Question 1

Which could be considered an indirect cost?
A)Overhead
B)Programmer salary
C)Contract with painter
D)Cost of "meat" in a hot dog
E)You're trying to trick me, these are all direct costs.

Accepted Answer

Indirect costs are resources that cannot be assigned to any specific contract, project, service, product or project activity. In this case, overhead is the only one that would fall into that category. With the hot dog, programmer and painter, you can likely assign those costs to specific tasks or products (e.g. the creation of the hot dog you had for lunch).
Key Takeaway: Indirect costs might sound like things you don't need to care about, but you should. For instance, in many companies, electricity is considered an indirect cost. What if your project requires computers that use twice as much energy as the average computer? Doesn't that affect the company's profitability (and the value of your stock options)?

Question 2

In McGregor's X and Y Theories, Theory X assumes workers are inherently lazy and will avoid work if they can, while Theory Y assumes workers can be ambitious if they are properly motivated.

Accepted Answer

Douglas McGregor was a professor at the MIT Sloan School of Management (your editor's alma mater) who proposed these two theories of human motivation. Theory X assumes workers are inherently lazy and will avoid work if they can, while Theory Y assumes workers can be ambitious if they are properly motivated.
Key Takeaway: McGregor didn't believe either X or Y was right or wrong, but rather that companies tended to follow one approach or the other with regards to managing their employees. It's valuable to understand what direction the organizational culture where you are working tends to tilt. Most companies are, of course, somewhere in between.

Question 3

Positive reinforcement and punishment are strategies employed by what theory?
A)Reinforcement theory
B)Expectancy theory
C)Valence theory
D)Acquired need theory

Accepted Answer

Reinforcement theory includes the two strategies of positive reinforcement and punishment as consequences to an action.
Key Takeaway: In reinforcement theory, there are three possible outcomes to an action. First, positive reinforcement could occur which would help promote the person to repeat the action again in the future. Second, punishment or negative reinforcement could be used to dissuade the person from repeating the action in the future. Third, no action or consequence could be used. Often, if there are no positive or negative consequences to an action, then the action is deemed unimportant by the person performing it.

Question 4

Zachary is part of a group at work. After being late to one of the group meetings, he is confronted by his peers and asked to arrive on time for future meetings. Which group development stage is this task associated with?
A)Forming
B)Storming
C)Norming
D)Performing

Accepted Answer

Setting the standard for what behaviors will and will not be tolerated within a group is part of the norming group development stage.
Key Takeaway: During the third stage of group development, the norming stage, group members set the standard for what typical group interactions and expectations are. Norming can create a more efficient and task-oriented group. Often, this is done informally. For example, instead of creating an official rule that everyone must be on time to meetings, the leader will instead confront those who are late and use them as an example.

Question 5

In Company XYZ, the marketing department is often in conflict with the manufacturing department. What type of conflict can this be characterized as?
A)Interpersonal
B)Intrapersonal
C)Inter-group
D)Intra-group

Accepted Answer

Because the conflict is between two distinct groups, the conflict is characterized as an inter-group conflict.
Key Takeaway: Conflicts can occur between groups as well as between individuals within those groups. An inter-group conflict (conflict between two groups) can occur when each group has different and opposing objectives. For example, the marketing department might be tasked with generating high sales volume while the manufacturing department might not be able to respond to those increased sales in a timely manner. This would create a potential conflict between the two groups.

Question 6

Elizabeth has been late for work the last two days. Her manager gave her a verbal warning and mentioned that if she was late again, she would receive a written warning. What type of discipline is this an example of?
A)Permanent discipline
B)Positive discipline
C)Progressive discipline
D)Perceptive discipline

Accepted Answer

This is an example of progressive discipline, since the punishment is works with subsequent offenses.
Key Takeaway: Progressive discipline is defined as a discipline system that uses a series of steps or levels to punish employees. Each step or level is more severe than the prior one. Progressive discipline often starts with a verbal warning, progresses to a written warning, then suspension and finally termination of employment. Depending on how the system is set up, managers may choose to skip levels in the progressive discipline system based on the severity of the initial infraction.

