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Chapter 18Emerging Management Practices

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How does business process reengineering cause radical changes in the way firms execute processes? Why are competitive forces driving decisions to downsize and restructure operations? !n what ways and why are operations of many firms becoming more diverse? How does the increasing diversity affect the roles of the firms" accounting systems Why are firms adopting enterprise resource planning systems$ and what are their purposes? What are strategic alliances$ what forms do they ta&e$ and why do firms engage in them? What are the characteristics of open(boo& management$ and why does its adoption re)uire changes in accounting methods and practices? What are the three generic approaches that firms can ta&e in controlling environmental costs?

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TR"E$%AL E 1+ ,he focus of business process reengineering is on the improvement of specific processes+ -./0 , 1!20 3asy O450 16(1

2+ -ccountants have little involvement with 478 initiatives+ -./0 2 1!20 3asy O450 16(1

+ ,o increase the probability of success$ it is important to involve customers in 478 pro9ects+ -./0 , 1!20 3asy O450 16(1

#+ 2irms that are downsizing should engage in other innovative practices to improve efficiency+ -./0 2 1!20 :oderate O450 16(2

%+ 1ownsizing often results in one(time charges against income+ -./0 , 1!20 3asy O450 16(2

'+ 1ownsizing has no effect on materials and labor inputs used to produce outputs+ -./0 2 1!20 :oderate O450 16(2

*+ 1iversity among employees leads to increased employee turnover+ -./0 2 1!20 :oderate O450 16(

6+ :anagement talent is increased in a diverse group of employees+ -./0 , 1!20 3asy O450 16(

;+ !n an 387 system$ data is decentralized among an organization"s divisions+ -./0 2 1!20 :oderate O450 16(#

1<+ ,he &ey concept to an 387 system is a central site for all the data of an organization+ -./0 , 1!20 3asy O450 16(#

11+ 1ata mining employs statistical techni)ues to uncover answers to issues about business operations+ -./0 , 1!20 3asy O450 16(#

12+ /trategic alliances can result in improved operating efficiencies for multiple organizations+ -./0 , 1!20 3asy O450 16(%

1 + !f a strategic alliance is to function effectively$ all parties involved must feel that they are being fairly treated+

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-./0 ,

1!20 3asy

O450 16(%

1#+ ,op management personnel are the &ey players in open(boo& management+ -./0 2 1!20 :oderate O450 16('

1%+ Open(boo& management is most effective in decentralized organizations+ -./0 , 1!20 :oderate O450 16('

1'+ !n an open(boo& management setting$ financial information is often shared with employees who have little &nowledge of accounting concepts+ -./0 , 1!20 3asy O450 16('

1*+ One method to improve the effectiveness of open(boo& management is through game playing+ -./0 , 1!20 3asy O450 16('

16+ Open(boo& management systems are usually easy to implement+ -./0 2 1!20 :oderate O450 16('

1;+ One of the obstacles to implementing open(boo& management is reluctance of an organization to release sensitive financial data+ -./0 , 1!20 3asy O450 16('

2<+ !n a pollution prevention system$ managers produce the pollutant$ and then clean it up+ -./0 2 1!20 16(* O450 :oderate

21+ !n an =end(of(pipe> strategy$ managers produce the pollutant$ and then clean it up+ -./0 , COMPLETION 1+ - method of examining processes to identify and eliminate or reduce functions that add little customer value to products or services is referred to as ??????????????????????????????+ -./0 business process reengineering 1!20 3asy O450 16(1 1!20 16(* O450 :oderate

2+ -ny management action that reduces employment upon restructuring is &nown as ???????????????????+ -./0 downsizing 1!20 3asy O450 16(2

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+ 7ac&aged software programs that allow companies to automate and integrate the ma9ority of their business processes$ share data$ and produce information in a real(time environment are referred to as ?????????????????????????????????????+ -./0 enterprise resource planning @387A systems 1!20 3asy O450 16(#

