Management, 11e (Robbins/Coulter)

Chapter 18 Introduction to Controlling

1) Controlling is the process of monitoring, comparing, and correcting work performance.

Answer: TRUE
Page Ref: 486
Objective: 1
Difficulty: Easy
Classification: Conceptual

2) Having a control system reduces the scope of employee empowerment and autonomy.
Answer: FALSE
Page Ref: 487
Objective: 1
Difficulty: Easy
Classification: Conceptual

3) Some control criteria, such as employee satisfaction, can be used for any management
situation.
Answer: TRUE
Page Ref: 488
Objective: 2
Difficulty: Easy
Classification: Conceptual

4) Deviations that exceed the acceptable range of variation become significant and need a
manager's attention.
Answer: TRUE
Page Ref: 489
Objective: 2
Difficulty: Easy
Classification: Conceptual

5) Basic corrective action corrects problems at once to get performance back on track.
Answer: FALSE
Page Ref: 490
Objective: 2
Difficulty: Easy
Classification: Conceptual

6) Managers should do nothing if the variance observed from the standard is acceptable.
Answer: TRUE
Page Ref: 491
Objective: 2
Difficulty: Easy
Classification: Conceptual

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7) Productivity decreases when an organization raises the prices of its products.
Answer: FALSE
Page Ref: 492
Objective: 3
Difficulty: Easy
Classification: Conceptual

8) Organizational effectiveness is a measure of how appropriate organizational goals are and how
well those goals are being met.
Answer: TRUE
Page Ref: 492
Objective: 3
Difficulty: Easy
Classification: Conceptual

9) Feedforward control is more popular and effective than the other forms of control.
Answer: FALSE
Page Ref: 494
Objective: 4
Difficulty: Easy
Classification: Conceptual

10) Feedforward control takes place while a work activity is in progress.

Answer: FALSE
Page Ref: 494
Objective: 4
Difficulty: Easy
Classification: Conceptual

11) Activity ratios measure an organization's ability to meet its current debt obligations.
Answer: FALSE
Page Ref: 495
Objective: 4
Difficulty: Easy
Classification: Conceptual

12) The balanced scorecard approach evaluates organizational performance from more than just
the financial perspective.
Answer: TRUE
Page Ref: 496
Objective: 4
Difficulty: Easy
Classification: Conceptual

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13) Managers should not consider the standards when measuring the actual performance of
employees.
Answer: FALSE
Page Ref: 497
Objective: 4
Difficulty: Easy
Classification: Conceptual

14) Benchmarks for a company must be created based on the previous performance of the
company.
Answer: FALSE
Page Ref: 498
Objective: 4
Difficulty: Easy
Classification: Conceptual

15) Managers tend to use more direct supervision and highly centralized decision making for
control in less technologically advanced countries.
Answer: TRUE
Page Ref: 499
Objective: 5
Difficulty: Easy
Classification: Conceptual

16) Embezzlement and fraudulent filing of expenses are examples of employee theft.
Answer: TRUE
Page Ref: 500
Objective: 5
Difficulty: Easy
Classification: Conceptual

17) Employers establish specific policies defining theft and fraud and discipline procedures. This
is an example of a concurrent control measure to control employee theft.
Answer: FALSE
Page Ref: 501
Objective: 5
Difficulty: Easy
Classification: Conceptual

18) Using corporate hotlines or other mechanisms for reporting and investigating workplace
violence is an example of feedback control.
Answer: FALSE
Page Ref: 501
Objective: 5
Difficulty: Easy
Classification: Conceptual

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19) Job uncertainties and employee stress are factors that contribute to workplace violence.
Answer: TRUE
Page Ref: 502
Objective: 5
Difficulty: Easy
Classification: Conceptual

20) A service profit chain is the service sequence from employees to customers to profit.
Answer: TRUE
Page Ref: 504
Objective: 5
Difficulty: Easy
Classification: Conceptual

21) The Sarbanes-Oxley Act also called for more disclosure and transparency of corporate
financial information.
Answer: TRUE
Page Ref: 505
Objective: 5
Difficulty: Easy
Classification: Conceptual

22) ________ refers to the process of monitoring, comparing, and correcting work performance.
A) Controlling
B) Leading
C) Planning
D) Organizing
Answer: A
Page Ref: 486
Objective: 1
Difficulty: Easy
Classification: Conceptual

23) Which of the following is the final step in the management process?
A) organizing
B) planning
C) controlling
D) leading
Answer: C
Page Ref: 487
Objective: 1
Difficulty: Easy
Classification: Conceptual

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24) Which of the following corresponds to the controlling step in the management process?
A) performance measurements
B) employee motivation
C) strategy formulation
D) organizational structuring
Answer: A
Page Ref: 487
Objective: 1
Difficulty: Easy
Classification: Conceptual

25) Which of the following observations is true of organizational controlling?

