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 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.

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

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
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 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 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
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.
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.
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
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
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
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 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.
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 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.
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.
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
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
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.
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
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
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
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
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.
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.
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
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
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
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