Planning: The Foundation of Successful Management: True / False Questions

Chapter 05
Planning: The Foundation of Successful Management

True / False Questions
1. The career path that most resembles the traditional view of climbing the stairs in a
corporate hierarchy is called the linear career.
True
False
2. A steady-state career entails a slow-but-steady growth in level of responsibility and

compensation.
True
False
3. A spiral career path depends on having jobs that, while fundamentally different, build
on one another.
True
False
4. A transitory career path involves a series of alternating promotions and demotions.

True
False
5. Planning helps managers to cope with events that can be predicted but is not
particularly helpful when conditions are uncertain.
True
False
6. Planning occurs only at the highest levels of an organization, being done by top
managers.
True
False
7. Planning and strategic management derive from an organization's mission and vision
about itself.
True
False
8. In this time of Internet connections and speedy-access computer databases, one

typically has complete information for planning and decision making.
True
False
9. Planning gives you expectations against which you can compare your performance.
True
False
5-1
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10. According to Miles and Snow's basic strategy types, a defender protects its strong
position in an industry by constantly seeking new opportunities for growth.
True
False
11. Facebook strives to be on the cutting edge of social media and is experiencing
phenomenal growth. It encourages what it calls a "hacker" mindset, always looking to
break down the old in favor of something better. Of Miles and Snow's basic strategy
types, Facebook would be described as a prospector.
True
False
12. Microsoft has been accused of adapting competitors' products after those firms spent
the resources and took the risks to develop them. Companies with this strategy are
known as analyzers by Miles and Snow.
True
False
13. Blockbuster Video was slow to adapt to the latest trends in its industry, such as DVDby-mail and movie downloads online. When it tried to incorporate the same into its
business model, it was well behind competitors like Netflix. Blockbuster might be
defined as a defender, according to Miles and Snow.
True
False
14. Eastman Kodak, though it actually invented the digital camera, was slow to move into
the production of this product as well as digital printers. Its continued reliance on
traditional 35mm film production and processing, which resulted in its bankruptcy,
makes it a reactor according to Miles and Snow.
True
False
15. The process of a business cycling through decisions first to select products and
markets, then about producing and delivering the products, and finally to establish
roles and processes is known as the discovery cycle.
True
False
16. The administrative part of the adaptive cycle focuses on establishing roles and
organizational processes.
True
False
17. In an organization's approach to planning, its mission and vision statements should be
created once the strategic planning process is complete.
True
False
18. Determining an organization's mission is the responsibility of top management and

the board of directors.
True
False
5-2
19. A vision has a clear sense of the future and the actions needed to get there.
True
False
20. A mission statement expresses what the organization should become and where it
wants to go strategically.
True
False
21. Amazon's statement in which it states its desire "to be the earth's most customercentric company; to build a place where people can come to find and discover
anything they might want to buy online" is a mission statement.
True
False
22. Strategic planning determines goals for an organization for a period of 1-5 years.
True
False
23. Tactical planning is done by first-line managers, who look forward to the next 1-8
weeks.
True
False
24. Operational planning is normally performed by middle management.

True
False
25. Decisions that are predictable, following a well-defined set of procedures, are typical
of operational planning.
True
False
26. As part of the planning process, businesses set what are known as targets, which are
specific commitments to achieve measurable results within a stated period of time.
True
False
27. An organization's goals arranged in a hierarchy from low level to high level can be
termed a means-end chain.
True
False
28. Strategic goals focus on objectives for the organization as a whole.

True
False
29. Operational goals are set by middle managers and focus on the actions needed to
achieve strategic goals.
True
False
30. The operating plan defines the course of action needed to achieve a stated goal.
True
False
5-3
31. A marketing plan is an example of an action plan.

True
False
32. The operating plan identifies clear targets such as revenues and cash flow.
True
False
33. Southwest Airlines' goal of being highly profitable is a tactical goal.

True
False
34. Southwest Airlines' goal of making arrival times more reliable is a tactical goal.
True
False
35. Policies, procedures, and rules are types of single-use plans.

True
False
36. A policy includes more specifics than does a rule.

True
False
37. A procedure is a standing plan that outlines the response to particular problems or
circumstances.
True
False
38. In single-use plans, a program is another name for a project.

True
False
39. The U.S. government space program is an example of a single-use plan.

True
False
40. SMART is an acronym that represents characteristics necessary to motivate

employees in their periodic reviews.
True
False
41. The "R" in a SMART goal stands for "reachable."

True
False
42. A bike messenger company that operates in the downtown area of a large city
recently set the following goal: "All deliveries should be completed as quickly as
possible." This example meets the criteria for a SMART goal.
True
False
5-4
43. SMART goals that are challenging yet can be met within the available scope of time,
equipment, and financial support are known as attainable, the "A" in SMART.
True
False
44. Because it is unrealistic for SMART goals to be accomplished overnight, they should
have target dates.
True
False
45. MBO was developed by Frederick Taylor as part of scientific management.

True
False
46. The first step in an MBO program is for the manager to set objectives for her
subordinate.
True
False
47. The purpose of MBO is to motivate subordinates.

True
False
48. Perpetuation objectives are one type of objective used in MBO.

True
False
49. In MBO, objectives that employees fail to meet should be put aside for the next period
in favor of ones that they can achieve.
True
False
50. In order for MBO to be successful, it must be implemented throughout the entire
organization.
True
False
51. Organizationwide, the best structure for objectives in MBO is known as a diversity
pattern.
True
False
52. Deadlines can help one concentrate the mind, in order to make decisions rather than
put them off.
True
False
53. In the planning/control cycle, part of the control process can be to improve future
plans.
True
False
54. The planning/control cycle has three planning steps and three control steps.
True
False
5-5
55. In the planning/control cycle, comparing the results with the plan is one of the control
steps.
True
False
56. In the planning/control cycle, carrying out the plan is one of the control steps.
True
False
Multiple Choice Questions

57. A career that is upwardly mobile, with a number of jobs that are fundamentally
different yet still build on one another is known as a(n) ______ career.
A.
B.
C.
D.
E.
steady-state
portfolio
spiral
inclining
linear
58. If you are happiest being a "hands-on" professional rather than becoming a manager,
you may prefer a(n) ______ career.
A.
B.
C.
D.
E.
steady-state
portfolio
spiral
inclining
linear
59. Planning is defined as

A.
B.
C.
D.
E.
formulating a method to allocate resources effectively.

motivating employees.
coping with obstacles to past performance.
setting goals and deciding how to achieve them.
implementing strategic goals.
60. During which managerial function do you make a blueprint for action that describes
what you need to do to realize your goals?
A.
B.
C.
D.
E.
Organizing
Leading
Controlling
Defining
Planning
5-6
61. Which of the following is one of the challenges of planning?

A.
B.
C.
D.
E.
Assigning the right people to tasks.

Determining the correct budget.
Measuring results with accuracy.
Finding the time to plan.
Motivating employees.
62. If you do not have all of the information for a complete plan, you should
A. make decisions based on what you have, since perfect information is rare.
B. wait until you can get that information to take action you know will be appropriate.
C. implement two or more courses of action simultaneously.
D. shrink the plan to limit its scope to only areas where you have good information.
E.
disregard the plan and go with your intuition.
63. Which of the following is a benefit of planning?
A. Planning allows you to spend little time preparing for the future.
B. Planning allows you to make all decisions without consulting superiors.
C. Planning helps you compare your results to your competitors'.
D. Planning helps the company to be spontaneous.
E.
Planning helps you cope with uncertainty.
64. Which of the following is one of the organizational responses organizations make
when confronted with uncertainty, as identified by Miles and Snow?
A.
B.
C.
D.
E.
Aggressor
Investigator
Reactor
Planner
Leader
65. A company that is an expert at producing and selling narrowly defined products or
services, and which does not tend to seek opportunities outside its present market is
known by Miles and Snow as a(n)
A.
B.
C.
D.
E.
defender.
analyzer.
adaptor.
prospector.
reactor.
5-7
66. When a firm responds to uncertainty in its environment as a(n) ________, its continual
pursuit of product and market innovation may lead to a loss of efficiency, but is likely
to make competitors nervous.
A.
B.
C.
D.
E.
reactor
analyzer
defender
prospector
executor
67. In the current broadband environment, consumers are able to download products like
music, movies, and books. Netflix was aggressive in taking advantage of this fact,
offering web streaming and game console access to its customers before competitors.
According to Miles and Snow, Netflix would be a(n)
A.
B.
C.
D.
E.
reactor.
prospector.
analyzer.
defender.
executor.
68. A company producing cameras and video cameras prefers to focus its resources on a
fast imitation program to reverse-engineer new features from competitors and add
those, rather than implementing truly inventive features. Miles and Snow would call
this company a(n)
A.
B.
C.
D.
E.
reactor.
prospector.
analyzer.
defender.
imitator.
69. The adaptive cycle portrays businesses as continuously cycling through three kinds of
business decisions: entrepreneurial, ______, and administrative.
A.
B.
C.
D.
E.
leadership
alignment
organization
production
engineering
5-8
70. If a business lacks insight or fails to use the adaptive cycle properly, it is likely to be
which of the following?
A.
B.
C.
D.
E.
A prospector
An analyzer
A defender
A reactor
An imitator
71. Which of the following is the correct order of planning steps within an organization?
A. Strategic planning, mission statement & vision statement, operational planning,
tactical planning
B. Strategic planning, mission statement & vision statement, tactical planning,
operational planning
C. Strategic planning, operational planning, mission statement & vision statement,
tactical planning
D. Mission statement & vision statement, strategic planning, tactical planning,
E. Mission statement & vision statement, strategic planning, operational planning,
tactical planning
72. Which of the following comes LAST when an organization makes a plan?
A.
B.
C.
D.
E.
mission statement
strategic planning
tactical planning
vision statement
73. The statement which expresses the purpose of an organization is called a(n)
A.
B.
C.
D.
E.
goal statement.
rationale statement.
vision statement.
intention statement.
mission statement.
74. Hilton Hotel's statement expressing its purpose as "to fill the earth with the light and
warmth of hospitality" is a(n)
A.
B.
C.
D.
E.
vision statement.
goal statement.
mission statement.
5-9
75. McKesson Corp., a U.S. pharmaceutical distributor, has a(n) ________ statement, which
is "to provide comprehensive pharmacy solutions that improve productivity,
profitability and result in superior patient care and satisfaction."
A.
B.
C.
D.
E.
purpose
vision
intention
goal
mission
76. Avon, the world's leading direct seller of beauty products, has a(n) ________ statement,
which is "to be the company that best understands and satisfies the product, service,
and self-fulfillment needs of women globally."
A.
B.
C.
D.
E.
vision
intention
goal
mission
rationale
77. There are three levels of planning. Their order, from first to last, is
A.
B.
C.
D.
E.
operational, tactical, and strategic.

