Virginia Tech MGT 3304 Management - Test Bank

Virginia Tech MGT 3304 Management –
Test Bank
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Sample Questions

Chapter 03
Test Bank
True / False Questions
1. Paul, who is normally an ethical person, has an

opportunity to acquire what he feels is “easy” money in
his job, and he believes it is safe to steal the money
because nobody would know if he does take it. Paul
rationalizes that it is fine to steal the money because he
needs it more than the person whom the money belongs
to. The psychological mechanism that causes Paul to
want to steal the money is poor self-esteem.
FALSE
AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-01 Describe the triple bottom line of
people, planet, and profit.
Topic: Ethical Behavior
Feedback: People know stealing is wrong, but they do it
because of psychological mechanisms such as motivated
blindness, the tendency to overlook information that works
against their best interest. Motivated blindness allows us to
behave unethically while maintaining a positive self-image.
2. Habitual cheating tends to begin with small infractions,

such as illegally downloading books and songs, and then
grows by increments into an ongoing deliberate strategy
of deception or fraud.
TRUE
AACSB: Ethics
Blooms: Understand
Difficulty: 1 Easy
Feedback: As Carey has noted, habitual cheating tends to
begin with small infractions, such as illegally downloading
books and songs, and then grows by increments into an
ongoing deliberate strategy of deception or fraud.
3. Prior to a 2010 natural-gas pipeline explosion in San
Bruno, California, Pacific Gas & Electric chose to use its
surplus revenues to improve safety, an example of ethical
decision making.
FALSE
AACSB: Ethics
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 03-02 Identify important stakeholders
inside the organization.
Feedback: Prior to the explosion, PG&E’s own internal audit
found the incentives actually encouraged crews to produce
inaccurate surveys. An independent audit found that over an
11-year period PG&E collected $430 million more from its gas
operations than the government had authorized—and it “chose
to use the surplus revenues for general corporate purposes”
rather than for improved safety. In fact, in the three years prior
to the explosion, the company spent $56 million a year on an
incentive plan—stock awards, performance shares, and
deferred compensation—for its executives and directors,
including millions to the CEO.
4. The employees of a production facility that produce parts

for boats are meeting to discuss ways to control rising
costs, which are affecting their bonus (incentive pay). The
employees are internal stakeholders of the factory.
TRUE
AACSB: Knowledge Application
Blooms: Apply
Difficulty: 3 Hard
Topic: Internal Stakeholders
Feedback: Internal stakeholders include employees, owners,
and the board of directors. Some of the directors on the board
(inside directors) may be top executives of the firm.
5. The task environment of Top-Notch Sewing consists of

just two groups, customers and stockholders, who give
the employees and management of Top-Notch the daily
tasks that the company’s employees will handle.
FALSE
Blooms: Apply
Difficulty: 3 Hard
outside the organization.
Topic: External Stakeholders
Feedback: The task environment consists of 11 groups that
present employees with daily tasks to handle. The 11 groups
are customers, competitors, suppliers, distributors, strategic
allies, employee organizations, local communities, financial
institutions, government regulators, special-interest groups,
and mass media.
6. Pleasant Resort, a successful 100-year-old hotel and

resort, entered into a co-marketing arrangement with A-
Plus Hotels, a five-star hotel chain. Both companies
benefit from the new relationship. Pleasant is now able to
market its facility and services through A-Plus’s
marketing team, and A-Plus Hotels now offers access to
an upscale resort that it can recommend to its customers
who are looking for a resort experience. A-Plus Hotels and
Pleasant Resort can be considered strategic allies.
TRUE
Blooms: Apply
Difficulty: 3 Hard
Feedback: Companies, and even nonprofit organizations,
frequently link up with other organizations (even competing
ones) to realize strategic advantages. The
term strategic allies describes the relationship of two
organizations that join forces to achieve advantages neither
can perform as well alone.
7. The general environment, or macroenvironment, includes

six forces: economic, technological, sociocultural,
demographic, political-legal, and international.
TRUE
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 1 Easy
Feedback: The general environment, or macroenvironment,
includes six forces: economic, technological, sociocultural,
demographic, political-legal, and international.
8. When the Kiddie Village Daycare Center looks at the

recent increase in the number of working mothers in its
neighborhood to determine how many employees to hire,
its managers are studying demographic forces.
TRUE
Blooms: Apply
Difficulty: 3 Hard
Feedback: Demographic forces are influences on an
organization arising from changes in the characteristics of a
population, such as age, gender, or ethnic origin.
9. Paul, the vice president of marketing in an international

sales organization, is considering opening an office in a
new country. He is looking at the current economic,
political, legal, and technological global forces in that
country that can affect the success of his company’s
expansion into the new area. These forces that Paul is
studying are international forces.
TRUE
Blooms: Apply
Difficulty: 3 Hard
Feedback: International forces are changes in the economic,
political, legal, and technological global system that may
affect an organization.
10.Just before introduction of a new revolutionary laptop, the
Top205 by Top Computers, Greg, the CEO of Top, was informed
that a problem with a part inside the Top205 may cause
reliability issues. Greg knows that correcting the problem will
delay the introduction of the product, and be expensive due to
possible order cancelations and added advertising costs. But
he also knows that allowing the new flawed computer into the
market will affect Top Computers’ reputation. Greg’s decision
whether to delay the introduction of the Top205 or proceed as
planned is an example of an ethical dilemma.
TRUE
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-04 Explain the importance of ethics and
values in effective management.
Topic: Ethical Dilemma
Feedback: An ethical dilemma is a situation in which you have
to decide whether to pursue a course of action that may
benefit you or your organization but that is unethical or even
illegal.
11. The Sarbanes-Oxley Act set up the Federal Trade

Commission to ensure consumer protection and to
eliminate and prevent anticompetitive business practices,
with penalties of as much as 25 years in prison for
noncompliance.
FALSE
AACSB: Ethics
Blooms: Understand
Topic: Sarbanes-Oxley
Feedback: The Sarbanes-Oxley Act established requirements
for proper financial record keeping for public companies and
penalties of as much as 25 years in prison for noncompliance.
12. Companies can reduce unethical behavior by offering

a case-based approach to ethics training that presents
employees with ethical dilemmas and clarifies
expectations.
TRUE
AACSB: Ethics
Blooms: Understand
Topic: Code of Ethics
Feedback: Human resource professionals indicate that case-
based training regarding ethical dilemmas and how to respond
to them may reduce unethical behavior in the workplace.
13. Despite recent pressure from stockholders to

increase profits, World Extraction Corp., a global
petroleum organization, has maintained a practice of
consistently acting ethically by being a good global
corporate citizen, taking host-country and global
standards into consideration when making decisions, and
obeying the laws of host countries as well as
international law. World Extraction Corp. provides an
example of a company acting in a socially responsible
way.
TRUE
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 03-05 Describe the concept of social
responsibility and its role in today’s organizations.
Topic: Corporate Social Responsibility
Feedback: According to University of Georgia business scholar
Archie B. Carroll, corporate social responsibility rests at the
top of a pyramid of a corporation’s obligations, right up there
with economic, legal, and ethical obligations. Carroll suggests
the responsibilities of an organization in the global economy
should take the following priorities, with profit being the most
fundamental (base of the pyramid) and corporate citizenship at
the top: (1) Be a good global corporate citizen, as defined by
the host country’s expectations; (2) be ethical in practices,
taking host-country and global standards into consideration;
(3) obey the law of host countries as well as international law;
and (4) make a profit consistent with expectations for
international business.
15. After the scandals at WorldCom, Tyco, Adelphia, and

Enron, in which company employees lost millions of
dollars and their nest eggs, U.S. companies showed less
concern for corporate governance and more interest in
the development of corporate social responsibility.
FALSE
AACSB: Ethics
Blooms: Analyze
Learning Objective: 03-06 Discuss the role of corporate
governance in assessing management performance.
Topic: Corporate Governance
Feedback: Corporate governance is the system of governing a
company so that the interests of corporate owners and other
stakeholders are protected. After the Enron and other
scandals, there was a renewed interest in corporate
governance.
16. Shane, a sales manager, remarked that typically, her

employees sincerely and positively overstate their job
performance and abilities. This is an example of the ____
effect.
17. overstatement
18. motivated blindness
19. C. holier-than-thou
20. cheating
21. fudging
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: With the “holier-than-thou” effect, science writer
Benedict Carey suggests, “people tend to be overly optimistic
about their own abilities and fortunes—to overestimate their
standing in class, their discipline, their sincerity.”
17. Alonzo, the president of his high school’s senior

class and honor society, has been very busy and did not
study for an important history test. Although Alonzo is
very confident, he realizes that he probably will not do
well on the test. He has talked himself into cheating
because he believes that cheating will help him maintain
his strong GPA, which he will need to be accepted by a
good college. He tells his friend, “I don’t usually cheat,
but I really have to do it.” Which of the following might
explain Alonzo’s behavior?
18. the holier-than-thou effect
19. the deception effect
20. the cheating requirement
21. a depression disorder
22. E. motivated blindness
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: Motivated blindness is the tendency to overlook
information that works against our best interest. “People who
have a vested self-interest, even the most honest among us,
have difficulty being objective,” says one report. “Worse yet,
they fail to recognize their lack of objectivity.” Motivated
blindness enables us to behave unethically while maintaining a
positive self-image. Most students rationalize cheating by
saying, “I don’t usually do this, but I really have to do it.” They
would rather cheat than show their families they got an F.
18. Don, the owner of a bait and tackle shop, attended

an entrepreneurship workshop that discussed the triple
bottom line, which measures an organization’s ____
performance.
19. A. social, environmental, and financial
20. financial, diversity, and environmental
21. social, synergy, and diversity
22. marketing, profit, and efficiency
23. social, effectiveness, and financial
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Topic: Triple Bottom Line
Feedback: The triple bottom line—representing people, planet,
and profit (the 3 Ps)—measures an organization’s social,
environmental, and financial performance.
19. What mechanism is used to provide a systematic

assessment of an organization’s performance in
implementing socially responsible programs, often based
on predefined goals?
20. sustainability program
21. code of ethics
22. diversity program
23. financial audit
24. E. social audit
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Feedback: A social audit is a systematic assessment of a
company’s performance in implementing socially responsible
programs, often based on predefined goals.
20. An organization’s internal stakeholders consist of

21. the board of directors, employees, and suppliers.
22. the board of directors, customers, and owners.
23. customers, families of employees, and employees.
24. D. the board of directors, employees, and owners.
25. competitors, the community, and suppliers.