A) An effective control system facilitates employee empowerment.
B) Forming an organizational structure is a crucial control activity.
C) Human resource management is a subset of the controlling process.
D) Organizational strategies are formed during the controlling stage.
Answer: A
Page Ref: 487
Objective: 1
Difficulty: Easy
Classification: Conceptual

26) The control process assumes that ________.

A) employees require clear directions from management
B) employees are under-qualified and require training
C) performance standards are already in place
D) employee monitoring costs are part and parcel of doing business
Answer: C
Page Ref: 488
Objective: 2
Difficulty: Easy
Classification: Conceptual

27) The first step in the control process is ________.

A) setting the desired standards
B) measuring actual performance
C) comparing performance against expectations
D) enforcing managerial control
Answer: B
Page Ref: 488
Objective: 2
Difficulty: Easy
Classification: Conceptual

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28) Managers should use subjective measures when ________.
A) work activities cannot be expressed in quantifiable terms
B) work activities are critical to the organization
C) organizational processes and activities are complex
D) immediate managerial action is required
Answer: A
Page Ref: 488
Objective: 2
Difficulty: Easy
Classification: Conceptual

29) Which of the following sources of information for measuring performance has the
disadvantage of being subject to personal biases, and is time consuming and obtrusive?
A) oral reports
B) personal observations
C) statistical reports
D) written reports
Answer: B
Page Ref: 489
Objective: 2
Difficulty: Easy
Classification: Conceptual

30) Which of the following is one of the main advantages of using statistical reports as the source
of information?
A) Statistical reports can be used to obtain firsthand knowledge.
B) Unfiltered information can be obtained using statistical reports.
C) Statistical reports are effective for showing relationships.
D) Statistical reports allow verbal and non-verbal feedback.
Answer: C
Page Ref: 489
Objective: 2
Difficulty: Easy
Classification: Conceptual

31) Which of the following sources usually provides filtered information which cannot be
documented?
A) oral reports
B) personal observations
C) statistical reports
D) written reports
Answer: A
Page Ref: 489
Objective: 2
Difficulty: Easy
Classification: Conceptual

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32) Which of the following sources provides information which is comprehensive, formal, and
easy to file and retrieve?
A) oral reports
B) personal observations
C) statistical reports
D) written reports
Answer: D
Page Ref: 489
Objective: 2
Difficulty: Easy
Classification: Conceptual

33) The comparing step in the control process determines ________.

A) a company's relative position in the industry in terms of the standards used
B) a company's relative position in the industry in terms of performance variances
C) the ideal standard to be used in measuring organizational performance
D) the variation between actual performance and the standard
Answer: D
Page Ref: 489
Objective: 2
Difficulty: Easy
Classification: Conceptual

34) ________ corrects the problem at once to get performance back on track.
A) Basic corrective action
B) Immediate corrective action
C) Revision of standards
D) Revision of benchmarks
Answer: B
Page Ref: 490
Topic: The Control Process
Objective: 2
Difficulty: Easy
Classification: Conceptual

35) If a manager investigates how and why performance has deviated beyond the acceptable
range of variation, and then corrects the source of the deviation, she is using ________.
A) bureaucratic control
B) immediate corrective action
C) basic corrective action
D) concurrent control
Answer: C
Page Ref: 490
Objective: 2
Difficulty: Easy
Classification: Conceptual

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36) Managers could choose to do nothing when ________.
A) an employee fails to attain the standard because of internal problems
B) the difference between actual performance and standard performance is low and acceptable
C) performance standards are acceptable, though the employees have not attained it
D) the variance observed from the expected performance is caused due to unrealistic standards
Answer: B
Page Ref: 491
Topic: The Control Process
Objective: 2
Difficulty: Easy
Classification: Conceptual

37) Which of the following refers to the overall output of goods or services produced divided by
the inputs needed to generate that output?
A) Yield
B) Demand function
C) Effectiveness
D) Productivity
Answer: D
Page Ref: 492
Objective: 3
Difficulty: Easy
Classification: Conceptual

38) ________ is measured by the costs of acquiring and transforming organizational resources
into outputs.
A) Input
B) Quality
C) Effectiveness
D) Efficiency
Answer: A
Page Ref: 492
Objective: 3
Difficulty: Easy
Classification: Conceptual

39) Which of the following is considered the easiest way to increase organizational productivity?
A) increasing the price of outputs
B) increasing the amount of inputs
C) hiring more employees
D) decreasing the value of the products
Answer: A
Page Ref: 492
Objective: 3
Difficulty: Easy
Classification: Conceptual

8
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40) In order to increase the ratio of outputs to inputs, a manager would have to ________.
A) decrease the selling price
B) increase productivity
C) increase the quality of inputs
D) hire additional employees
Answer: B
Page Ref: 492
Objective: 3
Difficulty: Easy
Classification: Conceptual

41) Organizational ________ is a measure of how appropriate organizational goals are and how
well an organization is achieving those goals.
A) productivity
B) effectiveness
C) efficiency
D) yield
Answer: B
Page Ref: 492
Objective: 3
Difficulty: Easy
Classification: Conceptual

