Test Bank Management 8th Edition Bateman

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Chapter 02
The External Environment and Organizational Culture

True / False Questions

1. (p. 52) The external environment includes all relevant fores outside the organization's
boundaries.
TRUE
AACSB: Domestic and global economic environments

Blooms taxonomy: Knowledge
Difficulty: Easy
Learning Objective: 1

2. (p. 52) Organizations are open systems that affect and are affected by their external
environments.
TRUE

Difficulty: Medium

3. (p. 52) A firm's competitive environment is composed of the firm, its competitors, suppliers
and distributors.
FALSE

Difficulty: Medium

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4. (p. 52) All organizations operate in a macro environment.

TRUE

Difficulty: Medium

5. (p. 53) U. S. government policies both impose strategic constraints and provide opportunities
for organizations.
TRUE

Blooms taxonomy: Comprehension
Difficulty: Easy

6. (p. 55) Firms that develop strategies that don't include technological advances will realize
obsolescence and extinction.
TRUE

Difficulty: Medium

7. (p. 55) External pressures on organizations usually have a negative effect.

FALSE

Difficulty: Medium

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8. (p. 56) The fastest-growing age group in the US civilian labor force is the group between 30
and 40 years old.
TRUE

Difficulty: Hard

9. (p. 57) By 2020, men's participation in the labor force is expected to increase.

FALSE

Difficulty: Medium

10. (p. 57) By 2012, the labor force will be even more homogenous than it is today.
FALSE

Difficulty: Medium

11. (p. 57) A more diverse workforce presents managers with challenges as well as

opportunities.
TRUE

Difficulty: Medium

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12. (p. 57) Family leave, flexible working hours and child care assistance have been introduced
as a result of the re-entrance of older workers into the workplace.
FALSE

Difficulty: Easy

13. (p. 58) Porter's Model for competitive analysis is one example of analyzing the competitive
environment for adapting to and even influencing the nature of competition.
TRUE

Difficulty: Easy

14. (p. 58) Successful managers must be able to do more than react to the environment; they act
in ways that actually shape or change the organization's environment.
TRUE

Difficulty: Medium

15. (p. 58) The first question in understanding competitive environments is, "who is the

competition?"
TRUE

Difficulty: Medium

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16. (p. 64) Given that unionization in the U.S. has dropped to about 10 percent of the private
labor force, the power of unions has faded away from all industries.
FALSE

Difficulty: Hard

17. (p. 66) Customer service means giving customers what they want, the way they want it, the
first time.
TRUE

Difficulty: Medium

18. (p. 67) Environmental scanning means sorting through information available to the public to

interpret what is important and what is not.
FALSE

Difficulty: Medium

19. (p. 67) Competitive intelligence is the information necessary to decide how best to compete

in the competitive environment.
TRUE

Difficulty: Easy

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20. (p. 67) Benchmarking represents alternative combinations of different factors into a total

picture of the environment and the firm.
FALSE

Difficulty: Medium

21. (p. 70) In a dynamic environment, bureaucratic organizations are more efficient than organic
organizations.
FALSE

Difficulty: Medium

22. (p. 74) Defenders are more likely to engage in strategic maneuvering than prospectors.

FALSE

Difficulty: Medium

23. (p. 74-75) Three general considerations that help guide management's response to the

environment are: (1) change appropriate elements in the organization, (2) choose responses
that focus on pertinent elements of the environment and (3) choose responses that offer the
most benefits at the lowest cost.
TRUE
AACSB: Other management-specific knowledge/abilities

Blooms taxonomy: Application
Difficulty: Medium

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24. (p. 76) A strong organization culture is one in which everyone understand and believes in
the firm's goals, priorities and practices.
TRUE
AACSB: Group/individual dynamics

Difficulty: Easy

25. (p. 77) Stories told by employees almost never have any relevance on the true culture of the
organization.
FALSE

