
5-77
101. In terms of difficulty, the best goals are
A. just beyond what is achievable, to maximize motivation.

B. easy to attain, so failure will not hurt morale.
C. challenging but realistic.
D. impossible to really reach, because they are meant only to be idealistic and inspirational.
E. easy or hard, since both work equally well.
Goals should be challenging, of course, but above all they should be realistic and attainable. If
too easy, goals won't impel people to make much effort. If impossible, employees won't even
bother trying. Or they will try and continually fail, which will end up hurting morale.
AACSB: Analytic
Blooms: Understand
102. MBO stands for
A. Management by Observation.
B. Management by Objectives.
C. Management by Ownership.
D. Management by Obligation.
E. Management by Organization.
Management by objectives (MBO) is a four-step process for motivating employee performance.
AACSB: Analytic
Blooms: Remember
5-78
103. The first step in the MBO process is to
A. determine rewards for meeting goals.

B. give a performance appraisal.
C. develop an action plan.
D. periodically review performance.
E. jointly set objectives.
Management by objectives (MBO) is a four-step process, the first of which is for managers and
employees to jointly set objectives for the employee.
AACSB: Analytic
Blooms: Remember
104. Sultan is a new manager, and he is using MBO for the first time with his subordinates. It is
essential for Sultan to
A. decide on goals for employees and clearly inform them of these goals.
B. ask the employee to commit the goals to memory.
C. set goals that are just out of the subordinate's reach.
D. reward employees when they meet objectives.
E. review an employee's performance once, at the end of the performance period.
Because the purpose of MBO is to motivate employees, performance that meets the objectives
should be rewarded with compliments, raises, bonuses, promotions, or other suitable benefits.
AACSB: Analytic
Blooms: Apply
5-79
105. Which of the following would best describe MBO?
A. It works at the highest levels of an organization.

B. It works at the lowest levels of an organization.
C. Its purpose is to motivate employees.
D. Its purpose is to control employees.
E. It effectively benchmarks HR practices against competitors.
The purpose of MBO is to motivate rather than control subordinates.
AACSB: Analytic
Blooms: Understand
106. Which of the following is a type of objective for MBO?
A. Profitability
B. Personal development
C. Market share
D. Social responsibility
E. Ethics
There are three types of objectives in MBO: improvement, personal development, and
maintenance objectives (see Table 5.2).
AACSB: Analytic
Blooms: Understand
5-80
107. Productivity gains from MBO are higher when an organization has
A. top-management commitment.
B. few budget problems.
C. team rather than individual performance reviews.
D. union support.
E. nonmanagerial employee support.
For MBO to be successful, top management must be committed. "When top-management

commitment [to MBO] was high," said one review, "the average gain in productivity was 56%.
When commitment was low, the average gain in productivity was only 6%."
AACSB: Analytic
Blooms: Understand
108. MBO works by cascading objectives down through the organization, and these objectives
become more ______ at lower levels of the organization.
A. measurable
B. challenging
C. results-oriented
D. attainable
E. specific
MBO works by cascading objectives down through the organization; that is, objectives are
structured in a unified hierarchy, becoming more specific at lower levels of the organization.
AACSB: Analytic
Blooms: Understand
5-81
109. ______ help you ignore extraneous matters in favor of focusing on what's important, which is
realizing the goals on time and on budget.
A. Deadlines
B. Relationships
C. Changes
D. Networks
E. Options
Deadlines help you ignore extraneous matters (such as cleaning up a messy desk) in favor of
focusing on what's important, realizing the goals on time and on budget. Deadlines provide a
mechanism for giving ourselves feedback.
AACSB: Analytic
Blooms: Understand
110. The constant feedback loop of the ______ is designed to ensure plans stay headed in the right
direction.
A. means-end chain
B. planning/control cycle
C. control system
D. project management method
E. project planning sequence
The planning/control cycle describes a constant feedback loop designed to ensure plans stay
headed in the right direction.
AACSB: Analytic
Blooms: Remember
5-82
111. Improving future plans is part of which step in the planning/control cycle?
A. Making the plan.

