Corporate Governance & Transaction Cost Theory

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Questions and Answers

What role involves searching for opportunities within the organization and initiating improvement projects?

Disturbance handler

Entrepreneur (correct)

Liaison

Monitor

Which role is responsible for transmitting information to outsiders regarding the organization's plans and actions?

Monitor

Disseminator

Spokesperson (correct)

Resource allocator

What skill is characterized by the ability to work well with others and understand interpersonal dynamics?

Resource management skills

Human skills (correct)

Conceptual skills

Technical skills

Which managerial role is primarily focused on providing corrective action in response to unexpected disturbances?

Disturbance handler Signup and view all the answers

What involves allocating organizational resources and making significant decisions?

Resource allocator Signup and view all the answers

Which informational role is responsible for processing and gathering a wide variety of information?

Monitor Signup and view all the answers

What is a key component of managing organizational change effectively?

Cultivating productive relationships Signup and view all the answers

Which skill involves conceptualizing and thinking abstractly about complex organizational situations?

Conceptual skills Signup and view all the answers

What defines the core competencies of an organization?

The skills and abilities necessary for business activities Signup and view all the answers

Which aspect of corporate strategy focuses on how an organization competes in each of its businesses?

Business level strategy Signup and view all the answers

Which of the following is NOT a type of corporate strategy?

Innovation strategy Signup and view all the answers

What is the primary focus of a functional strategy within an organization?

To align specific business functions with overall strategies Signup and view all the answers

What does a competitive advantage primarily refer to?

The unique qualities that distinguish an organization Signup and view all the answers

Which business units are described as having their own competitive strategies?

Strategic Business Units (SBUs) Signup and view all the answers

Which of the following is an example of a goal for an organization?

Increasing customer satisfaction Signup and view all the answers

What does a growth strategy involve for an organization?

Expanding the market served or products offered Signup and view all the answers

What is NOT one of the three main human resource requirements for value chain management?

Strict adherence to traditional roles Signup and view all the answers

Which cultural attitude is least likely to promote effective value chain management?

Lack of trust Signup and view all the answers

What is a major obstacle to effective value chain management?

Refusal to share information Signup and view all the answers

Which capability is essential for value chain management according to the content?

Coordination and collaboration skills Signup and view all the answers

What role do cross-functional work teams play in quality management?

They contribute to quality improvement programs Signup and view all the answers

What is essential for monitoring the progress of quality improvement initiatives?

Establishing effective control mechanisms Signup and view all the answers

Which of the following is a planning activity in quality management?

Setting quality improvement goals Signup and view all the answers

Which is NOT a characteristic of organizations with successful quality improvement programs?

Rigid hierarchical structures Signup and view all the answers

What type of goal relates directly to the expected internal financial performance of an organization?

Financial Goals Signup and view all the answers

Which type of plan is designed specifically for a unique situation?

Single-use Plans Signup and view all the answers

In which approach to setting goals do top managers establish goals that become subgoals for different areas?

Traditional Goal-Setting Signup and view all the answers

What defines Real Goals in an organization?

Goals pursued through member actions Signup and view all the answers

Which type of plan provides general guidelines and is flexible in nature?

Directional Plans Signup and view all the answers

What is the first step in the Management by Objectives (MBO) process?

Formulation of overall objectives and strategies Signup and view all the answers

Which type of plan covers a time frame of one year or less?

Short-term Plans Signup and view all the answers

Which of the following is NOT a characteristic of Specific Plans?

Flexible guidelines Signup and view all the answers

What is a primary focus of the United Nations Global Compact?

Outlining principles for business in human rights Signup and view all the answers

What role do top managers play in promoting ethical behavior in an organization?

They set the cultural tone for ethical behavior. Signup and view all the answers

What can lead to ethical employees compromising their values?

Unrealistic job goals Signup and view all the answers

What is the purpose of independent social audits?

To evaluate ethical decisions and management practices. Signup and view all the answers

Which best describes a whistle-blower?

An individual who reports ethical concerns to authorities. Signup and view all the answers

Which strategy can encourage ethical behavior in an organization?

Implementing ethics training programs. Signup and view all the answers

What should a Code of Ethics primarily provide?

A statement of primary values and expected behaviors. Signup and view all the answers

How can organizations protect employees who raise ethical issues?

By assuring them there are no personal or career risks. Signup and view all the answers

What is the primary goal of Human Resource Planning?

To have the right number and types of employees at the right time Signup and view all the answers

Which of the following is NOT considered a high-performance work practice?

Micromanagement of employees Signup and view all the answers

What is the role of labor unions in human resource management?

To represent workers and protect their interests through collective bargaining Signup and view all the answers

What does a job analysis typically include?

Describing the job duties, environment, and specifications Signup and view all the answers

Which external factor can directly influence the Human Resource Management process?

