106. Refer to General Motors. As Harris monitored how the media reported on GM’s progress, he was often
forced to take corrective action such as responding to a very negative editorial in the New York Times.
Which management function was Harris using to monitor the external environment?
a.
planning
b.
organizing
c.
leading
d.
controlling
e.
evaluating
107. Refer to General Motors. Which role did Wagoner assume when he motivated GM’s work force to
support his turnaround strategy?
a.
resource allocator
b.
entrepreneur
c.
disturbance handler
d.
leader
e.
disseminator
108. Refer to General Motors. When Harris met with the media to discuss concerns about the operation of
General Motors, he was assuming a(n) _____ role.
a.
liaison
b.
decisional
c.
informational
d.
interpersonal
e.
controlling
109. Refer to General Motors. In terms of the decisional roles played by managers, Harris was hired to be
a(n):
a.
resource allocator
b.
entrepreneur
c.
disturbance handler
d.
liaison
e.
disseminator
110. Refer to General Motors. _____ skills allowed Wagoner to determine which problems needed to be
addressed first.
a.
Interpersonal
b.
Human
c.
Conceptual
d.
Informational
e.
Technical
Nortel
When people use the Internet or make calls on their cell phones, the companies providing the Internet
and cell phone service are probably using products made by Nortel Networks. With its products used
everywhere in the world, Nortel should be performing well. At least that’s what Mike Zafirovski
thought before he became Nortel’s new CEO and began working to turn around the financially
struggling company. He had hoped that his 25 years at GE, where he ran five of its key businesses, and
his five years as the president and chief operating officer at Motorola would have prepared him to be
Nortel’s new CEO. But he underestimated the pressures and expectations, as well as the magnitude of
problems that were now his responsibility.
The most serious problem occurred six months after he became CEO. After the previous
management team overreported earnings to trigger corporate bonuses, Nortel had supposedly solved
the company’s financial-reporting problems. But now, for the third year in a row, Nortel had
incorrectly overestimated its profits and had to report, yet again, that it had earned substantially less
than first reported. This time the problem wasn’t fraud, but poor accounting controls. To no one’s
surprise, Wall Street hammered Nortel’s stock price. Soon after, shareholders who had seen the value
of Nortel stock lose $30 billion brought two class-action lawsuits against the company, seeking $9
billion in damages. The lawsuits, if successful, would put Nortel out of business. The mounting
problems had demoralizing effects within the company; the percentage of employees highly satisfied
with their jobs dropped from 51 percent before to 40 percent after.
With Nortel needing to get better fast, Zafirovski started by dealing with the large problems that
demanded immediate action. First, the company publicly admitted the accounting errors and released
new financial statements. It severed its relationship with the accounting firm which had audited its
books for more than a decade. Then Mike invited the attorneys from the lawsuits to work directly
with him and a small team of Nortel managers by using a court-appointed mediator to work toward a
settlement. Zafirovski apologized for Nortel’s errors, saying, “We let you down.” He asked them to
“not kill the company,” because in doing so, “you would receive absolutely nothing.” His apology
worked. By the next morning, Nortel had agreed to partially compensate shareholders for their losses
by paying $2.4 billion in cash and stock. The shareholders involved in the lawsuit accepted the
settlement, which allowed Nortel to stay in business.
But, to pay the settlement, Zafirovski had to address his second large problem. Nortel, the only
unprofitable company in its industry, was running out of cash. Mike’s job as CEO was to persuade
skeptical financial companies to lend Nortel $2 billion to keep the company afloat. So he traveled to
seven cities in one week to try to convince them that Nortel was worth the risk, even though Nortel
hadn’t had positive cash flows for more than six years. Said Zafirovski, “I could see the skepticism
on their faces. It was pretty tough.” He obtained the $2 billion in loans, but only after agreeing to
pay a high interest rate of 10.75 percent.
With billions in losses, improving efficiency was one of Zafirovski’s most important goals. To
decrease costs by $1.5 billion, he slashed bureaucracy, reducing the number of management layers
from ten to seven, cut administrative expenses, reduced spending on research and development, and
slashed the overall number of parts used in its products. And, while it was difficult to do, cutting
retirement pensions and health care costs saved Nortel $100 million a year.
At the time this was written, things had begun to improve for Nortel. Customers, for example,
reported a dramatic 20 percent increase in satisfaction over a six-month period. That coincided with a
17 percent increase in sales and Nortel’s first quarterly profit in years. But, Zafirovski knows that a
complete turnaround will take time, most likely three to five years. After a year in the job, what did
Zafirovski have to say about his transition as a new CEO? “I have been stretched beyond what I
thought I was capable of. It’s difficult to have an appreciation for all these pressures and expectations
unless you’ve experienced them before.”
111. Refer to Nortel. Which traditional management function will be the key in ensuring that Nortel reduces
wastes, decreases costs, and still operates efficiently?
a.
organizing
b.
leading
c.
goal setting
d.
motivating
e.
controlling
112. Refer to Nortel. As CEO of Nortel, Zafirovski:
a.
is responsible for developing employees’ commitment to the company’s performance
b.
monitors and manages the performance of subunits and individual managers who report to
them
c.
is responsible for setting objectives consistent with organizational goals
d.
teaches employees how to do their job more efficiently
e.
coordinates and links groups, departments, and divisions within a company
113. Refer to Nortel. What specific role did CEO Zafirovski assume when he told the board of directors that
it was necessary to restate Nortel’s earnings for the third year in a row?
a.
figurehead
b.
monitor
c.
disseminator
d.
resource allocator
e.
spokesperson
114. Refer to Nortel. What specific decisional role did CEO Zafirovski assume when he convinced
skeptical financial companies to loan Nortel $2 billion?
a.
decisional
b.
conceptual
c.
interpersonal
d.
liaison
e.
negotiator
115. Refer to Nortel. What skills did CEO Zafirovski primarily use to convince financial institutions to loan
Nortel money even though the company had yet to show a profit?
a.
decisional
b.
conceptual
c.
interpersonal
d.
informational
e.
motivational
SHORT ANSWER
1. Define efficiency and effectiveness, and explain their relationship to the process of management.
2. Define meta-analysis, and briefly identify what it is used for.
3. List and briefly identify the four classical functions of management.
4. Identify the four different kinds of managers. List one of the basic responsibilities for each of these
four different types of manager.
5. What are the four major responsibilities for the typical middle manager?
6. Specify the differences in the timeframes involved in planning done by top, middle, and first-line
managers.
7. Among the four kinds of management jobs, specify the one that is the most recent addition to
organizations. List the basic responsibilities of that management job.
8. List and briefly identify the three basic managerial roles identified by Mintzberg. Include a list of the
basic subroles that characterize each of these roles in your definition.
9. List and briefly identify the four kinds of skills that companies look for in managers.
10. Within the four sets of skills that companies look for in managers, specify those that tend to be more
important or more prevalent in higher-level than lower-level managers.
ANS:
11. Identify three of the five most significant mistakes made by managers.
12. Briefly explain how and why companies can create competitive advantage through people.
ESSAY
1. Define meta-analysis and its role in scientific research. Explain why meta-analysis is of value to both
management scholars and management practitioners.
ANS:
2. Top managers are responsible for (1) creating a context for change, (2) developing attitudes of
commitment and ownership, (3) creating a positive organizational culture through words and actions,
and (4) monitoring their company’s business environment. Of these four dimensions, which ones do
you think can also be significantly impacted by the day-to-day actions of middle managers, first-line
managers, and team leaders? Explain the rationale for your answer.
3. Compare and contrast the managerial roles of liaison, spokesperson, and negotiator. Explain both the
similarities that link these roles behaviorally, and the differences that are used by Mintzberg to
differentiate them.
ANS:
4. Compare and contrast the relative importance of the four characteristics that companies look for in
managers as they rise through the management hierarchy. That is, describe the similarities and
differences in these characteristics among lower, middle, and upper-level managers, and explain the
reasons for the differences.
ANS:
5. Describe the transition to management during the first year. Explain how this illustrates the chapter’s
emphasis on human skills as being more important than technical skills for success or failure in
management.
ANS:
