Robbins Organization Behavior Leadership Quiz

Chapter 11 Leadership 1) John Kotter's view argues that management focuses on coping with complexity, whereas leadership focuses on coping with ________. A) conflict B) success C) day-to-day matters D) morale E) change Answer: E Explanation: E) John Kotter of the Harvard Business School argues that management is about coping with complexity. Good management brings about order and consistency by drawing up formal plans, designing rigid organization structures, and monitoring results against the plans.Leadership, in contrast, is about coping with change. Leaders establish direction by developing a vision of the future; then they align people by communicating this vision and inspiring them to overcome hurdles. Diff: 2Page Ref: 150 Objective: Management and Leadership Quest. Category: Concept/Definitional LO: 1 2) Leadership is best defined as ________. Similar essay: Absolute StatementA) the ability to influence a group toward the achievement of a vision or set of goals B) the process of drawing up formal plans and monitoring their implementation C) the process of carrying out the vision and strategy provided by management D) coordinating and staffing the organization and handling day-to-day problems E) the proper use of the influence gained exclusively as a result of one's organizational position Answer: A Explanation: A) Leadership can be defined as the ability to influence a group toward the achievement of a vision or set of goals.Leaders can emerge from within a group as well as by formal appointment. Diff: 2Page Ref: 150 Objective: Leadership Quest. Category: Concept/Definitional LO: 3) Which of the following statements regarding leadership is true? A) All leaders are managers. B) Formal rights ensure good leadership. C) All managers are leaders. D) All leaders are hierarchically superior to followers. E) Nonsanctioned leaders hip is as important as formal influence. Answer: E Explanation: E) The source of a leader's influence may be formal, such as that provided by managerial rank in an organization.But not all leaders are managers, nor, for that matter, are all managers leaders. Just because an organization provides its managers with certain formal rights is no assurance they will lead effectively. Nonsanctioned leadership—the ability to influence that arises outside the formal structure of the organization—is often as important or more important than formal influence. Diff: 2Page Ref: 151 Objective: Leadership Quest. Category: Concept/Definitional LO: 1 4) Which theory of leadership differentiates leaders from nonleaders by focusing on personal qualities and characteristics? A) Fiedler's modelB) attributes theory C) LMX theory D) contingency theory E) trait theory Answer: E Explanation: E) Trait theories of leadership focus on personal qualities and characteristics. The search for persona lity, social, physical, or intellectual attributes that differentiate leaders from nonleaders goes back to the earliest stages of leadership research. Diff: 1Page Ref: 151 Objective: Trait Theories Quest. Category: Concept/Definitional LO: 2 5) Early research efforts at isolating leadership traits resulted in a number of dead ends. A breakthrough, of sorts, came when researchers began ________.A) organizing traits around the Big Five personality framework B) using the Keirsey Temperament Sorter C) using Cattell's 16 personality factors D) focusing on Eysenck's three factor model E) considering the Revised NEO Personality Inventory Answer: A Explanation: A) Early research efforts at isolating leadership traits resulted in a number of dead ends. By the 1990s, after numerous studies and analyses, about the best we could say was that most leaders â€Å"are not like other people,† but the particular traits that characterized them varied a great deal from review to review.A breakth rough, of sorts, came when researchers began organizing traits around the Big Five personality framework. Most of the dozens of traits in various leadership reviews fit under one of the Big Five, giving strong support to traits as predictors of leadership. Diff: 2Page Ref: 151 Quest. Category: Concept/Definitional LO: 2 6) According to research, which of the Big Five personality traits is the most important in effective leaders? A) conscientiousness B) openness C) extraversion D) agreeablenessE) emotional stability Answer: C Explanation: C) A comprehensive review of leadership literature, when organized around the Big Five, has found extraversion to be the most important trait of effective leaders but more strongly related to leader emergence than to leader effectiveness. Conscientiousness and openness to experience also showed strong relationships to leadership, though not quite as strong as extraversion. Diff: 1Page Ref: 151 Objective: Trait Theories Quest. Category: Concept/Defin itionalLO: 