Economic conditions Signup and view all the answers

How can high-performance work practices improve organizational performance?

By increasing individual autonomy and decision-making power Signup and view all the answers

What do both the job description and job specification convey to managers during recruitment?

The necessary qualifications and responsibilities for the job Signup and view all the answers

What is a characteristic of decentralized decision making in high-performance work practices?

Decisions are typically made closer to the operational front lines Signup and view all the answers

What is primarily focused on ensuring activities are accomplished as planned?

Controlling Signup and view all the answers

Which management function involves determining how tasks will be accomplished?

Organizing Signup and view all the answers

Which managerial level is primarily responsible for making decisions that affect the entire organization?

Top Managers Signup and view all the answers

What does effectiveness in management primarily refer to?

Attaining organizational goals Signup and view all the answers

Which of the following is NOT one of the four primary management functions?

Evaluating Signup and view all the answers

Which interpersonal role involves motivating subordinates and handling staffing?

Leader Signup and view all the answers

What is the distinct characteristic of organizations?

They have a deliberate structure and mutual dependency Signup and view all the answers

Which term best describes the skill of doing things correctly to maximize output?

Efficiency Signup and view all the answers

What is the main focus of Total Quality Management (TQM)?

Continuous improvement and customer satisfaction Signup and view all the answers

Which statistical technique is often used in quality management for measuring critical variables?

Statistical Process Control Signup and view all the answers

What approach involves using mathematical and statistical solutions to enhance decision-making?

Quantitative Approach Signup and view all the answers

Which of the following best describes the Behavioral Approach to organizational behavior?

Study of actions of individuals in the workplace Signup and view all the answers

What is a key characteristic of the systems approach in contemporary management?

Identifying interrelated and independent parts Signup and view all the answers

Which concept emphasizes that quality management requires empowering employees in the quality improvement process?

Employee involvement Signup and view all the answers

What was the primary outcome of the Hawthorne Studies?

Understanding the impact of worker conditions on productivity Signup and view all the answers

What is the first step in the decision-making process?

Identifying a problem Signup and view all the answers

What does a continuous improvement philosophy in quality management imply?

Commitment to ongoing enhancements in processes and outcomes Signup and view all the answers

What does assigning weights to decision criteria help determine?

The order of importance of criteria Signup and view all the answers

In which step of the decision-making process is each alternative's strengths and weaknesses appraised?

Analyzing alternatives Signup and view all the answers

What is indicated by the highest total weight among alternatives during the decision-making process?

The best alternative has been selected Signup and view all the answers

At which step do managers implement their decisions and communicate to those involved?

Implementing an alternative Signup and view all the answers

What does evaluating decision effectiveness involve?

Judging the soundness based on outcomes Signup and view all the answers

How is a problem defined in the context of decision-making?

As an obstacle hindering goal achievement Signup and view all the answers

What is the purpose of developing alternatives in the decision-making process?

To find solutions without immediately evaluating them Signup and view all the answers

What organizational structure is best suited for companies focusing on tightly controlling costs?

Mechanistic Structure Signup and view all the answers

As an organization grows larger, its structure is likely to shift towards which type?

Mechanistic Structure Signup and view all the answers

Which production type is characterized by low formalization and low centralization?

Unit Production Signup and view all the answers

In which type of environment are mechanistic organizational structures most effective?

Stable environments Signup and view all the answers

Which organizational design is characterized by low departmentalization and centralized authority?

Simple Structure Signup and view all the answers

What is the primary characteristic of process production within organizational structures?

High formalization and high centralization Signup and view all the answers

Which structure is most appropriate for organizations pursuing unique and innovative offerings?

Organic Structure Signup and view all the answers

What impacts the choice of organizational structure based on external conditions?

Environmental Uncertainty Signup and view all the answers

What is one way that employees learn about their organization's culture?

By telling and listening to stories Signup and view all the answers

Which of the following best describes a strong organizational culture?

Culture where key values are intensely held and widely shared Signup and view all the answers

What role do material symbols play in organizational culture?

They create the organization's personality and convey expectations Signup and view all the answers

Which of the following is a key characteristic of culture as a descriptive term?

It articulates how members perceive their environment Signup and view all the answers

How do rituals contribute to an organization's culture?

By expressing and reinforcing important values and goals Signup and view all the answers

What aspect of language functions in organizational culture?

It identifies culture members' acceptance and commitment Signup and view all the answers

Which of the following statements is true about organizational culture?

Culture is shaped largely by the collective experiences of its members Signup and view all the answers

What is one intended outcome of corporate storytelling within an organization?

To celebrate significant accomplishments and learnings Signup and view all the answers

Which personality type is characterized by a chronic sense of urgency and competitiveness?

Type A personality Signup and view all the answers

What is the role of a realistic job preview during the selection process?

