TAYTAY UNITED METHODIST CHRISTIAN SCHOOL

Accountancy, Business and Management Strand

Organization and Management
1st Quarter Examination

Instructions:
Choose the best answer.
Please write your answers on the worksheet.

A. CASE STUDY (15 points)

I. IBM's Louis Gerstner as Decision Maker
At first, it might seem unlikely that a manager with a career at RJR Nabisco and
American Express would be the person who could lead a technically oriented
company like IBM out of its difficult 1993 position. Yet this was precisely what Louis
Gerstner did with two key decisions: first he did not break up the company; and
second, he focused on the service business. By 2001, its global business was the area
with the fastest growth. Despite the demands on his time, he still took time for social
causes, especially those related to schooling.

One of Gerstner's strategic decisions was in the server market, where Sun
Microsystems had been dominant with its UNIX servers. IBM was able to lower its
prices and therefore put its competitors such as Sun, Hewlett-Packard and Compaq
under the extreme pressure.

Thus, as a top level manager, Gerstner had to balance his time resources between
making strategic and tactical decisions, deciding on products and services, global and
domestic planning, and strategy formulation and implementation, as well as balancing
his energy between organizational and socially responsible actions.
1. What is the corporate social responsibility of Louis Gerstner?
a. He did not break up with IBM and focused on the service business.
b. He lowered the prices of IBM putting extreme pressure among its competitors.
c. He took time for social causes especially those related to schooling.
d. He balanced his energy and time resources between marketing strategic and tactical
decisions.

2. What skill is expected from Gerstner for being the top level manager?
a. Conceptual skills
b. Formal skills
c. Technical skills
d. Social skills

3. What was Gerstner's plan to remove IBM from its difficult position?
a. To merge with Sun, Hewlett-Packard and Compaq.
b. To remain with IBM and focus on the service business.
c. To create a server market where Sun Microsystems had been dominant.
d. To decide on IBM's products and services.
4. In the industry Gerstner was engaged, which among the external factors did they
consider?
a. Technological, Ecological, Economical
b. Technological, Economical, Political
c. Technological, Economical, Ethics
d. Technological, Political, Ethics

5. How did Gerstner manage to lead IBM?

a. He copied the style of leadership of RJR Nabisco and American Express where his
career started.
b. His strategic decision was to be more dominant from Sun Microsystems by
threatening them through legal and ethics.
c. He balanced his time resources between making strategic and tactical decisions and
strategy formulagion and implementation.
d. He left IBM and returned to the company in 2001 when global business was the
area with the fastest growth.

II. Lilo & Stitch on Budget

The full-length feature cartoon Tarzan grossed about $450 million worldwide for the
Walt Disney Company. However, production costs got out of control. The company
traditionally manages film production by focusing on meeting the planned release
dates – paying little attention to costs. In the case of Tarzan, production fell behind
schedule due to the tendency of animation teams to add more eye-dazzling complexity
to each production.

At one point, it was estimated that 190,000 individual drawings would be needed to
complete the film in contrast to the 130,000 drawings needed to complete the Lion
King. To meet Tarzan's release date, workers were pulled off from other productions
and were often paid at overtime rates. The size of the film crew eventually reached
573 which was nearly the size of the crew that made The Lion King. With animators
earning salaries in the hundreds of thousands of dollars, the cost implications were
staggering.
Thomas S. Schlumacher, Disney's feature-animation chief, was charged with
dramatically reducing the cost of future films while making sure the audience
wouldn't notice any decline in quality. Lilo & Stitch was the first film to be produced
with this goal in mind. The process began by prioritizing where the money was to be
spent. The budget for music was kept generous; animation costs were cut by
controlling the small details that add big costs with little effect on the quality of the
film.
For example, animators wanted to draw cute designs on the shirts worn by Nani,
Lilo's big sister. However, adding this level of detail on every frame in which Nani
appears in the film would have added about $250,000 in cost. By controlling such
details, Lilo & Stitch was finished on time and at a cost of about $80 million dollars.
This contrasted with a cost of more than $150 million for Tarzan.

6. What was the main issue of Walt Disney Company?

a. The full-length feature cartoon Tarzan grossed about $450 million worldwide.
b. Animators were earning salaries in the hundreds of thousands of dollars.
c. Production costs got out of control since the company focused more on meeting
planned release dates than costs.
d. Lilo & Stitch was the first film to be produced with reduced production costs while
making sure the audience would not notice the decline in quality.

7. How did the management maximize their budget for Lilo and Stitch movie?
a. Animation costs were reduced by controlling the small details that add big costs
with little effect on the quality of the film.
b. The budget for music was reduced and animation costs were kept generous.
c. Animators drew cute designs on the shirts worn by the characters to finish the film
on time.
d. Thomas Schlumacher dramatically reduced the cost of the film that made an effect
to its quality.

8. How did the cost cutting affected the staff?

a. Animators resigned since animation costs were cut by controlling the small details
that add big costs with little effect on the film's quality.
b. Workers earned overtime rates because production fell behind.
c. The size of the film crew reached 573 which was nearly the size of the crew that
made The Lion King.
d. Film crews were pulled off from other productions since they were earning
hundreds of thousands of dollars.