42) Certain organizations conduct culture audits to find out which companies are the best to work
for. What is the major benefit associated with these rankings?
A) The rankings indicate the effectiveness of an organization's concurrent control.
B) The rankings indicate how well a company performs in comparison to others.
C) These rankings are used by governments to make decisions on corporate grants.
D) These rankings affect the credit rating of concerned organizations.
Answer: B
Page Ref: 493
Objective: 3
Difficulty: Easy
Classification: Conceptual

43) An organization hires additional personnel as soon as they get a major contract. The
organization is using ________ control.
A) feedforward control
B) concurrent control
C) feedback control
D) management control
Answer: A
Page Ref: 494
Objective: 4
Difficulty: Moderate
Classification: Application

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44) Which of the following is considered the most desirable type of control to prevent anticipated
problems?
A) feedforward control
B) concurrent control
C) feedback control
D) reactive control
Answer: A
Page Ref: 494
Objective: 4
Difficulty: Easy
Classification: Conceptual

45) The management control that takes place while a work activity is in progress is known as
________.
A) feedforward control
B) concurrent control
C) feedback control
D) reactive control
Answer: B
Page Ref: 494
Objective: 4
Difficulty: Easy
Classification: Conceptual

46) Management by walking around is an example of ________ control.

A) feedback
B) concurrent
C) feedforward
D) reactive
Answer: B
Page Ref: 494
Objective: 4
Difficulty: Easy
Classification: Conceptual

47) ________ is when a manager in the work area interacts directly with employees to maintain
supervision.
A) Preventive maintenance
B) Management by walking around
C) Reactive control
D) Feedforward control
Answer: B
Page Ref: 494
Objective: 4
Difficulty: Easy
Classification: Conceptual

10
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48) The ________ ratios measure an organization's ability to meet its current debt obligations.
A) activity
B) liquidity
C) leverage
D) profitability
Answer: B
Page Ref: 495
Objective: 4
Difficulty: Easy
Classification: Conceptual

49) Which of the following ratios examines the organization's use of debt to finance its assets
and its ability to meet the interest payments on the debt?
A) liquidity ratios
B) leverage ratios
C) profitability
D) activity ratios
Answer: B
Page Ref: 495
Objective: 4
Difficulty: Easy
Classification: Conceptual

50) ________ ratios measure how efficiently the firm is using its assets.
A) Liquidity
B) Leverage
C) Profitability
D) Activity
Answer: D
Page Ref: 495
Objective: 4
Difficulty: Easy
Classification: Conceptual

51) Which of the following ratios measures how efficiently and effectively the firm is using its
assets to generate revenue?
A) liquidity ratios
B) leverage ratios
C) activity ratios
D) profitability ratios
Answer: D
Page Ref: 495
Objective: 4
Difficulty: Easy
Classification: Conceptual

11
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52) The ________ approach to performance measurement was introduced as a way to evaluate
organizational performance from more than just the financial perspective.
A) market value
B) economic value
C) balanced scorecard
D) financial control
Answer: C
Page Ref: 496
Objective: 4
Difficulty: Easy
Classification: Conceptual

53) Which of the following is a performance measurement tool that looks at four areas that
contribute to a company's performance?
A) market value method
B) economic value method
C) balanced scorecard approach
D) information control approach
Answer: C
Page Ref: 496
Objective: 4
Difficulty: Easy
Classification: Conceptual

54) When data is analyzed and processed, it becomes ________.

A) a system
B) information
C) fact
D) a structure
Answer: B
Page Ref: 497
Objective: 4
Difficulty: Easy
Classification: Conceptual

55) Raw, unanalyzed facts are called ________.

A) data
B) information
C) database
D) data center
Answer: A
Page Ref: 497
Objective: 4
Difficulty: Easy
Classification: Conceptual

12
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56) ________ is the search for the best practices among competitors or noncompetitors that lead
to their superior performance.
A) Factor analysis
B) Total quality management
C) Market positioning
D) Benchmarking
Answer: D
Page Ref: 498
Objective: 4
Difficulty: Easy
Classification: Conceptual

57) Control techniques can be quite different for different countries. The differences are
primarily in the ________.
A) types of tasks that employees perform in various countries
B) way employees respond to the controlling measures
C) strategic orientation of each technique
D) measurement and corrective action steps of the control process
Answer: D
Page Ref: 499
Objective: 5
Difficulty: Easy
Classification: Conceptual

58) Fraudulent filing of expense reports is an example of ________.

A) employee theft
B) workplace piracy
C) workplace violence
D) privacy intrusion
Answer: A
Page Ref: 500
Objective: 5
Difficulty: Easy
Classification: Conceptual

59) Clinical psychologists suggest that employee theft ________.

