Chapter 3

The Environment and Corporate Culture

True/False Questions

1. IBM’s new strategy is to focus less on technology and more on relationships.

Answer: True Level: 2 Page: 81 Type: F

2. Factors external to the organizations have been primarily the focus of management as a
discipline.

Answer: False Level: 2 Page: 82 Type: F

3. The two layers of an organization's external environment are the general environment and
the task environment.

Answer: True Level: 1 Page: 82 Type: F

4. The outer layer, the general environment, is widely dispersed and affects organizations
directly.

Answer: False Level: 1 Page: 83 Type: F

5. Two important sectors of the economic dimension of a firm's general environment are
customers and competitors.

Answer: False Level: 2 Page: 83 Type: F

6. Current employees, management, and especially corporate culture are part of an

organization's internal environment.

Answer: True Level: 1 Page: 83 Type: F

7. Economic problems in other parts of the world have a tremendous impact on U.S.
companies.

Answer: True Level: 2 Page: 84 Type: F

8. The general economic health of the country or region in which the organization operates is
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 part of the technological dimension.

Answer: False Level: 1 Page: 84 Type: F

9. It can be said that managers are working under conditions of uncertainty when they do not
have sufficient information about environmental factors to understand and predict
environmental needs and changes.

Answer: True Level: 1 Page: 84 Type: F

10. The economic dimension of the general environment represents the demographic
characteristics.

Answer: False Level: 2 Page: 85 Type: F

11. An example of part of the legal-political dimension of the general environment is a

government's report on the decline of unemployment rate to 11.9 percent.

Answer: False Level: 3 Page: 87 Type: A

12. President Clinton's signing of the telecommunications bill in 1996 deregulating the industry
is an example of the legal-political dimension of the general environment.

Answer: True Level: 3 Page: 87 Type: A

13. McDonalds, Burger King, and Checkers are competitors since all three sell fast food to
individuals.

Answer: True Level: 2 Page: 88 Type: A

14. The raw materials that organizations use to produce its outputs are provided by customers.

Answer: False Level: 1 Page: 88 Type: F

15. Other organizations in the same industry or type of business that provide goods or services
to the same set of customers are referred to as suppliers.

Answer: False Level: 1 Page: 88 Type: F

16. People in the environment who can be hired to work for an organization make up the labor
market.

Answer: True Level: 1 Page: 88 Type: F

17. If Johnson Lumber provides trees for Westvaco Paper Manufacturing, then Johnson Lumber
is considered a supplier for Westvaco.
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 Answer: True Level: 2 Page: 91 Type: A

18. A boundary-spanning role is an effort to spot trends that enable managers to predict future
events.

Answer: False Level: 2 Page: 91 Type: F

19. A sales executive for General Motors fills an essential boundary-spanning role.

Answer: True Level: 2 Page: 92 Type: A

20. Competitive intelligence professionals are really just in-house snoops who obtain
information about other companies.

Answer: True Level: 1 Page: 92 Type: F

21. Mergers and joint ventures rarely occur in the U.S. due to the stable environment and lack
of technological change.

Answer: False Level: 1 Page: 95 Type: F

22. The internal environment within which managers work includes corporate culture,
sociocultural aspects, and customers.

Answer: False Level: 2 Page: 95 Type: F

23. Symbols, stories, heroes, slogans, and ceremonies combine to create an organization's
culture.

Answer: True Level: 2 Page: 96 Type: F

24. The set of key values, beliefs, and norms, that are shared by members of an organization are
combined to create the symbols of an organization.

Answer: False Level: 2 Page: 96 Type: F

25. A figure that exemplifies the deeds, character, and attributes of a corporate culture is called
a symbol.

Answer: False Level: 2 Page: 96 Type: F

26. A narrative based on rumors, within the organization that can lead to destructive results if
not carefully controlled by management is called an organizational story.

Answer: False Level: 2 Page: 97 Type: F

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27. A story is a phrase or sentence that succinctly expresses a key corporate value.

Answer: False Level: 1 Page: 97 Type: F

28. The mythical sales representative at Robinson Jewelers who delivered a wedding ring
directly to the church because the ring had been ordered late is an example of a hero.

Answer: True Level: 1 Page: 97 Type: F

29. An achievement culture is found in an environment that is dynamic and requires high-risk
decision-making.

Answer: False Level: 2 Page: 100 Type: F

30. The clan culture is suited to organizations that are concerned with serving specific
customers in the external environment but without the intense need for flexibility and rapid
change.

Answer: False Level: 2 Page: 101 Type: F

31. The achievement culture is a results-oriented culture that values competitiveness,

aggressiveness, personal initiative, and willingness to work long and hard to achieve results.

