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Chapter 6—Managerial Planning and Goal Setting

TRUE/FALSE

1. Because everything else stems from leading, of the four management functions, leading is
considered the most fundamental.

ANS: F PTS: 1 DIF: 2 REF: 159


NAT: AACSB Analytic | Leadership Principles TYP: F

2. Managers must understand no plan is perfect, but should grow and change to meet new conditions.

ANS: T PTS: 1 DIF: 2 REF: 159


NAT: AACSB Analytic | Leadership Principles TYP: F

3. A desired future state that the individual or organization attempts to realize is a goal.

ANS: T PTS: 1 DIF: 1 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

4. Goals specify today's means; plans specify future ends.

ANS: F PTS: 1 DIF: 2 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

5. Goal setting is the act of determining the organization goals and the means for achieving them.

ANS: F PTS: 1 DIF: 1 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

6. The mission is the basis for the strategic level of goals and plans, which in turn shapes the tactical
and operational level.

170
Chapter 6/Managerial Planning and Goal Setting 171

ANS: T PTS: 1 DIF: 1 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

7. Tactical goals and plans are the responsibility of front-line managers and supervisors.

ANS: F PTS: 1 DIF: 1 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

8. Tactical goals and plans are the responsibility of middle managers.

ANS: T PTS: 1 DIF: 1 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

9. A broad definition of the organization's values, aspiration and reason for being, along with a
recognition of the scope and operations that distinguishes the organization refers to a Business
Strategic Statement.

ANS: F PTS: 1 DIF: 2 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

10. Goals and plans are valuable to an organization because they provide legitimacy, rationale for
decisions, and an increase in motivation and commitment.

ANS: T PTS: 1 DIF: 1 REF: 161


NAT: AACSB Analytic | Motivation Concepts TYP: F

11. A plan tells "why" to achieve the goal.

ANS: F PTS: 1 DIF: 2 REF: 161


NAT: AACSB Analytic | Strategy TYP: F

12. Goals help managers decide where they need to allocate resources.

ANS: T PTS: 1 DIF: 1 REF: 161


NAT: AACSB Analytic | Leadership Principles TYP: F

13. Goals and plans provide a sense of direction and focus on specific targets and direct employee
efforts toward important outcomes.

ANS: T PTS: 1 DIF: 2 REF: 161


NAT: AACSB Analytic | Leadership Principles TYP: F

14. Step 1 in the Operational Planning Process is to plan operations.

ANS: F PTS: 1 DIF: 1 REF: 162


NAT: AACSB Analytic | Operations Management TYP: F
172 Chapter 6/Managerial Planning and Goal Setting

15. Plans provide a standard of assessment.

ANS: F PTS: 1 DIF: 2 REF: 162


NAT: AACSB Analytic | Strategy TYP: F

16. In step 1 of the Operational Planning Process, operational goals and plans are defined, and
measures and targets are selected.

ANS: F PTS: 1 DIF: 2 REF: 162


NAT: AACSB Analytic | Operations Management TYP: F

17. Metacognitive awareness means to step back and see the big picture required for effective
planning, monitoring, and evaluating an organization.

ANS: T PTS: 1 DIF: 2 REF: 163


NAT: AACSB Analytic | Leadership Principles TYP: F

18. An organization's mission describes its reason for existence.

ANS: T PTS: 1 DIF: 2 REF: 164


NAT: AACSB Analytic | Strategy TYP: F

19. Strategic plans and goals are those that focus on where the organization wants to be in the future
and pertain to the organization as a whole.

ANS: T PTS: 1 DIF: 1 REF: 164


NAT: AACSB Analytic | Strategy TYP: F

20. A broad statement of where the organization wants to be in the future refers to a mission statement.

ANS: F PTS: 1 DIF: 1 REF: 164


NAT: AACSB Analytic | Strategy TYP: F

21. Operational plans and goals are those that focus on the outcomes that major divisions and
departments must achieve in order for the organization to reach its overall goals.

ANS: F PTS: 1 DIF: 2 REF: 164


NAT: AACSB Analytic | Strategy TYP: F

22. Tactical plans are designed to help execute the major strategic plans and to accomplish a specific
part of the company's strategy.

ANS: T PTS: 1 DIF: 2 REF: 165


NAT: AACSB Analytic | Operations Management TYP: F

23. Tactical goals are specific, measurable results expected from departments, work groups, and
individuals within the organization.

ANS: F PTS: 1 DIF: 2 REF: 165


NAT: AACSB Analytic | Operations Management TYP: F
Chapter 6/Managerial Planning and Goal Setting 173

24. Top managers make the broad strategic plan and identify specific tactical plans.

ANS: F PTS: 1 DIF: 2 REF: 165


NAT: AACSB Analytic | Operations Management TYP: F

25. The department manager's tool for daily and weekly operations is called the operational plan.

ANS: T PTS: 1 DIF: 1 REF: 166


NAT: AACSB Analytic | Strategy TYP: F

26. Operational planning specifies plans for department managers, supervisors, and individual
employees.

ANS: T PTS: 1 DIF: 2 REF: 166


NAT: AACSB Analytic | Operations Management TYP: F

27. A visual representation of the key drivers of an organization's success and shows how specific
goals and plans in each area are linked is called an operations map.