A) occurs primarily when there are poor management-labor relations
B) is a symptom of poor planning and management control
C) happens because people find ways to rationalize this behavior as correct
D) reflects deep cultural problems in the society
Answer: C
Page Ref: 501
Objective: 5
Difficulty: Easy
Classification: Conceptual

13
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60) Factors that have been found to be linked to workplace violence include ________.
A) too much caffeine
B) employee stress
C) poor employee diet
D) poor personal hygiene
Answer: B
Page Ref: 502
Objective: 5
Difficulty: Easy
Classification: Conceptual

61) Experts have described employee work driven by TNC as a primary contributor to workplace
violence. TNC refers to ________.
A) time, numbers, and crises
B) time, number, and chaos
C) time, neglect, and crises
D) time, neglect, and chaos
Answer: A
Page Ref: 502
Objective: 5
Difficulty: Easy
Classification: Conceptual

62) Which of the following is an example of a feedforward control measure used to control
possible workplace violence?
A) Clearly communicate the security policies to employees.
B) Use corporate hotlines for reporting and investigating incidences.
C) Review company policies and change, if necessary.
D) Investigate incidences and take appropriate action.
Answer: A
Page Ref: 503
Objective: 5
Difficulty: Easy
Classification: Conceptual

63) An organization communicates openly to its employees about violent incidences in the
workplace and what's being done to handle them. This is an example of a ________ control
strategy.
A) feedback
B) proactive
C) concurrent
D) feedforward
Answer: A
Page Ref: 503
Objective: 5
Difficulty: Easy
Classification: Conceptual

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64) The service profit chain is the service sequence from employees to customers to profit.
According to this concept, the company's strategy and service delivery system determines
________.
A) the skill development of employees
B) how the firm performs in the short run
C) the employee satisfaction in the company
D) how employees service customers
Answer: D
Page Ref: 504
Topic: Contemporary Issues in Control
Objective: 5
Difficulty: Easy
Classification: Conceptual

65) Corporate governance ________.

A) refers to executive governance practices in companies
B) is a system used to govern a corporation so that the interests of corporate owners are protected
C) is a term that refers to legal agreements made between two or more partner firms
D) refers to the negative influence of the corporate in society
Answer: B
Page Ref: 504
Topic: Contemporary Issues in Control
Objective: 4
Difficulty: Easy
Classification: Conceptual

66) Two areas in which corporate governance is being reformed are the role of boards of
directors and ________.
A) employee stock options
B) financial reporting
C) executive compensation
D) top level management
Answer: B
Page Ref: 504-505
Topic: Contemporary Issues in Control
Objective: 5
Difficulty: Easy
Classification: Conceptual

15
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67) The Sarbanes-Oxley Act called for ________.
A) increased pollution control measures from the government
B) more disclosure and transparency of corporate financial information
C) limited accountability of directors and executives of corporates
D) more social contribution from companies in the United States
Answer: B
Page Ref: 505
Objective: 5
Difficulty: Easy
Classification: Conceptual

Statco's Control (Scenario)

Statco, Inc., is a statistical software company based in Columbia, TN. This publicly traded firm
has grown in a systematic fashion over its 25-year existence and now claims more than 12,000
employees worldwide. As it has grown, the company has adopted a hierarchical structure, which
emphasizes organizational authority. Management relies heavily on administrative rules,
regulations, and policies in order to meet its goals. However, the company has struggled to meet
projected revenues for each of the past 10 quarters. The firm hires Mark Adams, an expert in
control system design, to design a control system and offer suggestions to improve the firm's
performance.

68) Which of the following is a key activity that the proposed control system should perform?
A) organizational planning
B) organizational structuring
C) performance measurement
D) strategic planning
Answer: C
Page Ref: 487
AACSB: Analytic Skills
Objective: 1
Difficulty: Moderate
Classification: Application

69) Mark wants to formulate a control process for the organization. What should be the first step
in the control process?
A) carrying out performance comparison
B) determining the actual performance
C) developing a benchmark
D) validating the performance standard
Answer: B
Page Ref: 488
AACSB: Analytic Skills
Objective: 2
Difficulty: Moderate
Classification: Application

16
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70) Mark wants to use a tool which is easy to visualize and effective for showing relationships.
Which of the following tools is best suited for this?
A) personal observations
B) oral reports
C) written reports
D) statistical reports
Answer: D
Page Ref: 489
AACSB: Analytic Skills
Objective: 2
Difficulty: Moderate
Classification: Application

71) Mark recommends that the managers at Statco should identify how and why performance has
deviated beyond the acceptable range of variation, and then correct the source of the deviation.
Here, Mark is recommending ________.
A) bureaucratic control
B) immediate corrective action
C) basic corrective action
D) concurrent control
Answer: C
Page Ref: 490
AACSB: Analytic Skills
Objective: 2
Difficulty: Moderate
Classification: Application

The Industry Leader (Scenario)

Frank, the new CEO for First Fidelity, is working hard to turn around the formerly successful
real estate business. His goal is to make First Fidelity a leader in the industry. He understands the
importance of improving organizational productivity in achieving his goals. Mark is keen to
improve organizational performance and effectiveness.

72) The operations manager suggests a hike in the prices to improve productivity. However,
Frank rules this option out. What could be the possible reason for this?
A) Product prices are not related to organizational productivity.
B) Selling price is negatively correlated to organizational productivity.
C) The real estate business is characterized by intense competition.
D) Such an action would lead to reduced employee satisfaction.
Answer: C
Page Ref: 492
AACSB: Analytic Skills
Objective: 3
Difficulty: Moderate
Classification: Application

17
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73) Frank believes organizational effectiveness is more important to the organization than
organizational productivity. What could be the rationale behind this belief?
A) Organizational productivity is not a measure of organizational performance.
B) Organizational effectiveness is a measure of how well the organizational goals are met.
C) Organizational productivity is not directly related to organizational output.
D) Organizational effectiveness is a quantitative measure of the input-output relationship.
Answer: B
Page Ref: 492
AACSB: Analytic Skills
Objective: 3
Difficulty: Moderate
Classification: Application

Controlling Operations

Charles is the operations manager of a firm which operates as a leaf tobacco merchant and
processor worldwide. Charles believes that the firm's productivity can be increased substantially
from the current level. He wants to exert control to improve organizational performance and
productivity.

74) Charles wants to prevent problems before their occurrence. Which of the following is the
most desirable type of control to achieve this goal?
A) reactive control
B) concurrent control
C) feedforward control
D) feedback control
Answer: C
Page Ref: 494
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application

75) Charles interacts directly with the employees in the work area to identify problem areas. He
works with various departments to obtain a holistic idea of the business. This type of direct
supervision is an example of ________ control.
A) proactive
B) concurrent
C) feedforward
D) feedback
Answer: B
Page Ref: 494
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application

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76) Charles discovers major flaws in the packaging department. He consults the production
manager and formulates control measures to improve packaging. Here, Charles is using the
________ control.
A) feedback
B) proactive
C) concurrent
D) feedforward
Answer: A
Page Ref: 494
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application

Financial Controls

Ruth Moody works as a freelance financial consultant. She renders financial services to
individuals and small businesses. Entropic Communications, Inc., a fabless semiconductor
company, seeks her services to study the financial stability of their company.

77) Ruth wants to analyze the organization's ability to meet its current debt obligations. Which of
the following ratios is most helpful to Ruth in analyzing this?
A) inventory turnover ratio
B) return on investment ratio
C) current ratio
D) total asset turnover ratio
Answer: C
Page Ref: 495
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application

78) Ruth identifies the firm's leverage ratio to be very high. What suggestion could Ruth give to
help the firm reduce its leverage ratio?
A) Increase the money supply by selling a part of its assets.
B) Pay back part of its debts to improve the ratio.
C) Maintain more current assets than current liabilities.
D) Reduce the sales to total assets ratio of the firm.
Answer: B
Page Ref: 496
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application

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Employee Theft

Barbara is the product manager of an energy company which operates in the Americas. She is
concerned about the increased employee theft observed in the factory. A study has shown that
$30000 worth of merchandise was accounted to employee theft in the year 2010.

79) Barbara consults a criminologist to identify the reasons for employee thefts. Which of the
following is the most likely interpretation that the criminologist would present?
A) People have financial-based pressures which motivate them to steal.
B) People steal because the opportunity presents itself through lax controls.
C) Favorable circumstances tempt people to commit crimes.
D) People steal because they can rationalize whatever they're doing.
Answer: A
Page Ref: 500-501
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application

80) Barbara wants to take corrective measures to prevent future theft. Which of the following is a
feedback tactic that Barbara could use to control theft?
A) use the services of professional investigators
B) openly communicate the costs of stealing
C) use corporate hotlines for reporting incidences
D) educate and train employees about the policies
Answer: A
Page Ref: 501
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application

20
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Workplace Violence

Three employees were injured in shootings at the Premier Bear Factory located in Arizona. An
employee about to lose his job opened fire to cause this debacle. Helen Gates, the factory
manager is looking for ways to control such incidents.

81) Which of the following is a feedforward control measure to prevent further occurrences?
A) employee assistance programs to help employees with behavioral problems
B) thorough investigation of the incident by an external agency
C) use of quick and decisive managerial intervention during the incident
D) open communication about incidences and what's being done
Answer: A
Page Ref: 503
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application

82) Helen investigates the incident to take measures to control its effects. By doing this she is
exerting ________ control over the incident.
A) feedback
B) concurrent
C) parallel
D) feedforward
Answer: A
Page Ref: 503
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application

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Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall
Kelbitron

Valerie is a plant manager at Kelbitron, a company which manufactures and sells air conditioning
and heating equipment in the United States and Canada. She measures the performance of the
workers every month and compares it with established standards. She uses different approaches
to measure the performance of different units in the plant, based on the type of employees and
the nature of work. The plant has 32 functional units. Each unit is named Unit-1 to Unit-32 based
on their order in the assembly line.