9. Identify the end result of this case.

a. Thomas Schlumacher was the first to produce a low production film.
b. Lilo & Stitch wad finished on time and at a lower cost than Tarzan.
c. Animators were able to produce eye-dazzling complexity in Lilo & Stitch with a
lower cost.
d. Workers were pulled off from other productions and were often paid at overtime
rates to meet the planned release dates.

10. Identify which is false.

a. Thomas Schlumcher is Disney's feature animation chief.
b. Animators were able to draw cute designs on the shirts of the characters despite
cost cutting.
c. The size of the film crew eventually reached 573 which was nearly the size of the
crew that made The Lion King.
d. Lilo & Stitch was finished on time and at a cost of about $80 million dollars.

11. Which external factors were Walt Disney Company considering?

a. Social, Technological
b. Social, Ecological
c. Social, Economical
d. Social, Legal

III. Canon invests in Research and Development

When Canon Inc., the world's leading digital camera manufacturer, prepares the
research and development (R&D) portion of its selling and administrative expense
budget, the focus on making long-run investments to grow sales rather than cutting
costs to maximize short-run profits.
In 2005, Canon spent 8% of its sales on R&D while many of its competitors spent 6%
and 7.5% of their sales on R&D. Canon's CEO Fujio Mitarai described his company's
R&D philosophy by saying “we have to plant the seeds for the next decade and
beyond.”

Indeed, Canon's seeds have blossomed as the company has secured more than 17,000
patents since 1995 – second only to IBM. Canon's commitment to R&D helps explain
why its digital cameras are delivering healthy earnings at a time when many of its
competitors are losing money.

12. What part of the organization hierarchy does Fujio Mitarai belong?
a. Top level management
b. Middle level management
c. Standard level management
d. Medium level management

13. How did Canon prioritize its budget?

a. Canon invested on making short run profits rather than long run investments to gain
more profit.
b. Canon prepared the research and development portion of its selling and
administrative expense budget.
c. Canon spent 6% of its sales on its research and development in 2005.
d. Canon secured more than 17,000 patents since 1995.

14. What was the influence of Canon's CEO to his company?

a. Mitarai wanted Canon to remain as the world's leading digital camera
manufacturer.
b. Mitarai focused on delivering healthy earnings at a time when many of his
competitors were losing money.
c. Mitarai focused on creating thr best digital camera in the world.
d. Mitarai believed that Canon should plant seeds for the next generations.

15. What managerial function was exhibited in the case?

a. Leading, Controlling
b. Organizing, Controlling
c. Staffing, Leading
d. Organizing, Leading

B. TRUE OR FALSE (2 points each)

A. I and III are true

B. III and IV are true
C. II and III are false
D. All are false
E. All are true

1.
I. The managerial functions are composed of planning, organizing, staffing, leading
and controlling.
II. John Maxwell said that leadership is influence.
III. Staffing is filling and keeping filled the positions in the organization structure.
IV. The aim of all managers is to create a surplus.

2.
I. An example of planning is the computation of a company's expense.
II. The Vice President of XYZ company belongs to the middle level management.
III. An example of organizing is the interview of new applicants.
IV. Effectivenes is the serious consideration of the impact of the company's action on
society

3.
I. No real plan exists without a decision.
II. Companies need not to consider the ecological environment.
III. Effectiveness is the achievement of objectives
IV. It is fine for businesses not to comply with the legal and political standards of
their country.

4.
I. Minimum wage earners belong to the top level management.
II. Productivity is the ratio of the output/input ratio within time period with due
consideration for quality.
III. A management should be aware of legislation regarding solid waste and air and
water pollution.
IV. The Human Resource department is responsible for the staffing in a company.

5.
I. Money, machine and manpower are considered as basic resources.
II. The count of labor hours and pay roll are under the organizing function.
III. Top level management does the decision making in the company.
IV. Corporate social responsibility is done for public exposure to maintain good
image of a company.

6.
I. JP Morgan is the world's richest company.
II. Henry Sy graduated from Ateneo de Manila.
III. Lucio Tan owns the Universal Robina.
IV. Metrobank opened its first foreign bank in Thailand.

7.
I. IBM means International Business Man.
II. Caregiver is the top most in demand job in the Philippines.
III. Lucio Tan graduated from De LaSalle University.
IV. Henry Sy started National Bookstore.

8.
I. It is the task of managers to utilize inputs to transform them through the managerial
functions into outputs.
II. An example of the role of the Human Resource Department is to recruit and to
train new employees.
III. A management should be aware of the governing laws in a country.
IV. Corporate social responsibility is the serious consideration of the impact of the
company's action on the society.

9.
I. The aim of all managers is to increase demand among consumers.
II. Skill required from the top level management is techno-vocational skill.
III. The purpose of an organizational structure is to help create an environment for
human performance.
IV. Effectiveness is the achievement of objectives

10.
I. Inputs are those that are needed to produce an aim.
II. An example of an input is the satisfaction of employees.
III. Ethics is a discipline dealing on what is good and bad with moral duty and
obligation
IV. Planning is doing a definite purpose or objective.

BONUS:. ILLUSTRATE (3 points)

Complete Organizational Hierarchy with Management skills and levels