ANS: F PTS: 1 DIF: 2 REF: 166


NAT: AACSB Analytic | Strategy TYP: F

28. Building good relationships with suppliers and partners would be considered customer service
goals.

ANS: F PTS: 1 DIF: 2 REF: 167


NAT: AACSB Analytic | Strategy TYP: F

29. Management by objectives, single-use plans, and standing plans are all management planning
approaches.

ANS: T PTS: 1 DIF: 2 REF: 167


NAT: AACSB Analytic | Strategy TYP: F

30. Specific and measurable goal characteristics apply only to the lower-level goals.

ANS: F PTS: 1 DIF: 2 REF: 168


NAT: AACSB Analytic | Strategy TYP: F

31. Goals are most effective when they are specific, measurable, challenging and linked to rewards.

ANS: T PTS: 1 DIF: 2 REF: 168


NAT: AACSB Analytic | Strategy TYP: F

32. Goals must be set for every aspect of employee behavior or organizational performance to be
effective.

ANS: F PTS: 1 DIF: 2 REF: 168


NAT: AACSB Analytic | Strategy TYP: F
174 Chapter 6/Managerial Planning and Goal Setting

33. The goals should be easy, for employees to feel motivated, so that they can achieve them easily
which in turn increases their motivation level.

ANS: F PTS: 1 DIF: 2 REF: 168


NAT: AACSB Analytic | Motivation Concepts TYP: F

34. MBO refers to managing by opportunity.

ANS: F PTS: 1 DIF: 1 REF: 168


NAT: AACSB Analytic | Strategy TYP: F

35. The final step in the MBO process is to review progress.

ANS: F PTS: 1 DIF: 1 REF: 169


NAT: AACSB Analytic | Strategy TYP: F

36. An action plan defines the course of action needed to achieve the stated goals.

ANS: T PTS: 1 DIF: 1 REF: 169


NAT: AACSB Analytic | Strategy TYP: F

37. The most difficult step in an MBO process is reviewing progress.

ANS: F PTS: 1 DIF: 2 REF: 170


NAT: AACSB Analytic | Strategy TYP: F

38. When a company faces rapid change, problems with MBO occur.

ANS: T PTS: 1 DIF: 1 REF: 170


NAT: AACSB Analytic | Strategy TYP: F

39. Managers believe they are better oriented toward goal achievement when MBO is used.

ANS: T PTS: 1 DIF: 2 REF: 170


NAT: AACSB Analytic | Strategy TYP: F

40. Standing plans define company responses to specific situations such as natural emergencies or
competitive setbacks.

ANS: F PTS: 1 DIF: 1 REF: 171


NAT: AACSB Analytic | Strategy TYP: F

41. Single-use plans are ongoing plans that are used to provide guidance for tasks performed
repeatedly within the organization.

ANS: F PTS: 1 DIF: 2 REF: 171


NAT: AACSB Analytic | Strategy TYP: F

42. Three critical planning methods are contingency planning, building scenarios, and crisis planning.
Chapter 6/Managerial Planning and Goal Setting 175

ANS: T PTS: 1 DIF: 1 REF: 172


NAT: AACSB Analytic | Strategy TYP: F

43. Crisis plans define company responses to be taken in the case of emergencies, setbacks, or
unexpected conditions.

ANS: F PTS: 1 DIF: 2 REF: 172


NAT: AACSB Analytic | Strategy TYP: F

44. If Renae, manager at Leak Free Roofing, wanted to develop a contingency plan for Leak Free, she
would need to look at factors such as new equipment, the economy, and the company workers'
compensation cases.

ANS: T PTS: 1 DIF: 3 REF: 172


NAT: AACSB Analytic | Strategy TYP: A

45. Contingency plans can also be considered as scenarios.

ANS: T PTS: 1 DIF: 1 REF: 173


NAT: AACSB Analytic | Strategy TYP: F

46. Trend management is looking at trends and discontinuities and imagining possible alternative
futures.

ANS: F PTS: 1 DIF: 2 REF: 173


NAT: AACSB Analytic | Leadership Principles TYP: F

47. Some firms engage in crisis planning to enable them to cope with unexpected events that are so
sudden and devastating that they have the potential to destroy the organization.

ANS: T PTS: 1 DIF: 2 REF: 173


NAT: AACSB Analytic | Strategy TYP: F

48. The first stage in crisis management planning includes building relationships and designating crisis
management team and spokesperson.

ANS: F PTS: 1 DIF: 2 REF: 174


NAT: AACSB Analytic | Environmental Influence TYP: F

49. Prevention and preparation are the two stages of crisis management.

ANS: T PTS: 1 DIF: 1 REF: 174


NAT: AACSB Analytic | Strategy TYP: F

50. The ABC Corporation should create a crisis management group that is not cross-functional, but
does work together well under pressure.

ANS: F PTS: 1 DIF: 2 REF: 174


NAT: AACSB Analytic | Group Dynamics TYP: F
176 Chapter 6/Managerial Planning and Goal Setting

51. The CEO of Andre's Autos, Inc. must do all of the planning for the company because that is the
way to do things in today's workplace.

ANS: F PTS: 1 DIF: 2 REF: 175


NAT: AACSB Analytic | Strategy TYP: A

52. Turtle Terrace should use traditional planning since that is the type of planning every company
uses.

ANS: F PTS: 1 DIF: 2 REF: 175


NAT: AACSB Analytic | Strategy TYP: A

53. In a complex and competitive business world, traditional planning done by a select few is the only
planning that works.

