Contemporary Management 11th Edition Test Bank Chapter 11

CH 11: Organizational Control and Change
ch8
Student: ___________________________________________________________________________
1. The process by which managers monitor and regulate the organization in order to determine if the
organization is operating efficiently and effectively is known as planning.
True False
2. Using the controlling function, managers monitor and evaluate the organization's strategy to see if it is
working.
True False
3. The control function is limited to reacting to events in a business after the events have already occurred.
True False
4. Organizational control procedures can give managers feedback about the quantity, but not the quality, of
products produced by the organization.
True False
5. Formal monitoring and evaluation systems that provide managers with information in order to determine if
the organization's strategy is working efficiently and effectively are known as control systems.
True False
6. Managers use feedforward control to anticipate problems.
True False
7. During the input stage, the most common type of control procedure is concurrent control, which gives
managers immediate feedback.
True False
8. At the output stage, managers typically use feedback control more than any other type of control procedure.
Feedback control gives managers regains about customers' reactions.
True False
9. The first step in the control process is to evaluate results in terms of performance standards.
True False
10. A standard of performance that measures efficiency at the functional level is the operating cost.
True False
11. The first type of performance measure that managers typically use measures outputs.
True False
12. Standard operating procedures are mechanisms for clan control.
True False
13. All managers develop a system of output control.
True False
14. Profit ratios measure the efficiency of the use of the organization's resources in generating profits.
True False
15. The most commonly used financial performance measure in organizations is the debt-to-equity ratio.
True False
16. The difference between revenues from a product and the costs that are directly associated with producing or
purchasing that product is known as the operating profit of that product.
True False
17. The "objectivity" of financial measures of performance is a main reason why managers use these ratios to
measure the efficiency and effectiveness of their organizations.
True False
18. When you divide the organization's current assets by its current liabilities, the result is known as the times-
covered ratio of the organization.
True False
19. The current ratio is an example of a leverage ratio of the organization.
True False
20. The inventory turnover ratio is an example of the activity ratio of an organization.
True False
21. Information on how efficiently managers are collecting revenue from customers to pay expenses is given
by the quick ratio.
True False
22. Financial information provides managers with all of the information that they need to measure the four
building blocks of competitive advantage.
True False
23. Output control procedures are used at every management level of an organization.
True False
24. Output control methods are effective in motivating employees, but behavior control methods are not.
True False
25. The least powerful form of behavior control is direct supervision of a subordinate by a manager.
True False
26. Participatory nature is an important characteristic of bureaucratic control.
True False
27. The control of subordinates largely through a system of rules and standard operating procedures is typical
in bureaucratic control.
True False
28. The use of bureaucratic control in an organization typically enhances creativity and learning of
subordinates.
True False
29. The set of values, norms, and standards of behavior that control the ways in which employees in an
organization interact with each other is known as the organizational culture.
True False
30. Clan control is an internally imposed system of constraints.
True False
31. Organizational culture is an externally imposed system of constraints on the behavior of the workers within
an organization.
True False
32. An adaptive culture is one that controls employee behavior and attitudes through its strong and cohesive
organizational culture.
True False
33. In inert cultures, employees often receive rewards directly linked to their performance.
True False
34. If an organization's control systems are not designed correctly, an organization may not be able to adapt to
a changing environment.
True False
35. Organization change affects organizational structure but not organizational culture.
True False
36. Seemingly trivial corporate-level changes can significantly affect how divisional and departmental
managers behave.
True False
37. Top-down change is more gradual and evolutionary than a bottom-up change.
True False
38. Bottom-up change can co-opt resistance to change from employees.
True False
39. Entrepreneurship ends once a new business has been founded.
True False
40. Intrapreneurs engage in entrepreneurship within an existing company.
True False
41. Which of the following is the process by which managers monitor and regulate how efficiently
and effectively an organization and its members are performing the activities necessary to achieve
organizational goals?
A. Planning
B. Organizing
C. Leading
D. Controlling
E. Coordinating
42. Which of the following are formal target-setting, monitoring, evaluation, and feedback systems that provide
managers with information about whether the organization's strategy and structure are working efficiently
and effectively?
A. Organizational socialization
B. Embedded systems
C. Control systems
D. Concurrent systems
E. Parallelism
43. Which type of control do managers typically use in the input stage of the process of transforming raw
materials into finished goods?
A. Feedforward control
B. Concurrent control
C. Feedback control
D. Bureaucratic control
E. MBO control
44. Acme Explosives recently gave very specific specifications to its suppliers of raw materials in an attempt
to improve the quality of those raw materials and to minimize and anticipate the problems they are likely to
face in the conversion process. This is an example of:
A. concurrent control.
B. feedforward control.
C. feedback control.
D. bureaucratic control.
E. MBO control.
45. Managers at Zeppelin Construction Company set up a stringent job interview process by which applicants
are carefully screened at different levels of the organization before they are hired, attempting to increase the
chance that newly hired managers will have the knowledge and skills they need to be successful within the
organization. This is an example of:
E. MBO control.
46. Hanover Insurance sets up a management information system (MIS) that gives its regional managers
information about changes in the task environment that may affect the organization at some future time.
This is an example of:
A. feedforward control.
B. concurrent control.
E. MBO control.
47. Which type of control do managers typically use at the conversion stage of transforming raw materials into
finished goods?
B. Bureaucratic control
C. Concurrent control
D. Feedback control
E. MBO control
48. Which of the following is most likely to be used in a garment factory to solve problems like defective
inputs, broken machine parts, or a worker's lack of skills to produce a specific type of garment?
B. MBO control
C. Feedback control
D. Concurrent control
E. Bureaucratic control
49. What type of control do managers typically use at the output stage?
A. MBO control
C. Bureaucratic control
D. Feedforward control
E. Feedback control
50. At which step of the control process does a manager establish the standards of performance?
A. Step 1
B. Step 2
C. Step 3
D. Step 4
E. Step 5
51. Brennan Manufacturing monitors the number of customer returns for each product model to attempt to
track when the organization is producing a large number of defective products. This is an example of:
C. MBO control.
D. feedback control.
E. bureaucratic control.
52. Beswick Widget Company sets up a system to monitor unit sales of its products to measure changes taking
place in customer tastes and the possible resulting impact on future sales. This is an example of:
B. feedback control.
C. MBO control.
E. concurrent control.
53. The standard of performance that measures efficiency at the corporate level of the organization is:
A. cost of goods sold.

B. profit before tax.
C. net sales.
D. operating costs.
E. net income after taxes.
54. At which step of the control process do managers evaluate whether the actual performance of the
organization differs significantly from the standards of performance being used to assess the performance
of the organization?
A. Measure actual performance

B. Compare actual performance to the standards
C. Establish the standards of performance
D. Initiate corrective action
E. Measure standards of performance
55. The final step in the control process is to:
A. initiate corrective action.

