Marketing

Chapter 11 - Organizational Control and Change
Chapter 11
Organizational Control and Change
True / False Questions
1. The process by which managers monitor and regulate the organization in order to determine
if the organization is operating efficiently and effectively is known as controlling.
True False
2. Managers monitor and evaluate the organization's strategy to see if it is working using the
controlling function.
True False
3. Control is concerned with keeping employees motivated.

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

True False
5. Control helps managers build a competitive advantage.

True False
6. Control helps managers respond more effectively to customers.

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

True False
11-1
8. At the input stage, managers use feedback control to anticipate problems before they arise
so problems do not occur later during the conversion process.
True False
9. The first step in the control process is to evaluate the results in terms of the performance
standards.
True False
10. In practice, managers can only measure the actual outputs that result from the behavior of
their members.
True False
11. When an organization and its members perform nonroutine activities, it is more
challenging for managers to measure outputs or behavior.
True False
12. Behaviors are usually easier to measure than outputs because they are intangible and
subjective.
True False
13. Establishing targets and designing measurement systems are much more difficult for
managers because the high level of uncertainty in the organizational environment means
managers rarely know what might happen in the future.
True False
14. Top managers are most concerned with overall organizational performance and use
various production measures to evaluate it.
True False
11-2
15. Profit ratios measure how well managers have protected organizational resources to be
able to meet short-term obligations.
True False
16. When you divide the organization's current assets by its current liabilities, the result is
known as the times-covered ratio of the organization.
True False
17. Operating margin is calculated by dividing a company's operating profit by sales

revenues.
True False
18. An organization is said to be highly leveraged if it uses more debt than equity to finance
its ongoing operations.
True False
19. Days sales outstanding is profit ratio that reveals how efficiently managers are collecting
revenue from customers to pay expenses.
True False
20. The "objectivity" of financial measures of performance is a main reason why managers
use these ratios to measure the efficiency and effectiveness of their organizations.
True False
21. Financial information by itself provides managers with all of the information that they
need to measure the four building blocks of competitive advantage.
True False
11-3
22. To encourage a future-oriented approach, top managers must establish organizational

goals.
True False
23. If goals are set at an impossibly high level, managers might work only half-heartedly to
achieve them because they are certain they will fail.
True False
24. The least powerful form of behavior control is direct supervision of a subordinate by a
manager.
True False
25. When managers personally supervise subordinates, they lead by example and in this way
can help subordinates develop and increase their own skill levels.
True False
26. The more complex a job is, the more difficult it is for a manager to evaluate how well a
subordinate is performing.
True False
27. Management by objectives (MBO) is a formal system of evaluating subordinates on their

ability to achieve specific organizational goals or performance standards and to meet
operating budgets.
True False
28. During the objective-setting process of the MBO, it is the sole responsibility of managers
to establish the goals for the employees.
True False
11-4
29. Bureaucratic control is control by means of a comprehensive system of rules and standard
operating procedures (SOPs) that shapes and regulates the behavior of divisions, functions,
and individuals.
True False
30. Output control and behavior control are appropriate for many of the most important and
significant organizational activities.
True False
31. Clan control keeps organizational members goal-directed, while they are still open to new
opportunities.
True False
32. Organizational culture functions as a kind of control system.

True False
33. Organizational dynamics is the movement of an organization away from its present state
toward some preferred future state to increase its efficiency and effectiveness.
True False
34. Evolutionary change involves a bold attempt to quickly find new ways to be effective.
True False
35. Top-down change is typically more gradual or evolutionary than bottom-up change.
True False
Multiple Choice Questions
11-5
36. The process by which managers monitor and regulate the efficiency and effectiveness of
the workers in an organization is called:
A. Planning
B. Organizing
C. Leading
D. Controlling
E. Coordinating
37. The formal monitoring, evaluation, and feedback systems that allow managers to
determine if the organization's strategy and structure are working according to plans are
known as:
A. Organizational socialization
B. Clan control
C. Control systems
D. Concurrent systems
E. Market control
38. Which type of control allows managers to anticipate problems before they arise?
A. Feedforward control
B. Concurrent control
C. Feedback control
D. Bureaucratic control
E. Clan control
39. At the __________ stage of the process of transforming raw materials into finished goods,
managers typically use __________ control procedures to anticipate problems before they
occur.
A. input; concurrent
B. conversion; feedforward
C. output; concurrent
D. input; feedforward
E. conversion; feedback
11-6
40. RST Consulting diligently screens job applicants, often by viewing their rsums
electronically and using several interviews to select the most highly skilled people. This is an
example of:
A. Concurrent control
B. Feedforward control
C. Feedback control
E. Market control
41. Starling Manufacturing Inc. has carefully set up strict specifications for its raw materials
and goes through a three-step approval process when selecting its suppliers to ensure its raw
materials are the best possible quality. This is an example of:
C. Feedback control
E. Clan control
42. At the __________ stage of the process of transforming raw materials into finished goods,
managers typically use __________ control procedures to obtain immediate feedback about
how efficiently the raw materials are being transformed into finished goods.
A. conversion; concurrent
B. conversion; feedback
C. output; feedforward
D. input; concurrent
E. output; concurrent
43. Which type of control do managers typically use at the conversion stage of transforming
raw materials into finished goods?
B. Bureaucratic control
C. Concurrent control
D. Feedback control
E. Market control
11-7
44. Which type of control is at the heart of total quality management programs?
C. Feedback control
E. Clan control
45. What type of control do managers typically use at the output stage of transforming raw
materials into finished goods?
A. Behavioral control
C. Bureaucratic control
D. Feedforward control
E. Feedback control
46. At the __________ stage of transforming raw materials into finished goods, managers
typically use __________ control methods to determine customers' reactions to the
organization's goods and services.
A. output; feedforward
B. input; feedback
C. conversion; feedforward
D. output; feedback
47. An organization monitors the number of customer returns for each product model to
attempt to recognize when the organization is producing a large number of defective products.
This is an example of:
C. Clan control
D. Feedback control
E. Bureaucratic control
11-8
48. Price Buster Retail has invested in a management information system (MIS) that measures
increases or decreases in relative sales of different products alerts managers to changes in
customer tastes. This is an example of:
B. Feedback control
C. MBO control
E. Concurrent control
49. Which step of the control process deals with establishing the standards of performance?
A. Step 1
B. Step 2
C. Step 3
D. Step 4
E. Step 5
50. The standard of performance that measures efficiency at the corporate level of the
organization is:
A. Cost of goods sold
B. Operating profit
C. Net sales
D. Operating costs
E. Net income after taxes
51. At what stage of the control process do managers evaluate actual outputs and behavior
outputs?
A. Step 1
B. Step 2
C. Step 3
D. Step 4
E. Step 5
11-9
52. When an organization and its members perform ______ activities, it is ______
A. nonroutine, more
B. nonroutine, less
C. routine, more
D. programmed, more
E. nonprogrammed, less
53. Trevor, the regional manager for Taylor Dairies, tracks the average sale of each dairy
product sold in order to determine the quantity of each type of product to be carried on the
fleet. This is an example of:
A. Bureaucratic control
C. Output control
D. Input control
E. Clan control
54. At Step 3 of the control process, managers:

A. Measure actual performance
B. Compare actual performance to the standards
C. Establish the standards of performance
D. Initiate corrective action
E. Develop goals
55. The final step in the control process is to:

A. Initiate corrective action
B. Measure actual performance
D. Compare actual performance to the standards
E. Provide feedback
11-10
56. Top managers are most concerned with overall organizational performance and use
various financial measures to evaluate it. The most common include all EXCEPT:
A. Activity ratios
B. Leverage ratios
C. Profit ratios
D. Liquidity ratios
E. Cash flow ratios
57. Which of the following is the most commonly used financial performance measure when
evaluating an organization's performance?
A. Gross profit margin
B. Debt-to-equity ratio
C. Days sales outstanding ratio
D. Inventory turnover ratio
E. Return on investment
58. What is the result of dividing a company's operating profit (the amount it has left after all
the costs of making the product and running the business have been deducted) by sales
revenues?
B. Return on investment
C. Net profit
D. Operating margin
E. Operating costs
59. The direct and indirect costs associated with producing a specific product are subtracted
from the net revenues received from the sale of this product. The resulting figure is called:
A. Net income
B. Operating profit
C. Cash flow
D. Gross profit margin
E. The liquidity ratio
11-11
60. Which type of financial ratios measures the ability of the organization to pay its shortterm debts?
A. Leverage ratios
B. Liquidity ratios
C. Activity ratios
D. Profit ratios
E. Inventory turnover ratios
61. Which type of financial ratio is computed by dividing the organization's current assets by
its current liabilities?
A. Inventory turnover ratio
B. Days sales outstanding ratio
C. Profit ratio
D. Current ratio
E. Debt-to-assets ratio
62. Which type of financial ratio indicates whether or not the organization is capable of
paying off its short-term debts without having to sell any of its inventories?
A. Quick ratio
B. Current ratio
E. Profit ratio
63. The times-covered ratio, which measures the degree to which managers use debt or equity
to finance ongoing operations, is a type of financial ratio known as:
A. Current ratio
B. Liquidity ratio
C. Leverage ratio
D. Activity ratio
E. Profit ratio
11-12
64. Which types of financial ratios measure how well the managers of the organization are
creating value from the organization's assets?
A. Leverage ratios
B. Liquidity ratios
C. Profit ratios
D. Current ratios
E. Activity ratios
65. Inventory turnover is a type of:

A. Leverage ratios
B. Liquidity ratios
C. Profit ratios
D. Activity ratios
E. Quick ratios
66. What is the reason why so many managers use financial measures to assess the efficiency
and effectiveness of their organizations?
A. Objectivity
B. Subjectivity
C. Feasibility
D. Ease of use
E. Creativity
67. As the regional manager, Ted's performance is evaluated on the basis of the difference
between the sales revenues generated by his region and the cost of making those goods and
services. Ted is being evaluated using:
A. A profit budget approach
B. A revenue budget approach
C. A cash flow budget approach
D. A cost budget approach
E. An expense budget approach
11-13
68. As a regional manager, Dwight is given an operating budget of $1 million for the coming
year and is evaluated on the basis of the amount of paper the region can sell based on that
budget. Dwight's performance will be evaluated on:
A. A revenue budget approach
B. A cash flow budget approach
C. An expense budget approach
D. A profit budget approach
E. A capital budget approach
69. A division manager is told to "maximize the sales of the division" and is then evaluated on
the basis of the net sales generated by the division. This is an example of:
D. A cash flow budget approach
70. A division manager is evaluated based on his division's revenues less the budgeted cost of
his division. This is an example of:
A. A cash flow budget approach
B. A capital budget approach
C. A revenue budget approach
D. An expense budget approach
E. A profit budget approach
71. What is the most immediate and potent form of behavior control?
A. SOPs
B. An MBO system
C. Rules
D. Direct supervision
11-14
72. What allows managers at all levels to become personally involved with their subordinates
and allows them to mentor subordinates and develop their management skills?
A. Clan control
B. MBO systems
C. Market control
D. Output control
E. Direct supervision
73. All of the following are problems associated with direct supervision EXCEPT:
A. Expensive
B. Demotivation of subordinates
C. Not feasible for some jobs
D. Employees may feel scrutinized
E. Personal involvement with subordinates
74. The use of direct supervision as a control mechanism:

A. Is the least expensive form of control
B. Can demotivate subordinates
C. Is feasible for complex jobs
D. Is preferred over output controls
E. Is preferred over behavior controls
75. A system for evaluating subordinates' behavior by their ability to achieve specific goals is
called:
A. An SOP
B. Performance appraisal
C. MBO
D. TQM
E. Clan control
11-15
76. MBO starts when top managers:

A. Establish lines of communication
B. Develop behavior controls
C. Develop output controls
D. Establish organizational objectives
E. Establish individual performance objectives
77. In MBO:
A. Subordinates set goals for themselves
B. Managers set goals for subordinates
C. Subordinates set goals for managers
D. Managers and subordinates set goals together
E. Managers and subordinates goals are unrelated
78. Control by means of a comprehensive system of rules and standard operating procedures
(SOPs) that shapes and regulates the behavior of divisions, functions, and individuals is
known as:
A. A bureaucratic control system
B. Management by objective
C. Output control
D. Clan control
E. Market control
79. ___________ guide behavior and specify what an employee should do when they confront
a problem that needs a solution.
A. Goals
B. SOPs
C. Rules
D. Rules and SOPs, but not goals
E. Rules, SOPs, and goals
11-16
80. The workers of an organization perform the same activities in the same way over and over
again, based on rules that managers have developed. We say that the behavior of these
workers has been:
A. Compromised
B. Standardized
C. Maximized
D. Minimized
E. Simplified
81. Too much ______ can actually ______ the level of learning taking place in an
organization and get the organization off track if managers and workers focus on the wrong
issues.
A. standardization; reduce
B. standardization; increase
C. innovation; reduce
D. innovation; increase
E. stability; increase
82. Bureaucratic control should be used when organizational activities are

________________; it is less useful when _________.
A. routine; nonprogrammed decisions must be made
B. routine; programmed decisions must be made
C. nonroutine; programmed decisions must be made
D. nonstandardized; nonprogrammed decisions must be made
E. standardized; programmed decisions must be made
83. The set of values, norms, and expectations of behavior which control the ways in which
workers interact with one another within the organization is known as:
A. Bureaucratic culture
B. Organizational culture
C. An MBO culture
D. SOPs
E. Rules
11-17
84. The type of control that is imposed on workers within the organization by the shared
values and standards of behavior for workers within that organization is known as:
C. Clan control
D. Feedback control
E. Output control
85. Which type of control keeps organizational members goal-directed while open to new
opportunities by taking advantage of the power of organizational culture?
C. Market control
D. Clan control
E. Output control
86. Many researchers believe that the highest-performing organizations are those that are
constantly:
A. Changing
B. Standardizing
C. Stabilizing
D. Controlling
E. Minimizing
87. What theory states that a wide variety of forces arise from the way an organization
operates that make organizations resistant to change?
A. TQM
B. Force-field
C. Benchmarking
D. Evolutionary change
E. Revolutionary change
11-18
88. When the forces are evenly balanced, the organization is in a state of ______ and does not
change.
A. equilibrium
B. balance
C. stagnation
D. inertia
E. stability
89. Which theory deals with understanding organizational change?