ANS: F PTS: 1 DIF: 2 REF: 175


NAT: AACSB Analytic | Environmental Influence TYP: F

54. Managers work with planning experts to develop their own goals and plans in decentralized
planning.

ANS: T PTS: 1 DIF: 1 REF: 175


NAT: AACSB Analytic | Strategy TYP: F

55. In centralized planning, managers work with planning experts to develop their own goals and
plans.

ANS: F PTS: 1 DIF: 1 REF: 175


NAT: AACSB Analytic | Strategy TYP: F

MULTIPLE CHOICE

1. ____ refers to a desired future state that an organization attempts to realize?


a. Plan
b. Vision statement
c. Goal
d. Mission statement
e. Idea
ANS: C PTS: 1 DIF: 2 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

2. ____ specify future ends and ____ specify today's means.


a. Goals, plans
b. Plans, goals
c. Planning, organizing
d. Ideas, behaviors
e. Mission, vision
ANS: A PTS: 1 DIF: 2 REF: 160
NAT: AACSB Analytic | Strategy TYP: F
Chapter 6/Managerial Planning and Goal Setting 177

3. A blueprint specifying the resource allocations schedules, and other actions necessary for attaining
goals is referred to as a(n)
a. goal.
b. plan.
c. mission.
d. vision.
e. objective.
ANS: B PTS: 1 DIF: 1 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

4. ____ is the act of determining the organization's goals and the means for achieving them.
a. Brainstorming
b. Organizing
c. Planning
d. Developing a mission
e. A blueprint
ANS: C PTS: 1 DIF: 1 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

5. The planning process begins with which of these?


a. The development of operational goals
b. The development of a mission statement
c. Communication of goals to the rest of the organization
d. A company-wide meeting
e. Brainstorming
ANS: B PTS: 1 DIF: 2 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

6. The ____ is the basis for the strategic level of goals and plans which in turn shapes the ____ and
____ level.
a. goal, mission, tactical
b. objective, operational, mission
c. operational goal, mission and tactical
d. mission, tactical, operational
e. tactical plan, operational, mission
ANS: D PTS: 1 DIF: 2 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

7. ____ is primarily responsible for strategic goals/plans.


a. Middle management
b. Board of directors
c. Consultants
178 Chapter 6/Managerial Planning and Goal Setting

d. Top management
e. Lower management
ANS: D PTS: 1 DIF: 1 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

8. ____ is primarily responsible for operational goals/plans.


a. Middle management
b. Board of directors
c. Consultants
d. Top management
e. Lower management
ANS: E PTS: 1 DIF: 1 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

9. Which of these is(are) primarily concerned with tactical goals/plans?


a. Middle management
b. Board of directors
c. Consultants
d. Senior management
e. Lower management
ANS: A PTS: 1 DIF: 1 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

10. Sherry is a first-line supervisor at Rooftop Corporation. She is most concerned with which level of
goals?
a. Operational goals
b. Tactical plans
c. Strategic goals
d. Mission statement
e. Vision
ANS: A PTS: 1 DIF: 2 REF: 160
NAT: AACSB Analytic | Strategy TYP: F

11. Which of the following symbolizes the legitimacy of the organization to external audiences?
a. Operational goals
b. Tactical plans
c. Strategic goals
d. Mission statement
e. Tactical goals
ANS: D PTS: 1 DIF: 2 REF: 161
NAT: AACSB Analytic | Strategy TYP: F

12. Roxanne is a manager at Geronimo Gaming. She recently attended a seminar on goal setting. She
wishes to use goals to provide a sense of direction to her staff. She is using goals as
a. a way to legitimize her department.
b. a source of motivation.
Chapter 6/Managerial Planning and Goal Setting 179

c. a standard of performance.
d. a guide to action.
e. impress others.
ANS: D PTS: 1 DIF: 2 REF: 161
NAT: AACSB Analytic | Strategy TYP: A

13. Which of the following is not an internal message in goals and plans?
a. Legitimacy for customers
b. Rationale for decisions
c. Resource allocation
d. Guides to action
e. Source of motivation and commitment
ANS: A PTS: 1 DIF: 2 REF: 161
NAT: AACSB Analytic | Strategy TYP: F

14. Which of the following is not a step in the organizational planning process?
a. Monitor and learn
b. Plan operations
c. Translate the plan
d. Develop the plan
e. Plan marketing tactics
ANS: E PTS: 1 DIF: 2 REF: 162
NAT: AACSB Analytic | Strategy TYP: F

15. Which of the following is NOT a tool for executing a plan?


a. Management by objectives
b. Strategic map
c. Performance dashboards
d. Single use plans
e. Decentralized responsibility
ANS: B PTS: 1 DIF: 2 REF: 162
NAT: AACSB Analytic | Strategy TYP: F

16. A statement that identifies distinguishing characteristics of an organization is known as


a. a goals statement.
b. a values statement.
c. an income statement.
d. a mission statement.
e. a competitive-edge statement.
ANS: D PTS: 1 DIF: 1 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

17. Which of these are described by mission statements?


a. Corporate values
b. Company philosophy
c. Company purpose
d. All of these
180 Chapter 6/Managerial Planning and Goal Setting

e. Corporate values and company philosophy only


ANS: D PTS: 1 DIF: 1 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

18. The organization's reason for existence is known as


a. the organization's value.
b. the organization's vision.
c. the organization's mission.
d. the organization's goal.
e. the organization's service.
ANS: C PTS: 1 DIF: 2 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

19. "We respect our employees and value their diversity" is an example of a statement you are most
likely to find in the organization's
a. mission.
b. strategic goals.
c. tactical goals.
d. strategic plans.
e. tactical plans.
ANS: A PTS: 1 DIF: 3 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

20. "We seek to become the premier business school in the west" is an example of a statement you are
most likely to find in the organization's
a. tactical goals.
b. operational goals.
c. mission.
d. tactical plans.
e. operational plans.
ANS: C PTS: 1 DIF: 3 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

21. ____ refers to a broadly stated definition of the organization's basic business scope and operations
that distinguishes it from similar types of organizations.
a. Mission statement
b. Goal statement
c. Management by objective
d. Goal setting
e. Corporate competitive-value statement
ANS: A PTS: 1 DIF: 1 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