B. measure actual performance.
C. establish the standards of performance.
D. compare actual performance to the standards.
E. measure the standards of performance.
56. Which of the following is a mechanism of control for organizational culture?
A. Direct supervision
B. Management by objectives
C. Socialization
D. Organizational goals
E. Operating budgets
57. Management by objectives is a mechanism of control for which of the following?
A. Input control
B. Clan control
C. Organizational culture
D. Output control
E. Behavior control
58. The manager of a fast-food restaurant such as McDonald's keeps track of the number of customers served
at different periods of the day in an attempt to plan a schedule for workers that matches the demand for the
restaurant's products. This is an example of:
A. output control.
B. bureaucratic control.
C. input control.
D. MBO control.
E. feedforward control.
59. The manager of a 7-Eleven convenience store keeps track of the average sale amount for each customer as
a way of deciding on the product mix to be carried in the store. This is an example of:
A. bureaucratic control.
C. output control.
D. input control.
E. MBO control.
60. Which of the following is the most commonly used financial performance measure when evaluating an
organization's performance?
A. Gross profit margin

B. Debt-to-assets ratio
C. Days sales outstanding ratio
D. Inventory turnover ratio
E. Return on investment
61. Which type of performance ratio measures the efficiency of the organization in terms of how well the
resources of the organization have been used to generate profit?
A. Activity ratios
B. Leverage ratios
C. Profit ratios
D. Liquidity ratios
E. Quick ratios
62. Which type of financial ratio measures the ability of the organization to pay its short-term debts?
A. Leverage ratios
B. Liquidity ratios
C. Activity ratios
D. Profit ratios
E. Inventory turnover ratios
63. Which type of financial ratio indicates the degree to which the organization uses debt or equity to finance
its ongoing operations?
A. Current ratio
B. Quick ratio
C. Debt-to-assets ratio
E. Days sales outstanding ratio
64. Which type of financial ratio measures how well the managers of the organization are creating value from
the organization's assets?
A. Leverage ratios
B. Liquidity ratios
C. Profit ratios
D. Current ratios
E. Activity ratios
65. Which type of financial ratio indicates how efficiently the managers of the organization are collecting the
revenues due to the organization from the sales of its products or services?
A. Debt-to-assets ratio
B. Quick ratio
C. Current ratio
D. Days sales outstanding ratio
E. Profit ratio
66. From the information given below, calculate the organization's return on investment (ROI).
Total Liabilities = $300,000; Total Assets = $600,000; Gross Margin = $200,000; Net Income Before
Taxes = $30,000; Total Expenses = $240,000
A. 50%
B. 5%
C. 10%
D. 12.5%
E. 15%
67. Calculate the return on investment (ROI) from the information given below.
Net Income After Taxes = $18,000; Advertising Expenses = $220,000; Total Liabilities = $120,000; Total
Assets = $160,000; Gross Margin = $80,000; Taxes Paid = $2000
A. 16.67%
B. 15%
C. 11.25%
D. 12.5%
E. 50%
68. From the information given below, calculate the organization's gross profit.
Sales Revenue = $400,000; Cost of Goods Sold = $260,000; Total Liabilities = $220,000; Total Assets =
$450,000; Operating Profit = $28,000
A. $372,000
B. $140,000
C. $180,000
D. $232,000
E. $230,000
69. Calculate the current ratio of the organization from the information given below.
Sales = $200,000; Gross Profit = $40,000; Total Assets = $450,000; Current Assets = $250,000; Current
Liabilities = $300,000
A. 0.44
B. 0.56
C. 0.67
D. 0.83
E. 1.2
70. From the information given below, calculate the organization's current ratio.
Total Liabilities = $750,000; Current Liabilities = $220,000; Total Assets = $700,000; Current Assets =
$176,000
A. 0.25
B. 0.93
C. 0.29
D. 0.80
E. 1.25
71. Which of the following results when the organization's net income before taxes divided by the total assets
figure for the organization?

B. Return on investment
D. Days sales outstanding
E. Inventory turnover ratio
72. If the direct costs associated with producing a specific product are subtracted from the net revenues
received from the sale of this product, the resulting figure is called:
A. net income.
B. operating profit.
C. cash flow.
D. gross profit.
E. the cost of goods sold.
73. Which of the following ratio is computed by dividing the difference between current assets and inventory
by current liabilities?
A. Inventory turnover ratio

B. Days sales outstanding ratio
C. Quick ratio
D. Current ratio
E. Debt-to-assets ratio
74. Which type of financial ratio indicates whether or not the organization is capable of paying off its short-
term debts without having to sell any of its inventory?
A. Quick ratio
B. Current ratio
E. Profit ratio
75. "Stretch goals" can be described as:
A. specific, easy goals.

B. specific, difficult goals.
C. vague, easy goals.
D. vague, difficult goals.
E. unachievable goals.
76. The managers of a division are given a fixed budget and are then evaluated on the basis of their ability to
produce goods or services. This is known as:
A. an expense budget approach.

B. a profit budget approach.
C. an operating profit budget approach.
D. a cash flow budget approach.
E. a revenue budget approach.
77. A manager of a profit center is evaluated on the basis of the amount of sales that have been generated from
the goods or services produced in his/her division. This is known as:

B. a cash flow budget approach.
C. a revenue budget approach.
D. a profit budget approach.
E. an operating profit budget approach.
78. A division manager's performance is evaluated on the basis of the difference between the sales revenues
generated by that division and the cost of making those goods and services. This is known as:
A. a profit budget approach.

B. a revenue budget approach.
C. a cash flow budget approach.
D. a cost budget approach.
E. an expense budget approach.
79. A division manager is given an operating budget of $2.2 million for the coming year and is evaluated on
the basis of the amount of output the division can produce based on that budget. This type of budget is
called:
A. a revenue budget approach.

C. an expense budget approach.
E. a capital budget approach.
80. A division manager is told to "maximize the sales of the division" and is then evaluated on the basis of the
net sales generated by the division. This is an example of:

81. A division manager is evaluated based on the operating income of his division. This is an example of:
A. a cash flow budget approach.

B. a capital budget approach.
D. an expense budget approach.
E. a profit budget approach.
82. The most immediate and potent form of behavior control is:
A. direct supervision.
B. MBO.
C. clan control.
E. socialization.
83. In MBO, which of the following is established first?
A. Evaluations
B. Organizational objectives
C. Managers' goals
D. Subordinates' goals
E. Performance appraisals
84. The type of control system that uses rules and SOP's to regulate the behavior of workers within the
organization is known as:
A. a bureaucratic control system.

B. an MBO system.
C. a feedback control system.
D. a feedforward control system.
E. a concurrent control system.
85. The workers of an organization perform the same activities in the same way over and over again based on
rules that managers have developed. We say that the behaviors of these workers have been:
A. compromised.
B. standardized.
C. maximized.
D. minimized.
E. nullified.
86. A worker at a motorcycle plant comes up with a new way to attach the fuel injection system to the motor,
increasing the efficiency of the assembly process. Management develops a new procedure to instruct all
employees to attach fuel injection systems the same way. This is an example of:
B. clan control.
C. management by objectives.
D. output control.
E. input control.
87. The set of values, norms, and expectations of behavior that controls the ways in which workers interact
with one another within the organization is known as:
A. a bureaucratic culture.
B. an organizational culture.
C. an MBO culture.
D. a feedback control culture.
E. a feedforward control culture.
88. The type of control that is imposed on workers within the organization by the shared values, norms,
standards of behavior, and expectations for workers within that organization is known as:
C. clan control.
89. A culture that is strong and controls employee attitudes and behaviors is called:
A. a clan culture.
B. an inert culture.
C. an adaptive culture.
D. a bureaucratic culture.
E. an MBO culture.
90. In an adaptive culture, employees often:
A. receive rewards based on performance.