Question 7

Expectancy theory states that employees who are motivated by incentives will remain motivated and productive so long as the rewards meet their expectations.

Accepted Answer

Expectancy theory states that employees who are motivated by incentives will remain motivated and productive provided rewards meet their expectations.
Key Takeaway: While this is simple, expectancy theory starts to become complex. What if a person is generally over-incentivized? It is much harder to motivate someone who is overpaid with what might seem fair to someone who is reasonably paid. That is why overpaying a long-term employee can be damaging to long-term productivity.

Question 8

Coffin's Coffee sells premium coffee. It decides to launch a new iced coffee product. What should be a key consideration?
A)Economies of scale
B)Cannibalization
C)Diversification
D)A niche market
E)Maturity phase

Accepted Answer

cannibalization. Cannibalization is what results when a company offers a product which takes away sales from another of its existing products. The question for Coffin's is whether it gets new people in the door who drink iced coffee. Adding new products must increase overall revenue to be worthwhile. Otherwise, it just increases the difficulty of managing the operation.
The four incorrect answers are also terms you should know:
Economies of scale is the economic benefit a company receives when its business expands.
Diversification is when you spread your money across different asset classes.
A niche market is a particular specialized segment of a market for which there is little, if any, competition.
Maturity phase is when a business has matured to the point that its growth is in line with the growth of the economy.
Key Takeaway: Whenever there is a new product introduction, you should immediately ask if cannibalization will be an issue.

Question 9

What, in order, are the needs in Maslow's hierarchy?
A)Social Acceptance, Self-Actualization, Physiological, Safety, Esteem
B)Physiological, Safety, Social Acceptance, Esteem, Self-Actualization
C)Safety, Physiological, Safety, Esteem, Self-Actualization
D)Learning, recognition from peers, respect and formal responsibility
E)X, Y and Z

Accepted Answer

Maslow's Hierarchy of Needs go in the following order:
Physiological - Food, housing, water and shelter
Safety - Physical safety and security for oneself and family/friends, and security of employment, resources, property, etc.
Social Acceptance - Acceptance from friends and family and intimate relationships
Esteem - Respect from others, achievement
Self-actualization - Personal growth, fulfillment, creativity
Key Takeaway: Abraham Maslow was an American psychologist who created this hierarchy of needs in 1943. It's a useful framework in your personal and professional life to understand what people are seeking. Generally, people must satisfy the lower levels (nourishment and physical safety) before they can seek higher levels of needs. As a professional manager, you can make an impact for someone in a number of areas by helping people grow, treating them with respect and giving them a sense of security.

Question 10

In the fictional country of Nigindia, a 10 percent kickback to an official is common practice. You are asked for this kickback to win a key project. Should you pay it?
A)Yes
B)No

Accepted Answer

The Foreign Corrupt Practices Act explicitly prohibits the bribery of foreign government officials. Even if it is common practice in Nigindia, you are not permitted by U.S. law to pay the kickback.
Key Takeaway: It's not whether you get this question right but how decisively you respond to moral questions when you are put into these situations that matters the most.

Question 11

Sarbanes-Oxley (SOX) might keep a firm from going public for which of the following reasons?
A)Compliance cost
B)Health care costs
C)Liquidity requirements
D)ARPU
E)All of the above

Accepted Answer

Sarbanes-Oxley was a result of the Enron/Tyco/WorldCom corporate scandal and requires substantial additional overhead to meet compliance and reporting requirements.
Key Takeaway: When looking at exit situations for small companies, an IPO is less attractive because being public means substantial overhead to meet SOX compliance standards.

