mgmt09_tif18
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mgmt09_tif18

Course Number: MAN 3025, Spring 2009

College/University: UCF

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Chapter 18 Foundations of Control TRUE/FALSE QUESTIONS WHAT IS CONTROL AND WHY IS IT IMPORTANT? 1. Control is the process of monitoring activities to ensure that they are being accomplished as planned. (True; moderate; p. 526) 2. The criterion that determines the effectiveness of a control system is how well it reduces unnecessary costs. (False; moderate; p. 526) 3. Clan control is found almost exclusively in...

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18 Chapter Foundations of Control TRUE/FALSE QUESTIONS WHAT IS CONTROL AND WHY IS IT IMPORTANT? 1. Control is the process of monitoring activities to ensure that they are being accomplished as planned. (True; moderate; p. 526) 2. The criterion that determines the effectiveness of a control system is how well it reduces unnecessary costs. (False; moderate; p. 526) 3. Clan control is found almost exclusively in small family-owned businesses, and is dependent upon the individual and the group to identify appropriate and expected behaviors and performance measures. (False; difficult; p. 527) 4. The value of the control function lies in its relation to organizational structure. (False; moderate; p. 528) 5. Managers need to control to protect the organization and its assets. (True; moderate; p. 529) THE CONTROL PROCESS 6. The control process is a two-step process that compares actual performance against a standard and takes managerial action to correct deviations or inadequate standards. (False; difficult; p. 529) 7. Some control criteria, such as employee satisfaction, are applicable to any management situation. (True; easy; p. 530) 8. Deviations that exceed the acceptable range of variation become significant and need the managers attention. (True; moderate; p. 531) 9. Understating sales is not nearly as troublesome as overstating. (False; moderate; p. 532) 10. In taking managerial actions, managers must correct actual performance, as it is the only choice. (False; difficult; p. 532) 11. Basic corrective action is aimed at correcting more generalized problems as quickly as possible, leaving more detailed action for later. (False; easy; p. 532) 243 12. Effective managers analyze deviations and, when the benefits justify it, take the time to pinpoint and correct the causes of variance. (True; moderate; p. 532) CONTROLLING FOR ORGANIZATIONAL PERFORMANCE 13. Performance is the end result of an activity. (True; easy; p. 534) 14. The most frequently used organizational performance measures include liquidity, profitability, leverage, and activity ratios. (False; moderate; p. 535) 15. What guides managerial decisions in designing strategies and work activities and in coordinating the work of employees is how well the organization meets its goals. (True; moderate; p. 536) TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE 16. The key to feedforward controls is taking action while the problem is occurring. (False; easy; p. 538) 17. Feedforward provides managers with meaningful information on how effective their planning efforts were. (False; moderate; p. 538) 18. Concurrent control prevents anticipated problems since it takes place before the actual activity. (False; easy; p. 538) 19. Direct supervision is the best-known form of concurrent control. (True; easy; p. 538) 20. Concurrent control relies on feedback. (False; easy; p. 538) 21. Technical equipment cannot be programmed for concurrent controls. (False; moderate; p. 539) 22. In feedback control, the control takes place after the activity is done. (True; easy; p. 539) 23. An example of feedback control is management by walking around. (False; moderate; p. 539) 24. When organizations manage earnings, they time income and expenses to enhance current financial performance. (True; moderate; p. 541) 244 25. External controls have been enacted to address some of the problems that have occurred because of managed earnings. (True; moderate; p. 542) 26. The Sarbanes-Oxley Act requires more financial disclosure by organizations. (True; moderate; p. 542) 27. Managers can focus on measuring only one performance area because it presents them with the big picture. (False; moderate; p. 542) CONTEMPORARY ISSUES IN CONTROL 28. Managers of foreign companies tend to be less controlled directly by the home office. (True; moderate; p. 546; AACSB: Globalizations) 29. Employers are allowed by law to tap your work telephone without your knowledge. (True; moderate; p. 547; AACSB: Communication) 30. The courts have ruled consistently that since the company owns your computer, managers have the right to view everything on it. (True; moderate; p. 548) MULTIPLE-CHOICE QUESTIONS For each of the following choose the answer that most completely answers the question. WHAT IS CONTROL AND WHY IS IT IMPORTANT? 31. Managers cant really know whether their work units are working properly until theyve evaluated what activities have been done ______________. a. with those that remain b. and have compared actual performance to a desired standard c. and evaluate the performance of each of their employees d. successfully (b; easy; p. 526) 245 32. Market control relies upon _____________. a. market forces to set standards used in the control system b. government regulators to set standards that guarantee fair competition c. establishing and maintaining dominant market share d. traditions and beliefs (a; moderate; p. 527) 33. Market control is an approach that emphasizes the use of external market mechanisms, such as ______________. a. price competition b. relative market share c. administrative procedures d. traditions (b; moderate; p. 527) 34. Bureaucratic control relies upon ______________. a. administrative rules and regulations b. managerial autonomy c. shared values d. units acting as individual profit centers (a; easy; p. 527) 35. Under clan control, employee behaviors are regulated by _________________. a. peer pressure b. shared values and norms c. brainwashing d. strict hierarchical mechanisms (b; moderate; p. 527) 36. What is the final step in the management process? a. organizing b. planning c. controlling d. leading (c; moderate; p. 528) 37. Many managers are tempted to do things themselves and avoid _______________. a. controlling b. empowering c. leading d. planning (b; difficult; p. 528) THE CONTROL PROCESS 246 38. The control process assumes that ________________. a. employees require constant direction from management b. performance standards must be created c. performance standards are already in place d. employee monitoring costs are part and parcel of doing business (c; moderate; p. 529) 39. The first step in the control process is _________________. a. setting standards b. measuring performance c. comparing performance against expectations d. taking managerial action (b; moderate; p. 530) 40. What common source of information for measuring performance has the disadvantages of being subject to personal biases, time consuming, and obtrusive? a. oral reports b. personal observations c. statistical reports d. written reports (b; moderate; p. 539) 41. What common source of information for measuring performance has the advantages of being easy to visualize and effective for showing relationships? a. oral reports b. personal observations c. statistical reports d. written reports (c; moderate; p. 539) 42. What common source of information for measuring performance has the disadvantage of being provided with filtered information that cant be documented? a. oral reports b. personal observations