Deck 3: The Organizational Environment and Culture

Question 1

Josiah, a new manager at Super Sandwiches, has been asked to focus on the competitive environment of the organization. Which of these factors is among those that Josiah should focus on?

A) government policies
B) demographics
C) suppliers
D) technology
E) social factors

Answer 1

C

Question 2

Divestiture is entering a new market or industry with existing expertise.

Answer 2

False

Question 3

The main difference between final consumers and intermediate consumers is that the final consumers

A) pay cash.
B) use products themselves.
C) purchase more than intermediate consumers.
D) are not as flexible as intermediate consumers.
E) do not have any bargaining power.

Answer 3

B

Question 4

Open systems are all relevant forces outside an organization's boundaries.

Question 5

________ is a common barrier to entry.

A) Distribution channels
B) Final consumers
C) Bargaining power of buyers
D) Demographics
E) Switching costs

Question 6

________ are conditions that prevent new companies from setting foot in an industry.

A) Demographics
B) Industry shakeouts
C) Prospectors
D) Zero-profit conditions
E) Barriers to entry

Question 7

A popular low-cost airline, Budget Airways, has gone out of business. Although the service and price provided by the airline was what customers wanted, the larger airlines were able to drive the low-cost airline out of business through an aggressive price war. Which component of the competitive environment does this illustrate?

A) customers
B) competitors
C) regulators
D) economic factors
E) threat of new entrants

Question 8

Environmental uncertainty means that managers do not have enough information about the environment to understand or predict the future.

Question 9

________ is the immediate environment surrounding a firm, including suppliers, customers, rivals, and the like.

A) Macroenvironment
B) Competitive environment
C) Microenvironment
D) Exosystem
E) Open system

Question 10

Benchmarking is the process comparing an organization's practices and technologies with those of other companies.

Question 11

Hospitals and universities are very expensive to start and keep running because of the capital and equipment required. The requirement of personnel, such as specialized medical doctors and researchers, is also high. What does this provide an example of?

A) protectionism
B) buffering
C) barriers to entry
D) smoothing
E) downsizing

Question 12

If there are many barriers to entry, the threat of new entrants is greater.

Question 13

Sonia, a manager of a new 50-person finance department in a U.S.-based firm, is working with Juan, the human resources manager in her organization, to develop strategies for staffing her department. Thinking of workforce demographics, Juan advises Sonia to consider all of the following actions, EXCEPT

A) Conduct interviews on campus for entry-level accounting and finance majors, even with their lack of experience.
B) Hire accountants and business professionals over the age of 55, even though they might have shorter projected remaining careers.
C) Outsource selected accounting and financial analysis tasks to overseas workers who might be lower priced, but be aware of possible communication challenges.
D) Institute a hiring freeze for women workers, due to their likelihood to leave the workforce.
E) Hire foreign-born accountants and financial professionals with a legal right to work in the United States, being sensitive of the cultural differences both sides might experience.

Question 14

Carroll Cereals Inc. is a major supplier to almost all grocery store chains. It has most of the valuable shelf space in the cereal aisle. Which of the following is true based on this information?

A) There are few entry barriers.
B) Government regulation of cereals is high.
C) The threat of new entrants is low.
D) Carroll Cereals has no or weak distribution channels.
E) Carroll Cereals has limited brand identification.

Question 15

________ occurs when weaker companies are eliminated, and the strong companies survive.

A) Cannibalization
B) Downsizing
C) Scaffolding
D) Industry shakeout
E) Economic fluctuation

Question 16

When an industry matures, profits drop. Weaker companies are eliminated, and the strong companies survive.

Question 17

Advances in genetic engineering are expected to produce some food products that will become available all year round even in continental climates. These changes will provide grocers with an opportunity to reduce their shipping costs while offering fresher produce to their customers. These advances are examples of changes in the ________ environment.