Question 12

Which leadership theory stated that there are two broad categories that should influence leadership style: subordinate characteristics and work environment?
A)Hersey-Blanchard's Life Cycle Theory
B)House's Path-Goal Theory
C)Blake and Mouton's Managerial Grid
D)Fiedler's Contingency Theory

Accepted Answer

The situational leadership theory of Robert House (the path-goal theory) states that there are two key categories of issues that impact the leadership style which should be used: subordinate characteristics and work environment.
Key Takeaway: Robert House developed a situational leadership model called the path-goal theory. In this theory, there are two categories of situations that determine leadership behavior or style: the subordinate characteristics and the work environment. The subordinate characteristics include items such as employee abilities and motivation levels. The work environment can include factors such as task structure and organizational systems.

Question 13

According to the University of Michigan study, which type of leadership was most effective?
A)Job-centered
B)Employee-centered
C)Lassez-faire
D)Production-centered

Accepted Answer

The University of Michigan study found that employee-centered leadership was more effective than job-centered leadership.
Key Takeaway: Employee-centered leadership is a leadership style where the leader or manager focuses on the employee and their needs instead of focusing solely on the job itself. By focusing on the employee and enabling them to become productive, the study found that the employees were actually more productive than if the leader had focused primarily on the job itself (i.e. meetings, schedules, overall efficiency ratings, etc.)

Question 14

Which of these terms best describes a leader who is concerned primarily with the details of how the job is performed?
A)transactional
B)transformational
C)coercive
D)empathetic

Accepted Answer

A transactional leader is diligent in monitoring job performance at the task level.
Key Takeaway: When describing leadership styles, there are two opposing styles that can be used: transactional and transformational. Transactional leadership provides managers with the ability to monitor tasks and ensure that they are completed correctly. However, one of the limitations of transactional leadership is that the vision or goal for the employee is never challenged and therefore remains the same whereas transformational leadership will help the employee reach new and often higher goals.

Question 15

The Ohio State University conducted a study on leadership and categorized leadership as having two distinct qualities: initiation of structure and consideration. Which combination of these two qualities did they find created the most effective leaders?
A)Low initiation of structure; low consideration
B)Low initiation of structure; high consideration
C)High initiation of structure; low consideration
D)High initiation of structure; high consideration

Accepted Answer

The combination of high initiation of structure and high consideration yielded the best overall results.
Key Takeaway: According to the Ohio State University study, both consideration and initiation of structure are important leadership characteristics. Consideration is the process of responding to worker needs and encouraging employees to succeed. Initiation of structure is comprised of setting up task outlines and reporting structures to help make the employees more effective and clearly communicate goals and expectations.

Question 16

According to Hersey and Blanchard's situational and life cycle leadership theory, which of the following statements is true?
A)An employee can be at one readiness level for one task and a different readiness level for a different task
B)Managers should vary their leadership style based solely on the length of time the employee has been in a role
C)Situational leadership is a limited concept that did not work in practice
D)Leadership style should be based on the task, not the employee

Accepted Answer

According to Hersey and Blanchard, an employee's readiness level can vary depending on the task
Key Takeaway: Situational leadership requires the manager to vary their leadership style between four different styles: directing, selling, participating, and delegating. The correct situational leadership style should be based on the employee readiness level (R1 - R4). This readiness level depends on the employee's ability to perform the task, willingness to perform the task, and confidence in performing the task. Depending on which task is being asked of the employee, the readiness level can change.

Question 17

Which theory of situational leadership describes the four leadership modes as directive, supportive, achievement, and participative?
A)Hersey-Blanchard's Life Cycle Theory
B)House's Path-Goal Theory
C)Blake and Mouton's Managerial Grid
D)Fiedler's Contingency Theory

Accepted Answer

House's path-goal theory of leadership uses four distinct modes of leadership: directive, supportive, achievement, and participative.
Key Takeaway: The path-goal theory of situational leadership contains four styles of leadership from which to choose. The directive style provides detailed steps for completing a specific task while the supportive style encourages the employee to complete the task. The achievement style of leadership pushes the employee to pursue lofty goals while the participative style involves the employee in the decision-making process.

