Deck 11: Organizational Control and Change

Question 1

The subjectivity of financial measures of performance is the reason why managers use them to measure the efficiency and effectiveness of their organizations.

Answer 1

False
Explanation:The objectivity of financial measures of performance is the reason why so many managers use them to assess the efficiency and effectiveness of their organizations.

Question 2

Control means just reacting to events after they have occurred and nothing more.

Answer 2

False
Explanation:Control is more than just reacting to events after they have occurred.

Question 3

At the input stage, managers use feedback control to anticipate problems before they arise.

Answer 3

False
Explanation:At the input stage, managers use feedforward control to anticipate problems before they arise so problems do not occur later during the conversion process.

Question 4

An organization is said to be highly leveraged if it uses more debt than equity to finance its ongoing operations.

Question 5

When you divide the organization's current assets by its current liabilities, the result is known as the times-covered ratio of the organization.

Question 6

The high level of uncertainty in the organizational environment makes establishing targets and designing measurement systems much easier for managers

Question 7

In practice, managers can only measure the actual outputs that result from the behavior of their members and not the behaviors themselves.

Question 8

Behaviors are typically easier to measure than outputs because they are more tangible and objective.

Question 9

Financial information provides managers with all the information required to measure the four building blocks of competitive advantage.

Question 10

The operating margin is calculated by dividing a company's operating profit by sales revenues.

Question 11

As a part of the controlling process, managers monitor and evaluate the organization's strategy to see if it is working.

Question 12

Control is not concerned with keeping employees focused on the important problems confronting the organization but with reacting to events after they have occurred.

Question 13

Control helps managers build competitive advantage.

Question 14

Days sales outstanding is a profit ratio that reveals how efficiently managers are collecting revenue from customers to pay expenses.

Question 15

A control system must be rigid in order to be effective.

Question 16

Profit ratios measure how well managers have protected organizational resources to be able to meet short-term obligations.

Question 17

Control helps managers respond more effectively to customers.

Question 18

It is more challenging for managers to measure outputs or behavior when an organization and its members perform nonroutine activities.

Question 19

The final step in the control process is to evaluate the results and bring about change as appropriate.

Question 20

The first step in the control process is to evaluate results in terms of performance standards.

Question 21

The least powerful form of behavior control is direct supervision of a subordinate by a manager.

Question 22

If goals are set at an impossibly high level, managers might work only half-heartedly to achieve them because they are certain they will fail.

Question 23

Bureaucratic rules constrain and standardize behavior and encourage people to think for themselves.

Question 24

Organizational culture functions as a kind of control system.

Question 25

Behavior control tends to be the first type of control that managers at all levels use to evaluate performance.

Question 26

Revolutionary change is gradual, incremental, and narrowly focused.

Question 27

When managers personally supervise subordinates, they lead by example and help subordinates develop and increase their own skill levels.

Question 28

Organizations with entrepreneurial, flexible cultures, such as high-tech companies, are much easier to change.

Question 29

The process of comparing one company's performance on specific dimensions with the performance of other high-performing organizations is called benchmarking.

Question 30

Evolutionary change involves a bold attempt to quickly find new ways to be effective.

Question 31

An important characteristic of management by objectives is its nonparticipatory nature.

Question 32

Assessing the need for change calls for two important activities: recognizing that there is a problem and identifying its source.

Question 33

Being under close scrutiny or not being evaluated in an impartial way motivates employees to perform better.

Question 34

Output control and behavior control are appropriate for the most important and significant organizational activities.

Question 35

Clan control keeps organization members goal-directed, while they are still open to new opportunities.

Question 36

The more complex a job is, the more difficult it is for a manager to evaluate how well a subordinate is performing.

Question 37

Top-down change is typically more gradual or evolutionary than bottom-up change.

Question 38

Organizational change is the movement of an organization away from its present state toward some preferred future state to increase its efficiency and effectiveness.

Question 39

With bottom-up change, the emphasis is on making the changes quickly and dealing with problems as they arise; it is revolutionary in nature.

Question 40

Bureaucratic control is control by means of a comprehensive system of rules and standard operating procedures.

Question 41

During the input stage, managers use __________ control procedures to anticipate problems before they occur.

A) input
B) conversion
C) output
D) feedforward
E) feedback

Question 42

RST Consulting screens job applicants by viewing their résumés electronically and using several interviews to select highly skilled people. By doing so, the managers at RST Consulting ensure that the wrong candidates are not picked for a particular job. This is an example of:

A) concurrent control.
B) feedforward control.
C) feedback control.
D) bureaucratic control.
E) clan control.

