Chap 7

Chapter 7
Managerial Planning and

Goal Setting
True/False Questions
1.
The Europa Hotel survived terrorism by carefully planning security measures for guests,
employees, and the building.
Answer: True
2.
Type: F
Level: 1
Page: 238
Type: F
Level: 2
Page: 238
Type: F
Level: 1
Page: 238
Type: F
The mission is the basis for the strategic level of goals and plans, which in turn shapes the
tactical and operational level.
Answer: True
7.
Page: 238
The act of determining the organization goals and the means for achieving them is called
goal setting.
Answer: False
6.
Level: 2
Goals specify today's means; plans specify future ends.

Answer: False
5.
Type: F
A desired future state that the individual or organization attempts to realize is a goal.
Answer: True
4.
Page: 237
Because everything else stems from leading, of the four management functions, leading is
considered the most fundamental.
Answer: False
3.
Level: 2
Level: 1
Page: 238
Type: F
The complexity of todays environment and uncertainty about the future overwhelm many
managers and lead them to focus on long-term goals and plans instead of operational
issues and short-term results.
Answer: False
Level: 2
Page: 239
Type: F
Chapter Seven * Managerial Planning and Goal Setting

Test Bank * Page 185
8.
Because they provide legitimacy, rationale for decisions, and an increase in motivation and
commitment, goals and plans are valuable to an organization.
Answer: True
9.
Type: F
Level: 2
Page: 241
Type: F
Level: 2
Page: 241
Type: F
Level: 2
Page: 241
Type: F
Level: 1
Page: 242
Type: F
Level: 1
Page: 242
Type: F
Operational plans and goals are those that focus on the outcomes that major divisions and
departments must achieve in order for the organization to reach its overall goals.
Answer: False
17.
Page: 240
A broad statement of where the organization wants to be in the future refers to a mission
statement.
Answer: False
16.
Level: 2
Strategic plans and goals are those that focus on where the organization wants to be in the
future and pertain to the organization as a whole.
Answer: True
15.
Type: F
An organization's mission describes its reason for existence.

Answer: True
14.
Page: 240
The company's philosophy as well as purpose is often expressed in mission statements.

Answer: True
13.
Level: 2
A broad definition of the organization's values, aspiration and reason for being, along with
a recognition of the scope and operations that distinguishes the organization refers to a
Business Strategic Statement.
Answer: False
12.
Type: F
Plans provide a standard of assessment.

Answer: False
11.
Page: 239-240
A plan tells "why" to achieve the goal.

Answer: False
10.
Level: 1
Level: 2
Page: 242
Type: F
The department manager's tool for daily and weekly operations is called the operational
plan.
Answer: True
Level: 1
Page: 243
Type: F

18.
A means-end chain is when lower-level goals lead to the accomplishment of higher-level

goals.
Answer: True
19.
Level: 2
Page: 246
Type: F
Level: 2
Page: 246
Type: F
Level: 1
Page: 247
Type: F
Level: 2
Page: 247
Type: F
Level: 3
Page: 247
Type: A
Level: 1
Page: 248
Type: F
Problems with MBO occur when the company faces rapid change.
Answer: True
28.
Type: F
To review progress is the final step in the MBO process.

Answer: False
27.
Page: 246
An example of a qualitative goal is the University will provide quality education at a fair
price.
Answer: True
26.
Level: 2
The most difficult step in an MBO process is reviewing progress.

Answer: False
25.
Type: F
MBO refers to managing by opportunity.