strategic, operational, and tactical.
tactical, operational, and strategic.
tactical, strategic, and operational.
strategic, tactical, and operational.
78. At which level of planning must managers be paying attention to the environment
outside the organization, be future oriented, and deal with uncertain and competitive
conditions?
A.
B.
C.
D.
E.
tactical
organizational
strategic
front-line
operational
79. Because of the frequency with which world competition and information technology
alter marketplace conditions, a company's ________ may have to be done closer to
every 1 or 2 years than every 5.
A.
B.
C.
D.
E.
management planning
strategic planning
tactical planning
implementation planning
5-10
80. Which level of management is most often engaged in tactical planning?

A.
B.
C.
D.
E.
Working-level employees
First-line managers
Middle managers
Top managers
Consultants
81. What is the time frame of an operational plan?

A.
B.
C.
D.
E.
2-10 years
1-5 years
6-24 months
1-52 weeks
1-90 days
82. Alita is participating with other division heads in a discussion about new international
competition for the firm and what the organization's goals should be for the next three
years. She is participating in
A.
B.
C.
D.
E.
tactical planning.
strategic planning.
operational planning.
controlling.
writing a mission statement.
83. Executive management has recently decided to acquire a small company with a
complementary product line, so Craig, a marketing manager, is meeting with other
managers to discuss how to implement policies to support the acquisition over the
next year. He is participating in
A.
B.
C.
D.
E.
mission development.
strategic planning.
controlling.
tactical planning.
84. Portia is meeting with her subordinates to determine which workers from her
department need training in order to handle production increases expected during the
next nine months. Portia is involved in
A.
B.
C.
D.
E.
vision development.
controlling.
tactical planning.
developing an MBO.
5-11
85. Which of the following is associated with operational planning?

A. Determining the overall direction of the organization.
B. Examining the environment outside of the organization.
C. Implementing policies and plans of top management.
D. Directing daily tasks of nonmanagerial personnel.
E. Making decisions under highly uncertain conditions.
86. Which of the following best represents the strategic planning time frame that Jeff
Bezos of Amazon prefers?
A.
B.
C.
D.
E.
Six months or less

One to two years
Three to five years
Five to seven years
Ten to twenty years
87. ________ goals are set by and for middle managers and focus on the actions needed to
achieve ________ goals.
A.
B.
C.
D.
E.
Strategic; operational
Tactical; strategic
Strategic; tactical
Tactical; operational
Operational; tactical
88. Cimarron Saddlery expects to improve profitability of the organization by 15% over
the next three years. This is an example of a(n)
A.
B.
C.
D.
E.
supervision objective.
operational goal.
tactical goal.
maintenance objective.
strategic goal.
89. Managers at Cimarron Saddlery expect to meet profitability goals for the company by
cutting costs through a 70% increase in global sourcing of leather and other materials
over the next two years. This is an example of a(n)
A.
B.
C.
D.
E.
operational goal.
tactical goal.
strategic goal.
5-12
90. After setting goals, managers should next

A. prepare an action plan for accomplishing the goals.
B. propose changes to the goals of same-level managers to bring all into alignment.
C.
supervise subordinates closely.
D.
report failure to meet goals to superiors.
E.
begin the planning process anew.
91. Southwest Airlines acquisition of rival AirTran Airways may have been responsible for
a sharp decline in on-time arrivals, which is one of Southwest's ________ goals,
supporting a larger goal of being highly profitable.
A.
B.
C.
D.
E.
dependant
strategic
operational
facilities
tactical
92. One type of standing plan, the __________, outlines the general response to a
designated problem or situation.
A.
B.
C.
D.
E.
policy
project
rule
procedure
program
93. When White Castle specifies exactly how to dress a hamburger, including the order of
the condiments, this is called a
A.
B.
C.
D.
E.
program.
policy.
rule.
procedure.
project.
94. Dayton Construction has a ________ for processing invoices, which includes coding
them by job number and construction phase, and matching them with the correct
purchase order.
A.
B.
C.
D.
E.
program.
policy.
rule.
procedure.
project.
5-13
95. Management instituted a new ______ in Yichao's workplace that "employees who are
more than 15 minutes late to work without calling a supervisor will be given a written
warning."
A.
B.
C.
D.
E.
policy
rule
procedure
project
program
96. A single-use plan encompassing a range of projects or activities is a(n)

A.
B.
C.
D.
E.
program.
strategy.
series.
agenda.
mission.
97. NASA's Curiosity Rover, employed to investigate a large crater on Mars, is an example
of a
A.
B.
C.
D.
E.
policy.
rule.
project.
procedure.
program.
98. A SMART goal is one that is

A.
B.
C.
D.
E.
specific, maintainable, affordable, realistic, and timely.

specific, measurable, attainable, results-oriented, and has target dates.
specific, maintainable, achievement-oriented, in real time, and timely.
specific, measurable, affordable, realistic, and has target dates.
specific, maintainable, aligned with other goals, realistic, and timely.
99. The goal to "improve the quality of customer service by instituting follow-up
telephone calls this month" is not a SMART goal because it is
A.
B.
C.
D.
E.
unlikely to align with higher level goals.

not measurable.
too simplistic.
not results oriented.
unlikely to result in improvement to customer service.
5-14
100 Kristi has been struggling with her weight, and one of her coworkers suggested that
.
she make a SMART goal for herself. Which of the following is the best example of a
SMART goal for Kristi?
A.
I want to lose a lot of weight.
B.
I want to look better in a swimsuit.
C. I want to lose 20 pounds over the course of one calendar year.
D.
I want to start losing weight soon.
E. I want to lose 30% of my body mass by next month.
101 In terms of difficulty, the best goals are
.
A. just beyond what is achievable, to maximize motivation.
B.
easy to attain, so failure will not hurt morale.
C.
challenging but realistic.
D. impossible to really reach, because they are meant only to be idealistic and
inspirational.
E.
easy or hard, since both work equally well.
102 MBO stands for
.
A.
B.
C.
D.
E.
Management by Observation.
Management by Objectives.
Management by Ownership.
Management by Obligation.
Management by Organization.
103 The first step in the MBO process is to

.
A.
B.
C.
D.
E.
determine rewards for meeting goals.

give a performance appraisal.
develop an action plan.
periodically review performance.
jointly set objectives.
104 Sultan is a new manager, and he is using MBO for the first time with his subordinates.
.
It is essential for Sultan to
A. decide on goals for employees and clearly inform them of these goals.
B. ask the employee to commit the goals to memory.
C. set goals that are just out of the subordinate's reach.
D. reward employees when they meet objectives.
E. review an employee's performance once, at the end of the performance period.
5-15
105 Which of the following would best describe MBO?

.
A. It works at the highest levels of an organization.
B. It works at the lowest levels of an organization.
C.
Its purpose is to motivate employees.
D.
Its purpose is to control employees.
E. It effectively benchmarks HR practices against competitors.
106 Which of the following is a type of objective for MBO?
.
A.
B.
C.
D.
E.
Profitability
Personal development
Market share
Social responsibility
Ethics
107 Productivity gains from MBO are higher when an organization has
.
A.
B.
C.
D.
E.
top-management commitment.
few budget problems.
team rather than individual performance reviews.
union support.
nonmanagerial employee support.
108 MBO works by cascading objectives down through the organization, and these
.
objectives become more ______ at lower levels of the organization.
A.
B.
C.
D.
E.
measurable
challenging
results-oriented
attainable
specific
109 ______ help you ignore extraneous matters in favor of focusing on what's important,
.
which is realizing the goals on time and on budget.
A.
B.
C.
D.
E.
Deadlines
Relationships
Changes
Networks
Options
5-16
110 The constant feedback loop of the ______ is designed to ensure plans stay headed in
.
the right direction.
A.
B.
C.
D.
E.
means-end chain
planning/control cycle
control system
project management method
project planning sequence
111 Improving future plans is part of which step in the planning/control cycle?
.
A.
B.
C.
D.
E.
Making the plan.