A) technological
B) social
C) legal
D) demographic
E) economic

Question 18

Netflix, Amazon, and YouTube have recently emerged as serious and successful content providers, attracting viewers away from traditional networks such as ABC, CBS, and NBC. The success of these nontraditional providers demonstrates the power in the competitive environment held by new competitors, or new entrants to the marketplace. To effectively compete with these new entrants, executives at traditional networks will take advantage of barriers to entry, such as

A) buffering.
B) distribution channels.
C) complements.
D) smoothing.
E) substitutes.

Question 19

Roberto owns a janitorial service company. Over the past five years, the bulk of his business, about 80 percent, has derived from a long-term service contract with the federal government. He learned today that his company will not be awarded an extension of the contract, and thus his company's work for the government client must cease within 30 days. The very negative impact of this decision on Roberto's company is a reminder that

A) contracting with the federal government is not profitable over the long term.
B) a firm that does not achieve affirmative action goals must implement a corrective action plan.
C) government clients cannot be relied upon to be good business partners.
D) long-term services contracts are not good for business.
E) an organization is at a disadvantage if it depends too heavily upon powerful customers.

Question 20

________ is/are composed of all relevant forces outside a firm's boundaries, such as competitors, customers, the government, and the economy.

A) The external environment
B) Open systems
C) Relative constraints
D) The barriers to entry domain selection
E) Conditions of certainty

Question 21

Jameson Products is the only provider of a patented leakproof valve for industrial applications. Acme Construction desires to include Jameson Products in a project for Acme's customer, thereby increasing the chance that Acme will be selected by Acme's customer to perform the project. However, Jameson Products charges a premium price for its valves, eroding Acme's profitability. This situation is indicative of the high bargaining power of

A) customers.
B) suppliers.
C) substitute companies.
D) competitors.
E) complementary firms.

Question 22

Competition is most intense when there are ________ direct competitors, industry growth is slow, and the product or service cannot be differentiated.

A) few
B) many
C) some
D) no
E) limited

Question 23

Identify the environmental factor that is a characteristic of an attractive environment.

A) low customer bargaining power
B) few entry barriers
C) many competitors
D) many substitutes
E) complementary products

Question 24

Dennis, a senior manager at VST Corporation, is considering the acquisition of a revolutionary water treatment technology from a small development firm. The asking price is $5 million. However, the environmental uncertainty of the water treatment marketplace is both complex and dynamic. Dennis wants to acquire the new technology but seeks to manage the risk associated with his decision, or "hedge his bets." Key elements of his risk management strategy might be to

A) gain competitive intelligence through environmental scanning, develop business scenarios, forecast sales, and benchmark the technology.
B) diversify, merge, divest, prospect, or defend the technology.
C) establish visible artifacts; develop symbols, rites, and ceremonies; and develop stories about the technology.
D) decide upon a clan (collaborate), adhocracy (create), hierarchy (control), or market (compete) culture from which to market the technology.
E) buffer, smooth, and empower in order to manage the technology supply chain.

Question 25

________ is the information necessary to decide how to best manage the competitive environment.

A) Business acumen
B) Lift coefficient
C) Competitive intelligence
D) Hidden agenda
E) Environmental scanning

Question 26

________ is a barrier to entry.

A) Price reductions
B) Brand identification
C) Advertising campaigns
D) Capital requirements
E) Environmental uncertainty

Question 27

Forecasts are most useful when the ________ will look radically different from the

A) past; future.
B) future; past.
C) present; future.
D) present; past.
E) future; present.

Question 28

In an attempt to improve customer service, Hi-Tech Toys Inc. decided to assign a team to investigate the kinds of services offered by competing companies. The team discovered that a smaller company, VG Games Corp., seemed to have outstanding customer service. The team then determined the major differences between the two companies and developed a plan to incorporate the best elements of VG Games into Hi-Tech Toys. Which of the following is being implemented by Hi-Tech Toys?