C. Benchmarking against competitors.
D. Controlling the direction.
Improving future plans is one part of controlling the direction by taking corrective action. The
other way is to correct deviations in the plan being carried out.
AACSB: Analytic
Blooms: Understand
112. Jordan, a sales manager, met with his staff to discuss that they were only a third of the way to
their sales goal, but halfway through the sales period. He was looking for suggestions to
improve second-half performance. Which part of the planning/control cycle is Jordan doing?
A. Benchmarking against competitors.

B. Controlling the direction.
C. Making the plan.
D. Carrying out the plan.
Controlling the direction includes comparing the results with the plan, improving future plans,
and correcting deviations in the plan being carried out.
AACSB: Analytic
Blooms: Apply
5-83
113. Megan met with her supervisor for a formal review of her job performance over the past year.
Though Megan had agreed to complete five training modules during the course of the year, she
only did two. At this stage, which part of the planning/control cycle would be applicable to her
manager going forward?
A. Carry out the plan.

B. Improve feedback.
C. Correct deviations in the plan.
D. Benchmark against other employees.
E. Improve future plans.
Controlling the direction includes the corrective action in step 4 of the cycle, which (a) can get a
project back on track before it's too late by correcting deviations or (b) if it's too late, can
provide data for improving future plans. In this case, at the end of the performance period, the
information can be used to improve future plans. It is possible that five training modules is an
unreasonable goal.
AACSB: Analytic
Blooms: Apply
5-84
114. Apple has a plan to generate buzz for its new products by maintaining secrecy about them.
Apple has learned that strong measures are required to protect such mysteries, so it has
enhanced its security and even fired and sued employees for leaking news about the products.
These efforts would be considered which part of the planning/control cycle?
A. Making the plan.

C. Comparing results.
D. Taking corrective action.
E. Benchmarking competitors.
Despite Apple's plan for its products, leaks have occurred, and Apple has learned that secrecy
requires strong measures. Thus, Apple has fired and later sued employees who leaked news
about unannounced products and has implemented a number of other security measure as part
of its corrective action.
AACSB: Analytic
Blooms: Understand
5-85
Essay Questions
115. In general, planning has many benefits. However, planning also has two cautions of which one
must be aware. Discuss these.
Planning requires time, including that to involve others (subordinates, peers, staff, competitors,
markets, etc.).
Also, some decisions have to be made without a lot of time. While you shouldn't shoot from the
hip in making decisions, often you may have to "go with what you've got" and make a decision
based on a plan that is perhaps only three-quarters complete. Sometimes the need to make a
decision quickly outweighs the benefit of having more complete information.
AACSB: Analytic
Blooms: Understand
116. List the four benefits of planning.
Planning provides a means to check on progress toward goals.

Planning helps to coordinate activities between people and/or departments.
Planning helps in thinking ahead and anticipating problems or opportunities.
Planning helps one cope with uncertainty.
AACSB: Analytic
Blooms: Understand
5-86
117. Miles and Snow suggest that organizations responding to uncertainty in the environment do so
with one of four approaches. Name and describe these approaches, and provide an example of
each.
Defenders are expert at producing and selling narrowly defined products or services. Often they
are old-line successful enterprises, such as Macy's and JCPenney, which in the 2010 era of
consumer frugality found themselves losing customers to discounters like Walmart. They do not
tend to seek opportunities outside their present markets. They devote most of their attention to
making refinements in their existing operations, such as slashing prices.
A company described as "aggressive" is often a Prospector organization. Prospectors focus on

