Understanding Management 10th Edition Daft

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Chapter 05 Planning and Goal Setting

TRUEFALSE

1. A desired future state that the individual or organization attempts to realize is a goal.

(A) True

(B) False

Answer : (A)

2. Defining operational goals and plans occurs in the execution phase of the organizational planning
process.

(A) True (B)

False

Answer : (B)

3. Operational plans and goals are those that focus on the outcomes that major divisions and
departments must achieve in order for the organization to reach its overall goals.

(A) True (B)

False

Answer : (B)

4. A broad definition of the organization's values, aspiration and reason for being, along with a
recognition of the scope and operations that distinguishes the organization refers to a business plan.
(A) True (B)

False

Answer : (B)

5. Goals are typically stated in quantitative terms.

(A) True

(B) False

Answer : (A)

6. Goals are most effective when they are specific, measurable, challenging and linked to rewards.
(A) True : (B)
Answer

(B) False

Answer : (A)

7. Goals should be easy for employees to feel motivated so that they can achieve them easily, which
in turn increases their motivation level.

(A) True (B)

False

Answer : (B)

8. One of the biggest benefits of planning is that, in turbulent environments, plans create greater
organizational flexibility.

(A) True (B)

False

Answer : (B)

9. If Renae, manager at Leak Free Roofing, wanted to develop a contingency plan for Leak Free, she
would need to look at factors such as new equipment, the economy, and the company workers'
compensation cases.

(A) True (B)

False

Answer : (A)

10. Prevention and preparation are the two stages of crisis management.

(A) True

(B) False

Answer : (A)

11. The CEO of Andre's Autos, Inc. must do all of the planning for the company because that is the
way to do things in today's workplace.

(A) True

(B) False
(A) True : (B)
Answer

(B) False

Answer : (A)
12. Trend management is looking at trends and discontinuities and imagining possible alternative
futures.

(A) True (B)

False

Answer : (B)

13. Research has shown that strategic thinking and planning positively affect a firm's performance
and financial success.

(A) True (B)

False

Answer : (A)

14. Front-line managers have the final responsibility for strategic planning.

(A) True

(B) False

Answer : (B)

15. Competitive advantage refers to the set of decisions and actions used to formulate and
implement strategies.

(A) True (B)

False

Answer : (B)

16. Some companies hire competitive intelligence professionals to scan the external environment
and provide data and research on relevant domestic and global trends.

(A) True (B)

False

Answer : (A)

17. The essence of formulating strategy is choosing how the organization will conform to become
like its key competitors in the industry.
(A) True : (B)
Answer

(B) False

Answer : (B)

18. Executives acquire information about external opportunities and strengths from a variety of
reports, including budgets, financial ratios, profit and loss statements, and surveys of employee
attitudes and satisfaction.

(A) True (B)

False

Answer : (B)

19. The task environment sectors are the most relevant to strategic behavior and include the
behavior of competitors, customers, suppliers, and the labor supply.

(A) True (B)

False

Answer : (A)

20. The BCG (Boston Consulting Group) matrix evaluates SBUs with respect to their business
growth rate and geographical location.

(A) True (B)

False

Answer : (B)

21. The dog, according to the BCG Matrix, is a poor performer.

(A) True

(B) False

Answer : (A)

22. Cost leadership is a type of competitive strategy with which the organization seeks to distinguish
its products or services from that of competitors.

(A) True

(B) False
(A) True : (B)
Answer

(B) False

Answer : (B)
23. One of the limitations of setting goals and making plans is that they can get in the way of
creativity.

(A) True (B)

False

Answer : (A)

24. Of executives whose companies had no formal strategic planning process, about half said they
were dissatisfied with the company's development strategy.

(A) True (B)

False

Answer : (A)

MULTICHOICE

25. A blueprint specifying the resource allocations schedules, and other actions necessary for
attaining goals is referred to as a(n):

(A) goal.

(B) plan.

(C) mission.

(D) vision.

(E) objective.

Answer : (B)

26. Of the strategic management functions, which is considered the most fundamental?

(A) Executing

(B) Analyzing

(C) Controlling

(D) Planning

(E) Leading
Answer : (D)

27. The planning process begins with which of these?

(A) The development of operational goals

(B) The development of a mission statement

(C) Communication of goals to the rest of the organization

(D) A company-wide meeting

(E) Brainstorming

Answer : (B)

28. "We respect our employees and value their diversity" is an example of a statement you are most
likely to find in the organization's:

(A) mission.

