Understanding business Test Bank Solution Chap 1 Taking risks and making profits within the dynamic business environment

Chapter 01 Taking Risks and Making Profits within the Dynamic Business Environment Businesses provide goods, jobs, and services to others. Businesses seek to earn a profit by providing goods and services to others Profits of a business include the salaries paid to its employees Maintaining a high quality of life requires the combined efforts of businesses, nonprofit organizations, and government agencies. Discuss the views of economist Adam Smith. How does the invisible hand philosophy suggested by Smith benefit society as a whole?

Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment TEST PLANNING TABLE FOR CHAPTER Learning Goal LL:1 Knows Basic Terms and Facts LL:2 Understands Concepts and Principles Describe the relationship between profit and risk and show how businesses and nonprofit organizations can raise the standard of living for all 1,2,3,4,5,6,7,8,9,10, 11,12,13,14,15,16,17 18,19,20,21,22,23, 168,169,170,171,172, 173,174,175,176,177, 178,179 24,25,26,27,28,29,30, 31,32, 180,181,182,183,184, 185,186,187,188,189 33,34,35,36,37,38, 39,40,41,42, 190,191,192,193, 194,195,196, 221, 326*, 330* Compare and contrast being an entrepreneur and working for others 56,57,58, 206,207,208,209,210, 211 59,60,61, 212,213,214,215, 216 Analyze the affect of the economic environment and taxes on businesses 43,44,45,46,47,48,49, 50,51,52,53,54,55, 197,198,199,200,201, 202,203,204,205 62,56,63,64,65,66,67, 68,69,70, 217,218,219,220,221, 222 71,72, 223,2234,225,226 Describe the effect of technology on business 92,93,94,95, 246,247,248,249~ Demonstrate how businesses can meet and beat competition 75,76,77,78,79,80,81, 82,83,84,85,86,87,88, 89,90,91, 232,233,234,235,236, 237,238,239,240,241, 242,243,244,245 102,103,104,105,106, 107,108,109,110, 260,261,262,263 73,74, 227,228,229,230, 231~, 320, 329* 96,97,98,99,100,101 250,251,252,253, 254,255,256,257, 258,259, 321 Analyze the social changes affecting business 127,128,129,130, 282,283,284,285,286 Identify what businesses must to meet the global challenge, which includes war and terrorism 116,117,118,119,120, 121,122,123,124,125, 126, 273,274,275,276,277, 278,279,280,281 134,135,137136,138, 139,140,141,142, 290,291,292,293,294, 295 143,144,145,146, 296,297,298,299,300 147,148,149,150, 301,302,303,304, 305, 324~ Review how past trends are being repeated in the present and what those trends will mean for tomorrow’s college graduate 151,152,153,154,155, 156,157,158,159,160, 161,162, 306,307,308,309,310, 311,312 163,164,165, 313,314,315 166,167, 316,317,318,319, 325 111,112,113, 264,265,266,267 Total number of test items: 330 True/false questions are in plain text Multiple choice questions are in bold text Questions on boxed material are in bold text with a tilde~ Essay questions are in bold underlined text Minicase questions are in bold with an asterisk* 1-1 LL:3 Applies Principles 114,115, 268,269,270,271, 272, 322, 327* 131,132,133, 287,288,289, 323, 328* Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment Chapter 01 Taking Risks and Making Profits within the Dynamic Business Environment Answer Key True / False Questions Businesses provide goods, jobs, and services to others Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Entrepreneurship and Wealth Building Businesses seek to earn a profit by providing goods and services to others Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Entrepreneurship and Wealth Building Revenue is the amount a business earns above and beyond what it spends for expenses and costs Answer: False Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Revenues, Profits, and Losses Bloom's: Knowledge 1-2 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment Profit is the amount of money a business earns above and beyond what it spends for salaries and other expenses Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Revenues, Profits, and Losses Since all businesses make a profit, starting a business is not risky Answer: False Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Matching Risk with Profit An entrepreneur risks time and money to start and manage a business Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Matching Risk with Profit If a business's costs and expenses are greater than its revenue, it will suffer a loss Answer: True Page: 1-3 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Revenues, Profits, and Losses Profits of a business include the salaries paid to its employees Answer: False Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Revenues, Profits, and Losses Bloom's: Knowledge Revenue is the total amount of money a business takes in during a given period by selling goods and services Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Revenues, Profits, and Losses 10 Risk is the chance an entrepreneur takes of losing time and money on a business that may not prove profitable Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Matching Risk with Profit 11 The United States has one of the highest standards of living in the world Answer: True Page: 1-4 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Standard of Living and Quality of Life 12 The term "standard of living" refers to the amount of debt people can incur on a given income Answer: False Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Standard of Living and Quality of Life 13 Health care availability, a clean environment, and good schools all contribute to a high quality of life Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Standard of Living and Quality of Life 1-5 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 14 Maintaining a high quality of life requires the combined efforts of businesses, nonprofit organizations, and government agencies Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Standard of Living and Quality of Life 15 Stakeholders are all the people who stand to gain or lose by the policies and activities of a business Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Responding to the Various Business Stakeholders 16 Stakeholders include customers, employees, stockholders, suppliers, dealers, bankers, government officials and environmentalists Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Responding to the Various Business Stakeholders 17 Outsourcing means selling goods and services to people in other countries Answer: False AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Responding to the Various Business Stakeholders Page: 1-6 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 18 Outsourcing has caused many complications in many states where jobs have been lost to overseas companies Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Responding to the Various Business Stakeholders 19 Insourcing refers to the practice of global companies setting up design and production facilities in the United States Answer: Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Responding to the Various Business Stakeholders 20 The knowledge and skills learned in business courses are seldom relevant to students who work for nonprofit organizations or volunteer groups Answer: False Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Using Business Principles in Nonprofit Organizations 21 Businesses and nonprofit organizations often strive to accomplish the same objectives Answer: True Page: 1-7 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Using Business Principles in Nonprofit Organizations 1-8 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 22 Nonprofit organizations use financial gains to meet stated social or educational goals of the organization rather than personal profit Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Using Business Principles in Nonprofit Organizations 23 Social entrepreneurs are people who start and manage organizations that are not-for-profit Their mission is to help others improve their quality of life Answer: True Page: AACSB: Reflective Thinking Bloom's: Knowledge Learning Goal: 01-1 Level of Difficulty 1: Knowledge of key terms Topic: Using Business Principles in Nonprofit Organizations 24 The only real purpose of a business is to make money for entrepreneurs Feedback: Businesses don't just make money for entrepreneurs Businesses provide all of us with necessities such as food, clothing, housing, medical care, and transportation, as well as other goods and services that make our lives easier and better Answer: False Page: AACSB: Reflective Thinking Bloom's: Comprehension Learning Goal: 01-1 Level of Difficulty 2: Understanding of concepts and principles Topic: Entrepreneurship and Wealth Building 25 The only way a firm can increase its profits is to increase its sales revenue Feedback: Revenues minus expenses = profits A firm with stable or even declining sales might be able to improve profits by reducing expenses Answer: False Page: 1-9 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment AACSB: Reflective Thinking Bloom's: Comprehension Learning Goal: 01-1 Level of Difficulty 2: Understanding of concepts and principles Topic: Revenues, Profits, and Losses 1-10 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 752 Pam is a sales manager for Paradise Beauty Products She has told her sales people that she expects each of them to increase their customer contacts by at least percent in the next month Pam has set a(n): 753 A procedural policy 754 B functional objective 755 C policy guide 756 D performance standard Feedback: In order to determine whether a firm is making progress toward its goals and objectives, managers must establish specific, attainable, and measurable standards This is what Pam has done Answer: D Page: 196 AACSB: Reflective Thinking Bloom's: Comprehension Learning Goal: 07-6 Level of Difficulty 2: Understanding of concepts and principles Topic: Controlling: Making Sure it Works 757 Which of the following is a clear performance standard? 758 A Bring about a significant improvement in the morale of all workers 759 B Decrease the number of products rejected due to manufacturing defects by 10% over the next months 760 C Completely eliminate all customer complaints 761 D Make secretaries more efficient Feedback: A good standard must be specific, measurable, and attainable Answer "B" has all of these characteristics Answers "A" and "D" are not good standards because "significant improvement" and "more efficient" are too vague Answer "C" is not a good standard because a complete elimination of all complaints in one month is unlikely to be an attainable standard Answer: B Page: 196 AACSB: Reflective Thinking Bloom's: Comprehension Learning Goal: 07-6 Level of Difficulty 2: Understanding of concepts and principles Topic: Controlling: Making Sure it Works 1-948 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 762 Two years ago, Travis started his own restaurant supply company, serving the greater Chicago area Until recently, he has never concerned himself with establishing a formal control system Now, with a recession looming, he is experiencing cost conscious restaurant owners He has decided that a formal control system is needed The first step Travis should take is: 763 A draw up a formal organization chart 764 B talk to his banker to set financial goals 765 C devise a set of clear performance standards 766 D design an accident report form so that he can keep accurate records of all accidents that occur Feedback: The first step in the controlling process is to set clear performance standards Answer: C Page: 195-196 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-6 Level of Difficulty 3: Application of principles Topic: Controlling: Making Sure it Works 767 Idle Time Gaming, Inc., has established clear standards of performance for its latest video game that will involve physical challenges such as hand-eye coordination and the player’s ability to react quickly After a significant amount of testing, the results are compared to the previously established development standards If necessary, the engineering team will correct deficiencies before the game is tested by customers These activities are part of the _ of management 768 A organizing function 769 B control function 770 C leading function 771 D planning function Feedback: The control function of management measures performance relative to the planned objectives and standards The process includes establishing clear standards, as well as comparing results against standards Answer: B Page: 195 AACSB: Reflective Thinking 1-949 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment Bloom's: Comprehension Learning Goal: 07-6 Level of Difficulty 3: Application of principles Topic: Controlling: Making Sure it Works 772 As a middle manager for her firm, Tori just finished comparing the results of a promotional campaign with the outcome expectations The next step in the control process is: 773 A monitor and record actual performance 774 B set up contingency plans 775 C communicate results and deviations with management and employees involved 776 D establish discipline committees to decide on dismissals Feedback: After comparing results to standards, the next step in the control process is to communicate results and deviations to the employees involved Answer: C Page: 195-196 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-6 Level of Difficulty 3: Application of principles Topic: Controlling: Making Sure it Works 1-950 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 777 Harper is a sales rep for an eyeglass company The company is always on the cutting edge of trendy designs In her job, she frequently relies on the marketing department to provide her with information and materials When using customer satisfaction to judge the success of their company, Harper's managers should: 778 A ignore Harper's satisfaction, since she is an employee rather than a customer 779 B take Harper's satisfaction into account, because customers can be internal as well as external 780 C consider Harper's satisfaction, but place less emphasis it than on the satisfaction of a stockholder, since she is an external customer 781 D only consider Harper's satisfaction if she has worked in the same job for at least years Feedback: The criterion for measuring success in a customer-oriented firm is customer satisfaction However, customers are now defined broadly to include internal customers (people within the organization that receive services from others within the organization) as well as external (dealers and end users) Harper would be an example of an internal customer Answer: B Page: 196-197 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-6 Level of Difficulty 3: Application of principles Topic: A Key Criteria for Management: Customer Satisfaction 1-951 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 782 Customers who shop on Amazon.com™ find it helpful to read the customer reviews associated with products that others have purchased After making a purchase, the customer can go to Amazon’s website and post his/her opinion of the product recently purchased This strategy not only assists other customers with their decision making, it helps Amazon react more quickly to the performance of the products it sells Which of the following statements attests to the value of this service? 783 A This action provides for complete transparency of company financial performance 784 B This action supports a key criterion of the control function: the measurement of customer satisfaction 785 C This action provides for better tactical planning, particularly the budgeting process 786 D This action supports the premise of recruiting, hiring, and motivating the employees who believe in social media and other ways to reach customers Feedback: Companies measure their performance in a number of areas, including their financial performance, their areas of operation, their ability to perform learning for their employees, and customer satisfaction The use of social media and interactive online communication provides the company with current customer perception of products and services Answer: B Page: 196-197 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-6 Level of Difficulty 3: Application of principles Topic: A Key Criteria for Management: Customer Satisfaction 1-952 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 787 When establishing criteria to measure the success of a customer-oriented business, managers should: 788 A limit their attention to financial measures such as profit and return on investment since these are the only objective and quantifiable measures available 789 B focus most of their attention on measures of employee satisfaction, since without good employees the firm will not be competitive 790 C focus primarily on financial measures, but pay some attention to non-financial concerns 791 D recognize that, while financial measures are important and should be considered, the purpose of the firm is to satisfy both internal and external customers Feedback: Financial measures of success, such as profit and return on investment, are important and should not be ignored In fact, these measures have traditionally been the measures most frequently used to judge success Today, however, the purpose of a customer-oriented firm is to please all of its stakeholders Thus, non-financial criteria also play an important role in measuring the success of a firm Answer: D Page: 196-197 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-6 Level of Difficulty 3: Application of principles Topic: A Key Criteria for Management: Customer Satisfaction 1-953 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment Essay Questions 792 Identify and define the four key functions of management Answer: The four functions of management are planning, organizing, leading, and controlling Planning includes anticipating future trends and determining the best strategies and tactics to achieve organizational goals and objectives Organizing includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives Leading is the function concerned with creating a vision for the organization and communicating, guiding, training, coaching, and motivating others to achieve the goals and objectives of the organization Leading today often involves empowering workers and giving them the freedom to become self-directed and self-motivated Controlling refers to establishing clear standards to determine whether an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not Basically, it means measuring whether what actually occurs meets the organization's goals Page: 181-183 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-2 Level of Difficulty 3: Application of principles Topic: The Four Functions of Management 1-954 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 793 Explain the differences between strategic, tactical, operational, and contingency planning Answer: Strategic planning is long-range planning that determines major goals of the organization It provides the foundation for the policies, procedures, and strategies for obtaining and using resources to achieve those goals Strategic planning deals with such fundamental questions as which customers to serve, what products and services to sell, and the geographic areas in which the firm will compete Students may note that top managers are very involved in strategic planning Tactical planning is short-range planning that involves the process of developing detailed, shortterm statements about what is to be done, who is to it, and how it is to be done Tactical planning involves setting annual budgets and deciding on other details which contribute to reaching strategic objectives Students may point out that lower level managers are more heavily involved in tactical planning Operational planning involves setting the work standards and schedules necessary to implement the company's tactical objectives Whereas strategic planning looks at the organization as a whole, operational planning focuses on specific supervisors, department managers, and individual employees Contingency planning is the preparation of alternative courses of action that may be used if the primary plans not achieve the objectives of the organization Due to rapid changes that can occur in economic and competitive environments, it is wise to have alternative plans ready to be implemented Crisis planning is a part of contingency planning that involves reacting to sudden changes in the environment Page: 185-187 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-3 Level of Difficulty 3: Application of principles Topic: Planning and Decision Making 1-955 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 794 What is the purpose of the SWOT analysis? What types of information does this analysis provide? Answer: SWOT analysis is an analysis of an organization's strengths, weaknesses, opportunities, and threats It is used to help managers answer several fundamental questions related to the planning function These questions include:  What is the current situation facing the organization?  What is the state of the business environment?  What opportunities currently exist for meeting people's needs?  What products and customers are most profitable?  Why people buy (or not buy) our products?  Who are our major competitors, and what threats they pose for our business? SWOT begins with an analysis of the general business environment It then identifies the strengths and weaknesses of the firm This part of SWOT involves internal analysis, which can normally be done fairly easily Then the analysis attempts to identify opportunities and competitive and environmental threats Since these are based on factors that are external to the firm, they are more difficult to assess Figure 7.3 lists several issues that SWOT analysis may examine Page: 184 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-3 Level of Difficulty 3: Application of principles Topic: Planning and Decision Making 1-956 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 795 What is empowerment? How has the movement toward empowerment changed the role of the manager? Answer: Empowerment means giving employees the authority and responsibility to respond quickly to consumer requests In the past, managers often were "bosses" who issued orders and expected workers to carry them out With the trend toward empowered workers, the manager's role is changing The role of managers of empowered workers will be less that of "boss" and more that of coach, assistant, counselor and team member They will work to "enable" workers to perform their tasks by giving them the education, training, and resources they need to assume their self-directed responsibilities Page: 194 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-5 Level of Difficulty 3: Application of principles Topic: Empowering Workers 796 Describe the three basic types of management skills, and relate these skills to the tasks performed by different levels of management Answer: The three basic types of management skills are technical skills, human relations skills, and conceptual skills Technical skills are the skills needed to perform tasks in a specific discipline (such as selling a product or developing software) or department (such as marketing or information systems) Human relations skills involve communication and motivation; they enable managers to work through and with people Such skills also include those associated with leadership, coaching, morale building, delegating, training and development, and help and supportiveness Conceptual skills refer to the ability to picture the organization as a whole and the relationships among its various parts Conceptual skills are needed in planning, organizing, controlling, systems development, problem analysis, decision-making, coordinating, and delegating First-line managers, who often must explain procedures and specific techniques to employees, and evaluate the performance of those employees, make extensive use of technical skills Firstline managers seldom perform tasks requiring conceptual skills At higher levels of management, managers tend to rely more on conceptual skills to carry out their controlling and planning functions but seldom need technical skills Managers at all levels make use of human relations skills Page: 190 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-4 1-957 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment Level of Difficulty 3: Application of principles Topic: Tasks and Skills at Different Levels of Management 797 Describe three different leadership styles and give an example of a situation in which each style could be most used effectively Answer: Students should identify the following leadership styles: Autocratic leadership involves making managerial decisions without consulting others Such a style is effective in emergencies and when absolute followership is needed—for example, when fighting fires Autocratic leadership is also effective sometimes with new, relatively unskilled workers who need clear direction and guidance Democratic (or participative) leadership encourages managers and employees to work together to make decisions Research has found that employee participation in decisions may not always increase effectiveness, but it usually increases job satisfaction Many progressive organizations are highly successful at using a democratic style of leadership that values traits such as flexibility, good listening skills, and empathy Companies such as IBM, Cisco, and AT&T have used this style successfully Free-rein leadership involves setting objectives and giving employees a significant amount of freedom to whatever it takes to accomplish those objectives Doctors often have this flexibility in hospitals, as other professionals such as engineers and lawyers who often work on special projects or cases The traits needed by managers in such organizations include warmth, friendliness, and understanding Page: 192-194 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-5 Level of Difficulty 3: Application of principles Topic: Leadership Styles 1-958 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment Multiple Choice Questions Mini-Case Lauzy Fare left his position as senior vice president at Blue Skies Electronics a few weeks ago to become the new CEO of Idle Time Gaming Before joining the new company, Lauzy spent time studying Idle Time's competitive position and talking to employees in all divisions and at all levels of the organization Based on his findings, Lauzy believes that Idle Time has potential, but also faces some serious challenges if it expects to grow Lauzy found that when confronted by him, most of Idle Time's professional employees seemed almost afraid to express their opinions He learned that Otto Craddick, the previous CEO and founder of the company viewed himself as the boss, and, as such, micromanaged every aspect of the business This discouraged employees from using their own initiatives and ideas to solve problems For example, Otto required sales and service