CHAPTER 5

Multiple Choice Questions

1. With increasing competition in the restaurant business, Sal, owner of Mom's Pizza, is dealing with
growing uncertainty. He is meeting with his managers to develop a future course of action to meet
company goals. This process is known as _____. 
 

A.  planning
B.  leading
C.  controlling
D.  defining
E.  diversifying

Planning is coping with uncertainty by formulating future courses of action to achieve specified results.
When you make a plan, you make a blueprint for action that describes what you need to do to realize
your goals.

2 The primary reason for an organization to adopt planning and strategic management is to _____. 
 

A.  develop MBO

B.  encourage new ideas
C.  develop a sustainable competitive advantage
D.  provide direction and momentum
E.  increase organization diversity

An organization should adopt planning and strategic management for three reasons: They can (1)
provide direction and momentum, (2) encourage new ideas, and above all (3) develop a sustainable
competitive advantage.

 
3 Helping people focus on critical problems, choices, and opportunities is possible through _____. 
 

A.  planning and diversity

B.  MB
O
C.  planning and strategic management
D.  effective synergy policy
E.  a strong value system

Planning and strategic management can help people focus on the most critical problems, choices, and
opportunities.

4 The profits of ABC Grocery have dropped significantly over the last several months. After
investigating, the owner realizes that the store is moving in the wrong direction in many departments, so
there needs to be greater focus by management. This is an example of how an organization can progress
in the wrong direction with ____. 
 

A.  little company diversity

B.  no focus on JIT
C.  no code of ethics
D.  a poor plan
E.  too much employee diversity

A poor plan can send an organization in the wrong direction.

 
5. The need the firm will fill, the operations of the business, its components and functions, as well as the
expected revenues and expenses is expressed in the organization's ____. 
 

A.  mentoring plan

B.  code of ethics
C.  risk statement
D.  business model
E.  code of business

The business model outlines the need the firm will fill, the operations of the business, its components
and functions, as well as the expected revenues and expenses.

6. Prior to opening her new restaurant, Nia is determining what items to offer on the menu, the anticipated
profits and expenses, the tasks of various employees, and how those jobs will be handled. Nia is writing
her ____. 
 

A.  business model

B.  mentoring plan
C.  code of ethics
D.  risk statement
E.  code of business

The business model outlines the need the firm will fill, the operations of the business, its components
and functions, as well as the expected revenues and expenses.

 
7. David is starting a karate school, and he has been working with Mr. Smith, a business counselor with
the SBA. Mr. Smith told David that the first three steps to planning his organization are (in the correct
order) ___. 
 

A.  strategic planning, mission statement, vision statement

B.  operational planning, mission statement, hiring plan
C.  strategic planning, operational planning, vision statement
D.  mission statement, vision statement, strategic planning
E.  tactical planning, operational planning, mission statement

According to Figure 5.2, the correct order of the steps are mission statement, vision statement, strategic
planning, tactical planning, and operational planning.

8. The planning process begins with two attributes: a mission statement, which answers the question
_____, and a vision statement, which answers the question ______ 
 

A.  What do we want to become?; What is our reason for being?

B.  What are the costs?; How much money can I make?
C.  What are the risks?; What is our reason for being?
D.  What do we want to become?; What products do we offer at a profit?
E.  What is our reason for being?; What do we want to become?

The planning process begins with two attributes: a mission statement (which answers the question
"What is our reason for being?") and a vision statement (which answers the question "What do we want
to become?").

9. The mission statement expresses the ____. 

 

A.  expected profitability of the organization

B.  purpose of the organization
C.  code of ethics
D.  market for the product
E.  types of employees needed

A mission statement expresses the purpose of the organization.

 
10. Clothing maker Patagonia states that its purpose as an organization is to "build the best product, cause
no unnecessary harm, [and] use business to inspire and implement solutions to the environmental
crisis." This is the company's ___. 
 

A.  mission statement

B.  belief statement
C.  goals pact
D.  code of ethics
E.  management pledge

A mission statement expresses the purpose of the organization. The mission statement for clothing
maker Patagonia is to "build the best product, cause no unnecessary harm, [and] use business to inspire
and implement solutions to the environmental crisis."