A. Maslow's Hierarchy
B. Lewin's Force-Field Theory
C. Scientific Management
D. TQM
E. MBO
90. What type of change is gradual, incremental, and narrowly focused?

A. Force-field
B. Culture
C. Structural
D. Revolutionary
E. Evolutionary
91. What type of change is rapid, dramatic, and broadly focused?

A. Force-field
B. Culture
C. Structural
D. Revolutionary
E. Evolutionary
11-19
92. The first step managers must take to manage change effectively is:
A. Evaluate the change
B. Decide on the change to make
C. Implement the change
D. Assess the need to change
E. Identify obstacles to change
93. A change that is gradual, in which managers at all levels work together to develop a
detailed plan for change, is called a __________ change.
A. top-down
B. management-directed
C. bottom-up
D. revolutionary
E. restructuring
Essay Questions
94. Explain the relationship between organizational control and the four building blocks of
competitive advantage.
95. Discuss the three characteristics of an effective control system in an organization.

Illustrate each characteristic with a specific example from an organization of your choosing.
11-20
96. Discuss the type of control used at each stage in process of transforming inputs into
finished goods or services. Provide examples of each type of control.
97. Describe the four steps in the control process.
98. The top managers of an organization typically use a variety of financial indicators to
assess the performance of their organization. Discuss the four major types of financial
measures and give one specific example of how each would be computed.
99. Discuss three ways in which managers can attempt to control the behavior of
subordinates.
11-21
100. Discuss the steps involved in the management by objective process.
101. Discuss the problems associated with bureaucratic control.
102. What is "clan control"? How can a manager use clan control to influence employees'
work behaviors?
103. Discuss the two opposing forces in the control process that influence how organizations
change.
11-22
104. Describe Lewin's Force-Field Theory.
105. Define evolutionary and revolutionary change. When is each appropriate?
106. Describe the steps in the organizational change process.
11-23
Chapter 11 Organizational Control and Change Answer Key
True / False Questions
1. (p. 355) The process by which managers monitor and regulate the organization in order to
determine if the organization is operating efficiently and effectively is known as controlling.
TRUE
Controlling is the process by which managers monitor and regulate the organization in order
to determine if the organization is operating efficiently and effectively.
AACSB: Reflective Thinking

Bloom's: Remember
Difficulty: Easy
Learning Objective: 11-01 Define organizational control and explain how it increases organizational effectiveness.
Topic: Organizational Control
2. (p. 356) Managers monitor and evaluate the organization's strategy to see if it is working using
the controlling function.
TRUE
In controlling, managers monitor and evaluate whether the organization's strategy and
structure are working as intended, how they could be improved, and how they might be
changed if they are not working.

Bloom's: Remember
Difficulty: Easy
11-24
3. (p. 356) Control is concerned with keeping employees motivated.

TRUE
Control is concerned with keeping employees motivated, focused on the important problems
confronting the organization, and working together to make the changes that will help an
organization improve its performance over time.

Bloom's: Understand
Difficulty: Medium
4. (p. 356) Control is simply just reacting to events after they have occurred.
FALSE
Control is more than just reacting to events after they have occurred.

Bloom's: Understand
Difficulty: Easy
5. (p. 356) Control helps managers build a competitive advantage.

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

Bloom's: Understand
Difficulty: Medium
11-25
6. (p. 356) Control helps managers respond more effectively to customers.

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

Bloom's: Understand
Difficulty: Medium
7. (p. 357) A control system must be rigid and consistent in order to be effective.
FALSE
An effective control system is flexible enough to allow managers to respond as necessary to
unexpected events.

Bloom's: Understand
Difficulty: Medium
8. (p. 357) At the input stage, managers use feedback control to anticipate problems before they
arise so problems do not occur later during the conversion process.
FALSE
At the input stage, managers use feedforward control to anticipate problems before they arise

Bloom's: Understand
Difficulty: Medium
11-26
9. (p. 358) The first step in the control process is to evaluate the results in terms of the
performance standards.
FALSE
At step 1 in the control process managers decide on the standards of performance, goals, or
targets that they will use in the future to evaluate performance.

Bloom's: Understand
Difficulty: Medium
Learning Objective: 11-02 Describe the four steps in the control process and the way it operates over time.
Topic: Control Process
10. (p. 359) In practice, managers can only measure the actual outputs that result from the
behavior of their members.
FALSE
In practice, managers can measure or evaluate two things: the actual outputs that result from
the behavior of their members and the behaviors themselves.

Bloom's: Understand
Difficulty: Medium
11. (p. 359) When an organization and its members perform nonroutine activities, it is more
TRUE
When an organization and its members perform complex, nonroutine activities that are
intrinsically hard to measure, it is more challenging for managers to measure outputs or
behavior.

Bloom's: Understand
Difficulty: Medium
11-27
12. (p. 360) Behaviors are usually easier to measure than outputs because they are intangible and
subjective.
FALSE
Outputs are usually easier to measure than behaviors because they are more tangible and
objective.

Bloom's: Understand
Difficulty: Medium
13. (p. 361) Establishing targets and designing measurement systems are much more difficult for
TRUE
Establishing targets and designing measurement systems are much more difficult for

Bloom's: Remember
Difficulty: Medium
14. (p. 361) Top managers are most concerned with overall organizational performance and use
various production measures to evaluate it.
FALSE
Top managers are most concerned with overall organizational performance and use various
financial measures to evaluate it.

Bloom's: Understand
Difficulty: Medium
Learning Objective: 11-03 Identify the main output controls; and discuss their advantages and disadvantages as means of coordinating and
motivating employees.
Topic: Output Control
11-28
15. (p. 362) Profit ratios measure how well managers have protected organizational resources to
be able to meet short-term obligations.
FALSE
Liquidity ratios measure how well managers have protected organizational resources to be

Bloom's: Remember
Difficulty: Medium
16. (p. 362) When you divide the organization's current assets by its current liabilities, the result
is known as the times-covered ratio of the organization.
FALSE
The current ratio (current assets divided by current liabilities) tells managers whether they
have the resources available to meet the claims of short-term creditors.

Bloom's: Remember
Difficulty: Medium
17. (p. 362) Operating margin is calculated by dividing a company's operating profit by sales
revenues.
TRUE
Operating margin is calculated by dividing a company's operating profit (the amount it has
left after all the costs of making the product and running the business have been deducted) by
sales revenues.

Bloom's: Remember
Difficulty: Easy
11-29
18. (p. 362) An organization is said to be highly leveraged if it uses more debt than equity to
finance its ongoing operations.
TRUE
An organization is highly leveraged if it uses more debt than equity.

Bloom's: Remember
Difficulty: Medium
19. (p. 363) Days sales outstanding is profit ratio that reveals how efficiently managers are
collecting revenue from customers to pay expenses.
FALSE
Days sales outstanding, an activity ratio, reveals how efficiently managers are collecting
revenue from customers to pay expenses.

