Chapter 12 Outsourcing Managing Interorganizational Relations Answer Key

Chapter 12 - Outsourcing: Managing Interorganizational Relations Chapter 12 Outsourcing: Managing Interorganizational Relations Answer Key Multiple Choice Questions 1. Successful firms are very careful in selecting the work to be outsourced. If expectations and requirements are fuzzy or open to debate, working together can become very difficult. The following are ways to clarify requirements and procedures EXCEPT A. Make sure that different firms’ project management systems are integrated B. Contract only work with clearly defined deliverables with measurable outcomes C. Establish who has access to certain information through robust safeguards D. Make sure communication is well structured and interactions are managed to avoid confusion E. Document your requirements Feedback: Structured communication and managed interactions are both functions of a traditional approach to project management and do not help clarify project requirements and procedures. Open communication avoids misdirection. Answer: D AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Difficult 2. The transferring of business functions or processes to other companies has traditionally been known as A. Subcontracting B. Downsizing C. Partnering D. Joint venture E. Outsourcing Feedback: The term outsourcing has traditionally been applied to the transferring of business functions or processes (e.g., customer support, IT, accounting) to other, often foreign companies. Answer: E AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 12-1 Chapter 12 - Outsourcing: Managing Interorganizational Relations 3. When you call your Internet provider to solve a technical problem and you end up talking to a technician in India or Romania, you have just experienced A. Telecommunications B. Partnering C. Outsourcing D. Service shift E. Bilingual customer service Feedback: When you call your Internet provider to solve a technical problem and you end up speaking with a technician in Bangalore, India, or Bucharest, Romania, the parent company has outsourced the task. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 4. The following are differences between the partnering approach and the traditional approach to managing contracted relationships EXCEPT A. Mutual trust forms in the partnering approach where suspicion and distrust are prominent in the traditional approach B. Contracts establish long-term commitments in the partnering approach while single project contracting is normal in the traditional approach C. Access to each other’s organization resources is available in the partnering approach but limited in the traditional approach D. Risk is shared jointly among partners in a partnering approach but is transferred to the other party in the traditional approach E. The partnering approach entails significant time and energy while a handshake is satisfactory in the traditional approach Feedback: Although the goal is long-term commitments that will provide the opportunity for continuous improvement, neither party is bound by a contract to ensure that this will happen. Answer: B AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-2 Chapter 12 - Outsourcing: Managing Interorganizational Relations 5. Advantages of outsourcing project work may likely include all of the following EXCEPT A. Shortened project duration B. Reduced costs C. Higher level of expertise D. Reduced conflict E. Increased flexibility Feedback: Dysfunctional conflict can be a result of outsourcing and is a disadvantage. Projects are more prone to interpersonal conflict since the different participants do not share the same values, priorities, and culture. Answer: D AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Medium 6. Disadvantages of outsourcing project work may likely include all of the following EXCEPT A. Increased conflict B. Coordination breakdowns C. Increased costs D. Loss of control E. More internal morale issues Feedback: Cost reduction is an advantage when outsourcing. Companies can secure competitive prices for contracted services, especially if the work can be outsourced offshore. Furthermore, overhead costs are dramatically cut since the company no longer has to internally maintain the contracted services. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Medium 12-3 Chapter 12 - Outsourcing: Managing Interorganizational Relations 7. Why are extensive training and team building activities important when managing contracted relationships? A. Extensive training and team building activities are not worth the effort because people issues will usually work themselves out over time B. So team members are provided with a theoretical understanding of the barriers to collaboration as well as the skills and procedures to be successful C. So conflict management processes can be put into place D. So teams can still function together when co-location is not important for project success E. So teams can identify difficult individuals and keep their distance during the project Feedback: Smart firms recognize that people issues are as important if not more important than technical issues. They train their personnel to work effectively with people from other organizations and countries. Team members are provided with a theoretical understanding of the barriers to collaboration as well as skills and procedures to be successful. Answer: B AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 8. Outsourced projects are susceptible to conflicts since people are unaccustomed to working together. Which of the following is a primary control mechanism for dealing with and resolving problems? A. Arbitration B. Escalation C. Collaboration D. Mediation E. Regulation Feedback: Escalation is the primary control mechanism for dealing with and resolving problems. The basic principle is that problems should be resolved at the lowest level within a set limit, or they are “escalated” to the next level of management. Answer: B AACSB: Reflective Thinking Bloom's: Remember Learning Objective: Best Practices in Outsourcing Project Work Level: Easy 12-4 Chapter 12 - Outsourcing: Managing Interorganizational Relations 9. Key practices in the partnering approach to managing contracted relationships include A. Single project contracting B. Risk being transferred to the other party C. Access to each other's organizational resources D. Structured communications E. Independent project teams Feedback: Key practices in partnering relationships include mutual trust, shared goals, a joint project team, open communications, long-term commitment, objective critique, access to each other’s organization resources, total company involvement, integration of administrative systems, and shared risk. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 10. Which of the following is the BEST way to ensure that cohesion and cooperation are not undermined and the parties involved will be satisfied when the project is complete? A. Long-term outsourcing relationships B. Good negotiation practices C. Well-established conflict management processes in place D. Frequent review and status updates E. Fair and incentive-laden contracts Feedback: When negotiating contracts the goal is to reach a fair deal for all involved. Managers recognize that cohesion and cooperation are undermined if one party feels he or she is being treated unfairly by others. Answer: E AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Difficult 12-5 Chapter 12 - Outsourcing: Managing Interorganizational Relations 11. Which of the following is NOT a key to successful partnering relationships? A. Mutual trust B. Jointly shared risk C. Total company involvement D. Independent project teams E. Long-term commitment Feedback: Key practices in partnering relationships include mutual trust, shared goals, a joint project team, open communications, long-term commitment, objective critique, access to each other’s organization resources, total company involvement, integration of administrative systems, and shared risk. Independent project teams is a practice in the traditional approach. Answer: D AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12. Which of the following is part of the traditional approach to managing contracted relationships? A. Structured communications B. Long-term commitment C. Total company involvement D. Shared risk E. Mutual trust Feedback: Suspicion and distrust, independent project teams, structured communications, single project contracting, limited objectivity, limited access to other organization’s resources, involvement is limited to project-level personnel, and risk is transferred to the other party all characterize the traditional approach to managing contracted relationships. Answer: A AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-6 Chapter 12 - Outsourcing: Managing Interorganizational Relations 13. Which of the following is NOT an advantage of establishing a long-term partnership? A. More efficient utilization of resources B. Reduced administration costs C. Improved innovation D. Risk is eventually transferred to the other party E. Improved performance Feedback: Among the many advantages for establishing a long-term partnership are reduced administration costs, more efficient utilization of resources, improved communication, improved innovation, and improved performance. Answer: D AACSB: Reflective Thinking Bloom's: Understanding Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 14. Which of the following is true in regard to negotiation when managing projects? A. It is a competitive contest B. Each negotiator should win as much as he or she can for his or her side C. If project managers are not able win negotiations, they will not be seen as effective leaders D. Success is measured by how much is gained compared to the other party E. It cannot be viewed as a contest Feedback: Project management is not a contest. Effective negotiating is critical to successful collaboration. All it takes is one key problem to explode to convert a sense of “we” into “us versus them.” Answer: E AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Easy 12-7 Chapter 12 - Outsourcing: Managing Interorganizational Relations 15. Best practices in outsourcing project work include all the following EXCEPT A. Well-defined requirements and procedures B. Training and team-building activities C. Well-established conflict management processes D. Frequent reviews and status updates E. Short-term, no-pressure outsourcing relationships Feedback: Best practices in outsourcing project work include well-defined requirements and procedures, extensive training and team-building activities, well-established conflict management processes in place, frequent review and status updates, co-location when needed, fair and incentive-laden contracts and long-term outsourcing relationships. Answer: E AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Easy 16. When negotiating, the tendency is to want to win! Why is this not a good approach when managing contracted relationships? A. This approach inhibits the degree of trust and cooperation needed for the alliance to work B. A noncompetitive approach can bring about functional conflict C. This approach can cause dysfunctional conflict to rise and negotiations to break down D. Because people have to continue to work together after negotiations E. All of these are reasons a competitive approach to negotiation should not be used when managing contracted relationships Feedback: Project management is not a contest. First, different organizations have formed a temporary alliance to complete a project. For this alliance to work requires a certain degree of trust, cooperation, and honesty. Second, if conflicts escalate to the point where negotiations break down and the project comes to a halt, then everyone loses, Third, unlike bartering with a street vendor, the people involved in project work have to continue to work together. Finally, conflict on a project can be good. When dealt with effectively, it can lead to innovation, better decisions, and more creative problem solving. Answer: E AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The art of Negotiating Level: Medium 12-8 Chapter 12 - Outsourcing: Managing Interorganizational Relations 17. When considering principled negotiation, both buyers and sellers relying on the blue book to establish price parameters of a used car would be an example of A. Focusing on interests, not positions B. Inventing options of mutual gain C. Being honest and forthright D. Using objective criteria E. Separating the people from the problem Feedback: Whenever possible, you should insist on using external, objective criteria to settle disagreements. For example, both buyers and sellers relying on the blue book to establish price parameters of a used car. Answer: D AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 18. The result of team building among the project's participants that states their common goals for the project as well as the procedures that will be used to achieve these goals is a A. Signed contract B. Legal partnership agreement C. Project plan D. Partnering charter E. Responsibility matrix Feedback: The team-building sessions often culminate with the creation of a partnering charter signed by all of the participants. This charter states their common goals for the project as well as the procedures that will be used to achieve these goals. Answer: D AACSB: Reflective Thinking Bloom's: Remember Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-9 Chapter 12 - Outsourcing: Managing Interorganizational Relations 19. In regard to outsourcing, the MOST effective way to avoid problems with schedules and deadlines is to A. Develop detailed schedules B. Hold frequent status reviews C. Add a penalty clause to the contract D. Hold frequent conversations with the outsourcer E. Build extra time into the schedules that the outsourcer is not aware of Feedback: To ensure that outsourced work is completed on time it is imperative to add a penalty clause to your contract or enforce late fees. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Difficult 20. What does the acronym BATNA stand for? A. Best alternative to a negotiated agreement B. Be able to negotiate an agreement C. Better ability to negotiate an agreement D. Best ability to have a negotiated agreement E. Better agree than no agreement Feedback: The acronym BATNA stands for best alternative to a negotiated agreement. AACSB: Reflective Thinking Bloom's: Remember Learning Objective: The Art of Negotiating Level: Medium 21. Long-term partnerships will provide all the following EXCEPT A. Improved communication B. More efficient utilization of resources C. Reduced communication requirements D. Lower administrative costs E. Improved innovation Feedback: Among the many advantages for establishing a long-term partnership are reduced administration costs, more efficient utilization of resources, improved communication, improved innovation, and improved performance. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-10 Chapter 12 - Outsourcing: Managing Interorganizational Relations 22. Which of the following is NOT a reason to have a BATNA? A. It increases the chance that you will win the negotiation B. It gives you the power to walk away C. It can reduce how dependent you are on the other party D. It increases the likelihood of coming to a win/win agreement E. It is a good defense against unreasonable win/lose negotiators Feedback: People try to reach an agreement to produce something better than the result of not negotiating with that person. A strong BATNA gives you the power to walk away and say, “No deal unless we work toward a win/win scenario.” BATNA doesn’t increase the chance that you will win; it increases the chance that there will be a win/win scenario. If not, you will have something to fall back on. Answer: A AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 23. Ultimate success of the project is determined by A. Whether the project was completed on time B. Whether the customer is happy C. Whether the project meets specifications D. Whether the project was under budget E. Whether the project served the purpose it intended Feedback: Ultimate success is not determined by whether the project was completed on time, within budget, or according to specifications, but whether the customer is satisfied with what has been accomplished. Answer: B AACSB: Reflective Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Easy 12-11 Chapter 12 - Outsourcing: Managing Interorganizational Relations 24. What is the fundamental difference between a fixed-price and a cost-plus contract? A. On fixed-price contracts, partnering is used while it is not used for cost-plus contracts B. On fixed-price contracts macro estimates are used while micro estimates are used for costplus contracts C. No scope changes are made on fixed-price contracts while scope changes are allowed for cost-plus contracts D. On fixed-price contracts the cost is set in advance while for cost-plus contracts it is established after the project is completed E. On fixed-price contracts contractors are used while on cost-plus contracts no external contractors are used Feedback: The difference between a fixed-price contract and a cost-plus contract is that for fixed-price contracts the cost is set before the project starts while for cost-plus contracts it is established after the project is completed. Answer: D AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Contract Management Level: Medium 25. Principled negotiation emphasizes developing win/win solutions while protecting yourself against those who would take advantage of your forthrightness. Which of the following is NOT one of the key points of principled negotiation? A. Use objective criteria when possible B. Be honest and forthright C. Focus on interests, not positions D. Separate the people from the problem E. Invent options for mutual gain Feedback: The key points of principled negotiation are to separate the people from the problem, focus on interests, not positions, invent options for mutual gain, and when possible, use objective criteria. Answer: B AACSB: Reflective Thinking Bloom's: Remember Learning Objective: The Art of Negotiating Level: Medium 12-12 Chapter 12 - Outsourcing: Managing Interorganizational Relations 26. Customer satisfaction can be quantified by A. Perceived performance divided by actual performance B. Actual performance divided by expected performance C. Perceived performance divided by expected performance D. Actual performance divided by perceived performance E. Expected performance divided by actual performance Feedback: The Met-Expectations Model of customer satisfaction shows that customer satisfaction can be calculated by dividing perceived performance by expected performance. A number below one indicates the customer was dissatisfied or the way they perceived your performance didn’t meet their expectations. A value above one indicates a happy customer or the way they perceived your performance was more than what they expected. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Medium 27. Mathematically, customer satisfaction is a function of the extent to which perceived performance exceeds expectations. A customer satisfaction ratio of .95 indicates that a customer is A. Very satisfied B. Slightly satisfied C. Neutral. Expectations were met D. Slightly dissatisfied E. Very dissatisfied Feedback: A customer satisfaction ration of .95 indicates that a customer is slightly dissatisfied. The way they perceived your performance didn’t quite meet their expectations. Answer: D AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Medium 12-13 Chapter 12 - Outsourcing: Managing Interorganizational Relations 28. Which of the following is suggested as the best target for a customer satisfaction ratio? A. 1.00 B. 1.05 C. 1.10 D. 1.20 E. 1.50 Feedback: Under most circumstances, the most profitable arrangement occurs when the customer's expectations are only slightly exceeded. Returning to the mathematical model, with all other things being equal, one should strive for a satisfaction ratio of 1.05, not 1.50! Answer: B AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Medium 29. The following are ways a project manager can manage a customer’s expectations and perceptions EXCEPT A. Avoid the temptation to oversell the virtues of the project to win approval B. Make sure to develop a well-defined scope statement C. Delay communicating problems that you feel can be resolved without involving the customer D. Share significant risks that might disrupt project execution E. Make sure that customer interactions are handled in a competent and professional manner Feedback: Customers should be kept informed of project developments, even if they are negative. Nothing will impact the trust between the manager and the client more than hiding potential problems. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Medium 12-14 Chapter 12 - Outsourcing: Managing Interorganizational Relations 30. When interacting with the customer, it is important that the project manager A. Show the customer your knowledge on the subject by using technical terms B. Speak slowly and in precise terms C. Speak the language of the customer D. Allow only one person from the project team to communicate with the customer E. Ask the customer to repeat important details Feedback: Speak the language of the customer. Too often project members respond to customer inquiries with technical jargon that exceeds the customer's vocabulary. Project managers and members need to describe problems, trade-offs, and solutions in ways that the customer can understand. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Easy 31. Which of the following is NOT an element of good negotiation? A. Be hard on the problem, soft on the people B. Conflict on a project can be good C. Negotiation is not a contest D. Seek first to understand, then to be understood E. Avoid dealing with unreasonable people Feedback: Try to keep the focus on the problem to be resolved. In Fisher and Ury's words: Be hard on the problem, soft on the people. Also when focusing on interests, it is important to practice the communication habit: Seek first to understand, then to be understood. In addition it is beneficial to have a friendly rapport with the other person prior to negotiating. Friendly rapport is consistent with the social network tenet introduced in Chapter 10 of building a relationship before you need it. Lastly avoid personalizing the negotiation and framing the negotiation as a contest. Answer: E AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 12-15 Chapter 12 - Outsourcing: Managing Interorganizational Relations 32. When considering principled negotiation, keeping focus on the issues even when people become upset, frustrated, and even angry is an example of A. Separating people from the problem B. Being honest and forthright C. Focusing on interests, not positions D. Inventing options for mutual gain E. Using objective criteria Feedback: When people become emotional, negotiators should keep a cool head and remember the old German proverb, "Let anger fly out the window." In other words, in the face of an emotional outburst, imagine opening a window and letting the heat of the anger out the window. Avoid taking things personally, and redirect personal attacks back to the question at hand. Don't react to the emotional outburst, but try to find the issues that triggered it. Answer: A AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 33. When considering principled negotiation, revealing why you are trying to achieve something instead of demanding what you want or need is an example of A. Separate people from the problem B. Be honest C. Focus on interests, not positions D. Invent options for mutual gain E. When possible, use objective criteria Feedback: The key is to focus on the interests behind your positions (what you are trying to achieve) and separate these goals from your ego as best you can. Not only should you be driven by your interests, but you should try to identify the interests of the other party. Answer: C AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 12-16 Chapter 12 - Outsourcing: Managing Interorganizational Relations 34. When considering principled negotiation, when one person identifies options that are of low cost to them but of high interest to the other party, this is an example of A. Separate people from the problem B. Be honest C. Focus on interests, not positions D. Invent options for mutual gain E. When possible, use objective criteria Feedback: Clarifying interests and exploring mutual options create the opportunity for dovetailing interests. Dovetailing means one person identifies options that are of low cost to them but of high interest to the other party. This is only possible if each party knows what the other's needs are. Answer: D AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium Fill in the Blank Questions 35. Since different participants do not share the same values, priorities, and culture, projects are more prone to interpersonal ___________ when outsourcing. conflict Feedback: Projects are more prone to interpersonal conflict since the different participants do not share the same values, priorities, and culture. Trust, which is essential to project success, can be difficult to forge when interactions are limited and people come from different organizations. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Medium 12-17 Chapter 12 - Outsourcing: Managing Interorganizational Relations 36. In the traditional approach to managing contracted relationships, _________ project contracting is normal. single Feedback: Single project contracting is normal in the traditional approach to managing contracted relationships. In the partnering approach, long-term commitment provides the opportunity to attain continuous improvement. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 37. When using the partnering approach to manage contracted relationships, ________ is shared jointly among the partners, which encourages innovation and continuous improvement. risk Feedback: Risk is shared jointly among the partners, which encourages innovation and continuous improvement. In the traditional approach, risk is transferred to the other party. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 38. When using the partnering approach to manage contracted relationships, mutual ________ forms the basis for strong working relationships. trust Feedback: In a partnering relationship, mutual trust forms the basis for strong working relationships. Suspicion and distrust, where each party is wary of the motives for actions by the other are evident in the traditional approach. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-18 Chapter 12 - Outsourcing: Managing Interorganizational Relations 39. The team-building sessions often conclude with the creation of a partnering _________ signed by all of the participants. charter Feedback: The team-building sessions often conclude with the creation of a partnering charter signed by all of the participants. This charter states their common goals for the project as well as the procedures that will be used to achieve these goals. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 40. In the traditional approach to managing contracted relationships, ________ are structured and guarded. communications Feedback: Communications are structured and guarded in the traditional approach as opposed to open communication in the partnering approach. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 41. Projects are more prone to conflict when outsourcing project work. The primary control mechanism for dealing with and resolving problems is known as _________. escalation Feedback: Escalation is the primary control mechanism for dealing with and resolving problems. The basic principle is that problems should be resolved at the lowest level within a set limit, or they are “escalated” to the next level of management. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-19 Chapter 12 - Outsourcing: Managing Interorganizational Relations 42. The term __________ has traditionally been applied to the transferring of business functions or processes to other, often foreign, companies. outsourcing Feedback: The term outsourcing has traditionally been applied to the transferring of business functions or processes (e.g., customer support, IT, accounting) to other, often foreign companies. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 43. Whether a client is dissatisfied or delighted with a project is not based on hard facts and objective data but on perceptions and _________. expectations Feedback: Whether a client is dissatisfied or delighted with a project is not based on hard facts and objective data but on perceptions and expectations. Project managers must be skilled at managing customer expectations and perceptions. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Medium 44. Cost __________ is a major advantage of outsourcing project work because companies can secure competitive prices for contracted services, especially if the work can be outsourced offshore. reduction Feedback: Cost reduction is where companies can secure competitive prices for contracted services, especially if the work can be outsourced offshore. Furthermore, overhead costs are dramatically cut since the company no longer has to internally maintain the contracted services. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 12-20 Chapter 12 - Outsourcing: Managing Interorganizational Relations 45. Not only can contracted project work be cheaper, it can also be done __________. faster Feedback: Not only can work be done more cheaply, but it can also be done faster. Competitive pricing means more resources for the dollar. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Medium 46. A company no longer has to keep up with technological advances. High levels of __________ and technology can be brought onto a project by using contracted services. expertise Feedback: A high level of expertise and technology can be brought to bear on the project. A company no longer has to keep up with technological advances. Instead, it can focus on developing its core competencies and hire firms with the know-how to work on relevant segments of the project. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Medium 47. Contracting project services can increase a firm's _________ by no longer being constrained by their own resources. flexibility Feedback: In terms of flexibility, organizations are no longer constrained by their own resources but can pursue a wide range of projects by combining their resources with talents of other companies. Small companies can instantly go global by working with foreign partners. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Medium 12-21 Chapter 12 - Outsourcing: Managing Interorganizational Relations 48. When outsourcing project work, coordination __________ are intensified by physical separation with people working in different buildings, different cities,; if not different countries. breakdowns Feedback: Coordination of professionals from different organizations can be challenging, especially if the project work requires close collaboration and mutual adjustment. Breakdowns are exacerbated by physical separation with people working in different buildings, different cities, if not different countries. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 49. More and more companies are using online _________ to collect data from all project participants about the quality of working relations. surveys Feedback: More and more companies are using online surveys to collect data from all project participants about the quality of working relations. With this data one can gauge the “pulse” of the project and identify issues that need to be addressed. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 50. There is a potential loss of __________ over a project when the core team depends on other organizations that they do not have direct authority over. control Feedback: There is potential loss of control over the project when outsourcing project work. The core team depends on other organizations that they have no direct authority over. While long-term survival of participating organizations depends on performance, a project may falter when one partner fails to deliver. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Easy 12-22 Chapter 12 - Outsourcing: Managing Interorganizational Relations 51. Too often project members respond to customer inquiries with technical jargon. Project members should speak the language of the ________. customer Feedback: Too often project members respond to customer inquiries with technical jargon that exceeds the customer’s vocabulary. Project managers and members need to describe problems, trade-offs, and solutions in ways that the customer can understand. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Easy 52. Many people approach _________ as if it is a competitive process. negotiation Feedback: Many people approach negotiation as if it is a competitive process. Project management is not a contest. A firm understanding of the negotiation process, skills, and tactics is essential to project success. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiation Level: Easy 53. Fisher and Ury champion the ________ negotiation approach to negotiation because it emphasizes win/win solutions while protecting yourself against those who would take advantage of your forthrightness. principled Feedback: Fisher and Ury from the Harvard Negotiation Project champion an approach to negotiating that embodies these goals. It emphasizes developing win/win solutions while protecting yourself against those who would take advantage of your forthrightness. Their approach is called principled negotiation. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 12-23 Chapter 12 - Outsourcing: Managing Interorganizational Relations 54. _______ satisfaction is measured by the ratio of perceived performance to expected performance. Customer Feedback: Customer satisfaction is a function of the extent to which perceived performance (or outcome) exceeds expectations. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Easy 55. The best defense against unreasonable, win/lose negotiators is having what Fisher and Ury call a strong __________. BATNA Feedback: The best defense against unreasonable, win/lose negotiators is having what Fisher and Ury call a strong BATNA (best alternative to a negotiated agreement). They point out that people try to reach an agreement to produce something better than the result of not negotiating with that person. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 56. One key focus of principled negotiation is to separate people from the _________. problem Feedback: One key focus of principled negotiation is to separate people from the problem. When people become emotional, negotiators should keep a cool head and remember the old German proverb, "Let anger fly out the window." In other words, in the face of an emotional outburst, imagine opening a window and letting the heat of the anger out the window. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Easy 12-24 Chapter 12 - Outsourcing: Managing Interorganizational Relations 57. When both buyers and sellers rely on the blue book to establish price parameters for a used car, they are using _________ criteria. objective Feedback: Whenever possible, you should insist on using external, objective criteria to settle disagreements. For example, both buyers and sellers relying on the blue book to establish price parameters for a used car. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 58. In regard to outsourcing, the MOST effective way to avoid problems with schedules and deadlines is to add a _________ clause to the contract. penalty Feedback: To ensure that outsourced work is completed on time it is imperative to add a penalty clause to your contract or enforce late fees. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 59. __________ is less relevant for independent work that does not require ongoing coordination between professionals for different organizations. Co-location Feedback: Co-location is less relevant for independent work that does not require ongoing coordination between professionals for different organizations. Otherwise co-location is critical and well worth the added expense and inconvenience. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium True / False Questions 12-25 Chapter 12 - Outsourcing: Managing Interorganizational Relations 60. Toyota and Daimleren-Chrysler collaborating with suppliers to develop new automobile platforms is an example of outsourcing. TRUE Feedback: Outsourcing is now being applied to contracting significant chunks of project work. For example, HP and Dell work closely with hard drive manufacturers to develop nextgeneration laptops. Toyota and DaimlerChrysler collaborate with suppliers to develop new automobile platforms. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 61. Participants from different organizations working close together at the construction site or in shared office space is an example of a virtual team. FALSE Feedback: Many outsourced projects operate in a virtual environment in which people are linked by computers, faxes, computer-aided design systems, and video conferencing. They rarely, if ever, see one another face-to-face. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 62. Working in outsourcing teams, projects can be completed faster and more cheaply. TRUE Feedback: Not only can work be done more cheaply, but it can also be done faster. Competitive pricing means more resources for the dollar. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 12-26 Chapter 12 - Outsourcing: Managing Interorganizational Relations 63. Increased conflict and loss of coordination are typical disadvantages of outsourcing project work. TRUE Feedback: Advantages of outsourcing project work include cost reduction, faster project completion, high level of expertise, and flexibility. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Medium 64. Trust can be difficult to forge when interactions are limited and people come from different organizations. TRUE Feedback: Trust, which is essential to project success, can be difficult to forge when interactions are limited and people come from different organizations. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 65. When using the partnering approach to manage contracted relationships, access to each other's organization resources is available. TRUE Feedback: Key practices in partnering relationships include mutual trust, shared goals, a joint project team, open communications, long-term commitment, objective critique, access to each other’s organization resources, total company involvement, integration of administrative systems, and shared risk. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Easy 12-27 Chapter 12 - Outsourcing: Managing Interorganizational Relations 66. In the traditional method of managing projects, total company involvement requires commitment from CEO to team members. FALSE Feedback: In the traditional method of managing projects, involvement is normally limited to project level personnel. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Easy 67. When using the partnering approach to manage contracted relationships, each party's goals and objectives are similar but geared to what is best for them. FALSE Feedback: When using the partnering approach to manage contracted relationships, shared goals and objectives ensure common direction. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Easy 68. Co-location is less relevant for independent work that does not require ongoing coordination between professionals from different organizations. TRUE Feedback: This would be the case if you are outsourcing discrete, independent deliverables like beta testing or a marketing campaign. Here normal channels of communication can handle the coordination issues. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-28 Chapter 12 - Outsourcing: Managing Interorganizational Relations 69. In some countries, laws are considered to be guidelines that are not necessarily followed. TRUE Feedback: As an American, you likely assume that laws are generally obeyed. Believe it or not, that's generally not true in most of the world, where laws are guidelines that are not necessarily followed. This can lead to major communication problems! You think if you write a contract, everybody is going to adhere to it. For many people, a contract is merely a suggestion. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 70. Project managers have the capability to manage customer expectations and perceptions. TRUE Feedback: Project managers must be skilled at managing customer expectations and perceptions. Too often they deal with these expectations after the fact when they try to alleviate a client’s dissatisfaction by carefully explaining why the project cost more or took longer than planned. A more proactive approach is to begin to shape the proper expectations up front and accept that this is an ongoing process throughout the life of a project. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 71. In order to keep the customer happy and to keep perceptions about performance high, it is acceptable to falsely assure customers that everything is on track, especially if you feel that the problem will be resolved soon. FALSE Feedback: Trust is dissolved when managers neglect to keep their clients informed or neglect to tell them the truth. Active customer involvement allows customers to naturally adjust their expectations in accordance with the decisions and events that transpire on a project, while at the same time, the customer’s presence keeps the project team focused on the customer’s objectives for the project. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Medium 12-29 Chapter 12 - Outsourcing: Managing Interorganizational Relations 72. It is rare in today’s flat world to find important projects that are being completed totally in-house. TRUE Feedback: It is rare in today’s flat world to find important projects that are being completed totally in-house. Outsourcing or contracting significant segments of project work to other companies is commonplace. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Outsourcing Project Work Level: Easy 73. Experience indicates that co-location of project teams is not worth the extra costs. FALSE Feedback: One of the best ways to overcome interorganizational friction is to have people from each organization working side by side on the project. Smart companies rent or make available the necessary accommodations so that all key project personnel can work collectively together. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 74. A partnering charter states the common goals for the project as well as the procedures that will be used to achieve these goals. TRUE Feedback: The team-building sessions often culminate with the creation of a partnering charter signed by all of the participants. This charter states their common goals for the project as well as the procedures that will be used to achieve these goals. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-30 Chapter 12 - Outsourcing: Managing Interorganizational Relations 75. It is a good idea to add a penalty clause to an outsourcing agreement to ensure that work is completed on time. TRUE Feedback: Another important cultural difference relates to schedules and deadlines. To most Americans, a deadline is a set completion date. In many other cultures, a deadline is a suggestion that maybe something will be finished by that indicated date. To ensure that outsourced work is completed on time it is imperative to add a penalty clause to your contract or enforce late fees. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 76. A prime consideration in choosing outsourcing vendors is to assess the fit with their project management system. TRUE Feedback: The best companies address this issue up front instead of waiting for problems to emerge. First they assess "fit" between providers' project management methods and their own project management system. This is a prime consideration in choosing vendors. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 77. Conflict is inevitable on a project; however, if it is handled effectively, it can elevate performance. TRUE Feedback: Conflict is inevitable on a project; however, if it is handled effectively, it can elevate performance. On the other hand, dysfunctional conflict can catch fire and severely undermine project success. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 78. In project negotiation each negotiator is out to win as much as he or she can for their side. FALSE 12-31 Chapter 12 - Outsourcing: Managing Interorganizational Relations Feedback: Many people approach negotiating as if it is a competitive contest. Each negotiator is out to win as much as he or she can for his or her side. Success is measured by how much is gained compared with the other party. While this may be applicable when negotiating the sale of a house, it is not true for project management. Project management is not a contest! AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Easy 79. Principled negotiation emphasizes developing win/win solutions while protecting yourself against those who would take advantage of your forthrightness. TRUE Feedback: Fisher and Ury from the Harvard Negotiation Project champion an approach to negotiating that embodies these goals. It emphasizes developing win/win solutions while protecting yourself against those who would take advantage of your forthrightness. Their approach is called principled negotiation. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Easy 80. When separating the people from the problem, negotiators don’t react to the emotional outburst, but try to find the issues that triggered it. TRUE Feedback: By keeping the focus on the issues and not the personalities, negotiators are better able to let the other person blow off steam. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Medium 81. The best defense against unreasonable, win/lose negotiators is having what Fisher and Ury call a strong BATNA. TRUE 12-32 Chapter 12 - Outsourcing: Managing Interorganizational Relations Feedback: The best defense against unreasonable, win/lose negotiators is having what Fisher and Ury call a strong BATNA (best alternative to a negotiated agreement). They point out that people try to reach an agreement to produce something better than the result of not negotiating with that person. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: The Art of Negotiating Level: Easy 82. A value of 1.5 is the optimal target for the Met-Expectations model of customer satisfaction. FALSE Feedback: Under most circumstances, the most profitable arrangement occurs when the customer's expectations are only slightly exceeded. Returning to the mathematical model, with all other things being equal, one should strive for a satisfaction ratio of 1.05, not 1.50! AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Easy Short Answer Questions 83. What is partnering and why has it become popular for managing projects? Feedback: Partnering is a method of transforming contractual relationships into a cohesive, cooperative project team with a single set of goals and established procedures for resolving disputes in a timely manner. It is popular because the old way, built on an adversarial premise, was not working. AACSB: Analytic Bloom's: Analyze Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-33 Chapter 12 - Outsourcing: Managing Interorganizational Relations 84. Identify and briefly describe three of the four advantages to outsourcing project work. Feedback: 1. Cost reduction: Companies can secure competitive prices for contracted services, especially if the work is outsourced overseas. 2. Faster project completion: Outsourcing can provide access to equipment that can accelerate completion. 3. Increased flexibility: Organizations are no longer constrained by their own resources. 