Answer: True Level: 2 Page: 101 Type: F

32. The bureaucratic culture has an external focus and a consistency orientation for a dynamic
environment.

Answer: False Level: 2 Page: 101 Type: F

33. The cultural leader articulates a vision for the organizational culture that employees can
believe in and that generates excitement.

Answer: True Level: 1 Page: 104 Type: F

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 Multiple Choice Questions
1. Palmisano’s new strategy requires IBM to be __________.

a. fast
b. flexible
c. innovative
d. relationship focused
e. all of the above

2. According to the opening case, IBM once a leader in the technology industry, was almost a
hasbeen by losing __________ dollars in one year.

a. 7 million
b. 8 million
c. 7 billion
d. 8 billion
e. 5 billion

3. Which of these includes all elements existing outside the boundary of the organization that
have the potential to affect the organization?

a. Organizational environment
b. Internal environment
c. Task environment
d. General environment
e. Technological environment

4. Which of these is a part of an organization's internal environment?

a. Its customers
b. Its salespeople
c. The consumer price index
d. Its suppliers
e. Its competitors

5. __________ system draws resources from the external environment and releases goods and
services back to it.
a. production
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 b. closed
c. open
d. information
e. management

6. is a part of Ford’s, a U.S. auto manufacturer, task environment.

a. Inflation rate
b. Chrysler
c. Securities and Exchange Commission (SEC), a government regulating agency
d. Amazon.com, an online bookseller
e. Ford’s corporate culture

7. Ally Likens received “The Employee of the Month” Award at Internal Workings
Remodeling Service in April. Ally would be considered a part of which of these for
Internal Workings?

a. General environment
b. Task environment
c. Economic environment
d. Internal environment
e. Political activity

8. The environment represents the outer layer of the environment and affects
organizations .

a. task; indirectly
b. general; directly
c. internal; directly
d. internal; indirectly
e. general; indirectly

9. Which of these is NOT a part of an organization's task environment.

a. Customers
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 b. Labor markets
c. Competitors
d. Employers
e. Suppliers

10. Which of these is NOT a part of an organization's general environment?

a. Technological
b. Economic
c. Competitors
d. Legal-political
e. Sociocultural

11. Which dimension of the external environment represents events originating in foreign
countries as well as opportunities for American companies in other countries?

a. National dimension
b. Global dimension
c. International dimension
d. Japan’s dimension
e. U.S. dimension

12. In a recent survey of managers, __________ % said that multicultural experience is

important for leaders.

a. 15
b. 18
c. 20
d. 28
e. 30

13. Scientific and technological advancements in a specific industry as well as in society at

large are included in which general environment dimension?

a. Sociocultural dimension
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 b. Legal-political dimension
c. Economic dimension
d. Technological dimension
e. Corporate culture dimension

14. The dimension of the general environment representing the demographic characteristics,
norms, customs, and values of the population within which the organization operates is
referred to as a(n)

a. legal-political dimension.
b. economic dimension.
c. technological dimension.
d. corporate culture dimension.
e. sociocultural dimension.

15. When Miami Herald launches a Spanish-language newspaper, El Nuevo Herald, with
articles emphasizing Hispanic, Cuban, and Latin American news and sports, it is responding
to changes in environment.

a. sociocultural
b. technological
c. economic
d. competitors
e. suppliers

16. __________environment consists of demographic factors, such as population density.

a. Technological
b. Sociocultural
c. Legal-political
d. Internal
e. Economic

17. The general environment dimension that includes consumer purchasing power, the
unemployment rate, and interest rates is called the

a. legal-political dimension.
b. sociocultural dimension.
c. technological dimension.
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 d. economic dimension.
e. task dimension.

18. A recent significant trend in the economic environment is the frequency with which
companies seem to be involved in __________.

a. mergers
b. bankruptcy
c. reorganizations
d. layoffs
e. expansions outside the United States.

19. A government inspection has required your company to upgrade the safety equipment in the
manufacturing process of ice creamery. What dimension of the external environment has
influenced these upgrades?

a. Technological
b. Legal-political
c. Task
d. Sociocultural
e. Economic

20. What dimension of the general environment includes federal, state, and local government
regulations?

a. Technological
b. Legal-political
c. Economic
d. Sociocultural
e. International

21. An interest group that works within the legal-political framework to influence companies to
behave in socially responsible ways is called a(n)

a. pressure group.
b. legal group.
c. political influence group.
d. social group.
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 e. none of the above.