Bloom's: Understand
Difficulty: Hard
20. (p. 363) The "objectivity" of financial measures of performance is a main reason why
managers use these ratios to measure the efficiency and effectiveness of their organizations.
TRUE
The objectivity of financial measures of performance is the reason why so many managers use
them to assess the efficiency and effectiveness of their organizations.

Bloom's: Understand
Difficulty: Easy
11-30
21. (p. 364) Financial information by itself provides managers with all of the information that
they need to measure the four building blocks of competitive advantage.
FALSE
Although financial information is an important output control, financial information by itself
does not tell managers all they need to know about the four building blocks of competitive
advantage.

Bloom's: Understand
Difficulty: Medium
22. (p. 364) To encourage a future-oriented approach, top managers must establish organizational
goals.
TRUE
To encourage a future-oriented approach, top managers must establish organizational goals.

Bloom's: Understand
Difficulty: Easy
23. (p. 364) If goals are set at an impossibly high level, managers might work only half-heartedly
to achieve them because they are certain they will fail.
TRUE
If goals are set at an impossibly high level, managers might work only half-heartedly to
achieve them because they are certain they will fail.

Bloom's: Understand
Difficulty: Medium
11-31
24. (p. 366) The least powerful form of behavior control is direct supervision of a subordinate by
a manager.
FALSE
The most immediate and potent form of behavior control is direct supervision.

Bloom's: Remember
Difficulty: Medium
Learning Objective: 11-04 Identify the main behavior controls; and discuss their advantages and disadvantages as a means of coordinating
and motivating employees.
Topic: Behavior Control
25. (p. 366) When managers personally supervise subordinates, they lead by example and in this
way can help subordinates develop and increase their own skill levels.
TRUE
When managers personally supervise subordinates, they lead by example and in this way can
help subordinates develop and increase their own skill levels.

Bloom's: Understand
Difficulty: Easy
26. (p. 366) The more complex a job is, the more difficult it is for a manager to evaluate how
well a subordinate is performing.
TRUE
The more complex a job is, the more difficult it is for a manager to evaluate how well a
subordinate is performing.

Bloom's: Remember
Difficulty: Easy
11-32
27. (p. 367) Management by objectives (MBO) is a formal system of evaluating subordinates on
their ability to achieve specific organizational goals or performance standards and to meet
operating budgets.
TRUE
Management by objectives (MBO) is a formal system of evaluating subordinates on their
operating budgets.

Bloom's: Remember
Difficulty: Easy
28. (p. 367) During the objective-setting process of the MBO, it is the sole responsibility of
managers to establish the goals for the employees.
FALSE
The participation of subordinates in the objective-setting process of MBO is a way of
strengthening their commitment to achieving their goals and meeting their budgets.

Bloom's: Understand
Difficulty: Medium
11-33
29. (p. 369) Bureaucratic control is control by means of a comprehensive system of rules and
standard operating procedures (SOPs) that shapes and regulates the behavior of divisions,
functions, and individuals.
TRUE
Bureaucratic control is control by means of a comprehensive system of rules and standard
and individuals.

Bloom's: Remember
Difficulty: Easy
30. (p. 374) Output control and behavior control are appropriate for many of the most important
and significant organizational activities.
FALSE
For many of the most important and significant organizational activities, however, output
control and behavior control are inappropriate for several reasons.

Bloom's: Understand
Difficulty: Medium
11-34
31. (p. 374) Clan control keeps organizational members goal-directed, while they are still open to
new opportunities.
TRUE
One source of control increasingly being used by organizations is clan control, which takes
advantage of the power of internalized values and norms to guide and constrain employee
attitudes and behavior in ways that increase organizational performance.

Bloom's: Remember
Difficulty: Medium
32. (p. 374) Organizational culture functions as a kind of control system.

TRUE
Organizational culture functions as a kind of control system because managers can
deliberately try to influence the kind of values and norms that develop in an organization.

Bloom's: Remember
Difficulty: Easy
33. (p. 376) Organizational dynamics is the movement of an organization away from its present
state toward some preferred future state to increase its efficiency and effectiveness.
FALSE
Organizational change is the movement of an organization away from its present state toward
some preferred future state to increase its efficiency and effectiveness.

Bloom's: Remember
Difficulty: Medium
Learning Objective: 11-05 Discuss the relationship between organizational control and change; and explain why managing change is a vital
management task.
Topic: Organizational Change
11-35
34. (p. 378) Evolutionary change involves a bold attempt to quickly find new ways to be
effective.
FALSE
Revolutionary change involves a bold attempt to quickly find new ways to be effective.

Bloom's: Remember
Difficulty: Medium
management task.
35. (p. 380) Top-down change is typically more gradual or evolutionary than bottom-up change.
FALSE
Bottom-up change is typically more gradual or evolutionary.

Bloom's: Understand
Difficulty: Medium
management task.
Multiple Choice Questions
11-36
36. (p. 355) The process by which managers monitor and regulate the efficiency and
effectiveness of the workers in an organization is called:
A. Planning
B. Organizing
C. Leading
D. Controlling
E. Coordinating
Controlling is the process by which managers monitor and regulate the organization in order
to determine if the organization is operating efficiently and effectively.

Bloom's: Remember
Difficulty: Easy
37. (p. 357) The formal monitoring, evaluation, and feedback systems that allow managers to
determine if the organization's strategy and structure are working according to plans are
known as:
A. Organizational socialization
B. Clan control
C. Control systems
D. Concurrent systems
E. Market control
Control systems are formal target-setting, monitoring, evaluation, and feedback systems that
provide managers with information about whether the organization's strategy and structure are
working efficiently and effectively.

Bloom's: Remember
Difficulty: Easy
11-37
38. (p. 357) Which type of control allows managers to anticipate problems before they arise?
C. Feedback control
E. Clan control
Feedforward control is control that allows managers to anticipate problems before they arise.

Bloom's: Remember
Difficulty: Easy
39. (p. 357) At the __________ stage of the process of transforming raw materials into finished
goods, managers typically use __________ control procedures to anticipate problems before
they occur.
A. input; concurrent
B. conversion; feedforward
C. output; concurrent
D. input; feedforward

Bloom's: Understand
Difficulty: Hard
11-38
40. (p. 357) RST Consulting diligently screens job applicants, often by viewing their rsums
electronically and using several interviews to select the most highly skilled people. This is an
example of:
C. Feedback control
E. Market control

Bloom's: Apply
Difficulty: Hard
41. (p. 357) Starling Manufacturing Inc. has carefully set up strict specifications for its raw
materials and goes through a three-step approval process when selecting its suppliers to
ensure its raw materials are the best possible quality. This is an example of:
C. Feedback control
E. Clan control

Bloom's: Apply
Difficulty: Hard
11-39
42. (p. 358) At the __________ stage of the process of transforming raw materials into finished
goods, managers typically use __________ control procedures to obtain immediate feedback
about how efficiently the raw materials are being transformed into finished goods.
A. conversion; concurrent
B. conversion; feedback
C. output; feedforward
D. input; concurrent
E. output; concurrent
At the conversion stage, concurrent control gives managers immediate feedback on how
efficiently inputs are being transformed into outputs so managers can correct problems as they
arise.

