Chapter 4—Planning and Decision Making
TRUE/FALSE
1. Creating and executing a plan is one of the most important tasks of a manager.
2. On average, companies that create plans have larger profits and grow much faster than companies that
don’t.
3. Planning can impede change, create a false sense of certainty, and lead to the detachment of planners.
4. Planning is one of the best ways to improve organizational and individual performance.
5. Planning is a three-step process which involves setting goals, then next developing effective action
plans, and finally tracking progress toward goal achievement.
6. S.M.A.R.T. goals are Specific, Meaningful, Active, Reachable, and Timely.
7. Encouraging worker participation in goal setting, making goals public, and getting top management’s
support are all recommended ways to increase goal commitment in a company.
8. Both proximal and distal goals are used to provide additional motivation and rewards for employees.
9. For planning to be effective, workers need a specific, challenging goal as well as regular feedback to
track their progress.
10. The two approaches to maintaining flexibility in organizations while they plan are outcome-based
planning and change-based planning.
11. Planning works best when the goals and action plans at the bottom and middle of the organization
supports the goals and action plans at the top of the organization.
12. Developing a purpose statement is the sole responsibility of middle management.
13. A strategic objective is a statement of a company’s purpose or reason for existing.
14. An organization’s purpose must regularly change to adapt to changes in the environment over time.
15. Tactical plans specify how a company will use its resources, budgets, and people to accomplish
specific goals within its mission.
16. Tactical plans and objectives are used to direct behavior, efforts, and attention over the next six
months to two years.
17. Management by objectives is a two-step process in which managers and their employees discuss
possible goals and then meet regularly to review progress toward the accomplishment of those goals.
18. The three kinds of operational plans are single-use plans, standing plans, and budgets.
19. Standing plans deal with unique, one-time-only events.
20. The three kinds of standing plans are policies, procedures, and rules and regulations.
21. Budgeting is a critical management task, one that most managers could do better.
22. All decision making by management is rational.
23. The term decision making is used to refer to the process of choosing a solution from available
alternatives.
24. The process of rational decision making emphasizes the use of systematic procedures to arrive at
optimal solutions. Not all processes of decision making follow suit.
25. The six steps in the rational decision-making process are as follows: (1) frame the problem, (2)
identify decision criteria, (3) weight the criteria, (4) generate alternative courses of action, (5) evaluate
each alternative, and (6) compute the optimal decision.
26. Both absolute comparisons and relative comparisons are methods for identifying decision criteria.
27. Groupthink is more likely to occur in a highly cohesive group that is insulated from others and has no
established procedure for systematically defining problems and exploring alternatives.
MULTIPLE CHOICE
1. After earning $8 billion in profit, Royal Dutch/Shell decided to strive to double its profits within the
next five years. Which classical management function would be instrumental in achieving this goal?
a.
motivating
b.
research and development
c.
planning
d.
marketing
e.
optimizing
2. Planning is ultimately based upon ____.
a.
how a planner deals with bounded rationality
b.
choosing a goal and developing a method or strategy to achieve that goal
c.
the relationship between organizational line and staff personnel
d.
whether the mission statement is internally or externally oriented
e.
the personality type of the individual engaged in planning
3. One of the benefits of planning is how it ____.
a.
encourages people to work faster
b.
encourages people to try a variety of different ways to do others’ jobs
c.
reduces employee turnover
d.
eliminates all discriminatory practices
e.
does none of these
4. One of the benefits of planning is how it ____.
a.
encourages people to work harder for extended periods
b.
encourages people to try a variety of different ways to do others’ jobs
c.
reduces employee turnover
d.
creates a mechanistic environment
e.
does none of these
5. One of the benefits of planning is how it ____.
a.
improves vertical integration of departments
b.
encourages people to engage in behaviors directly related to goal accomplishment
c.
encourages people to remain with the company, rather than go to work for the competition
d.
eliminates the need for change agents
e.
makes a long-term mission statement redundant
6. How does a company benefit from planning?
a.
increased use of groupthink
b.
less solidified group cohesion
c.
more compliance with organizational culture
d.
intensified effort, persistence, direction, and creation of task strategies
e.
the ability to make greater use of devil’s advocacy
7. The use of ____ in planning produces a false sense of certainty and is often cited as one of the major
pitfalls of planning.
a.
assumptions
b.
commitment
c.
detachment
d.
tactics
e.
benchmarking
8. According to the text, which of the following is a pitfall of planning?
a.
the acceptance of sacrificing solutions
b.
a false sense of certainty based on faulty assumptions
c.
the inability of organizational line personnel to accept the long-term benefit of planning
d.
the requirement for expensive employee training before plans can be effectively
implemented
e.
outsourcing
9. Which of the following is a possible outcome of planning?
a.
Planning may lead to a mechanistic organizational chart.
b.
Planning may harm individual and organizational performance.
c.
Planning can eliminate the need for formalization.
d.
Planning will allow the company to know about all changes in its external environment
before they occur.
e.
All of these are possible outcomes of planning
10. The last step in effective planning is to ____.
a.
maintain flexibility in planning
b.
develop long-term action plans
c.
develop goal commitment
d.
acculturate the employees
e.
track progress toward goal achievement
11. According to the S.M.A.R.T. guidelines, goals should be ____.
a.
Service-oriented
b.
Measurable
c.
Rational
d.
Tactical
e.
Actionable
12. According to the S.M.A.R.T. guidelines, goals should be ____.
a.
Aggregated
b.
Reliable
c.
Timely
d.
Motivated
e.
all of these
13. According to the S.M.A.R.T. guidelines, goals should be ____.
a.
Synergistic
b.
Maximized
c.
Accelerated
d.
Role-related
e.
none of these
14. Which of the following is NOT one of the characteristics of S.M.A.R.T. goals?
a.
Synergistic
b.
Measurable
c.
Timely
d.
Attainable
e.
Realistic
15. The most popular approach to increasing goal commitment is ____.
a.
encouraging workers’ participation in goal setting
b.
making goals public
c.
getting top management’s support
d.
assigning realistic and attainable goals
e.
management by mentoring
16. Which of the following is a commonly used method for increasing goal commitment?
a.
encouraging worker participation in goal setting
b.
keeping goals private
c.
setting ethical goals
d.
using ombudsman to set goals
e.
all of these
17. Which of the following is a commonly used method for increasing goal commitment?
a.
reward whistleblowing
b.
make goals public
c.
get the union’s support
d.
use the equity theory
e.
establish a median goal for all employees
18. A(n) ____ lists the specific steps, people, resources, and time period for accomplishing a goal.
a.
strategy
b.
proximal goal
c.
distal goal
d.
action plan
e.
subordinate objective
19. Which of the following is an accepted method for tracking progress toward goal achievement?
a.
setting response and stimulus goals
b.
gathering and providing performance feedback
c.
using operant and classical conditioning
d.
mechanistic and dynamic feedback
e.
data warehousing and data mining
20. The goal of a company was to reduce the expenses incurred by the sales force. A manager examining
weekly expense sheets would be using which of the accepted methods for tracking progress toward
goal achievement?
a.
setting realistic and attainable goals
b.
gathering and providing performance feedback
c.
developing concrete action plans
d.
making sure goals are measurable
e.
comparing dynamic with mechanistic goals
21. A manufacturer of suntan lotion could set a(n) ____ goal to increase revenues by 8 percent over the
next five years and a(n) ____ goal to increase sales next June in the Miami Beach area by 3 percent.
a.
tactical; strategic
b.
operational; tactical
c.
distal; proximal
d.
operational; strategic
e.
proximal; distal
22. ____ can help organizations to maintain flexibility as they plan.
a.
Environmental munificence
b.
Options-based planning
c.
Formalization
d.
Liaisons
e.
Group cohesiveness
23. ____ planning keeps options open by making small, simultaneous investments in many alternative
plans.
a.
Learning-based
b.
Options-based
c.
Conditioned
d.
Functional
e.
Operant
24. The basic purpose of ____ planning is to leave commitments open by maintaining slack resources.
a.
options-based planning
b.
learning-based planning
c.
traditional planning
d.
operant planning
e.
the establishment of planning windows
25. For options-based planning to work, the organization must ____.
a.
have slack resources
b.
use cross-functional teams
c.
have broad spans of management
d.
have tall organizational structures
e.
use decentralization
26. Planning works best when the goals and action plans at the ____ of the organization support the goals
and action plans at the ____ of the organization.
a.
bottom and top; middle
b.
top and middle; bottom
c.
bottom and middle; top
d.
group level; individual level
e.
staff level; line level
27. Top management is responsible for developing long-term ____ that make clear how the company will
serve customers and position itself against competitors in the next two to five years.
a.
standing plans
b.
tactical plans
c.
operational plans
d.
strategic plans
e.
mission statements
28. ____ is responsible for developing strategic plans that make clear how the company will serve
customers and position itself against competitors in the next two to five years.
a.
An action team
b.
Middle management
c.
Planning staff
d.
A change agent
e.
Top management
29. An Australian manufacturer of surfboards wants to increase awareness of its brand in the U.S. market.
A ____ plan to accomplish this objective might be to host a series of surfboard competitions in
California .
a.
contingency
b.
single-use
c.
standing
d.
visionary
e.
tactical
30. A department store is experiencing greater than usual losses due to theft and management wants it
stopped. Middle management decided to hire a security company to study the problem and develop the
best plan for dealing with it. Middle management have implemented a(n) ____ plan.
a.
contingency
b.
strategic
c.
operational
d.
visionary
e.
tactical
31. ____ plans are plans that specify how a company will use resources, budgets, and people to
accomplish specific goals within its mission.
a.
Strategic
b.
Tactical
c.
Operational
d.
Single-use
e.
Dialectical
32. Who is responsible for the creation of tactical plans?
a.
team leaders
b.
lower-level managers
c.
middle managers
d.
top managers
e.
staff advisors
33. What type of planning would be used to create the festivities necessary to celebrate the 100-year
anniversary of a furniture manufacturer?
a.
single-use plan
b.
contingency plan
c.
scenario plan
d.
standing plan
e.
role-model plan
34. Management by objectives (MBO) is a management technique often used to develop and carry out
____.
a.
single-use plans
b.
standing plans
c.
operational plans
d.
tactical plans
e.
hierarchical plans
35. Which of the following is NOT a step in the management by objectives (MBO) process?
a.
jointly discuss possible goals
b.
participatively select goals that are challenging
c.
jointly develop operational plans
d.
meet regularly to review progress toward goal accomplishment
e.
participate in the selection of goals that are consistent with the company’s overall goals
36. When done correctly, management by objectives (MBO) is an extremely effective method for ____.
a.
brainstorming
b.
developing policies and procedures
c.
broadening the span of transformation
d.
problem framing
e.
tactical planning
37. Who is primarily responsible for developing operational plans?
a.
lower-level managers
b.
middle managers
c.
top managers
d.
staff advisors
e.
any of these
38. ____ plans direct the behavior, efforts, and priorities of operative employees for periods ranging from
one to six months.
a.
Strategic
b.
Tactical
c.
Operational
d.
Standing
e.
Procedural
39. There are three kinds of ____ plans. They are single-use plans, standing plans, and budgets.
a.
strategic
b.
tactical
c.
operational
d.
MBO
e.
actionable
40. ____ are a type of operational plan.
a.
Single-use plans
b.
Contingency plans
c.
Short-term strategies
d.
Mission modifications
e.
Benchmarks
41. The ____ is a type of operational plan that saves managers time because it is created once and then
used repeatedly to handle frequently recurring events.
a.
standing plan
b.
budget
c.
multiple-use plan
d.
options-based plan
e.
forecast
42. In case of a fire, most organizations have a series of actions that must take place beginning with
notifying the fire department and include evacuating buildings. What kind of a standing plan is
described in this example?
a.
rules and regulations
b.
procedures
c.
policies
d.
organizational norms
e.
security governances
43. ____ are types of standing plans.
a.
Policies and procedures
b.
Targeted plans
c.
Long-term tactical strategies
d.
MBO guidelines
e.
Transformational plans
44. ____ are standing plans that indicate the specific steps that should be taken in response to a particular
event.
a.
Policies
b.
Procedures
c.
Actionable plans
d.
Options-based plans
e.
Single-use plans
45. A(n) ____ is a standing plan that indicates the general course of action that should be taken in response
to a particular event or situation.
a.
policy
b.
procedure
c.
rule
d.
regulation
e.
heuristic
46. Which of the following is the most specific type of standing plan?
a.
policies
b.
procedures
c.
rules and regulations
d.
forecasts
e.
MBO plans
47. Budgets are an example of ____ planning.
a.
strategic
b.
tactical
c.
operational
d.
actionable
e.
single-use
48. At a canning factory, new employees were instructed never to wear loose-fitting clothes when working
around the canning machine. What kind of a standing plan is described in this example?
a.
rules and regulations
b.
procedures
c.
policies
d.
organizational norms
e.
security governances
49. ____ is the process of choosing a solution from available alternatives.
a.
Decision making
b.
Problem identification
c.
Heuristics
d.
Multivariable selection
e.
Problem solving
50. ____ is a systematic process of defining problems, evaluating alternatives, and choosing optimal
solutions.
a.
Problem identification
b.
Rational decision making
c.
Benchmarking
d.
Multivariable selection
e.
Keystoning
51. Neither Chile nor Peru have a mass-market café culture, but that fact has not stopped Starbucks from
engaging in ____ to determine how best to expand into those markets.
a.
intuitive conditioning
b.
benchmarking
c.
decision making
d.
organizational design
e.
conditioned learning
52. Neither Chile nor Peru has a mass-market café culture, but that fact has not stopped Starbucks from
trying to determine what can be done to make its coffee houses successful in those markets. By
recognizing that people in these two South American countries do not drink coffee like people in the
United States and that they should change this habit, Starbucks has begun a ____ process with problem
identification.
a.
rational decision making
b.
trend analysis
c.
sacrificing
d.
selection of optimal solutions
e.
framing constraints
53. The European Union encourages companies to abandon national boundaries and offer the same
products to all of the member countries. Allianz, Germany’s largest insurance group, is considering
converting from a German company to a European company. If it makes this decision rationally, it will
first ____.
a.
create decision criteria based on national GNPs
b.
identify problems arising from tax and regulatory issues
c.
decide whether to expand to one nation at a time
d.
create a committee to make the final decision
e.
avoid the use of bounded rationality
54. A ____ exists when there is a gap between a desired state (what managers want) and an existing state
(the situation that the managers are facing).
a.
service gap
b.
benchmark
c.
condition of uncertainty
d.
minimum threshold
e.
problem
55. Which of the following is one of the six steps in the rational decision-making process?
a.
choose a minimally acceptable alternative solution
b.
evaluate the effectiveness of the decision
c.
weight the criteria
d.
introduce the decision to those who will be impacted by it
e.
identify customer service gaps