Answer: False
24.
Page: 245
The goals should be easy, for employees to feel motivated, so that they can achieve them
easily which in turn increases their motivation level.
Answer: False
23.
Level: 2
To be effective, goals must be set for every aspect of employee behavior or organizational
performance.
Answer: False
22.
Type: F
Goals are most effective when they are specific, measurable, challenging and linked to
rewards.
Answer: True
21.
Page: 244
Specific and measurable goal characteristics apply only to the lower-level goals.
Answer: False
20.
Level: 1
Level: 1
Page: 249
Type: F
Organic organizations and values that encourage participation can harm the MBO process.
Answer: False
29.
Page: 251
Type: A
Level: 2
Page: 253
Type: F
Level: 1
Page: 253
Type: F
Level: 2
Page: 254
Type: A
Level: 2
Page: 255
Type: F
Level: 2
Page: 255
Type: F
The CEO of Alex Aquariums, Inc. must do all of the planning for the company because
that is the way to do things in todays workplace.
Answer: False
38.
Level: 3
Companies should ensure the physical safety and emotional needs of people and/or animals
after implementing a crisis management plan.
Answer: True
37.
Page: 250-251 Type: F
In the containment stage of crisis management, the organization should get the awful
truth out to employees only as soon as possible.
Answer: False
36.
Level: 1
The XYZ Corporation should create a crisis management group that is not crossfunctional, but does work together well under pressure.
Answer: False
35.
Type: F
The three stages of crisis management are prevention, preparation, and containment.
Answer: True
34.
Page: 250
The first stage in crisis management planning includes building relationships and
designating crisis management team and spokesperson.
Answer: False
33.
Level: 1
If Kari, manager at Tip Top Roofing, wanted to develop a contingency plan for Tip Top,
she would need to look at factors such as new equipment, the economy, and the company
workers compensation cases.
Answer: True
32.
Type: F
Contingency plans can also be considered as scenarios.

Answer: True
31.
Page: 249
Standing plans define company responses to specific situations such as natural

emergencies or competitive setbacks.
Answer: False
30.
Level: 2
Level: 2
Page: 256
Type: A
Turtle Terrace should use traditional planning since that is the type of planning every
company uses.
Answer: False
39.
Page: 256
Type: A
In a complex and competitive business world, traditional planning done by a select few is
the only planning that works.
Answer: False
40.
Level: 2
Level: 2
Page: 256
Type: F
A temporary group consisting of line managers responsible for developing strategic plans
is called a centralized planning group.
Answer: False
Level: 1
Page: 256
Type: F
Multiple Choice Questions

1.
Which of these refers to a desired future state that an organization attempts to realize?
a.
b.
c.
d.
e.
Plan
Vision statement
Goal
Mission statement
Idea
Answer: c
2.
specify future ends and

a.
b.
c.
d.
e.
Page: 238
Type: F
specify today's means.
Goals, plans
Plans, goals
Planning, organizing
Ideas, behaviors
Mission, vision
Answer: a
3.
Level: 1
Level: 2
Page: 238
Type: F
A blueprint specifying the resource allocations schedules, and other actions necessary for
attaining goals is referred to as a(n)
a.
b.
c.
d.
e.
goal.
plan.
mission.
vision.
objective.
Answer: b
4.
Page: 238
Type: F
The development of operational goals

The development of a mission statement
Communication of goals to the rest of the organization
A company-wide meeting
Brainstorming
Answer: b
The
the
a.
b.
c.
d.
e.
Level: 2
Page: 238
Type: F
is the basis for the strategic level of goals and plans which in turn shapes
and
level.
goal, mission, tactical
objective, operational, mission
operational goal, mission and tactical
mission, tactical, operational
tactical plan, operational, mission
Answer: d
Level: 2
Page: 238
Type: F
Which of these are primarily responsible for strategic goals/plans?

a.
b.
c.
d.
e.
Middle management
Board of directors
Consultants
Senior management
Lower management
Answer: d
8.
Level: 1
The planning process begins with which of these?

a.
b.
c.
d.
e.
7.
Type: F
Brainstorming
Organizing
Planning
Developing a mission
A blueprint
Answer: c
6.
Page: 238
______ is the act of determining the organization's goals and the means for achieving
them.
a.
b.
c.
d.
e.
5.
Level: 1
Level: 1
Page: 238
Type: F
______ is primarily responsible for operational goals/plans.

a.
Middle management
b.
c.
d.
e.
Board of directors
Consultants
Senior management
Lower management
Answer: e
9.
Level: 1
Page: 239
Type: F
Ruby is a first-line supervisor at Rooftop Corporation. She is most concerned with which
level of goals?
a.
b.
c.
d.
e.
Operational goals
Tactical plans
Strategic goals
Mission statement
Vision
Answer: a
Level: 2
Page: 239
Type: A
______ symbolizes the legitimacy of the organization to external audiences.

a.
b.
c.
d.
e.
Operational goals
Tactical plans
Strategic goals
Mission statement
Tactical goals
Answer: d
12.
Type: F
Middle management
Board of directors
Consultants
Senior management
Lower management
Answer: a
11.
Page: 239
Which of these is/are primarily concerned with tactical goals/plans?

