Management, 12e (Robbins/Coulter)

Chapter 10 Managerial Controls

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

Answer: TRUE

Page Ref: 266

Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 1

Difficulty: Easy

Classification: Conceptual

2) Having a control system reduces the scope of employee empowerment and autonomy.

Answer: FALSE

Page Ref: 267

Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 1

Difficulty: Easy

Classification: Conceptual

3) Managers engage in controlling activities to protect the organization and its assets.

Answer: TRUE

Page Ref: 267

 Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 1

Difficulty: Easy

Classification: Conceptual

4) Some control criteria, such as employee satisfaction, can be used for any management situation.

Answer: TRUE

Page Ref: 269

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

5) Deviations that exceed the acceptable range of variation become significant and need a manager's attention.

Answer: TRUE

Page Ref: 269

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

6) Basic corrective action corrects problems at once to get performance back on track.
Answer: FALSE

Page Ref: 270

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

7) Managers should do nothing if the variance observed from the standard is acceptable.

Answer: TRUE

Page Ref: 271

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

8) Productivity decreases when an organization raises the prices of its products.

Answer: FALSE

Page Ref: 272

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual
 9) Most employees do their jobs well and never require disciplinary action.

Answer: TRUE

Page Ref: 273

Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual

10) Organizational effectiveness is a measure of how appropriate organizational goals are and how
well those goals are being met.

Answer: TRUE

Page Ref: 272

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual

11) Feedforward control is more popular and effective than the other forms of control.

Answer: FALSE

Page Ref: 275

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

 Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

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

Answer: FALSE

Page Ref: 275

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

13) Activity ratios measure an organization's ability to meet its current debt obligations.

Answer: FALSE

Page Ref: 277

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

14) Managers should not consider the standards when measuring the actual performance of
employees.

Answer: FALSE

Page Ref: 278

 Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

15) The balanced scorecard approach evaluates organizational performance from more than just the
financial perspective.

Answer: TRUE

Page Ref: 279

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

16) Benchmarks for a company must be created based on the previous performance of the company.

Answer: FALSE

Page Ref: 279

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

17) Managers tend to use more direct supervision and highly centralized decision making for control
in less technologically advanced countries.
 Answer: TRUE

Page Ref: 280

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills; Use of Information Technology

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

18) Embezzlement and fraudulent filing of expenses are examples of employee theft.

Answer: TRUE

Page Ref: 282

Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe the
components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

19) 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: 283

Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe the
components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5
 Difficulty: Easy

Classification: Conceptual

20) Using corporate hotlines or other mechanisms for reporting and investigating workplace violence
is an example of feedback control.

Answer: FALSE

Page Ref: 283

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

21) Job uncertainties and employee stress are factors that contribute to workplace violence.

Answer: TRUE

Page Ref: 284

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

22) A service profit chain is the service sequence from employees to customers to profit.

Answer: TRUE

Page Ref: 285

Learning Outcome: Describe the components of the control process

 AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

23) The Sarbanes-Oxley Act also called for more disclosure and transparency of corporate financial
information.

Answer: TRUE

Page Ref: 286

Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe the
components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

24) ________ refers to the process of monitoring, comparing, and correcting work performance.

A) Controlling

B) Leading

C) Planning

D) Organizing

Answer: A

Page Ref: 266

Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills

 Ch. Objective: 1

Difficulty: Easy

Classification: Conceptual

25) ________ is the final step in the management process, which provides a critical link back to
________.

A) Organizing; planning

B) Planning; controlling

C) Controlling; planning

D) Leading; organizing

Answer: C

Page Ref: 267

Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 1

Difficulty: Moderate

Classification: Conceptual

26) Which of the following management responsibilities determines if organizational goals are being
achieved?

A) designing the organization's structure

B) motivating employees

C) formulating business strategy

D) measuring firm performance

Answer: D

Page Ref: 267

 Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 1

Difficulty: Moderate

Classification: Conceptual

27) Which of the following observations best explains why the control function is important?

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: 267

Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 1

Difficulty: Easy

Classification: Conceptual

28) 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: 267

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

29) 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: 268

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

30) 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: 268

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

31) 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: 268

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

32) 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: 268

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

33) 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: 268

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

34) 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: 268

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

35) 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: 269

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual
 36) ________ 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: 270

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

37) 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: 270

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy
 Classification: Conceptual

38) 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: 271

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

39) 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: 272

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

 Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual

40) ________ 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: 272

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual

41) 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: 272

Learning Outcome: Describe the components of the control process

 AACSB: Reflective Thinking Skills

Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual

42) 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: 272

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual

43) 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: 272

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual

44) 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: 272

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 3

Difficulty: Easy

Classification: Conceptual

45) An organization hires additional personnel as soon as they get a major contract. The organization
is using ________ control.

A) feedforward

B) concurrent

C) feedback

D) management
 Answer: A

Page Ref: 275

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. Objective: 4

Difficulty: Moderate

Classification: Application

46) 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: 275

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

47) 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: 275

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

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

A) feedback

B) concurrent

C) feedforward

D) reactive

Answer: B

Page Ref: 275

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

49) ________ 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: 275

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

50) 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: 276

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

51) 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: 276-277

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

52) ________ ratios measure how efficiently the firm is using its assets.

A) Liquidity

B) Leverage

C) Profitability

D) Activity

Answer: D

Page Ref: 277

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual
53) 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: 277

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. 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: 278

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills; Use of Information Technology

Ch. 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: 278

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills; Use of Information Technology

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

56) 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: 279

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. Objective: 4
 Difficulty: Easy

Classification: Conceptual

57) 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: 279

Learning Outcome: Describe the components of the control process

AACSB: Analytic Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

58) ________ 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: 279

Learning Outcome: Describe the components of the control process

 AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

59) 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: 280

Learning Outcome: Identify the fundamental concepts and issues of international business and
management; Describe the components of the control process

AACSB: Dynamics of the Global Economy; Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

60) The earthquake/tsunami which hit Japan in March of 2011 highlights the contemporary need to
design organizational controls for ________.

A) cross-cultural differences

B) global turmoil and disasters

C) workplace privacy

D) workplace safety

Answer: B
 Page Ref: 281

Learning Outcome: Identify the fundamental concepts and issues of international business and
management; Describe the components of the control process

AACSB: Analytic Skills; Dynamics of the Global Economy

Ch. Objective: 5

Difficulty: Easy

Classification: Application

61) 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: 282

Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe the
components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

62) 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: 282

Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe the
components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

63) 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: 284

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

64) 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: 284

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

65) 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: 284

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

66) 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: 284

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

67) 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: 285

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual
68) 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 corporation in society

Answer: B

Page Ref: 286

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

69) 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: 286

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual
 70) 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: 286

Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe the
components of the control process

AACSB: Reflective Thinking Skills

Ch. 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.

71) 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: 267

Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 1

Difficulty: Moderate

Classification: Application

72) 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: 268

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 2

Difficulty: Moderate

Classification: Application

73) 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: 268

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 2

Difficulty: Moderate

Classification: Application

74) 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: 270

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. 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.

75) 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: 272

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 3

Difficulty: Moderate

Classification: Application

76) 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: 272

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. 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.

77) 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: 275

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 4

Difficulty: Moderate

Classification: Application
 78) 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: 275

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 4

Difficulty: Moderate

Classification: Application

79) 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: 276

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

 Ch. 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.

80) 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: 276-277

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 4

Difficulty: Moderate

Classification: Application

81) 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: 277

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 4

Difficulty: Moderate

Classification: Application

Employee Theft (Scenario)

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 $30,000 worth
of merchandise was accounted to employee theft in the year 2010.

82) 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: 282

Learning Outcome: Discuss the role of ethics and social responsibility in management; Discuss
factors influencing organizational structure decisions

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 5
 Difficulty: Moderate

Classification: Application

83) 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: 283

Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe the
components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 5

Difficulty: Moderate

Classification: Application

Workplace Violence (Scenario)

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.

84) 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: 284

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 5

Difficulty: Moderate

Classification: Application

85) 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: 284

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 5

Difficulty: Moderate

Classification: Application

86) 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: 266-267

Learning Outcome: Describe the roles of managers and the skills they need to succeed within an
organization; Describe the components of the control process

AACSB: Reflective Thinking Skills; Communication Abilities

Ch. Objective: 1

Difficulty: Easy

Classification: Conceptual

87) 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. Measuring—the 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. Comparing—the 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 action—managers 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: 267-271

 Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills; Communication Abilities

Ch. Objective: 2

Difficulty: Easy

Classification: Conceptual

88) 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 control—feedforward control—prevents

anticipated problems since it takes place before the actual activity. Example - at 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 become too costly.
Example - When 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. Example - when 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: 275-276

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills; Communication Abilities

Ch. Objective: 4

Difficulty: Moderate

Classification: Application

89) List and discuss four performance control tools used for monitoring and measuring organizational
performance.

Answer:

a. Financial controls—one 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 controls—information 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 scorecard—this 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 areas—financial, customer, internal processes, and
people/innovation/growth assets—that 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 practices—benchmarking 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: 276-280

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills; Communication Abilities

Ch. Objective: 4

Difficulty: Easy

Classification: Conceptual

90) 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: 279

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 4

Difficulty: Moderate

Classification: Application

91) 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: 283

Learning Outcome: Describe the components of the control process

AACSB: Reflective Thinking Skills; Communication Abilities

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

92) 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: 284

Learning Outcome: Describe the components of the control process

 AACSB: Reflective Thinking Skills; Communication Abilities

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

93) 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: 284

Learning Outcome: Describe the components of the control process

AACSB: Communication Abilities; Analytic Skills

Ch. Objective: 5

Difficulty: Moderate

Classification: Application

94) 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 Sarbanes-Oxley 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 Sarbanes-Oxley 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
information—that 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: 286

Learning Outcome: Discuss the role of ethics and social responsibility in management; Describe the
components of the control process

AACSB: Reflective Thinking Skills; Communication Abilities

Ch. Objective: 5

Difficulty: Easy

Classification: Conceptual

Copyright © 2014 Pearson Education, Inc.