22. IBM, Gateway, and Compaq were vying for dominance in the computer industry. This is an
example of which of the following?

a. Task/legal political
b. General/competitor
c. Task/competitor
d. General/economic
e. Task/technological

23. When Ford Motor Company, the U.S. auto manufacturer, buys tires for its cars from
Firestone, it represents which dimension of the following?

a. Task/customer
b. General/customer
c. Task/competitor
d. Task/supplier
e. Task/economic

24. For Southwest Airlines, all of the following can be suppliers EXCEPT

a. Exxon (providing jet fuel).

b. Citibank (providing finances).
c. Delta Airlines (providing competition).
d. Boeing (providing planes).
e. All of the above are suppliers for Southwest Airlines.

25. Integrated Computers, Inc. wants to compile a profile of the customer it will target in its
next promotional mailing. What environment would this be found in?

a. Internal environment
b. Task environment
c. Work environment
d. General environment
e. None of the above

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26. __________ are included in an organization's task environment.

a. Suppliers
b. Accounting procedures
c. Technology
d. Government
e. Demographic characteristics

27. Traditionally, many manufacturer and ________ relationships have been adversarial, but
recently, companies are finding that cooperation is the key to saving money, maintaining
quality, and speeding products to market.

a. government
b. employee
c. supplier
d. special interest groups
e. customer

28. The represents people in the environment who can be hired to work for the
organization.

a. competitors
b. labor market
c. suppliers
d. customers
e. government

29. Abraham’s Applesauce is in the process of hiring sixty new workers. The personnel
department has a large pool of unskilled labor to draw from due to the high unemployment
rate in the local area. Which dimension of the external environment is involved here?

a. Sociocultural
b. Competitors
c. Technological
d. Labor market
e. Legal-political

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30. Which statement below is correct?

a. When environment is dynamic, uncertainty is low.

b. When the environment is unstable, uncertainty is low.
c. A dynamic environment has more uncertainty than a stable environment.
d. The stability of the environment does not determine the structure of the firm.
e. None of the above.

31. Which of the following is NOT a part of adapting the organization to changes in the
environment for coping with high environmental uncertainty?

a. Boundary-spanning roles
b. Advertising/public relations
c. Mergers/joint ventures
d. Flexible structures
e. All of the above are a part of organizational response in adapting the
organization to changes in the environment.

32. Sarah’s Jewelry Shop has just hired a comparative shopper to visit other local jewelry stores
to gain product pricing information. What strategy is this describing?

a. Boundary-spanning roles
b. A flexible structure
c. Unfair practice
d. Increase planning and forecasting
e. Joint venture

33. Based on the notion that organizations are dealing with a very turbulent and uncertain
external environment, more organizations are requiring __________ to perform boundary-
spanning activities.

a. top leaders
b. middle managers
c. line managers
d. all employees
e. suppliers

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34. Many organizations are adapting to the environment by developing more of a __________
relationship rather than a _________ relationship with competitors.

a. adversarial, partnership
b. partnership, adversarial
c. strategic, competitive
d. competitive, strategic
e. none of the above

35. Companies can reduce boundaries and increase collaboration with other organizations by
creating

a. flexible structures.
b. interorganizational partnerships.
c. new company cultures.
d. new supplier connections.
e. none of the above.

36. When two or more organizations combine to become one, it is referred to as a

a. joint venture.
b. flexible structure.
c. mechanistic structure.
d. merger.
e. inorganic venture.

37. In a joint venture between large and small businesses, large businesses can provide all of the
following EXCEPT

a. sales staff.
b. research staff.
c. financial resources.
d. distribution channels.
e. top level management.

38. Which of these defines culture?

a. The set of key values, beliefs, understandings, and norms shared by

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 members of an organization
b. The ability to speak different languages
c. An object, act, or event that conveys meaning to others
d. A narrative based on true events that is repeated frequently and shared by
organizational employees
e. None of the above

39. Which of these is associated with surface level of organizational culture?

a. Values
b. Norms
c. Manners of dress
d. Beliefs
e. All of the above.

40. Which of the following would be considered a visual representation(s) of a company's

corporate culture?

a. All department heads have an executive office.

b. Each department has an award plaque for employee of the month.
c. All employees are dressed in professional business attire.
d. Top level executives drive company owned sports car.
e. All of the above.

41. An object, act, or event that conveys meaning to others is referred to as a

a. symbol.
b. slogan.
c. story.
d. hero.
e. culture.

42. Symbols, stories, and heroes are important because they

a. entertain executive level management.

b. address the concerns of government.
c. acquaint customers to the organization.
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 d. communicate the significant values of an organization.
e. give employees something to talk about.