a.
b.
c.
d.
e.
10.
Level: 1
Level: 2
Page: 239
Type: F
Rosalie is a manager at GMG Gaming. She recently attended a seminar on goal setting.
She wishes to use goals to provide a sense of direction to her staff. She is using goals as
a.
b.
c.
d.
e.
a way to legitimize her department.

a source of motivation.
a standard of performance.
a guide to action.
impress others.
Answer: d
13.
Level: 2
a goals statement.
a values statement.
an income statement.
a mission statement.
a competitive-edge statement.
Answer: d
Level: 1
Level: 1
Page: 241
Type: F
The organization's reason for existence is known as

a.
b.
c.
d.
e.
the organization's value.

the organization's vision.
the organization's mission.
the organization's goal.
the organization's service.
Answer: c
Level: 2
Page: 241
Type: F
"We respect our employees and value their diversity" is an example of a statement you are
most likely to find in the organization's
a.
b.
c.
d.
e.
mission.
strategic goals.
tactical goals.
strategic plans.
tactical plans.
Answer: a
17.
Type: F
Corporate values
Company philosophy
Company purpose
All of the above
a and b only
Answer: d
16.
Page: 241
Which of these are described by mission statements?

a.
b.
c.
d.
e.
15.
Type: A
A statement that identifies distinguishing characteristics of an organization is known as

a.
b.
c.
d.
e.
14.
Page: 240
Level: 3
Page: 241
Type: A
"We seek to become the premier business school in the west" is an example of a statement
you are most likely to find in the organization's
a.
tactical goals.
b.
c.
d.
e.
operational goals.
mission.
tactical plans.
operational plans.
Answer: c
18.
Level: 1
Page: 241
Type: F
Page: 241
Type: F
At the top of the goal hierarchy is the

a.
b.
c.
d.
e.
strategic goals.
tactical goals.
operational goals.
mission.
employee goals.
Answer: d
Level: 2
Which of these represent the broad statements of where the organization wants to be in
the future?
a.
b.
c.
d.
e.
Operational goals
Tactical goals
Strategic goals
Operational goals
Tactical plans
Answer: c
21.
Type: A
Mission statement
Goal statement
Management by objective
Goal setting
Corporate competitive-value statement
Answer: a
20.
Page: 241
Which of these refers to a broadly stated definition of the organization's basic business
scope and operations that distinguishes it from similar types of organizations?
a.
b.
c.
d.
e.
19.
Level: 3
Level: 1
Page: 242
Type: F
The official goals of the organization are best represented by the

a.
b.
c.
d.
e.
strategic goals
tactical goals
operational goals
competitive goals
none of the above
Answer: a
22.
Level: 2
Page: 242
Type: F
Which of these are called the action steps by which an organization intends to attain its
strategic goals?
a.
b.
c.
d.
e.
Tactical goals
Operational goals
Tactical plans
Operational plans
Strategic plans
Answer: e
24.
of
a.
b.
c.
d.
e.
Level: 1
Page: 242
goals lead to the attainment of

goals.
Type: F
goals, which in turn lead to the attainment
Operational, strategic, tactical

Tactical, operational, strategic
Strategic, tactical, operational
Operational, tactical, strategic
None of the above.
Answer: d
Level: 3
Goals that define the outcomes that major divisions and departments must achieve in order
for the organization to reach its overall goals is called
a.
b.
c.
d.
e.
strategic goals.
tactical goals.
operational goals.
a mission.
a plan.
Answer: b
26.
Type: F
operational plans.
tactical plans.
strategic plans.
mission plans.
tactical goals.
Answer: c
25.
Page: 242
A long-term time frame is most closely associated with

a.
b.
c.
d.
e.
23.
Level: 2
Level: 1
Page: 242
Type: F
Beth is a middle manager at Egg Elements Corporation. She is most likely responsible for
the achievement of
goals.
a.
b.
c.
d.
e.
operational
tactical
strategic
lower-level
top-level
Answer: b
27.
Level: 1
Page: 243
Type: F
Which of these refer to specific results expected from individuals?

a.
b.
c.
d.
e.
Operational goals
Tactical goals
Strategic goals
Operational plans
Mission statements
Answer: a
Level: 2
Page: 243
Type: F
Lower-level goals should lead to the achievement of higher-level goals. This is called
a.
b.
c.
d.
e.
linking pin theory.