A) environmental dynamism
B) strategic maneuvering
C) cooperative action
D) benchmarking
E) forecasting

Question 29

Smith Forge is a successful wholesale provider of hand tools to small retail hardware stores in Florida. Six months ago, John, national sales director for Smith Forge, succeeded in securing a large contract to provide hand tools to HomeFix, a major national retail hardware chain. Furthermore, Smith Forge's contract with HomeFix allows Smith Forge to provide HomeFix with hand tools made of materials of lesser quality at a lesser price. Therefore, HomeFix can charge its retail customers a lower price, providing an attractive profit for both companies. Six months into the contract, both John and Smith Forge are disappointed that, although the hand tools meet the technical specifications of the contract between Smith Forge and HomeFix, the products are not selling. And, furthermore, HomeFix is receiving nonstop complaints from its customers about the quality of the hand tools, prompting HomeFix to consider canceling its contract with Smith Forge. In retrospect, in its eagerness to land a large contract with HomeFix, John and Smith Forge failed to adequately consider the needs of the

A) media.
B) distributor.
C) final consumer.
D) supplier.
E) broker.

Question 30

A ________ is an intermediate consumer.

A) wholesaler
B) manufacturer's representative
C) distributor
D) retailer
E) broker

Question 31

What method is used to predict exactly how some variable or variables will change in the future?

A) environmental scanning
B) sorting information
C) forecasting
D) searching
E) competitive intelligence

Question 32

________ includes searching for and sorting through information about the environment.

A) Environmental scanning
B) Forecasting
C) Predictions
D) Competitive intelligence
E) Minimization

Question 33

Allied Bank Corp. utilizes the janitorial services of Marie's Clean-It Corp. to keep their buildings clean. Marie's provides all the necessary cleaning supplies, training, background security checks (because the crew works after hours), and all other associated expenses. The other available janitorial services do not typically provide security checks, and a client such as a bank would have to hire guards to watch the work of the janitors. If Allied Bank were to consider hiring another cleaning service to replace Marie's, which of the following would the bank incur?

A) high employment costs
B) unfavorable supplier status
C) high switching costs
D) favorable quality status
E) complementary products

Question 34

________ is the degree of discontinuous change that occurs within the industry.

A) Complexity
B) Dynamism
C) Environmental uncertainty
D) Interconnectedness
E) Buffering

Question 35

________ refers to searching for information that is not immediately evident and sorting through that information to interpret what is important.

A) Competitive skimming
B) Data classification
C) Environmental scanning
D) Knowledge browsing
E) Information foraging

Question 36

________ is the number of issues to which a manager must attend and the degree to which they are interconnected.

A) Complexity
B) Dynamism
C) Environmental uncertainty
D) Continuous change
E) Minimization

Question 37

Identify the environmental factor that contributes to an attractive environment for firms.

A) many barriers to entry
B) high threat of entry
C) many competitors
D) few suppliers
E) many substitutes

Question 38

A complement is a potential ________ because customers use it as an alternative, buying less of one kind of product but more of another.

A) threat
B) opportunity
C) strength
D) weakness
E) minimization

Question 39

A ________ is powerful if a buyer has few other sources of supply or if the supplier has many other buyers.

A) supplier
B) customer
C) marketer
D) manager
E) competitor

Question 40

If a consumer changes suppliers, they are faced with

A) switching costs.
B) increased global competition.
C) supply chain management.
D) unforeseen logistics.
E) observational inadequacy.

Question 41

In ________, supplies are created of excess resources in case of unpredictable needs.

A) hoarding
B) smoothing
C) yielding
D) flocking
E) buffering

Question 42

A university has just formed a board of trustees and invited 25 of its wealthiest alumni to join the board. Which of the following is being adopted by the university?

A) smoothing
B) cooptation
C) competitive intelligence
D) divestiture
E) scaffolding

Question 43

Todd Pharmaceuticals and Gregg Medicines Corp. have joined forces to fight for health care reform. The two companies

A) merged.
B) created a coalition.
C) selected a domain.
D) were benchmarking.
E) acted with competitive aggression.