Carrying out the plan.
Benchmarking against competitors.
Controlling the direction.
Updating the plan.
112 Jordan, a sales manager, met with his staff to discuss that they were only a third of
.
the way to their sales goal, but halfway through the sales period. He was looking for
suggestions to improve second-half performance. Which part of the planning/control
cycle is Jordan doing?
A.
B.
C.
D.
E.

Making the plan.
Updating the plan.
113 Megan met with her supervisor for a formal review of her job performance over the
.
past year. Though Megan had agreed to complete five training modules during the
course of the year, she only did two. At this stage, which part of the planning/control
cycle would be applicable to her manager going forward?
A.
B.
C.
D.
E.
Carry out the plan.

Improve feedback.
Correct deviations in the plan.
Benchmark against other employees.
Improve future plans.
5-17
114 Apple has a plan to generate buzz for its new products by maintaining secrecy about
.
them. Apple has learned that strong measures are required to protect such mysteries,
so it has enhanced its security and even fired and sued employees for leaking news
about the products. These efforts would be considered which part of the
planning/control cycle?
A.
B.
C.
D.
E.
Making the plan.

Comparing results.
Taking corrective action.
Benchmarking competitors.
Essay Questions
115 In general, planning has many benefits. However, planning also has two cautions of
.
which one must be aware. Discuss these.
116 List the four benefits of planning.

.
5-18
117 Miles and Snow suggest that organizations responding to uncertainty in the
.
environment do so with one of four approaches. Name and describe these
approaches, and provide an example of each.
118 Explain the different types of planning for the different levels of management. Include
.
the typical time frame for which each plan is created.
119 Explain the difference between standing plans and single-use plans. Define the three
.
types of standing plans, the two types of single-use plans and give examples of each.
120 Define the components of the acronym SMART in goal setting. Provide an example of
.
a SMART goal and demonstrate that it meets all criteria.
5-19
121 What is MBO? Describe the process by which MBO is done as well as its purpose.
.
122 Discuss the three things that must happen for MBO to be successful.
.
123 Describe the planning/control cycle.

.
5-20
Chapter 05 Planning: The Foundation of Successful

Management Answer Key
True / False Questions

1.
The career path that most resembles the traditional view of climbing the stairs in a
corporate hierarchy is called the linear career.
TRUE
The linear career resembles the traditional view of climbing the stairs in an
organization's hierarchy. That is, you move up the organization in a series of jobs,
each of which entails more responsibility and requires more skills.
AACSB: Analytic
Blooms: Understand
Learning Objective: 05-01 How do I tend to deal with uncertainty; and how can planning help?
Level of Difficulty: 2 Medium
Topic: Planning and Uncertainty
2.
A steady-state career entails a slow-but-steady growth in level of responsibility and

compensation.
FALSE
The steady-state career is almost the opposite of a linear career: You discover early
in life that you're comfortable with a certain occupation and you stay with it. Or you
accept a promotion for a while, decide you don't like the responsibility, and take a
step down.
AACSB: Analytic
Blooms: Understand
3.
A spiral career path depends on having jobs that, while fundamentally different,
build on one another.
TRUE
The spiral career is, like the linear career, upwardly mobile. However, on this career
path, you would have a number of jobs that are fundamentally different yet still
build on one another, giving you more general experience and the skills to advance
in rank and status.
AACSB: Analytic
5-21
Blooms: Understand
4.
A transitory career path involves a series of alternating promotions and demotions.

FALSE
If you favor the transitory career path, you're the kind of person who doesn't want
the responsibility that comes with promotion. You're a free spirit who likes the
variety of experience that comes with continually shifting sideways from job to job
or place to place (or you're afraid of making the commitment to doing any one
thing).
AACSB: Analytic
Blooms: Understand
5.
Planning helps managers to cope with events that can be predicted but is not
particularly helpful when conditions are uncertain.
FALSE
Planning is coping with uncertainty by formulating future courses of action to
achieve specified results.
AACSB: Analytic
Blooms: Remember
Level of Difficulty: 1 Easy
6.
Planning occurs only at the highest levels of an organization, being done by top
managers.
FALSE
Planning covers not only strategic planning (done by top managers) but also
tactical planning (done by middle managers) and operational planning (done by
first-line managers).
AACSB: Analytic
Blooms: Understand
5-22
7.
Planning and strategic management derive from an organization's mission and

vision about itself.
TRUE
Planning and strategic management derive from an organization's mission and
vision about itself, as shown in Figure 5.1.
AACSB: Analytic
Blooms: Understand
8.
In this time of Internet connections and speedy-access computer databases, one

typically has complete information for planning and decision making.
FALSE
Despite modern technology, many occurrences prevent complete gathering of
facts. Often you may have to "go with what you've got" and make a decision based
on a plan that is perhaps only three-quarters complete.
AACSB: Analytic
Blooms: Understand
9.
Planning gives you expectations against which you can compare your
performance.
TRUE
How well is your work going in an organization? You won't know unless you have
some way of checking your progress. That's why you need to have some
expectations of what you're supposed to do, or in other words, a plan.
AACSB: Analytic
Blooms: Understand
5-23
10.
According to Miles and Snow's basic strategy types, a defender protects its strong
position in an industry by constantly seeking new opportunities for growth.
FALSE
Defenders are expert at producing and selling narrowly defined products or
services. They do not tend to seek opportunities outside their present markets.
They devote most of their attention to making refinements in their existing
operations, such as slashing prices.
AACSB: Analytic
Blooms: Understand
11.
Facebook strives to be on the cutting edge of social media and is experiencing

phenomenal growth. It encourages what it calls a "hacker" mindset, always looking
to break down the old in favor of something better. Of Miles and Snow's basic
strategy types, Facebook would be described as a prospector.
TRUE
Prospectors are aggressive companies focused on developing new products or
services and in seeking out new markets, rather than waiting for things to happen.
AACSB: Analytic
Blooms: Apply
Level of Difficulty: 3 Hard
12.
Microsoft has been accused of adapting competitors' products after those firms
spent the resources and took the risks to develop them. Companies with this
strategy are known as analyzers by Miles and Snow.
TRUE
Analyzers let other organizations take the risks of product development and
marketing and then imitate what seems to work best. For years, Microsoft has been
accused of taking this approach.
AACSB: Analytic
Blooms: Understand
5-24
13.
Blockbuster Video was slow to adapt to the latest trends in its industry, such as
DVD-by-mail and movie downloads online. When it tried to incorporate the same
into its business model, it was well behind competitors like Netflix. Blockbuster
might be defined as a defender, according to Miles and Snow.
FALSE
The Reactor is passive and reactive, making adjustments only when finally forced
to by environmental pressures. In the worst cases, they are so incapable of
responding fast enough that they suffer massive sales losses and are even driven
out of business.
AACSB: Analytic
Blooms: Apply
14.
Eastman Kodak, though it actually invented the digital camera, was slow to move
into the production of this product as well as digital printers. Its continued reliance
on traditional 35mm film production and processing, which resulted in its
bankruptcy, makes it a reactor according to Miles and Snow.
TRUE
The Reactor is passive and reactive, making adjustments only when finally forced
to by environmental pressures. In the worst cases, they are so incapable of
responding fast enough that they suffer massive sales losses and are even driven
out of business.
AACSB: Analytic
Blooms: Apply
15.
The process of a business cycling through decisions first to select products and
markets, then about producing and delivering the products, and finally to establish
roles and processes is known as the discovery cycle.
FALSE
The adaptive cycle portrays businesses as continuously cycling through decisions
about three kinds of business problems: (1) entrepreneurial (selecting and making
adjustments of products and markets), (2) engineering (producing and delivering
the products), and (3) administrative (establishing roles, relationships, and
organizational processes).
AACSB: Analytic
Blooms: Understand
5-25
16.
The administrative part of the adaptive cycle focuses on establishing roles and
organizational processes.
TRUE
The adaptive cycle portrays businesses as continuously cycling through decisions
about three kinds of business problems: (1) entrepreneurial (selecting and making
adjustments of products and markets), (2) engineering (producing and delivering
the products), and (3) administrative (establishing roles, relationships, and
organizational processes).
AACSB: Analytic
Blooms: Understand
17.
In an organization's approach to planning, its mission and vision statements should

be created once the strategic planning process is complete.
FALSE
According to Figure 5.2, an organization should express its mission and vision, and
from these are derived the strategic plans.
AACSB: Analytic
Blooms: Understand
Learning Objective: 05-02 What are mission and vision statements; and what are three types of planning and
goals?
Topic: Fundamentals of Planning
18.
Determining an organization's mission is the responsibility of top management and

the board of directors.
TRUE
Determining the mission is the responsibility of top management and the board of
directors. It is up to them to formulate a mission statement, which expresses the
purpose of the organization.
AACSB: Analytic
Blooms: Understand
goals?
5-26
19.
A vision has a clear sense of the future and the actions needed to get there.
TRUE
A vision is a long-term goal describing "what" an organization wants to become. It
is a clear sense of the future and the actions needed to get there.
AACSB: Analytic
Blooms: Remember
goals?
20.
A mission statement expresses what the organization should become and where it
wants to go strategically.
FALSE
An organization's mission statement identifies the goods or services it provides and
will provide. A vision statement expresses what the organization should become,
where it wants to go strategically.
AACSB: Analytic
Blooms: Remember
goals?
21.
Amazon's statement in which it states its desire "to be the earth's most customercentric company; to build a place where people can come to find and discover
anything they might want to buy online" is a mission statement.
FALSE
Vision statements answer the question, "What do we want to become?" or "Where
do we want to go?" Here is Amazon's statement: "Our vision is to be earth's most
customer-centric company; to build a place where people can come to find and
discover anything they might want to buy online."
AACSB: Analytic
Blooms: Understand
goals?
5-27
22.
Strategic planning determines goals for an organization for a period of 1-5 years.
TRUE
Using their mission and vision statements, top managers do strategic planning.
They determine what the organization's long-term goals should be for the next 1-5
years with the resources they expect to have available.
AACSB: Analytic
Blooms: Remember
goals?
23.
Tactical planning is done by first-line managers, who look forward to the next 1-8
weeks.
FALSE
Tactical planning is determining what contributions middle managers and their
departments or similar work units can make with their given resources during the
next 6-24 months.
AACSB: Analytic
Blooms: Remember
goals?
24.
Operational planning is normally performed by middle management.

FALSE
Strategic priorities and policies are passed down to middle managers, who must do
tactical planning. Operational planning is done by first-line managers.
AACSB: Analytic
Blooms: Remember
goals?
5-28
25.
Decisions that are predictable, following a well-defined set of procedures, are

typical of operational planning.
TRUE
According to Figure 5.3, operational planning helps to direct daily tasks of
nonmanagerial personnel, and decisions are often predictable, following a welldefined set of routine procedures.
AACSB: Analytic
Blooms: Understand
goals?
26.
As part of the planning process, businesses set what are known as targets, which
are specific commitments to achieve measurable results within a stated period of
time.
FALSE
A goal, also known as an objective, is a specific commitment to achieve a
measurable result within a stated period of time.
AACSB: Analytic
Blooms: Remember
goals?
27.
An organization's goals arranged in a hierarchy from low level to high level can be
termed a means-end chain.
TRUE
Goals are arranged in a hierarchy known as a means-end chain because, in the
chain of management, the accomplishment of low-level goals is the means leading
to the accomplishment of high-level goals or ends.
AACSB: Analytic
Blooms: Remember
goals?
5-29
28.
Strategic goals focus on objectives for the organization as a whole.

TRUE
Strategic goals are set by and for top management and focus on objectives for the
organization as a whole.
AACSB: Analytic
Blooms: Remember
goals?
29.
Operational goals are set by middle managers and focus on the actions needed to
achieve strategic goals.
FALSE
Tactical goals are set by and for middle managers and focus on the actions needed
to achieve strategic goals.
AACSB: Analytic
Blooms: Remember
goals?
30.
The operating plan defines the course of action needed to achieve a stated goal.
FALSE
The goal should be followed by an action plan, which defines the course of action
needed to achieve the stated goal, such as a marketing plan or sales plan. The
operating plan, which is typically designed for a 1-year period, defines how you will
conduct your business based on the action plan; it identifies clear targets such as
revenues, cash flow, and market share.
AACSB: Analytic
Blooms: Remember
goals?
31.
A marketing plan is an example of an action plan.

TRUE
A goal should be followed by an action plan, which defines the course of action
needed to achieve the stated goal, such as a marketing plan or sales plan.
AACSB: Analytic
Blooms: Understand
5-30
goals?
32.
The operating plan identifies clear targets such as revenues and cash flow.
TRUE
The operating plan, which is typically designed for a 1-year period, defines how you
will conduct your business based on the action plan; it identifies clear targets such
as revenues, cash flow, and market share.
AACSB: Analytic
Blooms: Remember
goals?
33.
Southwest Airlines' goal of being highly profitable is a tactical goal.

FALSE
The strategic goal of top managers of Dallas-based Southwest Airlines is to ensure
that the airline is highly profitable, following the general strategy of (a) keeping
costs and fares down, (b) offering a superior on-time arrival record, and (c) keeping
customers happy.
AACSB: Analytic
Blooms: Understand
goals?
34.
Southwest Airlines' goal of making arrival times more reliable is a tactical goal.
TRUE
How do you make arrival times more reliable? To achieve this second tactical goal,
middle managers did away with guaranteed seat reservations before ticketing, so
that no-shows won't complicate (and therefore delay) the boarding process.
Passengers paying more for "business select" are now the exception.
AACSB: Analytic
Blooms: Understand
goals?
5-31
35.
Policies, procedures, and rules are types of single-use plans.

FALSE
Standing plans consist of policies, procedures, and rules.
AACSB: Analytic
Blooms: Remember
goals?
36.
A policy includes more specifics than does a rule.

FALSE
A rule is a standing plan that designates specific required action. A policy is a
standing plan that outlines the general response to a designated problem or
situation with few specifics.
AACSB: Analytic
Blooms: Understand
goals?
37.
A procedure is a standing plan that outlines the response to particular problems or

circumstances.
TRUE
A procedure (or standard operating procedure) is a standing plan that outlines the
response to particular problems or circumstances.
AACSB: Analytic
Blooms: Remember
goals?
38.
In single-use plans, a program is another name for a project.

FALSE
Single-use plans can be programs or projects. A program is a single-use plan
encompassing a range of projects or activities. A project is a single-use plan of less
scope and complexity than a program.
AACSB: Analytic
Blooms: Remember
goals?
5-32

39.
The U.S. government space program is an example of a single-use plan.

TRUE
A program is a single-use plan encompassing a range of projects or activities.
Example: The U.S. government space program had several projects, including the
space shuttle project and the Hubble Telescope project.
AACSB: Analytic
Blooms: Remember
goals?
40.
SMART is an acronym that represents characteristics necessary to motivate

employees in their periodic reviews.
FALSE
The five characteristics of a good goal are represented by the acronym SMART. A
SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and
has Target dates.
AACSB: Analytic
Blooms: Remember
Learning Objective: 05-03 What are SMART goals and MBO and how can they be implemented?
Topic: Promoting Goal Setting: Setting SMART Goals and Management by Objectives
41.
The "R" in a SMART goal stands for "reachable."

FALSE
The five characteristics of a good goal are represented by the acronym SMART. A
SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and
has Target dates.
AACSB: Analytic
Blooms: Remember
5-33
42.
A bike messenger company that operates in the downtown area of a large city
recently set the following goal: "All deliveries should be completed as quickly as
possible." This example meets the criteria for a SMART goal.
FALSE
A SMART goal is one that is Specific, Measurable, Attainable, Results-oriented, and
has Target dates. The example is not measurable.
AACSB: Analytic
Blooms: Apply
43.
SMART goals that are challenging yet can be met within the available scope of
time, equipment, and financial support are known as attainable, the "A" in SMART.
TRUE
has Target dates. Goals should be challenging, of course, but above all they should
be realistic and attainable. It may be best to set goals that are quite ambitious so
as to challenge people to meet high standards. Always, however, the goals should
be achievable within the scope of the time, equipment, and financial support
available.
AACSB: Analytic
Blooms: Understand
44.
Because it is unrealistic for SMART goals to be accomplished overnight, they should

have target dates.
TRUE
has Target dates. Goals should specify the target dates or deadline dates when
they are to be attained. For example, it's unrealistic to expect an airline to improve
its on-time arrivals by 10% overnight. However, you could set a target date, say 3
to 6 months away, by which this goal is to be achieved.
AACSB: Analytic
Blooms: Understand
5-34
45.
MBO was developed by Frederick Taylor as part of scientific management.

FALSE
First suggested by Peter Drucker in 1954, MBO has spread largely because of the
appeal of its emphasis on converting general objectives into specific ones for all
members of an organization.
AACSB: Analytic
Blooms: Understand
46.
The first step in an MBO program is for the manager to set objectives for her
subordinate.
FALSE
In the first step of MBO, you sit down with your manager and the two of you jointly
set objectives for you to attain. It's necessary to have back-and-forth negotiation to
make the objectives practicable.
AACSB: Analytic
Blooms: Remember
47.
The purpose of MBO is to motivate subordinates.

TRUE
The purpose of MBO is to motivate rather than control subordinates.
AACSB: Analytic
Blooms: Understand
48.
Perpetuation objectives are one type of objective used in MBO.

FALSE
There are three types of objectives in MBO: improvement objectives, personal
development objectives, and maintenance objectives (see Table 5.2).
AACSB: Analytic
Blooms: Understand
5-35
49.
In MBO, objectives that employees fail to meet should be put aside for the next
period in favor of ones that they can achieve.
FALSE
Failure to meet MBO objectives can be addressed by redefining the objectives for
the next 6- or 12-month period, or even by taking stronger measures, such as
demotion.
AACSB: Analytic
Blooms: Understand
50.
In order for MBO to be successful, it must be implemented throughout the entire

organization.
TRUE
The MBO program has to be put in place throughout the entire organization. That
is, it cannot be applied in just some divisions and departments; it has to be done in
all of them.
AACSB: Analytic
Blooms: Understand
51.
Organizationwide, the best structure for objectives in MBO is known as a diversity

pattern.
FALSE
MBO works by cascading objectives down through the organization; that is,
objectives are structured in a unified hierarchy, becoming more specific at lower
levels of the organization. Top managers set general organizational objectives,
which are translated into divisional objectives, which are translated into
departmental objectives. The hierarchy ends in individual objectives set by each
employee.
AACSB: Analytic
Blooms: Understand
5-36
52.
Deadlines can help one concentrate the mind, in order to make decisions rather
than put them off.
TRUE
Deadlines can help you keep your eye on the "big picture" while simultaneously
paying attention to the details that will help you realize the big picture. Deadlines
can help concentrate the mind, so that you make quick decisions rather than put
them off.
AACSB: Analytic
Blooms: Understand
53.
In the planning/control cycle, part of the control process can be to improve future
plans.
TRUE
In the planning/control cycle, controlling the direction of planning can be
accomplished by taking corrective action in two ways: by correcting deviations in
the plan being carried out, or by improving future plans.
AACSB: Analytic
Blooms: Understand
Learning Objective: 05-04 How does the planning/control cycle help keep a manager's plans headed in the right
direction?
Topic: The Planning/Control Cycle
54.
The planning/control cycle has three planning steps and three control steps.
FALSE
The planning/control cycle has two planning steps and two control steps (see Figure
5.5).
AACSB: Analytic
Blooms: Understand
direction?
5-37
55.
In the planning/control cycle, comparing the results with the plan is one of the
control steps.
TRUE
In Figure 5.5, the two control steps are (1) control the direction by comparing the
results with the plan; and (2) control the direction by correcting deviations or
improving future plans.
AACSB: Analytic
Blooms: Remember
direction?
56.
In the planning/control cycle, carrying out the plan is one of the control steps.
FALSE
In Figure 5.5, the two planning steps are (1) make the plan, and (2) carry out the
plan.
AACSB: Analytic
Blooms: Remember
direction?
Multiple Choice Questions

57.
A career that is upwardly mobile, with a number of jobs that are fundamentally
different yet still build on one another is known as a(n) ______ career.
A.
B.
C.
D.
E.
steady-state
portfolio
spiral
inclining
linear
The spiral career is, like the linear career, upwardly mobile. However, on this career
path, you would have a number of jobs that are fundamentally different yet still
build on one another, giving you more general experience and the skills to advance
in rank and status.
AACSB: Analytic
Blooms: Remember
5-38

58.
If you are happiest being a "hands-on" professional rather than becoming a

manager, you may prefer a(n) ______ career.
A.
B.
C.
D.
E.
steady-state
portfolio
spiral
inclining
linear
The steady-state career is actually fairly commonplace: Sales representatives,

computer programmers, or physicians, for example, may decide they are happy
being "hands-on" professionals rather than managers.
AACSB: Analytic
Blooms: Understand
59.
Planning is defined as
A.
B.
C.
D.
E.
formulating a method to allocate resources effectively.

motivating employees.
coping with obstacles to past performance.
setting goals and deciding how to achieve them.
implementing strategic goals.
Planning is defined as setting goals and deciding how to achieve them.

AACSB: Analytic
Blooms: Remember
5-39
60.
During which managerial function do you make a blueprint for action that describes
what you need to do to realize your goals?
A.
B.
C.
D.
E.
Organizing
Leading
Controlling
Defining
Planning
Planning is coping with uncertainty by formulating future courses of action to

achieve specified results. When you make a plan, you make a blueprint for action
that describes what you need to do to realize your goals.
AACSB: Analytic
Blooms: Understand
61.
Which of the following is one of the challenges of planning?

A.
B.
C.
D.
E.
Assigning the right people to tasks.

Determining the correct budget.
Measuring results with accuracy.
Finding the time to plan.
Motivating employees.
Planning requires you to set aside time to do it, and it will require your time and
some of your subordinates'.
AACSB: Analytic
Blooms: Understand
5-40
62.
If you do not have all of the information for a complete plan, you should
A. make decisions based on what you have, since perfect information is rare.
B. wait until you can get that information to take action you know will be
appropriate.
C. implement two or more courses of action simultaneously.
D. shrink the plan to limit its scope to only areas where you have good
information.
E.
disregard the plan and go with your intuition.
A plan need not be perfect to be executable. While you shouldn't shoot from the hip
in making decisions, often you may have to "go with what you've got" and make a
decision based on a plan that is perhaps only three-quarters complete.
AACSB: Analytic
Blooms: Understand
63.
Which of the following is a benefit of planning?

A. Planning allows you to spend little time preparing for the future.
B. Planning allows you to make all decisions without consulting superiors.
C. Planning helps you compare your results to your competitors'.
D.
Planning helps the company to be spontaneous.
E.
There are four benefits to planning: (1) planning helps you check on your progress.
(2) Planning helps you coordinate activities. (3) Planning helps you think ahead. (4)
AACSB: Analytic
Blooms: Understand
5-41
64.
Which of the following is one of the organizational responses organizations make

when confronted with uncertainty, as identified by Miles and Snow?
A.
B.
C.
D.
E.
Aggressor
Investigator
Reactor
Planner
Leader
Scholars Raymond E. Miles and Charles C. Snow suggest that organizations adopt
one of four approaches when responding to uncertainty in their environment. They
become Defenders, Prospectors, Analyzers, or Reactors.
AACSB: Analytic
Blooms: Understand
65.
A company that is an expert at producing and selling narrowly defined products or

services, and which does not tend to seek opportunities outside its present market
is known by Miles and Snow as a(n)
A.
B.
C.
D.
E.
defender.
analyzer.
adaptor.
prospector.
reactor.

services. They do not tend to seek opportunities outside their present markets.
AACSB: Analytic
Blooms: Remember
5-42
66.
When a firm responds to uncertainty in its environment as a(n) ________, its

continual pursuit of product and market innovation may lead to a loss of efficiency,
but is likely to make competitors nervous.
A.
B.
C.
D.
E.
reactor
analyzer
defender
prospector
executor
Prospectors focus on developing new products or services and in seeking out new
markets, rather than waiting for things to happen. The continual product and
market innovation has a price: Such companies may suffer a loss of efficiency.
Nevertheless, their focus on change can put fear in the hearts of competitors.
AACSB: Analytic
Blooms: Understand
67.
In the current broadband environment, consumers are able to download products

like music, movies, and books. Netflix was aggressive in taking advantage of this
fact, offering web streaming and game console access to its customers before
competitors. According to Miles and Snow, Netflix would be a(n)
A.
B.
C.
D.
E.
reactor.
prospector.
analyzer.
defender.
executor.
A company described as "aggressive" is often a Prospector organization.

markets, rather than waiting for things to happen.
AACSB: Analytic
Blooms: Apply
5-43
68.
A company producing cameras and video cameras prefers to focus its resources on
a fast imitation program to reverse-engineer new features from competitors and
add those, rather than implementing truly inventive features. Miles and Snow
would call this company a(n)
A.
B.
C.
D.
E.
reactor.
prospector.
analyzer.
defender.
imitator.
Analyzers take a "me too" response to the world. Analyzers let other organizations
take the risks of product development and marketing and then imitate (or perhaps
slightly improve on) what seems to work best.
AACSB: Analytic
Blooms: Apply
69.
The adaptive cycle portrays businesses as continuously cycling through three kinds
of business decisions: entrepreneurial, ______, and administrative.
A.
B.
C.
D.
E.
leadership
alignment
organization
production
engineering
Miles and Snow introduced the idea of the adaptive cycle, which portrays
businesses as continuously cycling through decisions about three kinds of business
problems: (1) entrepreneurial (selecting and making adjustments of products and
markets), (2) engineering, and (3) administrative (establishing roles, relationships,
and organizational processes).
AACSB: Analytic
Blooms: Understand
5-44
70.
If a business lacks insight or fails to use the adaptive cycle properly, it is likely to be
which of the following?
A.
B.
C.
D.
E.
A prospector
An analyzer
A defender
A reactor
An imitator
As one scholar points out, "With enough cycles and insight, a given business
becomes a very good, comprehensively aligned Prospector, Analyzer, or Defender.
If a business lacks insight, or if it fails to take advantage of alignment opportunities
afforded by the adaptive cycle, it will be an incongruent, poorly performing
Reactor."
AACSB: Analytic
Blooms: Understand
71.
Which of the following is the correct order of planning steps within an

organization?
A. Strategic planning, mission statement & vision statement, operational planning,
tactical planning
B. Strategic planning, mission statement & vision statement, tactical planning,
C. Strategic planning, operational planning, mission statement & vision statement,
tactical planning
D. Mission statement & vision statement, strategic planning, tactical planning,
E. Mission statement & vision statement, strategic planning, operational planning,
tactical planning
According to Figure 5.2, the correct order of the steps is mission statement & vision
statement, strategic planning, tactical planning, and operational planning.
AACSB: Analytic
Blooms: Understand
goals?
5-45
72.
Which of the following comes LAST when an organization makes a plan?

A.
B.
C.
D.
E.
mission statement
strategic planning
tactical planning
vision statement
According to Figure 5.2, the correct order of the steps is mission statement & vision
statement, strategic planning, tactical planning, and operational planning.
AACSB: Analytic
Blooms: Understand
goals?
73.
The statement which expresses the purpose of an organization is called a(n)

A.
B.
C.
D.
E.
goal statement.
vision statement.
mission statement.
A mission statement expresses the purpose of the organization.

AACSB: Analytic
Blooms: Remember
goals?
74.
Hilton Hotel's statement expressing its purpose as "to fill the earth with the light
and warmth of hospitality" is a(n)
A.
B.
C.
D.
E.
vision statement.
goal statement.
mission statement.
A mission statement expresses the purpose of the organization. The mission

statement for Hilton Hotels, a large company, reads: "To fill the earth with the light
and warmth of hospitality."
AACSB: Analytic
Blooms: Understand
5-46
goals?
75.
McKesson Corp., a U.S. pharmaceutical distributor, has a(n) ________ statement,

which is "to provide comprehensive pharmacy solutions that improve productivity,
profitability and result in superior patient care and satisfaction."
A.
B.
C.
D.
E.
purpose
vision
intention
goal
mission
A mission statement expresses the purpose of the organization. Whether the

organization is for-profit or nonprofit, the mission statement identifies the goods or
services the organization provides and will provide. Sometimes it also gives the
reasons for providing them (to make a profit or to achieve humanitarian goals, for
example).
AACSB: Analytic
Blooms: Apply
goals?
76.
Avon, the world's leading direct seller of beauty products, has a(n) ________
statement, which is "to be the company that best understands and satisfies the
product, service, and self-fulfillment needs of women globally."
A.
B.
C.
D.
E.
vision
intention
goal
mission
rationale
A vision statement expresses what the organization should become, where it wants
to go strategically.
AACSB: Analytic
Blooms: Apply
goals?
5-47
77.
There are three levels of planning. Their order, from first to last, is
A.
B.
C.
D.
E.
operational, tactical, and strategic.

strategic, operational, and tactical.
tactical, operational, and strategic.
tactical, strategic, and operational.
strategic, tactical, and operational.
The order of planning is strategic, then tactical, and then operational.

AACSB: Analytic
Blooms: Remember
goals?
78.
At which level of planning must managers be paying attention to the environment

outside the organization, be future oriented, and deal with uncertain and
competitive conditions?
A.
B.
C.
D.
E.
tactical
organizational
strategic
front-line
operational
According to Figure 5.3, strategic planning includes long-term decisions about the
overall direction of the organization. Managers need to pay attention to the
environment outside the organization, be future oriented, and deal with uncertain
and highly competitive conditions.
AACSB: Analytic
Blooms: Understand
goals?
5-48
79.
Because of the frequency with which world competition and information technology
alter marketplace conditions, a company's ________ may have to be done closer to
every 1 or 2 years than every 5.
A.
B.
C.
D.
E.
management planning
strategic planning
tactical planning
implementation planning
Strategic planning determines what the organization's long-term goals should be

for the next 1-5 years with the resources they expect to have available. Today,
because of the frequency with which world competition and information technology
alter marketplace conditions, a company's strategic planning may have to be done
closer to every 1 or 2 years than every 5.
AACSB: Analytic
Blooms: Understand
goals?
80.
Which level of management is most often engaged in tactical planning?

A.
B.
C.
D.
E.
Working-level employees
First-line managers
Middle managers
Top managers
Consultants
The strategic priorities and policies are then passed down to middle managers, who
must do tactical planning.
AACSB: Analytic
Blooms: Remember
goals?
5-49
81.
What is the time frame of an operational plan?

A.
B.
C.
D.
E.
2-10 years
1-5 years
6-24 months
1-52 weeks
1-90 days
First-line managers do operational planning, which means they determine how to

accomplish specific tasks with available resources within the next 1-52 weeks.
AACSB: Analytic
Blooms: Remember
goals?
82.
Alita is participating with other division heads in a discussion about new

international competition for the firm and what the organization's goals should be
for the next three years. She is participating in
A.
B.
C.
D.
E.
tactical planning.
strategic planning.
controlling.
writing a mission statement.
According to Figure 5.3, strategic planning includes long-term decisions about

overall direction of organization. Managers need to pay attention to environment
outside the organization, be future oriented, and deal with uncertain and highly
competitive conditions.
AACSB: Analytic
Blooms: Apply
goals?
5-50
83.
Executive management has recently decided to acquire a small company with a

complementary product line, so Craig, a marketing manager, is meeting with other
managers to discuss how to implement policies to support the acquisition over the
next year. He is participating in
A.
B.
C.
D.
E.
mission development.
strategic planning.
controlling.
tactical planning.
Tactical planning is done by middle management to determine what contributions

their departments or similar work units can make with their given resources during
the next 6-24 months.
AACSB: Analytic
Blooms: Apply
goals?
84.
Portia is meeting with her subordinates to determine which workers from her
department need training in order to handle production increases expected during
the next nine months. Portia is involved in
A.
B.
C.
D.
E.
vision development.
controlling.
tactical planning.
developing an MBO.
Operational planning is done by first-line management to determine how to

accomplish specific tasks with available resources within the next 1-52 weeks.
AACSB: Analytic
Blooms: Apply
goals?
5-51
85.
Which of the following is associated with operational planning?

A.
B.
C.
D.
E.
Determining the overall direction of the organization.

Examining the environment outside of the organization.
Implementing policies and plans of top management.
Directing daily tasks of nonmanagerial personnel.
Making decisions under highly uncertain conditions.
According to Figure 5.3, operational planning is done by first-line management and

directs the daily tasks of nonmanagerial personnel. Decisions are often predictable,
following routine procedures.
AACSB: Analytic
Blooms: Understand
goals?
86.
Which of the following best represents the strategic planning time frame that Jeff
Bezos of Amazon prefers?
A.
B.
C.
D.
E.
Six months or less

One to two years
Three to five years
Five to seven years
Ten to twenty years
Back in 1997, Bezos warned stockholders that "[i]t's all about the long term. We
may make decisions and weigh trade-offs differently than some companies." Most
top managers do strategic planning on a one- to three-year time line. Bezos is very
long term, operating on a 10- to 20-year time line.
AACSB: Analytic
Blooms: Understand
goals?
5-52
87.
________ goals are set by and for middle managers and focus on the actions needed
to achieve ________ goals.
A.
B.
C.
D.
E.
Strategic; operational
Tactical; strategic
Strategic; tactical
Tactical; operational
Operational; tactical
AACSB: Analytic
Blooms: Remember
goals?
88.
Cimarron Saddlery expects to improve profitability of the organization by 15% over

the next three years. This is an example of a(n)
A.
B.
C.
D.
E.
operational goal.
tactical goal.
strategic goal.
Strategic goals are set by and for top management and focus on objectives for the
organization as a whole.
AACSB: Analytic
Blooms: Apply
goals?
5-53
89.
Managers at Cimarron Saddlery expect to meet profitability goals for the company
by cutting costs through a 70% increase in global sourcing of leather and other
materials over the next two years. This is an example of a(n)
A.
B.
C.
D.
E.
operational goal.
tactical goal.
strategic goal.
AACSB: Analytic
Blooms: Apply
goals?
90.
After setting goals, managers should next

A.
prepare an action plan for accomplishing the goals.
B. propose changes to the goals of same-level managers to bring all into
alignment.
C.
supervise subordinates closely.
D.
report failure to meet goals to superiors.
E.
begin the planning process anew.
The goal should be followed by an action plan, which defines the course of action
needed to achieve the stated goal, such as a marketing plan or sales plan.
AACSB: Analytic
Blooms: Understand
goals?
5-54
91.
Southwest Airlines acquisition of rival AirTran Airways may have been responsible
for a sharp decline in on-time arrivals, which is one of Southwest's ________ goals,
supporting a larger goal of being highly profitable.
A.
B.
C.
D.
E.
dependant
strategic
operational
facilities
tactical
AACSB: Analytic
Blooms: Understand
goals?
92.
One type of standing plan, the __________, outlines the general response to a
designated problem or situation.
A.
B.
C.
D.
E.
policy
project
rule
procedure
program
A policy is a standing plan that outlines the general response to a designated

problem or situation.
AACSB: Analytic
Blooms: Remember
goals?
5-55
93.
When White Castle specifies exactly how to dress a hamburger, including the order
of the condiments, this is called a
A.
B.
C.
D.
E.
program.
policy.
rule.
procedure.
project.
response to particular problems or circumstances. Example: White Castle specifies
exactly how a hamburger should be dressed, including the order in which the
mustard, ketchup, and pickles are applied.
AACSB: Analytic
Blooms: Understand
goals?
94.
Dayton Construction has a ________ for processing invoices, which includes coding
them by job number and construction phase, and matching them with the correct
purchase order.
A.
B.
C.
D.
E.
program.
policy.
rule.
procedure.
project.
response to particular problems or circumstances.
AACSB: Analytic
Blooms: Apply
goals?
5-56
95.
Management instituted a new ______ in Yichao's workplace that "employees who

are more than 15 minutes late to work without calling a supervisor will be given a
written warning."
A.
B.
C.
D.
E.
policy
rule
procedure
project
program
A rule is a standing plan that designates specific required action.

AACSB: Analytic
Blooms: Apply
goals?
96.
A single-use plan encompassing a range of projects or activities is a(n)

A.
B.
C.
D.
E.
program.
strategy.
series.
agenda.
mission.

AACSB: Analytic
Blooms: Remember
goals?
97.
NASA's Curiosity Rover, employed to investigate a large crater on Mars, is an

example of a
A.
B.
C.
D.
E.
policy.
rule.
project.
procedure.
program.
The Curiosity Rover is one project in the government's space program.

AACSB: Analytic
Blooms: Apply
5-57
goals?
98.
A SMART goal is one that is

A.
specific, maintainable, affordable, realistic, and timely.
B. specific, measurable, attainable, results-oriented, and has target dates.
C. specific, maintainable, achievement-oriented, in real time, and timely.
D. specific, measurable, affordable, realistic, and has target dates.
E. specific, maintainable, aligned with other goals, realistic, and timely.
has Target dates.
AACSB: Analytic
Blooms: Remember
99.
The goal to "improve the quality of customer service by instituting follow-up

telephone calls this month" is not a SMART goal because it is
A.
B.
C.
D.
E.
unlikely to align with higher level goals.

not measurable.
too simplistic.
not results oriented.
unlikely to result in improvement to customer service.
Whenever possible, goals should be measurable, or quantifiable. Some goals such

as those concerned with improving quality are not precisely quantifiable. In that
case, something on the order of "Improve the quality of customer relations by
instituting 10 follow-up telephone calls every week" will do. You can certainly
quantify how many follow-up phone calls were made.
AACSB: Analytic
Blooms: Apply
5-58
100. Kristi has been struggling with her weight, and one of her coworkers suggested that
she make a SMART goal for herself. Which of the following is the best example of a
SMART goal for Kristi?
A.
B.
C.
D.
E.
I want to lose a lot of weight.

I want to look better in a swimsuit.
I want to lose 20 pounds over the course of one calendar year.
I want to start losing weight soon.
I want to lose 30% of my body mass by next month.
A SMART goal is specific, measurable, attainable, results-oriented, and has target

dates. Only choice C has all of these characteristics.
AACSB: Analytic
Blooms: Apply
101. In terms of difficulty, the best goals are

A.
just beyond what is achievable, to maximize motivation.
B.
easy to attain, so failure will not hurt morale.
C.
challenging but realistic.
D. impossible to really reach, because they are meant only to be idealistic and
inspirational.
E.
easy or hard, since both work equally well.
Goals should be challenging, of course, but above all they should be realistic and
attainable. If too easy, goals won't impel people to make much effort. If impossible,
employees won't even bother trying. Or they will try and continually fail, which will
end up hurting morale.
AACSB: Analytic
Blooms: Understand
5-59
102. MBO stands for

A.
B.
C.
D.
E.
Management by Observation.
Management by Objectives.
Management by Ownership.
Management by Obligation.
Management by Organization.
Management by objectives (MBO) is a four-step process for motivating employee

performance.
AACSB: Analytic
Blooms: Remember
103. The first step in the MBO process is to

A.
B.
C.
D.
E.
determine rewards for meeting goals.

give a performance appraisal.
develop an action plan.
periodically review performance.
jointly set objectives.
Management by objectives (MBO) is a four-step process, the first of which is for

managers and employees to jointly set objectives for the employee.
AACSB: Analytic
Blooms: Remember
104. Sultan is a new manager, and he is using MBO for the first time with his
subordinates. It is essential for Sultan to
A. decide on goals for employees and clearly inform them of these goals.
B.
ask the employee to commit the goals to memory.
C.
set goals that are just out of the subordinate's reach.
D.
reward employees when they meet objectives.
E. review an employee's performance once, at the end of the performance period.
Because the purpose of MBO is to motivate employees, performance that meets
the objectives should be rewarded with compliments, raises, bonuses, promotions,
or other suitable benefits.
AACSB: Analytic
Blooms: Apply
5-60

105. Which of the following would best describe MBO?

A.
B.
C.
D.
E.
It works at the highest levels of an organization.

It works at the lowest levels of an organization.
Its purpose is to motivate employees.
Its purpose is to control employees.
It effectively benchmarks HR practices against competitors.
The purpose of MBO is to motivate rather than control subordinates.

AACSB: Analytic
Blooms: Understand
106. Which of the following is a type of objective for MBO?

A.
B.
C.
D.
E.
Profitability
Personal development
Market share
Social responsibility
Ethics
There are three types of objectives in MBO: improvement, personal development,

and maintenance objectives (see Table 5.2).
AACSB: Analytic
Blooms: Understand
107. Productivity gains from MBO are higher when an organization has
A.
B.
C.
D.
E.
top-management commitment.
few budget problems.
team rather than individual performance reviews.
union support.
nonmanagerial employee support.
For MBO to be successful, top management must be committed. "When topmanagement commitment [to MBO] was high," said one review, "the average gain
in productivity was 56%. When commitment was low, the average gain in
productivity was only 6%."
AACSB: Analytic
5-61
Blooms: Understand
108. MBO works by cascading objectives down through the organization, and these
objectives become more ______ at lower levels of the organization.
A.
B.
C.
D.
E.
measurable
challenging
results-oriented
attainable
specific
MBO works by cascading objectives down through the organization; that is,
objectives are structured in a unified hierarchy, becoming more specific at lower
levels of the organization.
AACSB: Analytic
Blooms: Understand
109. ______ help you ignore extraneous matters in favor of focusing on what's important,
which is realizing the goals on time and on budget.
A.
B.
C.
D.
E.
Deadlines
Relationships
Changes
Networks
Options
Deadlines help you ignore extraneous matters (such as cleaning up a messy desk)
in favor of focusing on what's important, realizing the goals on time and on budget.
Deadlines provide a mechanism for giving ourselves feedback.
AACSB: Analytic
Blooms: Understand
5-62
110. The constant feedback loop of the ______ is designed to ensure plans stay headed
in the right direction.
A.
B.
C.
D.
E.
means-end chain
planning/control cycle
control system
project management method
project planning sequence
The planning/control cycle describes a constant feedback loop designed to ensure

plans stay headed in the right direction.
AACSB: Analytic
Blooms: Remember
direction?
111. Improving future plans is part of which step in the planning/control cycle?
A.
B.
C.
D.
E.
Making the plan.

Updating the plan.
Improving future plans is one part of controlling the direction by taking corrective
action. The other way is to correct deviations in the plan being carried out.
AACSB: Analytic
Blooms: Understand
direction?
5-63
112. Jordan, a sales manager, met with his staff to discuss that they were only a third of
the way to their sales goal, but halfway through the sales period. He was looking
for suggestions to improve second-half performance. Which part of the
planning/control cycle is Jordan doing?
A.
B.
C.
D.
E.

Making the plan.
Updating the plan.
Controlling the direction includes comparing the results with the plan, improving
future plans, and correcting deviations in the plan being carried out.
AACSB: Analytic
Blooms: Apply
direction?
113. Megan met with her supervisor for a formal review of her job performance over the
past year. Though Megan had agreed to complete five training modules during the
course of the year, she only did two. At this stage, which part of the
planning/control cycle would be applicable to her manager going forward?
A.
B.
C.
D.
E.
Carry out the plan.

Improve feedback.
Correct deviations in the plan.
Benchmark against other employees.
Improve future plans.
Controlling the direction includes the corrective action in step 4 of the cycle, which
(a) can get a project back on track before it's too late by correcting deviations or
(b) if it's too late, can provide data for improving future plans. In this case, at the
end of the performance period, the information can be used to improve future
plans. It is possible that five training modules is an unreasonable goal.
AACSB: Analytic
Blooms: Apply
direction?
5-64
114. Apple has a plan to generate buzz for its new products by maintaining secrecy
about them. Apple has learned that strong measures are required to protect such
mysteries, so it has enhanced its security and even fired and sued employees for
leaking news about the products. These efforts would be considered which part of
the planning/control cycle?
A.
B.
C.
D.
E.
Making the plan.

Comparing results.
Taking corrective action.
Benchmarking competitors.
Despite Apple's plan for its products, leaks have occurred, and Apple has learned
that secrecy requires strong measures. Thus, Apple has fired and later sued
employees who leaked news about unannounced products and has implemented a
number of other security measure as part of its corrective action.
AACSB: Analytic
Blooms: Understand
direction?
Essay Questions
5-65
115. In general, planning has many benefits. However, planning also has two cautions of
which one must be aware. Discuss these.
Planning requires time, including that to involve others (subordinates, peers, staff,
competitors, markets, etc.).
Also, some decisions have to be made without a lot of time. While you shouldn't
shoot from the hip in making decisions, often you may have to "go with what
you've got" and make a decision based on a plan that is perhaps only threequarters complete. Sometimes the need to make a decision quickly outweighs the
benefit of having more complete information.
AACSB: Analytic
Blooms: Understand
116. List the four benefits of planning.
Planning
Planning
Planning
Planning
provides a means to check on progress toward goals.

helps to coordinate activities between people and/or departments.
helps in thinking ahead and anticipating problems or opportunities.
helps one cope with uncertainty.
AACSB: Analytic
Blooms: Understand
5-66
117. Miles and Snow suggest that organizations responding to uncertainty in the
environment do so with one of four approaches. Name and describe these
approaches, and provide an example of each.

services. Often they are old-line successful enterprises, such as Macy's and
JCPenney, which in the 2010 era of consumer frugality found themselves losing
customers to discounters like Walmart. They do not tend to seek opportunities
outside their present markets. They devote most of their attention to making
refinements in their existing operations, such as slashing prices.
A company described as "aggressive" is often a Prospector organization.
markets, rather than waiting for things to happen. An example of a Prospector
company is Gap, which announced it would look for new sales by expanding
abroad. Another such company is Apple.
Analyzers take a "me too" response to the world. Analyzers let other organizations
take the risks of product development and marketing and then imitate (or perhaps
slightly improve on) what seems to work best. For years, Microsoft has been
accused of taking this approach.
Reactors make adjustments only when finally forced to by environmental pressures.
In the worst cases, they are so incapable of responding fast enough that they suffer
massive sales losses and are even driven out of business. Kmart, for instance,
failed to respond to Walmart's development of its distribution and inventory
management competencies, resulting in stalled growth and a significant reduction
in market share. Kmart's core business never recovered from this reactive strategy.
AACSB: Analytic
Blooms: Apply
5-67
118. Explain the different types of planning for the different levels of management.
Include the typical time frame for which each plan is created.
Strategic planning is done by top management. Using their mission and vision
statements, top managers do strategic planningthey determine what the
organization's long-term goals should be for the next 1-5 years with the resources
they expect to have available. It should communicate not only general goals about
growth and profits but also ways to achieve them.
Tactical planning is done by middle management. The strategic priorities and
policies are then passed down to middle managers, who must do tactical planning
that is, they determine what contributions their departments or similar work units
can make with their given resources during the next 6-24 months.
Operational planning is done by first-line management. Middle managers then pass
these plans along to first-line managers to do operational planningthat is, they
determine how to accomplish specific tasks with available resources within the next
1-52 weeks.
AACSB: Analytic
Blooms: Understand
goals?
5-68
119. Explain the difference between standing plans and single-use plans. Define the
three types of standing plans, the two types of single-use plans and give examples
of each.
Standing plans are plans developed for activities that occur repeatedly over a
period of time. Standing plans consist of policies, procedures, and rules.
A policy is a standing plan that outlines the general response to a designated
problem or situation. Example: "This workplace does not condone swearing." This
policy is a broad statement that gives managers a general idea about what is
allowable for employees who use bad language, but gives no specifics.
response to particular problems or circumstances. Example: White Castle specifies
exactly how a hamburger should be dressed, including the order in which the
mustard, ketchup, and pickles are applied.
A rule is a standing plan that designates specific required action. Example: "No
smoking is allowed anywhere in the building." This allows no room for
interpretation.
Single-use plans are plans developed for activities that are not likely to be repeated
in the future. Such plans can be programs or projects.
Example: The U.S. government space program (which was to be closed by the end
of 2010) had several projects, including the Challenger project and the Hubble
Telescope project.
A project is a single-use plan of less scope and complexity than a program.
Example: The space shuttle Discovery was one project in the government's space
program.
AACSB: Analytic
Blooms: Apply
goals?
120. Define the components of the acronym SMART in goal setting. Provide an example
of a SMART goal and demonstrate that it meets all criteria.
SMART goals are: specific (rather than vague), measurable (quantifiable),

attainable (challenging but realistic and attainable), results-oriented (support the
vision), and with target dates (deadlines).
An example of a SMART goal is "Ninety percent of planes should arrive within 15
minutes of the scheduled arrival time by December 2013."
AACSB: Analytic
Blooms: Apply
5-69

121. What is MBO? Describe the process by which MBO is done as well as its purpose.
Management by objectives (MBO) is a four-step process in which (1) managers and

employees jointly set objectives for the employee, (2) managers develop action
plans, (3) managers and employees periodically review the employee's
performance, and (4) the manager makes a performance appraisal and rewards the
employee according to results. The purpose of MBO is to motivate rather than
control subordinates.
AACSB: Analytic
Blooms: Understand
122. Discuss the three things that must happen for MBO to be successful.
For MBO to be successful, three things have to happen:

1. Top management must be committed. "When top-management commitment [to
MBO] was high," said one review, "the average gain in productivity was 56%. When
commitment was low, the average gain in productivity was only 6%."
2. It must be applied organizationwide. The program has to be put in place
throughout the entire organization. That is, it cannot be applied in just some
divisions and departments; it has to be done in all of them.
3. Objectives must "cascade." MBO works by cascading objectives down through
the organization; that is, objectives are structured in a unified hierarchy, becoming
more specific at lower levels of the organization. Top managers set general
organizational objectives, which are translated into divisional objectives, which are
translated into departmental objectives. The hierarchy ends in individual objectives
set by each employee.
AACSB: Analytic
Blooms: Understand
5-70
123. Describe the planning/control cycle.
The planning/control cycle has two planning steps (1 and 2) and two control steps
(3 and 4), as follows: (1) Make the plan. (2) Carry out the plan. (3) Control the
direction by comparing results with the plan. (4) Control the direction by taking
corrective action in two waysnamely, (a) by correcting deviations in the plan
being carried out, or (b) by improving future plans.
AACSB: Analytic
Blooms: Understand
direction?
5-71

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Chapter 05

Planning: The Foundation of Successful Management

2. A steady-state career entails a slow-but-steady growth in level of responsibility and

4. A transitory career path involves a series of alternating promotions and demotions.

8. In this time of Internet connections and speedy-access computer databases, one

18. Determining an organization's mission is the responsibility of top management and

24. Operational planning is normally performed by middle management.

28. Strategic goals focus on objectives for the organization as a whole.

31. A marketing plan is an example of an action plan.

33. Southwest Airlines' goal of being highly profitable is a tactical goal.

35. Policies, procedures, and rules are types of single-use plans.

36. A policy includes more specifics than does a rule.

38. In single-use plans, a program is another name for a project.

39. The U.S. government space program is an example of a single-use plan.

40. SMART is an acronym that represents characteristics necessary to motivate

41. The "R" in a SMART goal stands for "reachable."

45. MBO was developed by Frederick Taylor as part of scientific management.

47. The purpose of MBO is to motivate subordinates.

48. Perpetuation objectives are one type of objective used in MBO.

Multiple Choice Questions

59. Planning is defined as

formulating a method to allocate resources effectively.

61. Which of the following is one of the challenges of planning?

Assigning the right people to tasks.

operational, tactical, and strategic.

80. Which level of management is most often engaged in tactical planning?

81. What is the time frame of an operational plan?

85. Which of the following is associated with operational planning?

Six months or less

90. After setting goals, managers should next

96. A single-use plan encompassing a range of projects or activities is a(n)

98. A SMART goal is one that is

specific, maintainable, affordable, realistic, and timely.

unlikely to align with higher level goals.

103 The first step in the MBO process is to

determine rewards for meeting goals.

105 Which of the following would best describe MBO?

Making the plan.

Benchmarking against competitors.

Carry out the plan.

Making the plan.

116 List the four benefits of planning.

123 Describe the planning/control cycle.

Chapter 05 Planning: The Foundation of Successful

True / False Questions

A steady-state career entails a slow-but-steady growth in level of responsibility and

A transitory career path involves a series of alternating promotions and demotions.

Planning and strategic management derive from an organization's mission and

In this time of Internet connections and speedy-access computer databases, one

Facebook strives to be on the cutting edge of social media and is experiencing

In an organization's approach to planning, its mission and vision statements should

Determining an organization's mission is the responsibility of top management and

Operational planning is normally performed by middle management.

Decisions that are predictable, following a well-defined set of procedures, are

Strategic goals focus on objectives for the organization as a whole.

A marketing plan is an example of an action plan.

Southwest Airlines' goal of being highly profitable is a tactical goal.

Policies, procedures, and rules are types of single-use plans.

A policy includes more specifics than does a rule.

A procedure is a standing plan that outlines the response to particular problems or

In single-use plans, a program is another name for a project.

Level of Difficulty: 1 Easy

The U.S. government space program is an example of a single-use plan.