a value-based chain.
a means-end chain.
all of the above.
none of the above.
Answer: c
30.
Type: F
Tactical plans
Strategic plans
Operational plans
Supervisory plans
Organizational plans
Answer: c
29.
Page: 242
______ represent plans developed at the organization's lower levels that specify action
steps toward achieving operational goals and that support tactical planning activities.
a.
b.
c.
d.
e.
28.
Level: 2
Level: 2
Page: 244
Type: F
Which of these is lacking in the goal "profits should be increased in the coming year?"
a.
b.
c.
d.
e.
Specific and measurable

Challenging but realistic
Covers key result areas
Defined time period
None of the above
Answer: a
31.
Level: 3
Page: 246
Type: A
You are violating which of these goal characteristics when you attempt to create goals for
every aspect of employee behavior?
a.
b.
c.
d.
e.

Linked to rewards
Defined time period
Cover key result areas
Answer: d
Level: 2
Page: 246
Type: F
Samuel set goals for each of his employees. Each employee ended up with at least
twenty-five goals. This process violates which of the following criteria for effective goals?
a.
b.
c.
d.
e.

Covers key result areas
Defined time period
Linked to rewards
Answer: c
34.
Type: A
not specific and measurable.

not realistic.
irrelevant.
lacking a specific time period.
does not cover key result area.
Answer: b
33.
Page: 245
Tabu is a salesperson at a large retail chain. She was assigned a goal of $265,000 in sales
for the current quarter. She is unhappy because she knows that the most any salesperson
has sold in one quarter in the past is $150,000. Her goal of $265,000 is probably
a.
b.
c.
d.
e.
32.
Level: 2
Level: 2
Page: 246
Type: A
All of the following are characteristics of effective goal setting EXCEPT

a.
b.
c.
d.
e.
goals should be challenging but not unreasonably difficult.

goals should be set for every aspect of employee behavior.
specific and measurable.
cover key results area.
linked to rewards.
Answer: b
Level: 2

35.
The ultimate impact of goals depended on the extent to which goal achievement is linked
to
a.
b.
c.
d.
e.
rewards.
salary increases.
promotions.
all of the above.
b and c only.
Answer: d
36.
Level: 1
Page: 247
Type: F
In using MBO, objectives should be set

a.
b.
c.
d.
e.
by the supervisor.
by the employee.
jointly by the supervisor and the employee.
by the accounting department.
by top management.
Answer: c
Level: 2
Page: 247
Type: F
Which of these is a method of management whereby managers and employees define goals
for every department, project, and person and use them to monitor subsequent
performance?
a.
b.
c.
d.
e.
Organizational planning
Management by objectives
Goal setting
Mission development
Vision development
Answer: b
39.
Type: F
Setting goals
Developing action plans
Appraising overall performance
Reviewing progress
None of the above
Answer: a
38.
Page: 246
Which of these is the first step in the MBO process?

a.
b.
c.
d.
e.
37.
Level: 2
Level: 1
Page: 247
Type: F
Yard Fence Corporation is currently implementing an MBO program. Managers and

employees jointly set objectives and develop action plans, and goal achievement is
evaluated on an annual basis. Yard Fence is missing which major activity that must occur
in order for MBO to be successful?
a.
b.
c.
d.
e.
Developing a mission statement

Developing tactical goals
Reviewing progress
Reviewing operational plans
None of the above
Answer: c
40.
Level: 2
Page: 248
Type: A
Which is the final step in the MBO process?

a.
b.
c.
d.
e.
Appraise overall performance

Develop an action plan
Review progress
Set goals
Conduct periodic checkups
Answer: a
Level: 1
Page: 248
Type: F
One major problem with MBO is

a.
b.
c.
d.
e.
it discourages individual creativity.

it does not work well in constantly changing environments.
it decreases employee motivation.
it does not work well in non-profit organizations.
none of the above.
Answer: b
43.
Type: A
to develop new action plans.

to develop new objectives based on the review of last year's performance.
to begin a new MBO "cycle", using the same objectives as last year.
to wait several months to allow information to be digested.
none of the above.
Answer: b
42.
Page: 247-248
Frostburg Fireplaces has used MBO for the past year. Top management just finished
evaluating overall performance. The next step in the MBO process should be
a.
b.
c.
d.
e.
41.
Level: 2
Level: 2
Page: 249
Type: F
Which of the following is NOT one of the benefits of MBO?

a.
b.
c.
d.
e.
Performance can be improved at all company levels.