Question 44

Which approaches should an organization adopt for managing uncertainty in a simple and stable environment?

A) centralized and organic approach, with direct supervision
B) decentralized and bureaucratic approach, with standardized skills
C) decentralized and organic approach, with mutual adjustment
D) centralized and bureaucratic approach, with standardized work processes
E) centralized and organic approach, with mutual adjustment

Question 45

When Good As Mom's Corp. advertises its syrup products as better than the syrup products of Grandma's Best Corp., Good As Mom's is demonstrating

A) competitive aggression.
B) competitive pacification.
C) benchmarking.
D) smoothing.
E) cooptation.

Question 46

When Kevin's Healthy-and-Good-for-You Fruit Juice Company acts on its own to promote the fruit juice industry as a whole, the company is practicing

A) competitive aggression.
B) competitive pacification.
C) public relations.
D) voluntary cooptation.
E) cooperative action.

Question 47

The growth of contingent workers in the U.S. labor force due to unpredictable labor demand is an illustration of

A) adapting at the core.
B) process flexibility.
C) buffering.
D) smoothing.
E) empowerment.

Question 48

Sandra owns a small gift shop in Tennessee. She hopes the economy will rebound this fall as she has to order her Christmas merchandise and other holiday gifts in February. She wants to make sure she has enough goods for the surge in sales that the holiday season usually brings to her retail store. Here, Sandra is using ________ to be sure she has enough gifts for those extra customers that she hopes will bear the economic woes and shop for holiday presents.

A) substitutes
B) smoothing
C) complements
D) buffering
E) demographics

Question 49

________ are methods for adapting the technical core to changes in an environment.

A) Supply chain actions
B) Flexible processes
C) Independent strategies
D) Cooperative strategies
E) Technical acquisitions

Question 50

________ are approaches used by an organization that acts on its own to change some aspect of its current environment.

A) Flexible processes
B) Forecasting methods
C) Independent strategies
D) Benchmarking procedures
E) Buffering techniques

Question 51

Which approaches should an organization adopt for managing uncertainty in a complex and dynamic environment?

A) centralized and bureaucratic approach, with standardized work processes
B) decentralized and bureaucratic approach, with standardized skills
C) decentralized and organic approach, with mutual adjustment
D) centralized and organic approach, with direct supervision
E) centralized and organic approach, with mutual adjustment

Question 52

________ is the process of sharing authority with employees to enhance their confidence in their ability to perform their jobs and contribute to an organization.

A) Empowerment
B) Licensing
C) Vetoing
D) Endorsement
E) Concurrence

Question 53

SurTran Inc. is an 80-year-old transportation company headquartered in St. Louis. SurTran ships goods via truck and train throughout the United States. Its general operations manager, Raul Sosa, has grown up in the business and knows that Surtran is a highly complex business with 100 facilities and 2,000 staff in dozens of U.S. cities. But Raul knows that, at its core, SurTran is also a stable (nondynamic) business. As Raul is fond of saying, "As long as there are people in one place and their desired goods in another, there will always be a need for shipping! And that makes for a stable business." Nonetheless, Raul, like any other manager, deals with uncertainty on a daily basis, as do his four regional vice presidents located in Los Angeles, Houston, Chicago, and New York City. Due to SurTran's high complexity and high stability, what management style should Raul adopt to be successful in allowing his vice presidents to operate "in the field"?

A) "Address each problem or opportunity as a unique situation and make operational decisions in the field, through consultation with me or your managers as appropriate." (decentralized and organic approach, with mutual adjustment).
B) "Hire good people with the right skills and train them to use our formal business work processes, and then make operational decisions in the field yourselves." (decentralized and bureaucratic approach, with standardized skills).
C) "Our people will follow instructions as pre-defined by headquarters, and I will make operational decisions, including those in the field." (centralized and bureaucratic approach, with standardized work processes)
D) "I will handle each problem or opportunity as a unique situation, and I will make operational decisions, including those in the field, based upon my personal supervision of those involved." (centralized and organic approach, with direct supervision)
E) "I will address each problem or opportunity as a unique situation, and I will make operational decisions, including those in the field, after consulting with you and others as appropriate." (centralized and organic approach, with mutual adjustment)

Question 54

A centralized, bureaucratic approach with standardized work processes for managing uncertainty is ideal for which of the following environments?