Blooms: Remember
Difficulty: 1 Easy
Feedback: A company’s internal stakeholders consist of
employees, owners, and the board of directors.
21. The marketing director for Zap Games, a video game

company, has informed his employees that he feels the
company needs to improve its relationship with the
distributors of the company’s products because the
distributors are part of the ______ environment for Zap
Games. He believes that a stronger relationship with
distributors will lead to more market share, and higher
profits, for both Zap Games and its distributors.
22. strategic
23. focused
24. outlying
25. internal
26. E. task

Blooms: Apply
Difficulty: 3 Hard
Feedback: Distributors are part of an organization’s task
environment, and therefore one of its external stakeholders.
22. Patsy, a registered nurse, has decided to start a
home healthcare service to assist with the medical, meal
preparation, and light housecleaning needs of older
adults. To grow her business, Patsy is focusing her
marketing efforts on the older adult population; in these
efforts, she is involved with the _____ environment.
23. task
24. B. general
25. internal
26. natural capital
27. strategic allies

Blooms: Apply
Difficulty: 3 Hard
Feedback: Age is one of the demographic forces, and
demographic forces are part of an organization’s general
environment.
23. Don was recently promoted, and his salary increase

includes retirement investment options, so he has
decided to take part in an ESOP. This means that Don
24. will be on the company’s board of directors.
25. will participate in an Externship Supervisors’
Oversight Plan.
26. C. will be buying or receiving shares of his
company’s stock.
27. is now one of the company’s external stakeholders.
28. is in charge of an investment group.
Blooms: Apply
Difficulty: 3 Hard
Feedback: With an Employee Stock Ownership Plan (ESOP),
employees buy (or are given) company stock to become
owners.
24. Amy, a successful banker and educator, has decided

to retire, but she is very interested in staying involved
with a company “that cares.” So when asked to serve on
its board of directors, she gladly accepted the invitation.
As a member of the board, Amy will be involved with the
organization’s
25. A. overall strategic goals and approval of major
decisions.
26. daily company management and employee
supervision.
27. overall strategic goals and global HR management.
28. daily specific company goals and management of a
specific department.
29. oversight of sales and marketing.

Blooms: Apply
Difficulty: 3 Hard
Feedback: Members of the board of directors are very
important in setting the organization’s overall strategic goals
and in approving the major decisions and salaries of top
management.
25. Warm Hearts is a nonprofit organization that brings

warm meals to older adults and runs errands for its
clients; the board of Warm Hearts is called the
26. board of directors.
27. board of ethics.
28. strategic board.
29. daily oversight committee.
30. E. board of regents.

Blooms: Apply
Difficulty: 3 Hard
Feedback: In nonprofit organizations, such as universities or
hospitals, the board may be called the board of trustees or the
board of regents.
26. Marie and Marti are partners who solely own M and M
Florist. As owners, they can
27. claim only limited liability.
28. avoid taking any legal responsibility for M and M.
29. sell stock in their company.
30. D. claim the organization as their legal property.
31. decide not to pay a dividend to their stockholders.
Blooms: Apply
Difficulty: 3 Hard
Feedback: The owners of an organization consist of all those
who can claim it as their legal property. A partnership is a form
of business ownership.
27. To focus on improving company customer service

this year, the CEO of a pet food manufacturer outlined a
list of stakeholders to concentrate on: distributors, local
communities, and the mass media. These three groups
are
28. A. external stakeholders.
29. general stakeholders.
30. internal stakeholders.
31. preferred stockholders.
32. interest groups.

Blooms: Apply
Difficulty: 3 Hard
Feedback: External stakeholders are people or groups in the
organization’s external environment that are affected by it.
The external task environment consists of 11 groups that
present the organization with daily tasks to handle: customers,
competitors, suppliers, distributors, strategic allies, employee
organizations, local communities, financial institutions,
government regulators, special-interest groups, and the mass
media.
28. Rebecca and Donna, owners of Fine Coffee and

Pastry Shop, are concerned because Panera Bread is
opening a new store just one mile from their shop.
Rebecca and Donna know that Panera will be offering
similar products; therefore, Panera Bread will be a ____ to
Rebecca and Donna.
29. A. competitor
30. competitive ally
31. strategic ally
32. distributor
33. internal stakeholder

Blooms: Apply
Difficulty: 3 Hard
Feedback: Competitors are people or organizations that
compete for customers or resources.
29. A supplier is an external stakeholder that

30. competes for customers or resources.
31. helps a company sell its goods and services to
customers.
32. joins forces with another company to achieve
advantages that neither can achieve on its own.
33. rescinds tax breaks when firms don’t deliver
promised jobs.
34. E. provides raw materials, services, equipment,
labor, or energy.

Blooms: Apply
Difficulty: 3 Hard
Feedback: A supplier is a person or an organization that
provides supplies like raw materials, services, equipment,
labor, or energy to other organizations.
30. Every Saturday Mrs. Jones and hundreds of other

shoppers visit ABC Market, a grocery store, to buy food
for their home or business. These shoppers are _____ to
ABC.
31. suppliers
32. community allies
33. competitors
34. D. customers
35. partners

Blooms: Apply
Difficulty: 3 Hard
Feedback: Customers are those who pay to use an
organization’s goods or services.
31. ABC Brothers’ cleaning products and equipment are

sold to consumers and commercial cleaning companies in
Best Supply’s janitorial supply and equipment store. ABC
relies heavily on Best Supply to help sell its goods and
services to customers. Best Supply is a(n) ____ for ABC
Brothers’ products.
32. competitor
33. B. distributor
34. customer
35. subsidiary
36. account ally

Blooms: Apply
Difficulty: 3 Hard
Feedback: A distributor is a person or an organization that
helps another organization sell its goods and services to
customers.
32. Ole McDonald, a successful farm equipment supply

company in the Midwest, has joined forces with A-Plus
Supply, a national hardware and home retailer. As a result
of this new relationship, Ole McDonald can open stores in
other regions and A-Plus can now offer a high-quality
product in the farm community. Ole McDonald and A-Plus
Supply are now
33. distributors.
34. competitors.
35. customers.
36. suppliers.
37. E. strategic allies.

Blooms: Apply
Difficulty: 3 Hard
Feedback: The term strategic allies describes the
relationship of two organizations who join forces to achieve
advantages neither can perform as well alone.
33. Since the 1950s, the percentage of the U.S. labor

force represented by unions has
34. rapidly increased.
35. steadily increased.
36. fallen to nearly zero.
37. D. steadily declined.
38. remained unchanged.

Blooms: Remember
Difficulty: 1 Easy
Feedback: In recent years, the percentage of the labor force
represented by unions has steadily declined (from 35 percent
in the 1950s to 11.1 percent in 2015).
34. Local communities are stakeholders of organizations

because communities
35. rely on the products the companies produce.
36. B. rely on the tax base from companies and the jobs
the company provides.
37. wish to join forces with organizations to create
strategic alliances.
38. need a major corporate presence to maintain federal
funding of the local highway system.
39. prefer products made by large multinational
organizations over locally made products.

Blooms: Understand
Feedback: Local communities are important stakeholders.
Schools and municipal governments rely on the organization
for their tax base. Families and merchants depend on its
employee payroll for their livelihoods. In addition, everyone
from the United Way to the Little League may rely on it for
some financial support.
35. The city government of Pleasantville promised
significant tax breaks to a large retailer if it opened a
store in Pleasantville, which would result in nearly 200
new local jobs. However, the retailer decided that it
would staff the new Pleasantville store with employees
from its other stores, meaning no new jobs were created.
As a result, the city of Pleasantville instituted clawbacks
by
36. increasing the tax breaks offered to the retailer.
37. forcing the retailer to pay large fines.
38. C. rescinding the tax breaks given to the retailer.
39. boycotting the retailer.
40. forcing the retailer to unionize.

Blooms: Apply
Difficulty: 3 Hard
Feedback: If a community gives a company tax breaks in
return for the promise of new jobs and the firm fails to deliver
on its promises, the community may institute clawbacks,
which means rescinding the tax breaks when firms don’t
deliver promised jobs.
36. Which type of funding raises small amounts of money

from many people to finance a new venture?
37. A. crowdfunding
38. multifunding
39. duplicating
40. venture-funding
41. angel-financing
Blooms: Understand
Difficulty: 1 Easy
Feedback: Crowdfunding means raising money for a project or
venture by obtaining many small amounts of money from many
people (“the crowd”).
37. _______ are regulatory agencies, such as the SEC

(Securities and Exchange Commission), that establish
ground rules under which organizations may operate.
38. Whistle-blowers
39. Government moderators
40. C. Government regulators
41. Interest groups
42. Watchdogs

Blooms: Understand
Difficulty: 1 Easy
Feedback: Government regulators establish ground rules under
which organizations may operate. Regulators include the World
Trade Organization and the Federal Aviation Administration.
38. Joe, a lobbyist who represents the oil industry, is
meeting with several members of Congress to try to exert
political influence by contributing funds to the lawmakers’
election campaigns. Joe also is involved in a letter-writing
campaign to promote his cause. Joe is working on behalf
of a
39. government regulator.
40. task force.
41. focus group.
42. strategic alliance.
43. E. special-interest group.