22. At the top of the goal hierarchy is the


a. strategic goals.
Chapter 6/Managerial Planning and Goal Setting 181

b. tactical goals.
c. operational goals.
d. mission.
e. employee goals.
ANS: D PTS: 1 DIF: 2 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

23. ____ are the broad statements of where the organization wants to be in the future.
a. Operational goals
b. Tactical goals
c. Strategic goals
d. Operational goals
e. Tactical plans
ANS: C PTS: 1 DIF: 1 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

24. The official goals of the organization are best represented by the ____.
a. strategic goals
b. tactical goals
c. operational goals
d. competitive goals
e. none of these
ANS: A PTS: 1 DIF: 2 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

25. A long-term time frame is most closely associated with


a. operational plans.
b. tactical plans.
c. strategic plans.
d. mission plans.
e. tactical goals.
ANS: C PTS: 1 DIF: 2 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

26. ____ are called the action steps by which an organization intends to attain its strategic goals.
a. Tactical goals
b. Operational goals
c. Tactical plans
d. Operational plans
e. Strategic plans
ANS: E PTS: 1 DIF: 1 REF: 164
NAT: AACSB Analytic | Strategy TYP: F

27. ____ goals lead to the attainment of ____ goals, which in turn lead to the attainment of ____ goals.
a. Operational, strategic, tactical
b. Tactical, operational, strategic
c. Strategic, tactical, operational
d. Operational, tactical, strategic
182 Chapter 6/Managerial Planning and Goal Setting

e. None of these.
ANS: D PTS: 1 DIF: 3 REF: 164-165
NAT: AACSB Analytic | Strategy TYP: F

28. Goals that define the outcomes that major divisions and departments must achieve in order for the
organization to reach its overall goals is called
a. strategic goals.
b. tactical goals.
c. operational goals.
d. a mission.
e. a plan.
ANS: B PTS: 1 DIF: 1 REF: 165
NAT: AACSB Analytic | Strategy TYP: F

29. Sarah is a middle manager at Stylin' Sneakers Corporation. She is most likely responsible for the
achievement of ____ goals.
a. operational
b. tactical
c. strategic
d. lower-level
e. top-level
ANS: B PTS: 1 DIF: 2 REF: 165
NAT: AACSB Analytic | Strategy TYP: F

30. Which of the following refer to specific results expected from individuals?
a. Operational goals
b. Tactical goals
c. Strategic goals
d. Operational plans
e. Mission statements
ANS: A PTS: 1 DIF: 2 REF: 165
NAT: AACSB Analytic | Strategy TYP: F

31. Which of the following represent plans developed at the organization's lower levels that specify
action steps toward achieving operational goals and that support tactical planning activities?
a. Tactical plans
b. Strategic plans
c. Operational plans
d. Supervisory plans
e. Organizational plans
ANS: C PTS: 1 DIF: 1 REF: 166
NAT: AACSB Analytic | Strategy TYP: F

32. The ____ is the department manager's tool for daily and weekly operations.
a. conventional goal
b. strategic goal
Chapter 6/Managerial Planning and Goal Setting 183

c. strategic plan
d. operational plan
e. targeted plan
ANS: D PTS: 1 DIF: 2 REF: 166
NAT: AACSB Analytic | Operations Management TYP: F

33. Which of the following is a visual representation of the key drivers of an organization's success,
showing the cause-and-effect relationships among goals and plans?
a. Operational plan
b. Gantt chart
c. Strategy map
d. SWOT analysis
e. Strategic plan
ANS: C PTS: 1 DIF: 2 REF: 166
NAT: AACSB Analytic | Strategy TYP: F

34. According to the strategy map described in chapter 6, which of the following is NOT one of goal?
a. Financial performance goals
b. Customer service goals
c. Internal business process goals
d. Learning and growth goals
e. External business process goals
ANS: E PTS: 1 DIF: 1 REF: 167
NAT: AACSB Analytic | Strategy TYP: F

35. Managers use ____ to direct employees and resources toward achieving specific outcomes that
enable the organization to perform efficiently and effectively.
a. strategic goals
b. operational goals
c. growth goals
d. financial results
e. internal business process goals
ANS: B PTS: 1 DIF: 2 REF: 167
NAT: AACSB Analytic | Operations Management TYP: F

36. Which of these is lacking in the goal "profits should be increased in the coming year?"
a. Specific and measurable
b. Challenging but realistic
c. Covers key result areas
d. Defined time period
e. None of these
ANS: A PTS: 1 DIF: 2 REF: 168
NAT: AACSB Analytic | Strategy TYP: A

37. Kate is a salesperson at a large retail chain. She was assigned a goal of $265,000 in sales for the
current quarter. She is unhappy because she knows that the most any salesperson has sold in one
quarter in the past is $150,000. Her goal of $265,000 is probably
a. not specific and measurable.
184 Chapter 6/Managerial Planning and Goal Setting

b. not realistic.
c. irrelevant.
d. lacking a specific time period.
e. does not cover key result area.
ANS: B PTS: 1 DIF: 3 REF: 168
NAT: AACSB Analytic | Strategy TYP: F

38. You are violating which of these goal characteristics when you attempt to create goals for every
aspect of employee behavior?
a. Specific and measurable
b. Linked to rewards
c. Defined time period
d. Cover key result areas
e. Challenging but realistic
ANS: D PTS: 1 DIF: 2 REF: 168
NAT: AACSB Analytic | Strategy TYP: F

39. Darren set goals for each of his employees. Each employee ended up with at least twenty-five
goals. This process violates which of the following criteria for effective goals?
a. Specific and measurable
b. Challenging but realistic
c. Covers key result areas
d. Defined time period
e. Linked to rewards
ANS: C PTS: 1 DIF: 2 REF: 168
NAT: AACSB Analytic | Strategy TYP: A

