Foundations of Planning (Q 44-74)

Chapter 5 Foundations of Planning 44) Which of the following is NOT a function of planning? A) defining goals B) identifying a strategy for attaining goals C) settling disputes between employees D) coordinating organizational activities Answer: C Explanation: C) Defining goals, identifying strategies for attaining goals, and coordinating organizational activities are all recognized functions of planning, whether it is formal or informal, so these choices are incorrect. Settling disputes is not something that can be planned for, since most disputes are spontaneous and can occur at any time over any issue. This means that settling disputes is not a function of planning, therefore making that the correct response. 45) Planning is concerned with ________. A) both ends and means B) ends only C) means only D) neither ends nor means Answer: A Explanation: A) Planning is concerned with goals or ends, as well as how those goals are reached, or means. Therefore, the choice indicating both ends and means is the correct response and all of the other responses are incorrect. 46) In informal planning, goals are usually ________ shared with others in the organization. A) written, but little is B) unwritten and little is C) written and much is D) unwritten, but much is Answer: B Explanation: B) A key difference between formal and informal planning is that informal planning rarely involves recording the plans in written form. Informal planners also typically keep their plans to themselves, or share them with few others. Together, these factors make the choice indicating "unwritten and much" is the correct response. The two choices indicating "written" can be immediately ruled out because informal plans are not written. "Unwritten but much is" can be ruled out because little is shared with informal plans. 47) Informal planning is ________. A) always performed at the lowest organizational level B) general and usually lacks continuity C) performed exclusively by middle managers D) more specific than formal planning Answer: B Explanation: B) Informal plans are typically not specific and performed by leaders or owners rather than by middle managers or individuals on the lowest organizational level, ruling out all of these choices. This leaves the correct response, as it correctly states that informal plans are usually non-specific and lacking in continuity. 48) In formal planning, ________. A) specific goals covering a period of years are defined B) to maximize flexibility, specific goals are never spelled out C) very broad general goals are developed D) goals may be written or unwritten Answer: A Explanation: A) Formal planning requires written, not unwritten plans and specific, rather than general goals. Since only the choice regarding specific goals covering a period of years identifies specific goals, it is the correct response. 49) Which of the following is NOT a reason for managers to plan? A) to give direction to an organization B) to deal with change C) to establish goals D) to establish responsibility for mistakes Answer: D Explanation: D) Planning provides an organization with direction, goals, and a way to deal with change. Since all of these choices are reasons for a manager to plan, they can be ruled out as the correct response for this question. Blaming people for mistakes is not a function of planning so establishing responsibility for mistakes is the correct response for this question. 50) Planning gives organizations direction that primarily helps them ________. A) improve teamwork and coordinate activities B) improve their image in the business community C) improve morale of middle managers D) improve morale of all employees Answer: A Explanation: A) Direction provides a common path for all employees in an organization, thus helping employees work together in a coordinated, cooperative effort. This makes improving teamwork and coordinating activities the correct response since it mentions teamwork and coordination. Planning is not concerned with organizational morale or image so all of those choices can be ruled out as correct responses. 51) Planning gives organizations a way to deal with change that ________. A) eliminates all uncertainty B) reduces uncertainty C) reduces certainty D) increases ambiguity Answer: B Explanation: B) A key function of planning is to help organizations deal with uncertainty, making the choice regarding reducing uncertainty the correct response. Uncertainty unfortunately cannot be completely eliminated, so that is not the correct response here. Reducing certainty or increasing ambiguity are both tantamount to increasing, rather than decreasing uncertainty, so they are incorrect responses. 52) Organizations that don't formally plan may be more likely to have ________. A) corrupt managers B) legal problems C) multiple departments performing the same task D) a single department carrying out all company functions Answer: C Explanation: C) A major advantage to formal planning is that it reduces redundancy. That means that organizations that don't carry out formal plans would be more likely to have more than one department carrying out the same task, making that the correct response. Formal planning has little effect on corruption or legal problems so those choices can be ruled out. A single department carrying out all company functions is essentially the opposite of redundancy so it too can be ruled out. 53) One effect of planning on managers is that it forces them to ________. A) fear change B) anticipate and consider the effect of change C) work to prevent change D) ignore any change that doesn't directly affect them Answer: B Explanation: B) A major benefit of planning is that it forces managers to think systematically about the future. Rather than fear change, try to prevent change, or ignore change, planning requires managers to think constructively about change and its consequences. 54) Managers who fail to plan may ________. A) take advantage of change B) stimulate change C) be positively affected by change D) be adversely affected by change Answer: D Explanation: D) Change can be disruptive and even destructive in the best of circumstances, so managers who fail to plan thoughtfully are likely to suffer negative consequences of change, making "being adversely affected" the correct response. Without planning, managers are likely to be surprised by change, making it highly unlikely that they would be able to benefit or in any way be positively affected by the change—making these choices incorrect. There is no connection between planning and stimulating change so "stimulating change" would also be an incorrect response for this question. 