Blooms: Apply
Difficulty: 3 Hard
Feedback: Special-interest groups are groups whose members
try to influence specific issues. Special-interest groups may try
to exert political influence, as in contributing funds to
lawmakers’ election campaigns or in launching letter-writing
efforts to officials. Or they may organize picketing and
boycotts—holding back their patronage—of certain companies
or events (such as the Oscars).
39. The mass media are part of an organization’s

40. general environment.
41. B. task environment.
42. internal stakeholders.
43. macroenvironment.
44. distribution network.
Blooms: Understand
Feedback: No manager can afford to ignore the power of the
mass media—print, radio, TV, and the Internet—to rapidly and
widely disseminate news both bad and good. Thus, most
companies, universities, hospitals, and even government
agencies have a public relations person or department to
communicate effectively with the press. The mass media are
part of an organization’s task environment.
40. Which forces are part of the macroenvironment?

41. economic, technological, sociocultural, and diversity
42. diversity, microenvironment, sociocultural,
demographic, and political-legal
43. globalism, technological, sociocultural, demographic,
and microenvironment
44. D. economic, technological, sociocultural,
demographic, political-legal, and international
45. international, demographic, diversity, family, culture,
and technology

Blooms: Remember
Difficulty: 1 Easy
Feedback: Beyond the task environment is the general
environment, or macroenvironment, which includes six forces:
economic, technological, sociocultural, demographic, political-
legal, and international.
41. What is a synonym for the macroenvironment?

42. economic environment
43. ethical environment
44. microenvironment
45. task environment
46. E. general environment

Blooms: Remember
Difficulty: 1 Easy
Feedback: The macroenvironment is also known as the general
environment, and it includes six forces: economic,
technological, sociocultural, demographic, political-legal, and
international.
42. Tom and his managers are discussing the

unemployment, inflation, and interest-rate trends that
might affect their chain of coffee shops over the next 12
months and the projected growth in the areas where the
stores are located. The managers are studying the ______
forces in their organization’s general environment.
43. technological
44. sociocultural
45. political
46. D. economic
47. international

Blooms: Apply
Difficulty: 3 Hard
Feedback: Economic forces consist of the general economic
conditions and trends like unemployment, inflation, interest
rates, and economic growth that may affect an organization’s
performance.
43. Fewer children are interested in learning how to play

a musical instrument, and young people having less
interest in owning cars. These two trends are examples of
____ forces at work.
44. diversity
45. financial
46. political
47. D. sociocultural
48. legal

Blooms: Understand
Topic: Sociocultural Forces
Feedback: Sociocultural forces are influences and trends
originating in a country’s, a society’s, or a culture’s human
relationships and values that may affect an organization or
industry.
44. _____ forces lead to new developments in methods for

transforming resources into goods or services. For
example, a new technique called hydraulic fracturing (or
fracking) has been developed to harvest natural gas
trapped below the earth’s surface.
45. Sociocultural
46. B. Technological
47. Demographic
48. Political-legal
49. Media
AACSB: Technology
Blooms: Understand
Feedback: Technological forces lead to new developments in
methods for transforming resources into goods or services.
45. When a food distributor considers changing the

products it markets in the southern states because of an
increasing percentage of customers from Central and
South America, it is examining the ____ forces at work in
the southern United States.
46. economic
47. B. demographic
48. technological
49. political
50. legal
AACSB: Diversity
Blooms: Apply
Difficulty: 3 Hard
Feedback: Demographic forces are influences on an
organization arising from changes in the characteristics of a
population, such as age, gender, or ethnic origin.
46. _____ forces affect the way politics shape laws and
the way laws shape the opportunities for and threats to
an organization. For example, some cities in the United
States (including New York and San Francisco) have set
the minimum wage far above the federally mandated
minimum wage.
47. A. Political-legal
48. Demographic
49. Financial
50. Sociocultural
51. Technological

Blooms: Remember
Difficulty: 1 Easy
Feedback: Political-legal forces may lead to changes in the
way politics shape laws and the way laws shape the
opportunities for and threats to an organization. As for legal
forces, some countries have more fully developed legal
systems than others. American companies may be willing to
use the legal system to advance their interests, as in suing
competitors to gain competitive advantage, but they must also
be aware that other companies may do the same to them.
47. Changes in the economic, political, legal, and

technological global system that may affect an
organization are ______ forces. For example, stresses
within the European Union (including the United
Kingdom’s recent decision to exit the EU) may have
global ramifications.
48. local
49. demographic
50. C. international
51. technological
52. internal stakeholder

Blooms: Remember
Difficulty: 1 Easy
Feedback: International forces are changes in the economic,
political, legal, and technological global system that may
affect an organization.
48. Joe, the owner of ABC Electronics, just discovered
that his trusted friend Paul, his accountant for over 30
years, has been mishandling the company books and
stealing from the company bank account. Joe must
decide whether to ignore his friend’s actions and avoid
bad publicity for ABC Electronics, or to have Paul arrested
for embezzlement. Joe is facing
49. a whistle-blower.
50. a synergy factor.
51. an issue of corporate governance.
52. a social audit.
53. E. an ethical dilemma.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: An ethical dilemma is a situation in which you have
to decide whether to pursue a course of action that may
benefit you or your organization, but that is unethical or even
illegal.
49. Ethics are

50. influences arising from changes in the
characteristics of a population.
51. an organization’s written code of social
responsibility.
52. C. standards of right and wrong that influence
behavior.
53. a set of behaviors accepted as “right” or “good.”
54. rules to be enforced in an organization.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Feedback: Ethics are the standards of right and wrong that
influence behavior.
50. ______ are the relatively permanent and deeply held

underlying beliefs and attitudes that help determine a
person’s behavior. These beliefs may include the idea that
employees should be promoted solely on the basis of
merit, that no bribes will be paid to foreign officials to
obtain business licenses, and that companies should offer
extended maternity leave upon the employee’s request.
51. Morals
52. Norms
53. Ethical advantages
54. D. Values
55. Fairness factors
AACSB: Ethics
Blooms: Understand
Difficulty: 1 Easy
Feedback: Values are the relatively permanent and deeply held
underlying beliefs and attitudes that help determine a person’s
behavior, such as the belief that fairness means hiring
according to ability, not family background.
51. To increase profitability, top management of a

national retailer needs to decide if it will close several
stores. Management knows that by closing the locations,
it will save the company millions of dollars and benefit
many stockholder groups and individuals. The benefits of
closing the stores outweigh the benefits of keeping them
open. Keeping the stores open would be advantageous for
many fewer people than closing the stores. This logic is
an example of the ___ approach to deciding ethical
dilemmas.
52. individual
53. majority
54. C. utilitarian
55. justice
56. moral-rights
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Topic: Utilitarian Approach
Feedback: Ethical behavior in the utilitarian approach is
guided by what will result in the greatest good for the greatest
number of people. Managers often take the utilitarian
approach, using financial performance such as efficiency and
profit as the best definition of what constitutes “the greatest
good for the greatest number.”
52. Consider the following situation: Local livestock
farmers could allow the runoff of manure nutrients into a
stream that feeds a local lake because polluting the
stream helps farmers in the short term. However, farmers
will act ethically in the short run to avoid harming others
in the long run because doing so is also in the farmer’s
best long-term interests. This type of thinking reflects the
_____ approach to deciding ethical dilemmas.
53. A. individual
54. group
55. moral-rights
56. utilitarian
57. justice
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: Ethical behavior in the individual approach is guided
by what will result in the individual’s best long-term interests,
which ultimately are in everyone’s self-interest. The
assumption here is that you will act ethically in the short run
to avoid others harming you in the long run.
53. With recent reports of identity theft, Mr. Jones, the

CEO of a construction company, is concerned about his
employees’ privacy, and because of recent accidents on
the job, he is also worried about the safety of his workers.
Mr. Jones’s concerns with privacy and health and safety
are key elements in the _____ approach to deciding ethical
dilemmas.
54. individual rights
55. justice
56. impartial
57. utilitarian
58. E. moral rights
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Topic: Moral-Rights Approach
Feedback: Ethical behavior in the moral-rights approach is
guided by respect for the fundamental rights of human beings,
such as those expressed in the U.S. Constitution’s Bill of
Rights. We would all tend to agree that denying people the
right to life, liberty, privacy, health and safety, and due
process is unethical.
54. ______ guides the justice approach to deciding ethical

dilemmas.
55. Increasing profits and workplace diversity
56. Respect for the fundamental rights of human beings
57. C. Respect for impartial standards of fairness and
equity
58. Respect for society and the environment
59. The individual’s best long-term interest
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Topic: Justice Approach
Feedback: The justice approach is guided by respect for
impartial standards of fairness and equity.
55. Bernard (Bernie) Madoff used money from newer

investors to pay off older investors. Which type of scam
was Madoff running?
56. illegal lobbying
57. insider trading
58. salami slicing
59. D. Ponzi scheme
60. whistle-blowing
AACSB: Ethics
Blooms: Understand
Feedback: Financier Bernard (Bernie) Madoff, who confessed
to running a $50 billion Ponzi scheme, used cash from newer
investors to pay off older ones, the definition of this type of
scheme.
56. Greg, the president of an IT company, is friends with