Difficulty: Medium

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Multiple Choice Questions

26. (p. 52) Organizations that are affected by and that affect, their environment are called:
____________.
A. Inputs
B. Outputs
C. Open systems
D. External environment
E. Macroenvironment

Difficulty: Easy

27. (p. 52) The competitive environment includes all of the following EXCEPT:

A. Suppliers
B. Customers
C. Competitors
D. Financial status

Difficulty: Easy

28. (p. 52, Figure 2.2) Amy Jane, a new manager at C & D Grooming, has been asked to focus on
the competitive environment of the organization. Which of these factors is among those that
Amy Jane should focus on?
A. Government policies
B. Demographics
C. Suppliers
D. Technology
E. Social factors

Difficulty: Hard

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29. (p. 53) Government can affect business opportunities through:

A. Tax laws
B. Economic policies
C. International trade rulings
D. All of the above
E. Only A. and B

Difficulty: Easy

30. (p. 53, Figure 2.2) The macroenvironment includes all of the following EXCEPT:

A. Demographics
B. Technology
C. Government policies
D. International developments
E. New entrants

Difficulty: Easy

31. (p. 54) Robert was recently hired as the workplace safety compliance officer at ABC Power
Company. Robert will have the responsibility to monitor regulations from which of these
government agencies?
A. FCC
B. EPA
C. SEC
D. NLRB
E. OSHA

Difficulty: Hard

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32. (p. 54) The SEC recently proposed regulations requiring companies to disclose more details
about executive compensation. This illustrates an important interaction between organizations
and their relevant
A. Demographics
B. Regulators
C. Lawyers
D. Labor officials
E. Suppliers

Difficulty: Hard

33. (p. 54) Specific government organizations in a firm's immediate task environment are called

______________.
A. Substitutes
B. New entrants
C. Regulators
D. Economic indicators
E. Demographics

Difficulty: Easy

34. (p. 54) The economy is a crucial component of the macroenvironment. The challenge

presented by this component is
A. The impact of changes in the economy is predictable to competitors
B. The lack of awareness most managers have of economic indicators
C. Changes in the economy are difficult to quantify
D. Ascertaining the interconnectedness of various countries' economies
E. All of the above present challenges to management

Difficulty: Hard

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35. (p. 54) Interest rates, inflation, the federal deficit and unemployment levels are all elements
in which aspect of the macroenvironment?
A. The social environment
B. The international environment
C. The regulatory environment
D. The economy
E. Demographics

Difficulty: Medium

36. (p. 55) New methods of communication, production and even the development of entire new
industries are the results of the changes in:
A. Demographics
B. Societal preferences
C. Technology
D. The economy
E. Politics

Difficulty: Easy

37. (p. 55-56) Advances in genetic engineering and biotechnology are expected to produce some

food products that will become available year-round even in northern climates. These changes
will provide grocers with an opportunity to reduce their shipping costs while at the same time,
offering fresher produce to their customers. These advances are an example of changes in
the:
A. Technological environment
B. Economic environment
C. Political environment
D. Demographic environment
E. International environment

Difficulty: Hard

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38. (p. 56) In the decade from 2004 to 2014, the U.S. civilian labor force is expected to:
A. Grow 10%
B. Grow 20%
C. Stay the same
D. Shrink 10%
E. Shrink 20%

Difficulty: Medium

39. (p. 56) Statistically describing the population in terms of age, gender, education, income and
occupation is referred to as:
A. Demographics
B. Market placing
C. Categorization
D. Population consensus
E. None of the above

Difficulty: Easy

40. (p. 56) By 2014, the number of older workers (55 and above) is expected to rise to about
____ percent of the U.S. labor force.
A. 42
B. 63
C. 31
D. 20
E. 4

Difficulty: Hard

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41. (p. 57) The growing movement of companies introducing more supportive human resource

policies is reflective of the ______ aspect of the macroenvironment.
A. Social and natural
B. Demographic
C. Economic
D. International
E. Technology