Question 43

Which of the following types of controls helps monitor the quality of goods or services provided during the production process?

A) Feedforward control
B) Concurrent control
C) Feedback control
D) Bureaucratic control
E) Clan control

Question 44

Once managers have measured actual performance, they should:

A) revise accepted standards.
B) compare actual performance to the standards.
C) establish the standards of performance.
D) initiate corrective action.
E) develop goals and objectives.

Question 45

Which of the following is the first step of the control process?

A) Measuring actual performance
B) Comparing actual performance against chosen standards
C) Evaluating the results of comparison
D) Establishing the standards of performance
E) Initiating corrective action

Question 46

An organization monitors the number of customer returns for each product model as a part of an attempt to recognize defective products. This is an example of:

A) feedforward control.
B) concurrent control.
C) clan control.
D) feedback control.
E) bureaucratic control.

Question 47

Which of the following is true of the control process?

A) It is difficult to take corrective action when reasons for poor performance are identified.
B) It is always easy to measure outputs and behavior.
C) It is easy to measure outputs and behavior of complex, nonroutine activities.
D) Realistic standards reduce the gap between actual performance and desired performance.
E) Managers develop performance standards to measure behavior first and then outputs.

Question 48

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) establish targets.

Question 49

Which of the following cannot be measured easily?

A) The creativity of a research engineer
B) An employee's ability to meet deadlines
C) The success of a product
D) An employee's adherence to rules
E) The money spent on organizational resources

Question 50

The process by which managers monitor and regulate the efficiency and effectiveness of the workers in an organization is called _____.

A) planning
B) organizing
C) leading
D) controlling
E) coordinating

Question 51

Which of the following can hurt the performance of an organization?

A) Adopting realistic performance standards
B) Setting stretch goals for employees
C) Establishing operating budgets that regulate how managers and workers attain their goals
D) Using output controls to motivate managers and employees at different levels
E) Focusing on only one standard instead of a hundred different standards

Question 52

Which of the following is true of the control process?

A) Managers can easily take corrective action when reasons for poor performance are identified.
B) Outputs and behavior can be measured easily always.
C) It is easy to measure the outputs and behavior of complex, nonroutine activities.
D) Managers should never revise performance standards to a lower level.
E) Managers develop performance standards to measure behavior first and then outputs.

Question 53

Starling Manufacturing Inc. has carefully set up strict specifications for raw materials that are sourced from suppliers. It follows a three-step approval process to select new suppliers and ensures that they are aware of raw material specifications. This is an example of:

A) concurrent control.
B) feedforward control.
C) feedback control.
D) bureaucratic control.
E) clan control.

Question 54

Which of the following steps of the control process involves goal setting?

A) Measuring actual performance
B) Comparing actual performance against chosen standards
C) Evaluating the results of comparison
D) Establishing the standards of performance
E) Initiating corrective action

Question 55

Which of the following types of controls do managers use during the conversion stage to gain feedback on the conversion process?

A) Feedforward control
B) Bureaucratic control
C) Concurrent control
D) Feedback control
E) Clan control

Question 56

Once managers have chosen the standards to evaluate performance, the next step in the control process is to:

A) compare actual performance against chosen standards of performance.
B) initiate corrective action if the chosen standard is not being achieved.
C) measure actual performance.
D) evaluate the results of comparison.
E) revise performance standards.

Question 57

The formal monitoring, evaluation, and feedback systems that allow managers to determine if the organization's strategy and structure are working according to plans are known as _____ systems.

A) social
B) routine
C) control
D) nonprogrammed
E) classical

Question 58

Which of the following is true of measuring actual performance?

A) Managers can either evaluate output or behavior, never both.
B) Outputs and behavior can be measured easily always.
C) It is easy to measure outputs and behavior of complex, nonroutine activities.
D) Outputs are easier to measure because they are more tangible and objective.
E) Managers develop performance stands to measure behavior first and then outputs.

Question 59

Which of the following types of control allows managers to anticipate problems before they arise?

A) Feedforward control
B) Concurrent control
C) Feedback control
D) Bureaucratic control
E) Clan control

Question 60

Which of the following types of controls do managers use during the output stage of transforming raw materials into finished goods?

