Deck 11: Organizational Control and Change

Question 1

Control helps managers build a competitive advantage.

Answer 1

True
Explanation: To understand the importance of organizational control,consider how it helps managers obtain superior efficiency,quality,responsiveness to customers,and innovation-the four building blocks of competitive advantage.

Question 2

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

Answer 2

False
Explanation: The current ratio (current assets divided by current liabilities)tells managers whether they have the resources available to meet the claims of short-term creditors.

Question 3

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

Answer 3

False
Explanation: Days sales outstanding,an activity ratio,reveals how efficiently managers are collecting revenue from customers to pay expenses.

Question 4

Control helps managers respond more effectively to customers.

Question 5

In practice,managers can only measure the actual outputs that result from the behavior of their members.

Question 6

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

Question 7

When an organization and its members perform nonroutine activities,it is more challenging for managers to measure outputs or behavior.

Question 8

The process by which managers monitor and regulate the organization in order to determine if the organization is operating efficiently and effectively is known as controlling.

Question 9

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

Question 10

Managers monitor and evaluate the organization's strategy to see if it is working using the controlling function.

Question 11

The "objectivity" of financial measures of performance is a main reason why managers use these ratios to measure the efficiency and effectiveness of their organizations.

Question 12

Control is simply just reacting to events after they have occurred.

Question 13

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

Question 14

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

Question 15

Establishing targets and designing measurement systems are much more difficult for managers because the high level of uncertainty in the organizational environment means managers rarely know what might happen in the future.

Question 16

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

Question 17

Top managers are most concerned with overall organizational performance and use various production measures to evaluate it.

Question 18

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

Question 19

Control is concerned with keeping employees motivated.

Question 20

Behaviors are usually easier to measure than outputs because they are intangible and subjective.

Question 21

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

Question 22

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 23

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

Question 24

Bureaucratic control is control by means of a comprehensive system of rules and standard operating procedures (SOPs)that shapes and regulates the behavior of divisions,functions,and individuals.

Question 25

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

Question 26

RST Consulting diligently screens job applicants,often by viewing their résumés electronically and using several interviews to select the most highly skilled people.This is an example of:

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

Question 27

Management by objectives (MBO)is a formal system of evaluating subordinates on their ability to achieve specific organizational goals or performance standards and to meet operating budgets.

Question 28

Financial information by itself provides managers with all of the information that they need to measure the four building blocks of competitive advantage.

Question 29

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

Question 30

To encourage a future-oriented approach,top managers must establish organizational goals.

Question 31

Organizational culture functions as a kind of control system.

Question 32

At the __________ stage of the process of transforming raw materials into finished goods,managers typically use __________ control procedures to anticipate problems before they occur.

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

Question 33

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

Question 34

Which type 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 35

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

Question 36

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

Question 37

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 38

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:

A)Organizational socialization
B)Clan control
C)Control systems
D)Concurrent systems
E)Market control

Question 39

During the objective-setting process of the MBO,it is the sole responsibility of managers to establish the goals for the employees.

Question 40

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

Question 41

Starling Manufacturing Inc.has carefully set up strict specifications for its raw materials and goes through a three-step approval process when selecting its suppliers to ensure its raw materials are the best possible quality.This is an example of:

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

Question 42

At the __________ stage of transforming raw materials into finished goods,managers typically use __________ control methods to determine customers' reactions to the organization's goods and services.

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

Question 43

At the __________ stage of the process of transforming raw materials into finished goods,managers typically use __________ control procedures to obtain immediate feedback about how efficiently the raw materials are being transformed into finished goods.

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

Question 44

Which type of control do managers typically use at the conversion stage of transforming raw materials into finished goods?

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

Question 45

Top managers are most concerned with overall organizational performance and use various financial measures to evaluate it.The most common include all EXCEPT:

A)Activity ratios
B)Leverage ratios
C)Profit ratios
D)Liquidity ratios
E)Cash flow ratios

Question 46

At Step 3 of the control process,managers:

A)Measure actual performance
B)Compare actual performance to the standards
C)Establish the standards of performance
D)Initiate corrective action
E)Develop goals

Question 47

Which of the following is the most commonly used financial performance measure when evaluating an organization's performance?

A)Gross profit margin
B)Debt-to-equity ratio
C)Days sales outstanding ratio
D)Inventory turnover ratio
E)Return on investment

Question 48

Which type of 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 49

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

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

Question 50

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)Provide feedback

Question 51

What type of control do managers typically use at 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 52

Which step of the control process deals with establishing the standards of performance?

A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5

Question 53

At what stage of the control process do managers evaluate actual outputs and behavior outputs?