Jack, the CEO of HyperTech, a company that develops
and manufactures computer hardware. Jack tells Greg
that HyperTech is about to announce the creation of a
revolutionary new computer processor that will quadruple
processing capacity and cause HyperTech’s sales and
profits to skyrocket. Greg then purchases a large number
of shares of HyperTech company stock before the news of
the new computer processor is made public. In which
illegal activity has Greg engaged?
57. a Ponzi scheme
58. short selling
59. issuing a call
60. information abuse
61. E. insider trading
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: Insider trading is the illegal trading of a company’s
stock by people using confidential company information.
57. The Sarbanes-Oxley Act of 2002 established

requirements for ____. Noncompliance can result in
penalties of
58. proper financial record keeping for private
companies; as much as 25 years in prison.
59. proper financial record keeping for government
organizations; as much as 25 years in prison.
60. codes of ethics guidelines for organizations; as much
as $2 million.
61. D. proper financial record keeping for public
companies; as much as 25 years in prison.
62. all corporate financial records to be made public; as
much as $5 million.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Feedback: The Sarbanes-Oxley Act of 2002 established
requirements for proper financial record keeping for public
companies and penalties of as much as 25 years in prison for
noncompliance.
58. Jane, a successful store manager, leads her

employees by encouraging them and showing that she
genuinely believes in them. She also encourages group
and team efforts. Jane manages at Kohlberg’s _____ level
of personal moral development.
59. unconventional
60. nonconventional
61. C. conventional
62. postconventional
63. preconventional
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Topic: Kohlberg’s Model
Feedback: Kohlberg proposed three levels of personal moral
development: preconventional, conventional, and
postconventional. At Level 2 (the conventional level), people
follow the expectations of others. People whose moral
development has reached this level are conformist but not
slavish, generally adhering to the expectations of others in
their lives. Level 2 managers lead by encouragement and
cooperation and are more group and team oriented. Most
managers are at this level.
59. Don has managed several restaurants for over 50

years and is close to retirement. With his maturity and
business experience, his decisions are sound, based on
solid, proven values. Don tends to be an independent
thinker who focuses on empowering his employees. Don
manages at Kohlberg’s ______ level of personal moral
development.
60. conventional
61. nonconventional
62. unconventional
63. preconventional
64. E. postconventional
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: Kohlberg proposed three levels of personal moral
development: preconventional, conventional, and
postconventional. Only about a fifth of American managers
reach Level 3, the postconventional level, when managers are
guided by internal values. It is the farthest along in moral
development, and Level 3 managers are independent souls
who follow their own values and standards, focusing on the
needs of their employees and trying to lead by empowering
those working for them.
60. The employees of Mom’s Pizza, a local pizza

restaurant, feel that the owners and managers really try
to follow the ethical policies outlined in their company’s
code of ethics. Pete, a cook, said that “Just today, Joe,
our manager, called our supplier to let them know we
received an extra case of tomatoes that we did not pay
for. And they do this type of thing almost every day.”
Mom’s Pizza maintains a(n)
61. dilemma-free climate.
62. profitable climate.
63. C. ethical climate.
64. holier-than-thou atmosphere.
65. synergy environment.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Topic: Ethical Climate
Feedback: An ethical climate represents employees’
perceptions about the extent to which work environments
support ethical behavior. It is important for managers to foster
ethical climates because they significantly affect the
frequency of ethical behavior.
61. A(n) ____ is a formal written set of ethical standards
guiding an organization’s actions.
62. moral compass
63. business plan
64. dilemma document
65. ethical plan
66. E. code of ethics
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Topic: Code of Ethics
Feedback: A code of ethics consists of a formal written set of
ethical standards guiding an organization’s actions. Most
codes offer guidance on how to treat customers, suppliers,
competitors, and other stakeholders. The purpose is to clearly
state top management’s expectations for all employees. Most
codes prohibit bribes.
62. Phillip said to a close friend, “I am fed up with my

company’s continual disregard for the environment. They
secretly dispose of hazardous chemicals into a nearby
stream constantly. I don’t know how they get away with
it! I am going to call a reporter at the local newspaper and
reveal what my company is doing.” Phillip’s decision to
tell somebody about his company’s actions is an example
of
63. operating at a preconventional level.
64. violating a code of ethics.
65. backstabbing his manager.
66. being guided by the invisible hand.
67. E. whistle-blowing.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: A whistle-blower is an employee who reports
organizational misconduct to the public, such as health and
safety matters, waste, corruption, or overcharging of
customers.
63. As the CEO of a company that produces products for

schools, Hannah believes that her company needs not
only to produce a profit but also to do things that benefit
society. _______ guides Hannah’s beliefs.
64. Individual responsibility
65. The desire for sustainability
66. C. Social responsibility
67. A sense of moral rights
68. Corporate lobbying
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: Social responsibility is a manager’s duty to take
actions that will benefit society’s interests as well as the
company’s interests.
64. The company that Don owns, the Ardmore General

Store, is a family-owned company that has been in
business for more than 100 years. Don wants to give back
to the people of the community to acknowledge their role
in the store’s success. He decides to donate a significant
portion of the store’s profits to a charity every year. Don’s
decision is an example of ___ in action.
65. A. corporate social responsibility
66. corporate governance
67. a code of ethics
68. economic responsibility
69. legal responsibility
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: Corporate social responsibility (CSR) is the notion
that corporations are expected to go above and beyond the
law and profit to help society.
65. Sustainable economic development

66. meets future needs without compromising present
needs.
67. always generates greater profitability.
68. produces greater diversity in the workforce.
69. D. meets present needs without compromising the
ability of future generations to meet their needs.
70. is an idea proposed by Frank and Lillian Gilbreth to
cut costs and increase efficiency.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Topic: Sustainability
Feedback: Sustainability is meeting the needs of the present
without compromising the ability of future generations to meet
their own needs.
66. Business scholar Archie Carroll suggested that

________ is the first and primary responsibility of an
organization in the global economy.
67. to be a good global corporate citizen, as defined by
the host country’s expectations,
68. B. to make a profit consistent with expectations for
international business
69. to be ethical in its practices
70. to obey the law of host countries as well as
international law
71. to have a written code of ethics
AACSB: Ethics
Blooms: Understand
Feedback: Making a profit consistent with expectations for
international business is at the bottom of Carroll’s global
corporate social responsibility pyramid. These priorities are
illustrated in the pyramid in Figure 3.2.
67. Mr. Smythe, a wealthy businessman who made his

fortune in the oil industry, understands the importance of
a college education, so he has donated over $10 million
over the last several years to colleges and universities.
Mr. Smythe’s actions are an example of
68. A.
69. sustainability.
70. servant leadership.
71. mentoring.
72. corporate governance.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
Feedback: Philanthropy is defined as making charitable
donations to benefit humankind.
68. Which of the following is an example of a green

policy or action?
69. A local factory pollutes the atmosphere via
smokestacks that belch out carbon dioxide.
70. The owner of a sole proprietorship announces that
she is taking on a business partner.
71. A major publisher donates 10,000 books a year to
national literacy groups.
72. 3M encourages employees to experiment with
creating new products.
73. E. Coca-Cola has pledged to replenish (return to
nature) all the water it uses to make its beverages.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Topic: Ethical Climate
Feedback: Green policies and actions benefit the environment.
Coca-Cola’s promise to replenish water has an environmental
goal.
69. Which of the following describes the system of

corporate governance?
70. governing an industry, such as the trucking industry,
to protect customers
71. protecting citizens against unethical state and
national governments
72. C. governing a company so that the interests of
corporate owners and other stakeholders are protected
73. monitoring an industry, such as law firms, to ensure
ethical practices
74. monitoring and limiting corporate political donations
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Feedback: Corporate governance is the system of governing a
company so that the interests of corporate owners and other
stakeholders are protected.
70. On an organization’s board of directors,

71. inside directors are supposed to be elected from
outside the organization and outside directors may be
members of the firm.
72. inside directors must work for the company and
outside directors are also members of the firm.
73. C. inside directors may be members of the firm and
outside directors are supposed to be elected from outside
the firm.
74. inside directors are always retired executives and
outside directors typically are employees.
75. inside directors must work for the organization and
outside directors are paid members of the organization.
AACSB: Ethics
Blooms: Analyze
Feedback: Inside directors may be members of the firm;
outside directors are supposed to be elected from outside the
firm.
71. With regard to boards of directors, and in particular

their oversight of the CEO, the board of directors’ _______
is the biggest complaint.
72. lack of interest in company matters
73. lack of corporate social responsibility
74. focus on profit over employee satisfaction
75. D. lack of independence from the CEO
76. lack of a written ethical code
AACSB: Ethics
Blooms: Understand
Feedback: The biggest complaint concerns the independence
of the directors. Inside directors may be members of the firm,
but outside directors are supposed to be elected from outside
the firm. However, in some companies, the outside directors
have been handpicked by the CEO, making oversight difficult.
72. This question has three parts; be sure to answer all

three. First, contrast the “holier-than-thou” effect and
motivated blindness. Second, explain how both concepts
might apply to the following situation: “Glenn is the
president of the senior class, and he is having a very busy
semester, trying to balance his coursework and his
internship at a major company. He can’t find the time he
needs to write a term paper for his history course. To
save himself time, he decides to buy a prewritten paper
from a website that sells papers for a hefty fee.” Third,
explain the dynamics behind cheating.
The “holier-than-thou” effect: Science writer Benedict Carey

suggests, “People tend to be overly optimistic about their own
abilities and fortunes—to overestimate their standing in class,
their discipline, their sincerity. . . . But this self-inflating bias
may be even stronger when it comes to moral judgment.” In
Glenn’s case, the holier-than-thou effect may result in Glenn
not questioning his own moral judgment. He may believe that
as senior class president, he has the right to take
shortcuts because the entire senior class benefits when Glenn
works on their behalf. He may also feel that buying a term
paper from the Internet is not at all immoral; he may see it as a
necessity that helps him get everything done (rather than as
cheating).
Motivated blindness: This is the tendency to overlook
information that works against our best interest. “People who
have a vested self-interest, even the most honest among us,
have difficulty being objective,” says one report. “Worse yet,
they fail to recognize their lack of objectivity.” Motivated
blindness enables us to behave unethically while maintaining a
positive self-image. Glenn has an internship with a good
company, so he is clearly motivated to make contacts and
have a career. Doing well in his history course is in his self-
interest, because he needs a good GPA to get called for job
interviews. In short, he is motivated to buy the term paper by
self-interest and has difficulty being objective about this
decision.
The dynamics behind cheating: Habitual cheating, Carey
suggests, “begins with small infractions—illegally downloading
a few songs, skimming small amounts from the register, lies of
omission on taxes—and grows by increments.” As success is
rewarded, these “small infractions” can burgeon into an
ongoing deliberate strategy of deception or fraud. Buying the
term paper can become a slippery slope for Glenn. If he cheats
and does not get caught, he may be tempted to take additional
“shortcuts” in the future. These shortcuts may involve
cheating or fraud at the company that hires him.
AACSB: Ethics
Blooms: Understand
73. This question has two parts; be sure to answer both.