Difficulty: Hard

42. (p. 57) _______ trends regarding how people think and behave have major implications for
management of the labor force, corporate social actions and strategic decisions about products
and markets.
A. Political
B. International
C. Economic
D. Technological
E. Societal

Difficulty: Medium

43. (p. 58) Which of the following is NOT an element of Michael Porter's model for analyzing
the competitive environment?
A. Threat of new entrants
B. Power of customers
C. Rivalry among current competitors
D. Threat of substitutes
E. All of the above are correct

Difficulty: Easy

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44. (p. 58) The competitive environment consists of

A. Those specific organizations with which the organization directly interacts
B. Those organizations which the organization relies upon to provide supplies and materials
C. Those people who comprise the workers of the organization that complete the
organization's activities
D. Those organizations that hold the firm accountable to their stakeholders
E. Those broader influences that affect a firm's competitive advantage

Difficulty: Medium

45. (p. 58) A firm's current competition, suppliers, customers and the threat of new entrants or
of substitutes are all elements in the
A. Porter Model for competitive analysis
B. Task environment
C. Macro environment
D. Peters Model for organizational excellence
E. Industry environment

Difficulty: Easy

46. (p. 59) A low-cost airline described as one of the excellent companies in the bestseller of the
early 1980's, In-Search Of Excellence is no longer in business. Industry analysts state that
although the service and price provided by the airline was what customers wanted, the larger
airlines were able to drive out of business through an aggressive price war. This scenario is
illustrative of which aspect of the competitive environment?
A. Customers
B. Regulators
C. Competitors
D. The economy
E. Politics

Difficulty: Hard

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47. (p. 59) Which of the following is NOT a competitor which a department store chain like K-
mart must identify and anticipate the actions of?
A. Non-store retailers like Avon or Tupperware
B. Firms focusing on smaller, premium markets
C. Wholesale outlets like Sam's or Price Club
D. Companies entering new markets
E. All of the above are potential competitors

Difficulty: Medium

48. (p. 61) Conditions which may prevent new firms from entering an industry (i.e., the use of
patents) are referred to as
A. Barriers to entry
B. Roadblocks
C. Unfair trade practices
D. Insider trading
E. Trade protectionism

Difficulty: Easy

49. (p. 61) The entry of many long distance companies into the long distance telephone service
industry was only possible after the court system "broke up" the monopoly previously held by
AT&T. This is an example of:
A. Enhancing barriers to entry
B. Eliminating trade protectionism
C. Unfair competition
D. Enhancing trade protectionism
E. Eliminating barriers to entry

Difficulty: Hard

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50. (p. 61) Barriers to entry may include all of the following EXCEPT:

A. Brand loyalty
B. Capital requirements
C. Governmental regulation
D. Pricing practices
E. Distribution channels

Difficulty: Medium

51. (p. 61) The development of new products that may replace sales of existing products is
referred to as the threat of
A. Substitutes
B. New entrants
C. Diminished supply
D. Technology
E. Evil forces

Difficulty: Easy

52. (p. 62-63) The introduction of microwave ovens posed a potential threat to the producers of

conventional ovens. Over time, the effect of microwaves on the sales of conventional ovens
has been minimal; most homes utilize BOTH appliances. In this instance
A. The threat of new entrants was high
B. The threat of substitutes was low
C. The threat of new entrants was low
D. The threat of substitutes was high
E. Suppliers realized a landslide profit

Difficulty: Hard

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53. (p. 62, Table 2.1) Which of the following is NOT an example of a potential substitute product?
A. Polyester for cotton
B. DVDs for movie theaters
C. Internet sites for print magazines or newspapers
D. Sony for Magnavox
E. Cellular phone for local telephone

Difficulty: Medium

54. (p. 64) Organizations must acquire a variety of resources in order to produce a product or

service of value. These resources may include materials, equipment, financing or even
employees. The sources that provide these various resources are referred to as
A. Resource firms
B. Placement centers
C. Wholesalers
D. Suppliers