A)Step 1
B)Step 2
C)Step 3
D)Step 4
E)Step 5

Question 54

Price Buster Retail has invested in a management information system (MIS)that measures increases or decreases in relative sales of different products alerts managers to changes in customer tastes.This is an example of:

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

Question 55

When an organization and its members perform ______ activities,it is ______ challenging for managers to measure outputs or behavior.

A)nonroutine,more
B)nonroutine,less
C)routine,more
D)programmed,more
E)nonprogrammed,less

Question 56

Which type of control is at the heart of total quality management programs?

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

Question 57

The direct and indirect costs associated with producing a specific product are subtracted from the net revenues received from the sale of this product.The resulting figure is called:

A)Net income
B)Operating profit
C)Cash flow
D)Gross profit margin
E)The liquidity ratio

Question 58

Trevor,the regional manager for Taylor Dairies,tracks the average sale of each dairy product sold in order to determine the quantity of each type of product to be carried on the fleet.This is an example of:

A)Bureaucratic control
B)Feedforward control
C)Output control
D)Input control
E)Clan control

Question 59

What is the result of dividing a company's operating profit (the amount it has left after all the costs of making the product and running the business have been deducted)by sales revenues?

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

Question 60

The standard of performance that measures efficiency at the corporate level of the organization is:

A)Cost of goods sold
B)Operating profit
C)Net sales
D)Operating costs
E)Net income after taxes

Question 61

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

A)An SOP
B)Performance appraisal
C)MBO
D)TQM
E)Clan control

Question 62

The workers of an organization perform the same activities in the same way over and over again,based on rules that managers have developed.We say that the behavior of these workers has been:

A)Compromised
B)Standardized
C)Maximized
D)Minimized
E)Simplified

Question 63

The times-covered ratio,which measures the degree to which managers use debt or equity to finance ongoing operations,is a type of financial ratio known as:

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

Question 64

All of the following are problems associated with direct supervision EXCEPT:

A)Expensive
B)Demotivation of subordinates
C)Not feasible for some jobs
D)Employees may feel scrutinized
E)Personal involvement with subordinates

Question 65

The use of direct supervision as a control mechanism:

A)Is the least expensive form of control
B)Can demotivate subordinates
C)Is feasible for complex jobs
D)Is preferred over output controls
E)Is preferred over behavior controls

Question 66

A division manager is told to "maximize the sales of the division" and is then evaluated on the basis of the net sales generated by the division.This is an example of:

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

Question 67

Which types of financial ratios measure how well the managers of the 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 68

What is the reason why so many managers use financial measures to assess the efficiency and effectiveness of their organizations?

A)Objectivity
B)Subjectivity
C)Feasibility
D)Ease of use
E)Creativity

Question 69

Control by means of a comprehensive system of rules and standard operating procedures (SOPs)that shapes and regulates the behavior of divisions,functions,and individuals is known as:

A)A bureaucratic control system
B)Management by objective
C)Output control
D)Clan control
E)Market control

Question 70

As the regional manager,Ted's performance is evaluated on the basis of 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

Question 71

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

A)SOPs
B)An MBO system
C)Rules
D)Direct supervision
E)Return on investment

Question 72

A division manager is evaluated based on his division's revenues less the budgeted cost of his division.This is an example of:

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

Question 73

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

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

Question 74

In MBO:

A)Subordinates set goals for themselves
B)Managers set goals for subordinates
C)Subordinates set goals for managers
D)Managers and subordinates set goals together
E)Managers and subordinates goals are unrelated

Question 75

Inventory turnover is a type of:

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

Question 76

What allows managers at all levels to become personally involved with their subordinates and allows them to mentor subordinates and develop their management skills?

A)Clan control
B)MBO systems
C)Market control
D)Output control
E)Direct supervision

Question 77

Which type of financial ratio indicates whether or not the organization is capable of paying off its short-term debts without having to sell any of its inventories?

A)Quick ratio
B)Current ratio
C)Days sales outstanding ratio
D)Inventory turnover ratio
E)Profit ratio

Question 78

___________ guide behavior and specify what an employee should do when they confront a problem that needs a solution.

A)Goals
B)SOPs
C)Rules
D)Rules and SOPs,but not goals
E)Rules,SOPs,and goals

Question 79

As a regional manager,Dwight is given an operating budget of $1 million for the coming year and is evaluated on the basis of the amount of paper the region can sell based on that budget.Dwight's performance will be evaluated on:

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

Question 80

MBO starts when top managers:

A)Establish lines of communication
B)Develop behavior controls
C)Develop output controls
D)Establish organizational objectives
E)Establish individual performance objectives