B. receive rewards based on union contracts.
C. receive rewards based on length of service with the company.
D. receive rewards based on their organizational commitment.
E. do not receive rewards.
91. Which of the following leads to values and norms that fail to motivate or inspire employees which
eventually leads to stagnation and often failure over time?
A. An adaptive culture
B. An MBO culture
C. An inert culture
D. A clan culture
E. A bureaucratic culture
92. The process through which managers try to increase members' abilities to understand and appropriately
respond to changing conditions is:
A. clan control.
B. organizational change.
C. socialization.
D. organizational learning.
93. Which of the following process includes comparing the performance on specific dimensions with the
performance of high-performing organizations, to decide how successful a change effort has been?
A. Socialization
B. Amalgamation
C. Diversification
D. Social facilitation
E. Benchmarking
94. Entrepreneurship is:
A. intrapreneurship within an existing company.

B. the consolidation of companies.
C the process in which employees of existing organizations who notice opportunities for product or service
. improvements are responsible for managing the development process.
D.the mobilization of resources to take advantage of an opportunity to provide customers with new or
improved goods and services.
E. the systematic gathering, recording, and analysis of data about issues relating to marketing products and
services.
95. Discuss the three characteristics of an effective control system in an organization and illustrate each of
them with a specific example from an organization of your choosing.
96. Within an organization, the control process normally progresses through four steps. Discuss these steps as
they would apply to an important management situation of your choosing.
97. The top managers of an organization typically use a variety of financial indicators to assess the
performance of their organizations. Discuss the four major types of financial measures and create one
specific example of how each would be computed.
98. Managers typically use three primary measures to assess the output performance of their organizations.
Discuss these three types of measures and give one specific example of how a manager would use each of
the measures that you select, in a situation of your choosing.
99. Output control systems have advantages and disadvantages. Discuss the possible disadvantages of these
types of systems within organizations.
100.Behavior control is one way for managers to attempt to motivate workers. Discuss three ways managers
could use behavior control with subordinates and give a specific example of how a manager of servers in a
restaurant would use each of these methods.
101.Direct supervision is one of the best ways for managers to monitor the behavior of subordinates, but this
method of behavior control can create problems with subordinates. Discuss the problems that can occur and
explain what a manager can do to minimize these problems when working with subordinates.
102.Management by objectives (MBO) is one way that managers can use to evaluate the performance of
subordinates. Create a situation that involves a manager and a subordinate, and discuss the steps involved
in using this technique.
103.All organizations make use of bureaucratic control methods in their dealings with the employees of the
organization. This type of control system can, however, create problems for the subordinates. Discuss these
types of problems and explain what an organization's managers can do to reduce these types of problems
within the organization.
104.How does organizational culture help managers exert control over subordinates?
105.How is the type of organizational culture related to entrepreneurship in the organization?
106.Define "adaptive culture" and "inert culture". Which is better for an organization and why? Give at least two
examples of what organizations with each of these do to develop their cultures.
107.Discuss the need to balance two opposing forces in the control process that influences the way
organizations change.
108.Identify the steps in the organizational change process, and describe what occurs in each step.
109.Why do people resist change? Explain how the type of culture an organization has affects how it changes.
110.Define "entrepreneurs" and "intrapreneurs".
111.Describe common problems entrepreneurs have in managing their organizations.

ch8 Key
1. The process by which managers monitor and regulate the organization in order to determine if the
(p. 261) organization is operating efficiently and effectively is known as planning.
FALSE
AACSB: Analytic
Blooms Taxonomy: Knowledge
Difficulty: Easy
Jones - Chapter 08 #1
Learning Objective: 08-1
Topic: What Is Organizational Control?
2. Using the controlling function, managers monitor and evaluate the organization's strategy to see if it is
(p. 261) working.
TRUE
AACSB: Analytic
Difficulty: Easy
3. The control function is limited to reacting to events in a business after the events have already occurred.
(p. 261)
FALSE
AACSB: Analytic
Difficulty: Moderate
4. Organizational control procedures can give managers feedback about the quantity, but not the quality, of
(p. 262) products produced by the organization.
FALSE
AACSB: Analytic
Difficulty: Easy
Topic: The Importance of Organizational Control
5. Formal monitoring and evaluation systems that provide managers with information in order to
(p. 263) determine if the organization's strategy is working efficiently and effectively are known as control
systems.
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Control Systems and IT
6. Managers use feedforward control to anticipate problems.
(p. 263)
TRUE
AACSB: Analytic
Difficulty: Easy
7. During the input stage, the most common type of control procedure is concurrent control, which gives
(p. 263) managers immediate feedback.
FALSE
AACSB: Analytic
8. At the output stage, managers typically use feedback control more than any other type of control
(p. 264) procedure. Feedback control gives managers regains about customers' reactions.
TRUE
AACSB: Analytic
Difficulty: Easy
9. The first step in the control process is to evaluate results in terms of performance standards.
(p. 264)
FALSE
AACSB: Analytic
Difficulty: Easy
Topic: The Control Process
10. A standard of performance that measures efficiency at the functional level is the operating cost.
(p. 265)
FALSE
AACSB: Analytic
Difficulty: Easy
11. The first type of performance measure that managers typically use measures outputs.
(p. 266)
TRUE
AACSB: Analytic
12. Standard operating procedures are mechanisms for clan control.
(p. 267
(Figure
8.3)) FALSE
AACSB: Analytic
13. All managers develop a system of output control.

(p. 268)
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Output Control
14. Profit ratios measure the efficiency of the use of the organization's resources in generating profits.
(p. 268)
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Financial Measures of Performance
15. The most commonly used financial performance measure in organizations is the debt-to-equity ratio.
(p. 268)
FALSE
AACSB: Analytic
16. The difference between revenues from a product and the costs that are directly associated with
(p. 268) producing or purchasing that product is known as the operating profit of that product.
FALSE
AACSB: Analytic
17. The "objectivity" of financial measures of performance is a main reason why managers use these ratios
(p. 268) to measure the efficiency and effectiveness of their organizations.
TRUE
AACSB: Analytic
18. When you divide the organization's current assets by its current liabilities, the result is known as the
(p. 268) times-covered ratio of the organization.
FALSE
AACSB: Analytic
Difficulty: Easy
19. The current ratio is an example of a leverage ratio of the organization.

(p. 268)
FALSE
AACSB: Analytic
20. The inventory turnover ratio is an example of the activity ratio of an organization.
(p. 268)
TRUE
AACSB: Analytic
21. Information on how efficiently managers are collecting revenue from customers to pay expenses is
(p. 268) given by the quick ratio.
FALSE
AACSB: Analytic
22. Financial information provides managers with all of the information that they need to measure the four
(p. 270) building blocks of competitive advantage.
FALSE
AACSB: Analytic
23. Output control procedures are used at every management level of an organization.
(p. 271)
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Organizational Goals
24. Output control methods are effective in motivating employees, but behavior control methods are not.
(p. 273)
FALSE
AACSB: Analytic
Blooms Taxonomy: Comprehension
Topic: Behavior Control
25. The least powerful form of behavior control is direct supervision of a subordinate by a manager.
(p. 273)
FALSE
AACSB: Analytic
Topic: Direct Supervision
26. Participatory nature is an important characteristic of bureaucratic control.

