Deck 8: Control, Change, and Entrepreneurship

Question 1

The three main mechanisms that managers use to assess output or performance are financial measures,organizational goals,and operating budgets.

Answer 1

True
Explanation: The three main mechanisms that managers use to assess output or performance are financial measures,organizational goals,and operating budgets.

Question 2

Organizational control procedures can give managers feedback about the quantity,but not the quality,of products produced by the organization.

Answer 2

False
Explanation: Organizational control helps managers obtain superior efficiency,quality,responsiveness to customers,and innovation-the four building blocks of competitive advantage.

Question 3

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 planning.

Answer 3

False
Explanation: Controlling is the process whereby managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals.

Question 4

A standard of performance that measures efficiency at the functional level is operating costs.

Question 5

Controlling at some point lowers the level of innovation in an organization.

Question 6

Using the controlling function,managers monitor and evaluate the organization's strategy to evaluate whether it is working as intended.

Question 7

The current ratio is an example of a leverage ratio of the organization.

Question 8

The control function is limited to reacting to events in a business,after the events have already occurred.

Question 9

The first step in the control process is to evaluate results in terms of performance standards.

Question 10

Information on how efficiently managers are collecting revenue from customers to pay expenses is given by the quick ratio.

Question 11

The times-covered ratio of an organization is determined by current assets divided by current liabilities.

Question 12

Profit ratios measure the efficiency of the use of the organization's resources in generating profits.

Question 13

The inventory turnover ratio is an example of the activity ratio of an organization.

Question 14

During the input stage,the most common type of control procedure is concurrent control,which gives managers immediate feedback.

Question 15

Managers use feedforward control to anticipate problems.

Question 16

The most commonly used financial performance measure in organizations is the debt-to-equity ratio.

Question 17

Even an effective control system does not give managers enough time to respond to opportunities and threats.

Question 18

Standard operating procedures are mechanisms for clan control.

Question 19

An organization's net income before taxes divided by its total assets is known as operating profit.

Question 20

At the output stage,managers use feedforward control to provide information about customers' reactions to goods.

Question 21

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.

Question 22

The least powerful form of behavior control is direct supervision of a subordinate by a manager.

Question 23

Organizational culture makes control possible in situations where managers cannot use behavior control.

Question 24

Top-down change can co-opt resistance to change from employees.

Question 25

Top-down change is more gradual and evolutionary than a bottom-up change.

Question 26

In inert cultures,employees often receive rewards directly linked to their performance.

Question 27

Organizational culture is an externally imposed system of constraints on the behavior of the suppliers of an organization.

Question 28

Output control methods are effective in motivating employees,but behavior control methods are not.

Question 29

Participatory nature is an important characteristic of bureaucratic control.

Question 30

An inert culture is one that controls employee behavior and attitudes through its strong and cohesive organizational culture.

Question 31

Organizational change affects organizational structure but not organizational culture.

Question 32

Control by means of a comprehensive system of rules and standard operating procedures that shape and regulate the behavior of divisions,functions,and individuals is known as bureaucratic control.

Question 33

The use of bureaucratic control in an organization typically enhances creativity and learning.

Question 34

Seemingly trivial corporate-level changes can significantly affect how divisional and departmental managers behave.

Question 35

An adaptive culture allows the use of organizational structures that empower employees to make decisions and motivate them to succeed.

Question 36

If an organization's control systems are not designed correctly,an organization may not be able to adapt to a changing environment.

Question 37

Adaptive cultures are those whose values and norms help an organization to build momentum and to grow and change as needed to achieve its goals and be effective.

Question 38

Clan control is an internally imposed system of constraints.

Question 39

Financial information by itself provides managers with all of the information that they need to measure the four building blocks of competitive advantage.

Question 40

Output control procedures are used at every management level of an organization.

Question 41

Intrapreneurs engage in entrepreneurship within an existing company.

Question 42

The control system that managers use at the conversion stage of transforming raw materials into finished goods is _____________ control.

A) feedforward
B) bureaucratic
C) concurrent
D) feedback
E) MBO

Question 43

Entrepreneurship ends once a new business has been founded.

Question 44

Ben,the production manager of Pace Shoes,sets a production target of 220 shoes to be distributed among 20 employees in a week.In the context of the control process,Ben is:

A) establishing the standards of performance.
B) measuring the actual level of performance of employees.
C) comparing the actual performance against chosen standards of performance.
D) evaluating the result of the set standards.
E) initiating corrective actions.

