110. Which of the following would be an example of a visible artifact for an organization that is being
merged with a large international firm?
a.
personal parking spaces for all salespeople
b.
a private company dining room
c.
traditional offices
d.
end-of-year bonuses
e.
all of these
111. Which of the following statements about corporate cultures is true?
a.
Corporate cultures are dynamic creations that respond positively to change.
b.
Corporate culture are unaffected by changes in perks, office layouts, or work relationships.
c.
Corporate cultures are very difficult to change.
d.
Any manager who wants to modify a corporate culture must follow the cultural change
plan, which begins with employee input and ends with behavioral addition and/or
substitution.
e.
Corporate culture change is significantly easier with behavioral addition than with
behavioral subtraction.
112. Milsand Corp. used office cubicles for its employees. Each employee had a 6-foot-square office with
walls that do not go all the way to the ceiling. Employees were not allowed to personalize their
cubicles. If Milsand wanted to change its organizational culture, it could begin by:
a.
creating a new human resources department
b.
hiring a cultural ombudsman
c.
adhering to affirmative action regulations
d.
allowing employees to personalize their cubicles
e.
giving everyone raises
113. Which of the following is a strategy recommended for changing organizational culture?
a.
allow employees to personalize their offices
b.
use behavioral substitution and behavioral addition
c.
select job applicants with appropriate values and beliefs
d.
eliminate the company dress code
e.
all of these
Coca-Cola
Coca-Cola is one of the most respected companies in the world. The company has earned this
reputation through what it calls “citizenship initiatives,” which range from funding a floating library on
the Amazon River to building schools in China to renovating a museum in St. Petersburg. However,
Coca-Cola faces several ongoing challenges. Most serious is the allegation that by encouraging
people to drink sugary carbonated drinks, Coke shares responsibility for the obesity epidemic.
Another problem is rising anti-American sentiment furthered by resentment against U.S. foreign
policy. One of the accolades of which Coke is proudest is praise from the environmental group
Greenpeace for phasing out cooling equipment that released greenhouse gases. The company’s
spokesperson said, “By listening to people, we have the opportunity to make our company better.”
114. Refer to Coca-Cola. The change Coke made at the request of Greenpeace was an example of a
change in the _____ component of its environment.
a.
economic
b.
political/legal
c.
sociocultural
d.
demographic
e.
technological
115. Refer to Coca-Cola. The growing concern about obesity is a(n) _____ component in Coke’s general
environment.
a.
economic
b.
political/legal
c.
sociocultural
d.
demographic
e.
technological
116. Refer to Coca-Cola. U.S. foreign policy is a(n) _____ component in Coke’s general environment.
a.
economic
b.
political/legal
c.
sociocultural
d.
demographic
e.
technological
117. Refer to Coca-Cola. Greenpeace would be an example of a(n):
a.
advocacy group
b.
boundary-spanning organization
c.
component of Coke’s general environment
d.
consumer lobbying group
e.
boycotter
118. Refer to Coca-Cola. _____ would allow Coke to watch for additional threats and opportunities in its
environment.
a.
Environmental certainty
b.
Observational analysis
c.
Environmental scanning
d.
A market audit
e.
Internal situational analysis
119. Refer to Coca-Cola. Coke could use _____ to summarize the perceived relationships between
environmental factors and possible organizational responses.
a.
cognitive maps
b.
perceptual maps
c.
response matrices
d.
behavioral graphs
e.
response hierarchies
120. Refer to Coca-Cola. Coke’s devotion to humanitarian efforts is part of the company’s:
a.
general environment
b.
cognitive response
c.
specific environment
d.
internal environment
e.
affective response
The Fashion Industry
It is not easy being green in an industry often characterized as excessive, frivolous, and elitist. But
many people in fashion have found that green can stand for greenback as much as it stands for
environmental and ethical concerns. Christophe Caillaud, president of Jean-Paul Gaultier, is one CEO
who invests heavily in green marketing. With his reputation as a temperamental artist, he’s being
watched closely by other industry leaders. Julie Gilhart, fashion director at Barneys department stores,
is a champion of ethical fashion products. As a member of the Ingeo Round Table, she promotes the
use of Ingeo, a synthetic fiber composed entirely of renewable materials. Since all businesses respond
to market forces, many companies in the fashion industry waited to jump on the bandwagon until they
saw how many consumers approve of eco-friendly clothing. One of these late-comers is Levi-Strauss,
which has introduced the Eco brand of denim.
121. Refer to The Fashion Industry. One of the materials favored by the fashion-industry is organic cotton,
which is grown without the use of pesticides. Currently only one percent of the global production of
cotton can be labeled as organic. This produces a(n) _____ in the external environment of the fashion
industry.
a.
environmental complexity
b.
environmental change
c.
resource scarcity
d.
environmental uncertainty
e.
environmental risk
122. Refer to The Fashion Industry. The growth of consumer desire to wear clothes that are produced in an
ecologically friendly manner is an example of a change in the _____ environment.
a.
economic
b.
general
c.
synergistic
d.
reciprocal
e.
specific
123. Refer to The Fashion Industry. Levi-Strauss more than likely used _____ before developing its Eco
brand.
a.
proactive customer monitoring
b.
consumer confidence forecasts
c.
demographic information
d.
reactive customer monitoring
e.
a competitive analysis
124. Refer to The Fashion Industry. As one of the first businesses within the fashion industry to sell
ethically and environmentally friendly clothing, Barneys department stores more than likely used:
a.
proactive customer monitoring
b.
consumer confidence forecasts
c.
demographic information
d.
reactive customer monitoring
e.
a competitive analysis
125. Refer to The Fashion Industry. Organic cotton is heavily favored by the fashion industry. Currently
only one percent of the global production of cotton can be labeled as organic. A key factor in the
relationship between the fashion industry and cotton growers is:
a.
buyer dependence
b.
supplier dependence
c.
industry regulation
d.
reciprocal behavior
e.
competitive advocacy
126. Refer to The Fashion Industry. The Ingeo Round Table is an example of a(n) _____ that influences the
environment in which the fashion industry operates.
a.
advocacy group
b.
industry regulatory agency
c.
World Trade Organization
d.
green marketer
e.
humanist organization
127. Refer to The Fashion Industry. Which of the following methods might businesses in the fashion
industry have used to predict the consumer reaction to green marketing?
a.
environmental scanning
b.
perceptual restructuring
c.
reactive monitoring
d.
downsizing
e.
benchmarking
128. Refer to The Fashion Industry. Christophe Caillaud is now a source of _____ shaping his
organization’s culture.
a.
organizational rationales
b.
synergistic visions
c.
corporate myths
d.
organizational stories
e.
transactional legends
XM Radio
In the late 1980s, the American Mobile Radio Corporation was founded. In March 1997, it became one
of two companies to receive an exclusive Satellite digital audio radio license. The company changed
its name to XM Satellite Radio and contracted with Hughes Space (now Boeing Space Systems) to
build and launch two satellites. XM then gave a public offering of its stock, and began signing
contracts with media providers and celebrities and making exclusive broadcast arrangements with
major sports.
As competition with its fellow satellite radio company, Sirius Satellite radio began heating up, the
general environment for radio, which had been relatively static for the last 50 years, experienced a
dramatic change. In addition to the traditional ground based stations, XM and Sirius found themselves
competing with new personal music devices, like the iPod, HD radio, Internet radio, and in-car DVD
players.
In efforts to attract new customers, XM began offering various free trials and discounts on its
services, along with reduced rate radio installations. Low yields from subscriptions and high subscriber
turnover made these methods costly, however. So, to further separate itself from the competition, XM
introduced NavTraffic, a system that compiles ground based traffic information, and new XM2go
devices, which could be removed from vehicles. Again, the result was not what XM had hoped for. In
spite of positive feedback reviews, the devices provoked a lawsuit from record labels and also came
under investigation from the Federal Communications Commission (FCC) for interfering with other
nearby radio signals.
Despite years of hopeful forecasts, XM and Sirius recently reported combined annual losses of
$1.5 billion. Though XM’s number of subscribers has grown continuously to 7.5 million, the company
has yet to turn a profit. With rising competition and large contractual obligations, XM needed to find
ways to adapt to the new environment. First, XM stopped trying to buy new radio content and began to
focus more on customer acquisitions.
With obtaining new customers proving difficult, however, XM also began new cost cutting
strategies. With subscriptions being low priced already, XM stopped giving away new radio receivers
and began requiring purchasers of the radio receivers to sign subscriber contracts. Further, XM
contracted with GM and Honda, both originals XM shareholders, to install radios in their new cars.
These measures resulted in substantial reductions in acquisitions costs, from over $89 per subscriber to
less than $70.
Another potential solution that XM has pursued is a merger with Sirius. When the satellite license
was initially granted in 1997, specific provisions prevented a merger; however, in light of the recent
major changes in the market, both companies hope that those provisions might be invalidated. The
FCC would have to approve the merger, and it is possible the certain concessions might be required,
such as price restraints, restrictions on carrying local radio content, and allowing other companies to
lease usage of the satellites. Still, such a merger would remove competition and potentially allow for
reduced costs and increased prices.
129. Refer to XM Radio. With the invention of MP3 players, iPods, and Internet radio, XM needs to
determine how it can adapt to changes in its _____ environment.
a.
technological
b.
sociocultural
c.
economic
d.
political/legal
e.
demographic
130. Refer to XM Radio. Prior to the merger, Sirius Satellite Radio was a part of the _____ component of
XM Radio’s specific environment.
a.
technological
b.
sociocultural
c.
economic
d.
competitor
e.
geographic
131. Refer to XM Radio. Which of the following activities would ensure that XM was aware of changes in
its general environment?
a.
a SWOT analysis
b.
environmental scanning
c.
benchmarking
d.
boundary spanning
e.
correlation
132. Refer to XM Radio. When XM Radio decided to reduce the costs for acquiring new consumers, the
action didn’t change the company’s _____ environment because organizational strategy is not one of
XM Radio’s components.
a.
general
b.
SWOT
c.
internal
d.
managerial
e.
ethical
133. Refer to XM Radio. Combining XM Radio and Sirius Satellite Radio organizational cultures could
conceivably call for _____ as the cultures are merged into one.
a.
the total elimination of reliance on organizational stories and heroes
b.
behavioral substitution and behavioral addition
c.
conditioned and classical perception
d.
the establishment of environmental certainty
e.
the laddering of managerial hierarchy
SHORT ANSWER
1. Briefly differentiate between the external and internal environments that companies face, and explain
why these environments are important.
2. Briefly define and explain the relationship between environmental change, complexity, uncertainty,
and resource scarcity.
3. Compare and contrast the general environment with the specific environment faced by a company.
ANS:
4. Briefly identify the two predictors of future economic activity that are available to managers for
decision making. Specify which one managers typically prefer.
5. Identify and provide examples of the two important ways in which sociocultural changes and trends
influence organizations.
6. Identify the major concern facing businesses from the perspective of the political/legal component of
the general environment. What is the most appropriate action businesses can take to manage their
legal responsibilities?
ANS:
7. Briefly differentiate the two basic strategies used for monitoring customers.
8. Define advocacy groups. List the three approaches to influencing businesses that they are likely to use.
Specify which one of these three is most likely to have an impact on company sales and profits.
9. What are cognitive maps? Briefly explain why they are used and their potential value to the manager.
10. List and briefly define the four characteristics of successful organizational cultures.
ANS:
11. Characterize the level of difficulty of changing organizational culture. Identify three approaches that
can be used to accomplish that goal.
ESSAY
1. Describe environmental change and its relationship to punctuated equilibrium theory.
2. Identify and discuss the implications of changes in the political/legal component of the general
environment facing organizations over the past decade. Give one example of a relevant recent change.
What is the best way for companies to manage their legal responsibilities?
ANS:
3. Define advocacy groups. Explain the basic techniques that advocacy groups use to achieve their goals.
Provide one example of the use of advocacy techniques.
4. Identify and explain the three-step process that managers use to make sense of changes in their
external environments. Discuss the role of the Internet in enhancing this process, particularly as it
relates to CEO behavior and overall company performance.
ANS:
5. List and describe the four characteristics of successful organizational cultures and explain what is
meant by success in this context. Identify an organization that you are aware of that seems to have a
successful organizational culture, and characterize that organization on each of these four dimensions.
Can an organization still have a successful culture if it is weak on one of these dimensions?