A) stable and complex
B) complex and dynamic
C) dynamic and simple
D) simple and stable
E) stable and dynamic

Question 55

Domain selection, diversification, mergers or acquisitions, and divestitures are all examples of

A) cooperative strategies.
B) voluntary action.
C) strategic maneuvering.
D) independent strategies.
E) competitive pacification.

Question 56

A decentralized, organic approach with mutual adjustment for managing uncertainty is ideal for which of the following environments?

A) stable and complex
B) complex and dynamic
C) simple and stable
D) dynamic and simple
E) stable and dynamic

Question 57

A decentralized, bureaucratic approach with standardized skills for managing uncertainty is ideal for which of the following environments?

A) stable and complex
B) complex and dynamic
C) simple and stable
D) dynamic and simple
E) stable and dynamic

Question 58

________ is leveling normal fluctuations at the boundaries of an environment.

A) Smoothing
B) Buffering
C) Sifting
D) Flexing
E) Skirting

Question 59

A centralized, organic approach with direct supervision for managing uncertainty is ideal for which of the following environments?

A) stable and complex
B) complex and dynamic
C) dynamic and simple
D) simple and stable
E) stable and dynamic

Question 60

Great American Farms Corp. announced that it was selling off its cereals division in order to realign itself more competitively in the marketing of its other products. This is an example of managing the task environment through

A) diversification.
B) acquisition.
C) merger.
D) divestiture.
E) domain selection.

Question 61

The Company is experiencing an increase in competition, and at the same time they are building more production facilities in Southeast Asia. In this scenario, the top management team is most likely to

A) give lower-level managers the authority to make decisions to benefit the firm.
B) pull decision-making responsibility from low-level management, taking it on themselves.
C) restructure to reflect a more bureaucratic, stable organization.
D) rid themselves of all buffering product.
E) increase the cost of their products.

Question 62

________ are companies that stay within a stable product domain as a strategic maneuver.

A) Adopters
B) Accommodators
C) Protectors
D) Sponsors
E) Defenders

Question 63

During the holiday season, Budget Department Store works with a contracted employment agency to bring extra workers on board to handle overflow business, and extra duties such as wrapping presents. Budget is using ________ during these rush times.

A) smoothing
B) buffering
C) independent strategies
D) flexible strategies
E) lift coefficient

Question 64

________ occurs when a company sells one or more businesses.

A) Diversification
B) Cooptation
C) Acquisition
D) Divestiture
E) Merger

Question 65

________ are the strongly held and taken-for-granted beliefs that guide behavior in a firm.

A) Values
B) Organizational divestitures
C) Prospectors
D) Unconscious assumptions
E) Buffers

Question 66

________ is the first level of organization culture.

A) Unconscious assumptions
B) Values
C) Desirable behaviors
D) Visible artifacts
E) Intangible beliefs

Question 67

A company uses ________ when it acts on its own to change some aspect of its current environment.

A) strategic maneuvering
B) domain selection
C) buffering
D) independent action
E) endorsement

Question 68

Beatrice owns and operates a food truck in a large city. Competitors are many, and competition is fierce. Due to her small business's size, she cannot realistically influence her business environment. However, Beatrice can and does take steps to adapt to the environment, including

A) slashing her food prices to force her competitors to do likewise city-wide (competitive aggression).
B) sponsoring local events to establish and maintain a positive brand image (public relations).
C) recruiting the mayor to participate on her business advisory board (cooptation).
D) hiring a lobbyist to promote state legislation that is favorable to operation of food trucks (political action).
E) hiring part-time help and maintaining extra inventory for peak periods (buffering).