c. statistical reports d. written reports (a; moderate; p. 539) 247 43. What common source of information for measuring performance has the advantages of being comprehensive, formal, and easy to file and retrieve? a. oral reports b. personal observations c. statistical reports d. written reports (d; moderate; p. 539) 44. Some control criteria need to recognize _________________. a. employees rights to privacy b. the costs of monitoring and measuring performance c. the diversity of activities that managers do d. and reward exceptional employee performance (c; moderate; p. 530) 45. When a performance indicator cant be stated in quantifiable terms, managers should ___________. a. use subjective measures b. use objective measures c. ignore the control function d. have no standards at all (a; moderate; p. 531) 46. What is defined as the acceptable parameters of variance between actual performance and the standard? a. basic corrective action b. performance c. productivity d. range of variation (d; easy; p. 531) 47. In the third and final step in the control process, managers can choose between _____________ possible courses of action in taking managerial action. a. two b. three c. four d. five (b; moderate; p. 532) 48. What corrects problems at once to get performance back on track? a. basic corrective action b. immediate corrective action c. range of variation d. standard revision (b; moderate; p. 532) 49. If employees or managers dont meet the standard, the first thing theyre likely to accuse is _______________. a. the standard 248 b. their coworkers c. the organization d. their performance (a; moderate; p. 533) 50. When should a managers course of action be to do nothing? a. if the cause of the variation has been identified b. if the standard is acceptable c. if the standard is not acceptable d. if the variance is acceptable (d; moderate; p. 534) 51. When should the managers course of action be to revise the standard? a. if the cause of the variation has been identified b. if the standard is acceptable c. if the standard is not acceptable d. if the variance is acceptable (c; moderate; p. 534) CONTROLLING FOR ORGANIZATIONAL PERFORMANCE 52. The accumulated end results of all the organizations work activities are called ________________. a. organizational performance b. organizational planning c. environmental scanning d. scenario planning (a; moderate; p. 534) 53. ______________ is the overall output of goods or services produced divided by the inputs needed to generate that output. a. Factoring b. Forfeiting c. Correlation d. Productivity (d; moderate; p. 535) 249 54. ______________ is measured by the sales revenue an organization receives when goods or services are sold. a. Input b. Output c. Quality d. Effectiveness (b; easy; p. 535) 55. ______________ is measured by the costs of acquiring and transforming the organizational resources into the outputs. a. Input b. Quality c. Effectiveness d. Efficiency (a; easy; p. 535) 56. The easiest way to increase the ratio of outputs to inputs would be to ______________ of the outputs. a. decrease the selling price of outputs b. increase the selling price of outputs c. increase the cost of the input d. hire additional employees (b; moderate; p. 535) 57. In order to increase the ratio of outputs to inputs, a manager would have to _________________. a. decrease the selling price b. increase productivity c. increase the cost of the input d. hire additional employees (b; easy; p. 535) 58. ______________ is a measure of how appropriate organizational goals are and how well an organization is achieving those goals. a. Situational effectiveness b. Organizational effectiveness c. Competitor analysis d. Environmental scanning (b; moderate; pp. 535-536) 59. Which of the following models of organizational effectiveness proposes that effectiveness is measured by the organizations ability to exploit its environment in acquiring scarce and valued resources? a. systems resource b. process c. multiple constituencies d. single-criteria (a; moderate; p. 536) 60. The ______________ model emphasizes the transformation processes of the organization and how well the organization converts inputs into desired outputs. a. systems resource 250 b. process c. multiple constituencies d. single-criteria (b; moderate; p. 536) 61. Which of the following models of organizational effectiveness says that several different effectiveness measures should be used, reflecting the different criteria of the organizations constituencies? a. systems resource b. process c. multiple constituencies d. single-criteria (c; moderate; p. 536) 62. Fortunes Top Performing Companies of the Fortune 500 are determined by _______________. a. customer service b. employee satisfaction c. financial results d. product quality (c; moderate; p. 536) 63. Fortunes 100 Best Companies to Work For are chosen by answers given by thousands of randomly selected employees on a questionnaire called the _______________. a. American Customer Satisfaction Index (ASCI) b. Kiersey Temperament Sorter c. Economic Analysis Survey d. Great Place to Work Trust Index (d; easy; p. 536) 64. The ______________ measures customer satisfaction with the quality of goods and services available to household consumers in the United States and then links the results to financial returns. a. American Customer Satisfaction Index (ASCI) b. Kiersey Temperament Sorter c. Economic Analysis Survey d. Great Place to Work Trust Index (a; moderate; pp. 536-537) 251 TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE 65. Applebees philosophy is ______________. a. slower is better b. faster is better c. colorful is better d. more is better (b; moderate; p. 537) 66. What is the most desirable type of control that prevents anticipated problems? a. feedforward control b. concurrent control c. feedback control d. fast-forward control (a; easy; p. 538) 67. _________________ is a term used to describe when a manager is out in the work area interacting directly with employees. a. Concurrent control b. Direct interaction c. Management by walking around d. Work area management (c; easy; p. 538) 68. Which of the following is a traditional financial control measure that managers might employ in the monitoring and measuring of organizational performance? a. ratio analysis b. economic value added c. ethical analysis d. market value added (a; moderate; p. 540) 69. The ______________ ratios measure an organizations ability to meet its current debt obligations. a. liquidity b. leverage c. conformance d. activity (a; moderate; p. 540) 252 70. Which of the following ratios examines the organizations use of debt to finance its assets and its ability to meet the interest payments on the debt? a. liquidity ratios b. leverage ratios c. conformance ratios d. activity ratios (b; moderate; p. 540) 71. The ______________ ratios measure how efficiently the firm is using its assets. a. liquidity b. leverage c. conformance d. activity (d; moderate; p. 540) 72. Which of the following ratios measures how efficiently and effectively the firm is using its assets to generate profits? a. liquidity ratios b. leverage ratios c. conformance ratios d. profitability ratios (d; moderate; p. 540) 73. ______________ provide managers with quantitative standards against which to measure and compare resource allocation. a. An organization chart b. Reengineering c. TQM d. A budget (d; moderate; p. 541) 74. The fundamental concept behind which of the following two financial tools is that companies are supposed to take in capital from investors and make it worth more? a. principle value added and economic value added b. economic value added and real value added c. economic value