A) Behavioral control
B) Concurrent control
C) Bureaucratic control
D) Feedforward control
E) Feedback control

Question 61

_____ allows managers to become personally involved with their subordinates and mentor them.

A) Clan control
B) An MBO system
C) Bureaucratic control
D) Output control
E) Direct supervision

Question 62

As regional manager of KIM Corp., Dwight is given an operating budget of $1 million for that financial year and is evaluated on the basis of the amount of goods produced based on that budget. Dwight's performance is evaluated on a(n):

A) revenue budget approach.
B) cash flow budget approach.
C) expense budget approach.
D) profit budget approach.
E) capital budget approach.

Question 63

Which of the following is true of direct supervision?

A) It is an inexpensive form of control.
B) It can demotivate subordinates.
C) It is the least potent form of behavior control.
D) It is feasible for complex jobs.
E) It is preferred over bureaucratic control.

Question 64

Which of the following is a mechanism of behavior control?

A) Clan control
B) Direct supervision
C) Output control
D) Feedback control
E) Organizational change

Question 65

The _____ shows whether an organization can pay claims of short-term creditors without selling inventory.

A) quick ratio
B) current ratio
C) days sales outstanding ratio
D) inventory turnover ratio
E) profit ratio

Question 66

Which of the following financial ratios 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

Question 67

What is the most immediate and potent form of behavior control?

A) SOPs
B) An MBO system
C) Rules
D) Direct supervision
E) Bureaucracy

Question 68

Which of the following financial measures is a result of dividing a company's operating profit by its sales revenues?

A) Gross profit margin
B) Return on investment
C) Net profit
D) Operating margin
E) Operating costs

Question 69

Which of the following can be inferred from calculating a company's operating margin?

A) An organization's competitive advantage
B) How efficiently an organization is using its resources
C) Whether the organization has the resources available to meet the claims of short-term creditors
D) How efficiently managers are turning inventory over
E) How efficiently managers are collecting revenue from customers

Question 70

A formal system for evaluating subordinates' behavior by their ability to achieve specific goals is called:

A) an SOP.
B) an operating standard.
C) management by objectives.
D) total quality management.
E) clan control.

Question 71

Why is return on investment (ROI) the most commonly used financial performance measure?

A) It measures how far profits can decline before managers cannot meet interest changes.
B) It measures how efficiently managers are collecting revenues from customers to pay expenses.
C) It shows whether organizations can pay claims of short-term creditors without selling inventory.
D) It measures how efficiently managers are turning inventory over.
E) It allows managers of one organization to compare performance with that of other organizations.

Question 72

Which type of financial ratio measures how well the managers of an organization are creating value from the organization's assets?

A) Leverage ratios
B) Liquidity ratios
C) Profit ratios
D) Current ratios
E) Activity ratios

Question 73

Which of the following provides a framework to monitor progress toward achieving goals?

A) Management by objectives
B) Direct supervision
C) Clan control
D) Output control
E) Top-down change

Question 74

Which of the following is true of direct supervision?

A) It is an expensive form of behavior control.
B) It is the least potent form of behavior control.
C) Direct supervision is preferred to output control.
D) Close scrutiny motivates employees to make their own decisions.
E) Personal control through direct supervision is feasible for all jobs.

Question 75

The times-covered ratio, which measures the degree to which managers use debt or equity to finance ongoing operations, is a type of _____.

A) current ratio
B) liquidity ratio
C) leverage ratio
D) activity ratio
E) profit ratio

Question 76

What is an operating budget?

A) A measure of how much percentage profit a company is earning on sales
B) The result of dividing a company's operating profit by sales revenues
C) The amount an organization has left after all the costs of making the product and running the business have been deducted
D) Specification of the functional goals that the managers of different functions need to achieve
E) A blueprint that states how managers intend to use organizational resources to achieve organizational goals efficiently

Question 77

MBO starts when top managers:

A) determine subordinates' goals.
B) review subordinates' progress toward meeting goals.
C) resort to direct supervision.
D) establish organizational objectives.
E) link performance evaluations to rewards.

Question 78

Which type of financial ratio is computed by dividing the organization's present assets by its present liabilities?

A) Inventory turnover ratio
B) Days sales outstanding ratio
C) Profit ratio
D) Current ratio
E) Debt-to-assets ratio

Question 79

Which of the following describes stretch goals?

A) Goals at one level that are not in sync with goals set at other levels of the organization
B) Goals that subordinates set for themselves
C) Goals that are specific and difficult but not out of reach
D) Goals that are set low and are easy to achieve
E) Goals set at an impossibly high level

Question 80

As the regional manager, Ted's performance is evaluated on the difference between the sales revenues generated by his region and the cost of making those goods and services. Ted is being evaluated using:

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.