First, explain each element of the triple bottom line. Next,
imagine that you are managing White Teeth Inc., a
company that produces chemical treatments that dentists
use to whiten their patients’ teeth. Explain how you might
take each element of the triple bottom line into account
in your day-to-day management of the company.
The triple bottom line—representing people, planet, and profit

(the 3 Ps)—measures an organization’s social, environmental,
and financial performance. In this view of corporate
performance, an organization has a responsibility to its
employees and to the wider community (people), is committed
to sustainable (green) environmental practices (planet), and
includes the costs of pollution, worker displacement, and other
factors in its financial calculations (profit). Success in these
areas can be measured through a social audit, a systematic
assessment of the company’s performance in implementing
socially responsible programs, often based on predefined
goals.

Here are some examples of how you might manage the 3 P’s at
White Teeth, Inc.:

People: In general, you will treat your employees with respect,
paying them properly and offering them the best benefits
package that your company can afford. You can take your
people responsibilities several steps further, too. For example,
you might institute a program that offers a lower price to
people with lower income. (Many pharmaceutical companies
have begun selling extremely expensive drugs at discounted
prices to lower-income people.)

Planet: Tooth whitening agents are made from chemicals. You
want to make sure you are not dumping chemical waste into
any public water supplies and that you are disposing of waste
products responsibly and legally.

Profit: Of course, White Teeth, Inc. is in business to make a
profit. While doing the best for your people and the planet, you
want to keep an eye on the bottom line, making sure that you
are minimizing your costs (while still creating a safe, effective
product), marketing your product widely and maximizing your
customer base, and maximizing your profits.

AACSB: Ethics
Blooms: Understand
74. This question has two parts; be sure to answer each
one. First, what are stakeholders, and why is it important
for managers to understand this concept? Second,
describe the stakeholders at a nonprofit organization,
Just Say No Way, whose employees travel to grammar
schools to talk with students about the dangers of drugs.
Stakeholders are the people whose interests are affected by

an organization’s activities. Internal stakeholders consist of
employees, owners, and the board of directors. Managers must
take all of these stakeholders into account as they make
decisions and operate the business.

The employees are those who work for the organization. The
staff of Just Say No Way may include a marketing person who
does community outreach, a scheduler who makes
appointments at local schools, a support or administrative
staff, a director or CEO, and the speakers who travel from
school to school.

The owners of an organization consist of all those who can
claim it as their legal property. The owners of Just Say No Way
can claim it as their property. Because the company does not
manufacture a product (rather, it provides a service to local
schools, neighborhoods, children, and parents), it will not have
an inventory of products that it owns, but it likely will own
office equipment, computers, and perhaps even cars that the
speakers drive as they travel from school to school.

The board of directors are very important in setting the
organization’s overall strategic goals and in approving the
major decisions and salaries of top management. Because
Just Say No Way is a nonprofit organization, its board is called
the board of trustees or the board of regents. The trustees of
Just Say No Way will determine how best to use the donations
that fund the organization (for example, how it might expand
its program into other states or how it might offer talks on new
topics, such as the dangers of using steroids or how to
recognize and stop in-person or online bullying).
AACSB: Ethics
Blooms: Understand
75. This question has two parts; be sure to answer both.

First, what are external stakeholders? Next, imagine you
are the manager of an art gallery, Diaspora, whose
mission is to show (and sell) art by marginalized
populations, such as the homeless or undocumented
immigrants. Describe at least three of Diaspora’s external
stakeholders in the task environment.
External stakeholders are people or groups in the

organization’s external environment that are affected by it.
This environment consists of the task environment and the
general environment. The external task environment consists
of 11 groups that present a manager with daily tasks to handle
customers, competitors, suppliers, distributors, strategic
allies, employee organizations, local communities, financial
institutions, government regulators, special-interest groups,
and mass media.

Here are examples of how Diaspora might interact with its
external stakeholders in the task environment.

Diaspora’s customers are individuals who wish to purchase
art; customers may also be corporations or nonprofits that
want to display art in their offices.

Diaspora’s competitors are other art galleries, and in general
any other place where people or corporations can purchase
art.

Diaspora’s suppliers are the artists themselves, who supply
the paintings, sketches, sculptures, and crafts that Diaspora
sells.

Diaspora is a single gallery, so it likely does not have
any distributors; however, it may use smaller galleries (for
example, those in tourist areas) to display and sell some of its
art.

Diaspora’s strategic allies may include artists’ organizations,
the local chamber of commerce, and the National Endowment
for the Humanities, all of which seek to further the interests of
artists and to make art a part of everyday life.

As a single gallery, Diaspora likely is not unionized, so it
probably does not have to deal with employee organizations.
Diaspora’s local community is the city or neighborhood in
which it is located; but the gallery’s reach may extend beyond
the immediate community by offering to display and sell work
by artists who were (for example) born in the state or who live
their now.

Diaspora’s financial institutions include a commercial bank in
which it deposits cash and holds its money, and from which it
writes and cashes checks.

As an art gallery, Diaspora is likely not subject to government
regulation. It may work with special-interest groups of artists
to ensure that their work is represented at the gallery, and it
will certainly have (or seek to develop relationships with) the
mass media in order to market and publicize upcoming shows
and artists. The gallery will also likely have a presence on
social media, such as Facebook and Twitter, and will actively
seek friends and followers—all with the goal of getting the
word out and selling more art.
AACSB: Ethics
Blooms: Understand
76. Joseph, a small café owner, is facing possible

bankruptcy due to a severe decrease in business in his
restaurant. Tom, a friend of Joseph, approached him
about hiring illegal immigrants because Joseph can pay
those workers a lower pay rate and save on payroll.
Discuss some of the legal and ethical issues involved in
this situation. How should Joseph respond to his ethical
dilemma—should he hire the illegal immigrants or not?
Explain your answer.
Joseph faces the ethical dilemma of deciding whether to

pursue a course of action that may benefit him and his
organization, but that is unethical or even illegal. In this case,
it might be argued that hiring illegal immigrant is not unethical
because these people often come to the United States to
work, so that they can send money back home to support their
families. However, the United States has a federal minimum
wage, and it is illegal to pay people less than that wage; so if
Joseph underpays his workers, he is breaking the law. In
addition, it may also be illegal to hire undocumented
immigrants because they will not have Social Security
numbers and therefore cannot pay income taxes. In this
particular ethical dilemma, Joseph should not hire the illegal
immigrants; he will have to find another way to help his
troubled business.
AACSB: Ethics
Blooms: Apply
Difficulty: 3 Hard
77. Summarize the Sarbanes-Oxley Act of 2002 and

describe the mandates it placed on organizations.
The Sarbanes-Oxley Act of 2002 established requirements for

proper financial record keeping for public companies and
penalties of as much as 25 years in prison for noncompliance.
Administered by the Securities and Exchange Commission, the
Act, known informally as SarbOx, requires a company’s chief
executive officer and chief financial officer to personally
certify the organization’s financial reports, prohibits them from
taking personal loans or lines of credit, and makes them
reimburse the organization for bonuses and stock options
when required by restatement of corporate profits. It also
requires the company to have established procedures and
guidelines for audit committees.
AACSB: Ethics
Blooms: Understand
Topic: Sarbanes-Oxley
78. Summarize Laurence Kohlberg’s three levels of

personal moral development. Imagine that you manage a
local gym, and explain how your management style or
techniques would be different at each level.
Kohlberg’s three levels of personal moral development are

preconventional, conventional, and postconventional.
Level 1, preconventional—follow rules. People who have
achieved this level of moral development tend to follow rules
and to obey authority to avoid unpleasant consequences.
Managers of the Level 1 sort tend to be autocratic or coercive,
expecting employees to be obedient for obedience’s sake. As a
gym manager who operates at Level 1, you would probably
expect all of your personal trainers, class instructors, and
front-desk staff to be extremely punctual and to do as you say
without questioning you.
Level 2, conventional—follow expectations of others. People
whose moral development has reached this level are
conformist but not slavish, generally adhering to the
expectations of others in their lives. Level 2 managers lead by
encouragement and cooperation and are more group and team
oriented. Most managers are at this level. As a gym manager
who operates at Level 2, you will consider your employees a
team, and you will work with them to achieve the goals set by
corporate, such as selling a certain number of new
memberships per month, or booking a certain number of hours
of personal training per week. To achieve the former goal, you
might call meetings of your sales/marketing staff to discuss
ways to achieve the new-membership goal, and you might
meet with your trainers as a team to discuss ways for them to
network and bring new personal-training clients into the gym.
Level 3, postconventional—guided by internal values. The
farthest along in moral development, Level 3 managers are
independent souls who follow their own values and standards,
focusing on the needs of their employees and trying to lead by
empowering those working for them. Only about a fifth of
American managers reach this level. As a gym manager who
operates at Level 3, you might be more willing to “talk back” to
the corporate office, communicating when you believe goals
are not achievable rather than slavishly adhering to them and
forcing them on your employees. You might also advocate for
your employees, trying to find ways for them to advance in
their careers and earn more money.
AACSB: Ethics
Blooms: Understand
79. Contrast the viewpoints for and against social

responsibility. Which leading economist argued against
social responsibility?
Milton Friedman, a free-market economist, represents the view

against social responsibility. He said, “The social
responsibility of business is to make profits.” That is, unless a
company focuses on maximizing profits, it will become
distracted and fail to provide goods and services, benefit the
stockholders, create jobs, and expand economic growth—all of
which are the real social justification for the firm’s existence.
In short, Friedman believed that the pursuit (and earning) of
profit had great social value in and of itself.
The arguments in favor of corporate social responsibility
includes the following:
1. Businesses have an ethical obligation to contribute to

society’s welfare.
2. Businesses create problems and should help solve those
problems.
3. Businesses have resources to solve problems that other
entities do not have.
4. Socially responsible behavior can create a favorable
public image, which in turn makes the business more
profitable.