added and market value added d. market value added and principle value added (c; difficult; p. 541) 75. ______________ is a tool for measuring corporate and divisional performance. a. Economic value added b. Market value added c. Principle value added d. Real value added (a; moderate; p. 541) 76. Which of the following financial control measures is calculated by taking after-tax operating profit minus the total annual cost of capital? a. market value added 253 b. principle value added c. economic value added d. real value added (c; difficult; p. 541) 77. _______________ is a measure of how much economic value is being created by what a company does with its assets, less any capital investments the company has made in its assets. a. Market value added b. Principle value added c. Economic value added d. Real value added (c; difficult; p. 541) 78. Which of the following financial control measures adds a market dimension because it measures the stock markets estimate of the value of a firms past and expected capital investment projects? a. economic value added b. market value added c. principle value added d. real value added (b; moderate; p. 541) 79. A companys ______________ is the value of all outstanding stock plus the companys debt. a. debt obligation b. capital outlay c. market value d. asset allocation (c; moderate; p. 541) 80. If the companys market value is greater than all the capital invested in it, the company has a positive ______________, indicating that managers have created wealth. a. market value added b. principle value added c. economic value added d. real value added (a; difficult; p. 541) 81. Studies have shown that _______________ is a predictor of ______________. a. principle value added; economic value added b. economic value added; real value added c. economic value added; market value added d. market value added; principle value added (c; difficult; p. 541) 82. The ______________ approach to performance measurement was introduced as a way to evaluate organizational performance from more than just the financial perspective. a. market value added b. economic valued added c. balanced scorecard d. information control 254 (c; moderate; p. 542) 83. Which of the following is a performance measurement tool that looks at four areas that contribute to a companys performance? a. market value added b. economic valued added c. balanced scorecard d. information control (c; moderate; p. 542) 84. The balanced scorecard is an approach that looks at four areas financial, customer, internal processes, and _______________ - that contribute to a companys performance. a. shareholder value b. people/innovation/growth assets c. managerial decision making d. debt (b; moderate; p. 542) 85. Managers need _____________ to monitor organizational performance and to control organizational activities. a. time b. control analysis systems c. data d. information (d; moderate; p. 543) 86. A(n) ______________ is defined as a system used to provide management with needed information on a regular basis. a. data entry system b. management information system c. expert system d. artificial intelligence system (b; easy; p. 543) 255 87. Which of the following is not related to the meaning of management information systems? a. Its meant to provide managerial information on a regular basis. b. To be considered a system, it needs to be on a computer and not manually regulated. c. The word system implies order, arrangement, and purpose. d. It provides data and information. (b; difficult; pp. 543-544) 88. Which of following terms would be associated with data and not with information? a. analyzed b. processed c. ordered d. raw (d; moderate; p. 544) 89. When data are analyzed and processed, they become ________________. a. a system b. information c. economically viable d. factual (b; moderate; p. 544) 90. ________________ is the search for the best practices among competitors or noncompetitors that lead to their superior performance. a. Factoring b. Correlating c. Situating d. Benchmarking (d; moderate; p. 545) 91. The __________ is the standard of excellence against which to measure and compare. a. market leader b. service excellence award c. benchmark d. Good Housekeeping Seal (c; moderate; p. 545) 92. Research suggests that best practices frequently already exist within an organization, _______________. a. but often go unidentified b. but various managerial biases prevent them from being enacted c. making formalized benchmarking a redundant and costly task d. and are being used (a; moderate; p. 545) 256 CONTEMPORARY ISSUES IN CONTROL 93. The differences seen in organizational control systems of global organizations are primarily in the _________________. a. measurement and corrective action steps of the control process b. measurement and comparison steps of the control process c. comparison step of the control process d. corrective action step of the control process (a; moderate; p. 546; AACSB: Globalizations) 94. The laws in some countries can constrain organizational control by not allowing organizations to ______________. a. bring in a new management team from outside the country b. hiring employees c. open facilities d. bring money into the country (a; moderate; p. 547; AACSB: Globalizations ) 95. A recent survey of U.S. employers said that ____________ percent of employees look at nonworkrelated Web sites while at work. a. 32 b. 46 c. 68 d. 87 (d; easy; p. 547) 96. Managers monitor electronic mail because ______________. a. they are nosy b. it helps ensure that company trade secrets are not being leaked c. they are not concerned about employee privacy d. they want to be sure that employees dont spread rumors about the company (b; moderate; p. 548) 97. The Electronic Communications Privacy Act allows employers to monitor communications ______________. a. when employees have been notified of the practice b. without notifying employees c. that take place online only d. only during official business hours (a; moderate; p. 548; AACSB: Communication) 257 98. Up to __________ of all theft and fraud are committed by firm employees, not outsiders. a. 33 percent b. 50 percent c. 75 percent d. 85 percent (d; moderate; p. 549) 99. Clinical psychologists argue that employee theft _______________. a. occurs primarily when there are poor management-labor relations b. is a symptom of deeper control issues and is not the real problem c. happens because many people can find ways to rationalize this behavior d. reflects deep problems in the greater society (c; moderate; p. 549) 100.The U.S. National Institute of Occupational Safety and Health says that each year, some ____________ American workers are victims of some form of workplace violence. a. 35,000 b. 112,000 c. 678,000 d. 2,000,000 (c; moderate; p. 550) 101.Factors that have been found to be linked to workplace violence include _______________. a. too much caffeine b. employee stress c. poor diet d. poor personal hygiene (b; easy; p. 551) 102.Experts have described dangerously dysfunctional work environments characterized by employee work driven by TNC as a primary contributor to workplace violence. TNC refers to ____________. a. Time, Numbers, and Crises b. Time, Number, and Chaos c. Time, Neglect, and Crises d. Time, Neglect, and Chaos (a; moderate; p. 551) 103.The service profit chain is the service sequence from employees to customers to profit. According to this concept, the companys strategy and service delivery system determines _____________. a. how committed the firm is to its customers b. how the firm performs in the short run c. employee retention d. how employees service customers (d; moderate; p. 552) 104.Corporate governance is ________________. a. another name for executive management b. a system used to protect the rights of shareholders 258 c. a term that refers to legal agreements made between two or more partner firms d. primarily a problem facing U.S. firms (b; easy; p. 553) 105.Two areas in which the corporate governance is being reformed are the role of boards of directors and __________________. a. awarding of employee stock options b. financial reporting c. executive compensation d. upper management (b; difficult; p. 553) 106.As a result of the Sarbanes-Oxley Act, senior managers in U.S. firms are now required by law to ___________. a. publicly report the awarding and exercise of their personal stock options b. certify the companys financial results c. submit quarterly financial statements to the SEC d. have a moral board of directors (b; moderate; p. 555) 259 SCENARIOS AND QUESTIONS For each of the following choose the answer that most completely answers the question. WHAT IS CONTROL AND WHY IS IT IMPORTANT? Statcos Control Statco, Inc., is a statistical software company based in Columbia, TN. This publicly traded firm has grown in a systematic fashion over its 25-year existence and now claims more than 12,000 employees worldwide. As it has grown, the company has adopted a hierarchical structure, which emphasizes organizational authority. Management relies heavily on administrative rules, regulations, and policies in order to meet its goals. However, the company has struggled to meet projected revenues for each of the past 10 quarters. While it is true that world financial markets have been in a free-fall over the past 3 years, demand for the firms products has typically been fairly recession-proof in the past. The board of directors is growing increasingly impatient with the management team. The firms president, Susan Wamerdam is concerned that recent performance indicates that management has lost control of the workforce. She has hired Mark Adams, an expert in control system design, to evaluate Statco, Inc., and offer suggestions to improve the firms performance. 107.Susan asks how management will know whether the new control system is working. Mark tells Susan that final judgments regarding the effectiveness of a control system rests upon _______________. a. how well managers buy in to the new system b. how well employees adhere to controls put in place c. how well it facilitates goal achievement d. the amount of thought given to setting standards in the first place (c; moderate; p. 526) 108.Statcos traditional approach to control system design could best be described as ______________. a. market control b. bureaucratic control c. clan control d. mind control (b; moderate; p. 527) 109.Mark suggests that Statcos approach to control should place greater emphasis on the use of external market mechanisms, such as _______________. a. currency exchange rates b. administrative policies c. shared values d. rituals (a; moderate; p. 527) 110.Mark suggests to Susan that each division of the company should be turned into a profit center and be evaluated by the percentage of total corporate profits each contributes. This approach is most representative of what control system design approach? a. market control b. bureaucratic control c. clan control 260 d. financial control (a; difficult; p. 527) THE CONTROL PROCESS Statcos Control Statco, Inc., is a statistical software company based in Columbia, TN. This publicly traded firm has grown in a systematic fashion over its 25-year existence and now claims more than 12,000 employees worldwide. As it has grown, the company has adopted a hierarchical structure, which emphasizes organizational authority. Management relies heavily on administrative rules, regulations, and policies in order to meet its goals. However, the company has struggled to meet projected revenues for each of the past 10 quarters. While it is true that world financial markets have been in a free-fall over the past 3 years, demand for the firms products has typically been fairly recession-proof in the past. The board of directors is growing increasingly impatient with the management team. The firms president, Susan Wamerdam is concerned that recent performance indicates that management has lost control of the workforce. She has hired Mark Adams, an expert in control system design, to evaluate Statco, Inc., and offer suggestions to improve the firms performance. 111.Mark asks Susan how management measures organizational performance. Susan states they that rely mainly on statistical reports, but also draw inferences from qualitative oral and written reports. Mark responds that, for most organizations and managers, using a combination of approaches _______________. a. increases noise in the control system b. increases the probability of getting reliable information c. indicates that management is overly cautious d. is an indicator of managerial indecisiveness (b; moderate; p. 530) 112.Mark is adamant in telling Susan that what management measures is much more critical to the control process than how it is measured. Susan asks why Mark feels so strongly about this. Mark responds that what the organization measures _________________. a. determines largely how well the organization performs b. determines what people in the organization will strive to excel at c. plays a large role in employee satisfaction and retention d. determines organizational inputs (b; easy; p. 530) 113.After clearing up questions regarding measurement issues, Mark tells Susan that the next step in the control process is _____________. a. taking managerial action b. revising performance standards c. comparing performance to standards d. establishing standards of performance (c; moderate; p. 531) 114.Susan asks Mark whether, after the second step has been taken, any further steps are necessary. Mark responds, ______________. 261 no; the control process is a two-step process yes; the third step is to take managerial action yes, but only if performance remains unsteady yes; the third step is to compare performance to standards (b; moderate; p. 532) a. b. c. d. 115.If sales goals are not met, one option for Statco, Inc., would be to take managerial action. For example, Mark suggests that management might look _______________. a. at industry standards b. to redesign the sales compensation plan c. to implement a benchmarking initiative d. adjust controls for cross-cultural differences (b; difficult; p. 532) 116.Susan has just gotten out of a rough meeting with the board. She is looking to take immediate corrective action by letting a few heads roll in the sales department. She hopes that such a drastic move might light a fire under the remaining sales force. Mark cautions that Statcos sales management has been perpetually putting out fires over the past 3 years and that it might be wiser to take basic corrective action. Susan asks Mark what he means. Mark explains that basic corrective action ______________. a. involves accepting the way things are b. looks at how and why performance has deviated c. corrects problems at once to get performance back on track d. involves revising company standards (b; moderate; p. 532) 262 CONTROLLING FOR ORGANIZATIONAL PERFORMANCE The Industry Leader (Scenario) Frank, the new CEO for First Fidelity, is working hard to turn around the formerly successful real estate business. His goal, once again, is to make First Fidelity a leader in the industry. Frank is currently at a meeting with senior officers and is informing them about measuring the companys performance. 117.Before he begins his discussion, Frank defines ______________ as the accumulated end results of all the organizations work processes and activities. a. organizational planning b. environmental scanning c. organizational performance d. scenario planning (c; moderate; p. 534) 118.Frank states that the systems resource model of organizational effectiveness emphasizes _______________. a. the transformation processes of the organization and how well the organization converts inputs into desired outputs b. the systematic management of internal firm resources c. the organizations ability to exploit its environment in acquiring scarce resources d. that several different effectiveness measures should be used, reflecting the different criteria of the organizations constituencies (c; moderate; p. 536) 119.Seth, a senior staff member at the meeting, asks whether the process model of organizational effectiveness might be more appropriate for First Fidelity. Seth explains that the process model emphasizes _______________. a. how well the organization transforms inputs into outputs b. the systematic management of internal firm resources c. the organizations ability to exploit its environment in acquiring scarce resources d. that several different effectiveness measures should be used, reflecting the different criteria of the organizations constituencies (a; moderate; p. 536) 120.Frank suggests that the most ideal model of organizational effectiveness for First Fidelity would be one that reflected the different criteria of those parties which have a vested interest in the success of the organization. This model is commonly referred to as _______________. a. the systems model b. the process model c. the stakeholder model d. the multiple constituencies model (d; moderate; p. 536) TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE Financial Ratios (Scenario) 263 Jan was in a big hurry. She had just been given the assignment of reporting on the financial health of her company to the new divisional vice president. Donna, the new vice president, had asked Jan to work up several calculations to help her gain an understanding of the companys financial shape. Jan was working hard and had a big order to fill, one that could make or break her reputation with Donna. She quickly pulled out her old financial management textbook and turned to the chapter on financial ratios to help her answer the questions that were asked. 121.Donna asked Jan to provide her with an estimate of how efficiently the firm is using its assets. Therefore, Jan turned to the section in her textbook on ______________ ratios. a. leverage b. activity c. profitability d. liquidity (b; difficult; p. 540) 122.Donna also asked Jan to give her an idea of the organizations ability to meet the interest payments on its debt. Therefore, Jan looked to the section on ______________ ratios. a. leverage b. activity c. profitability d. liquidity (a; difficult; p. 540) 123.Donna was also interested in understanding the companys ability to meet short-term obligations, which meant that Jan had to calculate a(n) ______________ ratio. a. leverage b. activity c. profitability d. liquidity (d; difficult; p. 540) 124.Donna was also very interested in examining the organizations use of debt to finance its assets. Jan needed to calculate a(n) ______________ ratio. a. leverage b. activity c. profitability d. equity (a; difficult; p. 540) 125.Finally, as the hour dragged to midnight, Jan finished calculating the ______________ ratio, because Donna wanted to know how efficiently and effectively management is using its assets to generate profits. a. leverage b. activity c. profitability d. equity (c; difficult; p. 540) 264 126.In addition to the traditional financial tools ratios that Jan calculated, Donna suggested that management needed to get a sense of how good a job the company is doing at creating value for the companys investors. She suggested that Donna should find out more about ________________. a. market value added b. liquidity ratios c. equity ratios d. traditional financial control measures (d; moderate; p. 541) 127.Market value added differs from economic value added in that it ____________. a. measures the markets estimate of past and future firm capital investments b. measures corporate and divisional performance c. incorporates the cost of capital d. measures how much market value is being created by what the company does with its assets, less any capital investments the company has made in its assets (a; moderate; p. 541) The Balanced Scorecard (Scenario) Upon completing his industrial engineering degree, Evan Karnoupakis took a position as a manager with the Franklin Mint, a manufacturer of commemorative and collectible products. Bruce Benedict, Evans boss and the VP of operations, has been asked by the organizations CEO to look into the balanced scorecard approach of performance management to see whether this would be appropriate for the organization. In turn, Mr. Benedict has asked Evan to look into balanced scorecard approaches and report back to him. 128.The intent of the balanced scorecard is to ______________. a. search for the best practices among competitors only b. emphasize that all four areas are important to the organizations success c. identify which areas are most critical to the organizations success d. create a benchmark for the company (b; moderate; p. 542) 129.Evan reported that while the balanced scorecard approach to performance management makes good sense, ______________. a. managers still tend to focus on areas that currently drive organizational success b. it is not widely accepted as a management tool c. studies have not consistently shown it to significantly improve firms performance d. successful organizations tend to focus exclusively on their customers (a; moderate; p. 542) Information Controls (Scenario) 265 Computing Solutions, Inc., is a high-tech consulting firm that focuses on helping companies to implement and adapt new technological developments in daily operations. Ted is the department head and needs to train John and Kelly, both project managers, on the proper applications of technological solutions for businesses. 130.Before beginning the training session, Ted informs both John and Kelly that ______________ is a system used to provide management with needed information on a regular basis. a. information b. data c. a system d. a management information system (d; moderate; p. 543; AACSB: Technology) 131.Ted also informs John and Kelly that the term ______________ in MIS implies order, arrangement, and purpose. a. information b. data c. system d. category (c; moderate; p. 544; AACSB: Technology) 132.During the training session, John is overwhelmed by the quantity of raw, unanalyzed facts that are being presented to him. These numbers and names can also be termed _____________. a. information b. data c. a system d. a management information system (b; moderate; p. 544; AACSB: Technology) 133.When John organizes and processes the raw, unanalyzed facts, he will have _____________. a. information b. data c. systems d. a management information system (a; easy; p. 544; AACSB: Technology) 266 ESSAY QUESTIONS WHAT IS CONTROL AND WHY IS IT IMPORTANT? 134.Define controlling within an organization. In a brief essay, list and describe characteristics of the three approaches to designing control systems that have been identified. What determines the effectiveness of any control system? Answer Control is the process of monitoring, comparing, and correcting work performance. Three different types of control systems have been identified: market control, bureaucratic control, and clan control. Market control emphasizes the use of external market mechanisms, such as price competition and relative market share, to establish the standards used in the control system. Bureaucratic control systems emphasize organizational authority and rely on administrative rules, regulations, procedures, and policies. Under clan control, employee behaviors are regulated by shared values, norms, traditions, rituals, beliefs and other aspects of the organizations culture. Regardless of the design, the effectiveness of any control systems is determined by how well it facilitates goal achievement. (moderate; pp. 526-527) 135.In a short essay, detail why control is important for managers. In what areas can the value of the control function be seen? Answer Control is important, therefore, because its the only way managers know whether organizational goals are being met and if not, the reasons why. The value of the control function can be seen in three specific areas: planning, empowering employees, and protecting the workplace. As the final step in the management process, controlling provides the critical link back to planning. If managers didnt control, theyd have no way of knowing whether their goals and plans were on target and what future actions to take. The second reason controlling is important is because of employee empowerment. Many managers are reluctant to empower their employees because they fear employees will do something wrong for which the manager would be held responsible. Many managers are tempted to do things themselves and avoid empowering. But an effective control system can provide information and feedback on employee performance, thus reducing potential problems. The final reason that managers control is to protect the organization and its assets. Todays environment brings heightened threats from natural disasters, financial scandals, workplace violence, supply chain disruptions, security breaches, and even possible terrorist attacks. Managers must have plans in place to protect the organizations employees, facilities, data, and infrastructure. As many organizations discovered in the aftermath of catastrophes, such as 9/11 and Hurricane Katrina, having comprehensive controls and backup plans helps assure only minimal disruptions of their ongoing business operations. (moderate; pp. 528-529) 267 THE CONTROL PROCESS 136.In a short essay, list and briefly explain the steps, processes, and best practices managers typically utilize in the control process. Provide examples where appropriate. Answer a. Measuringthe first step in the control process is measuring. Most jobs and activities can be expressed in tangible and measurable terms. However, managers frequently use a variety of sources of information to measure actual performance, such as personal observation, statistical reports, oral reports, and written reports. For most managers, using a combination of approaches increases both the number of input sources and the probability of getting reliable information. b. Comparingthe second step involves determining the degree of variation between actual performance and the prespecified standard. Some variation is to be expected. However, it is important for managers to determine the acceptable range of variation. c. Taking managerial actionmanagers can choose among three possible courses of action: do nothing, correct the actual performance, or revise the standards. Examples of corrective actions might include changing strategy, structure, compensation plans, training programs, redesigning jobs, or firing employees. Revising standards is an appropriate response if the variance was the result of unrealistic expectations. However, revising standards downwards can be troublesome when an employee or work unit fall short of reaching a goal. If they dont meet the standard, their natural response is to attack the standard. If the manager believes the standard is fair, they should explain their position, reaffirm their desire for the employee or work unit to meet the standard, and then take necessary corrective action to turn that expectation into reality. (moderate; pp. 530-532) 268 CONTROLLING FOR ORGANIZATIONAL PERFORMANCE 137.In a short essay, describe the most frequently used organizational performance measures. Answer a. Organizational productivityorganizations strive to be productive. They want the most goods and services produced using the least amount of inputs. Output is measured by the sales revenue an organization receives when those goods and services are sold. Input is measured by the costs of acquiring and transforming the organizational resources into the outputs. Its managements job to increase this ratio. The easiest way to do this, of course, is to raise the selling price of the outputs, but this is a risky choice in todays competitive environment and it may, in fact, decrease the total output sold. The only other viable option, then, for increasing productivity is to decrease the input part of the ratiothat is, the organizations expenses. Doing so means being more efficient in performing the organizations work activities. Thus, organizational productivity becomes a measure of how efficiently employees do their work. b. Organizational effectivenessorganizational effectiveness is a measure of how appropriate organizational goals are and how well an organization is achieving those goals. Its a common performance measure used by managers. Other descriptions of organizational effectiveness have been suggested by management researchers. For instance, the systems resource model of organizational effectiveness proposes that effectiveness is measured by the organizations ability to exploit its environment in acquiring scarce and valued resources. The process model emphasizes the transformation processes of the organization and how well the organization converts inputs into desired outputs. And the multiple constituencies model says that several different effectiveness measures should be used, reflecting the different criteria of the organizations constituencies. Although each of these models is useful for measuring certain aspects of organizational effectiveness, the bottom line for managers continues to be how well the organization meets its goals. Thats what guides managerial decisions in designing strategies and work activities and in coordinating the work of employees. c. Industry and company rankingstheres no shortage of different types of industry and company rankings. For instance, Fortunes Top Performing Companies of the Fortune 500 are determined by financial results including, for example, profits, return on revenue, and return on shareholders equity; growth in profits for 1, 5, and 10 years; and revenues per employee, revenues per dollar of assets, and revenues per dollar of equity. Fortunes 100 Best Companies to Work For are chosen by answers given by thousands of randomly selected employees on a questionnaire called The Great Place to Work Trust Index, on materials filled out by thousands of company managers including a corporate culture audit created by the Great Place to Work Institute, and on a human resources questionnaire designed by Hewitt Associates. Industry Weeks Best Managed Plants are determined by organizational accomplishments and demonstrations of superior management skills in the areas of financial performance, innovation, leadership, globalization, alliances, and partnerships, employee benefits and education, and community involvement. The American Customer Satisfaction Index (ACSI) measures customer satisfaction with the quality of goods and services available to household consumers in the United States and then links the results to financial returns. (difficult; pp. 535-536) TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE 269 138.In a short essay, list and