11. During a management meeting, Dave, the CEO of Top Office Equipment, reminded his management
team of where the company wants to go as an organization: "Top Office Equipment is the expert whom
customers should always call regarding all their office equipment needs because Top Office strives to
understand customer needs and provide the right answers for them." This statement is Top Office
Equipment's ____. 
 

A.  belief statement

B.  goals pact
C.  code of ethics
D.  management pledge
E.  vision statement

A vision statement expresses what the organization should become, where it wants to go strategically.

 
12. At the strategic level of planning, managers must pay attention to the environment outside the
organization, be future oriented, and ____. 
 

A.  have more stability than at other levels

B.  have more control over employee issues
C.  have less competition
D.  deal with uncertain and competitive conditions
E.  be more likely to understand the competition

According to Figure 5.3, strategic planning includes long-term decisions about the overall direction of
the organization. At the strategic level of planning managers must pay attention to the environment
outside the organization, be future oriented, and deal with uncertain and competitive conditions.

 
13. The upper management of a large national retail grocery store has passed along the new goals of
improving customer service to the district managers. At this point, the district managers need to
determine how the stores in their district will achieve top management's goal with the given resources
during the next 6 to 24 months. This type of planning is known as ____. 
 

A.  working-level planning

B.  tactical planning
C.  middle-level planning
D.  operational planning
E.  strategizing

The strategic priorities and policies are then passed down to middle managers, who must do tactical
planning.

 
 
14. Planning done by middle managers to determine what contributions their departments or similar work
units can make with their given resources during the next 6 to 24 months is ____. 
 

A.  writing a belief statement

B.  developing a goals pact
C.  producing a code of ethics
D.  tactical planning
E.  management pledging

Tactical planning is done by middle managers to determine what contributions their departments or
similar work units can make with their given resources during the next 6 to 24 months.

 
15. Planning done by first-line managers to determine how to accomplish specific tasks with available
resources within the next 1 to 52 weeks is known as _____. 
 

A.  writing a belief statement

B.  developing their goals pact
C.  producing their code of ethics
D.  doing management pledging
E.  doing operational planning

Operational planning is done by first-line managers to determine how to accomplish specific tasks with
available resources within the next 1 to 52 weeks.

16. The top management of Tasty Foods, a food distribution company, has set strategic goals of increasing
organizational market share and also decreasing corporate costs over the next three years. Greg, a
division manager for Tasty Foods, has looked at his resources, and decided how his division can
contribute to the two strategic goals set by upper management. These types of objectives set by Greg are
_____. 
 

A.  vision statements

B.  management guidelines
C.  codes of ethics
D.  tactical goals
E.  operational goals

Tactical goals are set by and for middle managers and focus on the actions needed to achieve strategic
goals.

 
17. Dave owns several computer repair shops across the Midwest, and he has set a goal for his company of
cutting costs in all his locations over the next three years. Dave has set a(n) ____. 
 

A.  tactical goal

B.  management guideline
C.  business plan
D.  strategic goal
E.  operational goal

Strategic goals are set by and for top management and focus on objectives for the organization as a
whole.

18. A specific commitment to achieve a measurable result within a stated period of time is a _____. 
 

A.  goal
B.  vision
C.  business plan
D.  supervisory objective
E.  norm

A goal is a specific commitment to achieve a measurable result within a stated period of time.

19. A goal is also known as a(n) ____. 

 

A.  task
B.  vision
C.  business plan
D.  objective
E.  norm

A goal, also known as an objective, is a specific commitment to achieve a measurable result within a
stated period of time.

 
20. In a late October marketing meeting, Theresa, the branch manager, told her marketing manager, Sal,
that she needed two things by the end of the year from him: "First I want your goals for next year, and
then I need your action plan to reach your goals, your ____." 
 

A.  code of ethics

B.  business plan
C.  vision statement
D.  expense report
E.  marketing plan

The goal should be followed by an action plan, which defines the course of action needed to achieve the
stated goal, such as a marketing plan or sales plan.