(p. 274)
FALSE
AACSB: Analytic
Topic: Management by Objectives
27. The control of subordinates largely through a system of rules and standard operating procedures is
(p. 275) typical in bureaucratic control.
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Bureaucratic Control
28. The use of bureaucratic control in an organization typically enhances creativity and learning of
(p. 276) subordinates.
FALSE
AACSB: Analytic
Topic: Problems with Bureaucratic Control
29. The set of values, norms, and standards of behavior that control the ways in which employees in an
(p. 277) organization interact with each other is known as the organizational culture.
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Organizational Culture and Clan Control
30. Clan control is an internally imposed system of constraints.
(p. 277)
TRUE
AACSB: Analytic
31. Organizational culture is an externally imposed system of constraints on the behavior of the workers
(p. 277) within an organization.
FALSE
AACSB: Analytic
Difficulty: Easy
32. An adaptive culture is one that controls employee behavior and attitudes through its strong and cohesive
(p. 273) organizational culture.
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Adaptive Cultures versus Inert Cultures
33. In inert cultures, employees often receive rewards directly linked to their performance.
(p. 279)
FALSE
AACSB: Analytic
34. If an organization's control systems are not designed correctly, an organization may not be able to adapt
(p. 281) to a changing environment.
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Organizational Change
35. Organization change affects organizational structure but not organizational culture.
(p. 282)
FALSE
AACSB: Analytic
Difficulty: Easy
Topic: Assessing the Need for Change
36. Seemingly trivial corporate-level changes can significantly affect how divisional and departmental
(p. 283) managers behave.
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Deciding on the Change to Make
37. Top-down change is more gradual and evolutionary than a bottom-up change.
(p. 285)
FALSE
AACSB: Analytic
Topic: Implementing the Change
38. Bottom-up change can co-opt resistance to change from employees.

(p. 285)
TRUE
AACSB: Analytic
Difficulty: Easy
Topic: Implementing the Change
39. Entrepreneurship ends once a new business has been founded.

(p. 286)
FALSE
AACSB: Analytic
Difficulty: Easy
Topic: Entrepreneurship, Control, and Change
40. Intrapreneurs engage in entrepreneurship within an existing company.

(p. 286)
TRUE
AACSB: Analytic
41. Which of the following is the process by which managers monitor and regulate how efficiently
(p. 261) and effectively an organization and its members are performing the activities necessary to achieve
organizational goals?
A. Planning
B. Organizing
C. Leading
D. Controlling
E. Coordinating
Controlling is the process whereby managers monitor and regulate how efficiently and effectively an
organization and its members are performing the activities necessary to achieve organizational goals.
AACSB: Analytic
Difficulty: Easy
42. Which of the following are formal target-setting, monitoring, evaluation, and feedback systems that
(p. 263) provide managers with information about whether the organization's strategy and structure are working
efficiently and effectively?
A. Organizational socialization
B. Embedded systems
C. Control systems
D. Concurrent systems
E. Parallelism
Control systems are formal target-setting, monitoring, evaluation, and feedback systems that provide
managers with information about whether the organization's strategy and structure are working
efficiently and effectively.
AACSB: Analytic
Difficulty: Easy
43. Which type of control do managers typically use in the input stage of the process of transforming raw
(p. 263) materials into finished goods?
C. Feedback control
D. Bureaucratic control
E. MBO control
At the input stage, managers use feedforward control to anticipate problems before they arise so that
problems do not occur later, during the conversion process.
AACSB: Analytic
44. Acme Explosives recently gave very specific specifications to its suppliers of raw materials in an
(p. 263) attempt to improve the quality of those raw materials and to minimize and anticipate the problems they
are likely to face in the conversion process. This is an example of:
E. MBO control.
Acme is attempting to control the quality of inputs into its production process and to anticipate
problems before they arise so that problems do not occur later.
AACSB: Reflective Thinking

Blooms Taxonomy: Application
45. Managers at Zeppelin Construction Company set up a stringent job interview process by which
(p. 263) applicants are carefully screened at different levels of the organization before they are hired, attempting
to increase the chance that newly hired managers will have the knowledge and skills they need to be
successful within the organization. This is an example of:
E. MBO control.
Managers can use feedforward control while screening job applicants, often by viewing their résumés
electronically, and using several interviews to select the most highly skilled people, which can lessen
the chance that they will hire people who lack the necessary skills or experience to perform effectively.

46. Hanover Insurance sets up a management information system (MIS) that gives its regional managers
(p. 263) information about changes in the task environment that may affect the organization at some future time.
This is an example of:
E. MBO control.
Managers use feedforward control to anticipate problems before they arise so that problems do not
occur later.

Difficulty: Hard
47. Which type of control do managers typically use at the conversion stage of transforming raw materials
(p. 263) into finished goods?
B. Bureaucratic control
C. Concurrent control
D. Feedback control
E. MBO control
At the conversion stage, concurrent control gives managers immediate feedback on how efficiently
inputs are being transformed into outputs so that managers can correct problems as they arise.
AACSB: Analytic
Difficulty: Easy
48. Which of the following is most likely to be used in a garment factory to solve problems like defective
(p. 264) inputs, broken machine parts, or a worker's lack of skills to produce a specific type of garment?
B. MBO control
C. Feedback control
D. Concurrent control
E. Bureaucratic control
At the conversion stage, concurrent control gives managers immediate feedback on how efficiently
inputs are being transformed into outputs so that managers can correct problems as they arise, be it a
defective batch of inputs, a machine that is out of alignment, or a worker who lacks the skills necessary
to perform a task efficiently.
AACSB: Analytic
49. What type of control do managers typically use at the output stage?
(p. 264)
A. MBO control
C. Bureaucratic control
D. Feedforward control
E. Feedback control
At the output stage, managers use feedback control to provide information about customers' reactions to
goods and services so that corrective action can be taken if necessary.
AACSB: Analytic
Difficulty: Easy
50. At which step of the control process does a manager establish the standards of performance?
(p. 264)
A. Step 1
B. Step 2
C. Step 3
D. Step 4
E. Step 5
At step 1 in the control process managers decide on the standards of performance, goals, or targets that
they will use in the future to evaluate the performance of the entire organization or part of it.
AACSB: Analytic
Difficulty: Easy
51. Brennan Manufacturing monitors the number of customer returns for each product model to attempt to
(p. 264) track when the organization is producing a large number of defective products. This is an example of:
C. MBO control.
At the output stage, managers use feedback control to provide information about customers' reactions to
goods and services so that corrective action can be taken if necessary.

52. Beswick Widget Company sets up a system to monitor unit sales of its products to measure changes
(p. 264) taking place in customer tastes and the possible resulting impact on future sales. This is an example of:
B. feedback control.
C. MBO control.
Beswick is attempting to learn about changes in customers' tastes so that they can increase or decrease
production of products as necessary. Thus, this is feedback control.