Bloom's: Understand
Difficulty: Hard
43. (p. 358) Which type of control do managers typically use at the conversion stage of
transforming raw materials into finished goods?
B. Bureaucratic control
C. Concurrent control
D. Feedback control
E. Market control
At the conversion stage, concurrent control gives managers immediate feedback on how
efficiently inputs are being transformed into outputs so managers can correct problems as they
arise.

Bloom's: Understand
Difficulty: Hard
11-40
44. (p. 358) Which type of control is at the heart of total quality management programs?
C. Feedback control
E. Clan control
Concurrent control is at the heart of total quality management.

Bloom's: Understand
Difficulty: Medium
45. (p. 358) What type of control do managers typically use at the output stage of transforming
raw materials into finished goods?
A. Behavioral control
C. Bureaucratic control
D. Feedforward control
E. Feedback control
At the output stage, managers use feedback control to provide information about customers'
reactions to goods and services so corrective action can be taken if necessary.

Bloom's: Understand
Difficulty: Medium
11-41
46. (p. 358) At the __________ stage of transforming raw materials into finished goods,
managers typically use __________ control methods to determine customers' reactions to the
organization's goods and services.
A. output; feedforward
B. input; feedback
C. conversion; feedforward
D. output; feedback

Bloom's: Understand
Difficulty: Hard
47. (p. 358) An organization monitors the number of customer returns for each product model to
attempt to recognize when the organization is producing a large number of defective products.
This is an example of:
C. Clan control
D. Feedback control
E. Bureaucratic control

Bloom's: Apply
Difficulty: Hard
11-42
48. (p. 358) Price Buster Retail has invested in a management information system (MIS) that
measures increases or decreases in relative sales of different products alerts managers to
changes in customer tastes. This is an example of:
B. Feedback control
C. MBO control
E. Concurrent control

Bloom's: Apply
Difficulty: Hard
49. (p. 358) Which step of the control process deals with establishing the standards of
performance?
A. Step 1
B. Step 2
C. Step 3
D. Step 4
E. Step 5
At step 1 in the control process managers decide on the standards of performance, goals, or
targets that they will use in the future to evaluate performance.

Bloom's: Remember
Difficulty: Easy
11-43
50. (p. 358) The standard of performance that measures efficiency at the corporate level of the
organization is:
A. Cost of goods sold
B. Operating profit
C. Net sales
D. Operating costs
E. Net income after taxes
At the corporate level, a standard of performance that measures efficiency is operating costs,
the actual costs associated with producing goods and services, including all employee-related
costs.

Bloom's: Remember
Difficulty: Medium
51. (p. 359) At what stage of the control process do managers evaluate actual outputs and
behavior outputs?
A. Step 1
B. Step 2
C. Step 3
D. Step 4
E. Step 5
The second step in the control process is to measure actual performance. In practice,
managers can measure or evaluate two things: (1) the actual outputs that result from the
behavior of their members and (2) the behaviors themselves.

Bloom's: Understand
Difficulty: Medium
11-44
52. (p. 359) When an organization and its members perform ______ activities, it is ______
A. nonroutine, more
B. nonroutine, less
C. routine, more
D. programmed, more
E. nonprogrammed, less
When an organization and its members perform complex, nonroutine activities that are
intrinsically hard to measure, it is more challenging for managers to measure outputs or
behavior.

Bloom's: Understand
Difficulty: Medium
53. (p. 359) Trevor, the regional manager for Taylor Dairies, tracks the average sale of each dairy
product sold in order to determine the quantity of each type of product to be carried on the
fleet. This is an example of:
C. Output control
D. Input control
E. Clan control
The second step in the control process is to measure actual performance. In practice,
managers can measure or evaluate two things: (1) the actual outputs that result from the
behavior of their members and (2) the behaviors themselves.

Bloom's: Apply
Difficulty: Hard
11-45
54. (p. 360) At Step 3 of the control process, managers:

A. Measure actual performance
B. Compare actual performance to the standards
D. Initiate corrective action
E. Develop goals
During step 3, managers evaluate whether-and to what extent-performance deviates from the
standards of performance chosen in step 1.

Bloom's: Understand
Difficulty: Easy
55. (p. 360) The final step in the control process is to:
A. Initiate corrective action
B. Measure actual performance
D. Compare actual performance to the standards
E. Provide feedback
The final step in the control process is to evaluate the results and bring about change as
appropriate.

Bloom's: Remember
Difficulty: Medium
11-46
56. (p. 361) Top managers are most concerned with overall organizational performance and use
various financial measures to evaluate it. The most common include all EXCEPT:
A. Activity ratios
B. Leverage ratios
C. Profit ratios
D. Liquidity ratios
E. Cash flow ratios
Top managers are most concerned with overall organizational performance and use various
financial measures to evaluate it. The most common are profit ratios, liquidity ratios, leverage
ratios, and activity ratios.

Bloom's: Remember
Difficulty: Medium
57. (p. 362) Which of the following is the most commonly used financial performance measure
when evaluating an organization's performance?
B. Debt-to-equity ratio
Return on investment (ROI), an organization's net income before taxes divided by its total
assets, is the most commonly used financial performance measure because it allows managers
of one organization to compare performance with that of other organizations.

Bloom's: Remember
Difficulty: Medium
11-47
58. (p. 362) What is the result of dividing a company's operating profit (the amount it has left
after all the costs of making the product and running the business have been deducted) by
sales revenues?
B. Return on investment
C. Net profit
D. Operating margin
E. Operating costs
Operating margin is calculated by dividing a company's operating profit (the amount it has
left after all the costs of making the product and running the business have been deducted) by
sales revenues.

Bloom's: Remember
Difficulty: Medium
59. (p. 362) The direct and indirect costs associated with producing a specific product are
subtracted from the net revenues received from the sale of this product. The resulting figure is
called:
A. Net income
B. Operating profit
C. Cash flow
D. Gross profit margin
E. The liquidity ratio
Operating profit is the amount it has left after all the costs of making the product and running
the business have been deducted.

Bloom's: Remember
Difficulty: Medium
11-48
60. (p. 362) Which type of financial ratios measures the ability of the organization to pay its
short-term debts?
A. Leverage ratios
B. Liquidity ratios
C. Activity ratios
D. Profit ratios
E. Inventory turnover ratios
Liquidity ratios measure how well managers have protected organizational resources to be

Bloom's: Understand
Difficulty: Medium
61. (p. 362) Which type of financial ratio is computed by dividing the organization's current
assets by its current liabilities?
A. Inventory turnover ratio
B. Days sales outstanding ratio
C. Profit ratio
D. Current ratio
E. Debt-to-assets ratio
The current ratio (current assets divided by current liabilities) tells managers whether they
have the resources available to meet the claims of short-term creditors.

Bloom's: Understand
Difficulty: Medium
11-49
62. (p. 362) Which type of financial ratio indicates whether or not the organization is capable of
paying off its short-term debts without having to sell any of its inventories?
A. Quick ratio
B. Current ratio
E. Profit ratio
The quick ratio shows whether they can pay these claims without selling inventory.

Bloom's: Understand
Difficulty: Medium
63. (p. 362) The times-covered ratio, which measures the degree to which managers use debt or
equity to finance ongoing operations, is a type of financial ratio known as:
A. Current ratio
B. Liquidity ratio
C. Leverage ratio
D. Activity ratio
E. Profit ratio
Leverage ratios, such as the debt-to-assets ratio and the times-covered ratio, measure the
degree to which managers use debt or equity to finance ongoing operations.

Bloom's: Understand
Difficulty: Medium
11-50
64. (p. 363) Which types of financial ratios measure how well the managers of the organization
are creating value from the organization's assets?
A. Leverage ratios
B. Liquidity ratios
C. Profit ratios
D. Current ratios
E. Activity ratios
Activity ratios show how well managers are creating value from organizational assets.

Bloom's: Understand
Difficulty: Medium
65. (p. 363) Inventory turnover is a type of:

A. Leverage ratios
B. Liquidity ratios
C. Profit ratios
D. Activity ratios
E. Quick ratios
Activity ratios show how well managers are creating value from organizational assets.

Bloom's: Understand
Difficulty: Medium
11-51
66. (p. 363) What is the reason why so many managers use financial measures to assess the
efficiency and effectiveness of their organizations?
A. Objectivity
B. Subjectivity
C. Feasibility
D. Ease of use
E. Creativity
The objectivity of financial measures of performance is the reason why so many managers use
them to assess the efficiency and effectiveness of their organizations.

Bloom's: Understand
Difficulty: Medium
67. (p. 365) As the regional manager, Ted's performance is evaluated on the basis of the
difference between the sales revenues generated by his region and the cost of making those
goods and services. Ted is being evaluated using:
C. A cash flow budget approach
D. A cost budget approach
E. An expense budget approach
Managers may be evaluated on the difference between the revenues generated by the sales of
goods and services and the budgeted cost of making those goods and services (a profit budget
approach).

Bloom's: Apply
Difficulty: Hard
11-52
68. (p. 365) As a regional manager, Dwight is given an operating budget of $1 million for the
coming year and is evaluated on the basis of the amount of paper the region can sell based on
that budget. Dwight's performance will be evaluated on:
A. A revenue budget approach
B. A cash flow budget approach
D. A profit budget approach
Managers of a division may be given a fixed budget for resources and be evaluated on the
amount of goods or services they can produce using those resources (this is a cost or expense
budget approach).

Bloom's: Apply
Difficulty: Hard
69. (p. 365) A division manager is told to "maximize the sales of the division" and is then
evaluated on the basis of the net sales generated by the division. This is an example of:
D. A cash flow budget approach
Managers may be asked to maximize the revenues from the sales of goods and services
produced (a revenue budget approach).

Bloom's: Remember
Difficulty: Hard
11-53
70. (p. 365) A division manager is evaluated based on his division's revenues less the budgeted
cost of his division. This is an example of:
A. A cash flow budget approach
B. A capital budget approach
C. A revenue budget approach
D. An expense budget approach
E. A profit budget approach
Managers may be evaluated on the difference between the revenues generated by the sales of
goods and services and the budgeted cost of making those goods and services (a profit budget
approach).

Bloom's: Remember
Difficulty: Hard
71. (p. 366) What is the most immediate and potent form of behavior control?
A. SOPs
B. An MBO system
C. Rules
D. Direct supervision
The most immediate and potent form of behavior control is direct supervision.

Bloom's: Remember
Difficulty: Medium
11-54
72. (p. 366) What allows managers at all levels to become personally involved with their
subordinates and allows them to mentor subordinates and develop their management skills?
A. Clan control
B. MBO systems
C. Market control
D. Output control
E. Direct supervision
Direct supervision allows managers at all levels to become personally involved with their
subordinates and allows them to mentor subordinates and develop their management skills.

Bloom's: Remember
Difficulty: Easy
73. (p. 366) All of the following are problems associated with direct supervision EXCEPT:
A. Expensive
B. Demotivation of subordinates
C. Not feasible for some jobs
D. Employees may feel scrutinized
E. Personal involvement with subordinates
A benefit of direct supervision is that it allows managers at all levels to become personally
involved with their subordinates and allows them to mentor subordinates and develop their
management skills.

Bloom's: Understand
Difficulty: Medium
11-55
74. (p. 366) The use of direct supervision as a control mechanism:

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

Bloom's: Remember
Difficulty: Medium
75. (p. 367) A system for evaluating subordinates' behavior by their ability to achieve specific
goals is called:
A. An SOP
B. Performance appraisal
C. MBO
D. TQM
E. Clan control
Management by objectives (MBO) is a formal system of evaluating subordinates on their
operating budgets.

Bloom's: Remember
Difficulty: Easy
11-56
76. (p. 367) MBO starts when top managers:

A. Establish lines of communication
B. Develop behavior controls
C. Develop output controls
D. Establish organizational objectives
E. Establish individual performance objectives
MBO starts when top managers establish overall organizational objectives, such as specific
financial performance goals or targets.

Bloom's: Understand
Difficulty: Medium
77. (p. 367) In MBO:

A. Subordinates set goals for themselves
B. Managers set goals for subordinates
C. Subordinates set goals for managers
D. Managers and subordinates set goals together
E. Managers and subordinates goals are unrelated
Managers at every level sit down with each of the subordinate managers who report directly
to them, and together they determine appropriate and feasible goals for the subordinate.

Bloom's: Remember
Difficulty: Medium
11-57
78. (p. 369) Control by means of a comprehensive system of rules and standard operating
procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and
individuals is known as:
A. A bureaucratic control system
B. Management by objective
C. Output control
D. Clan control
E. Market control
Bureaucratic control is control by means of a comprehensive system of rules and standard
and individuals.

Bloom's: Remember
Difficulty: Easy
79. (p. 370) ___________ guide behavior and specify what an employee should do when they
confront a problem that needs a solution.
A. Goals
B. SOPs
C. Rules
D. Rules and SOPs, but not goals
E. Rules, SOPs, and goals
Rules and SOPs guide behavior and specify what employees are to do when they confront a
problem that needs a solution.

Bloom's: Remember
Difficulty: Easy
11-58
80. (p. 370) The workers of an organization perform the same activities in the same way over
and over again, based on rules that managers have developed. We say that the behavior of
these workers has been:
A. Compromised
B. Standardized
C. Maximized
D. Minimized
E. Simplified
When employees follow the rules that managers have developed, their behavior is
standardized-actions are performed the same way time and time again-and the outcomes of
their work are predictable.

Bloom's: Remember
Difficulty: Easy
81. (p. 372) Too much ______ can actually ______ the level of learning taking place in an
issues.
A. standardization; reduce
B. standardization; increase
C. innovation; reduce
D. innovation; increase
E. stability; increase
Thus too much standardization can actually reduce the level of learning taking place in an
issues.