Question 18

Which theory of leadership is represented by the five characteristics of leadership: self-awareness, control or regulation of emotions, empathy, motives, and influence?
A)Hersey-Blanchard's Life Cycle Theory
B)House's Path-Goal Theory
C)Goleman's Emotional Intelligence Theory
D)Fiedler's Contingency Theory

Accepted Answer

Goleman's emotional intelligence theory contains all five of those emotional leadership characteristics.
Key Takeaway: Daniel Goleman developed the theory that emotional intelligence is an important characteristic for leaders to have. Emotional intelligence consists of five distinct aspects: self-awareness, the control of your own emotions, empathy for others, motivation and passion to achieve their goals, and the ability to use emotions to influence others.

Question 19

What was the drawback to both the trait and managerial grid approaches to leadership evaluation?
A)The study findings were inconclusive
B)The assumption that leaders were born, not made
C)The leadership situation was ignored
D)The findings were based on too small of a population size

Accepted Answer

In both the trait and managerial grid approaches to leadership, the situation in which the leader operated was ignored.
Key Takeaway: When considering leadership and its effectiveness, it is important to also consider the situation that the leader and their team are operating in. Certain leadership styles may prove very effective in one situation while not at all effective in another. For example, a militaristic leadership style works well during war-time military efforts, but would not be the ideal leadership style for a group of teenage volunteers during a community revitalization project.

Question 20

Decreasing the number of products sold can improve profits.

Accepted Answer

Too many products can limit economies of scale, make administration difficult and result in cannibalization.
Key Takeaway: Think of the dynamics of a company that has too many product lines that are similar. We recall one case where a snack machine vendor was sourcing products from so many different vendors, they had little buying power. Consolidating their power as a buyer was the key to unlocking profitability.

Quiz 6: Management

Which could be considered an indirect cost?

In McGregor's X and Y Theories, Theory X assumes workers are inherently lazy and will avoid work if they can, while Theory Y assumes workers can be ambitious if they are properly motivated.

Positive reinforcement and punishment are strategies employed by what theory?

Zachary is part of a group at work. After being late to one of the group meetings, he is confronted by his peers and asked to arrive on time for future meetings. Which group development stage is this task associated with?

In Company XYZ, the marketing department is often in conflict with the manufacturing department. What type of conflict can this be characterized as?

Elizabeth has been late for work the last two days. Her manager gave her a verbal warning and mentioned that if she was late again, she would receive a written warning. What type of discipline is this an example of?

Expectancy theory states that employees who are motivated by incentives will remain motivated and productive so long as the rewards meet their expectations.

Coffin's Coffee sells premium coffee. It decides to launch a new iced coffee product. What should be a key consideration?

What, in order, are the needs in Maslow's hierarchy?

In the fictional country of Nigindia, a 10 percent kickback to an official is common practice. You are asked for this kickback to win a key project. Should you pay it?

Sarbanes-Oxley (SOX) might keep a firm from going public for which of the following reasons?

Which leadership theory stated that there are two broad categories that should influence leadership style: subordinate characteristics and work environment?

According to the University of Michigan study, which type of leadership was most effective?

Which of these terms best describes a leader who is concerned primarily with the details of how the job is performed?

The Ohio State University conducted a study on leadership and categorized leadership as having two distinct qualities: initiation of structure and consideration. Which combination of these two qualities did they find created the most effective leaders?

According to Hersey and Blanchard's situational and life cycle leadership theory, which of the following statements is true?

Which theory of situational leadership describes the four leadership modes as directive, supportive, achievement, and participative?

Which theory of leadership is represented by the five characteristics of leadership: self-awareness, control or regulation of emotions, empathy, motives, and influence?

What was the drawback to both the trait and managerial grid approaches to leadership evaluation?

Decreasing the number of products sold can improve profits.