Correct Answer: A

According to Fred E. Fiedler's contingency theory, people become leaders not only because of personality attributes, but also because of various situational factors and the interaction between the leaders and the situation. Thus, the right person at the right time may rise to a position of leadership if his/her personality and the needs of the situation complement each other. The same person might not become a leader in different circumstances because of failure to interact successfully with that situation. The contingency theory model has three dimensions. (1) Position power is a function of the formal authority structure. It is the degree to which the position held enables a leader to evaluate, reward, sanction, or promote the group members independent of other sources of power, such as personality or expertise. (2) Task structure is how clearly and carefully members' responsibilities for various tasks are defined. Quality of performance is more easily controlled when tasks are clearly defined. (3) Leadermember relations reflect the extent to which group members like, trust, and are willing to follow a leader.

Correct Answer: A

A dynamic and complex organizational environment faces constant change, so the level of uncertainty increases. The more uncertainty an organization faces, the more organic the structure should be. Organic organizations tend to be flexible and adaptive to change.

Correct Answer: B

The supervisor's expectations should be clear. The employee should also be involved in determining how to reach the desired outcome, thereby increasing both acceptance and understanding of the assignment.

Correct Answer: B

Groups in the acceptance stage of group development tend to be effective and efficient. This stage is characterized by personal and mutual understanding, tolerance of individual differences, constructive conflict about substantive matters, realistic expectations about group performance, and acceptance of the authority structure. The resulting trust engenders cohesiveness and a free exchange of information between group members.

Correct Answer: C

When purchasing power is concentrated in a few buyers or when buyers are well organized, their bargaining power is greater. This effect is reinforced when sellers are in a capitalintensive industry, such as trucking.

Correct Answer: D

The intensity of rivalry and the threat of entry may vary with the extent of capacity expansion dictated by the need to achieve economics of scale. If it must be made in large increments to achieve economics of scale, competition will be more intense. The need for large-scale expansion to achieve production efficiency may result in an excess of industry capacity over demand. However, if capacity may be expanded in small increments, industry capacity is less likely to be excessive, the supply-demand balance is less likely to be upset, and price cutting is less likely to be necessary.

Correct Answer: B

If the demand for a product is inelastic, the coefficient of price elasticity of demand (percentage change in quantity demanded - percentage change in price) is less than 1.0. The relationship between price changes and total revenue (TR) changes is TR = price x quantity. The result is that a price increase causes total revenue to increase.

Correct Answer: A

Cost leadership is the generic strategy favored by firms that seek competitive advantage through lower costs and that have a broad competitive scope. Such a firm can earn higher profits than its competitors at the industry average price or charge a lower price to increase market share. The typical firm that follows a cost leadership strategy has low profit margins, a high volume of sales, and a substantial market share. Such a firm has efficient supply and distribution channels; is capable of large capital investment; if it is a manufacturer, has strengths in product design and process engineering; and closely supervises its labor force.

Correct Answer: C

Job sharing and flextime allow employees to adjust their work schedules and hours to better achieve personal objectives. These programs can increase worker loyalty and motivation.

Correct Answer: A

Governmental factors may lead to overbuilding. For example, tax incentives may promote excess capacity by permitting foreign subsidiaries to pay no tax on earnings retained in the business. A nation also may wish to create an indigenous industry. When the minimum efficient scale is great in relation to world demand, the excess production in the country may contribute to global overcapacity. Furthermore, governmental employment pressures may result in overbuilding to create jobs or avoid job loss.