Bloom's: Understand
Difficulty: Medium
11-59
82. (p. 372) Bureaucratic control should be used when organizational activities are
________________; it is less useful when _________.
A. routine; nonprogrammed decisions must be made
B. routine; programmed decisions must be made
C. nonroutine; programmed decisions must be made
D. nonstandardized; nonprogrammed decisions must be made
E. standardized; programmed decisions must be made
Bureaucratic control is most useful when organizational activities are routine and well
understood and when employees are making programmed decisions.

Bloom's: Understand
Difficulty: Medium
83. (p. 374) The set of values, norms, and expectations of behavior which control the ways in
which workers interact with one another within the organization is known as:
A. Bureaucratic culture
B. Organizational culture
C. An MBO culture
D. SOPs
E. Rules
Organizational culture is values and norms that specify appropriate and inappropriate
behaviors and so determine the way its members behave.

Bloom's: Remember
Difficulty: Easy
11-60
84. (p. 374) The type of control that is imposed on workers within the organization by the shared
values and standards of behavior for workers within that organization is known as:
C. Clan control
D. Feedback control
E. Output control
Clan control is the control exerted on individuals and groups in an organization by shared
values, norms, standards of behavior, and expectations.

Bloom's: Remember
Difficulty: Easy
85. (p. 374) Which type of control keeps organizational members goal-directed while open to
new opportunities by taking advantage of the power of organizational culture?
C. Market control
D. Clan control
E. Output control
Clan control serves this dual function of keeping organizational members goal-directed while
open to new opportunities because it takes advantage of the power of organizational culture.

Bloom's: Understand
Difficulty: Medium
11-61
86. (p. 376) Many researchers believe that the highest-performing organizations are those that
are constantly:
A. Changing
B. Standardizing
C. Stabilizing
D. Controlling
E. Minimizing
Many researchers believe that the highest-performing organizations are those that are
constantly changing.

Bloom's: Remember
Difficulty: Easy
management task.
87. (p. 377) What theory states that a wide variety of forces arise from the way an organization
operates that make organizations resistant to change?
A. TQM
B. Force-field
C. Benchmarking
D. Evolutionary change
E. Revolutionary change
According to force-field theory, a wide variety of forces arise from the way an organization
operates that make organizations resistant to change.

Bloom's: Remember
Difficulty: Easy
management task.
11-62
88. (p. 377) When the forces are evenly balanced, the organization is in a state of ______ and
does not change.
A. equilibrium
B. balance
C. stagnation
D. inertia
E. stability
When the forces are evenly balanced, the organization is in a state of inertia and does not
change.

Bloom's: Understand
Difficulty: Medium
management task.
89. (p. 377) Which theory deals with understanding organizational change?
A. Maslow's Hierarchy
B. Lewin's Force-Field Theory
C. Scientific Management
D. TQM
E. MBO
According to his force-field theory, a wide variety of forces arise from the way an
organization operates that make organizations resistant to change.

Bloom's: Remember
Difficulty: Medium
management task.
11-63
90. (p. 378) What type of change is gradual, incremental, and narrowly focused?
A. Force-field
B. Culture
C. Structural
D. Revolutionary
E. Evolutionary
Evolutionary change is gradual, incremental, and narrowly focused.

Bloom's: Remember
Difficulty: Easy
management task.
91. (p. 378) What type of change is rapid, dramatic, and broadly focused?
A. Force-field
B. Culture
C. Structural
D. Revolutionary
E. Evolutionary
Revolutionary change is rapid, dramatic, and broadly focused.

Bloom's: Remember
Difficulty: Easy
management task.
11-64
92. (p. 378) The first step managers must take to manage change effectively is:
A. Evaluate the change
B. Decide on the change to make
C. Implement the change
D. Assess the need to change
E. Identify obstacles to change
During the first step in the change process, managers need to recognize that there is a problem
that requires change.

Bloom's: Remember
Difficulty: Medium
management task.
93. (p. 380) A change that is gradual, in which managers at all levels work together to develop a
detailed plan for change, is called a __________ change.
A. top-down
B. management-directed
C. bottom-up
D. revolutionary
E. restructuring
Bottom-up change is a gradual or evolutionary approach to change in which managers at all
levels work together to develop a detailed plan for change.

Bloom's: Remember
Difficulty: Medium
management task.
Essay Questions
11-65
94. (p. 356-357) Explain the relationship between organizational control and the four building
blocks of competitive advantage.
To determine how efficiently they are using their resources, managers must be able to
accurately measure how many units of inputs are being used to produce a unit of output.
Managers also must be able to measure how many units of outputs are being produced. A
control system contains the measures or yardsticks that let managers assess how efficiently
the organization is producing goods and services. Today much of the competition among
organizations centers on increasing the quality of goods and services. Organizational control
is important in determining the quality of goods and services because it gives managers
feedback on product quality. Effective managers create a control system that consistently
monitors the quality of goods and services so they can continuously improve quality-an
approach to change that gives them a competitive advantage. Managers can help make their
organizations more responsive to customers if they develop a control system, such as a CRM
system, that allows them to evaluate how well customer contact employees perform their jobs.
Finally, controlling can raise the level of innovation in an organization. Successful innovation
takes place when managers create an organizational setting in which employees feel
empowered to be creative and in which authority is decentralized to employees so they feel
free to experiment and take control of their work activities.

Bloom's: Analyze
Difficulty: Hard
95. (p. 357) Discuss the three characteristics of an effective control system in an organization.
Illustrate each characteristic with a specific example from an organization of your choosing.
An effective control system should be flexible so that managers can respond to unexpected
events, should provide accurate information about the organization's performance, and should
provide this information in time for managers to use it to make decisions. Students' examples
will vary.

Bloom's: Apply
Difficulty: Medium
11-66
96. (p. 357-358) Discuss the type of control used at each stage in process of transforming inputs
into finished goods or services. Provide examples of each type of control.
so problems do not occur later during the conversion process. At the conversion stage,
concurrent control gives managers immediate feedback on how efficiently inputs are being
transformed into outputs so managers can correct problems as they arise. At the output stage,
managers use feedback control to provide information about customers' reactions to goods
and services so corrective action can be taken if necessary. Students' examples will vary.

Bloom's: Apply
Difficulty: Medium
97. (p. 358-360) Describe the four steps in the control process.
Step 1: Establish the standards of performance, goals, or targets against which performance is
to be evaluated. Step 2: Measure actual performance. Step 3: Compare actual performance
against chosen standards of performance. Step 4: Evaluate the result and initiate corrective
action (that is, make changes) if the standard is not being achieved.

Bloom's: Understand
Difficulty: Medium
11-67
98. (p. 361-363) The top managers of an organization typically use a variety of financial indicators
to assess the performance of their organization. Discuss the four major types of financial
measures and give one specific example of how each would be computed.
Profit ratios measure how efficiently managers are using the organization's resources to
generate profits. Return on investment (ROI), an organization's net income before taxes
divided by its total assets, is the most commonly used financial performance measure because
it allows managers of one organization to compare performance with that of other
organizations. Operating margin is calculated by dividing a company's operating profit (the
amount it has left after all the costs of making the product and running the business have been
deducted) by sales revenues. Liquidity ratios measure how well managers have protected
organizational resources to be able to meet short-term obligations. The current ratio (current
assets divided by current liabilities) tells managers whether they have the resources available
to meet the claims of short-term creditors. The quick ratio shows whether they can pay these
claims without selling inventory. Leverage ratios, such as the debt-to-assets ratio and the
times-covered ratio, measure the degree to which managers use debt (borrow money) or
equity (issue new shares) to finance ongoing operations. Activity ratios show how well
managers are creating value from organizational assets. Inventory turnover measures how
efficiently managers are turning inventory over so excess inventory is not carried. Days sales
outstanding reveals how efficiently managers are collecting revenue from customers to pay
expenses.