Difficulty: Easy

55. (p. 64) Fixed costs buyers face if they change suppliers are called:

A. Change costs
B. Switching costs
C. Supply chain management
D. Supplier costs
E. Sunk costs

Difficulty: Easy

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56. (p. 64) ABC Bank utilizes the janitorial services of Bob's Scrub-A-Dub-Dub to keep their
buildings clean. Bob's provides all the necessary cleaning supplies, training of crews,
background security checks (since the crews work 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. This
expense effectively limits the bank to utilizing only Bob's services. This illustrates the concept
of:
A. High employment costs
B. Unfavorable supplier status
C. High switching costs
D. Unfavorable buyer status

Difficulty: Hard

57. (p. 64) Managing the network of facilities and people that obtains materials from the
outside, transform them into products and distribute them to customers are called
_______________.
A. Collaboration
B. Switching costs
C. Cooptation
D. Supply chain management
E. Customer service

Difficulty: Easy

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58. (p. 65) A customer who purchases raw materials or wholesale products before selling them
is called a:
A. Final customer
B. Middle customer
C. Intermediate consumer
D. Final advocate
E. Preliminary customer

Difficulty: Easy

59. (p. 65) The main difference between a final consumer and an intermediate consumer is:
A. The final consumer usually pays cash for the purchase
B. An intermediate consumer will utilize the purchase in order to sell their product/service to
other consumers
C. Final consumers purchase more (in dollar value) than do intermediate consumers
D. Intermediate consumers are usually more flexible than final consumers
E. Final consumers have more bargaining power

Difficulty: Medium

60. (p. 65-66) Which of the following might be considered a customer?

A. Shoppers at a mall
B. Students at a University
C. Neiman-Marcus stores
D. All of the above
E. A and B; but not C

Difficulty: Medium

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61. (p. 66) Sid's Siding traditionally provides sub-contracting services to construction firms.

Sid's does about 85% of their work for Bob's Building. Bob typically negotiates quite heavily,
which reduces Sid's profits. This situation is indicative of the high bargaining power of
A. A customer
B. A supplier
C. A substitute
D. Competitors
E. New entrants

Difficulty: Hard

62. (p. 66) Giving customers what they want or need, they way they want it, the first time is
known as:
A. Planned giving
B. Planned obsolescence
C. Customer service
D. Planned service
E. Any of the above

Difficulty: Easy

63. (p. 67) Environmental uncertainty results from:

A. Complexity
B. Simplicity
C. Dynamism
D. Cooperation
E. Both A and C

Difficulty: Easy

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64. (p. 67) _____________ refers to the degree of discontinuous change that occurs within the
industry.
A. Environmental complexity
B. Environmental contracting
C. Cooptation
D. Environmental dynamism

Difficulty: Medium

65. (p. 67) Managers at Apex Clothing, Inc. engage in an annual organizational assessment as

part of an attempt to predict changes as well as possible opportunities and threats. They look
at issues such as who their competitors are, how many entry barriers there are in the industry
and what substitutes exist for their products. This assessment could be called:
A. Scenario development
B. Forecasting
C. Benchmarking
D. Environmental scanning
E. SWOT analysis

Difficulty: Hard

66. (p. 67) Which of the following is NOT a question asked in environmental scanning?

A. Who are our current competitors?
B. Are there few or many exit barriers to our industry?
C. What substitutes exist for our product or service?
D. Is the company too dependent on powerful suppliers?
E. Is the company too dependent on powerful customers?

