PART 3: TEST BANK
Article I.
Article II. CHAPTER 1
Section 2.01 ORGANIZATIONS AND ORGANIZATIONAL EFFECTIVENESS
TEST ITEM FILE
Article III. TRUE-FALSE QUESTIONS
1. Studying organizations is relatively easy because they are tangible. That is, we can see and touch
them.
a. True
b. False (page 2, easy)
2. Entrepreneurship is the process by which people recognize opportunities to structure
organizations more efficiently.
a. True
b. False (page 2, easy)
3. One of the difficulties in studying organizations is that they are intangible. In other words, we
cannot touch or see them.
a. True (page 2, easy)
b. False
4. Entrepreneurship is the process by which people recognize opportunities to structure
organizations more efficiently.
a. True
b. False (page 2, easy)
5. Amazon.com was created to satisfy the need to buy books over the Internet.
a. True (page 3, easy)
b. False
6. The degree of specialization in small companies tends to be lower than that of large companies.
a. True (page 4, moderate)
b. False
7. Transaction costs are the costs associated with negotiating, monitoring, and governing exchanges
between people.
a. True (page 6, easy)
b. False
8. The environment in which an organization operates is a major source of uncertainty.
a. True (page 6, easy)
b. False
9. One reason that organizations exist is so that they can exert power and control.
a. True (page 6, easy)
b. False
238
,10. One reason for starting an organization is to create jobs for individuals.
a. True
b. False (page 6, difficult)
11. Economies of scope are cost savings achieved when an organization manufactures products in
large volumes.
a. True
b. False (page 6, easy)
12. Economies of scale are cost savings achieved when an organization manufactures products in
large volumes.
a. True (page 6, easy)
b. False
13. Transaction costs are the costs associated with negotiating, monitoring, and governing
exchanges between people.
a. True (page 6, easy)
b. False
14. Organizational structure is used to control and coordinate people’s actions.
a. True
b. False (page 7, moderate)
15. Organizational theory is primarily concerned with how an organization can outperform its
competitors.
a. True
b. False (page 7, moderate)
16. Organizations that operate in the same environment will always have similar organizational
cultures.
a. True
b. False (page 8, moderate)
17. Organizational structure can be shaped by organizational culture.
a. True (page 8, moderate)
b. False
18. The external resource approach evaluates an organization’s ability to obtain scarce resources.
a. True (page 15, moderate)
b. False
19. The internal systems approach considers corporate culture.
a. True (page 15, moderate)
b. False
20. The internal systems approach evaluates an organization’s ability to obtain resources.
a. True
b. False (page 15, moderate)
239
, 21. The guiding principles that the organization formally states in its annual report is called the
mission statement.
a. True
b. False (page 18, moderate)
22. Operative goals give employees direction.
a. True (page 18, moderate)
b. False
23. An organization’s mission as stated in public documents is an official goal.
a. True (page 18, moderate)
b. False
24. Operative goals can be either short or long term in nature.
a. True (page 18, moderate)
b. False
25. One of the main problems with AOL’s structure was that the decentralized structure was not
very effective as the company grew.
a. True
b. False (page 25, moderate)
26. In the AOL-Time Warner case, Pittman’s structural changes were the primary reason for the
successful merger.
a. True
b. False (page 25, moderate)
Article IV. MULTIPLE-CHOICE QUESTIONS
27. _______________ is a tool used by people to coordinate their actions to obtain something they
desire or value.
a. Entrepreneurship
b. An organization (page 2, easy)
c. A hierarchy
d. Shareholder wealth
28. _______________ is recognizing the opportunity to satisfy a need and collecting resources to
meet that need.
a. Organizational theory
b. Organizational behavior
c. Entrepreneurship (page 2, moderate)
d. Strategic management
240
, 29. Jeffrey Bezos saw the opportunity to sell books over the Internet, which was growing. This is an
example of _____.
a. organizational theory
b. managerial expertise
c. education
d. entrepreneurship (page 2, easy)
30. Which of the following is not a stage in the value creation process?
a. Input
b. Conversion
c. Output
d. Market (page 3, moderate)
31. An organization’s inputs include all except _____.
a. finished goods (page 3, easy)
b. raw materials
c. money and capital
d. information and knowledge
32. In the conversion process, an organization creates value by applying all except _____.
a. machinery
b. raw materials (page 3, easy)
c. computers
d. human skills
33. An organization’s output include all except _____.
a. finished goods
b. services
c. suppliers (page 3, easy)
d. value for stakeholders
34. An organization:
a. facilitates the division of labor. (page 4, moderate)
b. increases transaction costs.
c. has little power over individuals.
d. is a tangible entity.
35. Which of the following is not a reason for creating an organization?
a. To achieve economies of scale
b. To manage the external environment
c. To provide people with jobs (page 6, moderate)
d. To exert power and control to achieve goals
36. The organization’s environment includes all except _____.
a. distributors
b. competitors
c. suppliers
d. raw materials (page 6, easy)
241
Article I.