#+ -n analysis tool employing statistical techni)ues to answer business(related )uestions is referred to as ?????????????????????????????????+ -./0 data mining %+ -n agreement involving two or more firms with complementary core competencies to 9ointly contribute to the supply chain is referred to as a@nA ?????????????????????????????????+ -./0 strategic alliance 1!20 3asy O450 16(%

'+ - management philosophy that allows all wor&ers access to information necessary to do their 9obs effectively is referred to as ?????????????????????????????+ -./0 open(boo& management 1!20 16(' O450 3asy

*+ - system that accounts for both environmental costs and the impact of environmental issues is referred to as a@nA ??????????????????????????????+ -./0 environmental management system+ M"LTIPLE C&OICE 1+ ,he focus of 478 is improving a+ products+ b+ processes+ c+ cost reduction+ d+ decision ma&ing+ -./0 4 1!20 3asy O450 16(1

2+ 478 is n't associated with a+ employee layoffs+ b+ outsourcing initiatives+ c+ technology ac)uisition+ d+ plant expansion+ -./0 1 1!20 3asy O450 16(1

+ 478 stands for a+ business product reengineering+ b+ business purchase reengineering+ c+ business process reengineering+

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d+ business process reduction+ -./0 B 1!20 3asy O450 16(1

#+ Who is n't involved in the successful implementation of 478? a+ investors b+ customers c+ suppliers d+ top management -./0 1!20 3asy O450 16(1

%+ Which of the following is n't a trend promoting the increased use of 478? a+ advancement of technology b+ pursuit of increased )uality c+ price competition caused by globalization d+ business expansion -./0 1 1!20 3asy O450 16(1

'+ 1ownsizing results in a@nA a+ reduction in wor&force+ b+ restructuring of processes+ c+ elimination of noncore businesses+ d+ all of the above+ -./0 1 1!20 3asy O450 16(2

*+ -n advantage of downsizing is a+ decreased costs in the long run+ b+ layoffs+ c+ one(time losses+ d+ reduced communication+ -./0 1!20 3asy O450 16(2

6+ Outsourcing and mar&eting worldwide enable firms to a+ develop new mar&ets+ b+ reduce input costs+ c+ manage effects of pea&s and valleys in local economies+ d+ all of the above+ -./0 1 1!20 3asy O450 16(2

;+ 1iversity applies to differences in a+ race+ b+ religion+ c+ culture+ d+ all of the above+ -./0 1 1!20 3asy O450 16(

1<+ 387 stands for a+ enterprise resource production+ b+ enterprise resource purchasing+ c+ enterprise resource planning+

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d+ enterprise resource processing+ -./0 B 1!20 3asy O450 16(#

11+ 387 systems are a+ pac&aged software+ b+ methods of examining processes+ c+ ways to downsize+ d+ ways to expand geographical operations+ -./0 1!20 3asy O450 16(#

12+ 387 systems should help a company a+ improve )uality+ b+ improve service+ c+ reduce overhead+ d+ all of the above+ -./0 1 1!20 3asy O450 16(#

1 + 1ata mining is used to a+ uncover )uality problems+ b+ study customer retention+ c+ identify cost drivers+ d+ all of the above+ -./0 1 1!20 3asy O450 16(#

1#+ 1ata mining a+ is pac&aged software+ b+ is a method of examining processes+ c+ uses statistical techni)ues to solve problems+ d+ is a way to downsize+ -./0 B 1!20 3asy O450 16(#

1%+ - strategic alliance is a a+ pac&aged software+ b+ way for two companies to 9ointly contribute to the supply chain+ c+ way to downsize+ d+ method of examining processes+ -./0 4 1!20 3asy O450 16(%

1'+ /trategic alliances ta&e the form of a+ 9oint ventures+ b+ technology swaps+ c+ licensing+ d+ all of the above+ -./0 1 1!20 3asy O450 16(%

1*+ @-A ?????????? allows a company to accomplish a technology swap+ a+ data mining b+ strategic alliance c+ diversity