To minimize stress by clarifying job expectations Signup and view all the answers

Which structural variable is essential for fostering innovation within an organization?

Organic-type structure Signup and view all the answers

What is a key cultural variable that supports innovation?

Tolerating risk and encouraging experimentation Signup and view all the answers

What best describes the role of an idea champion in an organization?

To actively support and implement new ideas Signup and view all the answers

Which of the following statements is true regarding the connection between design thinking and innovation?

Design thinking emphasizes a deep understanding of customer requirements. Signup and view all the answers

How do organizations minimize extreme time pressures on creative activities?

By minimizing time pressures on creativity Signup and view all the answers

What does encouraging a focus on ends rather than means promote within an organization?

Consideration of alternative approaches to goals Signup and view all the answers

What is meant by efficiency in management?

Maximizing output with minimal inputs Signup and view all the answers

Which management function involves motivating team members to achieve goals?

Leading Signup and view all the answers

What characteristic is common to organizations?

Having a deliberate structure Signup and view all the answers

Which role is primarily concerned with staffing and training subordinates?

Leader Signup and view all the answers

What is the first management function in achieving an organization’s stated purposes?

Planning Signup and view all the answers

What is the primary focus of top managers in an organization?

Making large-scale decisions that affect the organization Signup and view all the answers

Which term best describes 'doing the right things' in management?

Effectiveness Signup and view all the answers

What is a key responsibility of middle managers?

Managing first-line managers Signup and view all the answers

What role do decision criteria play in the decision-making process?

They are factors important for resolving the problem. Signup and view all the answers

Which step follows analyzing alternatives in the decision-making process?

Selecting an alternative Signup and view all the answers

What is the purpose of allocating weights to decision criteria?

To prioritize criteria based on their importance Signup and view all the answers

What does implementing an alternative entail in the decision-making process?

Communicating the decision to involved parties Signup and view all the answers

What is evaluated during the final step of the decision-making process?

The effectiveness of the implemented decision Signup and view all the answers

What is a critical factor to determining stakeholder partnerships according to the framework?

The criticality of the stakeholder and environmental uncertainty Signup and view all the answers

How is the effectiveness of a decision ultimately assessed?

By comparing anticipated vs. actual outcomes Signup and view all the answers

What is a characteristic of programmed decisions?

They can be addressed using established procedures or rules. Signup and view all the answers

Under which decision-making condition can managers make accurate decisions?

Certainty Signup and view all the answers

Which of the following is a type of nonprogrammed decision?

Developing a new product line Signup and view all the answers

What does a strategy primarily define for an organization?

The plans for competing and achieving business goals Signup and view all the answers

Which component is essential for a business model?

Clear understanding of customer value and profitability Signup and view all the answers

Which statement correctly describes programmed decisions in terms of their characteristics?

They can be solved using predefined guidelines. Signup and view all the answers

What approach is described by using design thinking in managing problems?

Applying creative problem-solving techniques Signup and view all the answers

What is the primary role of big data in decision making?

To provide comprehensive analytics for informed decisions Signup and view all the answers

What is the primary distinction of a virtual organization?

It consists of a small number of full-time employees and utilizes outside specialists as needed. Signup and view all the answers

Which of the following statements best describes a task force?

A temporary committee formed to tackle a specific issue affecting multiple departments. Signup and view all the answers

What is a characteristic of open innovation?

Engaging external collaborators, including customers and competitors, to foster innovation. Signup and view all the answers

Which of the following describes a compressed workweek?

Employees work longer hours per day in exchange for fewer workdays each week. Signup and view all the answers

How does operations management contribute to an organization’s success?

By transforming resources into goods and services efficiently. Signup and view all the answers

What distinguishes manufacturing organizations from service organizations?

Manufacturing organizations only produce physical goods. Signup and view all the answers

Which employment type is defined as contingent upon demand for services?

Contingent workforce workers. Signup and view all the answers

What defines job sharing as a flexible work arrangement?

Two employees sharing responsibilities for one full-time job. Signup and view all the answers

What is the primary focus of the classical view of social responsibility?

To maximize profits Signup and view all the answers

Which approach involves firms taking environmental responsibility beyond legal requirements?

Activist Approach Signup and view all the answers

What does SRI stand for in the context of investing?

Socially Responsible Investment Signup and view all the answers

Which of the following is NOT a component of the socioeconomic view of social responsibility?

Maximizing profits Signup and view all the answers

Which approach primarily considers customer preferences for environmentally friendly products?

Market Approach Signup and view all the answers

What is the primary ethical consideration for managers making decisions?

Considering who is affected by the results Signup and view all the answers

What does social responsiveness require from a firm?

Responding to social needs actively Signup and view all the answers

Which of the following reflects a firm taking a legal (light green) approach to green management?