83) Unit-32 conducts functional testing and quality analysis of the air-conditioners. Valerie
decides to measure the performance of workers of Unit-32 by personally observing them. Which
of the following additional pieces of information would offer most support to her decision to use
personal observation?
A) A majority of the employees in Unit-32 had called for a fair scheme of performance
measurement in a recent feedback session.
B) Valerie needs immediate information to support a performance appraisal which is due.
C) Kelbitron policies state that performance measurement should be free from bias.
D) The unit's tasks are considered complex and require an intensive coverage of work activities
when measuring performance.
Answer: D
Page Ref: 488-489
AACSB: Reflective Thinking Skills
Objective: 2
Difficulty: Difficult
Classification: Critical Thinking

84) Valerie chooses oral reports instead of statistical reports when collecting information for
measuring the performance of Unit-27. Unit-27 monitors the flow of the assembly line. Which of
the following, if true, would most weaken the decision to choose oral reports?
A) Non-verbal feedback from employees is considered crucial to performance evaluation as it is
a better indicator of truth.
B) Studies have shown that managers who use filtered information for making decisions tend to
make poor decisions.
C) Subjective factors are important when measuring the performance of employees who perform
routine tasks such as working in an assembly line.
D) Extensive information is needed to measure the performance of the unit as it is difficult to
quantify the performance.
Answer: B
Page Ref: 488-489
AACSB: Reflective Thinking Skills
Objective: 2
Difficulty: Difficult
Classification: Critical Thinking

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Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall
NTR Associates

NTR Associates is an industrial conglomerate with interests all over the world and based in the
United States. The company manufactures packaged food products such as packaged snacks and
carbonated beverages worldwide.

85) NTR group has a manufacturing plant in South Africa which serves African markets such as
South Africa, Zimbabwe, and Zambia. Ferguson, the plant manager, identifies the output of the
plant's bottling line is not up to the mark. He transfers a few employees from another department
to the bottling line to increase production. Which of the following, if true, would support this
corrective action the most?
A) A recent study revealed that the current employees at the bottling line are not motivated to
produce more.
B) The plant has sixteen departments and Ferguson is authorized to transfer employees across
departments.
C) A study conducted by the operations management team had found that the bottling line needs
more employees.
D) Most of the employees he transferred to the bottling line are highly skilled in their current
area of specialization.
Answer: C
Page Ref: 490
AACSB: Reflective Thinking Skills
Objective: 2
Difficulty: Difficult
Classification: Critical Thinking

86) As a part of its market development strategy, NTR group recently launched operations in
Zambia. Albert, the head of marketing in Zambia, decides to keep the prices of products high.
Which of the following pieces of information, if true, would most strengthen Albert's decision to
keep the prices high?
A) NTR group does not face significant competition in the Zambian market for packaged foods.
B) Research evidence suggests that the initial demand for NTR's products will be low in Zambia.
C) Charging high prices would provide a margin to reduce the prices after a point in time.
D) Substantial research evidence is available to support the idea that the packaged food industry
has huge potential in Zambia.
Answer: A
Page Ref: 492
AACSB: Reflective Thinking Skills
Objective: 3
Difficulty: Difficult
Classification: Critical Thinking

23
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall
87) Charles, the head of operations in Africa, urges managers to use only feedforward controls.
Which of the following is an assumption that he must have made in choosing this course of
action?
A) The nature of the company's operations demands constant monitoring.
B) Work teams at the plant are multi-functional and collaborative.
C) Accurate and timely information is available to the managers at will.
D) Management control is a continuous process that requires inputs from everyone in the
organization.
Answer: C
Page Ref: 494
AACSB: Reflective Thinking Skills
Objective: 4
Difficulty: Difficult
Classification: Critical Thinking

88) Kevin Jones is a financial analyst who provides consulting services. Kevin advises a
pharmaceutical company to improve its liquidity by selling unproductive assets. Which of the
following, if true, would most strengthen the suggestion to improve liquidity?
A) The company is characterized by low financial leverage.
B) Inventory turnover ratio is high in the pharmaceutical industry.
C) The company has an extremely low debt to equity ratio.
D) The company has a very low acid test ratio.
Answer: D
Page Ref: 495-496
AACSB: Reflective Thinking Skills
Objective: 4
Difficulty: Moderate
Classification: Critical Thinking

89) Kevin Jones is a financial analyst who provides consulting services. Kevin considers the acid
test ratio to be a better measure of liquidity than the current ratio, for a pharmaceutical company.
This conclusion rests on which of the following assumptions?
A) The company has consistently paid dividends in the past.
B) The company has high inventories and a low inventory turnover ratio.
C) The company has one of the highest ROI ratios in the industry.
D) The company uses equity as a major source of financing.
Answer: B
Page Ref: 495-496
AACSB: Reflective Thinking Skills
Objective: 4
Difficulty: Moderate
Classification: Critical Thinking