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d+ 478 -./0 4 1!20 3asy O450 16(%

16+ ????????????? is a philosophy of increasing a firmCs performance by involving all wor&ers+ a+ Open(boo& management b+ 1ata mining c+ 1iversity d+/trategic alliance -./0 1!20 3asy O450 16('

1;+ 1isclosing detailed financial information to all employees is a characteristic of a+ open(boo& management+ b+ data mining+ c+ diversity+ d+ strategic alliance+ -./0 1!20 3asy O450 16('

2<+ ????????????? is a way of teaching accounting concepts to financially unsophisticated employees+ a+ 1ata mining b+ Open(boo& management c+ Dame playing d+ 478 -./0 B 1!20 3asy O450 16('

21+ ,o ma&e game playing successful$ the employees must be able to a+ mine data+ b+ form strategic alliances+ c+ win+ d+ use 387+ -./0 B 1!20 3asy O450 16('

22+ 2or game playing to wor&$ motivation must come from a+ individual employees+ b+ lower management+ c+ the board of directors+ d+ upper management+ -./0 1 1!20 3asy O450 16('

2 + ????????????? is a characteristic of a company that is best suited for open(boo& management+ a+ Large size b+ 1ecentralized management c+ Bentralized management d+ /ervice(oriented -./0 4 1!20 3asy O450 16('

2#+ 3:/ stands for a+ environmental manufacturing system+ b+ employee management system+ c+ emergency medical services+

1 1

d+ environmental management system+ -./0 1 1!20 3asy O450 16(*

2%+ ???????????? is @areA a strategy for dealing with environmental effects+ a+ 3nd(of(pipe strategies b+ 7rocess improvements c+ 7ollution prevention d+ -ll of the above -./0 1 1!20 3asy O450 16(*

2'+ 3:/ has to do with handling a+ pollution+ b+ manufacturing+ c+ scrap+ d+ by(products+ -./0 &ORT AN (ER 1+ 1efine business process reengineering @478A+ -./0 4usiness process reengineering is a tool to achieve large$ )uic& gains in effectiveness or efficiency through redesigning the execution of specific business functions+ !t is a method of examining processes to identify and then eliminate$ reduce$ or replace functions and processes that add little customer value to products or services+ 478 is designed to bring radical changes to an organizationCs operations+ 478 is often associated with employee layoffs$ outsourcing initiatives$ and technology ac)uisition+ 1!20 :oderate O450 16(1 1!20 3asy O450 16(*

2+ Why has 478 usage increased? -./0 1+ ,he advancement of technology has made possible electronic remittance of accounts payable and the use of robotic e)uipment to move and assemble components in a manufacturing facility+ -dvancements in technology have improved efficiencies throughout the supply chain+ ,he pursuit of increased )uality is necessary because global competition allows consumers to purchase products and services from the highest )uality providers in the world+ 478 is a useful tool for increasing )uality because it focuses attention on processes associated with poor )uality and indicates ways in which )uality can be improved by replacing$ changing$ or eliminating those processes+ 478 usage is increasing because of the increase in price competition caused by globalization+ ,o successfully compete on the basis of price$ firms must identify ways to become more efficient and thus reduce costs+ O450 16(1

2+

1!20 :oderate

1 2

+ What is downsizing and how is it accomplished? -./0 1ownsizing is any management action that reduces employment upon restructuring operations in response to competitive pressures+ 3vents typical of downsizing are reduction of the wor&force$ restructuring of 9obs and processes$ and reduction or elimination of noncore businesses+ 1!20 :oderate O450 16(2

#+ What are the ris&s and dangers of downsizing? -./0 1+ 2irms can find that layoffs have depleted the in(house talent poolE therefore the ability to solve problems creatively and generate ideas may have been diminished+ 2+ 1ownsizing may reduce trust and morale between employees and management+ !n turn$ communication between these two groups may decrease+ + 1ownsizing can destroy a corporate culture that embraced lifetime employment as a &ey factor in attracting new employees+ !n turn$ this can diminish morale and trust+ 1!20 :oderate O450 16(2