Being socially responsible can help head off government
regulation.
AACSB: Ethics
Blooms: Understand
80. This question contains two parts; be sure to answer

both. First, compare the four levels of Carroll’s global
corporate social responsibility pyramid. Give an example
of what is desired, expected, or required at each level by
global stakeholders or global capitalism at each level.
Next, imagine that you are the CEO of a corporation that
runs a well-branded fast-food chain, Healthy Delight.
Healthy Delight is in many countries, including nations in
Europe, Asia, Africa, North America, and South America.
Apply each of Carroll’s four levels to your business.
According to University of Georgia business scholar Archie B.

Carroll, corporate social responsibility rests at the top of a
pyramid of a corporation’s obligations, right up there with
economic, legal, and ethical obligations. While some people
might hold that a company’s first duty is to make a profit,
Carroll suggests the responsibilities of an organization in the
global economy should take the following priorities:
1. Be a good global corporate citizen, as defined by the host

country’s expectations. (Top of pyramid, philanthropic
responsibility)—As the CEO of Healthy Delight, you will
adjust your business practices based on the expectations
of the country in which your stores/restaurants are
located. Not only will you make sure you are complying
with all laws, you will also show respect for the country’s
culture, perhaps by designing your stores in a way that
blend with the local landscape and provide meals that
match the tastes and preferences of the local population.
2. Be ethical in its practices, taking host-country and global
standards into consideration. (Ethical responsibility)—As
the CEO of Healthy Delight, you will closely monitor your
ethical obligations. For example, in some countries,
children are permitted to work at a much younger age
than in the United States. In those countries, children’s
income can be very important in supporting the family. If
the local culture supports the hiring of, say, 13- or 14-
year-olds, then you are not violating any ethical
obligations by hiring children of that age.
3. Obey the law of host countries as well as international
law. (Legal responsibility)—As the CEO of Healthy Delight,
you have to navigate the murky waters of common
business practices versus the country’s laws. For
example, in many countries, bribes are common, but they
are nonetheless against the law. Because you must obey
the local laws (as well as international law), you will have
to find ways to conduct business that do not break any
laws.
4. Make a profit consistent with expectations for

international business. (Pyramid base, economic
responsibility)—As the CEO of Healthy Delight, of course
you are concerned with making a profit. Your
shareholders expect this; and you should examine your
local markets to determine where your opportunities
are and how you can adjust your restaurant’s offerings
and services to maximize your profitability.
These priorities are illustrated in the pyramid in Figure 3.2.

AACSB: Ethics
Blooms: Understand
81. Explain the recent concerns for the independence of

the board of directors.
Perhaps the biggest problem in corporate governance

concerns the independence of the directors. Inside directors
may be members of the firm; outside directors are supposed to
be elected from outside the firm. But in some companies, the
outside directors have been handpicked by the CEO because
they are friends, because they have a business relationship
with the firm, or because they supposedly “know the industry.”
In such instances, the board of directors may be too lenient on
the CEO when he or she asks for leeway to pursue certain
policies. Now more attention is being paid to strengthening
corporate governance so that directors are clearly separated
in their authority from the CEO. While directors are not
supposed to get involved with day-to-day management issues,
they are now feeling more pressure from stockholders and
others to have stronger financial reporting systems and more
accountability.
AACSB: Ethics
Blooms: Understand

Category

# of
Questions
AACSB: Analytical
Thinking

11
AACSB:
Diversity

1
AACSB:
Ethics

47
AACSB: Knowledge
Application

21
AACSB:
Technology

1
Accessibility: Keyboard
Navigation

71
Blooms:
Analyze

2
Blooms:
Apply

40
Blooms:
Remember

15
Blooms:
Understand

24
Difficulty: 1
Easy

19
Difficulty: 2
Medium

22
Difficulty: 3
Hard

40
people, planet, and
profit.
5
inside the
organization.
8
outside the
organization.
29
values in effective
management.
24
responsibility and its role in today’s
organizations.
10
governance in assessing management
performance.
5
Topic: Code of
Ethics

2
Topic: Corporate
Governance

5
Topic: Corporate Social
Responsibility

8
Topic: Ethical
Behavior

12
Topic: Ethical
Climate

2
Topic: Ethical
Dilemma

4
Topic: External
Stakeholders

28
Topic: Internal
Stakeholders

7
Topic: Justice
Approach

1
Topic: Kohlberg’s
Model

3
Topic: Moral-Rights
Approach

1
Topic: Sarbanes-
Oxley

2
Topic: Sociocultural
Forces

1
Topic:
Sustainability

1
Topic: Triple Bottom
Line

3
Topic: Utilitarian
Approach

1
Chapter 05
Test Bank

1. A business model outlines what customer needs the

company will satisfy, the operations of the business, the
company components and functions, and the projected
revenue and expenses.
TRUE
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 05-01 Discuss the role of strategic
management.
Topic: Business Model
Feedback: A business model outlines the need the firm will fill,
the operations of the business, its components and functions,
and the expected revenues and expenses.
2. When using MBO, managers should meet about once a

year, either informally or formally, to review progress on
meeting objectives.
FALSE
Blooms: Understand
Learning Objective: 05-04 Describe SMART goals and their
implementation.
Topic: Management by Objectives (MBO)
Feedback: Managers should meet with their employees
reasonably often—either informally as needed or formally every
three months—to review progress. Frequent communication is
necessary so that everyone will know how well he or she is
doing in meeting the objectives.
3. Every five years, the upper-level managers of ABC

Technology meet to develop a new large-scale action plan
that will set the direction for the company for the next
five years. In that meeting the managers work on
developing a strategy.
TRUE
Blooms: Apply
Difficulty: 3 Hard
management.
Topic: Strategy
Feedback: A strategy is a large-scale action plan that sets the
direction for an organization.
4. The upper-level managers of Deluxe Coffee are meeting to
discuss the company’s long-range goals and vision. Like
any organization, Deluxe Coffee should adopt planning
and strategic management for just two reasons: (1) to
provide direction and momentum and (2) to encourage
retention of high-value employees.
FALSE
Blooms: Apply
Difficulty: 3 Hard
management.
Topic: Strategic Planning
Feedback: An organization should adopt planning and strategic
management for three reasons: They can (1) provide direction
and momentum, (2) encourage new ideas, and (3) develop a
sustainable competitive advantage.
5. When Holiday Inn Express stated that the organization

strives to “be the primary source of hospitality in the
communities” it serves by providing its customers “the
best possible experience and by being good neighbors,” it
is stating its code of ethics.
FALSE
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 05-02 Compare mission, vision, and value
statements.
Topic: Vision Statement
Feedback: Holiday Inn is not stating a code of ethics here.
Rather, it is offering its vision statement. A vision statement
answers the question, “What do we want to become?” or
“Where do we want to go?” Here is Amazon’s vision 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.”
6. Alison, the director of marketing for a global company, is

planning the contributions she and her department will
make to the organization over the next 24 months. This
type of planning is called operational planning.
FALSE
Blooms: Remember
Difficulty: 1 Easy
statements.
Topic: Tactical Planning
Feedback: 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 to 24
months.
7. Paula is the store manager for a national grocery retailer,

and she received the yearly tactical plan from Greg, her
district manager. Paula is meeting with her department
managers to plan how to implement the specific tasks
outlined in Greg’s plan for the next year. Paula is engaged
in operational planning.
TRUE
Blooms: Apply
Difficulty: 3 Hard
statements.
Topic: Operational Goals
Feedback: Middle managers pass along their tactical plans to
first-line managers to do operational planning, whereas first-
line managers determine how to accomplish specific tasks
with available resources within the next 1 to 52 weeks.
8. Goals are arranged in a hierarchy known as a means-end

chain because in the chain of management, the
accomplishment of high-level goals is the means leading
to the accomplishment of low-level goals or ends.
FALSE
Blooms: Understand
Learning Objective: 05-03 Discuss the types and purposes of
goals and plans.
Topic: Goal Setting
Feedback: 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.
9. Jerome’s Italian Pizza is in a very competitive industry,

and its upper management believes that it can achieve
higher profits by focusing on a strategy of lowering costs
and prices, providing quicker delivery, and providing good
customer service. “Increase profits by 15% a year for
each of the next five years” is an example of a strategic
goal.
TRUE
Blooms: Apply
Difficulty: 3 Hard
goals and plans.
Topic: Strategic Goals
Feedback: Strategic goals are set by and for top management
and focus on objectives for the organization as a whole. For
example, top managers of Dallas-based Southwest Airlines
ensure that the airline is highly profitable by following the
general strategy of (1) keeping costs and fares down, (2)
offering a superior on-time arrival record, and (3) keeping
customers happy.
10. The production plant for Ace Manufacturing has been