55) Which of the following is a frequently cited criticism of formal planning? A) Plans lock organizations into rigid goals and timetables. B) Plans take too long to create. C) Plans create resentment within different levels of the organization. D) Formal planning works well only for smaller companies. Answer: A Explanation: A) Planning works better for larger rather than smaller companies. Few serious complaints are ever voiced that planning is too time-consuming or that it creates discord, making these responses incorrect. What planning does do is lock organizations into commitments that are sometimes overly confining or destructive, making that the correct response. 56) One criticism of formal planning is that it focuses on how to beat the competition rather than how to ________. A) have cordial relationships with the competition B) focus on new opportunities C) balance the organization's budget D) cooperate with the competition Answer: B Explanation: B) Critics of planning do not complain that planning focuses too much on organizational budgets or too-close relationships of an organization with its rivals. Critics do complain that organizations that put too much emphasis on planning end up being smallminded and myopic as they spend all of their energy trying to beat the competition rather than in being innovative and creating whole new products or industries. This makes "focus on new opportunities" the correct response. 57) Failing to discard successful plans from the past is likely to lead to ________. A) more success because conditions are unlikely to change in the future B) failure because conditions are likely to change in the future C) success because of the high quality of the plans D) failure because of the low quality of the plans Answer: B Explanation: B) The trouble with focusing too much on successes of the past is that it is rare that these successes can be duplicated in the changed circumstances of the future. So organizations that rigidly stick to a tried-and-true success formula can get "burned" when conditions change. This makes "failure because conditions are likely to change" the correct response and eliminates the other choices. 58) Studies of performance in organizations that plan have reached ________ with respect to the benefits of formal planning. A) somewhat negative conclusions B) no conclusion C) extremely negative conclusions D) generally positive conclusions Answer: D Explanation: D) Studies have shown that formal planning usually results in higher profits and general financial and organizational success, making "generally positive conclusions" the correct response. Both choices regarding negative conclusions can be ruled out because they indicate negative, rather than positive outcomes for formal planning. The choice indicating no conclusion can be ruled out because it fails to indicate a positive outcome for formal planning. 59) Studies of planning show that the key to successful planning is to make sure that the plans ________. A) cover every possible detail B) are high in quality and insight C) are exceedingly simple to follow D) are not shared with employees Answer: B Explanation: B) Success in planning seems to hinge more on the quality of the planning itself rather than the the subject of the planning. A company may focus its plans on all of the right topics, but unless those plans are systematic, comprehensive, and high in insight, they will not provide successful direction for the organization. These factors make the choice indicating "high in quality and insight" the correct response. Whether or not details are covered, plans are easy to follow, or plans are shared extensively matter less than the quality of the plans themselves. 60) In studies in which high-quality formal planning did not lead to higher performance, ________ usually the culprit. A) unforeseen events or conditions were B) demanding employees were C) stubborn ownership was D) lack of communication was Answer: A Explanation: A) Even the best plans can be foiled by unforeseen events, such as economic disruptions or political turmoil—meaning that "unforeseen events or conditions" is the correct response for this question. Plans can only take into account known events of the past, they can't anticipate unknown future events, especially highly unlikely future events. When it comes to spoiling plans, such things as demanding employees, stubborn owners, or poor communication are minor factors compared to important outside events, so these choices are all incorrect responses. 61) Formal planning typically leads to which of the following? A) higher profits B) lower productivity C) higher sales, but lower profits D) tension between different management levels Answer: A Explanation: A) Studies show a positive correlation between formal planning and profits along with other economic indicators, making "higher profits" the correct response. Lower productivity and lower profits both show a negative correlation between planning and economic success, so those choices can be ruled out. There is no evidence that planning results in tension of any kind, so that choice can also be ruled out. 62) The first step in the six-step strategic management process is to ________. A) analyze the organization's strengths and weaknesses B) identify the organization's mission C) identify strategies to reach the organization's goals D) analyze the opportunities the organization has Answer: B Explanation: B) Identifying the organization's mission is the first step in the strategic management process, making that the correct response. Analysis of strengths and weaknesses, and opportunities are all part of the second and third SWOT analysis steps of the process, while identification of strategies would be included in the fourth step, formulate strategies. 63) The first three steps of the strategic management process involve ________ strategies. A) planning B) implementing C) evaluating D) identifying Answer: A Explanation: A) The first three steps of the process include stating the mission of the organization, followed by an analysis of its position (strengths, weaknesses, etc.) in the marketplace. These first three steps are planning strategies, rather than the implementation (step 5), evaluation (step 6), or identification (step 4) strategies, making planning the correct answer. 64) A mission statement includes identification of an organization's ________. A) strengths and weaknesses B) products and basic philosophy C) assets and resources D) resources and strengths Answer: B Explanation: B) Finding the organization's strengths, weaknesses, assets, and resources are all part of an internal analysis, so the choices indicating strengths and weaknesses, assets and resources, and resources and strengths can all be ruled out because they include one or more of those items. That leaves products and basic philosophy as the correct response, as it correctly identifies that a mission statement should include a description of an organization's products as well as a summary of its basic philosophy. 