Difficulty: Hard

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67. (p. 67) In environmental scanning, managers must address:

A. Suppliers
B. Entry barriers
C. Competitors
D. Substitute products
E. All of the above

Difficulty: Easy

68. (p. 67) A narrative that describes a particular set of future conditions is called a:
A. Benchmarking
B. Scenario
C. Forecasting
D. Managerial outcomes analysis

Difficulty: Easy

69. (p. 67) _____________ create(s) alternative combinations of different factors into a total

picture of the environment and the firm.
A. Scenarios
B. Forecasting
C. Benchmarking
D. Cooptation
E. Coalition

Difficulty: Medium

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70. (p. 68) The method for predicting how variables will change the future is called:
A. Budgeting
B. Scenario development
C. Forecasting
D. Benchmarking
E. Collaboration

Difficulty: Easy

71. (p. 68) In determining how interest rates will change, a manager would use
A. Budgeting
B. Scenario development
C. Forecasting
D. Benchmarking

Difficulty: Medium

72. (p. 68, Table 2.2) Which of the following would NOT be consistent with an attractive
environment for an organization?
A. Few competitors and high industry growth
B. Many barriers to entry
C. Many available substitutes
D. Low bargaining power of suppliers
E. Low bargaining power of customers

Difficulty: Medium

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73. (p. 68, Table 2.2) Which of the following would NOT be consistent with an unattractive
environment for an organization?
A. Low industry growth with many competitors
B. Few barriers to entry
C. Many substitutes available
D. High bargaining power of suppliers and customers
E. All of the above are consistent with an unattractive environment

Difficulty: Medium

74. (p. 68) The best advice for using forecasts might include all of the following EXCEPT:
A. Average the predictions of multiple forecasts
B. Remember that forecasts become more accurate the further into the future you predict
C. Forecasts are no better than the data used to construct them
D. Use simple forecasts when possible

Difficulty: Medium

75. (p. 69) _______________ means identifying the best-in-class performance by a company in

your area and then comparing your processes to theirs.
A. Scenarios
B. Forecasting
C. Benchmarking
D. Cooptation
E. Coalition

Difficulty: Medium

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76. (p. 69) In an attempt to improve upon customer service, Monkey Toys decided to assign a
team to investigate what kinds of services competing companies offered. The team discovered
that a smaller company, Tiger, Inc., 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 Tiger, Inc into Monkey Toys. This illustrates:
A. Environmental dynamism
B. Benchmarking
C. Strategic maneuvering
D. Cooperative action
E. Forecasting

Difficulty: Hard

77. (p. 70) The process of sharing power with employees is called:

A. Empowerment
B. Job sharing
C. Benchmarking
D. Power creation
E. Power leveling

Difficulty: Easy

78. (p. 70) Creating supplies of excess resources in case of unpredictable needs is called:

_________.
A. Buffering
B. Smoothing
C. Flexible processes
D. Empowerment
E. None of the above is correct

Difficulty: Easy

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79. (p. 70) 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. Flexible processes
C. Buffering
D. Smoothing
E. Both A and B

Difficulty: Hard

80. (p. 70) Leveling normal fluctuations at the boundaries of the environment is called:

_______________.
A. Buffering
B. Smoothing
C. Flexible processes
D. Empowerment

Difficulty: Easy

81. (p. 71) Methods for adapting the technical core to changes in the environment are called
A. Flexible processes
B. Smoothing
C. Buffering
D. Benchmarking
E. Environmental scanning

Difficulty: Easy

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82. (p. 71, Table 2.4) When McMillan Yogurt Company acts on its own to promote the yogurt
industry as a whole, the company is practicing:
A. Competitive aggression
B. Competitive pacification
C. Public relation
D. Voluntary action
E. Cooperative action

Difficulty: Hard

83. (p. 71, Table 2.4) When Davis Company advertises its soap products as better than Wilson
Company's products, Davis Co. is demonstrating
A. Competitive aggression
B. Competitive pacification
C. Benchmarking
D. Political action
E. Cooptation

Difficulty: Medium

84. (p. 71) Strategies that an organization acting on its own uses to change some aspect of its
current environment are called:
A. Flexible processes
B. Buffering
C. Independent action
D. Smoothing