21. This month, Alice, the branch manager of Quality Computer Sales, has heard several complaints from
customers that Quality employees do not return calls. Today a good customer told Alice that "my phone
calls and e-mails are returned after maybe a week or so." Hearing enough, Alice mandated that "all
customer phone calls and e-mails must be returned within 24 hours." This new directive by Alice is an
example of a(n) _____. 
 

A.  office order

B.  policy
C.  norm
D.  value
E.  ethic

A policy is a standing plan that outlines the general response to a designated problem or situation.

 
22. Fast Delivery trains its truck loaders how to set the packages in the delivery vehicles, so that when
delivery drivers are pulling packages off their trucks, they are organized in a specific order and with the
label facing forward to reduce errors and save time. This precise method of loading a truck is known is
a(n) ____. 
 

A.  industry standard

B.  norm
C.  policy
D.  rule
E.  procedure

A procedure (or standard operating procedure) is a standing plan that outlines the response to particular
problems or circumstances. For example, White Castle specifies exactly how a hamburger should be
dressed, including the order in which the mustard, ketchup, and pickles are applied.

 
23. A standing plan that outlines the response to particular problems or circumstances is a(n) 
 

A.  procedure.
B.  industry standard.
C.  norm.
D.  program.
E.  certified procedure.

A procedure (or standard operating procedure) is a standing plan that outlines the response to particular
problems or circumstances.

24. Because several computers and keyboards in the computer labs have been damaged recently by drinks
and food being spilled, the department chair of the IT department issued a directive that "Absolutely no
food or drink are allowed in any computer lab." This statement by the department chair is a(n) ______. 
 

A.  procedure
B.  industry standard
C.  rule
D.  level of certification
E.  certified procedure

A rule is a standing plan that designates specific required action.

 
25. Plans developed for activities that are not likely to be repeated in the future, such as plans for programs
or projects, are _____. 
 

A.  solo plans

B.  lone-use proposals
C.  individual arrangements
D.  single-use plans
E.  standing plans

Single-use plans are plans developed for activities that are not likely to be repeated in the future. Such
plans can be programs or projects.

 
26. A single-use plan encompassing a variety of projects or activities is an example of a(n) ___. 
 

A.  program
B.  rule
C.  policy
D.  project
E.  procedure

A program is a single-use plan encompassing a range of projects or activities.

  
27. Brenda, the district manager for Beautiful Florist, told the store managers in her district that she needs
the sales goals for next year. A new manager, Paula, said, "I am going to sell over $100,000 in flowers
next year." Brenda later told Paula that "I need to know specifically, in each category, how much you
plan on selling." Brenda's request for a specific answer is an example of a _____. 
 

A.  target date

B.  general objective
C.  simplistic goal
D.  focal point
E.  SMART
goal

Whenever possible, goals should be measurable, or quantifiable. Some goals such as those concerned
with improving quality, are not precisely quantifiable. In that case, something on the order of "Improve
the quality of customer relations by instituting 10 follow-up telephone calls every week" will do. You
can certainly quantify how many follow-up phone calls were made.

 
28. With SMART goals only a few goals should be chosen, and they should be results-oriented, that ____. 
 

A.  support the company's diversity plan

B.  align with the beliefs of the local community
C.  keep employees happy
D.  support the organization's vision
E.  meet low cost goals

A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and has Target dates.
Whenever possible, goals should be achievable. With SMART Goals only a few goals should be chosen
—say, five for any work unit. And they should be results-oriented—they should support the
organization's vision.

  
29. Andre, the plant manager, is interested in increasing the facility's productivity by utilizing MBO so that
his managers and their employees are more focused on objectives. This month Andre asked his
managers to concentrate on the two first steps of MBO, which are ____. 
 

A.  for managers to develop an action plan and give a performance appraisal
B.  for employees to develop an action plan and study the competition
C.  to periodically review performance and develop an action plan
D.  to review the employee performance and set an action plan based on performance
E.  to jointly set objectives and have managers develop action plans

Management by objectives (MBO) is a four-step process in which (1) the manager and employee jointly
set objectives for the employee, (2) the manager develops action plans, (3) the manager and employee
periodically review the employee's performance, and (4) the manager makes a performance appraisal
and rewards the employee according to results.

