Chapter 10—Quality and Performance
TRUE/FALSE
1. The systematic process of regulating organizational activities to make them consistent with the
expectations in plans, targets, and standards of performance refers to organizational control.
2. Effectively controlling an organization requires information about product standards and actual
products, as well as actions to correct any deviations from the standards.
3. It is important to create a written Internet policy for an “acceptable use policy” for workplace Internet
use.
4. Customer service, external business processes, financial performances, and the organization’s capacity
for learning and growth are the four major perspectives of the balanced scorecard.
5. The feedback control model is a comprehensive management control system that balances traditional
financial measures with measures of customer service, internal business processes, and the
organization’s capacity for learning and growth.
6. Managers record, analyze, and discuss the metrics on the balanced scorecard to determine if the
organization is achieving its strategic goals.
7. A standard for performance is included in an organization’s overall strategic plan to compare
organizational activities against.
8. The final step of the feedback control model is to do nothing if performance is adequate or to take
corrective action if performance is inadequate.
9. In most companies, managers rely exclusively on qualitative measures to measure actual performance.
10. The fourth step in the control process is comparing actual activities to performance standards.
11. Effective management control involves subjective judgment and employee discussions, as well as
objective analysis of performance data.
12. A responsibility center is the fundamental unit of analysis for a budget control system.
13. An expense budget lists forecasted and actual revenues of the organization.
14. The level of funds flowing through the organization and the nature of cash disbursements is shown
through the capital budget.
15. Bottom-up budgeting is a process in which lower level managers anticipate their departments’ resource
needs and pass them up to top management for approval.
16. A process in which lower level managers anticipate their department’s resource needs and pass them to
top management for approval is called top-down budgeting.
17. The balance sheet shows the firm’s financial position with respect to expenses and credits at a specific
point in time.
18. Liabilities are the firm’s debts, both current and long-term.
19. The income statement shows revenues coming into the organization from all sources and subtracts all
expenses.
20. Under hierarchical control, employees are actively engaged and committed to their work.
21. The use of cultural values, traditions, shared beliefs and trust to increase compliance with goals refers
to decentralized control.
22. Open-book management ties employee rewards to the company’s overall success.
23. The goal of open-book management is to get every employee thinking and acting like a business
owner.
24. Closed-book management helps employees appreciate why efficiency is important to the organization’s
success as well as their own.
25. An organization-wide commitment to infusing quality into every activity through continuous
improvement defines six sigma.
26. A group of six to twelve volunteer employees who meet regularly to discuss and solve problems
affecting their common work activities refers to a quality team.
27. The implementation of total quality management involves the use of many techniques such as quality
circles, benchmarking, Six Sigma principles, reduced cycle time, and continuous improvement.
28. Finland has the highest 2007-2008 opacity score.
29. Benchmarking is the age-old practice of allowing the artisan to sign his name to the finished product.
30. Outsourcing is the continuous process of measuring products, services, and practices against the
toughest competitors or the industry leaders.
31. Reduced cycle time is one of the common techniques of TQM, and refers to the ability of TQM to
shorten the time required to receive inventory after placing an order for it.
32. Continuous improvement is the implementation of a large number of small, incremental improvements
in all areas of the organization on an ongoing basis.
33. Six Sigma is most beneficial when employees have challenging jobs.
34. Very high expectations from senior management and a desire to share authority by middle managers
are two of the positive factors leading to the success of TQM.
35. The certification based on a set of international standards for quality management, setting uniform
guidelines for processes to ensure that products conform to customer requirements is the ISO
certification.
36. The system of governing an organization so that the interests of corporate owners are protected refers
to corporate governance.
37. Although work processes can be controlled and regulated, it is impossible to control and regulate
employee behavior.
38. Managers are increasingly recognizing the need to measure intangible aspects of performance such as
customer service.
39. The Six Sigma approach is a comprehensive management control system that balances traditional
financial measures with operational measures relating to a company’s critical success factors.
40. Within the balanced scorecard, customer service indicators measure things such as employee retention
and satisfaction.
41. Tracking measures such as customer service and employee involvement are examples of identifying
and defining nonfinancial measurements.
42. An expense budget lists forecasted and actual revenues of the organization.
43. The capital budget lists planned investments in major assets such as buildings, heavy machinery, or
complex information technology systems.
44. On a balance sheet, the bottom line indicates the net income – profit and loss – for the given time
period.
