In the context of the stages of organizational decline, which of the following is a difference between the faulty action stage and the crisis stage?
A) In the faulty action stage, management announces belt-tightening plans designed to cut costs, increase efficiency, and restore profits, whereas in the crisis stage, bankruptcy or dissolution is likely to occur unless the company completely reorganizes the way it does business.
B) In the faulty action stage, companies typically lack the resources to fully change how they run their businesses, whereas in the crisis stage, managers assume that if they just run a tighter ship, company performance will return to previous levels.
C) In the faulty action stage, the company is dissolved through bankruptcy proceedings, whereas in the crisis stage, management recognizes the need to change but still takes no steps.
D) In the faulty action stage, managers wait to see if organizational performance problems correct themselves, whereas in the crisis stage, companies completely reorganize the way they do business.

Question

Quizplus · Accepted Answer

The key difference between the faulty action stage and the crisis stage is that in the faulty action stage, management typically announces plans to cut costs and increase efficiency in order to restore profits, while in the crisis stage, bankruptcy or dissolution is likely unless the company completely reorganizes its operations. In other words, in the faulty action stage, there is still some hope that the company can recover, whereas in the crisis stage, the situation is much more dire. Option B is incorrect because in both stages, companies may lack the resources to fully change how they operate. Option C is incorrect because in the faulty action stage, the company is not dissolved through bankruptcy proceedings, as there is still hope that the situation can be turned around. Option D is incorrect because in the crisis stage, companies do take steps to reorganize, whereas in the faulty action stage, management may wait to see if the problems resolve themselves.

In the Context of the Stages of Organizational Decline, Which