Question 45

Beswick Widget Ltd. ,sets up a system to monitor unit sales of its products to measure changes taking place in customer tastes and the possible resulting impact on future sales.With this system,Beswick is using _____________ control.

A) feedforward
B) feedback
C) MBO
D) bureaucratic
E) concurrent

Question 46

Managers at Zeppel Construction Company set up a stringent job interview process by which management applicants are carefully screened at different levels of the organization before they are hired,attempting to increase the chance that newly hired managers will have the knowledge and skills they need to be successful within the organization.By using this process,Zeppel is using _____________ control.

A) concurrent
B) feedforward
C) feedback
D) bureaucratic
E) MBO

Question 47

The type of control that managers typically use in the input stage of the process of transforming raw materials into finished goods is ______________ control.

A) feedforward
B) concurrent
C) feedback
D) bureaucratic
E) MBO

Question 48

The final step in the control process is to:

A) evaluate the results and initiate corrective action.
B) measure actual performance.
C) establish the standards of performance.
D) compare actual performance to the standards.
E) measure the standards of performance.

Question 49

The 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 are known as _____________ systems.

A) operating
B) organizational
C) control
D) recurrent
E) concurrent

Question 50

Hanover Insurance set up a management information system that gives its regional managers information about changes in the task environment that may affect the organization at some future time.By using this system,Hanover is utilizing _____________ control.

A) feedforward
B) concurrent
C) feedback
D) bureaucratic
E) MBO

Question 51

The standard of performance that measures efficiency at the corporate level of the organization is known as:

A) cost of goods sold.
B) capital costs.
C) net sales.
D) operating costs.
E) net income after taxes.

Question 52

Brennan Manufacturing monitors the number of customer returns for each product model to track when the organization is producing a large number of defective products.In this case,Brennan Manufacturing is using _____________ control.

A) feedforward
B) concurrent
C) MBO
D) feedback
E) bureaucratic

Question 53

The process by which managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals is known as ___________.

A) planning
B) organizing
C) leading
D) controlling
E) coordinating

Question 54

The managers of Foodex,a fast food restaurant,record outputs on a daily basis by counting how many customers their employees serve,the time each transaction takes,and how much money each customer spends every day.With reference to the control process,the managers of Foodex are:

A) establishing the standards of performance.
B) measuring the actual level of performance of employees.
C) comparing the actual performance against chosen standards of performance.
D) evaluating the result of the set standards.
E) initiating corrective actions.

Question 55

Danny,the manager of Wader Shoes,installed new machinery to speed up the production process after the assigned targets were not achieved for the third week of the month.With regard to the control process,Danny is:

A) establishing the standards of performance.
B) measuring the actual level of performance of employees.
C) comparing the actual performance against chosen standards of performance.
D) evaluating the result of the set standards.
E) initiating corrective actions.

Question 56

The control system that is typically used in a garment plant to solve problems like substandard inputs,broken machine parts,or a worker's skill deficiency to produce a particular type of garment is _____________ control.

A) feedforward
B) MBO
C) feedback
D) concurrent
E) bureaucratic

Question 57

Brandon,the manager of Flipflop Footwear,checked the weekly records and discovered that the number of shoes produced in one week by 20 employees was 250 against the set target of 220 shoes.With reference to the control process,Brandon is:

A) establishing the standards of performance.
B) measuring the actual level of performance of employees.
C) comparing the actual performance against chosen standards of performance.
D) evaluating the result of the set standards.
E) initiating corrective actions.

Question 58

At the output stage,managers usually utilize _____________ control.

A) MBO
B) concurrent
C) bureaucratic
D) feedforward
E) feedback

Question 59

The step of the control process utilized by managers to evaluate whether the actual performance of the organization differs significantly from the standards of performance that assess the organization is:

A) measuring actual performance.
B) comparing actual performance to the standards.
C) establishing the standards of performance.
D) initiating corrective action.
E) measuring standards of performance.

Question 60

Action Explosives gives specifications to its suppliers of raw materials in an attempt to improve the quality of those raw materials and to minimize and anticipate the problems they are likely to face in the conversion process.This is an example of _____________ control.

A) concurrent
B) feedforward
C) feedback
D) bureaucratic
E) MBO

Question 61

The manager of a profit center is evaluated on the basis of the amount of sales that have been generated from the goods or services produced in his/her division.The divisional manager is being evaluated using the ______________ budget approach.

A) expense
B) cash flow
C) revenue
D) profit
E) operating profit

Question 62

Calculate the return on investment from the information given below.
Net Income = $18,000;Advertising Expenses = $220,000;Total Liabilities = $120,000;Total Assets = $160,000;Gross Margin = $80,000;Taxes Paid = $2,000

A) 16.67 percent
B) 15 percent
C) 11.25 percent
D) 12.5 percent
E) 50 percent

Question 63

The financial ratio that measures how well the managers of the organization are creating value from the organization's assets is the _____________ ratio.

A) leverage
B) liquidity
C) profit
D) current
E) activity

Question 64

A mechanism of control utilized in organizational culture is ___________.

A) direct supervision
B) management by objectives
C) socialization
D) organizational goals
E) operating budgets

Question 65

The managers of a division are given a fixed budget and are then evaluated on the basis of their ability to produce goods or services.This is an example of a(n)_____________ budget approach.

A) expense
B) profit
C) operating profit
D) cash flow
E) revenue

Question 66

The performance ratio that measures the efficiency of the organization in terms of how well the resources of the organization have been used to generate profit is a(n)_____________ ratio.

A) activity
B) leverage
C) profit
D) liquidity
E) inventory turnover

Question 67

When a manager is told to maximize the revenues from the sales of goods and services produced,this is an example of a(n)_____________ budget approach.

A) profit
B) revenue
C) expense
D) cash flow
E) capital

Question 68

Management by objectives is a mechanism of control with ______________ organizational control systems.

A) input
B) clan
C) organizational
D) output
E) behavior

Question 69

The ratio that is computed by dividing the difference between current assets and inventory by current liabilities is the _____________ ratio.

A) inventory turnover
B) days sales outstanding
C) quick
D) current
E) debt-to-assets

Question 70

The financial ratio that measures the ability of the organization to pay its short-term debts is the _____________ ratio.

A) leverage
B) liquidity
C) activity
D) profit
E) Inventory turnover ratios

Question 71

The financial ratio that indicates how efficiently the managers of the organization are collecting the revenue due to the organization from the sale of its products or services is the _____________ ratio.

A) debt-to-assets
B) quick
C) current
D) days sales outstanding
E) profit

Question 72

The manager of Inkman,a convenience store,keeps track of the average sale amount for each customer as a way of deciding on the product mix to be carried in the store.This is an example of _____________ control.

A) bureaucratic
B) feedforward
C) output
D) input
E) MBO

Question 73

An organization's net income before taxes divided by the total assets of the organization is known as:

A) gross profit margin.
B) return on investment.
C) the debt-to-assets ratio.
D) days sales outstanding.
E) the inventory turnover ratio.

Question 74

The most commonly used financial performance measure that allows managers of one organization to compare performance with that of other organizations is:

A) gross profit margin.
B) the debt-to-assets ratio.
C) the days sales outstanding ratio.
D) the inventory turnover ratio.
E) return on investment.

Question 75

Calculate the current ratio of the organization from the information given below.
Sales = $200,000;Gross Profit = $40,000;Total Assets = $450,000;Current Assets = $250,000;Current Liabilities = $300,000

A) 0.44
B) 0.56
C) 0.67
D) 0.83
E) 1.2

Question 76

From the information given below,calculate the organization's return on investment.
Total Liabilities = $300,000;Total Assets = $600,000;Gross Margin = $200,000;Net Income Before Taxes = $30,000;Total Expenses = $240,000

A) 50 percent
B) 5 percent
C) 10 percent
D) 12.5 percent
E) 15 percent

Question 77

The financial ratio that indicates whether or not the organization is capable of paying off its short-term debts without having to sell its inventory is the _____________ ratio.

A) quick
B) current
C) days sales outstanding
D) inventory turnover
E) profit

Question 78

The financial ratio that indicates the degree to which the organization uses debt or equity to finance its ongoing operations is the _____________ ratio.

A) leverage
B) liquidity
C) activity
D) profit
E) inventory turnover

Question 79

The manager of Triks Burgers keeps track of the number of customers served at different periods of the day in an attempt to plan a schedule for workers that matches the demand for the restaurant's products.By using this tracking system,the manager of Triks Burgers is utilizing _____________ control.

A) output
B) bureaucratic
C) input
D) MBO
E) feedforward

Question 80

From the information given below,calculate the organization's current ratio.
Total Liabilities = $750,000;Current Liabilities = $220,000;Total Assets = $700,000;Current Assets = $176,000

A) 0.25
B) 0.93
C) 0.29
D) 0.80
E) 1.25