45. Companies today are increasingly shifting from a hierarchical control process to one that is more
decentralized.
46. Decentralized control techniques can improve a company’s bottom line by reducing employee
misconduct, such as employee theft.
47. With hierarchical control, power is dispersed and is based on knowledge and experience as much as
position.
48. TQM became attractive to U.S. managers in the 1980s after it had been successfully implemented by
Japanese companies which were gaining market share and an international reputation for high quality.
49. A Six Sigma process will typically result in one defective package of product for every three
truckloads shipped.
50. TQM tends to be most successful when it enriches jobs and improves employee motivation.
MULTIPLE CHOICE
1. Which of the following is the systematic process through which managers regulate organizational
activities?
a.
Strategic planning
b.
Organizational control
c.
Organizational goal setting
d.
Strategic regulation
e.
Organizational leading
2. One area in which many managers are implementing stronger controls is
a.
employee use of e-mail and Internet.
b.
employee breaks.
c.
office socialization.
d.
employee conflict.
e.
promptness.
3. According to SPOTLIGHT ON SKILLS in Chapter 10, guidelines for creating an effective but fair
“acceptable use policy” for workplace Internet use includes all of the following EXCEPT:
a.
make sure employees understand that they have no legal right to privacy in the workplace
b.
create a written Internet policy
c.
describe the disciplinary process
d.
review the policy at regular intervals
e.
all of these are included in the guidelines
4. Which of the following is a comprehensive management control system that balances traditional
financial measures with operational measures relating to a company’s critical success factors?
a.
Economic value-added system
b.
Activity-based costing system
c.
Market value-added system
d.
Balanced scorecard
e.
Open-book management system
5. ____ indicators focus on production and operating statistics.
a.
Financial performance
b.
Business process
c.
Critical success
d.
Potential for learning and growth
e.
Performance measurement
6. All well-designed control systems involve the use of ____ to determine whether performance meets
established standards.
a.
opinions
b.
advice
c.
consultants
d.
benchmarks
e.
feedback
7. All of the following are major perspectives of the Balanced Scorecard EXCEPT:
a.
Competitors
b.
Customers
c.
Learning and growth
d.
Financial
e.
Internal business processes
8. What is the first step in the feedback control system?
a.
Establishing strategic objectives
b.
Establishing standards of performance
c.
Taking corrective action
d.
Comparing performance to standard
e.
Measuring previous performance
9. CyberChasers Corporation sends a post-purchase questionnaire to all consumers who buy their
products. They are interested in gathering data on product quality, customer service orientation, and
customer satisfaction. This is an example of
a.
a concurrent control.
b.
a feedback control.
c.
a feedforward control.
d.
preliminary control.
e.
preventive control.
10. Kendra is a manager at George’s Goodies. On a regular basis Kendra and her subordinates set
individual and organizational goals. This process is similar to which component of the control model?
a.
Taking corrective action when necessary
b.
An information system
c.
Establishing performance standards
d.
Engaging strategic analysis
e.
None of these
11. According to the control model, after establishing standards of performance the manager should
a.
compare performance to standards.
b.
get the standards approved by the supervisors and subordinates.
c.
measure actual performance.
d.
take corrective action.
e.
provide feedback.
12. Tiffany recently discovered that the reject rate for her department has exceeded the standard for
performance in this area. What should Tiffany do to exercise effective control?
a.
She should order more training for her workforce.
b.
She should contact the maintenance department and have them come fix her machinery.
c.
She should suspend the poorer workers in her department.
d.
She should investigate and discover the cause of the problem.
e.
None of these
13. Zachary, a manager at ExecuComp, receives quarterly reports, which track his department’s production
statistics. However, these reports lack key information regarding reject rates. Which of the following
components of the control model need improvement?
a.
Measuring actual performance
b.
The planning and setting of performance standards
c.
SWOT analysis
d.
The ability to take corrective action when necessary
e.
All of these
14. All of the following are key steps of setting up feedback control systems EXCEPT
a.
comparing performance to standards.
b.
establishing standards.
c.
getting employee opinions.
d.
measuring performance.
e.
making necessary corrections.
15. Mistletoe Corporation has a detailed set of organizational goals and management information system
that delivers timely and accurate information. Mistletoe still has control problems, however, because
its managers refuse to act on the information they receive. Mistletoe’s control process has flaws in
which of the following areas?
a.
Its performance standards
b.
Its management information systems
c.
Its ability to take corrective action when necessary
d.