7) Emotional intelligence (EI) is critical to effective leadership because one of its core components is ________. A) conscientiousness B) empathy C) optimism D) intraversion E) perfectionism Answer: B Explanation: B) A core component of EI is empathy. Empathetic leaders can sense others' needs, listen to what followers say (and don't say), and read the reactions of others. The caring part of empathy, especially for the people with whom you work, is what inspires people to stay with a leader when the going gets rough. Diff: 1Page Ref: 152Objective: Trait Theories Quest. Category: Concept/Definitional LO: 2 8) Which of the following statements accurately reflects the conclusions about the trait theories of leadership? A) Traits were better predictors of leadership 20 years ago than they are now. B) The Big Five traits are inadequate for predicting leadership. C) Traits are especially useful for distinguishing between effective and ineffective leaders. D) Traits do a good j ob of predicting the emergence of leaders. E) Overall, traits are poor predictors of leadership. Answer: DExplanation: D) Two conclusions can be offered about the effectiveness of the trait theory of leadership. First, traits can predict leadership. Twenty years ago, the evidence suggested otherwise. The Big Five seem to have rectified that. Second, traits do a better job predicting the emergence of leaders and the appearance of leadership than actually distinguishing between effective and ineffective leaders. Diff: 2Page Ref: 152 Objective: Trait Theories Quest. Category: Concept/Definitional LO: 2 9) Your company's HR director is a believer in trait theories of leadership.He believes that he can differentiate leaders from non-leaders by focusing on personal qualities and characteristics. The HR director plans to promote Lawrence, a highly extroverted manager with a great deal of ambition and energy to the position of VP, Manufacturing. He asks for your expertise in helping him to apply trait theory to leadership selection within your company. The director believes that because of his innate characteristics, Lawrence will be highly effective at helping the company achieve its production goals.You advise the director against basing his decision purely on traits because ________. A) research has identified emotional stability as the strongest predictor of leadership effectiveness B) studies have found that the Big Five traits are difficult to identify in leaders C) studies have shown that traits are poor predictors of leadership effectiveness D) research has found that conscientiousness is a better predictor of effectiveness than extroversion E) research has shown that effective managers are often unlikely to become effective leaders Answer: CExplanation: C) Traits do a better job predicting the emergence of leaders and the appearance of leadership than actually distinguishing between effective and ineffective leaders. The fact that an individual exhibits the t raits and others consider that person to be a leader does not necessarily mean the leader is successful at getting his or her group to achieve its goals. The context matters, too. Diff: 3Page Ref: 152 AACSB: Analytic Skills Objective: Trait Theories Quest. Category: Application LO: 2 10) Which of the following theories of leadership implies that individuals can be trained to become leaders?A) trait theories B) LMX theory C) contingency theories D) behavioral theories E) Fiedler model Answer: D Explanation: D) The failures of early trait studies led researchers in the late 1940s through the 1960s to wonder whether there was something unique in the way effective leaders behave. While trait research provides a basis for selecting the right people for leadership, behavioral studies implied we could train people to be leaders. Diff: 2Page Ref: 152 Objective: Behavioral Theories Quest. Category: Concept/Definitional LO: 2 1) The Ohio State Studies narrowed the independent dimensions of le ader behavior to two that substantially accounted for most of the leadership behavior described by employees: consideration and ________. A) employee-orientation B) empathy C) constructing vision D) initiating structure E) charisma Answer: D Explanation: D) Seeking to identify independent dimensions of leader behavior, the Ohio State Studies determined that two dimensions accounted for most effective leadership behavior: initiating structure and consideration.Initiating structure is the extent to which leaders are likely to define and structure their roles and those of their employees in the search for goal attainment. Consideration is the extent to which a leader's job relationships are characterized by mutual trust, respect for employees' ideas, and regard for their feelings. Diff: 2Page Ref: 152 Objective: Ohio State Studies Quest. Category: Concept/Definitional LO: 2 12) In the context of