40. All of the following are characteristics of effective goal setting EXCEPT
a. goals should be challenging but not unreasonably difficult.
b. goals should be set for every aspect of employee behavior.
c. specific and measurable.
d. cover key results area.
e. linked to rewards.
ANS: B PTS: 1 DIF: 2 REF: 168
NAT: AACSB Analytic | Strategy TYP: F

41. The ultimate impact of goals depended on the extent to which goal achievement is linked to
a. rewards.
b. salary increases.
c. promotions.
d. all of these.
e. salary increases and promotions.
ANS: D PTS: 1 DIF: 2 REF: 168
NAT: AACSB Analytic | Strategy TYP: F

42. ____ is the first step in the MBO process.


a. Setting goals
b. Developing action plans
Chapter 6/Managerial Planning and Goal Setting 185

c. Appraising overall performance


d. Reviewing progress
e. None of these
ANS: A PTS: 1 DIF: 1 REF: 168
NAT: AACSB Analytic | Strategy TYP: F

43. Which of these is a method of management whereby managers and employees define goals for
every department, project, and person and use them to monitor subsequent performance?
a. Organizational planning
b. Management by objectives
c. Goal setting
d. Mission development
e. Vision development
ANS: B PTS: 1 DIF: 1 REF: 168
NAT: AACSB Analytic | Strategy TYP: F

44. High Fence Corporation is currently implementing an MBO program. Managers and employees
jointly set objectives and develop action plans, and goal achievement is evaluated on an annual
basis. High Fence is missing which major activity that must occur in order for MBO to be
successful?
a. Developing a mission statement
b. Developing tactical goals
c. Reviewing progress
d. Reviewing operational plans
e. None of these
ANS: C PTS: 1 DIF: 2 REF: 168-169
NAT: AACSB Analytic | Strategy TYP: A

45. In using MBO, objectives should be set


a. by the supervisor.
b. by the employee.
c. jointly by the supervisor and the employee.
d. by the accounting department.
e. by top management.
ANS: C PTS: 1 DIF: 2 REF: 169
NAT: AACSB Analytic | Strategy TYP: F

46. Frostburg Fireplaces has used MBO for the past year. Top management just finished evaluating
overall performance. The next step in the MBO process should be
a. to develop new action plans.
b. to develop new objectives based on the review of last year's performance.
c. to begin a new MBO "cycle", using the same objectives as last year.
d. to wait several months to allow information to be digested.
e. none of these.
ANS: B PTS: 1 DIF: 2 REF: 169
NAT: AACSB Analytic | Strategy TYP: F

47. ____ is the final step in the MBO process.


186 Chapter 6/Managerial Planning and Goal Setting

a. Appraise overall performance


b. Develop an action plan
c. Review progress
d. Set goals
e. Conduct periodic checkups
ANS: A PTS: 1 DIF: 1 REF: 169
NAT: AACSB Analytic | Strategy TYP: F

48. One major problem with MBO is


a. it discourages individual creativity.
b. it does not work well in constantly changing environments.
c. it decreases employee motivation.
d. it does not work well in non-profit organizations.
e. none of these.
ANS: B PTS: 1 DIF: 2 REF: 170
NAT: AACSB Analytic | Environmental Influence TYP: F

49. Which of the following is NOT one of the benefits of MBO?


a. Performance can be improved at all company levels.
b. Employees are motivated.
c. Efforts are focused on activities that will lead to goal attainment.
d. Operational goals are able to displace strategic goals.
e. Individual and department goals are aligned with company goals.
ANS: D PTS: 1 DIF: 2 REF: 170
NAT: AACSB Analytic | Strategy TYP: F

50. Which of these is true about single-use plans?


a. They are developed to achieve a set of goals that are unlikely to be repeated in the future.
b. They are used to provide guidance for tasks performed repeatedly within the organization.
c. They define plans that define company responses to specific situations, such as
emergencies or setbacks.
d. They are most important in the organizations.
e. None of these.
ANS: A PTS: 1 DIF: 2 REF: 171
NAT: AACSB Analytic | Strategy TYP: F

51. Standing plans are


a. plans that are developed to achieve a set of goals that are unlikely to be repeated in the
future.
b. plans that used to provide guidance for tasks performed repeatedly within the organization.
c. plans that define company responses to specific situations, such as emergencies or
setbacks.
d. most important in the organizations.
e. none of these.
ANS: B PTS: 1 DIF: 1 REF: 171
NAT: AACSB Analytic | Strategy TYP: F

52. A project is an example of a


Chapter 6/Managerial Planning and Goal Setting 187

a. policy.
b. standing plan.
c. procedure.
d. single-use plan.
e. rule.
ANS: D PTS: 1 DIF: 1 REF: 171
NAT: AACSB Analytic | Strategy TYP: F

53. Cheyenne Creamery requires that all absent employees bring a note from their doctor when
returning to work. This is an example of a
a. single-plan use.
b. standing plan.
c. program.
d. procedure.
e. project.
ANS: B PTS: 1 DIF: 2 REF: 171
NAT: AACSB Analytic | Strategy TYP: A

54. According to MANAGER'S SHOPTALK in Chapter 6, effective policies governing the use of e-
mail include all of the following EXCEPT:
a. make clear that all e-mail and its content are the property of the company.
b. tie the policy to the company's sexual harassment policy.
c. establish guidelines for deleting or retaining messages.
d. consider having policies pop up on users' screen when they log on.
e. all of these are recommended.
ANS: E PTS: 1 DIF: 2 REF: 171
NAT: AACSB Analytic | Strategy TYP: F