developing new products or services and in seeking out new markets, rather than waiting for
things to happen. An example of a Prospector company is Gap, which announced it would look
for new sales by expanding abroad. Another such company is Apple.
Analyzers take a "me too" response to the world. Analyzers let other organizations take the risks
of product development and marketing and then imitate (or perhaps slightly improve on) what
seems to work best. For years, Microsoft has been accused of taking this approach.
Reactors make adjustments only when finally forced to by environmental pressures. In the worst
cases, they are so incapable of responding fast enough that they suffer massive sales losses and
are even driven out of business. Kmart, for instance, failed to respond to Walmart's development
of its distribution and inventory management competencies, resulting in stalled growth and a
significant reduction in market share. Kmart's core business never recovered from this reactive
strategy.
AACSB: Analytic
Blooms: Apply
5-87
118. Explain the different types of planning for the different levels of management. Include the typical
time frame for which each plan is created.
Strategic planning is done by top management. Using their mission and vision statements, top
managers do strategic planning—they determine what the organization's long-term goals
should be for the next 1-5 years with the resources they expect to have available. It should
communicate not only general goals about growth and profits but also ways to achieve them.
Tactical planning is done by middle management. The strategic priorities and policies are then
passed down to middle managers, who must do tactical planning—that is, they determine what
contributions their departments or similar work units can make with their given resources during
the next 6-24 months.
Operational planning is done by first-line management. Middle managers then pass these plans
along to first-line managers to do operational planning—that is, they determine how to
accomplish specific tasks with available resources within the next 1-52 weeks.
AACSB: Analytic
Blooms: Understand
5-88
119. Explain the difference between standing plans and single-use plans. Define the three types of
standing plans, the two types of single-use plans and give examples of each.
Standing plans are plans developed for activities that occur repeatedly over a period of time.
Standing plans consist of policies, procedures, and rules.
A policy is a standing plan that outlines the general response to a designated problem or
situation. Example: "This workplace does not condone swearing." This policy is a broad
statement that gives managers a general idea about what is allowable for employees who use
bad language, but gives no specifics.
particular problems or circumstances. Example: White Castle specifies exactly how a hamburger
should be dressed, including the order in which the mustard, ketchup, and pickles are applied.
A rule is a standing plan that designates specific required action. Example: "No smoking is
allowed anywhere in the building." This allows no room for interpretation.
Single-use plans are plans developed for activities that are not likely to be repeated in the
future. Such plans can be programs or projects.
A program is a single-use plan encompassing a range of projects or activities. Example: The U.S.
government space program (which was to be closed by the end of 2010) had several projects,
including the Challenger project and the Hubble Telescope project.
A project is a single-use plan of less scope and complexity than a program. Example: The space
shuttle Discovery was one project in the government's space program.
AACSB: Analytic
Blooms: Apply
5-89
120. Define the components of the acronym SMART in goal setting. Provide an example of a SMART
goal and demonstrate that it meets all criteria.
SMART goals are: specific (rather than vague), measurable (quantifiable), attainable (challenging
but realistic and attainable), results-oriented (support the vision), and with target dates
(deadlines).
An example of a SMART goal is "Ninety percent of planes should arrive within 15 minutes of the
scheduled arrival time by December 2013."
AACSB: Analytic
Blooms: Apply
121. What is MBO? Describe the process by which MBO is done as well as its purpose.
Management by objectives (MBO) is a four-step process in which (1) managers and employees
jointly set objectives for the employee, (2) managers develop action plans, (3) managers and
employees periodically review the employee's performance, and (4) the manager makes a
performance appraisal and rewards the employee according to results. The purpose of MBO is
to motivate rather than control subordinates.
AACSB: Analytic
Blooms: Understand
5-90
122. Discuss the three things that must happen for MBO to be successful.
For MBO to be successful, three things have to happen:
1. Top management must be committed. "When top-management commitment [to MBO] was
high," said one review, "the average gain in productivity was 56%. When commitment was low,
the average gain in productivity was only 6%."
2. It must be applied organizationwide. The program has to be put in place throughout the
entire organization. That is, it cannot be applied in just some divisions and departments; it has to
be done in all of them.
3. Objectives must "cascade." MBO works by cascading objectives down through the
organization; that is, objectives are structured in a unified hierarchy, becoming more specific at
lower levels of the organization. Top managers set general organizational objectives, which are
translated into divisional objectives, which are translated into departmental objectives. The
hierarchy ends in individual objectives set by each employee.
AACSB: Analytic
Blooms: Understand
123. Describe the planning/control cycle.
The planning/control cycle has two planning steps (1 and 2) and two control steps (3 and 4), as
follows: (1) Make the plan. (2) Carry out the plan. (3) Control the direction by comparing results
with the plan. (4) Control the direction by taking corrective action in two ways—namely, (a) by
correcting deviations in the plan being carried out, or (b) by improving future plans.
AACSB: Analytic
Blooms: Understand
5-91

Planning: The Foundation of Successful Management: True / False Questions

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Planning: The Foundation of Successful Management: True / False Questions

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Chapter 05

Planning: The Foundation of Successful Management

True / False Questions

2. A steady-state career entails a slow-but-steady growth in level of responsibility and compensation.

4. A transitory career path involves a series of alternating promotions and demotions.

24. Operational planning is normally performed by middle management.

28. Strategic goals focus on objectives for the organization as a whole.

31. A marketing plan is an example of an action plan.

33. Southwest Airlines' goal of being highly profitable is a tactical goal.

35. Policies, procedures, and rules are types of single-use plans.

36. A policy includes more specifics than does a rule.

39. The U.S. government space program is an example of a single-use plan.

41. The "R" in a SMART goal stands for "reachable."

45. MBO was developed by Frederick Taylor as part of scientific management.

47. The purpose of MBO is to motivate subordinates.

48. Perpetuation objectives are one type of objective used in MBO.

Multiple Choice Questions

A. formulating a method to allocate resources effectively.

61. Which of the following is one of the challenges of planning?

A. Assigning the right people to tasks.

A. operational, tactical, and strategic.

80. Which level of management is most often engaged in tactical planning?

85. Which of the following is associated with operational planning?

A. Determining the overall direction of the organization.

A. Six months or less

A. prepare an action plan for accomplishing the goals.

98. A SMART goal is one that is

A. specific, maintainable, affordable, realistic, and timely.

A. unlikely to align with higher level goals.

A. I want to lose a lot of weight.

101. In terms of difficulty, the best goals are

A. just beyond what is achievable, to maximize motivation.

102. MBO stands for

103. The first step in the MBO process is to

A. determine rewards for meeting goals.

105. Which of the following would best describe MBO?

A. It works at the highest levels of an organization.

106. Which of the following is a type of objective for MBO?

A. Making the plan.

A. Benchmarking against competitors.

A. Carry out the plan.

A. Making the plan.

123. Describe the planning/control cycle.

True / False Questions

2. A steady-state career entails a slow-but-steady growth in level of responsibility and

4. A transitory career path involves a series of alternating promotions and demotions.

A vision is a long-term goal describing "what" an organization wants to become. It is a clear

24. Operational planning is normally performed by middle management.

A goal, also known as an objective, is a specific commitment to achieve a measurable result

31. A marketing plan is an example of an action plan.

35. Policies, procedures, and rules are types of single-use plans.

Standing plans consist of policies, procedures, and rules.

36. A policy includes more specifics than does a rule.

38. In single-use plans, a program is another name for a project.

Single-use plans can be programs or projects. A program is a single-use plan encompassing a

39. The U.S. government space program is an example of a single-use plan.

47. The purpose of MBO is to motivate subordinates.

The purpose of MBO is to motivate rather than control subordinates.

In the planning/control cycle, controlling the direction of planning can be accomplished by

Multiple Choice Questions

The steady-state career is actually fairly commonplace: Sales representatives, computer

59. Planning is defined as

A. formulating a method to allocate resources effectively.