Difficulty: Hard
53. The standard of performance that measures efficiency at the corporate level of the organization is:
(p. 265)
A. cost of goods sold.

B. profit before tax.
C. net sales.
D. operating costs.
E. net income after taxes.
At the corporate level, a standard of performance that measures efficiency is operating costs.
AACSB: Analytic
54. At which step of the control process do managers evaluate whether the actual performance of
(p. 266) the organization differs significantly from the standards of performance being used to assess the
performance of the organization?
A. Measure actual performance

B. Compare actual performance to the standards
C. Establish the standards of performance
D. Initiate corrective action
E. Measure standards of performance
During step 3 (compare actual performance against chosen standards of performance), managers
evaluate whether—and to what extent—performance deviates from the standards of performance.
AACSB: Analytic
Difficulty: Easy
55. The final step in the control process is to:
(p. 266)
A. initiate corrective action.

B. measure actual performance.
C. establish the standards of performance.
D. compare actual performance to the standards.
E. measure the standards of performance.
The final step in the control process is to evaluate the results and bring about change as appropriate.
AACSB: Analytic
Difficulty: Easy
56. Which of the following is a mechanism of control for organizational culture?

(p. 267)
A. Direct supervision
B. Management by objectives
C. Socialization
D. Organizational goals
E. Operating budgets
Mechanisms of control for organizational culture include values, norms, and socialization (Figure 8.3).
AACSB: Analytic
57. Management by objectives is a mechanism of control for which of the following?

(p. 267)
A. Input control
B. Clan control
C. Organizational culture
D. Output control
E. Behavior control
Management by objectives is a mechanism of control for behavior control (Figure 8.3).
AACSB: Analytic
58. The manager of a fast-food restaurant such as McDonald's keeps track of the number of customers
(p. 268) served at different periods of the day in an attempt to plan a schedule for workers that matches the
demand for the restaurant's products. This is an example of:
A. output control.
B. bureaucratic control.
C. input control.
D. MBO control.
E. feedforward control.
McDonald's is tracking an output (number of customers served) and will adjust its production process to
try to match demand. This is a form of output control.

Difficulty: Hard
59. The manager of a 7-Eleven convenience store keeps track of the average sale amount for each customer
(p. 268) as a way of deciding on the product mix to be carried in the store. This is an example of:
C. output control.
D. input control.
E. MBO control.
7-Eleven is tracking an output (sales per customer) and will alter its product mix accordingly. This is a
form of output control.

Difficulty: Hard
60. Which of the following is the most commonly used financial performance measure when evaluating an
(p. 268) organization's performance?

B. Debt-to-assets ratio
E. Return on investment
Return on investment (ROI) is the most commonly used financial performance measure because it
allows managers of one organization to compare performance with that of other organizations.
AACSB: Analytic
61. Which type of performance ratio measures the efficiency of the organization in terms of how well the
(p. 268) resources of the organization have been used to generate profit?
A. Activity ratios
B. Leverage ratios
C. Profit ratios
D. Liquidity ratios
E. Quick ratios
Profit ratios measure how efficiently managers are using the organization's resources to generate profits.
AACSB: Analytic
Difficulty: Easy
62. Which type of financial ratio measures the ability of the organization to pay its short-term debts?
(p. 268)
A. Leverage ratios
B. Liquidity ratios
C. Activity ratios
D. Profit ratios
E. Inventory turnover ratios
Liquidity ratios measure how well managers have protected organizational resources to be able to meet
short-term obligations.
AACSB: Analytic
63. Which type of financial ratio indicates the degree to which the organization uses debt or equity to
(p. 268) finance its ongoing operations?
A. Current ratio
B. Quick ratio
E. Days sales outstanding ratio
Debt-to-assets ratio measures the degree to which managers use debt (borrow money) or equity (issue
new shares) to finance ongoing operations.
AACSB: Analytic
Difficulty: Easy
64. Which type of financial ratio measures how well the managers of the organization are creating value
(p. 268) from the organization's assets?
A. Leverage ratios
B. Liquidity ratios
C. Profit ratios
D. Current ratios
E. Activity ratios
Activity ratios provide measures of how well managers are creating value from organizational assets.
AACSB: Analytic
Difficulty: Easy
65. Which type of financial ratio indicates how efficiently the managers of the organization are collecting
(p. 268) the revenues due to the organization from the sales of its products or services?
A. Debt-to-assets ratio
B. Quick ratio
C. Current ratio
D. Days sales outstanding ratio
E. Profit ratio
Days sales-outstanding provides information on how efficiently managers are collecting revenue from
customers to pay expenses.
AACSB: Analytic
66. From the information given below, calculate the organization's return on investment (ROI).
(p. 268) Total Liabilities = $300,000; Total Assets = $600,000; Gross Margin = $200,000; Net Income Before
Taxes = $30,000; Total Expenses = $240,000
A. 50%
B. 5%
C. 10%
D. 12.5%
E. 15%
ROI = Net profit before taxes/Total assets = $30,000/$600,000 = .05 = 5%.
AACSB: Analytic
67. Calculate the return on investment (ROI) from the information given below.
(p. 268) Net Income After Taxes = $18,000; Advertising Expenses = $220,000; Total Liabilities = $120,000;
Total Assets = $160,000; Gross Margin = $80,000; Taxes Paid = $2000
A. 16.67%
B. 15%
C. 11.25%
D. 12.5%
E. 50%
ROI = Net profit After Taxes + Taxes paid/Total assets = $20,000/$160,000 = .125 = 12.5%.
AACSB: Analytic
Difficulty: Hard
68. From the information given below, calculate the organization's gross profit.
(p. 268) Sales Revenue = $400,000; Cost of Goods Sold = $260,000; Total Liabilities = $220,000; Total Assets
= $450,000; Operating Profit = $28,000
A. $372,000
B. $140,000
C. $180,000
D. $232,000
E. $230,000
Gross profit = Sales revenues - Cost of goods sold = $400,000 - $260,000 = $140,000.
AACSB: Analytic
Difficulty: Hard
69. Calculate the current ratio of the organization from the information given below.
(p. 268) Sales = $200,000; Gross Profit = $40,000; Total Assets = $450,000; Current Assets = $250,000; Current
Liabilities = $300,000
A. 0.44
B. 0.56
C. 0.67
D. 0.83
E. 1.2
Current ratio = Current assets/Current liabilities = $250,000/$300,000 = .83.
AACSB: Analytic
70. From the information given below, calculate the organization's current ratio.
(p. 268) Total Liabilities = $750,000; Current Liabilities = $220,000; Total Assets = $700,000; Current Assets =
$176,000
A. 0.25
B. 0.93
C. 0.29
D. 0.80
E. 1.25
Current ratio = Current assets/Current liabilities = $176,000/$220,000 = .80.
AACSB: Analytic
71. Which of the following results when the organization's net income before taxes divided by the total
(p. 268) assets figure for the organization?