(B) strategic goals.

(C) tactical goals.

(D) strategic plans.

(E) tactical plans.

Answer : (A)

29. A long-term time frame is most closely associated with:

(A) operational plans.

(B) tactical plans.

(C) strategic plans.

(D) mission plans.

(E) tactical goals.

Answer : (C)

30. Sarah is a middle manager at Stylin' Sneakers Corporation. She is most likely responsible for the
achievement of goals.

(A) operational

(B) tactical
(C) strategic

(D) lower-level

(E) top-level

Answer : (B)

31. Darren set goals for each of his employees. Each employee ended up with at least twenty-five
goals. This process violates which of the following criteria for effective goals?

(A) Specific and measurable

(B) Challenging but realistic

(C) Covers key result areas

(D) Defined time period

(E) Linked to rewards

Answer : (C)

32. Focusing manager and employee efforts on activities that will lead to goal attainment is a benefit
of what management method?

(A) Tactical planning

(B) Contingency planning

(C) Single-use planning

(D) Management by objectives

(E) Management by walking around

Answer : (D)

33. Which of the following is NOT one of the benefits of MBO?

(A) Performance can be improved at all company levels.

(B) Employees are motivated.

(C) Efforts are focused on activities that will lead to goal attainment.

(D) Operational goals are able to displace strategic goals.

(E) Individual and department goals are aligned with company goals.

Answer : (D)
34. Which of the following is a commonly-cited limitation of planning?

(A) Plans limit employee motivation and commitment.

(B) Plans make resource allocation more difficult.

(C) Plans make it more difficult to measure standards of performance.

(D) Plans boost intuition and creativity.

(E) Plans can create a false sense of security.

Answer : (E)

35. Jeff is a top manager at a textile factory. He is developing a crisis plan in the event that the
company has a toxic spill or accident. Which of the following should Jeff undertake to prepare for
such a crisis?

(A) Building relationships with neighboring businesses

(B) Detecting signals from the natural environment

(C) Polling employees on the likelihood of an environmental disaster

(D) Designating a crisis management team in the event of an environmental disaster

(E) Dismantling the company's ties to the external media

Answer : (D)

36. Alabama Airlines has three planning specialists who help division managers develop their own
division plans. Serving as consultants to the divisions, the planning specialists give advice about
strengths, weaknesses, opportunities, and threats. Alabama Airlines is utilizing what approach to the
planning function?

(A) Centralized planning department

(B) Decentralized planning staff

(C) Planning task force

(D) Centralized planning committee

(E) TQM

Answer : (B)

37. The plan of action that prescribes resource allocation and other activities for dealing with the
environment and helping the organization attain its goals is known as a(n):

(A) goal.
(B) objective.

(C) mission.

(D) vision.

(E) strategy.

Answer : (E)

38. refers to the use of managerial tools to direct resources toward the achievement of
strategic goals.

(A) Strategy formulation

(B) Strategy coordination

(C) Strategy execution

(D) Strategy control

(E) Strategy planning

Answer : (C)

39. Fred has been assigned to conduct a SWOT analysis for his organization, Acme, Inc. As part of
this assignment, Fred will:

(A) conduct an external wage survey.

(B) search for the strengths, weaknesses, opportunities, and threats that impact his firm.

(C) choose a grand strategy for his firm.

(D) do a cost/benefit analysis.

(E) develop a mission.

Answer : (B)

40. Where does the information about opportunities and threats comes from?

(A) An analysis of the organization's internal environment

(B) A department by department study of the organization

(C) Scanning the external environments

(D) Employee grievances

(E) Financial ratios of the organization

Answer : (C)

41. Double Click, Inc. has a number of strategic business units. Their hand-held computer unit has a
large market share in this rapidly growing industry. Their hand-held computer business would be
classified as:

(A) a dog.

(B) a star.

(C) a question mark.

(D) a cash cow.

(E) stuck in the middle.

Answer : (B)

42. Which of these is true about the cash cow?

(A) It generates tremendous profits in a rapidly growing industry.

(B) It has a small market share in a rapidly growing industry.

(C) It has a small market share in a slow growth industry.

(D) It has a large market share in a slow growth industry.

(E) It is generally a dead business that should be divested.

