Deck 14: Control

Question 1

In an organizational setting,to "control" means to adjust or bring about conformity to specifications or objectives that have been set.

Answer 1

True

Question 2

Companies that have rejected budgets require employees to measure themselves against the performance of competitors against internal peer groups.

Answer 2

True

Question 3

An organization cannot run without formulating and implementing a budget.

Answer 3

False

Question 4

The external environment is the least significant factor affecting whether a strategic control system can be set up.

Question 5

Managers should take reinforcing action when actual performance is worse than expected and corrective action when actual performance is better than expected.

Question 6

As the complexity of a task increases and its assessment standards become more abstract,there will be a higher potential that performance measurement will cause confusion.

Question 7

Research on goal setting related to the budgetary process suggests that the ideal budget is one that is not challenging and is easily attainable.

Question 8

A budget is designed to influence behavior so that forecasts or plans for expenditures and revenues can be achieved.

Question 9

No hard-and-fast boundaries separate strategic,operational,and tactical controls.

Question 10

Extensive control measures almost always deflate employee morale and lower profitability,irrespective of the situation.

Question 11

Regardless of cost,performance measurement should always be comprehensive.

Question 12

The break-even point is the amount of a product that must be sold to cover a firm's fixed and variable costs.

Question 13

Tactical controls involve the fundamental control arrangements of the organization,those with which its members have to live day to day.

Question 14

When readily quantifiable criteria do not exist,it becomes extremely important to obtain as much consensus as possible about the way in which performance is to be assessed.

Question 15

When managers predict a turbulent external environment,they should establish centralized strategic control systems to anchor the firm.

Question 16

Supervisory structure is a type of strategic control based on the organization's overall approach to utilizing its human resources.

Question 17

Selection,training,compensation,and appraisal and evaluation are all opportunities for control in the human resource function.

Question 18

The financial ratio of liquidity indicates how well the organization can meet its long-term financial obligations.

Question 19

Sales that do not meet their forecast may mean that production should be increased or the product line should be extended.

Question 20

A manager can control without restricting.

Question 21

The contemporary approach to operational control involves shifting the responsibility for control away from operations personnel toward separate evaluators at the end of the production process.

Question 22

A key feature of many companies that have ________ is the use of rolling forecasts,which are created every few months.

A) restricted employee participation
B) established benchmarks
C) increased turnover rates
D) rejected budgets

Question 23

Planning and control do not have to be linked together in organizations.

Question 24

The first step of the control process in an organizational setting is ________.

A) comparing performance to standard
B) measuring performance
C) establishing standards
D) evaluating performance

Question 25

Achievable budget standards are regarded as desirable because ________.

A) they focus only on long-term actions at the expense of short-term objectives
B) they are not too challenging for the company
C) they reduce the motivation to manipulate data
D) they reduce uncertainty and keep employee morale under check

Question 26

Administering therapy to an unwell patient is an example of exercising tactical control.

Question 27

Which of the following is a reason for involving in decision making the people who are going to be affected by its results?

A) The decision-making process will not be partial or biased toward anyone.
B) They will be more committed to meeting standards that they themselves have created.
C) The degree of difficulty will neither be too difficult nor too ambitious.
D) They will be more accepting of losses and failures if they are involved from the start.

Question 28

Which of the following statements is true about measuring performance?

A) Usefulness of the information always justifies the cost of measurement.
B) Measurements of performance need not always be related to organizational goals.
C) Ease of measurement determines what is going to be measured.
D) Relevant indicators of progress toward goals justify the costs of measurement.

Question 29

Companies that use "stage gate" control technology divide projects into several stages with gates between them.The gates act as comprehensive quality control checks that have to be passed before a gate will open.Managers measure performance at the end of each stage to decide whether the project should move forward.Which of the following is a drawback of this technology?

A) gaining no up-front commitment to the performance measurement methods
B) Reviewing the project at each stage may lead to overanalysis and underperformance.
C) achieving low consensus between assessments about performance
D) Promising new projects might be killed too soon by overeager, stage gate keepers.

Question 30

Control can be thought of as a causal variable because ________.

A) the results of control efforts cannot be negative or harmful for any organization
B) the results of control efforts can inform and improve the planning process of the organization
C) the results of control efforts dictate the structures of all other organizations within an industry.
D) the results of control efforts are in no way related to planning and organizing.

Question 31

How can measurement of performance be facilitated?

A) by imitating rival's methods
B) by setting concrete standards
C) by providing major incentives
D) by reducing hours of work

Question 32

In which of the following cases is the need for change the least?

A) when the difference between performance and standard is negative
B) No difference exists between performance and standard.
C) when the difference between performance and standard is positive
D) There is no well-defined standard to measure performance by.

Question 33

Which of the following best defines "standard" in relation to establishing control?

A) performance target
B) unbiased evaluation
C) parallel association
D) rival strategies

Question 34

Which of the following is an outcome of too much organizational control?

A) lowered motivation
B) exposure to risks
C) low quality operations
D) ineffective utilization of resources

Question 35

The guiding principle for focusing control is that it should be closely linked to the strategic goals and,particularly,the planning process of the organization.

Question 36

FoodMart Inc.is a grocery supermarket chain with 65 stores in various locations across the country.For the past year,total revenues have been steadily declining,and the management wants to make some changes to try and improve earnings.According to the CEO of the company,shutting down the 10 lowest performing stores should remedy the situation.Which of the following is the strongest counterargument for the above?

A) Eighty percentage of the workforce in the stores is constituted of contracted laborers.
B) Most of the retail stores that the company has are located in high rental demand areas.
C) A recent analysis by the operations department suggests that implementing a vendor managed inventory system would significantly reduce the operating costs.
D) A recent study reveals that inventory and transportation costs contribute up to 70 percent of the total operating costs.

Question 37

The first step in the control process is dependent on the existence of ________.

A) a favorable cost-benefit ratio
B) the department of human resources
C) the absence of well-defined performance yardsticks
D) as much specificity as possible so that standards are not vague

Question 38

Within the context of organizations,control involves ________.

A) arranging the organization's workforce in some sequence
B) tracking flow of transactions across different organizational departments
C) regulating activities and behaviors to accomplish specific organizational objectives
D) grouping of tasks into different organizational departments

Question 39

Shared values and beliefs are the social requirements needed to support a system of bureaucratic control.

Question 40

________ is usually the most difficult managerial task in the control process.

A) Comparing performance to standards
B) Establishing standards
C) Evaluating and taking corrective action
D) Measuring performance

Question 41

Which of the following questions is a matter of strategic scope for an organization?

A) What changes have to be made, in terms of policy, at the new manufacturing units in China?
B) How much money is to be allocated to the sales and marketing departments annually?
C) How can the ratio of employees to supervisors be improved to increase productivity?
D) What can be done to employ more ethnic and gender minorities in the organization?

Question 42

Which of the following is a critical decision in the context of the environmental conditions in which large companies operate?

A) how flexible to make the budget
B) how centralized or decentralized should the control systems be
C) how much to invest in precontrol systems for operations
D) how to fund the budget for the training and development department

Question 43

Which of the following is true of strategic controls?

A) They are least useful when the environment is uncertain.
B) They are unrelated to measures of organizational performance.
C) They are most useful when operating environments are rough.
D) They are easy to implement even when exact measurement is difficult.

Question 44

The ratio of return on investment (ROI)measures the profitability of a business unit by comparing ________ to ________.

A) activity; sales
B) liquidity; liability
C) inventory cost; inventory turnover
D) net profit before taxes; total assets invested

Question 45

Which of the following represents the narrowest scope of control for a bank branch manager?

A) ensuring that there is an adequate ratio of deposits relative to loans
B) ensuring proper credit checking before a loan is granted to any individual or organization
C) ensuring that the bank gets enough publicity to attract new clientele
D) ensuring that there is a fair ratio of human tellers to automated tellers present

Question 46

Which type of control has the broadest organizational scope?

A) diagnostic
B) operational
C) strategic
D) tactical

Question 47

Which of the following is a corrective action that could be taken based on the outcomes of performance measurement?

A) increase in training
B) increase in recognition
C) addition of a new product line
D) increase in production targets

Question 48

What determines whether a control is considered operational,tactical,or strategic?

A) its industry
B) its breadth of scope
C) its effect on profitability
D) its implementation schedule

Question 49

In which of the following organizations will strategic controls work the best?

A) in a company designing the user interface of mobile phones, where every month the technology improves and new competitors enter the market
B) in an iron and steel industry whose business prospects depend largely on the ups and downs of the construction industry
C) in a company that provides counseling services to corporate clients and has infrequent performance audits
D) in a hotel chain where customer satisfaction and volatile money market determines the number and type of clientele

Question 50

A strategic control system is likely to be useful when environmental turbulence is ________ and it is ________ to specify and measure precise strategic objectives.

A) high; easy
B) low; difficult
C) high; difficult
D) low; easy

Question 51

Which of the following assessments carried out by the manager of a chain of used-car dealerships has the largest scope?

A) deciding upon suitable advertising for the next fiscal year
B) deciding whether to start another dealership in an area with a growing population
C) deciding how much inventory to carry in each dealership and the whole company
D) deciding on the appropriate number of sales staff for each dealership

Question 52

Research indicates that the efficiencies of managing through centralized control may be ________ when the operating environments of divisions in multidivisional organizations are relatively ________.

A) greater; stable and predictable
B) static; stable and predictable
C) greater; turbulent and unpredictable
D) static; turbulent and unpredictable

Question 53

High-performing employees in an organization can be retained by ________.

A) close monitoring
B) increased recognition
C) increased workload
D) increased feedback

Question 54

Tactical control focuses on ________.

A) implementing strategy
B) regulating activities
C) managing methods
D) planning policies

Question 55

Which of the following is a reinforcing action that could be taken based on the outcomes of performance measurement?

A) increase in training
B) addition of a new product line
C) modification in supervision
D) investment in newer equipment

Question 56

Arbery Fudge Company,Inc.engages in the production and marketing of fudge candy in the United States.The company believes in continuous improvement and constantly evaluates the effectiveness of the control strategies that the managers use.Which of the following situations would necessitate the use strategic control for evaluation?

A) The organization wants to implement a system for formalizing reporting at various levels in an organization.
B) The organization has to perform a task in a relatively limited time frame to help one of its key distributors make use of an important opportunity.
C) The competition in the confectionery market has increased significantly in the recent past and management is planning to revamp its competitive approaches.
D) The organization has current liabilities greater than the current assets. The managers are analyzing the situation to make a decision on whether or not to increase liquidity.

Question 57

Upon discovering stronger-than-expected sales of its product,a manufacturer of baby food finds that senior citizens who wear dentures are buying the meals meant for toddlers.Consequently,the firm targets a new line of packaged meals to senior citizens.This case suggests managers should always ________.

A) investigate positive differences between performance and standards
B) collapse similar, small market segments into one larger segment
C) design each product for maximum adjustability
D) market every product to multiple customer segments

Question 58

Department A shows an annual after-tax profit of $400,000 from invested assets of $12 million.Department B shows an annual after-tax profit of $400,000 from invested assets of $8 million.Which unit had the best financial performance?

A) Department A performed the best.
B) Department B performed the best.
C) Both departments had the same financial performance.
D) Performance cannot be determined from these statistics.

Question 59

Sales of photocopy machines manufactured by Xenon Ltd.have declined substantially,resulting in lower revenues.Most members of the core executive group blame unrealistic goals for this outcome.Which of the following is the strongest counterargument for this?

A) More revenue is being earned through service contracts than sales.
B) Competitors of Xenon are also facing a similar problem.
C) Cost of labor has increased slightly in the past year.
D) Broad-based participation was used in setting the standards.

Question 60

When there is more uncertainty in the environment,centralized control becomes ________.

A) crucial
B) more efficient
C) redundant
D) less efficient

Question 61

Which of the following is a drawback of the BEP analysis?

A) It can discourage future profitable activities if they initially don't seem profitable.
B) It can provide wrong indices of profit and loss and confuse managers.
C) It can only be conducted after production has been completed and inventory costs have been made.
D) It detracts from cost reduction and profit maximization.

Question 62

In an automobile sales unit,the manager had given 6 out of 7 car salesmen a bonus for good performance.Despite this,the unit kept underperforming in comparison to its counterparts.Which of the following is the most probable cause for this?

A) The goals set by the manager for his salesmen were not high enough.
B) The salesmen in this particular unit were very bright and persuasive.
C) The automobile company had launched a regional ad campaign with positive feedback.
D) The car sales figures had dipped nationwide in the past year.