Question 69

________ is exploiting a distinctive competence or improving efficiency for competitive advantage.

A) Competitive intelligence
B) Cooptation
C) Competitive aggression
D) Coalition
E) Smoothing

Question 70

________ refers to absorbing new elements into an organization's leadership structure to avert threats to its stability or existence.

A) Coalition
B) Contracting
C) Cooptation
D) Buffering
E) Smoothing

Question 71

The five-by-eight inch card with one rule on it-Use good judgment in all situations-that employees at J. R. Williams Corporation receive along with the employee handbook tells the employees a great deal about their company's

A) mission statement.
B) voluntary actions.
C) organization culture.
D) competitive aggression.
E) macroenvironment.

Question 72

________ is independent action to improve relations with competitors.

A) Competitive intelligence
B) Coalition
C) Cooptation
D) Competitive aggression
E) Competitive pacification

Question 73

For the past two years, Swen Johannsen, owner/general manager of Swen's Fine Duds, a local men's clothing store, has fought to stay in business. In the face of increasing competition, Swen has tried several tactics: aggressively promoting price-slashing sales to drive his competitors' customers to his doors; attempting to cut costs by leveling out sales and inventory through seasonal sales; as well as lining up contracts with wholesalers in advance of seasonal rushes (e.g., summer swimwear) to prevent inventory depletion. He has even recruited the president of the chamber of commerce to sit on his board. None of these tactics have been successful. Now, Swen is considering a deviation from his current business to one that might be more suitable, perhaps a formal wear/tuxedo rental and retail shop or a boutique Western wear store. Swen is using ________ as his final tactic.

A) independent action
B) domain selection
C) cooptation
D) buffering
E) smoothing

Question 74

An organization's ________ refers to all relevant forces inside a firm's boundaries, such as its managers, employees, resources, and organizational culture.

A) internal environment
B) competitive environment
C) macroenvironment
D) demographics
E) open systems

Question 75

________ are the components of an organization that can be seen and heard, such as office layout, dress, orientation, stories, and written material.

A) Incendiaries
B) Visible artifacts
C) Unconscious assumptions
D) Organizational divestitures
E) Apparitions

Question 76

For many years, Mars, Incorporated manufactured M&M's candies in assorted but fixed colors. M&M's were known and branded worldwide as individual candies featuring single solid colors. Then, in response to technological advancements and evolving customer tastes and expectations, Mars adapted its technical core by producing M&M's in an infinite variety of configurations and colors, even offering M&M's with personal photographs imprinted upon them. Thus, Mars offers personalized M&M's today as a product of "mass customization." Mars accomplished this by implementing

A) smoothing.
B) buffering.
C) flexible processes.
D) independent strategies.
E) concurrence.

Question 77

________ is leveling normal fluctuations at the boundaries of the environment.

A) Buffering
B) Smoothing
C) Flexible processes
D) Independent strategies
E) Empowerment

Question 78

Sam, general manager of a licensed supplier of advanced 3-D printing equipment, routinely and independently influences his business environment to the benefit of his company. Determine which action below is NOT among the ways that Sam independently influences his business environment.

A) by supporting and promoting elected officials to pass city ordinances that favor his customers or business (political action)
B) by suing or threatening to sue firms who are not licensed to sell his printing equipment when they attempt to do so (legal action)
C) by visibly supporting his brand through sponsorship of local sporting events (public relations)
D) by joining a task force with his local business neighbors to brainstorm ideas to reduce the cost of downtown parking (coalition)
E) by boldly stressing benefits of his technology against those of his competitors through comparative advertising (competitive aggression)

Question 79

________ is an organization's conscious efforts to change the boundaries of its task environment.

A) Independent action
B) Cooperative strategy
C) Strategic maneuvering
D) Public relations
E) Flexible processing

Question 80

A company uses ________ when it acts on its own to change some aspect of its current environment.

A) smoothing
B) buffering
C) independent strategies
D) flexible processes
E) competitive intelligence