Answer : (D)

43. Which of the following strategies involves rewarding an employee's innovation?

(A) Cost leadership

(B) Differentiation

(C) Focus

(D) Internal growth

(E) Liquidation

Answer : (B)

44. Mingles, Inc. concentrates its efforts on its target market of 18 to 25 year olds. It is using a(n)
strategy.

(A) focus
(B) differentiation

(C) cost leadership

(D) multidomestic

(E) universal

Answer : (A)

45. When top executives work with managers in major divisions or departments to develop their own
goals and plans, it is known as planning.

(A) interdepartmental

(B) crisis

(C) focus

(D) decentralized

(E) competitive

Answer : (D)

SHORTANSWER

46. A(n) is a blueprint for goal achievement and specifies the necessary resource allocations,
schedules, tasks, and other actions.Answer : plan

47. Broad statements describing where the organization wants to be in the future are called
.Answer : strategic goals

48. Goals that define the outcomes that major departments must achieve in order for the
organization to reach its overall goals are known as goals.Answer : tactical

49. is a method whereby managers and employees define goals for every department, project,
and person and use them to monitor subsequent performance.Answer : Management by objectives

50. Plans that define company responses to specific situations, such as emergencies, setbacks, or
unexpected conditions are called plans.Answer : contingency

51. A special type of contingency plan that is used when events are sudden and devastating and
require immediate response is called .Answer : crisis management planning

52. A group of planning specialists assigned to major departments and divisions to help managers
develop their own strategic plans is called .Answer : decentralized planning staff

53. is the set of decisions and actions used to formulate and implement strategies that will
provide a competitively superior fit between the organization and its environment so as to achieve
organizational goals.Answer : Strategic management

54. A business activity that an organization does particularly well relative to its competition is
known as a(n) .Answer : core competence

55. The use of managerial and organizational tools to direct resources toward accomplishing
strategic results is known as .Answer : strategy execution

56. In the BCG matrix, the dog has market share and business growth rate.Answer : low;
low

57. With a(n) strategy, the organization aggressively seeks efficient facilities, pursues cost
reductions, and uses tight cost controls to produce products more efficiently than
competitors.Answer : cost leadership

58. assess what is important to the organization and how well the organization is progressing
toward attaining its strategic goal.Answer : Key performance indicators

59. involves activities that managers undertake to try to prevent crises from occurring and to
detect warning signs of potential crises.Answer : Crisis prevention

ESSAY

60. List the five characteristics of effective goals.

Graders Info :

Goals should be (1) specific and measurable; (2) they should cover key result areas; (3) they should
be challenging but realistic; (4) they should have a defined time period; and (5) they should be linked
to rewards.

61. List the four major activities that must occur in order for MBO to succeed.

Graders Info :

(1) Set goals, (2) develop action plans, (3) review progress, and (4) appraise overall performance.

62. List the four components of a SWOT analysis.

Graders Info :

A SWOT includes strengths, weaknesses, opportunities, and threats.

63. Compare the four levels of goals and plans.

Graders Info :

The highest level is the mission statement, which defines the organization's basic business scope and
operations and specifies its reasons for existence. The second level is the level of strategic goals and
plans. Those pertain to the organization as a whole and specify where the organization wants to be
in the future. The third level is the tactical level, with a focus on outcomes that major divisions and
departments must achieve in order for the organization to reach its overall goals. The fourth and
lowest level is the operational level, involving specific measurable results for departments, work
groups, and individuals.

64. In what ways do plans and goals benefit an organization?

Graders Info :

Plans and goals benefit the organization in several ways. First they provide legitimacy and a reason
for existence. They also provide a source of motivation and commitment, provide guides for action
and decision making, and they set a standard of performance.

65. Briefly discuss Porter's three competitive strategies.

Graders Info :

Porter identified three competitive strategies: differentiation, cost leadership, and focus. A
differentiation strategy involves the organization attempting to distinguish its product or service
from those of its competition. Advertising, product features, and customer service are some of the
ways an organization can successfully differentiate. A cost leadership strategy is based on the
organization achieving a low-cost position relative to the competition. A company may achieve a cost
leadership through the operation of efficient facilities, cutting costs, or maintaining tight cost
control. When a company uses a differentiation or a cost leadership strategy in a particular market
or buyer group, they are employing a focus strategy. This strategy allows the organization to
concentrate on a narrow market niche.