representatives to get his approval before they made any major commitments to customers Otto's policy prevented the organization from responding quickly to customer requests, so sales were lost Unlike his predecessor, Lauzy believes it is important for sales and service personnel to be able to deal with many types of customer requests without needing approval from top management He is confident that giving employees the authority and flexibility to deal with customers, and providing them with the training and resources to help them so, will improve morale within the company, create customer satisfaction, and grow revenues Lauzy also wants to make workers throughout the organization feel more appreciated He plans to continue meeting with them on a regular basis to seek their advice He hopes his work colleagues will eventually respond to his leadership style He has already encouraged middle managers to get employees more involved in decision-making, and has suggested some problem solving techniques the managers could try Although he thought that changing the rigidity of the company culture would be his first challenge at the new firm, Lauzy quickly realized that there were no standards in place to measure the progress of changes in internal morale, customer satisfaction, and profitability He has asked managers in those departments to spend more time setting performance standards and then monitoring actual performance Lauzy is confident that in a relatively short period of time internal changes will lead to good company performance As a member of top management, Lauzy performs a variety of important tasks 1-959 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 798 Otto, the previous CEO at Idle Time Gaming relied on a(n) _ style of management 799 A autocratic 800 B iconoclastic 801 C democratic 802 D free-rein Feedback: Otto made decisions without consulting others, and expected subordinates to follow orders without question These are characteristics of the autocratic style of management Answer: A Page: 192 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-5 Level of Difficulty 3: Application of principles Topic: Leadership Styles 803 Lauzy seems to prefer a(n) style of leadership 804 A autocratic 805 B democratic (or participative) 806 C PMI 807 D altruistic Feedback: Lauzy likes to listen to the opinions and ideas of subordinates and get them involved in decision making This indicates a democratic, or participative, style of leadership Answer: B Page: 193 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-5 Level of Difficulty 3: Application of principles Topic: Leadership Styles 1-960 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 808 Lauzy favors problem-solving techniques that allow teams of workers to freely identify and discuss possible solutions to a problem without having their ideas censored Which of the following is a problem solving technique that Lauzy is likely to suggest to his managers? 809 A SWOT analysis 810 B PERT analysis 811 C brainstorming 812 D controlling Feedback: Brainstorming is a problem solving technique that encourages workers to come up with as many potential solutions to the problem as possible in a short time period without censoring the ideas Answer: C Page: 187 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-3 Level of Difficulty 3: Application of principles Topic: Planning and Decision Making 813 Lauzy's decision to establish well-defined standards for monitoring performance means that he expects management to seriously engage in the _ function of management 814 A research and development 815 B verbalizing 816 C organizing 817 D controlling Feedback: Controlling is the process of measuring performance relative to objectives and standards and taking corrective action when necessary Answer: D Page: 195-196 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-6 Level of Difficulty 3: Application of principles Topic: Controlling: Making Sure it Works 1-961 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 818 Which of the following statements best describes the relative importance of the various types of skills Lauzy will use to perform these tasks? The tasks Lauzy performs will require: 819 A only technical skills 820 B mainly conceptual skills and human relations skills 821 C only human relations skills 822 D mainly technical skills and human relations skills Feedback: As a top manager, Lauzy may have good technical skills, but will more often use conceptual and human relations skills in day to day activities The strategic planning, leadership, and other activities required of a CEO, however, will require him to use conceptual and human relations skills extensively Answer: B Page: 189-190 AACSB: Reflective Thinking Bloom's: Application Learning Goal: 07-4 Level of Difficulty 3: Application of principles Topic: Tasks and Skills at Different Levels of Management 1-962 ...Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment Chapter 01 Taking Risks and Making Profits within the Dynamic Business Environment Answer... 0 1-3 Level of Difficulty 2: Understanding of concepts and principles Topic: The Economic and Legal Environment 1-2 8 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment. .. Difficulty 2: Understanding of concepts and principles Topic: The Competitive Environment 1-4 0 Chapter 01 - Taking Risks and Making Profits within the Dynamic Business Environment 113 Customer-driven