B. Return on investment
D. Days sales outstanding
E. Inventory turnover ratio
Return on investment = Net income before taxes/Total assets
AACSB: Analytic
Difficulty: Easy
72. If the direct costs associated with producing a specific product are subtracted from the net revenues
(p. 268) received from the sale of this product, the resulting figure is called:
A. net income.
B. operating profit.
C. cash flow.
D. gross profit.
E. the cost of goods sold.
Gross profit = Revenue - Cost of goods sold
AACSB: Analytic
73. Which of the following ratio is computed by dividing the difference between current assets and
(p. 268) inventory by current liabilities?
A. Inventory turnover ratio

B. Days sales outstanding ratio
C. Quick ratio
D. Current ratio
E. Debt-to-assets ratio
Quick ratio = (current assets - inventory)/current liabilities.
AACSB: Analytic
Difficulty: Easy
74. Which type of financial ratio indicates whether or not the organization is capable of paying off its short-
(p. 268) term debts without having to sell any of its inventory?
A. Quick ratio
B. Current ratio
E. Profit ratio
The quick ratio tells whether managers have the resources available to meet the claims of short-term
creditors without selling inventory.
AACSB: Analytic
75. "Stretch goals" can be described as:
(p. 271)
A. specific, easy goals.

B. specific, difficult goals.
C. vague, easy goals.
D. vague, difficult goals.
E. unachievable goals.
The best goals are specific, difficult goals — goals that challenge and stretch managers' ability but are
not out of reach and do not require an impossibly high expenditure of managerial time and energy. Such
goals are often called stretch goals.
AACSB: Analytic
Difficulty: Easy
Topic: Organizational Goals
76. The managers of a division are given a fixed budget and are then evaluated on the basis of their ability
(p. 272) to produce goods or services. This is known as:

B. a profit budget approach.
C. an operating profit budget approach.
E. a revenue budget approach.
Managers of a division may be given a fixed budget for resources and be evaluated on the amount of
goods or services they can produce using those resources, this is a cost or expense budget approach.
AACSB: Analytic
Difficulty: Easy
Topic: Operating Budgets
77. A manager of a profit center is evaluated on the basis of the amount of sales that have been generated
(p. 272) from the goods or services produced in his/her division. This is known as:

E. an operating profit budget approach.
In a revenue budget approach, managers are asked to maximize the revenues from the sales of goods
and services produced.
AACSB: Analytic
78. A division manager's performance is evaluated on the basis of the difference between the sales revenues
(p. 272) generated by that division and the cost of making those goods and services. This is known as:

C. a cash flow budget approach.
D. a cost budget approach.
E. an expense budget approach.
In a profit budget approach, managers are evaluated on the difference between the revenues generated
by the sales of goods and services and the budgeted cost of making those goods and services.
AACSB: Analytic
Difficulty: Easy
79. A division manager is given an operating budget of $2.2 million for the coming year and is evaluated on
(p. 272) the basis of the amount of output the division can produce based on that budget. This type of budget is
called:
A. a revenue budget approach.

With an expense budget, a manager is given a fixed budget and asked to maximize the amount of goods
or services they can produce with that budget.
AACSB: Analytic
80. A division manager is told to "maximize the sales of the division" and is then evaluated on the basis of
(p. 272) the net sales generated by the division. This is an example of:

With a revenue budget, managers are asked to maximize the revenues from the sales of goods and
services produced.
AACSB: Analytic
Difficulty: Easy
81. A division manager is evaluated based on the operating income of his division. This is an example of:
(p. 272)
A. a cash flow budget approach.

B. a capital budget approach.
D. an expense budget approach.
E. a profit budget approach.
With a profit budget, managers are evaluated on the difference between revenues generated and
budgeted cost which is the operating income.
AACSB: Analytic
Difficulty: Easy
82. The most immediate and potent form of behavior control is:
(p. 273)
A. direct supervision.
B. MBO.
C. clan control.
E. socialization.
The most immediate and potent form of behavior control is direct supervision.
AACSB: Analytic
Difficulty: Easy
83. In MBO, which of the following is established first?
(p. 274)
A. Evaluations
B. Organizational objectives
C. Managers' goals
D. Subordinates' goals
E. Performance appraisals
Management by objective starts when top managers establish overall organizational objectives, such as
specific financial performance targets.
AACSB: Analytic
84. The type of control system that uses rules and SOP's to regulate the behavior of workers within the
(p. 275) organization is known as:
A. a bureaucratic control system.

B. an MBO system.
C. a feedback control system.
D. a feedforward control system.
E. a concurrent control system.
Bureaucratic control is control by means of a comprehensive system of rules and standard operating
procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and individuals.
AACSB: Analytic
Difficulty: Easy
85. The workers of an organization perform the same activities in the same way over and over again based
(p. 276) on rules that managers have developed. We say that the behaviors of these workers have been:
A. compromised.
B. standardized.
C. maximized.
D. minimized.
E. nullified.
When employees follow the rules that managers have developed, their behavior is standardized—
actions are performed the same way time and time again—and the outcomes of their work are
predictable.
AACSB: Analytic
Difficulty: Easy
86. A worker at a motorcycle plant comes up with a new way to attach the fuel injection system to the
(p. 275) motor, increasing the efficiency of the assembly process. Management develops a new procedure to
instruct all employees to attach fuel injection systems the same way. This is an example of:
B. clan control.
C. management by objectives.
D. output control.
E. input control.

Difficulty: Hard
87. The set of values, norms, and expectations of behavior that controls the ways in which workers interact
(p. 277) with one another within the organization is known as:
A. a bureaucratic culture.
B. an organizational culture.
C. an MBO culture.
D. a feedback control culture.
E. a feedforward control culture.
Organizational culture is the shared set of beliefs, expectations, values, norms, and work routines
that influences how members of an organization relate to one another and work together to achieve
organizational goals.
AACSB: Analytic
Difficulty: Easy
88. The type of control that is imposed on workers within the organization by the shared values, norms,
(p. 277) standards of behavior, and expectations for workers within that organization is known as:
C. clan control.
Clan control is the control exerted on individuals and groups in an organization by shared values,
norms, standards of behavior, and expectations.
AACSB: Analytic
Difficulty: Easy
89. A culture that is strong and controls employee attitudes and behaviors is called:
(p. 279)
A. a clan culture.
B. an inert culture.
C. an adaptive culture.
D. a bureaucratic culture.
E. an MBO culture.
An adaptive culture is a strong and cohesive organizational culture that controls employee attitudes and
behaviors.
AACSB: Analytic
Difficulty: Easy
90. In an adaptive culture, employees often:

(p. 279)
A. receive rewards based on performance.

B. receive rewards based on union contracts.
C. receive rewards based on length of service with the company.
D. receive rewards based on their organizational commitment.
E. do not receive rewards.
In adaptive cultures employees often receive rewards linked directly to their performance and to the
performance of the company as a whole.
AACSB: Analytic
Difficulty: Easy
91. Which of the following leads to values and norms that fail to motivate or inspire employees which
(p. 279) eventually leads to stagnation and often failure over time?
A. An adaptive culture
B. An MBO culture
C. An inert culture
D. A clan culture
E. A bureaucratic culture
Inert cultures are those that lead to values and norms that fail to motivate or inspire employees; they
lead to stagnation and often failure over time.
AACSB: Analytic
Difficulty: Easy
92. The process through which managers try to increase members' abilities to understand and appropriately
(p. 282) respond to changing conditions is:
A. clan control.
B. organizational change.
C. socialization.
D. organizational learning.
Organizational learning, the process through which managers try to increase organizational members'
abilities to understand and appropriately respond to changing conditions.
AACSB: Analytic
Difficulty: Easy
Topic: Assessing the Need for Change
93. Which of the following process includes comparing the performance on specific dimensions with the
(p. 285) performance of high-performing organizations, to decide how successful a change effort has been?
A. Socialization
B. Amalgamation
C. Diversification
D. Social facilitation
E. Benchmarking
Benchmarking is comparing the performance on specific dimensions with the performance of high-
performing organizations, to decide how successful a change effort has been.
AACSB: Analytic
Difficulty: Easy
Topic: Evaluating the Change
94. Entrepreneurship is:
(p. 286)
A. intrapreneurship within an existing company.