located in the same place for over 100 years. It has just
completed its new factory, which includes its new
corporate offices. The planning required for moving Ace
into a new facility is a single-use plan.
TRUE
Blooms: Apply
Difficulty: 3 Hard
goals and plans.
Topic: Planning
Feedback: A program is a single-use plan encompassing a
range of projects or activities. For example, the U.S.
government space program had several projects, including the
space shuttle project and the Hubble Telescope project. Ace’s
program will encompass a range of activities needed to move
all of its operations into the new factory.
11. When utilizing MBO, the manager and employee

jointly set objectives for the employee, the manager
develops action plans, the manager and employee
periodically review the employee’s performance, and the
manager makes performance appraisals and rewards the
employee according to the results.
TRUE
Blooms: Remember
implementation.
Topic: Management by Objectives
Feedback: When utilizing MBO, the manager and employee
jointly set objectives for the employee, the manager develops
action plans, the manager and employee periodically review
the employee’s performance, and the manager makes a
performance appraisal and rewards the employee according to
the results.
12. Greg, owner of Comfortable Home Heating and Air,

has been having problems with employee morale. After
investigating, he found that some of his department
managers were using management by objectives, but the
accounting and sales managers were not utilizing MBO in
their departments. For the MBO program to be successful,
Greg must be sure that it is implements throughout his
entire organization.
TRUE
Blooms: Apply
Difficulty: 3 Hard
implementation.
Topic: Management by Objectives
Feedback: To be effective, an MBO program must be put in
place throughout the entire organization. That is, it cannot be
applied in just some divisions and departments; it must be in
all of them.
13. The planning/control cycle has two control steps: (1)

control the direction by comparing results with the plan
and (2) control the direction by increasing organization
diversity and synergy.
FALSE
Blooms: Remember
Difficulty: 3 Hard
Learning Objective: 05-05 Outline the planning/control cycle.
Topic: Planning/Control Cycle
Feedback: The planning/control cycle has two control steps:
control the direction by comparing results with the plan and
control the direction by taking corrective action in two ways,
namely by correcting deviations in the plan being carried out
or by improving future plans (see Figure 5.6).
14. In the planning/control cycle, managers take

corrective action by correcting deviations in the plan
being carried out or by improving future plans.
TRUE
Blooms: Remember
Difficulty: 3 Hard
Feedback: In the planning/control cycle, managers take
corrective action by correcting deviations in the plan being
carried out or by improving future plans (see Figure 5.6).
15. Mr. Smith, CEO of an auto dealership, has been

working on the two planning steps of the planning/control
cycle with his managers. To do this, Mr. Smith and his
managers need to make their plan and then carry out the
plan.
TRUE
Blooms: Apply
Difficulty: 3 Hard
Feedback: In Figure 5.6, the two planning steps are (1) make
the plan, and (2) carry out the plan.
16. Setting a very challenging goal for yourself, such as

“I will double the number of hours I study next semester
so that I can increase my GPA by at least half a point,”
can keep you motivated and focused on achievement.
This type of goal, which involves pushing yourself beyond
what you mind might think is safe is known as a(n)
17. increased-state mindset.
18. push goal.
19. stress goal.
20. inclining goal.
21. E. stretch goal.
AACSB: Reflective Thinking

Blooms: Understand
management.
Topic: Goal Setting
Feedback: If you have outsize ambitions, you might set
yourself a really hard goal (for example, “increase study time
by 20%”). This stretch goal “propels you beyond what your
mind might think is safe.”
17. Research suggests that when writing out a plan to

achieve your biggest goals, it is important to
18. focus on broad rather than specific goals.
19. B. make a concrete plan and break goals into
manageable bites.
20. make a general plan, which embeds your intentions
firmly in your memory.
21. keep plans and goals private.
22. avoid specific goals because it increases stress.

Blooms: Understand
management.
Topic: Goal Setting
Feedback: Research suggests the advice for writing out and
achieving a person’s biggest goals are to (1) make a concrete
plan, (2) break your goals into manageable bites, (3) put
something of value on the line, (4) bundle your temptations or
rewards to your efforts, and (5) seek social support.
18. While sitting at her desk, Ann is setting goals and

deciding how to achieve them. She is
19. A.
20. controlling.
21. delegating.
22. diversifying.
23. synergizing.

Blooms: Understand
management.
Topic: Goal Setting
Feedback: Planning is defined as setting goals and deciding
how to achieve them.
19. With increasing competition in the restaurant

business, Sal, owner of Mom’s Pizza, is dealing with
growing uncertainty. He is meeting with his managers to
develop a future course of action to meet company goals.
This process is known as
20. A.
21. leading.
22. controlling.
23. defining.
24. diversifying.

Blooms: Apply
Difficulty: 3 Hard
management.
Topic: Planning
Feedback: 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.
20. ______ can help workers focus on critical problems,

choices, and opportunities.
21. Diversity planning
22. MBO
23. C. Planning and strategic management
24. An effective synergy policy
25. A strong value system

Blooms: Understand
management.
Topic: Strategic Management
Feedback: Planning and strategic management can help
people focus on the most critical problems, choices, and
opportunities.
21. The profits of ABC Grocery have dropped

significantly over the last several months. After
investigating, the owner realizes that many of the store’s
departments are moving in the wrong direction. The
owner realizes that these departments need stronger and
closer management, but she also realizes that she has not
provided her managers with enough direction regarding
her expectations for the store’s goals and the employees’
performance. This example shows how an organization
can progress in the wrong direction as a result of
22. little company diversity.
23. no focus on JIT.
24. no code of ethics.
25. D. poor planning.
26. too much employee diversity.

Blooms: Apply
Difficulty: 3 Hard
management.
Topic: Planning
Feedback: A poor plan can send an organization in the wrong
direction.
22. Deon is opening a car wash, and he has approached

SCORE, an SBA organization that assists small-business
owners in setting up their companies. As a new business
owner, the SCORE counselors would probably advise Deon
to
23. learn from experience, the best teacher, rather than
a mentor.
24. avoid developing a business plan the first year of
business.
25. try new things regardless of the risk.
26. get a new perspective by asking people who have
failed.
27. E. write a business plan.

Blooms: Apply
Difficulty: 3 Hard
management.
Topic: Business Plan
Feedback: Organizations that assist entrepreneurs often
encourage them to write a business plan.
23. An organization’s _______ expresses the need the firm

will fill, the operations of the business, its components
and functions, and the expected revenues and expenses.
24. mentoring plan
25. code of ethics
26. risk statement
27. D. business model
28. code of business

Blooms: Understand
management.
Feedback: The business model outlines the need the firm will
fill, the operations of the business, its components and
functions, as well as the expected revenues and expenses.
24. Prior to opening her new restaurant, Nia is

determining what items to offer on the menu, the
anticipated profits and expenses, the tasks of various
employees, and how those jobs will be handled. Nia is
creating her
25. A. business model.
26. mentoring plan.
27. code of ethics.
28. risk statement.
29. code of business.

Blooms: Apply
Difficulty: 3 Hard
management.
Feedback: The business model outlines the need the firm will
fill, the operations of the business, its components and
functions, and the expected revenues and expenses.
25. ________ is the primary reason for an organization to

adopt planning and strategic management.
26. A. Developing MBO
27. Encouraging new ideas
28. Developing a sustainable competitive advantage
29. Providing direction and momentum
30. Increasing organization diversity

Blooms: Understand
management.
Topic: Planning
Feedback: An organization should adopt planning and strategic
management for three reasons: They can (1) provide direction
and momentum, (2) encourage new ideas, and above all (3)
develop a sustainable competitive advantage.
26. _______ is the primary reason that entrepreneurs

create business plans.
27. To get financing and reduce competition
28. To develop a mentoring plan
29. To think through important details and focus on a
code of ethics
30. D. To get financing and think through important
details
31. To develop a code of business and succeed

Blooms: Apply
Difficulty: 3 Hard
management.
Topic: Business Plan
Feedback: There are several advantages to writing a business
plan. The reasons: Creating such a plan helps entrepreneurs
get financing (“If you want us to invest our money, show us
your plan”). It helps you think through important details (“Don’t
rush things; it’s best to get the strategy right”). Finally, it
increases the changes that the firm will succeed. (A study of
396 entrepreneurs in Sweden found that a greater number of
firms that failed never had a formal business plan.)
27. The first three steps in planning his organization are

(in the correct order)
28. strategic planning, creating a mission statement, and
creating a vision statement
29. operational planning, creating a mission statement,
and developing a hiring plan
30. strategic planning, operational planning, and
preparing a vision statement
31. D. writing a mission statement, creating a vision
statement, and strategic planning
32. tactical planning, operational planning, and writing a
mission statement

According to Figure 5.1, the correct order of the steps are
mission statement, vision statement, strategic planning,
tactical planning, and operational planning.
Blooms: Apply
Difficulty: 3 Hard
statements.
Topic: Planning
28. The planning process begins with two attributes: a

mission statement and a vision statement. What
questions are answered with each of these?
29. What do we want to become?; What is our reason for
being?
30. What are the costs?; How much money can I make?
31. What are the risks?; What is our reason for being?
32. What do we want to become?; What products do we
offer at a profit?
33. E. What is our reason for being?; What do we want to
become?

Blooms: Understand
statements.
Topic: Mission Statement
Feedback: The planning process begins with two attributes: a
mission statement (which answers the question “What is our
reason for being?”) and a vision statement (which answers the
question “What do we want to become?”).
29. A mission statement expresses the

30. expected profitability of an organization.
31. B. purpose of an organization.
32. code of ethics.
33. market for the product.
34. types of employees needed.