%+ ,o what does wor&force diversity refer? -./0 !t refers to the fact that companies often find that their employees have very diverse bac&grounds such as religion$ race$ values$ wor& habits$ cultures$ political ideologies$ and education levels+ 1!20 :oderate O450 16(

'+ What are enterprise resource planning systems @387sA? -./0 ,hey are pac&aged software programs that allow companies to0 @1A automate and integrate the ma9ority of their business processes$ @2A share common data and practices across the entire enterprise$ and @ A produce and assess information in a real(time environment+ 387 software includes brand names such as /-7$ 8F $ 7eople/oft$ and 4aan+ 1!20 :oderate O450 16(#

*+ What is data mining and how is it used? -./0 1ata mining uses statistical techni)ues and is useful in uncovering )uality problems$ studying customer retention$ determining which promotions generate the greatest sales impact$ and identifying cost drivers+ 1!20 3asy O450 16(#

6+ 1efine a strategic alliance+ -./0 !t is an interorganizational agreement that goes beyond normal customerFsupplier arrangements involving two or more firms with complimentary core competencies to 9ointly contribute to the supply chain+

1!20 3asy

O450 16(%

;+ What forms can strategic alliances ta&e? -./0 /trategic alliances can ta&e the forms of 9oint ventures$ e)uity investment$ licensing$ 9oint 8G1 arrangements$ technology swaps$ and exclusive buyerFseller agreements+ 1!20 3asy O450 16(%

1<+ What is open(boo& management? -./0 !t is a philosophy about increasing a firmCs performance by involving all wor&ers and ensuring that all wor&ers have access to operational and financial information necessary to achieve performance improvements+ 1!20 3asy O450 16('

11+ What are the principles of open(boo& management? -./0 1+ 2+ + #+ %+ '+ *+ 6+ ;+ 1<+ ,urn the management of a business into a game that employees can win+ Open the boo&s and share financial and operating information with employees+ ,each the employees to understand the companyCs financial statements+ /how employees how their wor& influences financial results+ Lin& nonfinancial measures to financial results+ ,arget priority areas and empower employees to ma&e improvements+ 8eview results together and &eep employees accountable+ 7ost results and celebrate successes+ 1istribute bonus awards based on employee contributions to financial outcomes+ /hare the ownership of the company with employees @i+e+$ stoc& optionsA+ O450 16('

1!20 :oderate

12+ How should employees be motivated so open(boo& management will succeed? -./0 ,he obvious way for upper management to motivate wor&ers is to lin& their compensation to increases in profits from the effective use of the financial and operating information provided to them+ 1!20 3asy O450 16('

1 + What are the characteristics of firms best(suited to open(boo& management? -./0 Bharacteristics of best(suited firms are small size$ decentralized management$ a history of employee empowerment$ and the presence of trust between employees and managers+ 1!20 3asy O450 16('

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1#+ 1efine an environmental management system @3:/A+ -./0 3:/ is a system that accounts for both environmental costs and the impact of environmental issues in every aspect of operations+ -ccountants are increasingly concerned with measuring business performance with regard to environmental issues and management of environmental cost+ !n the future$ investors are li&ely to evaluate a companyCs environmental trac& record along with its financial record when ma&ing financial decisions+ 7rimary environmental issues are energy consumption and pollution+ 1!20 :oderate O450 16(*

1%+ What are the three generic strategies for dealing with environmental effects of operations? -./0 1+ 2+ + End-of-pipe strategies. With this approach$ managers produce the waste or pollutant and then find a way to clean it up+ Process improvements. ,his approach involves changes to recycle wastes internally$ reduce production of waste$ or adopt production processes that generate no waste+ Pollution prevention. ,his approach involves eliminating production of pollutants+ O450 16(*

1!20 :oderate

1 %