October 25, 2017

CLEP Principles of Management Exam Answer Key

1. (B). The psychologist Abraham Maslow proposed five categories of need that drive human action. Lower order needs are more influential than higher order needs. The lowest order need in his hierarchy was physiological, followed by safety, social, esteem, and self-actualization.

2. (C). The acronym SMART is used to describe important goal qualities: goals should be Specific, Measurable, Attainable, Relevant, and Time-based.

3. (E). The four functions of management are considered to be: planning (identifying goals and deciding how to achieve them); organizing (defining the relationships in an organization); leading (motivating staff); and controlling (reviewing performance and taking action based on that review). Although managers certainly need to achieve goals and objectives in order to be successful, “achieving” is not a stand-alone function of management.

4. (A). Classical schools of management looked at success only in terms of aspects internal to an organization. The systems theory added the understanding that organizations are also affected by the environment in which they operate and that adapting to that environment is an important factor in achieving success.

5. (D). A utilitarian approach seeks the greatest good for the greatest number of people. This approach, however, uses company profits as the sole yardstick for measuring what is good, and therefore doesn’t reflect the importance of social benefits or costs beyond a company bottom line.

6. (A). Nobel laureate Herbert Simon coined the term satisficing to describe the fact that, when decision-making, people typically settle on the first adequate option they identify rather than pursuing the optimal solution.

7. (B). Michael Porter’s five forces framework identified five aspects of an industry that impact a firm’s success within that industry. Those forces are: threat of new entrants, threat of substitute products, threat of established competitors, bargaining power of customers, and bargaining power of suppliers. The threat of employee strikes, although it would certainly affect a business’s success, is not a competitive force in the environment.

8. (B). Culture refers to informal aspects of a company, not official procedures or policies (Answer (A)). Managers who act in line with a company’s culture may be described as “walking the talk,” (Answer (C)) but that is not a definition of corporate culture. Traditional ways of doing things (Answer (D)) and symbols, language, narratives, and practices (Answer (E)), are all part of what creates culture, but are not the definition of culture. Answer (B) is the best choice for that definition.

9. (D). A SWOT analysis is part of the Strategic Planning Process. It consists of an analysis of a company’s Strengths, Weaknesses, Opportunities, and Threats.

10. (A). The term negative entropy stands for the idea that all systems eventually wear down and thus need to acquire additional energy to sustain themselves.