65) A mission statement does NOT include which of the following? A) the customers of a company B) strategy for success C) why the company is in business and what it hopes to accomplish D) the company's basic beliefs Answer: B Explanation: B) A mission statement should identify an organization's customers, its core philosophy and beliefs, and its basic purpose, so these choices can be eliminated as possible correct responses. The one item listed that should not be part of a mission statement is strategy for success—the organization's mission has nothing to do with its strategy. The strategy is something that will be determined by the strategic management process. 66) An external analysis, the second step of the strategic management process, helps identify ________. A) the products that a company makes B) the long-term goals for a company C) a company's opportunities and threats D) a company's concern for its employees Answer: C Explanation: C) The focus of an external analysis is to locate the organization's place in the external business environment, analyzing the competition that the organization faces, the opportunities it might take advantage of, and the things that threaten the organization, making "opportunities and threats" the correct response. Long-term goals, product descriptions, and company policy toward its workers have nothing to with analyzing the external environment, so those choices are ruled out. 67) An internal analysis, the third step of the strategic management process, helps identify ________. A) opportunities and threats B) resources and capabilities C) opportunities and possibilities D) values and philosophy Answer: B Explanation: B) An organization's values and philosophy are part of its mission statement, not an internal analysis, which rules out that choice as a correct response. Finding opportunities is part of an external, not an internal analysis, which eliminates the choices regarding opportunities as correct responses. The internal analysis should identify resources (a company's physical, financial, and human assets) and capabilities (a company's skills and abilities) making "resources and capabilities" the correct response. 68) Which term refers to an organization's capital, workers, and patents? A) resources B) capabilities C) abilities D) core competencies Answer: A Explanation: A) An organization's workers, patents, and financial capital are all types of assets, or resources that the organization has, making resources the correct response. Items such as financial capital do not qualify as capabilities, abilities, or core competencies because they are tangible goods, not abstract abilities. 69) An organization's resources identify ________. A) how the organization gets things done B) where the organization operates C) when the organization operates D) what the organization has Answer: D Explanation: D) In informal terms, an organization's resources identify what the organization has, while its capabilities refer to what it does. This means that how, where, or when the organization operates all qualify as capabilities, so they can be ruled out as correct responses for this question. Resources are generally tangible assets, while capabilities refer to skills and abilities, making "what the organization has" the correct response. 70) An organization's capabilities identify ________. A) what the organization has B) who the organization is C) assets that the organization can rely on D) what the organization can do Answer: D Explanation: D) In informal terms, an organization's resources identify what the organization has, while its capabilities refer to what it does. What the organization has, who it is, or what its assets are all refer to what the organization has, so they are all resources, not capabilities. What the organization can do is a capability, so that is the correct response here. 71) Together, an organization's resources and core competencies make up which of the following? A) core philosophy B) competitive weapons C) core assets D) fundamental beliefs Answer: B Explanation: B) Finding the organization's strengths, weaknesses, assets, and resources are all part of an internal analysis, so core philosophy, core assets, and fundamental beliefs can all be ruled out because they include one or more of those items. That leaves competitive weapons as the correct response, as it correctly identifies that a mission statement should include a description of an organization's products as well as a summary of its basic philosophy. 72) SWOT analysis identifies and analyzes an organization's ________. A) strengths, weaknesses, opportunities, and threats B) strategy for competing in the market C) human resource assets D) long-term goals Answer: A Explanation: A) The term SWOT is an acronym for strengths, weaknesses, opportunities, and threats, making that the correct response and eliminating the other choices as possible correct answers. 73) SWOT analysis combines ________. A) a company's mission with its goals B) external and internal analyses C) a company's philosophy with its ethics D) profit with productivity Answer: B Explanation: B) An external analysis identifies threats to an organization and opportunities that it has. An internal analysis identifies strengths and weaknesses of the organization. Together, these two analyses make up the SWOT items—strengths, weaknesses, opportunities, and threats, making external and internal analyses the correct response. SWOT analysis has nothing to do with mission or company philosophy, making these choices incorrect. SWOT does not address profit or productivity, which rules out that choice. 74) Once SWOT analysis is complete, managers ________ to address the issues that came up during the analysis. A) formulate strategies B) implement strategies C) evaluate strategies D) eliminate strategies Answer: A Explanation: A) The ultimate goal of a SWOT analysis is to come up with strategies that will use an organization's strengths to take advantage of opportunities, defend against threats, and shore up weaknesses, making formulating strategies the correct response. Implementation and evaluation of the strategies will come later in the process, making these choices incorrect. Elimination of strategies might be considered a minor part of strategy formulation, but it certainly is not the objective of a SWOT analysis.