B. the consolidation of companies.
C the process in which employees of existing organizations who notice opportunities for product or
. service improvements are responsible for managing the development process.
D. the mobilization of resources to take advantage of an opportunity to provide customers with new or
improved goods and services.
E. the systematic gathering, recording, and analysis of data about issues relating to marketing products
and services.
Entrepreneurship is the mobilization of resources to take advantage of an opportunity to provide

customers with new or improved goods and services.
AACSB: Analytic
Difficulty: Easy
95. Discuss the three characteristics of an effective control system in an organization and illustrate each of
(p. 263) them with a specific example from an organization of your choosing.
An effective control system should be flexible so that managers can respond to unexpected events,
should provide accurate information about the organization's performance, and should provide this
information in time for managers to use it to make decisions.

96. Within an organization, the control process normally progresses through four steps. Discuss these steps
(p. 264- as they would apply to an important management situation of your choosing.
267)
Any control system must first establish standards of performance, then measure the performance of the
organization, then compare the actual performance to these standards, and, when needed, evaluate the
performance and take corrective action when the performance is significantly below the standards.

97. The top managers of an organization typically use a variety of financial indicators to assess the
(p. 268) performance of their organizations. Discuss the four major types of financial measures and create one
specific example of how each would be computed.
Managers use profit ratios (ROI, gross profit margin), liquidity ratios (current ratio, quick ratio),
leverage ratios (debt-to-assets, times-covered ratio), and activity ratios (inventory turnover, days sales
outstanding).

Difficulty: Hard
98. Managers typically use three primary measures to assess the output performance of their organizations.
(p. 268- Discuss these three types of measures and give one specific example of how a manager would use each
272)
of the measures that you select, in a situation of your choosing.
Managers use financial measures, organizational goals, and operating budgets to assess the output
performance of their organizations.

99. Output control systems have advantages and disadvantages. Discuss the possible disadvantages of these
(p. 272- types of systems within organizations.
273)
Inappropriate output control systems may motivate managers and other employees to behave in
inappropriate ways to achieve organizational goals, such as cutting essential costs involved with
maintenance or future investments. Actions such as these may cause managers to reach goals in the
short term, but with huge long-term costs.
AACSB: Analytic
Topic: Problems with Output Control
100. Behavior control is one way for managers to attempt to motivate workers. Discuss three ways managers
(p. 273- could use behavior control with subordinates and give a specific example of how a manager of servers
276)
in a restaurant would use each of these methods.
Managers can attempt to control the behavior of subordinates by direct supervision, by using
management by objectives (MBO), and by the use of rules and SOPs.
The most immediate and potent form of behavior control is direct supervision by managers who actively
monitor and observe the behavior of their subordinates, teach subordinates the behaviors that are
appropriate and inappropriate, and intervene to take corrective action as needed.
To provide a framework within which to evaluate subordinates' behavior and, in particular, to allow
managers to monitor progress toward achieving goals, many organizations implement some version of
management by objectives.
When direct supervision is too expensive and management by objectives is inappropriate, managers
might turn to another mechanism to shape and motivate employee behavior: bureaucratic control.

Difficulty: Hard
Topic: Behavior Control
101. Direct supervision is one of the best ways for managers to monitor the behavior of subordinates, but this
(p. 274) method of behavior control can create problems with subordinates. Discuss the problems that can occur
and explain what a manager can do to minimize these problems when working with subordinates.
Problems include:
1. reduced span of control, and increased expenses of having to employ more managers,
2. demotivation of subordinates who feel that they are under such close scrutiny that they are not free to
make their own decisions, and
3. lack of feasibility for complex jobs.

Difficulty: Hard
102. Management by objectives (MBO) is one way that managers can use to evaluate the performance
(p. 274) of subordinates. Create a situation that involves a manager and a subordinate, and discuss the steps
involved in using this technique.
The steps are: (1) Establish specific goals and objectives at each organizational level; (2) Determine
subordinates' goals, together with subordinates; (3) Periodically review subordinates' progress toward
goals, with subordinates.