24
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall
90) What are the major reasons why the control function is important to managers?
Answer: Control is important because it's the only way managers know whether organizational
goals are being met and if not, the reasons why. The value of the control function can be seen in
three specific areas: planning, empowering employees, and protecting the workplace. As the final
step in the management process, controlling provides the critical link back to planning. If
managers didn't control, they'd have no way of knowing whether their goals and plans were
being achieved and what future actions to take. The second reason controlling is important is
because of employee empowerment. Many managers are reluctant to empower their employees
because they fear employees will do something wrong for which they would be held responsible.
Many managers are tempted to do things themselves and avoid empowering. But an effective
control system can provide information and feedback on employee performance, thus reducing
potential problems. The final reason that managers control is to protect the organization and its
assets. Today's environment brings heightened threats from natural disasters, financial scandals,
workplace violence, supply chain disruptions, security breaches, and even possible terrorist
attacks. Managers must have plans in place to protect the organization's employees, facilities,
data, and infrastructure. Having comprehensive controls and backup plans will help assure
minimal work disruptions.
Page Ref: 487
Objective: 1
Difficulty: Easy
Classification: Conceptual

91) In a short essay, list and briefly explain the steps, processes, and best practices managers
typically utilize in the control process. Provide examples where appropriate.
Answer:
a. Measuringthe first step in the control process is measuring. Most jobs and activities can be
expressed in tangible and measurable terms. Managers frequently use a variety of sources of
information to measure actual performance, such as personal observation, statistical reports, oral
reports, and written reports. For most managers, using a combination of approaches increases
both the number of input sources and the probability of getting reliable information.
b. Comparingthe second step involves determining the degree of variation between actual
performance and the prespecified standard. Some variation is to be expected. However, it is
important for managers to determine the acceptable range of variation.
c. Taking managerial actionmanagers can choose among three possible courses of action: do
nothing, correct the actual performance, or revise the standards. Examples of corrective actions
might include changing strategy, structure, compensation plans, training programs, redesigning
jobs, or firing employees. Revising standards is an appropriate response if the variance was the
result of unrealistic expectations. However, revising standards downwards can be troublesome
when an employee or work unit fall short of reaching a goal. If they don't meet the standard, their
natural response is to attack the standard. If the manager believes the standard is fair, they should
explain their position, reaffirm their desire for the employee or work unit to meet the standard,
and then take necessary corrective action to turn that expectation into reality.
Page Ref: 488-491
Objective: 2
Difficulty: Easy
Classification: Conceptual

25
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall
92) Organizational effectiveness is a better measure of organizational performance than
organizational productivity. Do you agree with this statement? Why or why not?
Answer: Organizational effectiveness is a measure of how appropriate organizational goals are
and how well those goals are being met. So an effective organization is certain to meet its goals.
High organizational productivity does not necessarily indicate that organizational goals have
been achieved. Hence organizational effectiveness, as a measure of organizational performance,
can be considered a more accurate tool of measurement.
Productivity is the amount of goods or services produced divided by the inputs needed to
generate that output. So it could be easier to calculate productivity. Students could disagree
stating these reasons.
Page Ref: 492
AACSB: Reflective Thinking Skills
Objective: 3
Difficulty: Difficult
Classification: Critical Thinking

93) In a short essay explain feedforward, concurrent, and feedback controls and provide an
example for each one.
Answer: Feedforward control is the most desirable type of controlfeedforward control
prevents anticipated problems since it takes place before the actual activity. Exampleat St.
Joseph's Hospital in West Bend, Indiana, a new facility was designed with identical rooms,
nonslip floors, and glass walls to reduce errors in patient care and to increase employee safety.
Concurrent control, as its name implies, takes place while an activity is in progress. When
control occurs while the work is being performed, management can correct problems before they
come too costly. ExampleWhen managers use management by walking around, which is a
term describing when a manager is out in the work area interacting directly with employees,
they're using concurrent control.
Feedback control, the most popular type of control relies on feedback. In feedback control, the
control takes place after the activity is done. Examplewhen the Denver Mint discovered
flawed Wisconsin quarters, it was discovered with feedback control. The damage had already
occurred even though the organization corrected the problem once it was discovered.
Page Ref: 494
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application

26
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall
94) List and discuss three of the main performance control tools used for monitoring and
measuring organizational performance.
Answer:
a. Financial controlsone of the primary purposes of every business firm is to earn a profit. In
pursuit of this objective, managers need financial controls. They might perform several financial
ratio tests to ensure that sufficient cash is available to pay ongoing expenses, that debt levels
haven't become too high, or that assets are being used productively.
b. Information controlsinformation can be critical to monitoring and measuring an
organization's performance. Managers need the right information at the right time and in the right
amount. Inaccurate, incomplete, or delayed information can seriously impede organizational
performance. Managers need information about the standards in order to be able to compare
actual performance with the standard. They rely on information to help them determine if
deviations are acceptable. They also rely on information to help them develop appropriate
courses of action.
c. Balanced scorecardthis is a performance measurement that was introduced as a way to
evaluate organizational performance from more than just the financial perspective. The balanced
scorecard is a performance measurement tool that looks at four areasfinancial, customer,
internal processes, and people/innovation/growth assetsthat contribute to a company's
performance. According to this approach, managers should develop goals in each of the four
areas and measure to determine if these goals are being met.
d. Benchmarking of best practicesbenchmarking is the search for the best practices among
competitors or noncompetitors that lead to their superior performance. At its most fundamental
level, benchmarking means learning from others. As a tool for monitoring and measuring
organizational performance, benchmarking can be used to help identify specific performance
gaps and potential areas for improvement. Students can choose any three to elaborate on.
Page Ref: 495-498
Objective: 4
Difficulty: Easy
Classification: Conceptual

95) What do you think are the benefits of benchmarking? Provide examples of benchmarking
practices.
Answer: Benchmarking is the search for the best practices among competitors or
noncompetitors that lead to their superior performance. Benchmarking should identify various
benchmarks, which are the standards of excellence against which to measure and compare. It
provides an insight into the best practices in the industry and helps managers evaluate
organizational performance. For instance, the American Medical Association developed more
than 100 standard measures of performance to improve medical care. Carlos Ghosn, CEO of
Nissan, benchmarked Walmart operations in purchasing, transportation, and logistics.
Benchmarking allows organizations to learn from others. Student examples may vary for this
question.
Page Ref: 498
AACSB: Analytic Skills
Objective: 4
Difficulty: Moderate
Classification: Application

27
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall
96) Experts in various fields, industrial security, criminology, and clinical psychology, have
different perspectives on the motivation behind employee thefts. Which one do you think is the
best explanation? Provide reasons to justify your answer.
Answer: Experts in industrial security propose that people steal because the opportunity presents
itself through lax controls and favorable circumstances. Criminologists say that it's because
people have financial-based pressures (such as personal financial problems) or vice-based
pressures (such as gambling debts). And clinical psychologists suggest that people steal because
they can rationalize whatever they're doing as being correct and appropriate behavior. Each
approach provides compelling insights into employee theft and has been instrumental in attempts
to deter it. Students may support any of these views and should provide reasons to justify this
view.
Page Ref: 500-501
AACSB: Reflective Thinking Skills
Objective: 5
Difficulty: Moderate
Classification: Critical Thinking

97) Provide a few examples for feedforward strategies to reduce employee theft.
Answer: The following strategies can be used to control employee theft.
1. Careful prehiring screening.
2. Educating and training employees about policies.
3. Performing professional reviews to study internal controls.
4. Involving employees in writing policies.
The students may answer any two.
Page Ref: 501
Objective: 5
Difficulty: Easy
Classification: Conceptual

98) Identify three feedback control measures which would reduce work place violence.
Answer: The following could be used as feedback measures to control workplace violence.
1. Communicate openly about incidences and what's being done.
2. Investigate incidences and take appropriate action.
3. Review company policies and change, if necessary.
Page Ref: 503
Objective: 5
Difficulty: Easy
Classification: Conceptual

28
Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall
99) Workplace violence is a difficult problem for managers to handle . Managers can take
anticipatory steps to control workplace violence. Provide a few suggestions.
Answer: Managers can implement feedforward control as a preventive measure. Some of the
feedforward control measures include the following:
a. Identify potential problems by observing how employees treat and interact with each other.
b. Use careful prehiring screening.
c. Train employees about how to avoid danger if the situation arises.
d. Enforce organizational policy that any workplace rage, aggression, or violence will not be
tolerated.
Page Ref: 503
AACSB: Analytic Skills
Objective: 5
Difficulty: Moderate
Classification: Application

100) In a short essay, define corporate governance and describe some of the current trends in this
area.
Answer: Corporate governance is the system used to govern a corporation so that the interests of
corporate owners are protected. In response to several recent business scandals, two areas in
which corporate governance is being reformed are the role of boards of directors and financial
reporting. The cozy, quid pro quo composition of corporate boards, where board members are
frequently peers of other corporations, is changing considerably. The SarbanesOxley Act of
2002, puts greater demands on board members of publicly traded companies in the United States
to do what they were empowered and expected to do. To help boards do their job better,
researchers at the Corporate Governance Center at Kennesaw State University developed 10
governance principles for U.S. public companies that have been endorsed by the Institute of
Internal Auditors. In addition to expanding the role of boards of directors, the SarbanesOxley
Act also called for more disclosure and transparency of corporate financial information. In fact,
senior managers in the United States are now required to certify their companies' financial
results. These types of changes should lead to better informationthat is, information that is more
accurate and reflective of the firm's financial condition. In fulfilling their financial reporting
responsibilities, managers might also want to follow the 15 principles developed by the
researchers at the Corporate Governance Center at Kennesaw State University.
Page Ref: 504-505
Objective: 5
Difficulty: Easy
Classification: Conceptual

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Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall