Chapter 5: Planning and Decision Making
TRUE/FALSE
1. Planning offers three important benefits. They are intensified effort, synergy, and direction.
2. Planning can impede change, create a false sense of certainty, and lead to the detachment of planners.
3. Planning is one of the best ways to improve organizational and individual performance.
4. At the beginning of 2004, Gateway, the computer company, set a goal of reaching over $1 billion in
quarterly sales that year. This goal does not satisfy all of the S.M.A.R.T. guidelines because it is not
attainable or meaningful within Gateway’s competitive environment.
5. In 2005, Lipitor, manufactured by Pfizer, had $3.3 billion in sales. Pfizer executives announced that
Lipitor sales would total $13 billion in 2006 despite the recent release of a generic version of the
product. This is not an example of a stretch goal because it meets all of the S.M.A.R.T. guidelines.
6. Planning is a three-step process consisting of first setting goals, next developing effective action plans,
and finally tracking progress toward goal achievement.
7. S.M.A.R.T. goals are Specific, Meaningful, Active, Reachable, and Timely.
8. Both proximal and distal goals are used to provide additional motivation and rewards for employees.
9. The two approaches to maintaining flexibility in organizations while they plan are outcome-based
planning and change-based planning.
10. The basic purpose of learning-based planning is constant improvement.
11. Learning-based planning makes the same assumptions as traditional planning.
12. Encouraging worker participation in goal setting, making goals public, and getting top management’s
support are all recommended ways to increase goal commitment.
13. Planning works best when the goals and action plans at the bottom and middle of the organization
support the goals and action plans at the top of the organization.
14. Developing a purpose statement is the sole responsibility of middle management.
15. Yahoo’s mission statement contains the strategic objective “to connect people to their passions, their
communities, and the world’s knowledge. To ensure this, Yahoo offers a broad and deep array of
products and services to create unique and differentiated user experiences and consumer insights by
leveraging connections, data, and user participation.” This is not a good strategic objective because it
lacks a finish line and a time frame.
16. A purpose statement, which is often referred to as an organizational mission or vision, is a statement of
a company’s purpose or reason for existing.
17. Tactical plans specify how a company will use resources, budgets, and people to accomplish specific
goals related to its strategic objective for the next five years.
18. Tactical plans and objectives are used to direct behavior, efforts, and attention over the next six
months to two years.
19. Management by objectives (MBO) is so successful because it allows managers to focus on qualitative
goal setting.
20. 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 accomplishment of those goals.
21. One of the disadvantages of MBO is that managers are frequently unable to give employees feedback
on their performance.
22. The three kinds of operational plans are single-use plans, standing plans, and budgets.
23. Standing plans deal with unique, one-time-only events.
24. Budgeting is a critical management task, one that most managers could do better.
25. After realizing how difficult shopping is for visually impaired people, the manufacturer of L’Occitane,
a French beauty products company, started printing all of its labels in Braille. Now that the practice is
established, the coding and printing of these labels is an example of a procedure.
26. The three kinds of standing plans are policies, procedures, and rules and regulations.
27. All decision making is rational.
28. The term decision making is used to refer to the process of choosing a solution from available
alternatives.
29. The process of rational decision making emphasizes the use of systematic procedures to arrive at
optimal solutions. The process of decision making does not.
30. The first step in the rational decision-making process is to generate alternative courses of action.
31. 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.
32. Groups can do a much better job than individuals engaged in decision-making when defining the
problem and computing the optimal decision.
33. In the rational decision-making process, decision criteria must be identified and weighted before
alternatives can be evaluated.
34. Relative comparisons either compare each decision criterion to a standard or rank the criteria on their
own merits.
35. Both absolute comparisons and relative comparisons are methods for identifying decision criteria.
36. When generating alternative courses of action within the rational decision-making process, the
identification of a relatively few alternatives will facilitate evaluation.
37. It is highly doubtful that rational decision making can always help managers choose optimal solutions
that provide maximum benefits to their organizations.
38. The bounded rationality model argues that managers try to take a rational approach to decision making
but are restricted by real-world constraints, incomplete and imperfect information, and their own
limited decision-making capabilities.
39. Groupthink is more likely to occur in a highly cohesive group when group members feel intense
pressure to agree with each other.
40. Numerous studies show that groups can find and access much more information than individuals
alone.
41. Cognitive conflict is another name for c-type conflict.
42. The nominal group technique typically produces poorer quality decisions than does either the devil’s
advocacy or the dialectical inquiry approach.
43. Because it is a time-consuming, labor-intensive, and expensive process, the Delphi technique is best
reserved for important long-term issues and problems.
44. According to the What Really Works, “Devil’s Advocacy, Dialectical Inquiry, and Considering
Negative Consequences,” well-structured problems can be solved with programmed decisions that
ignore negative consequences.
45. Devil’s advocacy and dialectical inquiry are two methods that introduce structured a-type conflict into
the group decision-making process.
46. If available time is limited, then you should use the stepladder technique for decision making.
47. Face-to-face brainstorming is a much more effective method for generating alternatives than electronic
brainstorming.
48. Production blocking and evaluation apprehension are both disadvantages associated with electronic
brainstorming.
49. In electronic brainstorming, the number and quality of ideas generally increase with group size.
MULTIPLE CHOICE
1. Health Canada prepared a revised Food Guide to reflect the evolving cultural profile of the country,
from ethnic diversity and the aging population to changing family structure and increased home and
work pressures. The aim of the new 2006 guide, which would replace the version written in 1992,
was to provide “all Canadians with a vast array of food selections that broadens and enhances their
healthy food choices.” Which classical management function would be instrumental in achieving this
goal?
a.
motivating
b.
research and development
c.
planning
d.
marketing
e.
optimizing
2. A manager is involved in __________ when he or she chooses a goal and develops a method or
strategy to achieve that goal.
a.
goal-setting
b.
planning
c.
strategizing
d.
benchmarking
e.
keystoning
3. 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
4. According to a 2004 PCPS research study, 60 percent of CPA firms had owners in the 55 to 62 year
age bracket, and more than half of the firms had at least one partner retiring in the next five years. Yet,
according to the study, 81 percent had not named a successor in the event of death or catastrophic
illness. These CPA firms need to engage in:
a.
motivating
b.
research and development
c.
planning
d.
marketing
e.
optimizing
5. Wal-Mart Stores Inc. has been trying to rekindle growth in its U.S. operations. Sales at its U.S. stores
have declined due to remodeling projects, limited opportunities for growth, and problems with its
clothes offerings. In addition, the low-income shoppers who patronize Wal-Mart may have less
money to spend due to higher gas prices. Wal-Mart will need to rely on which management function
to achieve its growth goals?
a.
optimizing
b.
planning
c.
strategizing
d.
benchmarking
e.
keystoning
6. Which of the statements about planning is true?
a.
Planning should be used in all circumstances.
b.
Planning is a natural skill that cannot be taught, and therefore only some people can really
excel at it.
c.
The pitfalls of planning usually outweigh the benefits.
d.
Only certain people, like CEOs, need to plan.
e.
Planning has both advantages and disadvantages.
7. One of the benefits of planning is how it:
a.
encourages employees to work more slowly
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
8. 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
9. 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
10. 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
11. 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
12. Health Canada prepared a revised Food Guide to reflect the evolving cultural profile of the country,
from ethnic diversity and the aging population to changing family structure and increased home and
work pressures. The aim of the new 2006 guide, which would replace the version written in 1992,
was to provide “all Canadians with a vast array of food selections that broadens and enhances their
healthy food choices.” There is a potential for the creators of the new Food Guide to assume they
have reached all of the important audiences in a language that everyone can understand. This
assumption reflects:
a.
one of the pitfalls of planning
b.
why benchmarking is often ineffective
c.
the need for rules and regulations
d.
the importance of distal goals
e.
the need to welcome mission statement modification
13. 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.
14. According to the text, which of the following is a pitfall of planning?
a.
the acceptance of satisficing 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
15. 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
16. According to the S.M.A.R.T. guidelines, goals should be:
a.
Aggregated
b.
Reliable
c.
Timely
d.
Motivated
e.
all of these
17. According to the S.M.A.R.T. guidelines, goals should be:
a.
Service-oriented
b.
Measurable
c.
Rational
d.
Tactical
e.
Actionable
18. 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
19. 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
20. People who live in Baton Rouge, Louisiana, love to complain about traffic, but they have a right to
complain about Interstate 110 with its truly epic traffic engineering blunders that make every drive
along it a dance with death. The first step in planning how to correct these blunders would be to:
a.
develop effective action plans
b.
determine the interstate vision
c.
maintain flexibility
d.
set goals
e.
develop goal commitment
21. In 2005, the new Army Strategic Planning Guidance (ASPG) set long-term goals for the U.S. Army for
the next 10 to 20 years. One of these goals is to “improve capabilities for homeland defense.” In
terms of the S.M.A.R.T. goals, this goal:
a.
is neither service-oriented nor temporally based
b.
is tactical
c.
is not synergistic with other goals
d.
is rational but not timely
e.
lacks measurability and specificity
22. Wal-Mart Stores Inc. has been trying to rekindle growth in its U.S. operations. Sales at its U.S. stores
have been declining due to remodeling projects, limited opportunities for U.S. growth, and problems
with its clothes offerings. In addition, the low–income shoppers who patronize Wal-Mart may have
less money to spend due to higher gas prices. Wal-Mart has been very candid about its need to
implement a growth strategy for its U.S. stores. Why has Wal-Mart been so public about this goal?
a.
to establish a competitive advantage
b.
to create resource munificence
c.
to maintain valid benchmarks
d.
to encourage goal commitment
e.
to alleviate stakeholder criticism
23. 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 an ombudsman to set goals
e.
all of these
24. 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
25. 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
26. People who live in Baton Rouge, Louisiana, love to complain about traffic, but they have a right to
complain about Interstate 110 with its truly epic traffic engineering blunders that make every drive
along it a dance with death. The Department of Transportation has planned to correct the worst
mistakes and reduce traffic accidents on the road as it passes through the city. After setting its goals,
it publicized them in the local newspaper. How would this influence how well the plan worked?
a.
It would encourage goal commitment.
b.
It would make the plans inflexible.
c.
It would create a dynamic environment between the plans and the community.
d.
It would make action plans unnecessary.
e.
It would create an automatic method for checking progress.
27. A manufacturer of snowboards 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 Aspen, Colorado, by 3
percent.
a.
tactical; strategic
b.
operational; tactical
c.
distal; proximal
d.
operational; strategic
e.
proximal; distal
28. 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
29. People who live in Baton Rouge, Louisiana, love to complain about traffic, but they have a right to
complain about Interstate 110 with its truly epic traffic engineering blunders that make every drive
along it a dance with death. The goal was to correct the most obvious blunders and reduce traffic
accidents along the stretch of 110 that passes through the city. A Department of Transportation
manager examining weekly accident reports prepared by Baton Rouge law enforcement 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
30. 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
31. Managers can monitor __________ to track progress toward goal achievement.
a.
action plans and their implementation
b.
proximal and distal goals
c.
one-way and two-way evaluative techniques
d.
framing and non-framing goals
e.
open-ended and close-ended techniques
32. __________ can help organizations to maintain flexibility as they plan.
a.
Environmental munificence
b.
Learning-based planning and options-based planning
c.
Formalization
d.
Liaisons
e.
Group cohesiveness
33. The goal of __________ is to keep options open by making small, simultaneous investments in many
alternative plans.
a.
operant planning
b.
learning-based planning
c.
traditional planning
d.
motivational planning
e.
options-based planning
34. 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
35. __________ planning emphasizes learning better ways of achieving goals by continually testing,
changing, and improving plans and strategies.
a.
Learning-based
b.
Options-based
c.
Conditioned
d.
Functional
e.
Operant
36. The basic purpose of __________ is constant improvement.
a.
options-based planning
b.
learning-based planning
c.
traditional planning
d.
operant planning
e.
the establishment of planning windows
37. 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
38. 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
39. __________ 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
40. A(n) __________ is a statement of a company’s purpose or reason for existing.
a.
purpose statement
b.
action plan
c.
strategy
d.
competitive profile
e.
formal justification
41. Over the next three years, Procter & Gamble will improve its bargaining position with giant retailers
like Wal-Mart, which will improve its ability to introduce new products. This is P&G’s:
a.
vision
b.
mission
c.
strategic plan
d.
policy
e.
special-use plan
42. The _____ for Avon is “To be the company that best understands and satisfies the product, service and
self-fulfillment needs of women.
a.
purpose statement
b.
action plan
c.
strategy
d.
competitive profile
e.
marketing goal
43. The manufacturer of Michelin tires is not in the tire business. Its __________ is to protect those who
ride on its tires.
a.
transformational mission
b.
purpose statement
c.
strategic mission
d.
mission target
e.
motivational mission
44. The organization’s __________ does not change based on what the organization is selling or where.
a.
direction
b.
purpose statement
c.
strategy
d.
operational plan
e.
action plan
45. Seeds of Change is a company that markets certified organic food. A statement found at the
marketer’s Web site reads, “At Seeds of Change, we’re committed to making delicious foods that are
healthy for you as well as the planet.” This statement is most likely the company’s __________
because it will not change over time.
a.
purpose statement
b.
direction
c.
statement of value
d.
discretionary responsibility
e.
action-based goal
46. A(n) __________ should be brief, enduring, inspirational, clear, and consistent with widely shared
company beliefs and values.
a.
organizational strategy
b.
action statement
c.
purpose statement
d.
value statement
e.
action plan
47. The __________ flows directly from the __________.
a.
vision; tactical plans
b.
action plan; contingency plans
c.
mission; operational plans
d.
strategic objective; purpose
e.
strategy; action plans
48. Most people who have watched the television show Star Trek are familiar with the Starship
Enterprise’s __________–”To explore strange new worlds, to seek out new life and new civilization,
to boldly go where no man has gone before.”
a.
plan of action
b.
tactical plan
c.
purpose statement
d.
actionable goal
e.
strategy
49. The New Mexico Nurses Association is committed to advocating for all licensed nurses, promoting
lifelong learning, and improving health care for all people. This is the organization’s:
a.
direction
b.
action plan
c.
strategy
d.
competitive profile
e.
purpose statement
50. An Ottawa company that designs and manufactures fiber-optic networking components is opening a
manufacturing operation at the University of Arizona Science and Technology Park. This _____
supports the company’s goal to double the size of its manufacturing operation within the next five
years.
a.
standing plan
b.
tactical plan
c.
operational plan
d.
strategic plan
e.
mission statement
51. A company’s purpose statement:
a.
flows from its strategy
b.
is often referred to as an organizational mission or vision
c.
can never be accomplished, only approached
d.
is not in accordance with the S.M.A.R.T. guidelines
e.
identifies its organizational culture
52. Which of the following statements about a company’s purpose statement is true?
a.
A company’s purpose statement guides only managers in the organization.
b.
A company’s purpose statement is a more specific goal that unifies company-wide efforts.
c.
A company’s purpose statement should be flexible and vague.
d.
A company’s purpose statement is often referred to as an organizational mission.
e.
All of these statements about a company’s purpose statement are true.
53. In early 2005, General Electric launched a new promotion called “Ecoimagination” as part of its
strategy to remain one of the top-rated global companies. One __________ plan for accomplishing
this objective involved commercials emphasizing both its environmental sensitivity and its corporate
creativity.
a.
contingency
b.
single-use
c.
standing
d.
visionary
e.
tactical