discuss three of the main performance control tools used for monitoring and measuring organizational performance. Answer a. Feedforward, concurrent, and feedback controlsthe most desirable type of control feedforward controlprevents anticipated problems since it takes place before the actual activity. Concurrent control, as its name implies, takes place while an activity is in progress. The most popular type of control relies on feedback. In feedback control, the control takes place after the activity is done. b. Financial controlsone of the primary purposes of every business firm is to earn a profit. In pursuit of this objective, managers need financial controls. They might perform several financial ratio tests to ensure that sufficient cash is available to pay ongoing expenses, that debt levels havent become too high, or that assets are being used productively. Or, they might look at some newer financial control tools such as Market Value Added (MVA) to see if the companys market value is greater than the capital invested in it. c. Information controlsinformation can be critical to monitoring and measuring an organizations performance. Managers need the right information at the right time and in the right amount. Inaccurate, incomplete, excessive, or delayed information will seriously impede performance. d. Balanced scorecardthis is a performance measurement that was introduced as a way to evaluate organizational performance from more than just the financial perspective. The balanced scorecard is a performance measurement tool that looks at four areasfinancial, customer, internal processes, and people/innovation/growth assetsthat contribute to a companys performance. According to this approach, managers should develop goals in each of the four areas and measure to determine if these goals are being met. e. Benchmarking of best practicesbenchmarking is the search for the best practices among competitors or noncompetitors that lead to their superior performance. At its most fundamental level, benchmarking means learning from others. As a tool for monitoring and measuring organizational performance, benchmarking can be used to help identify specific performance gaps and potential areas for improvement. (difficult; pp. 538-545) 270 139.In a short essay, discuss the financial control measures of Economic Value Added (EVA) and Market Value Added (MVA). Answer a. Economic Value Added (EVA) is a tool for measuring corporate and divisional performance. Its calculated by taking after-tax operating profit minus the total annual cost of capital. EVA is a measure of how much economic value is being created by what a company does with its assets, less any capital investments the company has made in its assets. As a performance control tool, EVA focuses managers attention on earning a rate of return over and above the cost of capital. When EVA is used as a performance measure, employees soon learn that they can improve their organizations or business units EVA by earning more profit without using more capital, by using less capital, or by investing capital in high-return projects. b. Market Value Added (MVA) adds a market dimension because it measures the stock markets estimate of the value of a firms past and expected capital investment projects. If the companys market value is greater than all the capital invested in it, it has a positive MVA, indicating that managers have created wealth. If the companys market value is less than all the capital invested in it, the MVA will be negative, indicating that managers have destroyed wealth. Studies have shown that EVA is a predictor of MVA and the consecutive years of positive EVA generally lead to a high MVA. (moderate; p. 541) 271 CONTEMPORARY ISSUES IN CONTROL 140.In a short essay, describe workplace privacy concerns for managers today. What are managers doing to control this issue? Answer Employers can (and do), among other things, read your e-mail (even those marked personal or confidential), tap your telephone, monitor your work by computer, store and review computer files, monitor you in an employee bathroom or dressing room, and track your whereabouts in a company vehicle. Why do managers feel they must monitor what employees are doing? A big reason is that employees are hired to work, not to surf the Web checking stock prices, placing bets at online casinos, or shopping for presents for family or friends. Recreational on-the-job Web surfing is thought to cost billions of dollars in lost work productivity annually. Another reason that managers monitor employee e-mail and computer usage is that they dont want to risk being sued for creating a hostile workplace environment because of offensive messages or an inappropriate image displayed on a coworkers computer screen. Finally, managers want to ensure that company secrets arent being leaked. In addition to typical e-mail and computer usage, companies are beginning to monitor instant messaging and even banning camera phones in the office. Managers need to be certain that employees are not, even inadvertently, passing information on to others who could use that information to harm the company. Even with the workplace monitoring organizations can do, U.S. employees have some protection through the federal Electronic Communications Privacy Act, which prohibits unauthorized interception of electronic communication. Although this law gives employees some privacy protection, it doesnt make workplace electronic monitoring illegal as employers are allowed to monitor communications for business reasons or when employees have been notified of the practice. Although employees may think that its unfair for a company to monitor their work electronically and to fire them for what they feel are minor distractions, the courts have ruled that since the computer belongs to the company, managers have a right to view everything on it. Because of the potentially serious costs and given the fact that many jobs now entail work that involves using a computer, many companies are developing and enforcing workplace monitoring policies. The responsibility for this falls on managers. Its important to develop some type of viable workplace monitoring policy. What can managers do to maintain control but do so in a way that isnt demeaning to employees? They should develop a clear and unambiguous electronic equipment and computer usage policy and make sure that every employee knows about it. Tell employees up front that any and all computer or other electronic equipment use may be monitored at any time and provide clear and specific guidelines as to what constitutes acceptable use of company e-mail systems and the Web. (difficult; pp. 547-549; AACSB: Communication) 272 141.In a short essay, define corporate governance and describe some of the current trends in this area. Answer Corporate governance is the system used to govern a corporation so that the interests of corporate owners are protected. In response to several recent business scandals, two areas in which corporate governance is being reformed are the role of boards of directors and financial reporting. The cozy, quid pro quo composition of corporate boards, where board members are frequently peers of other corporations, is changing considerably. Since the passage of the SarbanesOxley Act of 2002, demands on board members of publicly traded companies in the United States have increased considerably. To help boards do their job better, researchers at the Corporate Governance Center at Kennesaw State University developed 10 governance principles for U.S. public companies that have been endorsed by the Institute of Internal Auditors. In addition to expanding the role of boards of directors, the previously mentioned SarbanesOxley Act also called for more disclosure and transparency of corporate financial information. In fact, senior managers in the United States are now required to certify their companies financial results. These types of changes should lead to better informationthat is, information that is more accurate and reflective of the firms financial condition. In fulfilling their financial reporting responsibilities, managers might want to follow the principles also developed by the researchers at the Corporate Governance Center at Kennesaw State University. (moderate; pp. 553-555) 273

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UCF - MAN - 3025
Chapter 19 Operations and Value Chain ManagementTRUE/FALSE QUESTIONSWHAT IS OPERATIONS MANAGEMENT AND WHY IS IT IMPORTANT?1. One of the reasons why operations management is so important to organizations and managers is that it plays a strategic r
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 140.A container of weight W is suspended from ring A. Cable BAC passes through the ring and is attached to fixed supports at B and C. Two forces P = Pi and Q = Qk are
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 1.Two forces P and Q are applied as shown at point A of a hook support. Knowing that P = 15 lb and Q = 25 lb, determine graphically the magnitude and direction of thei
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 2.Two forces P and Q are applied as shown at point A of a hook support. Knowing that P = 45 lb and Q = 15 lb, determine graphically the magnitude and direction of thei
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 3.Two forces are applied to an eye bolt fastened to a beam. Determine graphically the magnitude and direction of their resultant using (a) the parallelogram law, (b) t
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 4.A disabled automobile is pulled by means of ropes subjected to the two forces as shown. Determine graphically the magnitude and direction of their resultant using (a
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 5.The 200-N force is to be resolved into components along lines a-a and b-b. (a) Determine the angle using trigonometry knowing that the component along a-a is to be
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 6.The 200-N force is to be resolved into components along lines a-a and b-b. (a) Determine the angle using trigonometry knowing that the component along b-b is to be
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 7.Two forces are applied as shown to a hook support. Using trigonometry and knowing that the magnitude of P is 600 N, determine (a) the required angle if the resultan
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 8.Two control rods are attached at A to lever AB. Using trigonometry and knowing that the force in the left-hand rod is F1 = 30 lb, determine (a) the required force F2
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 9.Two control rods are attached at A to lever AB. Using trigonometry and knowing that the force in the right-hand rod is F2 = 20 lb, determine (a) the required force F
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 10.An elastic exercise band is grasped and then is stretched as shown. Knowing that the tensions in portions BC and DE of the band are 80 N and 60 N, respectively, det
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 11.To steady a sign as it is being lowered, two cables are attached to the sign at A. Using trigonometry and knowing that = 25, determine (a) the required magnitude o
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 12.To steady a sign as it is being lowered, two cables are attached to the sign at A. Using trigonometry and knowing that the magnitude of P is 70 lb, determine (a) th
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 13.As shown in Fig. P2.11, two cables are attached to a sign at A to steady the sign as it is being lowered. Using trigonometry, determine (a) the magnitude and direct
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 14.As shown in Fig. P2.10, an elastic exercise band is grasped and then is stretched. Knowing that the tension in portion DE of the band is 70 N, determine, using trig
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 15.Solve Prob. 2.1 using trigonometry. Problem 2.1: Two forces P and Q are applied as shown at point A of a hook support. Knowing that P = 15 lb and Q = 25 lb, determi
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 16.Solve Prob. 2.2 using trigonometry. Problem 2.2: Two forces P and Q are applied as shown at point A of a hook support. Knowing that P = 45 lb and Q = 15 lb, determi
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 17.Solve Prob. 2.3 using trigonometry. Problem 2.3: Two forces are applied to an eye bolt fastened to a beam. Determine graphically the magnitude and direction of thei
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 18.For the hook support of Prob. 2.7, determine, using trigonometry, the magnitude and direction of the resultant of the two forces applied to the support knowing that
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 19.Two structural members A and B are bolted to a bracket as shown. Knowing that both members are in compression and that the force is 30 kN in member A and 20 kN in m
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 20.Two structural members A and B are bolted to a bracket as shown. Knowing that both members are in compression and that the force is 20 kN in member A and 30 kN in m
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 21.Determine the x and y components of each of the forces shown.Vector Mechanics for Engineers: Statics and Dynamics, 8/e, Ferdinand P. Beer, E. Russell Johnston, Jr
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 22.Determine the x and y components of each of the forces shown.Vector Mechanics for Engineers: Statics and Dynamics, 8/e, Ferdinand P. Beer, E. Russell Johnston, Jr
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 23.Determine the x and y components of each of the forces shown.Vector Mechanics for Engineers: Statics and Dynamics, 8/e, Ferdinand P. Beer, E. Russell Johnston, Jr
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 24.Determine the x and y components of each of the forces shown.Vector Mechanics for Engineers: Statics and Dynamics, 8/e, Ferdinand P. Beer, E. Russell Johnston, Jr
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 25.Member BD exerts on member ABC a force P directed along line BD. Knowing that P must have a 960-N vertical component, determine (a) the magnitude of the force P, (b
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 26.While emptying a wheelbarrow, a gardener exerts on each handle AB a force P directed along line CD. Knowing that P must have a 30-lb horizontal component, determine
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 27.Activator rod AB exerts on crank BCD a force P directed along line AB. Knowing that P must have a 100-N component perpendicular to arm BC of the crank, determine (a
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COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 28.Member CB of the vise shown exerts on block B a force P directed along line CB. Knowing that P must have a 260-lb horizontal component, determine (a) the magnitude
Cornell - MAE - 2120
COSMOS: Complete Online Solutions Manual Organization SystemChapter 2, Problem 29.A window pole is used to open a window as shown. Knowing that the pole exerts on the window a force P directed along the pole and that the magnitude of the vertical