 
30. Steve, a hotel general manager, has had great success using MBO. Hannah, his district manager, has
found that his employees are highly motivated, and she believes that this is the case because in using
MBO, Steve ____. 
 

A.  has increased training

B.  rewards his employees with compliments, raises, and other benefits as they meet their goals
C.  is big on discipline
D.  gives few compliments, but is very honest with his employees
E.  uses the Outward Theory that proposes discussing issues in open meetings

Because the purpose of MBO is to motivate employees, performance that meets the objectives should be
rewarded with compliments, raises, bonuses, promotions, or other suitable benefits.

 
31. For MBO to be successful, top management must be committed, it must be applied organizationwide,
and _____. 
 

A.  objectives must cascade

B.  employees need to provide continuous feedback to each other
C.  objectives must remain fixed and unchanging
D.  objectives must be generated bottom-up
E.  there must be community support

For MBO to be successful, top management must be committed, it must be applied organizationwide,
and objectives must cascade.

 
32. MBO works by objectives moving through the organization; that is, top managers set general
organizational objectives, which are translated into divisional objectives, which are translated into
departmental objectives. The hierarchy ends in individual objectives set by each employee. This is an
example of MBO working as objectives ______ through the organization. 
 

A.  move upward

B.  move outward into the community
C.  change significantly
D.  cascade down
E.  become less refined and more generalized

MBO works by cascading objectives down through the organization; that is, objectives are structured in
a unified hierarchy, becoming more specific at lower levels of the organization.

33. When utilizing SMART goals or MBO, deadlines can help you keep your eye on the ______ while
simultaneously paying attention to _____. 
 

A.  task at hand; ethical standards

B.  customer; the employees
C.  profitability; details you may be missing
D.  big picture; the necessary details
E.  profits; employee satisfaction

Deadlines can help you keep your eye on the "big picture" while simultaneously paying attention to the
details that will help you realize the big picture.

 
34. To ensure that plans are moving in the right direction, managers can use the ______. 
 

A.  means-ends chain

B.  synergy method
C.  efficiency plan
D.  planning/control cycle
E.  satisficing strategy

The planning/control cycle describes a constant feedback loop designed to ensure plans stay headed in
the right direction.

35. The planning/control cycle has two planning steps: _____. 

 

A.  research planning, then receive feedback

B.  make the plan, then set it aside for a period of time
C.  make the plan, then carry out the plan
D.  review previous plans, then evaluate plans
E.  research planning, then look for ways to cut costs

The planning/control cycle has two planning steps: (1) make the plan and then (2) carry out the plan.

36. John, the owner of a lawn care service, likes to meet with his employees six months after their yearly
evaluation to discuss how they are progressing on suggestions on and plans to improve their yearly job
evaluation. At this point, by comparing the six-month results with the past evaluation, John is in the
______ steps of the planning/control cycle. 
 

A.  control
B.  planning
C.  organizing
D.  observation
E.  termination

Controlling the direction includes the corrective action in step 4 of the cycle, which (a) can get a project
back on track before it's too late by correcting deviations or (b) if it's too late, can provide data for
improving future plans. In this case, at the end of the performance period, the information can be used to
improve future plans.

 
37. The planning/control cycle has two control steps: (1) control the direction by comparing results with the
plan and (2) control the direction by taking corrective action in two ways—namely by _____. 
 

A.  receiving feedback, and, if needed, making new plans

B.  researching ways to plan better and increasing profits
C.  increasing organization synergy and diversity
D.  correcting deviations in the plan being carried out or improving future plans
E.  improving future plans, and, if needed, cutting costs

The planning/control cycle has two control steps: (1) control the direction by comparing results with the
plan and (2) control the direction by taking corrective action in two ways—namely by correcting
deviations in the plan being carried out or by improving future plans.

 
38. Strategic, tactical, and operational are the ____. 
 

A.  three levels of planning

B.  levels of diversity
C.  strategic levels
D.  three levels of marketing
E.  phases of the environment

The order of planning is strategic, tactical, then operational.