Chapter 11: Evaluation and Control
TRUE/FALSE
1. One of the primary reasons for evaluation and control is that the firm’s environment will change over
time.
2. Business people often like to believe that firms will automatically make changes as their competitive
environment changes.
3. The first step in gap analysis is the evaluation of the firm’s future direction and its industry.
4. A firm’s competitiveness is indirectly affected by its external environment.
5. Reengineering is a radical redesign of an organization’s processes so that they can be executed in
parallel, and the tasks undertaken by nonspecialists.
6. In conducting gap analysis, managers can simply rely on a binary yes or no judgment.
7. The easiest method to build forecasts of the future is simply scanning the environment for changes
along the external, strategic, and internal dimensions.
8. Brainstorming is a forecasting method in which a broad topic is set out and a discussion among the
participants is utilized to gain insights into what the future may look like.
9. Scenario planning tends to vary one quantifiable variable while holding others constant to see the
likely effect.
10. The Delphi method of forecasting is faster than brainstorming sessions, and may help to reduce the
problem of groupthink.
11. A firm should not assume it is on the right path simply because it met its current goal for profitability.
12. A global firm might conduct a gap analysis on a small scale twice a year, and on a larger scale with
middle managers meeting from around the world every one to two years.
13. Financial control focuses on gaps between desired financial outcomes and those actually produced by
a firm.
14. Denominator management occurs when a firm tries to increase its return on investment, or ROI by
simply reducing the denominator (R,) while holding or increasing the numerator (I,) constant.
15. Financial controls are often used by firms that have relied on related diversification.
16. International firms need strategic controls that ensure appropriate actions are being taken today to help
the firm tomorrow, but not if the short-term outcomes of these actions are costly.
17. Organizational controls can be the most powerful in an organization, but they are also the hardest to
change or institute.
18. Changes in the evaluation and control of personnel facilitated the adoption of quality control
techniques.
19. A quality circle is a group of workers that regularly confers on ways to improve both the quality of a
product and its production process.
20. The principal-principal problem occurs when employees do not do what is best for the shareholders.
21. Top management sets in motion the actions that implement the board’s strategic choices.
22. The department managers determine how to enact the mission, and determine what control actions are
needed and when, where, and how to implement them in order to successfully complete the control
process.
23. For an international firm that establishes a wholly owned subsidiary overseas, the firm’s middle
managers are key to helping prevent situations.
24.
The Balanced Scorecard is a system that summarizes an organization’s strategic objectives into four
main performance metrics: financial, external processes, customers, and learning and growth.
25. Quality management standards are process standards, not product standards.
MULTIPLE CHOICE
1.
The evaluation of how well a firm is meeting its goals is built around all of the following key activities
EXCEPT:
a.
evaluating the firm’s past status.
b.
evaluating forecasts.
c.
evaluating future direction.
d.
evaluating where the firm will end up given changes in the environment.
2. The decline in the value of the U.S. dollar and the rise in the value of the Euro has affected many
exporters. This example shows that a firm’s current status is affected by its:
a.
strategic environment.
b.
internal systems.
c.
external environment.
d.
technological advancements.
3. “Can the firm change positioning by moving upmarket?” should be evaluated at which level of a firm’s
environment?
a.
Internal systems
b.
External environment
c.
Technological advancements
d.
Strategic environment
4. Which of the following statements about the first step in gap analysis is true?
a.
An evaluation at this stage should include qualitative elements only.
b.
The firm needs to periodically evaluate where it stands relative to its expectations.
c.
The goals and objectives typically include only short-term time frames.
d.
It is the evaluation of the firm’s future direction and its industry.
5. Which of the following statements about disruptive technological change is false?
a.
History shows that most firms are successful in meeting disruptive challenges.
b.
Firms need to be attuned to major disruptive changes in their environment.
c.
Established firms start to suffer as they struggle to respond to disruptive change.
d.
It is a common source of industry upheaval.
6. _____ is a radical redesign of an organization’s processes so that they can be executed in parallel, and
the tasks undertaken by nonspecialists.
a.
Total quality management
b.
Scenario planning
c.
Process management
d.
Reengineering
7. Which of the following is a forecasting method where participants are given potential situations and
then asked to build likely responses and outcomes for the business?
a.
Case study
b.
Reengineering
c.
Scenario planning
d.
Brainstorming
8. _____ is a forecasting method in which a broad topic is set out and a discussion among the participants
is utilized to gain insights into what the future may look like.
a.
Scenario planning
b.
Brainstorming
c.
Mind mapping
d.
Balanced Scorecard
9. Which of the following statements about scenario planning is true?
a.
It can include firms’ competitive environment as summarized by the Five Forces Model
and other anticipatory elements that are difficult to formalize.
b.