Difficulty: Easy

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85. (p. 71) The two types of proactive strategies for influencing an organizations environment

include:
A. Dependent strategies, independent strategies and cooperative strategies
B. Independent strategies, cooperative strategies and strategic maneuvering
C. Cooperative strategies, strategic maneuvering and dependent strategies
D. Strategic maneuvering, dependent strategies and independent strategies

Difficulty: Easy

86. (p. 72) When two or more companies work together to alter their current environment, we
say that they are using:
A. Monopolistic strategies
B. Unethical trade strategies
C. Cooperative strategies
D. Dependent strategies
E. Codependent strategies

Difficulty: Easy

87. (p. 73) Domain selection, diversification, mergers/acquisitions and divestiture are all

examples of:
A. Illegal boundary management
B. Maneuvering the competition
C. Strategic maneuvering
D. Independent strategies
E. Portfolio maneuvering

Difficulty: Easy

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88. (p. 73, Table 2.5) When an organization's leadership invites its harshest critics to join its board
of directors, the organization is demonstrating
A. Contraction
B. Cooptation
C. Coalition
D. Political action
E. Voluntary action

Difficulty: Hard

89. (p. 73, Table 2.5) If your company joins forces with another to lobby for legislation important
to both organizations, it is demonstrating
A. Contraction
B. Coalition
C. Cooptation
D. Domain selection
E. Benchmarking

Difficulty: Medium

90. (p. 74) The entrance by a company into another suitable market or industry is called:

A. Cooperative strategies
B. Strategic maneuvering
C. Strategic alliances
D. Domain selection
E. Cooptation

Difficulty: Easy

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91. (p. 74) Prospectors are:
A. Companies that aggressively alter the boundaries of their competitive environment
B. Companies that monitor and protect the established boundaries of their competitive
environment
C. Financially sound
D. A and c, but not b
E. B and c, but not a

Difficulty: Easy

92. (p. 74) One firm buying another is called a(n) _____________.

A. Merger
B. Acquisition
C. Divestiture
D. Prospecting
E. Defending

Difficulty: Easy

93. (p. 74, Table 2.6) It was recently announced that Monster Meats was selling off its turkey
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

Difficulty: Hard

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94. (p. 75) The set of important assumptions about the organization and its goals and practices
that members of the company share is called:
A. Organization culture
B. Organization norms
C. Industrial environment
D. None of the above is correct

Difficulty: Easy

95. (p. 76, boxed material) When employees at Nordstrom receive the employee handbook shown in
the text, they could tell a great deal about their company's ______________.
A. Organizational goals
B. Business practices
C. Organization culture
D. A and B only are correct
E. A, B and C are correct

Difficulty: Hard

96. (p. 77-78) All of the following can be useful clues about organization culture EXCEPT:
A. Corporate mission statement and official goals
B. Business practices
C. Symbols, rites and ceremonies
D. Information printed in the media from sources outside the company

Difficulty: Medium

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97. (p. 79) If an organization's culture is internally oriented, flexible and tends to be based on

the values and normed associated with affiliation, it could best be described as a _______ type
of culture.
A. Group culture
B. Hierarchical culture
C. Rational culture
D. Adhocracy

Difficulty: Medium

98. (p. 79) If an organization's culture is externally oriented and focused on control with its
primary objectives as productivity, planning and efficiency, it could best be described as a
__________ type of culture.
A. Group culture
B. Hierarchical culture
C. Rational culture
D. Adhocracy

Difficulty: Medium

99. (p. 79) The two dimensions upon which the competing values model of culture is defined
are:
A. Flexibility vs. control AND internal vs. external focus
B. Internal focus vs. control AND external focus vs. flexibility
C. Flexibility vs. control
D. Internal vs. external focus

Difficulty: Hard

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100. (p. 80) Top managers can utilize all of the following approaches to managing culture
effectively EXCEPT:
A. Executives must not give too much attention to the mundane details of daily affairs
B. Executives should espouse lofty ideas and visions for the company
C. CEOS and other executes should celebrate and reward those who exemplify the values of
the culture
D. Hire and promote employees on the basis of the organization's corporate values

Difficulty: Hard

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Short Answer Questions

101. (p. 53-66) List the five elements of a firm's macroenvironment and describe how each
affects the firm.
Answer will vary.