Its measurement systems
e.
None of these
16. Your department has absenteeism standards, a way to measure absenteeism, and, based on your
investigation, you have concluded that your department has an excessive absenteeism rate. What
should your next step be?
a.
Set new absenteeism standards
b.
Develop new measures of absenteeism
c.
Terminate three employees for excessive absenteeism
d.
All of these would be good examples of taking corrective action.
e.
None of these
17. Kyle’s work group consistently exceeds the goals the members set for themselves some months ago. In
an attempt to better motivate the group, Kyle thought it would be a good idea to set new goals. This is
an example of Kyle exercising control by
a.
comparing performance to standards.
b.
developing adequate measures of performance.
c.
taking corrective action.
d.
all of these
e.
comparing performance to standards and developing adequate measures of performance
only.
18. ____ is any organizational department or unit under the supervision of a single person who is
responsible for its activity.
a.
Independent center
b.
Responsibility center
c.
Analysis center
d.
Control center
e.
Budgeting center
19. Which of the following includes anticipated and actual expenses for a responsibility center?
a.
revenue budget
b.
cash budget
c.
capital budget
d.
expense budget
e.
operating budget
20. Which of these is a financial budget that estimates cash flows on a daily basis or weekly basis to
ensure that the company can meet its obligations?
a.
Capital expenditure budget
b.
Balance sheet budget
c.
Cash budget
d.
Revenue budget
e.
Profit budget
21. Madison has been assigned to work on the development of a budget that plans future investments in
major assets such as buildings and heavy machinery. Madison is working on a(n)
a.
cash budget.
b.
capital budget.
c.
revenue budget.
d.
operating budget.
e.
expense budget.
22. The ____ plans future investments in major assets to be depreciated over several years.
a.
capital budget
b.
balance sheet budget
c.
cash budget
d.
revenue budget
e.
profit budget
23. Brad is a department manager at Home Theater, Inc. His sole role in the budget process is to
implement the budget that is developed for him. This is an example of
a.
strategic budgeting.
b.
operational budgeting.
c.
top-down budgeting.
d.
management by objectives.
e.
bottom-up budgeting.
24. Pauline is an area manager at Ironman Gym. She anticipates her area’s needs and formulates a
proposed budget every quarter. She then sends this proposal to her manager. This is an example of
a.
top-down budgeting.
b.
strategic budgeting.
c.
revenue budgeting.
d.
bottom-up budgeting.
e.
none of these.
25. An advantage of the bottom-up budgeting process is
a.
its emphasis on bureaucratic control.
b.
lower managers are more involved.
c.
top managers control the information flow.
d.
top managers are often not committed to achieving budget targets.
e.
all of these.
26. The firm’s financial position with respect to assets and liabilities at a specific point in time is shown by
its
a.
activity ratio.
b.
profitability ratio.
c.
income statement.
d.
liquidity ratio.
e.
balance sheet.
27. ____ provide the basic information used for financial control of an organization.
a.
Owners equity
b.
Income statements
c.
Financial position
d.
Mission Statements
e.
100–Ks
28. The basic philosophy of control at Nutrients-For-You, Inc. is based on the policies found in the
employee handbook, as well as a strict hierarchy of authority. This philosophy is consistent with
a.
clan control.
b.
bottom-up control.
c.
hierarchical control.
d.
culture control.
e.
decentralized control.
29. Which of the following allows employees to see for themselves the financial condition of the
company?
a.
Open-book management
b.
An economic value-added system
c.
Activity-based costing
d.
An inappropriate control system
e.
Market value-added system
30. The control “system” at FreshFood Corporation is based on the culture of the organization and norms
that develop in the individual work teams. This is an example of
a.
bureaucratic control.
b.
decentralized control.
c.
organizational control.
d.
feedback control.
e.
none of these.
31. The goal of ____ is to get every employee thinking and acting like a business owner.
a.
management-by-walking around
b.
closed-book management
c.
MBO
d.
open-book management
e.
just-in-time inventory systems
32. Total quality management
a.
is based on the ideas of Frederick Taylor.
b.
gives managers total responsibility for achieving quality goals.
c.
gives all employees the responsibility for achieving quality goals.
d.
was first successfully implemented in the United States.
e.
all of these.
33. The ____ offers some indication of the degree to which various countries are open regarding economic
matters.
a.
Opacity Index
b.
Economic Index
c.
Clarity Index
d.
National Index
e.
Foreign Economy Index