Scenarios always include expectedly important situations and problems that exist in some
form in the present day.
c.
At the end of the scenario planning exercise, analysts recommend selecting an even
number of scenarios that vary from low to high on a single key variable.
d.
It tends to vary one quantifiable variable while holding others constant to see the likely
effect.
10. Sensitivity analysis:
a.
is a forecasting method where participants are given potential situations and then asked to
build likely responses and outcomes for the business.
b.
is a forecasting method in which a broad topic is set out and a discussion among the
participants is utilized to gain insights into what the future may look like.
c.
can include anticipatory elements that are difficult to formalize, such as subjective
interpretations of facts, shifts in values, new regulations, or inventions.
d.
tends to vary one quantifiable variable while holding others constant to see the likely
effect.
11. According to _____, experts rank different potential future outcomes and through an iterative process
these predictions are refined until a prediction of what the future may hold is reached.
a.
the Delphi method
b.
scenario planning
c.
sensitivity analysis
d.
the Balanced Scorecard
12. Which of the following statements about the Delphi method is true?
a.
This method of forecasting is faster than brainstorming sessions.
b.
It is good for predicting the changes in a particular industry that will come about from
technology.
c.
It cannot reduce the problem of groupthink unlike other forecasting methods.
d.
It can occur only when all of the group is present in the same location.
13. Managers seeing opportunities and shifting the organization to that new direction are using a(n):
a.
planned strategy.
b.
deliberate strategy.
c.
emergent strategy.
d.
intended strategy.
14. Which of the following statements about financial controls is false?
a.
They include goals such as becoming the market leader in a given product-market.
b.
They are often used by firms that have relied on unrelated diversification.
c.
They focus on gaps between desired financial outcomes and those actually produced by a
firm.
d.
International firms that have a strict focus on only financial controls risk encouraging a
short-term perspective.
15. Which of the following occurs when a firm tries to increase its ROI by simply reducing the
denominator while holding or increasing the numerator constant?
a.
Reengineering
b.
Emergent strategy
c.
Numerator management
d.
Denominator management
16. Which of the following statements about strategic controls is true?
a.
They are the most important category of control for an international firm.
b.
They rely on more qualitative measures that are difficult to measure.
c.
In all cases, the measure is easy to quantify, especially if it relates to market share or
competitors’ positions.
d.
They are needed to ensure appropriate actions are being taken today to help the firm
tomorrow, but not if the short-term outcomes of these actions are costly.
17. According to the text, which category of control is perhaps the most important for an international
firm?
a.
Strategic control
b.
Personnel control
c.
Organizational control
d.
Financial control
18. Organizational controls:
a.
are typically the least quantifiable types of controls.
b.
often include goals such as expanding into a new market.
c.
focus on ensuring that a firm is meeting its strategic goals.
d.
emphasize gaps between desired financial outcomes and those actually produced by a
firm.
19. Controls that occur at the individual level in a firm are:
a.
strategic controls.
b.
procedural controls.
c.
financial controls.
d.
personnel controls.
20. _____ is a group of workers that regularly confers on ways to improve both the quality of a product
and its production process.
a.
Kaizen
b.
TQM
c.
Quality circle
d.
Six Sigma
21. The board of directors:
a.
helps to establish control mechanisms and guide how the firm will respond to major
changes in its environment.
b.
should be involved even with the relatively minor variances between expected and actual
results.
c.
have a legal responsibility to ensure that top managements’ best interests are served by the
company.
d.
is a group of individuals appointed by a firm’s top management to supervise a firm’s
activities and its shareholders.
22. A _____ is where employees do not do what is best for the shareholders.
a.
principal dilemma
b.
principal-agent problem
c.
principal-stakeholder problem
d.
principal-principal problem
23. Who determines how to enact a firm’s control mission, and determine what control actions are needed
and when, where, and how to implement them in order to successfully complete the control process?
a.
Department managers
b.
Top management
c.
Boards of directors
d.
Divisional managers
24. Which of the following is a system that summarizes an organization’s strategic objectives into four
main performance metrics: financial, internal processes, customers, and learning and growth?
a.
ISO 9000
b.
Delphi method
c.
Balanced Scorecard
d.
Quality circles
25. Which of the following concerns operating a facility with strong concerns for pollution control and the
environment?
a.
ISO 9000
b.
ISO 14001
c.
ISO 9001
d.
ISO 27001
ESSAY
1. What is reengineering? How is it helpful?
2. What is scenario planning? Explain its importance.
ANS:
3. What is organizational control? Why is it important for a worldwide firm?
4. Mention some of the criteria that successful firms utilize in their individual-level controls.
ANS:
5. Explain the role of top management in terms of institutionalizing control.
6. What is the Balanced Scorecard?
7. Write a short note on ISO 9000.