55. Numerous ____ are likely to be part of an overall ____.


a. programs, project
b. policies, project
c. standing plans, program
d. projects, program
e. programs, rule
ANS: D PTS: 1 DIF: 2 REF: 172
NAT: AACSB Analytic | Strategy TYP: F

56. ____ define boundaries within which to make a decision.


a. Programs
b. Policies
188 Chapter 6/Managerial Planning and Goal Setting

c. Rules
d. Procedures
e. Project
ANS: B PTS: 1 DIF: 2 REF: 172
NAT: AACSB Analytic | Strategy TYP: F

57. An example of a ____ is a statement supporting the organization's efforts in the area of sexual
harassment.
a. procedure
b. rule
c. policy
d. single-use plan
e. program
ANS: C PTS: 1 DIF: 2 REF: 172
NAT: AACSB Analytic | Strategy TYP: F

58. "No food and/or drinks in the classroom" is an example of a


a. procedure.
b. rule.
c. policy.
d. single-use plan.
e. project.
ANS: B PTS: 1 DIF: 2 REF: 172
NAT: AACSB Analytic | Strategy TYP: A

59. Which of these are true about contingency plans?


a. They are developed to achieve a set of goals that are unlikely to be repeated in the future.
b. They are used to provide guidance for tasks performed repeatedly within the organization.
c. They define company responses to specific situations, such as emergencies or setbacks.
d. They are most important in the organizations.
e. None of these.
ANS: C PTS: 1 DIF: 1 REF: 172
NAT: AACSB Analytic | Strategy TYP: F

60. Contingency plans are also referred to as


a. standing plans.
b. rules.
c. scenarios.
d. procedures.
e. operationally tactical plans.
ANS: C PTS: 1 DIF: 1 REF: 173
NAT: AACSB Analytic | Strategy TYP: F

61. ____ involves looking at trends and discontinuities and imagining possible alternative future to
build a framework within which unexpected future events can be managed.
a. Scenario building
b. Crisis planning
c. Contingency planning
Chapter 6/Managerial Planning and Goal Setting 189

d. Trend management
e. Caution planning
ANS: A PTS: 1 DIF: 2 REF: 173
NAT: AACSB Analytic | Strategy TYP: F

62. ____ enables firms to cope with unexpected events that are so sudden and devastating that they
have the potential to destroy the organization if managers aren't prepared with a quick and
appropriate response.
a. Incident planning
b. Contingency planning
c. Strategic planning
d. Crisis planning
e. Emergency planning
ANS: D PTS: 1 DIF: 2 REF: 173
NAT: AACSB Analytic | Strategy TYP: F

63. The crisis management plan should be a ____ that specifies the actions to be taken, and by whom,
if a crisis occurs.
a. vague, verbal plan
b. detailed, verbal plan
c. long, difficult to read plan
d. vague, written plan
e. detailed, written plan
ANS: E PTS: 1 DIF: 1 REF: 174
NAT: AACSB Analytic | Strategy TYP: F

64. Which of the following is NOT involved in the stages of crisis planning?
a. Setting up effective communication systems
b. Creating detailed crisis management plans
c. Investigating all stakeholders
d. Designating a crisis management team and spokesperson
e. Building relationships
ANS: C PTS: 1 DIF: 2 REF: 174
NAT: AACSB Analytic | Strategy TYP: F

65. Traditionally, if Stephanie, CEO of Butterfly Pillows, needed to conduct corporate planning, it
would be performed by all of the following EXCEPT
a. central planning departments.
b. decentralized planning groups.
c. top executives.
d. consulting groups.
e. the president of the company.
ANS: B PTS: 1 DIF: 2 REF: 175
NAT: AACSB Analytic | Group Dynamics TYP: A

66. The traditional approach to corporate planning was to


a. have a decentralized planning staff.
b. have a centralized planning department.
190 Chapter 6/Managerial Planning and Goal Setting

c. set up a planning task force.


d. set up planning committees.
e. use TQM approach.
ANS: B PTS: 1 DIF: 1 REF: 175
NAT: AACSB Analytic | Strategy TYP: F

67. A group of planning specialists who develop plans for the organization as a whole is known as
a. management by objectives.
b. planning task force.
c. decentralized planning staff.
d. centralized planning department.
e. total quality management group.
ANS: D PTS: 1 DIF: 1 REF: 175
NAT: AACSB Analytic | Group Dynamics TYP: F

68. Alabama Airlines has three planning specialists who help division managers develop their own
division plans. Serving as consultants to the divisions, the planning specialists give advice about
strengths, weaknesses, opportunities, and threats. Alabama Airlines is utilizing what approach to
the planning function?
a. Centralized planning department
b. Decentralized planning staff
c. Planning task force
d. Centralized planning committee
e. TQM
ANS: B PTS: 1 DIF: 2 REF: 175
NAT: AACSB Analytic | Strategy TYP: A

CASE

Scenario - Katelynn Kareem

The new program would be focused around MBO concepts. Katelynn Kareem had been a manager
at WXYZ for ten years and she was not all certain if this new MBO approach was going to fit her
department. She had strong commitment to achieving the company's objectives, but she also knew
her employees well enough to know that some didn't share the same commitment.

1. Katelynn can anticipate enjoying the advantages of MBO which include


a. increased orientation toward goal achievement.
b. performance can improve at all company levels.
c. employees are more motivated.
d. increased orientation toward goal achievement and motivation.
e. all of these.

ANS:
e

PTS: 1 DIF: 2 REF: 170


NAT: AACSB Analytic | Motivation Concepts KEY: Scenario Questions
Chapter 6/Managerial Planning and Goal Setting 191

TYP: A

2. Katelynn can anticipate and work to prevent the problems of MBO which include
a. increase in paperwork that leads to a reduction of energy.
b. a decrease in communication between managers and employees.
c. greater conflict because of opposing goals.
d. all of these.
e. none of these.

ANS:
a

PTS: 1 DIF: 2 REF: 170


NAT: AACSB Analytic | Strategy KEY: Scenario Questions TYP: A

3. In the MBO process, after the first step of setting objectives is accomplished, the next step that
Katelynn should expect is
a. reviewing progress toward company goals.
b. appraising overall performance.
c. developing action plans.
d. having a company party to celebrate.
e. none of these.

ANS:
c

PTS: 1 DIF: 2 REF: 169


NAT: AACSB Analytic | Strategy KEY: Scenario Questions TYP: A

COMPLETION

1. A(n) ____________________ is a desired future state that the organization attempts to realize.

ANS: goal

PTS: 1 DIF: 2 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

2. A(n) ____________________ is a blueprint for goal achievement and specifies the necessary
resource allocations, schedules, tasks, and other actions.

ANS: Plan

PTS: 1 DIF: 2 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

3. The act of determining the organization's goals and the means for achieving them is referred to as
____________________.

ANS: planning
192 Chapter 6/Managerial Planning and Goal Setting

PTS: 1 DIF: 2 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

4. ____________________ and plans are the responsibilities of middle managers.

ANS: Tactical goals

PTS: 1 DIF: 2 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

5. Operational plans that focus on specific tasks and processes that help to meet tactical and strategic
goals are developed by ____________________ managers and supervisors.

ANS: front-line

PTS: 1 DIF: 2 REF: 160


NAT: AACSB Analytic | Strategy TYP: F

6. ____________________ and ____________________ facilitate employees' identification with the


organization and help motivate them, provide a sense of direction, and allow managers to learn
what the organization is trying to accomplish.

ANS:
Goals; plans
Plans; goals

PTS: 1 DIF: 2 REF: 161


NAT: AACSB Analytic | Motivation Concepts TYP: F

7. ____________________ describes the organization's reason for existence.

ANS: Mission

PTS: 1 DIF: 2 REF: 164


NAT: AACSB Analytic | Strategy TYP: F

8. A(n) ____________________ is a broadly stated definition of basic business scope and operations
that distinguishes the organization from others of a similar type.

ANS: mission statement

PTS: 1 DIF: 2 REF: 164


NAT: AACSB Analytic | Strategy TYP: F

9. Broad statements describing where the organization wants to be in the future are called
____________________.
Chapter 6/Managerial Planning and Goal Setting 193

ANS: strategic goals

PTS: 1 DIF: 2 REF: 164


NAT: AACSB Analytic | Strategy TYP: F

10. ____________________ define the action steps by which an organization intends to attain its
strategic goals.

ANS: Strategic plans

PTS: 1 DIF: 2 REF: 164


NAT: AACSB Analytic | Strategy TYP: F

11. Goals that define the outcomes that major departments must achieve in order for the organization to
reach its overall goals are known as ____________________ goals.

ANS: tactical

PTS: 1 DIF: 2 REF: 165


NAT: AACSB Analytic | Strategy TYP: F

12. ____________________ are designed to help execute major strategic plans and to accomplish a
specific part of the company's strategy.

ANS: Tactical plans

PTS: 1 DIF: 2 REF: 165


NAT: AACSB Analytic | Strategy TYP: F

13. The specific results expected from departments, work groups, and individuals are the
____________________ goals.

ANS: operational

PTS: 1 DIF: 2 REF: 165


NAT: AACSB Analytic | Strategy TYP: F

14. ____________________ plans are developed at the lower levels of the organization to specify
action steps toward achieving operational goals and to support tactical plans.

ANS: Operational

PTS: 1 DIF: 2 REF: 165


NAT: AACSB Analytic | Strategy TYP: F

15. ____________________ is a method whereby managers and employees define goals for every
department, project, and person and use them to monitor subsequent performance.

ANS: Management by objectives

PTS: 1 DIF: 2 REF: 168


194 Chapter 6/Managerial Planning and Goal Setting

NAT: AACSB Analytic | Strategy TYP: F

16. The most difficult step in MBO is ____________________.

ANS: setting goals

PTS: 1 DIF: 2 REF: 170


NAT: AACSB Analytic | Strategy TYP: F

17. Managers believe that they are better oriented toward goal achievement when
____________________ is used.

ANS: management by objectives

PTS: 1 DIF: 2 REF: 170


NAT: AACSB Analytic | Strategy TYP: F

18. ____________________ plans are used to provide guidance for work-related tasks that are
performed repeatedly within the organization.

ANS: Standing

PTS: 1 DIF: 2 REF: 171


NAT: AACSB Analytic | Strategy TYP: F

19. ____________________ plans are developed to achieve a set of goals that are not likely to be
repeated in the future.

ANS:
Single-use
Single use

PTS: 1 DIF: 2 REF: 171


NAT: AACSB Analytic | Strategy TYP: F

20. ____________________ are ongoing plans that are used to provide guidance for tasks performed
repeatedly within the organization.

ANS: Standing plans

PTS: 1 DIF: 2 REF: 171


NAT: AACSB Analytic | Strategy TYP: F

21. Plans that define company responses to specific situations, such as emergencies, setbacks, or
unexpected conditions are called ____________________ plans.

ANS: contingency
Chapter 6/Managerial Planning and Goal Setting 195

PTS: 1 DIF: 2 REF: 172


NAT: AACSB Analytic | Strategy TYP: F

22. A special type of contingency plan that is used when events are sudden and devastating and require
immediate response is called ____________________.

ANS: crisis management planning

PTS: 1 DIF: 2 REF: 173


NAT: AACSB Analytic | Strategy TYP: F

23. The crisis management plan should be a(n) ____________________ that specifies the actions to be
taken, and by whom, if a crisis occurs.

ANS: detailed, written plan

PTS: 1 DIF: 1 REF: 174


NAT: AACSB Analytic | Strategy TYP: F

24. ____________________ are groups of planning specialists who report directly to the CEO or
president of a company.

ANS: Central planning departments

PTS: 1 DIF: 2 REF: 175


NAT: AACSB Analytic | Strategy TYP: F

25. Although ____________________ planning approaches are still popular with some organizations,
____________________ planning are being criticized as inappropriate for today's fast-paced
environment.

ANS: traditional; formal

PTS: 1 DIF: 2 REF: 175


NAT: AACSB Analytic | Environmental Influence TYP: F

26. A group of planning specialists assigned to major departments and divisions to help managers
develop their own strategic plans is called ____________________.

ANS: decentralized planning staff

PTS: 1 DIF: 2 REF: 175


NAT: AACSB Analytic | Strategy TYP: F

SHORT ANSWER

1. List the five reasons explicit goals and plans are important.

ANS:
196 Chapter 6/Managerial Planning and Goal Setting

Explicit goals and plans can serve the following functions: legitimacy, source of motivation and
commitment, guide to action, rationale for decisions, and standard of performance.

PTS: 1 DIF: 2 REF: 160-162


NAT: AACSB Analytic | Strategy TYP: F

2. List the five characteristics of effective goals.

ANS:
Goals should be (1) specific and measurable; (2) they should cover key result areas; (3) they should
be challenging but realistic; (4) they should have a defined time period; and (5) they should be
linked to rewards.

PTS: 1 DIF: 2 REF: 168


NAT: AACSB Analytic | Strategy TYP: F

3. List the four major activities that must occur in order for MBO to succeed.

ANS:
(1) Set goals, (2) develop action plans, (3) review progress, and (4) appraise overall performance.

PTS: 1 DIF: 2 REF: 168-169


NAT: AACSB Analytic | Strategy TYP: F

4. What are the three stages of crisis management?

ANS:
Prevention, Preparation, and Containment

PTS: 1 DIF: 2 REF: 174


NAT: AACSB Analytic | Strategy TYP: F

ESSAY

1. In what ways do plans and goals benefit an organization?

ANS:
Plans and goals benefit the organization in several ways. First they provide legitimacy and a reason
for existence. They also provide a source of motivation and commitment, provide guides for action
and decision making, and they set a standard of performance.

PTS: 1 DIF: 2 REF: 160-161


NAT: AACSB Analytic | Strategy TYP: F
Chapter 6/Managerial Planning and Goal Setting 197

2. Compare the four levels of goals and plans.

ANS:
The highest level is the mission statement, which defines the organization's basic business scope
and operations and specifies its reasons for existence. The second level is the level of strategic
goals and plans. Those pertain to the organization as a whole and specify where the organization
wants to be in the future. The third level is the tactical level, with a focus on outcomes that major
divisions and departments must achieve in order for the organization to reach its overall goals. The
fourth and lowest level is the operational level, involving specific measurable results for
departments, work groups, and individuals.

PTS: 1 DIF: 3 REF: 161


NAT: AACSB Analytic | Strategy TYP: F

3. Describe the purposes of goals and plans.

ANS:
Legitimacy: An organization's mission symbolized legitimacy to external audiences.

Source of motivation and commitment: Goals and plans facilitate employees' identification with the
organization and help motivate them by reducing uncertainty and clarifying what they should
accomplish.

Resource allocation: Goals help managers decide where they need to allocate resources.

Guides to action: Goals and plans provide a sense of direction

Rationale for decisions: Through goal setting and planning, managers learn what the organization
is trying to accomplish.

Standards of performance: Because goals define desired outcomes for the organization, they also
serve as performance criteria.

PTS: 1 DIF: 2 REF: 160-161


NAT: AACSB Analytic | Strategy TYP: F

4. Briefly define the characteristics of an effective goal.

ANS:
198 Chapter 6/Managerial Planning and Goal Setting

Effective goals are precisely defined and allow for measurable performance. They focus on the key
result areas that contribute most to desired performance. They should be challenging but not
unreasonably difficult. Finally, they should specify the time period that they cover and they should
be tied to valued rewards.

PTS: 1 DIF: 2 REF: 168


NAT: AACSB Analytic | Strategy TYP: F

5. List and define the four major activities that must occur in order for management by objectives
(MBO) to succeed.

ANS:
The first step is setting goals. The setting of goals involves employees at all levels and should
incorporate the principles of effective goal setting. Goals should be jointly determined by manager
and employee, so as to increase the employee's level of commitment. The second step is developing
action plans. These action plans will specify how the goals are to be achieved. Next, a progress
review is important to make sure that the action plans are working. They may be formal or informal
and the action plan should be changed if necessary. The last step is to determine if the goals have
been achieved within the specified time period. This appraisal should factor into the setting of the
next period's goals, allowing for feedback into the setting of the next set of goals.

PTS: 1 DIF: 3 REF: 168-169


NAT: AACSB Analytic | Strategy TYP: F

6. Describe the guidelines for planning in the new workplace.

ANS:
First, start with a strong mission. Next, set stretch goals. Third, embrace event-driving planning.
Fourth, use performance dashboards. Fifth, organize temporary task forces. And finally, top
managers show support and commitment.

PTS: 1 DIF: 2 REF: 175-177


NAT: AACSB Analytic | Strategy TYP: F

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