Employees are motivated.
Efforts are focused on activities that will lead to goal attainment.
Operational goals are able to displace strategic goals.
Individual and department goals are aligned with company goals.
Answer: d
44.
b.
c.
d.
e.
Level: 2
Page: 250
Type: F
Standing plans are

a.
b.
c.
d.
e.
plans that are developed to achieve a set of goals that are unlikely to be repeated in
the future.
plans that used to provide guidance for tasks performed repeatedly within the
organization.
plans that define company responses to specific situations, such as emergencies or
setbacks.
most important in the organizations.
none of the above.
Answer: b
Level: 1
Page: 250
Type: F
Page: 250
Type: F
A project is an example of a
a.
b.
c.
d.
e.
policy.
standing plan.
procedure.
single-use plan.
rule.
Answer: d
47.
Type: F
They are developed to achieve a set of goals that are unlikely to be repeated in the
future.
They are used to provide guidance for tasks performed repeatedly within the
organization.
They define plans that define company responses to specific situations, such as
emergencies or setbacks.
They are most important in the organizations.
None of the above.
Answer: a
46.
Page: 249
Which of these is true about single-use plans?

a.
45.
Level: 2
Numerous
a.
b.
c.
d.
e.
Level: 1
are likely to be part of an overall
programs, project
policies, project
standing plans, program
projects, program
programs, rule
Answer: d
48.
Level: 2
single-plan use.
standing plan.
program.
procedure.
project.
Answer: b
Level: 2
Level: 2
Page: 250
Type: F
An example of a ______ is a statement supporting the organization's efforts in the area of

sexual harassment.
a.
b.
c.
d.
e.
procedure
rule
policy
single-use plan
program
Answer: c
Level: 2
Page: 250
Type: F
"No food and/or drinks in the classroom" is an example of a

a.
b.
c.
d.
e.
procedure.
rule.
policy.
single-use plan.
project.
Answer: b
52.
Type: A
Programs
Policies
Rules
Procedures
Project
Answer: b
51.
Page: 250
Which of these define boundaries within which to make a decision?

a.
b.
c.
d.
e.
50.
Type: F
California Creamery requires that all absent employees bring a note from their doctor
when returning to work. This is an example of a
a.
b.
c.
d.
e.
49.
Page: 250
Level: 2
Page: 250
Type: A
Which of these are true about contingency plans?

a.
They are developed to achieve a set of goals that are unlikely to be repeated in the
b.
c.
d.
e.
future.
They are used to provide guidance for tasks performed repeatedly within the
organization.
They define company responses to specific situations, such as emergencies or
setbacks.
They are most important in the organizations.
None of the above.
Answer: c
53.
Level: 1
standing plans.
rules.
scenarios.
procedures.
operationally tactical plans.
Answer: c
Level: 1
Type: F
vague, verbal plan

detailed, verbal plan
long, difficult to read plan
vague, written plan
detailed, written plan
Answer: e
Level: 1
Page: 253
Type: F
Which of the following is not a step in the containment stage in crisis management?
a.
b.
c.
d.
e.
Meet safety and emotional needs

Return to business
Set up effective communications systems
Get the awful truth out
Activate the crisis management plan
Answer: c
56.
Page: 252
The crisis management plan should be a ________ that specifies the actions to be taken,
and by whom, if a crisis occurs.
a.
b.
c.
d.
e.
55.
Type: F
Contingency plans are also referred to as

a.
b.
c.
d.
e.
54.
Page: 251
Level: 2
Page: 255
Type: F
During the ______ stage of his companys crisis management, Jesse Winkler must ensure
that the stakeholders physical and emotional needs are met.
a.
b.
c.
prevention
preparation
containment
d.
e.
response
all of the above
Answer: c
57.
Level: 2
Page: 256
Type: A
The traditional approach to corporate planning was to

a.
b.
c.
d.
e.
have a decentralized planning staff.

have a centralized planning department.
set up a planning task force.
set up planning committees.
use TQM approach.
Answer: b
Level: 1
Page: 256
Type: F
A group of planning specialists who develop plans for the organization as a whole is
known as
a.
b.
c.
d.
e.
management by objectives.
planning task force.
decentralized planning staff.
centralized planning department.
total quality management group.
Answer: d
60.
Type: A
central planning departments.

decentralized planning groups.
top executives.
consulting groups.
the president of the company.
Answer: b
59.
Page: 255
Traditionally, if Tara, CEO of Butterfly Pillows, needed to conduct corporate planning, it

would be performed by all of the following EXCEPT
a.
b.
c.
d.
e.
58.
Level: 2
Level: 1
Page: 256
Type: F
Alabama Airlines has three planning specialists who help division managers develop their
own division plans. Serving as consultants to the divisions, the planning specialists give
advice about strengths, weaknesses, opportunities, and threats. Alabama Airlines is
utilizing what approach to the planning function?
a.
b.
c.
d.
e.
Centralized planning department

Decentralized planning staff
Planning task force
Centralized planning committee
TQM
Answer: b
61.
Level: 2
create an environment that encourages people to experiment and learn.

make continuous improvement a way of life.
avoid stretching goals.
design a new role for planning staff.
All of the above are acceptable ways.
Answer: c
Level: 2
Page: 257
Type: F
Baltimore Brewery allows its line managers to take responsibility for strategic planning.
This approach is consistent with which of the following?
a.
b.
c.
d.
e.

Planning task force
Centralized planning committee
Command-and-control
Answer: c
63.
Type: A
All of the following are ways in which companies can bring about relentless drive for
progress EXCEPT
a.
b.
c.
d.
e.
62.
Page: 256
Level: 2
Page: 259
Type: A
Which of these refers to a temporary group consisting of line managers responsible for
developing strategic plans?
a.
b.
c.
d.
e.
Planning task force

Schewhart planning group
Total quality management group
Answer: a
Level: 1
Page: 259
Type: F
Scenario Questions
Scenario-Elaine Eastman
The new program would be focused around MBO concepts. Elaine Eastman had been a manager
at ABCD for ten years and she was not all certain if this new MBO approach was going to fit her
department. She had strong commitment to achieving the company's objectives, but she also
knew her employees well enough to know that some didn't share the same commitment.
1.
Elaine can anticipate enjoying the advantages of MBO which include

a.
b.
c.
d.
e.
increased orientation toward goal achievement.

performance can improve at all company levels.
employees are more motivated.
a & c are correct.
a, b, and c are correct.
Answer: e
2.
Elaine can anticipate and work to prevent the problems of MBO which include
a.
b.
c.
d.
e.
increase in paperwork that leads to a reduction of energy.

a decrease in communication between managers and employees.
greater conflict because of opposing goals.
all of the above.
none of the above.
Answer: a
3.
Type: A
If Elaine dictates or suggests the goals for her employees, she can expect
a.
b.
c.
d.
e.
increased motivation from her workers.

decreased motivation from her workers.
decreased frustration for her workers.
decreased intragroup conflict.
none of the above.
Answer: b
4.
Type: A
Type: A
In the MBO process, after the first step of setting objectives is accomplished, the next step
that Eliane should expect is
a.
b.
c.
d.
e.
reviewing progress toward company goals.

appraising overall performance.
developing action plans.
having a company party to celebrate.
none of the above.
Answer: c
Type: A
Short-Answer Questions
1.
A(n)
is a desired future state that the organization attempts to realize.

Answer: goal
2.
Page: 238
A(n)
is a blueprint for goal achievement and specifies the necessary resource
allocations, schedules, tasks, and other actions.
Answer: Plan
3.
Page: 238
The act of determining the organization's goals and the means for achieving them is
referred to as
.
Answer: planning
4.
Page: 238
______ and plans are the responsibilities of middle managers.

Answer: Tactical goals
5.
Operational plans that focus on specific tasks and processes that help to meet tactical and
strategic goals are developed by ______ managers and supervisors.
Answer: front-line
6.
Page: 239
______ and ______ facilitate employees identification with the organization and help
motivate them, provide a sense of direction, and allow managers to learn what the
organization is trying to accomplish.
Answer: Goals; plans
7.
Page: 239
Page: 239
List the five reasons explicit goals and plans are important.
Answer:
Explicit goals and plans can serve the following functions: legitimacy, source of motivation
and commitment, guide to action, rationale for decisions, and standard of performance.
Page: 239-240
8.
describes the organization's reason for existence.

Answer: mission
9.
Page: 241
A(n) _______ is a broadly stated definition of basic business scope and operations that
distinguishes the organization from others of a similar type.
Answer: mission statement
10.
Page: 241
Broad statements describing where the organization wants to be in the future are called
.
Answer: strategic goals

11.
Page: 242
_______ define the action steps by which an organization intends to attain its strategic
goals.
Answer: Strategic plans
12.
Page: 242
Goals that define the outcomes that major departments must achieve in order for the
organization to reach its overall goals are known as _______ goals.
Answer: tactical
13.
Page: 242
are designed to help execute major strategic plans and to accomplish a

specific part of the company's strategy.
Answer: Tactical plans
14.
Page: 243
The specific results expected from departments, work groups, and individuals are the
goals.
Answer: operational
15.
plans are developed at the lower levels of the organization to specify

action steps toward achieving operational goals and to support tactical plans.
Answer: Operational
16.
Page: 243
Page: 243
List the five characteristics of effective goals.

Answer:
Goals should be (1) specific and measurable; (2) they should cover key result areas; (3)
they should be challenging but realistic; (4) they should have a defined time period; and (5)
they should be linked to rewards.
Page: 246
17.
is a method whereby managers and employees define goals for every

department, project, and person and use them to monitor subsequent performance.
Answer: Management by objectives
18.
The most difficult step in MBO is _______.

Answer: setting goals
19.
Page: 247
Page: 247
List the four major activities that must occur in order for MBO to succeed.
Answer: (1) Set goals, (2) develop action plans, (3) review progress, and (4) appraise
overall performance.
Page: 247-248
20.
Managers believe that they are better oriented toward goal achievement when
__________ is used.
Answer: management by objectives
21.
______ plans are used to provide guidance for work-related tasks that are performed
repeatedly within the organization.
Answer: Standing
22.
Page: 250
plans are developed to achieve a set of goals that are not likely to be
repeated in the future.
Answer: Single-use
23.
Page: 250
Plans that define company responses to specific situations, such as emergencies, setbacks,
or unexpected conditions are called
plans.
Answer: contingency
25.
Page: 250
_______ are ongoing plans that are used to provide guidance for tasks performed
repeatedly within the organization.
Answer: Standing plans
24.
Page: 247
Page: 251
A special type of contingency plan that is used when events are sudden and devastating
and require immediate response is called ________.
Answer: crisis management planning
Page: 253
26.
What are the three stages of crisis management?

Answer: Prevention, Preparation, and Containment
Page: 253
27.
In the ______ stage of crisis management, the company needs to care for the emotional
and physical safety of its stakeholders.
Answer: containment
28.
Page: 255
________ are groups of planning specialists who report directly to the CEO or president
of a company.
Answer: Centralized planning departments
29.
Although ______ planning approaches are still popular with some organizations, ______
planning are being criticized as inappropriate for todays fast-paced environment.
Answer: traditional, formal
30.
Page: 256
______ planning done by a few individuals in a complex and competitive business

environment no longer works.
Answer: Traditional
32.
Page: 256
A group of planning specialists assigned to major departments and divisions to help

managers develop their own strategic plans is called
.
Answer: decentralized planning staff
31.
Page: 256
Page: 256
List the steps of the new workplace approach to planning.

Answer:
First, start with a strong mission. Next, set stretch goals. Third, create a culture that
encourages people to experiment and learn. Next, design a new role for planning staff
followed by, make continuous improvement a way of life. Embrace event driven planning.
Finally, total support and commitment to the planning process from top management.
Page: 257-259
33.
A temporary group of line managers who have the responsibility of developing a strategic
plan is known as a(n) _______.
Answer: planning task force
34.
Page: 229
List the six guidelines for planning in todays workplace.

Answer: Start with a strong mission, set stretch goals, create a culture that encourages
learning, embrace event-driven planning, use temporary task forces, and remember that
planning still starts and stops at the top.
Page: 257-259

Essay Questions
1.
In what ways do plans and goals benefit an organization?

ANSWER:
Plans and goals benefit the organization in several ways. First they provide legitimacy and
a reason for existence. They also provide a source of motivation and commitment,
provide guides for action and decision making, and they set a standard of performance.
Level: 2
2.
Page: 239-240
Compare the four levels of goals and plans.

ANSWER:
The highest level is the mission statement, which defines the organization's basic business
scope and operations and specifies its reasons for existence. The second level is the level
of strategic goals and plans. Those pertain to the organization as a whole and specify
where the organization wants to be in the future. The third level is the tactical level, with
a focus on outcomes that major divisions and departments must achieve in order for the
organization to reach its overall goals. The fourth and lowest level is the
operational level, involving specific measurable results for departments, work groups, and
individuals.
Level: 3
3.
Page: 241-244
Briefly define the characteristics of an effective goal.

ANSWER:
Effective goals are precisely defined and allow for measurable performance. They focus
on the key result areas that contribute most to desired performance. They should be
challenging but not unreasonably difficult. Finally, they should specify the time period that
they cover and they should be tied to valued rewards.
Level: 2
4.
Page: 245-246
List and define the four major activities that must occur in order for management by
objectives (MBO) to succeed.
ANSWER:
The first step is setting goals. The setting of goals involves employees at all levels and
should incorporate the principles of effective goal setting. Goals should be jointly
determined by manager and employee, so as to increase the employee's level of
commitment. The second step is developing action plans. These action plans will specify
how the goals are to be achieved. Next, a progress review is important to make sure that
the action plans are working. They may be formal or informal and the action plan should
be changed if necessary. The last step is to determine if the goals have been achieved
within the specified time period. This appraisal should factor into the setting of the next
period's goals, allowing for feedback into the setting of the next set of goals.
Level: 3
5.
Page: 247-248
Define the new planning paradigm and explain the rationale behind it.
ANSWER:
The new planning paradigm has four components. First, start with a strong mission.
Next, stretch goals. Third, create an environment that encourages people to experiment
and learn. Next, design a new role for planning staff. Finally, make continuous
improvement a way of life with total support and commitment of top management for the
planning process. This paradigm is based upon the principle of decentralization. It strives
to involve workers at every level of the company. Due to the volatility of the business
environment, dynamic, timely plans are needed by today's organizations. The complexity
of the problems and challenges facing today's organizations mandates that all employees,
with their individual perspectives and talents, be involved.
Level: 3
Page: 256-259


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Chap 7

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Chapter 7

Managerial Planning and

Goals specify today's means; plans specify future ends.

Chapter Seven * Managerial Planning and Goal Setting

An organization's mission describes its reason for existence.

The company's philosophy as well as purpose is often expressed in mission statements.

Plans provide a standard of assessment.

A plan tells "why" to achieve the goal.

Chapter Seven * Managerial Planning and Goal Setting

A means-end chain is when lower-level goals lead to the accomplishment of higher-level

To review progress is the final step in the MBO process.

The most difficult step in an MBO process is reviewing progress.

MBO refers to managing by opportunity.

Page: 250-251 Type: F

Contingency plans can also be considered as scenarios.

Standing plans define company responses to specific situations such as natural

Multiple Choice Questions

specify future ends and

specify today's means.

The development of operational goals

Which of these are primarily responsible for strategic goals/plans?

The planning process begins with which of these?

______ is primarily responsible for operational goals/plans.

______ symbolizes the legitimacy of the organization to external audiences.

Which of these is/are primarily concerned with tactical goals/plans?

a way to legitimize her department.

The organization's reason for existence is known as

the organization's value.

Which of these are described by mission statements?

A statement that identifies distinguishing characteristics of an organization is known as

At the top of the goal hierarchy is the

The official goals of the organization are best represented by the

goals lead to the attainment of

Operational, strategic, tactical

Page: 242-243 Type: F

A long-term time frame is most closely associated with

Which of these refer to specific results expected from individuals?

linking pin theory.

Specific and measurable

Specific and measurable

Specific and measurable

not specific and measurable.

All of the following are characteristics of effective goal setting EXCEPT

goals should be challenging but not unreasonably difficult.

Page: 245-246 Type: F

Chapter Seven * Managerial Planning and Goal Setting

In using MBO, objectives should be set

Which of these is the first step in the MBO process?

Yard Fence Corporation is currently implementing an MBO program. Managers and

Developing a mission statement

Which is the final step in the MBO process?

Appraise overall performance

One major problem with MBO is

it discourages individual creativity.

to develop new action plans.

Which of the following is NOT one of the benefits of MBO?

Performance can be improved at all company levels.

Standing plans are

Which of these is true about single-use plans?

are likely to be part of an overall

An example of a ______ is a statement supporting the organization's efforts in the area of

"No food and/or drinks in the classroom" is an example of a