103. All organizations make use of bureaucratic control methods in their dealings with the employees of the
(p. 276- organization. This type of control system can, however, create problems for the subordinates. Discuss
277)
these types of problems and explain what an organization's managers can do to reduce these types of
problems within the organization.
Problems include:
1. bureaucratic rules tend not to disappear, and since new rules are often added, the organization may
become sluggish and unresponsive,
2. people may become so used to programmed decisions constrained by rules that they lose their ability
to think on their own.
Managers must therefore be sensitive about the way they use bureaucratic control. It is most useful
when organizational activities are routine and well understood and when employees are making
programmed decisions. Bureaucratic control is much less useful in situations where nonprogrammed
decisions have to be made and managers have to react quickly to changes in the organizational
environment.
AACSB: Analytic
Topic: Problems with Bureaucratic Control
104. How does organizational culture help managers exert control over subordinates?
(p. 277)
Organizational culture can help managers exert control in situations where output or behavior control is
not feasible, and a strong, positive set of organizational values and norms can cause employees to focus
on what is best for the company.
Organizational culture is not an externally imposed system of constraints, such as direct supervision or
rules and procedures. Rather, employees internalize organizational values and norms and then let these
values and norms guide their decisions and actions.
AACSB: Analytic
105. How is the type of organizational culture related to entrepreneurship in the organization?
(p. 279)
Organizations that have strong and cohesive organizational culture—an adaptive culture that controls
employee attitudes and behaviors have values and norms that help an organization to build momentum
and to grow and change as needed to achieve its goals and be effective. These cultures develop an
emphasis on entrepreneurship through its respect for employees, empowerment, long-term perspective,
and flat structures.
AACSB: Analytic
Difficulty: Hard
106. Define "adaptive culture" and "inert culture". Which is better for an organization and why? Give at least
(p. 279) two examples of what organizations with each of these do to develop their cultures.
An adaptive culture is one that controls employee attitudes and behavior. By contrast, an inert culture is
one that leads to values and norms that fail to inspire employees, and lead to stagnation and often failure
over time.
Adaptive cultures are better because they are not only able to motivate and control employees, but they
have values and norms that help an organization to build momentum and to grow and change as needed
to achieve its goals and be effective.
Organizations with strong adaptive cultures invest in their employees. They demonstrate their
commitment to their members by emphasizing the long-term nature of the employment relationship and
trying to avoid layoffs. These companies develop long-term career paths for their employees and invest
heavily in training and development to increase employees' value to the organization. In these ways,
terminal and instrumental values pertaining to the worth of human resources encourage the development
of supportive work attitudes and behaviors. In adaptive cultures employees often receive rewards linked
directly to their performance and to the performance of the company as a whole. Moreover, an adaptive
culture develops an emphasis on entrepreneurship and respect for the employee and allows the use of
organizational structures, such as the cross-functional team structure, that empower employees to make
decisions and motivate them to succeed.
In an inert culture, employees are content to be told what to do and have little incentive or motivation
to perform beyond minimum work requirements. In these cultures, the emphasis is on close supervision
and hierarchical authority, which result in a culture that makes it difficult to adapt to a changing
environment.
AACSB: Analytic
Difficulty: Hard
107. Discuss the need to balance two opposing forces in the control process that influences the way
(p. 281) organizations change.
Organizations and their managers need to be able to control their activities and make their operations
routine and predictable. At the same time, however, organizations have to be responsive to the need to
change, and managers and employees have to "think on their feet" and realize when then need to depart
from routines to be responsive to unpredictable events.
AACSB: Analytic
108. Identify the steps in the organizational change process, and describe what occurs in each step.
(p. 282-
285)
The steps are:
(1) Assess the need for change - Assessing the need for change calls for two important activities:
recognizing that there is a problem and identifying its source. During the first step in the change
process, managers need to recognize that there is a problem that requires change. To discover the source
of the problem, managers need to look both inside and outside the organization.
(2) Decide on the change to make - During this step, managers must engage in planning how they are
going to attain the organization's ideal future state. This step in the change process includes identifying
obstacles or sources of resistance to change. Managers must analyze the factors that may prevent the
company from reaching its ideal future state. Obstacles to change are found at the corporate, divisional,
departmental, and individual levels of the organization.
(3) Implement the change - Generally, managers implement change from the top down or from the
bottom up. Top-down change is implemented quickly: Top managers identify the need for change,
decide what to do, and then move quickly to implement the changes throughout the organization.
Bottom-up change is typically more gradual or evolutionary. Top managers consult with middle and
first-line managers about the need for change. Then, over time, managers at all levels work to develop a
detailed plan for change.
(4) Evaluate the change - The last step in the change process is to evaluate how successful the change
effort has been in improving organizational performance. Using measures such as changes in market
share, in profits, or in the ability of managers to meet their goals, managers compare how well an
organization is performing after the change with how well it was performing before. Managers also can
use benchmarking.
AACSB: Analytic
109. Why do people resist change? Explain how the type of culture an organization has affects how it
(p. 283- changes.
284)
For individuals, change brings uncertainty, which can be stressful. For managers, change may mean loss
of power and control. Organizations with adaptive cultures are much easier to change.
AACSB: Analytic
Topic: Deciding on the Change to Make
110. Define "entrepreneurs" and "intrapreneurs".

(p. 286)
Entrepreneurs are people who notice opportunities and take responsibility for mobilizing the resources
necessary to produce new and improved goods and services. Intrapreneurs are people who practice
entrepreneurship inside existing organizations.
AACSB: Analytic
Difficulty: Easy
111. Describe common problems entrepreneurs have in managing their organizations.
(p. 287)
1) Lacking skills to control or change the business

2) May not recognize the need to change
3) Difficulty in delegating authority
4) Overload and decline in decision-making quality
5) Lack of knowledge of management systems and procedures
AACSB: Analytic
ch8 Summary
Category # of
Questions
AACSB: Analytic 96
AACSB: Reflective Thinking 15
Blooms Taxonomy: Application 19
Blooms Taxonomy: Comprehension 21
Blooms Taxonomy: Knowledge 71
Difficulty: Easy 50
Difficulty: Hard 12
Difficulty: Moderate 49
Jones - Chapter 08 111
Learning Objective: 08-1 83
Topic: Adaptive Cultures versus Inert Cultures 7
Topic: Assessing the Need for Change 2
Topic: Behavior Control 2
Topic: Bureaucratic Control 4
Topic: Control Systems and IT 15
Topic: Deciding on the Change to Make 2
Topic: Direct Supervision 3
Topic: Entrepreneurship, Control, and Change 5
Topic: Evaluating the Change 1
Topic: Financial Measures of Performance 25
Topic: Implementing the Change 2
Topic: Management by Objectives 3
Topic: Operating Budgets 6
Topic: Organizational Change 3
Topic: Organizational Culture and Clan Control 6
Topic: Organizational Goals 2
Topic: Output Control 4
Topic: Problems with Bureaucratic Control 2
Topic: Problems with Output Control 1
Topic: The Control Process 11
Topic: The Importance of Organizational Control 1
Topic: What Is Organizational Control? 4

Contemporary Management 11th Edition Test Bank Chapter 11

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Contemporary Management 11th Edition Test Bank Chapter 11

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CH 11: Organizational Control and Change

A. cost of goods sold.

A. Measure actual performance

A. initiate corrective action.

A. Gross profit margin

A. Gross profit margin

A. Inventory turnover ratio

A. specific, easy goals.

A. an expense budget approach.

A. an expense budget approach.

A. a profit budget approach.

A. a revenue budget approach.

A. a profit budget approach.

A. a cash flow budget approach.

A. a bureaucratic control system.

A. receive rewards based on performance.

A. intrapreneurship within an existing company.

105.How is the type of organizational culture related to entrepreneurship in the organization?

110.Define "entrepreneurs" and "intrapreneurs".

111.Describe common problems entrepreneurs have in managing their organizations.

13. All managers develop a system of output control.

19. The current ratio is an example of a leverage ratio of the organization.

26. Participatory nature is an important characteristic of bureaucratic control.

38. Bottom-up change can co-opt resistance to change from employees.

39. Entrepreneurship ends once a new business has been founded.

40. Intrapreneurs engage in entrepreneurship within an existing company.

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

AACSB: Reflective Thinking

A. cost of goods sold.

A. Measure actual performance

A. initiate corrective action.

56. Which of the following is a mechanism of control for organizational culture?

57. Management by objectives is a mechanism of control for which of the following?

Management by objectives is a mechanism of control for behavior control (Figure 8.3).

AACSB: Reflective Thinking

AACSB: Reflective Thinking

A. Gross profit margin

ROI = Net profit before taxes/Total assets = $30,000/$600,000 = .05 = 5%.

Current ratio = Current assets/Current liabilities = $250,000/$300,000 = .83.

Current ratio = Current assets/Current liabilities = $176,000/$220,000 = .80.

A. Gross profit margin

Return on investment = Net income before taxes/Total assets

Gross profit = Revenue - Cost of goods sold

A. Inventory turnover ratio

Quick ratio = (current assets - inventory)/current liabilities.

A. specific, easy goals.

A. an expense budget approach.

A. an expense budget approach.

A. a profit budget approach.

A. a revenue budget approach.

A. a profit budget approach.

A. a cash flow budget approach.

A. a bureaucratic control system.

AACSB: Reflective Thinking

90. In an adaptive culture, employees often:

A. receive rewards based on performance.

A. intrapreneurship within an existing company.

Entrepreneurship is the mobilization of resources to take advantage of an opportunity to provide

AACSB: Reflective Thinking