4. Higher level of expertise: A high level of expertise and technology can be brought to bear on projects. AACSB: Reflective Thinking Bloom's: Remember Learning Objective: Outsourcing Project Work Level: Medium 85. Discuss how key practices in the partnering approach to managing contracted relationships vary fromwith those in the traditional approach for working relationships, goals, and communications. Feedback: With partnering, mutual trust forms the basis for strong working relationships while in traditional approaches there is suspicion and distrust with each party is wary of the motives for actions by the other. With partnering, goals and objectives are shared and ensure common direction while traditionally each party's goals and objectives are similar but geared to what is best for them. With partnering, communications are open to avoid misdirection and thus bolster effective working relationships while in traditional approaches communications are structured and guarded. AACSB: Analytic Bloom's: Analyze Learning Objective: Best Practices in Outsourcing Project Work Level: Difficult 86. Discuss how key practices in the partnering approach to managing contracted relationships vary fromwith those in the traditional approach foregarding risk, length of commitment, and structure of project teams. Feedback: In partnering, risk is shared jointly among the partners, which encourages innovation and continuous improvement while traditionally risk is to be avoided and transferred to the other party. In partnering, long-term commitments are made while traditionally single project contracting is the norm. In partnering, project teams are composed of all participating organizations and result in a high level of interaction while traditionally each organization has its own spatially separated teams. AACSB: Analytic Bloom's: Analyze Learning Objective: Best Practices in Outsourcing Project Work Level: Difficult 12-34 Chapter 12 - Outsourcing: Managing Interorganizational Relations 87. When using the traditional approach to managing contracted relationships, risk is transferred to the other party. Give a real life example of this. Discuss why this is not conducive of a partnering relationship and how it can it impact project innovation?. Feedback: When risk is contracted out or transferred to another party, there is no motivation for the organizations involved to work together (pool resources) to mitigate or manage the risk. If risk isn’t shared, project innovation will decrease in an effort to decrease the risk. AACSB: Analytic Bloom's: Analyze Learning Objective: Best Practices in Outsourcing Project Work Level: Difficult 88. One simple but useful way of viewing customer satisfaction is in terms of met expectations. Why should one strive for a ratio of 1.05 and not 1.50? Feedback: High customer satisfaction is the goal of most projects. However, profitability is another concern. Exceeding expectations typically entails additional costs. Under most circumstances, the most profitable arrangement occurs when the customer’s expectations are only slightly exceeded. AACSB: Analytic Bloom's: Analyze Learning Objective: A Note on Managing Customer Relations Level: Medium 89. "Team-building is nice to have for a project, but we really need to concentrate on the planning and technical challenges—this is the make-or-break point for this project." Agree or disagree? Support your answer. Feedback: Smart firms recognize that people issues are as important, if not more important, than technical issues. They train their personnel to work effectively with people from other organizations and countries. AACSB: Analytic Bloom's: Analyze Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 12-35 Chapter 12 - Outsourcing: Managing Interorganizational Relations 90. Project managers must be skilled at managing customer expectations and perceptions. Give three3 examples of how one can do this. Feedback: Project managers can manage customer expectations and perceptions by not overselling the project to win approval, developing a well-defined scope, sharing significant risks with the customer, keeping the customer abreast of project progress and makinge sure that customer interactions are handled in a competent and professional manner. AACSB: Analytic Bloom's: Analyze Learning Objective: A Note on Managing Customer Relations Level: Medium 91. Many companies recognize that major benefits can be enjoyed when outsourcing arrangements extend across multiple projects and are long term. Identify and describe 3 three advantages for establishing long-term partnerships. Feedback: 1. Reduced administration cost: Ccosts associated with bidding and selecting a contractor are eliminated. 2. More efficient utilization of resources: oOwners are able to concentrate their workforce on core business. 3. Improved communication: As partners gain experience with each other, they develop a common language and perspective. 4. Improved innovation: The partners are able to discuss innovation and associated risks in a more open manner and share risks and rewards fairly. 5. Improved performance: Over time partners are able to applye lessons learned from previous projects to current projects. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: Best Practices in Outsourcing Project Work Level: Medium 92. Describe the Met-Expectations Model of Customer Satisfaction including the formula to calculate it. Customer satisfaction is a function of the extent to which perceived performance exceeds expected performance and can be represented by dividing the perceived performance by the expected performance. A result less than one indicates dissatisfaction where a result over one indicates satisfaction. AACSB: Reflective Thinking Bloom's: Understand Learning Objective: A Note on Managing Customer Relations Level: Medium 12-36 Chapter 12 - Outsourcing: Managing Interorganizational Relations 93. When negotiating, the tendency is to want to win! Give two reasons why is this is not a good approach when managing contracted relationships.? Feedback: Project management is not a contest. First, different organizations have formed a temporary alliance to complete a project. For this alliance to work requires a certain degree of trust, cooperation, and honesty. Second, if conflicts escalate to the points where negotiations break down and the project comes to a halt, then everyone loses, Third, unlike bartering with a street vendor, the people involved ion project work have to continue to work together. Finally, conflict on a project can be good. When dealt with effectively it can lead to innovation, better decisions, and more creative problem solving. AACSB: Analytic Bloom's: Analyze Learning Objective: The Art of Negotiating Level: Medium 94. What does the acronym BATNA stand for and why is it important to being a successful negotiator? Feedback: BATNA It is a best alternative to a negotiated agreement and it is the true benchmark for determining whether you should accept an agreement. It is the best tool to deal with unreasonable people. AACSB: Analytic Bloom's: Analyze Learning Objective: The Art of Negotiating Level: Medium 12-37