Blooms: Understand
Difficulty: 1 Easy
statements.
Feedback: A mission statement expresses the purpose of the
organization.
30. Clothing maker Patagonia states that its purpose as
an organization is to “build the best product, cause no
unnecessary harm, [and] use business to inspire and
implement solutions to the environmental crisis.” This is
the company’s
31. A. mission statement.
32. belief statement.
33. goals pact.
34. code of ethics.
35. management pledge.

Blooms: Understand
statements.
organization. The mission statement for clothing maker
Patagonia is to “build the best product, cause no unnecessary
harm, [and] use business to inspire and implement solutions to
the environmental crisis.”
31. Elite Coffee and Bakery, a café that offers a relaxing

environment to enjoy quality coffees, teas, soups, and
other menu items, has a poster in the front of its
restaurants that reads, “We will always provide a quality
product to help our customers better meet the challenges
of their day and always take the time to offer caring
service one person at a time.” This statement is Elite’s
33. goals pact.
34. C. mission statement.
35. code of ethics.

Blooms: Apply
Difficulty: 3 Hard
statements.
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).
32. During a management meeting, Dave, the CEO of Top

Office Equipment, reminded his management team of
where the company wants to go as an organization: “Top
Office Equipment is the expert whom customers should
always call regarding all their office equipment needs
because Top Office strives to understand customer needs
and provide the right answers for them.” This statement is
Top Office Equipment’s
34. goals pact.
35. code of ethics.
37. E. vision statement.

Blooms: Apply
Difficulty: 3 Hard
statements.
Feedback: A vision statement expresses what the organization
should become, where it wants to go strategically.
33. One Fortune article states that “vision should

describe what’s happening to the world you compete in
and what you want to do about it” and
34. “it should help reduce competition.”
35. “it should guarantee organizational success”
36. C. “it should guide decisions.”
37. “it should improve employee morale.”
38. “it should reduce the glass ceiling.”

Blooms: Understand
statements.
Feedback: One Fortune article reads that “vision should
describe what’s happening to the world you compete in and
what you want to do “about it” and “it should guide decisions.”
34. The ______ are strategic, tactical, and operational.

35. A. three levels of planning
36. three levels of diversity
37. three strategic levels
38. three levels of marketing
39. three phases of the environment

Blooms: Understand
statements.
Topic: Planning
Feedback: The order of planning is strategic, then tactical,
then operational.
35. At the strategic level of planning, managers must pay

attention to the environment outside the organization, be
future oriented, and
36. have more stability than at other levels.
37. have more control over employee issues.
38. have less competition.
39. D. deal with uncertain and competitive conditions.
40. be more likely to understand the competition.

Blooms: Understand
statements.
Feedback: According to Figure 5.3, strategic planning includes
long-term decisions about the overall direction of the
organization. At the strategic level of planning, managers must
pay attention to the environment outside the organization, be
future oriented, and deal with uncertain and competitive
conditions.
36. A company’s strategic planning may have to be done

_____ due to frequently changing competition and
technology.
37. every five years rather than every two years
38. every five years rather than every ten years
39. every ten years
40. continuously
41. E. closer to every one or two years than every five
years

Blooms: Remember
Difficulty: 1 Easy
statements.
Feedback: Strategic planning determines what the
organization’s long-term goals should be for the next one to
five years with the resources it expects 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 one or two years than every five years.
37. The upper management of a large national retail

grocery store has passed along the new goals of
improving customer service to the district managers. At
this point, the district managers need to determine how
the stores in their district will achieve top management’s
goal with the given resources during the next 6 to 24
months. The district managers are developing ______
planning.
38. working-level
39. B. tactical
40. middle-level
41. operational
42. strategic

Blooms: Apply
Difficulty: 3 Hard
statements.
Feedback: When the strategic priorities and policies are
passed down to middle managers, the middle managers must
do the tactical planning.
38. Operational planning must be completed by first-line

managers every ____, and tactical planning is done by
middle management every
39. year; 2 to 10 years.
40. 6 to 24 months; 1 to 52 weeks.
41. C. 1 to 52 weeks; 6 to 24 months.
42. 1 to 12 weeks; year.
43. year, if necessary; 1 to 90 days.

Blooms: Remember
Difficulty: 1 Easy
statements.
Feedback: First-line managers do operational planning, which
means they determine how to accomplish specific tasks with
available resources within the next 1 to 52 weeks. Tactical
planning by middle management, where the managers
determine what contributions their departments or similar
work units can make with their given resources, must be done
during every 6 to 24 months.
39. The upper-level managers of Synergy Technology are

meeting for the week to look at the long-term company
goals and overall direction of the organization. The CEO
has expressed her concern over the economy and has told
her managers to look closely at the environment outside
the organization before making decisions and to be future
oriented. In this meeting, top managers of Synergy are
40. writing a belief statement.
41. developing their goals pact.
42. producing their code of ethics.
43. D. doing strategic planning.
44. doing management pledging.

Blooms: Apply
Difficulty: 3 Hard
statements.
Feedback: According to Figure 5.3, strategic planning includes
long-term decisions about the overall direction of an
organization. Managers need to pay attention to the
environment outside the organization, be future oriented, and
deal with uncertain and highly competitive conditions.
40. _______ is planning done by middle managers to

work units can make with their given resources during the
next 6 to 24 months.
41. Writing a belief statement
42. Developing a goals pact
43. Producing a code of ethics
44. D. Tactical planning
45. Management pledging

Blooms: Remember
Difficulty: 1 Easy
statements.
Feedback: Tactical planning is done by middle managers to
work units can make with their given resources during the
next 6 to 24 months.
41. ______ is planning done by first-line managers to

determine how to accomplish specific tasks with
available resources within the next 1 to 52 weeks.
42. Writing a belief statement
43. Developing a goals pact
44. Producing a code of ethics
45. Management pledging
46. E. Operational planning

Blooms: Remember
Difficulty: 1 Easy
statements.
Topic: Planning
Feedback: Operational planning is done by first-line managers
to determine how to accomplish specific tasks with available
resources within the next 1 to 52 weeks.
42. Suppose you manage an upscale restaurant in New

York City. __________ would involve writing employee
schedules and a list of things to do for the chef and other
kitchen staff.
43. Strategic planning
44. B. Operational planning
45. Delegation management
46. Human resource management
47. Tactical planning

Blooms: Apply
Difficulty: 3 Hard
statements.
Feedback: 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.
43. Strategic planning should communicate not only

general goals about growth and profits but also
44. how to pay for them
45. ways to increase organizational synergy
46. how to increase market share
47. D. ways to achieve them
48. methods related to MBO

Blooms: Understand
statements.
Feedback: “Strategic planning requires visionary and
directional thinking,” says one authority. It should
communicate not only general goals about growth and profits
but also ways to achieve them.
44. The top management of Tasty Foods, a food

distribution company, has set strategic goals of
increasing organizational market share and also
decreasing corporate costs over the next three years.
Greg, a division manager for Tasty Foods, has looked at
his resources, and he has decided how his division can
contribute to the two strategic goals set by upper
management: (1) by partnering with another company and
(2) by hiring a procurement manager to negotiate lower
prices from vendors. Greg’s next step is to roll out his ____
to his staff.
45. vision statements
46. management guidelines
47. codes of ethics
48. D. tactical goals
49. operational goals

Blooms: Apply
Difficulty: 3 Hard
goals and plans.
Topic: Tactical Goals

Virginia Tech MGT 3304 Management - Test Bank

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1. Paul, who is normally an ethical person, has an

2. Habitual cheating tends to begin with small infractions,

4. The employees of a production facility that produce parts

5. The task environment of Top-Notch Sewing consists of

6. Pleasant Resort, a successful 100-year-old hotel and

7. The general environment, or macroenvironment, includes

8. When the Kiddie Village Daycare Center looks at the

9. Paul, the vice president of marketing in an international

11. The Sarbanes-Oxley Act set up the Federal Trade

12. Companies can reduce unethical behavior by offering

13. Despite recent pressure from stockholders to

15. After the scandals at WorldCom, Tyco, Adelphia, and

16. Shane, a sales manager, remarked that typically, her

17. Alonzo, the president of his high school’s senior

18. Don, the owner of a bait and tackle shop, attended

19. What mechanism is used to provide a systematic

20. An organization’s internal stakeholders consist of

AACSB: Analytical Thinking

21. The marketing director for Zap Games, a video game

AACSB: Knowledge Application

AACSB: Knowledge Application

23. Don was recently promoted, and his salary increase

24. Amy, a successful banker and educator, has decided

AACSB: Knowledge Application

25. Warm Hearts is a nonprofit organization that brings

AACSB: Knowledge Application

27. To focus on improving company customer service

AACSB: Knowledge Application

28. Rebecca and Donna, owners of Fine Coffee and

AACSB: Knowledge Application

29. A supplier is an external stakeholder that

AACSB: Knowledge Application

30. Every Saturday Mrs. Jones and hundreds of other

AACSB: Knowledge Application

31. ABC Brothers’ cleaning products and equipment are

AACSB: Knowledge Application

32. Ole McDonald, a successful farm equipment supply

AACSB: Knowledge Application

33. Since the 1950s, the percentage of the U.S. labor

AACSB: Knowledge Application

34. Local communities are stakeholders of organizations

AACSB: Analytical Thinking

AACSB: Knowledge Application

36. Which type of funding raises small amounts of money

37. _______ are regulatory agencies, such as the SEC

AACSB: Analytical Thinking

AACSB: Knowledge Application

39. The mass media are part of an organization’s

40. Which forces are part of the macroenvironment?

AACSB: Analytical Thinking

41. What is a synonym for the macroenvironment?

AACSB: Analytical Thinking

42. Tom and his managers are discussing the

AACSB: Knowledge Application

43. Fewer children are interested in learning how to play

AACSB: Analytical Thinking

44. _____ forces lead to new developments in methods for

45. When a food distributor considers changing the

AACSB: Analytical Thinking

47. Changes in the economic, political, legal, and