Difficulty: Hard

102. (p. 57) Immigration patterns influence the management of the U.S. labor force. Explain.
Answer will vary.

Difficulty: Medium

103. (p. 47-48) Provide an example and explanation of a social trend's effect upon the

management of a specific organization.
Answer will vary.

Difficulty: Hard

104. (p. 58-66) Explain the five forces in Porter's Model for competitive analysis.
Answer will vary.

Difficulty: Medium

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105. (p. 65-66) List actions and attitudes that mean excellent customer service. Give an example
of each from your own experiences as either a customer or a service provider.
Answer will vary.

Difficulty: Hard

106. (p. 68, Table 2.2) Differentiate between unattractive and attractive competitive environments,

using examples.
Answer will vary.

Difficulty: Medium

107. (p. 77-79) Discuss the clues utilized to diagnose a culture.
Answer will vary.

Difficulty: Easy

108. (p. 79) Describe the culture of an organization that you have either worked in or studied.
Which of the four types of organizational culture described in the chapter does the
organization illustrate? Justify your answer.
Answer will vary.

Difficulty: Hard

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Multiple Choice Questions

Use the following to answer the following four questions:

Yesteryear's Antiques is a small antique store that specializes in Victorian furniture. In
analyzing the environment, the owners have uncovered several interesting findings:
As the older generation downsizes, they have recently purchased more inventory than normal.
These families are selling off more furniture because their children live further distances from
them and often can't affordably move the furniture to their own homes.
They have recently discovered that their business is covered under the Family Medical Leave
Act.
The business' customer base seems to be changing. Fewer people in their area are restoring
Victorian homes and so their customer base is shrinking.
The owners have been told that they should investigate selling their inventory via the Internet
but they do not own (or understand how to use) computers.
In a survey of regional business, the owners have determined that there are no other antique
stores within a 200 mile radius that specialize in Victorian furniture.
109. (p. 52-58) Given the information in Scenario A, which of the following elements of the

macroenvironment was NOT impacted in Yesteryear's findings?
A. Customers
B. Demographics
C. Laws and regulations
D. Economy
E. Technology

Blooms taxonomy: Analysis
Difficulty: Hard

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110. (p. 58-60) When the owners survey regional businesses, they are investigating:

_________________.
A. The competitive environment
B. The macroenvironment
C. A closed environment
D. Their internal environment

Difficulty: Medium

111. (p. 58-60) Findings 3 and 5 both are associated with the ______________.

A. Customer element of the competitive environment
B. Customer element of the macroenvironment
C. Laws and regulations of the macroenvironment
D. Economy element of the competitive environment
E. Technology element of the competitive environment

Difficulty: Hard

112. (p. 56-60) Finding 1 is most closely associated with which element of the

macroenvironment?
A. Laws and regulations
B. The economy
C. Demographics
D. Technology
E. The natural environment

Difficulty: Medium

2-37
Use the following to answer the following four questions:

You and a fellow investor are investigating the possibility of starting a new airline. It has been
your lifelong dream. You have won the lottery and are trying to decide if this is what you
want to do with your prize money. You decide to do an analysis of the competitive
environment. After your analysis, you discover several important issues. First, it will cost
most of your lottery winnings to finance a new airline! Second, it will be difficult to attract
new customers because they have so many choices available to them and are very savvy about
ticket pricing. Finally, the competition in the airline industry is considered "fierce" by
industry analysts and this is frightening to someone who has never even worked in the airline
industry.
113. (p. 58) The analysis of the competitive environment that you have conducted utilized the
work of ___________.
A. Frederick Taylor
B. Michael Porter
C. Abraham Maslow
D. Douglas McGregor
E. James Dean

Difficulty: Easy

114. (p. 67) The information that you have collected can be referred to as ______________.

A. Forecasting
B. Competitive intelligence
C. Macroenvironmental data
D. Benchmarking

Difficulty: Medium

2-38
115. (p. 68) The existence of savvy customers in an industry is an indication of ___________.

A. High bargaining power of suppliers
B. Low bargaining power of suppliers
C. High bargaining power of customers
D. Low bargaining power of customers
E. Low threat of new entry

Difficulty: Hard

116. (p. 68) The fact that it will require such a large capital investment to start a new airline is
an example of which of the following factors?
A. High bargaining power of customers
B. Low threat of new entrants
C. High threat of new entrants
D. Many substitute products
E. Low bargaining power of customers

Difficulty: Medium

Use the following to answer the following three questions:

W. B. Doner Company is an advertising firm located in the Midwest. They have a strong
culture built by the founder of the company, Mr. W. B. Doner. Employees celebrate the
awarding of a special prize given to the person who most exemplifies the organization's
values. New employees are told of the organization's greatest accomplishments and of the
history of the company. In the office building, there are photos of a disastrous fire that the
company survived. The company has a long tradition of employee participation in decision
making. They build consensus and consider themselves to be a "family."
2-39
117. (p. 76) The photo of the fire is an example of a(n) __________.

A. Business practice
B. Mission statement
C. Official goals
D. Symbol
E. Hierarchical culture

Difficulty: Medium

118. (p. 78) When new employees are told of the organization's great accomplishments and
history, it is an example of (a) ____________.
A. Mission statement
B. Official goals
C. Stories
D. Ceremony
E. Rite

Difficulty: Easy

119. (p. 79, Figure 2.6) The culture at W. B. Doner can best be described as:

A. A group culture
B. A hierarchical culture
C. A rational culture
D. An adhocracy

Blooms taxonomy: Analysis
Difficulty: Hard

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The External Environment and Organizational Culture

True / False Questions

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

4. (p. 52) All organizations operate in a macro environment.

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

7. (p. 55) External pressures on organizations usually have a negative effect.

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

9. (p. 57) By 2020, men's participation in the labor force is expected to increase.

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

11. (p. 57) A more diverse workforce presents managers with challenges as well as

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

15. (p. 58) The first question in understanding competitive environments is, "who is the

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

18. (p. 67) Environmental scanning means sorting through information available to the public to

AACSB: Domestic and global economic environments

19. (p. 67) Competitive intelligence is the information necessary to decide how best to compete

AACSB: Domestic and global economic environments

20. (p. 67) Benchmarking represents alternative combinations of different factors into a total

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

22. (p. 74) Defenders are more likely to engage in strategic maneuvering than prospectors.

AACSB: Domestic and global economic environments

23. (p. 74-75) Three general considerations that help guide management's response to the

AACSB: Other management-specific knowledge/abilities

AACSB: Group/individual dynamics

AACSB: Group/individual dynamics

Multiple Choice Questions

AACSB: Domestic and global economic environments

27. (p. 52) The competitive environment includes all of the following EXCEPT:

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

29. (p. 53) Government can affect business opportunities through:

AACSB: Domestic and global economic environments

30. (p. 53, Figure 2.2) The macroenvironment includes all of the following EXCEPT:

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

33. (p. 54) Specific government organizations in a firm's immediate task environment are called

AACSB: Domestic and global economic environments

34. (p. 54) The economy is a crucial component of the macroenvironment. The challenge

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

AACSB: Domestic and global economic environments

37. (p. 55-56) Advances in genetic engineering and biotechnology are expected to produce some

AACSB: Domestic and global economic environments