Article II. CHAPTER 1
Section 2.01 ORGANIZATIONS AND ORGANIZATIONAL EFFECTIVENESS
TEST ITEM FILE
Article III. TRUE-FALSE QUESTIONS
1. Studying organizations is relatively easy because they are tangible. That is, we can see and touch
them.
a. True
b. False (page 2, easy)
2. Entrepreneurship is the process by which people recognize opportunities to structure
organizations more efficiently.
a. True
b. False (page 2, easy)
3. One of the difficulties in studying organizations is that they are intangible. In other words, we
cannot touch or see them.
a. True (page 2, easy)
b. False
4. Entrepreneurship is the process by which people recognize opportunities to structure
organizations more efficiently.
a. True
b. False (page 2, easy)
5. Amazon.com was created to satisfy the need to buy books over the Internet.
a. True (page 3, easy)
b. False
6. The degree of specialization in small companies tends to be lower than that of large companies.
a. True (page 4, moderate)
b. False
7. Transaction costs are the costs associated with negotiating, monitoring, and governing exchanges
between people.
a. True (page 6, easy)
b. False
8. The environment in which an organization operates is a major source of uncertainty.
a. True (page 6, easy)
b. False
9. One reason that organizations exist is so that they can exert power and control.
a. True (page 6, easy)
b. False
238
,10. One reason for starting an organization is to create jobs for individuals.
a. True
b. False (page 6, difficult)
11. Economies of scope are cost savings achieved when an organization manufactures products in
large volumes.
a. True
b. False (page 6, easy)
12. Economies of scale are cost savings achieved when an organization manufactures products in
large volumes.
a. True (page 6, easy)
b. False
13. Transaction costs are the costs associated with negotiating, monitoring, and governing
exchanges between people.
a. True (page 6, easy)
b. False
14. Organizational structure is used to control and coordinate people’s actions.
a. True
b. False (page 7, moderate)
15. Organizational theory is primarily concerned with how an organization can outperform its
competitors.
a. True
b. False (page 7, moderate)
16. Organizations that operate in the same environment will always have similar organizational
cultures.
a. True
b. False (page 8, moderate)
17. Organizational structure can be shaped by organizational culture.
a. True (page 8, moderate)
b. False
18. The external resource approach evaluates an organization’s ability to obtain scarce resources.
a. True (page 15, moderate)
b. False
19. The internal systems approach considers corporate culture.
a. True (page 15, moderate)
b. False
20. The internal systems approach evaluates an organization’s ability to obtain resources.
a. True
b. False (page 15, moderate)
239
, 21. The guiding principles that the organization formally states in its annual report is called the
mission statement.
a. True
b. False (page 18, moderate)
22. Operative goals give employees direction.
a. True (page 18, moderate)
b. False
23. An organization’s mission as stated in public documents is an official goal.
a. True (page 18, moderate)
b. False
24. Operative goals can be either short or long term in nature.
a. True (page 18, moderate)
b. False
25. One of the main problems with AOL’s structure was that the decentralized structure was not
very effective as the company grew.
a. True
b. False (page 25, moderate)
26. In the AOL-Time Warner case, Pittman’s structural changes were the primary reason for the
successful merger.
a. True
b. False (page 25, moderate)
Article IV. MULTIPLE-CHOICE QUESTIONS
27. _______________ is a tool used by people to coordinate their actions to obtain something they
desire or value.
a. Entrepreneurship
b. An organization (page 2, easy)
c. A hierarchy
d. Shareholder wealth
28. _______________ is recognizing the opportunity to satisfy a need and collecting resources to
meet that need.
a. Organizational theory
b. Organizational behavior
c. Entrepreneurship (page 2, moderate)
d. Strategic management
240
, 29. Jeffrey Bezos saw the opportunity to sell books over the Internet, which was growing. This is an
example of _____.
a. organizational theory
b. managerial expertise
c. education
d. entrepreneurship (page 2, easy)
30. Which of the following is not a stage in the value creation process?
a. Input
b. Conversion
c. Output
d. Market (page 3, moderate)
31. An organization’s inputs include all except _____.
a. finished goods (page 3, easy)
b. raw materials
c. money and capital
d. information and knowledge
32. In the conversion process, an organization creates value by applying all except _____.
a. machinery
b. raw materials (page 3, easy)
c. computers
d. human skills
33. An organization’s output include all except _____.
a. finished goods
b. services
c. suppliers (page 3, easy)
d. value for stakeholders
34. An organization:
a. facilitates the division of labor. (page 4, moderate)
b. increases transaction costs.
c. has little power over individuals.
d. is a tangible entity.
35. Which of the following is not a reason for creating an organization?
a. To achieve economies of scale
b. To manage the external environment
c. To provide people with jobs (page 6, moderate)
d. To exert power and control to achieve goals
36. The organization’s environment includes all except _____.
a. distributors
b. competitors
c. suppliers
d. raw materials (page 6, easy)
241