Bloom's: Understand
Difficulty: Hard
11-68
99. (p. 366-369) Discuss three ways in which managers can attempt to control the behavior of
subordinates.
The most immediate and potent form of behavior control is direct supervision by managers
who actively monitor and observe the behavior of their subordinates, teach subordinates the
behaviors that are appropriate and inappropriate, and intervene to take corrective action as
needed. Moreover, when managers personally supervise subordinates, they lead by example
and in this way can help subordinates develop and increase their own skill levels. To provide a
framework within which to evaluate subordinates' behavior and, in particular, to allow
managers to monitor progress toward achieving goals, many organizations implement some
version of management by objectives. Management by objectives (MBO) is a formal system
of evaluating subordinates on their ability to achieve specific organizational goals or
performance standards and to meet operating budgets. When direct supervision is too
expensive and management by objectives is inappropriate, managers might turn to another
mechanism to shape and motivate employee behavior: bureaucratic control. Bureaucratic
control is control by means of a comprehensive system of rules and standard operating
procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and
individuals.

Bloom's: Understand
Difficulty: Medium
100. (p. 367) Discuss the steps involved in the management by objective process.
The steps are: (1) Establish specific goals and objectives at each organizational level; (2)
Determine subordinates' goals, together with subordinates; (3) Periodically review
subordinates' progress toward goals, with subordinates.

Bloom's: Understand
Difficulty: Easy
11-69
101. (p. 371-372) Discuss the problems associated with bureaucratic control.
First, establishing rules is always easier than discarding them. Organizations tend to become
overly bureaucratic over time as managers do everything according to the rule book. If the
amount of red tape becomes too great, decision making slows and managers react sluggishly
to changing conditions. Second, because rules constrain and standardize behavior and lead
people to behave in predictable ways, people might become so used to automatically
following rules that they stop thinking for themselves. Thus too much standardization can
actually reduce the level of learning taking place in an organization and get the organization
off track if managers and workers focus on the wrong issues.

Bloom's: Understand
Difficulty: Easy
102. (p. 374) What is "clan control"? How can a manager use clan control to influence
employees' work behaviors?
Clan control is the control exerted on individuals and groups in an organization by shared
values, norms, standards of behavior, and expectations. Managers can use clan control
indirectly by enabling the formation of a strong culture with strong, appropriate values and
norms.

Bloom's: Understand
Difficulty: Medium
11-70
103. (p. 376) Discuss the two opposing forces in the control process that influence how
organizations change.
There is a fundamental tension or need to balance two opposing forces in the control process
that influences how organizations change. Organizations and their managers need to be able to
control their activities and make their operations routine and predictable. At the same time,
however, organizations have to be responsive to the need to change, and managers and
employees have to "think on their feet" and realize when they need to depart from routines to
be responsive to unpredictable events. In other words, even though adopting the right set of
output and behavior controls is essential for improving efficiency, because the environment is
dynamic and uncertain employees also need to feel that they have the autonomy to depart
from routines as necessary to increase effectiveness.

Bloom's: Understand
Difficulty: Medium
management task.
104. (p. 377) Describe Lewin's Force-Field Theory.

According to his force-field theory, a wide variety of forces arise from the way an
organization operates-from its structure, culture, and control systems-that make organizations
resistant to change. At the same time a wide variety of forces arise from changing task and
general environments that push organizations toward change. These two sets of forces are
always in opposition in an organization. When the forces are evenly balanced, the
organization is in a state of inertia and does not change. To get an organization to change,
managers must find a way to increase the forces for change, reduce resistance to change, or do
both simultaneously. Any of these strategies will overcome inertia and cause an organization
to change.

Bloom's: Understand
Difficulty: Medium
management task.
11-71
105. (p. 378) Define evolutionary and revolutionary change. When is each appropriate?
Evolutionary change is gradual, incremental, and narrowly focused. It is appropriate when
there is a need to adjust or improve. Revolutionary change is rapid, dramatic, and broadly
focused. It is appropriate when there are drastic, unexpected changes in the environment, and
the organization needs to quickly find new ways to be effective.

Bloom's: Understand
Difficulty: Easy
management task.
106. (p. 378-382) Describe the steps in the organizational change process.
The steps are summarized in Figure 11.7.

Bloom's: Understand
Difficulty: Medium
management task.
11-72

Marketing

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Marketing

Uploaded by

Copyright:

Available Formats

Chapter 11 - Organizational Control and Change

3. Control is concerned with keeping employees motivated.

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

5. Control helps managers build a competitive advantage.

6. Control helps managers respond more effectively to customers.

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

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

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

Chapter 11 - Organizational Control and Change

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

27. Management by objectives (MBO) is a formal system of evaluating subordinates on their

Chapter 11 - Organizational Control and Change

32. Organizational culture functions as a kind of control system.

Multiple Choice Questions

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

54. At Step 3 of the control process, managers:

55. The final step in the control process is to:

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

65. Inventory turnover is a type of:

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

74. The use of direct supervision as a control mechanism:

Chapter 11 - Organizational Control and Change

76. MBO starts when top managers:

Chapter 11 - Organizational Control and Change

82. Bureaucratic control should be used when organizational activities are

Chapter 11 - Organizational Control and Change

Chapter 11 - Organizational Control and Change

89. Which theory deals with understanding organizational change?

90. What type of change is gradual, incremental, and narrowly focused?

91. What type of change is rapid, dramatic, and broadly focused?

Chapter 11 - Organizational Control and Change

95. Discuss the three characteristics of an effective control system in an organization.

Chapter 11 - Organizational Control and Change

97. Describe the four steps in the control process.

Chapter 11 - Organizational Control and Change

100. Discuss the steps involved in the management by objective process.

101. Discuss the problems associated with bureaucratic control.

Chapter 11 - Organizational Control and Change

104. Describe Lewin's Force-Field Theory.

105. Define evolutionary and revolutionary change. When is each appropriate?

106. Describe the steps in the organizational change process.

Chapter 11 - Organizational Control and Change

Chapter 11 Organizational Control and Change Answer Key

True / False Questions

AACSB: Reflective Thinking

AACSB: Reflective Thinking

Chapter 11 - Organizational Control and Change

3. (p. 356) Control is concerned with keeping employees motivated.

AACSB: Reflective Thinking

AACSB: Reflective Thinking

5. (p. 356) Control helps managers build a competitive advantage.

AACSB: Reflective Thinking

Chapter 11 - Organizational Control and Change

6. (p. 356) Control helps managers respond more effectively to customers.

AACSB: Reflective Thinking