Question 63

Some employers use software to track the key strokes of their employees involved in data entry.The software reflects the overall productivity of the employees by recording their pace of work.This software is an example of ________.

A) precontrol of operations
B) postcontrol of operations
C) concurrent control of operations
D) proactive control of operations

Question 64

________ represents a firm's ability to meet long-term financial obligations.

A) Leverage (total debt/total assets)
B) Liquidity (current assets/current liabilities)
C) Inventory turnover (annual sales/inventory)
D) Return on equity (net profit before taxes/total assets invested

Question 65

________ is a type of operational control that evaluates the conversion of inputs to outputs while it is happening.

A) Precontrol
B) Postcontrol
C) Concurrent control
D) Strategic control

Question 66

________ is a measure of how well a firm can meet its short-term cash requirements.

A) Leverage (total debt/total assets)
B) Liquidity (current assets/current liabilities)
C) Inventory turnover (annual sales/inventory)
D) Return on equity (net profit before taxes/total assets invested)

Question 67

What is the benefit of having precontrol of operations?

A) It controls the quality of the transformation process.
B) It provides immediate feedback for the production process.
C) It reduces the need for control at the later stages.
D) It ensures that the product is ready for the consumers.

Question 68

Which of the following is true of rolling budgets?

A) They are used in conjunction with normal budgets.
B) They do not have to be revised frequently.
C) They take very little managerial time and effort.
D) They are more accurate because of their recency.

Question 69

The ________ analysis allows managers to gauge the amount of a product that must be sold to cover a firm's fixed and variable costs.This analysis is difficult because ________.

A) return on equity; it is difficult to determine the total cost of inventory
B) break-even point; it is difficult to project variable costs accurately
C) efficiency; it is difficult to project variable costs accurately
D) activity; it is difficult to determine the total cost of inventory

Question 70

Which of the following is a type of control approach used under clan control?

A) strict adherence to rules and regulations
B) formal and impersonal approach to control
C) stress on group consensus on goals
D) emphasis on detecting deviance

Question 71

At Meridian Inc.,employees are given general goals and basic budgets rather than policy manuals.Furthermore,it is expected that they will be strongly dedicated to the goals of the organization.Which control approach does Meridian Inc.use?

A) bureaucratic
B) commitment
C) operational
D) self-reliant

Question 72

Which of the following is a drawback of the clan approach of organizational control?

A) Control is imposed on the members of the organization.
B) Emphasis on detecting deviance is troubling for employees.
C) Considerable time and managerial effort goes behind the control.
D) Individual responsibility becomes a source of stress.

Question 73

Which of the following controls the quality,quantity,and characteristics of the inputs into the production process?

A) precontrol
B) postcontrol
C) reactive control
D) concurrent control

Question 74

Which of the following defines a liquidity ratio?

A) revenue in relation to investment
B) current assets in relation to current liabilities
C) total debt in relation to total assets
D) amount of sales in relation to cost to produce

Question 75

The ________ is where the selling price of a unit of a product minus its variable costs exceeds the fixed costs for that unit.

A) current ratio
B) return on investment
C) inventory turnover ratio
D) break-even point

Question 76

The ________ of an organization is probably the most widespread tactical control system that the typical employee encounters.

A) operating budget
B) supervisory structure
C) human resource system
D) quantitative forecasting system

Question 77

Which of the following is a type of control approach used under bureaucracy control?

A) emphasis on detecting deviance
B) stress on group consensus on goals
C) mutual assistance in meeting standards
D) control comes from individuals or groups

Question 78

Which of the following statements is true of break-even point?

A) It cannot be used for control purposes in business organizations.
B) It can be reached by selling very few units if the fixed costs are high.
C) It is the point where the selling price minus variable cost exceeds the fixed costs of a unit.
D) It helps managers exercise control after the product has been created and is ready for marketing.

Question 79

South West Trading controls the raw materials used to make its products at the point of origin.In addition,it uses the services of United Parcel Service (UPS)to combine orders from various factories into one container for shipment.What type of control system is being used by South West Trading?

A) precontrol of operations
B) strategic control of operations
C) financial control of operations
D) concurrent control of operations

Question 80

The degree of stretch in a budget refers to the ________.

A) resilience of the budget
B) tightness of the budget
C) acceptability of the budget
D) standardization of the budget