Adhering to laws and regulations without challenge Signup and view all the answers

What does the Balanced Scorecard measure?

Performance in financial, customer, internal processes, and people/innovation/growth Signup and view all the answers

What is the primary goal of benchmarking?

To identify best practices for superior performance Signup and view all the answers

Which of the following statements about workplace privacy is true?

Employers have the right to track employees in company vehicles Signup and view all the answers

What does organizational culture influence?

The behavior of members within the organization Signup and view all the answers

What is a significant aspect of controlling customer interactions?

Using the Service Profit Chain as a guiding principle Signup and view all the answers

Which aspect of corporate governance involves the interests of shareholders?

Boards of Directors serving independent interests Signup and view all the answers

Which of these is NOT a dimension measured by the Balanced Scorecard?

Industry standards Signup and view all the answers

What challenge do managers face regarding controls in a global context?

Cross-cultural differences affecting corrective actions Signup and view all the answers

Study Notes

Exam Topic 1: Corporate Governance and Management

Corporate Governance: Supervising managers to ensure company longevity.
Shareholders: Individuals owning company shares (stocks); responsible for contributing money or goods for launching a firm. Inherit or purchase shares to take ownership.
Administrators: Individuals with authority to set company objectives, make decisions, and direct the work of others.
Legal Representatives: Board of Directors/Directors are the company's legal representatives.

Exam Topic 2: Transaction Cost Theory

Transaction Cost Theory: Defines a firm as contracts between individuals; a framework for contractual relationships.
Agency Theory: Evaluates the firm's performance as an economic agent.
Ex Ante/Ex Post Costs: Costs associated with theory (ex ante costs are incurred before a decision, ex post are after). Ex ante costs include contract formalization and control costs. Ex post costs encompass information, negotiation, and warranting costs.
Resources and Capabilities Theory: Views the firm as a technical-economic unit from a neoclassical perspective.
Types of Firm Resources: Financial, physical, human, technological, operational, strategic, and general resources.

Exam Topic 3: Stages of Decision Making

Decision Stages:
- Problem Identification
- Design Stage (information is the basic input)
- Choosing Alternatives (uncertainty about consequences)
- Coordinating Decisions
- Control
Information as Input: Essential input at the design stage of decision-making.
Synthesis and Integration: Crucial abilities needed in managing the design stage.
Uncertainty about Consequences: A defining characteristic of the choice stage.

Exam Topic 4: Definition of Culture

Multilevel Definition of Culture: Proposed by Schein, explicit/visible levels (symbols, rites, stories), implicit (unobservable assumptions, beliefs), and the level of values.
Levels of Culture: Explicit/visible level (cultural productions and creations), implicit (assumptions and beliefs), and the level of values.
Corporate Culture: Cultural productions/creations, values, and beliefs shared in an organization.

Code of Ethics: Principles, values, and rules for company employees and managers, guiding their behavior.
CSR: Encompasses a company's ethical commitment to stakeholders (different interest groups).
Types of CSR: Shareholder (focus on shareholder value), reciprocal (mutual benefit for company and society), altruistic (doing good without expecting a return), citizen (based on compliance).
Stakeholders: Individuals or groups having an interest in the company (customers, suppliers, etc.)

Exam Topic 6: Organizational Design

Formal Organization: Structured system of technical and social methods where resources are designed and used to meet company objectives.
Organizational Design: A framework combining technical and social design facets to organize a firm's resources.
Organizational Design Variables: Aspects of organizational design, such as hierarchy, differentiation, integration, and administrative systems.
Elements of an Organization: Work, people involved, formal organization, informal organization, integration, differentiation, and control.
Formal Organization Elements: People, differentiation, integration, control, and administrative systems.

Exam Topic 7: Operations Management

Operations Management Objectives: Cost, quality, time, design, and flexibility.
Strategic Operations Decisions: Relate to product/service planning, location of facilities, plant layout, capacity, and process decisions.
Product Attributes: Tangible (objectively valued) and intangible (subjectively valued) attributes; these are crucial to decision making.
Production Processes: Categorized as artisanal, mass/serial (or continuous), project, and batch.
Plant Layout Design Types: Fixed-position, product/functional, process, and others.

Exam Topic 8: Human Resources Management

HR Management Approaches: HR management, Strategic HR management, Human resources management.
HR Support Functions: Cover recruitment, human resources development, human resource motivation, human resources training, human resources attraction, and HR Information systems - the support function relating to information.
Recruitment Phases: Orientation. training, selection, and orientation.

Exam Topic 9: Multiple Choice Questions

Multiple choice questions cover the identified topics.

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Description

Explore key concepts of corporate governance and transaction cost theory in this quiz. Understand the roles of shareholders, administrators, and legal representatives, as well as the principles of agency theory and costs involved. Test your knowledge on these foundational topics in business management.