43. Heroes are important to an organization due to the fact that they

a. exemplify key values of the organization.

b. exemplify a strong corporate culture.
c. serve as examples to other employees.
d. all of the above.
e. none of the above.

44. Which of these is a narrative based on true event that is repeated frequently and shared by
organizational employees?

a. Symbol
b. Slogan
c. Story
d. Hero
e. Culture

45. A figure who exemplifies the deeds, character, and attributes of a corporate culture is
referred to as a

a. symbol.
b. stories.
c. slogan.
d. hero.
e. culture.

46. Which of these represent a phrase or sentence that succinctly express a key corporate value?

a. Symbol
b. Stories
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 c. Culture
d. Hero
e. Slogan

47. McDonald’s “We Love to See You Smile” represents a

a. ceremony.
b. symbol.
c. ritual.
d. slogan.
e. political activity.

48. “Chiquita. Perfect For Life.” was Chiquita’s

a. ceremony.
b. slogan.
c. symbol.
d. ritual.
e. all of the above.

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49. If a company emphasizes that “no purchase is complete until the customer is satisfied,” then
it's

a. utilizing a symbol.
b. communicating its values to customers.
c. using a slogan to present their values to customers and employees.
d. utilizing a hero for the purpose of conveying values.
e. using customers to harass the employees.

Answer: c Level: 1 Page: 98 Type: A

50. What are managers concerned with in adaptive cultures?

a. Customers and processes that bring about useful change

b. Themselves
c. All people who have ideas on changing the company
d. Their immediate work group
e. All of the above

Answer: a Level: 2 Page: 99 Type: F

51. Culture tends to differ between __________, but appears similar within __________.

a. organizations, industries
b. people, organizations
c. groups, industries
d. organizations, groups
e. industries, geographical regions

Answer a Level: 2 Page: 99 Type: F

52. All of the following are types of corporate cultures except

a. adaptability culture.
b. clan culture.
c. consistency culture.
d. involvement culture.
e. achievement culture.

Answer: d Level: 2 Page: 100 Type: F

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53. The adaptability culture emerges in an environment that requires ______ response and
______ decision making.

a. fast; high-risk
b. fast; low-risk
c. slow; high-risk
d. slow; low-risk
e. regulated; low-risk

Answer: a Level: 3 Page: 100 Type: F

54. __________ is suited to organizations that are concerned with servicing specific customers
in the external environment but without the intense need for flexibility and rapid change.

a. Adaptability culture
b. Clan culture
c. Achievement culture
d. Consistency culture
e. None of the above

Answer: c Level: 2 Page: 101 Type: F

55. The involvement culture has a(n) ________ focus on the involvement and participation of
employees to rapidly meet changing needs from the environment.

a. external
b. internal
c. structural
d. competitive
e. technological

Answer: b Level: 1 Page: 101 Type: F

56. The consistency culture has a(n) ________ focus and an orientation for a ________
environment.

a. external; stable
b. external; dynamic
c. internal; stable
d. internal; dynamic
e. structural; dynamic

Answer: c Level: 3 Page: 102 Type: F

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57. What is significant about corporate culture?

a. It is exactly the same for all companies within an industry.

b. It is the same regardless of the organization's environment.
c. It holds the people of an organization together.
d. It is only important to the top levels of management.
e. Having a culture directly translate into higher profitability.

Answer: c Level: 2 Page: 102 Type: F

58. Which of these is false about culture?

a. It serves as a compass for employee behavior.

b. It enables dispersed employees to work in concert toward shared goals that meet
changing needs from the environment.
c. It serves as the glue that gives people a sense of belonging.
d. Having a culture directly translates into higher profitability.
e. All of the above are correct.

Answer: d Level: 2 Page: 102-103 Type: F

59. By defining and using signals and symbols, __________ influence corporate culture.

a. corporate leaders
b. team leaders
c. cultural leaders
d. industry leaders
e. directional leaders

Answer: c Level: 1 Page: 104 Type: F

60. In a study by Kotter and Haskett evidence is provided to support the claim that __________
is important for performance.

a. managing cultural values

b. leading partnerships within an industry
c. surveying the external environment
d. managing client relationships as boundary spanners
e. empowering employees

Answer: a Level: 2 Page: 104 Type: F

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61. Leaders create a culture that everyone can believe in by directly involving employees in
determining what the company’s ________ should be.

a. structure
b. values
c. budget
d. socialization process
e. selection process

Answer: b Level: 2 Page: 104 Type: F

62. For values to guide the organization, managers must __________.

a. make sure employees actions fit in the culture

b. model the behavior
c. select employees that fit
d. understand how to do business
e. ask employees to stretch boundaries

Answer: b Level: 2 Page: 105 Type: F

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