behavioral dimensions of leadership identified in the Ohio State Studies, initiating struct ure refers to the extent to which ________.A) a person's job relationships are characterized by mutual trust, respect for employees' ideas, and regard for their feelings B) a leader engages in participative management C) a leader is accepting of and respects individual differences among various team members D) a leader is likely to define and structure his or her role and those of employees in the search for goal attainment E) a leader initiates efforts to communicate personally with employees Answer: DExplanation: D) As a behavioral dimension of leaders, initiating structure is the extent to which a leader is likely to define and structure his or her role and those of employees in the search for goal attainment. It includes behavior that attempts to organize work, work relationships, and goals. Diff: 2Page Ref: 152 Objective: Initiating Structure Quest. Category: Concept/Definitional LO: 2 13) Kimberley, a manager at a large company, tends to assign group members to particular task s, expects workers to maintain definite standards of performance, and emphasizes the meeting of deadlines.In the light of the Ohio State Studies, this indicates that Kimberley, as a leader, is ________. A) low in task orientation B) high in consideration C) relationship oriented D) employee oriented E) high in initiating structure Answer: E Explanation: E) Initiating structure is the extent to which a leader is likely to define and structure his or her role and those of employees in the search for goal attainment. It includes behavior that attempts to organize work, work relationships, and goals.A leader high in initiating structure is someone who â€Å"assigns group members to particular tasks,† â€Å"expects workers to maintain definite standards of performance,† and â€Å"emphasizes the meeting of deadlines. † Diff: 3Page Ref: 152 AACSB: Analytic Skills Quest. Category: Application LO: 2 14) In the context of behavioral dimensions of leadership identified in the Ohio State Studies, ________ is the extent to which a person's job relationships are characterized by mutual trust, respect for employees' ideas, and regard for their feelings. A) consideration B) initiating structure C) production orientationD) task orientation E) position power Answer: A Explanation: A) In the context of behavioral dimensions of leadership identified in the Ohio State Studies, consideration is the extent to which a person's job relationships are characterized by mutual trust, respect for employees' ideas, and regard for their feelings. Diff: 2Page Ref: 152 Objective: Consideration Quest. Category: Concept/Definitional LO: 2 15) Jim, a VP at a large company, helps employees with personal problems, is friendly and approachable, treats all employees as equals, and expresses appreciation and support.In the light of the Ohio State Studies, this indicates that Jim, as a leader, is ________. A) task oriented B) high in consideration C) high in initiating structure D) low in relationship orientation E) production oriented Answer: B Explanation: B) Consideration is the extent to which a person's job relationships are characterized by mutual trust, respect for employees' ideas, and regard for their feelings. A leader high in consideration helps employees with personal problems, is friendly and approachable, treats all employees as equals, and expresses appreciation and support. Diff: 3Page Ref: 152 AACSB: Analytic Skills Quest.Category: Application LO: 2 16) The two dimensions of leadership behavior identified in the University of Michigan studies are ________. A) absolute leadership and contingency leadership B) transformational leaders and authentic leaders C) employee-oriented leaders and production-oriented leaders D) initiating structure and consideration E) initiation and completion Answer: C Explanation: C) Leadership studies at the University of Michigan's Survey Research Center located behavioral characteristics of leaders that appeared r elated to performance effectiveness: the employee-oriented leader and the production-oriented leader.The employee-oriented leader emphasized interpersonal relationships by taking a personal interest in the needs of employees and accepting individual differences among them; the production-oriented leader emphasized the technical or task aspects of the job—concern focused on accomplishing the group's tasks. Diff: 2Page Ref: 153 Objective: University of Michigan Studies Quest. Category: Concept/Definitional LO: 2 17) The University of Michigan studies define a(n) ________ leader as one who takes a personal interest in the needs of his/her subordinates.A) contingency B) task-oriented C) employee-oriented D) production-oriented E) structure initiating Answer: C Explanation: C) According to the behavioral dimensions of leaders identified by the University of Michigan's Survey Research Center, the employee-oriented leader emphasized interpersonal relationships by taking a personal i nterest in the needs of employees and accepting individual differences among them. Diff: 2Page Ref: 153 Objective: Employee-Oriented Leaders Quest. Category: Concept/Definitional LO: 2 8) If a leader's main concern is accomplishing his/her group's tasks, the University of Michigan studies label this leader ________. A) employee-oriented B) high in consideration C) relationship-oriented D) low in initiating structure E) production-oriented Answer: E Explanation: E) According to the behavioral dimensions identified by the University of Michigan's Survey Research Center, the production-oriented leader emphasized the technical or task aspects of the job, his main concern being accomplishing the group's tasks. Diff: 2Page Ref: 153 Objective: Production-Oriented LeadersQuest. Category: Concept/Definitional LO: 2 19) The behavioral dimensions identified by the University of Michigan's Survey Research Center are closely related to those identified in the Ohio State Study. Employee-oriented leadership is similar to ________, and production-oriented leadership is similar to ________. A) initiating structure; consideration B) task-orientation; relationship-orientation C) transformational leadership; authentic leadership D) authentic leadership; transformational leadership E) consideration; initiating structure Answer: EExplanation: E) The behavioral dimensions identified by the University of Michigan's Survey Research Center are closely related to the Ohio State dimensions. Employee-oriented leadership is similar to consideration, and production-oriented leadership is similar to initiating structure. In fact, most leadership researchers use the terms synonymously. Diff: 2Page Ref: 153 Quest. Category: Concept/Definitional LO: 2 20) Contingency theories focus on the ________ that impact leadership success.. A) leader's personal characteristics and qualities B) leader's abilities to inspire and transform followersC) situational variables D) values and ethics E) aspects of the leader's behavior Answer: C Explanation: C) Numerous studies have shown that predicting leadership success is more complex than isolating a few traits or behaviors, since leadership styles that are effective in very bad times or in very good times do not necessarily translate into long-term success. This idea led researchers to change their focus from trait and behavior theories to situational influences on leadership styles, or contingency theories. Diff: 1Page Ref: 154 Objective: Contingency Models Quest. Category: Concept/DefinitionalLO: 3 21) The first comprehensive contingency model for leadership was developed by ________. A) Hersey and Blanchard B) Blake and Mouton C) Fred Fiedler D) John Kotter E) Douglas Surber Answer: C Explanation: C) The first comprehensive contingency model for leadership was developed by Fred Fiedler. Fiedler believes that a key factor in leadership success is the individual's basic leadership style. According to the Fiedler contingency model, effe ctive group performance depends on the proper match between the leader's style and the degree to which the situation gives the leader control. Diff: 1Page Ref: 154Objective: Fiedler Contingency Model Quest. Category: Concept/Definitional LO: 3 22) Which model represents the theory that effective group performance depends on the proper match between a leader's style and the degree to which the situation gives control to the leader? A) leader-member exchange model B) Fiedler's contingency model C) Hersey and Blanchard's situational leadership model D) Vroom and Yetton's leader-participation model E) House's path-goal model of leadership Answer: B Explanation: B) According to Fiedler's Contingency Model, the key factor predicting leadership success is the individual's basic leadership style.Since Fiedler assumes an individual's leadership style is fixed, effective group performance depends on the proper match between the leader's style and the degree to which the situation gives the le ader control. Diff: 2Page Ref: 154 Objective: Fiedler Contingency Model Quest. Category: Concept/Definitional LO: 3 23) In Fiedler's model, if a respondent describes his or her least preferred co-worker in relatively positive terms, then the respondent is considered to be ________. A) relationship oriented B) production-oriented C) task-oriented D) high in initiating structure E) low in consideration Answer: AExplanation: A) Fiedler's least preferred coworker (LPC) questionnaire measures whether a person is task- or relationship-oriented by asking respondents to rate their least favorite coworker. If respondents describe their least favorite coworker in favorable terms (a high LPC score), they are probably relationship-oriented. In contrast, respondents who describe their least-preferred coworker in unfavorable terms (a low LPC score) are viewed as primarily interested in productivity and as being task-oriented. Diff: 3Page Ref: 154 Objective: Least Preferred Coworker Quest. Categor y: Concept/Definitional LO: 3 4) If a survey respondent sees his or her least preferred co-worker in unfavorable terms, Fiedler would categorize the respondent as ________. A) high in consideration B) task-oriented C) low in initiating structure D) employee-oriented E) relationship oriented Answer: B Explanation: B) Fiedler's least preferred coworker (LPC) questionnaire measures whether a person is task- or relationship-oriented by asking respondents to rate their least favorite coworker. Respondents who describe their least-preferred coworker in unfavorable terms (a low LPC score) are viewed as primarily interested in productivity and as being task-oriented.Conversely, respondents who describe their least-favorite coworker in favorable terms (a high LPC score) are considered to be relationship-oriented. Diff: 2Page Ref: 154 Objective: Least Preferred Coworker Quest. Category: Concept/Definitional LO: 3 25) Fran has just completed and scored the LPC questionnaire given to her during an evaluation exercise. She is surprised when she finds out that she described her least preferred co-worker in relatively positive terms because she recalls being particularly annoyed by this difficult co-worker several times in the past.Based on your understanding of Fiedler's model, you explain to Fran that her LPC score makes sense within the model because ________. A) Fran tends to become very dominating when given ambiguous tasks B) Fran is usually much more focused on productivity than on developing relationships C) Fran tends in general to focus on building good relationships with the other employees D) Fran has a spotty work history and has tended to switch jobs every couple of years E) Fran is usually chosen for positions of high responsibility within your organization Answer: CExplanation: C) If you describe the person you are least able to work with in favorable terms (a high LPC score), Fiedler would label you relationship oriented. In contrast, if you see your least p referred co-worker in relatively unfavorable terms (a low LPC score), you are primarily interested in productivity and are task oriented. Diff: 3Page Ref: 154 AACSB: Analytic Skills Objective: Least Preferred Coworker Quest. Category: Application LO: 3 26) Fiedler's contingency leadership model assumes that ________. A) an individual's leadership style is essentially fixedB) an individual can use the LPC to change his/her style to a more productive style C) there is no ideal way to match leadership styles with situations D) all leaders can learn to adapt to different contingencies E) each person's style will change in accordance with the situation at hand Answer: A Explanation: A) Fiedler assumes an individual's leadership style is fixed. This means if a situation requires a task-oriented leader and the person in the leadership position is relationship oriented, either the situation has to be modified or the leader has to be replaced to achieve optimal effectiveness.Diff: 2Page Ref: 154 Objective: Fiedler Contingency Model Quest. Category: Concept/Definitional LO: 3 27) Fiedler labels the degree of confidence, trust, and respect that subordinates have in their leader as ________. A) leader-member relations B) task structure C) positional power D) leader-member exchange E) leader-member orientation Answer: A Explanation: A) Fiedler identified three contingency or situational dimensions to leadership success, including leader-member relations, task structure, and position power. Leader-member relations is the degree of confidence, trust, and respect members have in their leader.Diff: 1Page Ref: 154 Objective: Leader-Member Relations Quest. Category: Concept/Definitional LO: 3 28) Which of the following situational dimensions identified by Fiedler relates to the degree to which job assignments are procedurized, that is, structured or unstructured? A) leader-member relations B) task orientation C) task structure D) initiating structure E) productivity oriented Ans wer: C Explanation: C) Fiedler identified three contingency or situational dimensions in which certain types of leaders might excel or fail, including leader-member relations, task structure, and position power.Task structure is the degree to which job assignments are procedurized (that is, structured or unstructured). Leaders who are task-oriented, Fielder proposes, perform best when the situation is very favorable or very unfavorable. Diff: 1Page Ref: 154 Objective: Task Structures Quest. Category: Concept/Definitional LO: 3 29) In the context of Fiedler's model, the situational dimension termed ________ relates to the degree of influence a leader has over power variables such as hiring, firing, discipline, promotions, and salary increases. A) task structure B) leader-member exchange C) position powerD) initiating structure E) leader-member relations Answer: C Explanation: C) In the context of Fiedler's model, the situational dimension termed position power relates to the degree o f influence a leader has over power variables such as hiring, firing, discipline, promotions, and salary increases. Diff: 1Page Ref: 154 Quest. Category: Concept/Definitional LO: 3 30) If you were using the Fielder contingency model of leadership to establish a scenario in your company which gives managers maximum control, which of the following combinations of situational dimensions would you seek to achieve?A) high task structure, good leader-member relations, and strong position power B) limited position power, good leader-member relations, and low task structure C) less structured jobs, strong position power, and moderate leader-member relations D) broad employee responsibilities, low position power, and moderate leader-member relations E) good leader-member relations, low position power, unstructured jobs Answer: A Explanation: A) The Fiedler contingency model proposes that effective group performance depends on the proper match between the leader's style and the degree to whic h the situation gives the leader control.Fiedler states that the better the leader–member relations, the more highly structured the job, and the stronger the position power, the more control the leader has. Diff: 3Page Ref: 154 AACSB: Analytic Skills Quest. Category: Application LO: 3 31) According to the Fiedler contingency model of leadership, task-oriented leaders perform best in situations of ________, while relationship-oriented leaders perform best in ________ situations. A) moderate control; high and low control B) high control; low and moderate control C) high and moderate control; low controlD) high and low control; moderate control E) moderate and low control; high control Answer: D Explanation: D) In the Fiedler contingency model, combining the three contingency dimensions yields eight possible situations in which leaders can find themselves. Fiedler recently condensed these eight situations down to three. According to him, task-oriented leaders perform best in sit uations of high and low control, while relationship-oriented leaders perform best in moderate control situations. Diff: 2Page Ref: 154 Objective: Matching Leaders and Situations Quest. Category: Concept/Definitional LO: 3 2) Which of the following leadership theories argues that because of time pressures, leaders establish a special relationship with a small group of their subordinates—the in-group, who are trusted, get a disproportionate amount of the leader's attention, and are more likely to receive special privileges? A) situational leadership theory B) leader-member exchange C) path-goal D) expectancy E) Fiedler's theory Answer: B Explanation: B) Leader–member exchange (LMX) theory proposes that, because of time pressures, leaders establish a special relationship with a small group of their followers. These individuals make up the in-group.Members of the in-group are trusted, get a disproportionate amount of the leader's attention, and are more likely to receive s pecial privileges. Other followers fall into the out-group. Diff: 1Page Ref: 156 Objective: Leader-Member Exchange Theory Quest. Category: Concept/Definitional LO: 3 As you have observed your department manager and her interactions with the department's employees, you have come to believe in LMX theory. Sarah and Joe get less of the manager's time. Sally gets fewer of the preferred rewards that the manager controls and John has a relationship with the manager based on formal authority interactions.Rebecca is trusted. Jennifer gets a disproportionate amount of the manager's attention and is more likely to receive special privileges. 33) According to LMX theory, the in-group is likely to be composed of ________. A) Rebecca and Jennifer only B) Jennifer only C) Rebecca only D) John, Rebecca, and Jennifer only E) Sarah, Joe, Sally, and John only Answer: A Explanation: A) The LMX theory proposes that early in the history of the interaction between a leader and a given follower, the leade r implicitly categorizes the follower as an â€Å"in† or an â€Å"out,† and that relationship is relatively stable over time.Leaders induce LMX by rewarding those employees with whom they want a closer linkage and punishing those with whom they do not. Diff: 3Page Ref: 156 AACSB: Analytic Skills Objective: In-Group Quest. Category: Application LO: 3 34) According to LMX theory, which of the following employees is likely to be included in the out-group? A) Rebecca only B) Jennifer only C) Sarah and Jennifer only D) Sarah and Joe only E) Sarah, Joe, Sally, and John only Answer: EExplanation: E) The LMX theory proposes that early in the history of the interaction between a leader and a given follower, the leader implicitly categorizes the follower as an â€Å"in† or an â€Å"out,† and that relationship is relatively stable over time. Leaders induce LMX by rewarding those employees with whom they want a closer linkage and punishing those with whom they do not . Diff: 3Page Ref: 156 AACSB: Analytic Skills Objective: Out-Group Quest. Category: Application LO: 3 35) According to the LMX theory, a leader implicitly categorizes followers as â€Å"in† or â€Å"out† ________. A) after careful performance analysisB) on a temporary basis C) early in the interaction D) because of political pressure E) only after several months of working together Answer: C Explanation: C) The LMX theory proposes that early in the history of the interaction between a leader and a given follower, the leader implicitly categorizes the follower as an â€Å"in† or an â€Å"out,† and that relationship is relatively stable over time. Diff: 2Page Ref: 156 Objective: Leader-Member Exchange Theory Quest. Category: Concept/Definitional LO: 3 36) According to research relating to the LMX theory of leadership, which of the following does not appear to characterize in-group members?A) demographic characteristics similar to those of the leader B) atti tudes similar to those of the leader C) personality characteristics similar to those of the leader D) gender opposite to that of the leader E) higher level of competence than out-group members Answer: D Explanation: D) Just how the leader chooses who falls into each category is unclear, but there is evidence in-group members have demographic, attitude, and personality characteristics similar to those of their leader or a higher level of competence than out-group members.Leaders and followers of the same gender tend to have closer (higher LMX) relationships than those of different genders. Diff: 2Page Ref: 156 Quest. Category: Concept/Definitional LO: 3 37) Which of the following is true according to research testing the LMX theory of leadership? A) There is substantive evidence that leaders differentiate among followers. B) Disparities in how leaders treat different followers are largely random. C) The in-group shows no measurable difference in positive outcomes compared to the out- group. D) In-group members usually show lesser â€Å"citizenship† behavior at work.E) In-group members are no more satisfied with their leader than out-group members. Answer: A Explanation: A) Research to test LMX theory has been generally supportive, with substantive evidence that leaders do differentiate among followers; these disparities are far from random; and followers with in-group status will have higher performance ratings, engage in more helping or â€Å"citizenship† behaviors at work, and report greater satisfaction with their superior. Diff: 2Page Ref: 156 Quest. Category: Concept/Definitional LO: 3 8) Believing that in-group members are the most competent, leaders invest their resources in them. This, in turn, leads the in-group members to show higher levels of performance at their jobs. This chain of events reflects the concept of ________. A) assumption fallacy B) reverse engineering C) self-fulfilling prophecy D) Newcomb's paradox E) predestination para dox Answer: C Explanation: C) Followers with in-group status will have higher performance ratings, engage in more helping or â€Å"citizenship† behaviors at work, and report greater satisfaction with their superior.These positive findings for in-group members reflect the concept of self-fulfilling prophecy; leaders invest their resources with those they expect to perform best—the in-group members—and thus unwittingly fulfill their prophecy. Diff: 2Page Ref: 156-157 Quest. Category: Concept/Definitional LO: 3 39) Who was first researcher to consider charismatic leadership in terms of OB? A) Max Weber B) Robert House C) Fred Fiedler D) John Kotter E) Douglas Surber Answer: B Explanation: B) The first researcher to consider charismatic leadership in terms of OB was Robert House.According to House's charismatic leadership theory, followers attribute heroic or extraordinary leadership abilities when they observe certain behaviors. Diff: 1Page Ref: 157 Quest. Category : Concept/Definitional LO: 4 40) Which theory of leadership proposes that followers attribute heroic or extraordinary leadership abilities when they observe certain behaviors? A) transformational leadership theory B) authentic leadership theory C) transactional leadership theory D) attributional leadership theory E) charismatic leadership theory Answer: EExplanation: E) According to House's charismatic leadership theory, followers attribute heroic or extraordinary leadership abilities when they observe certain behaviors. A number of studies have attempted to identify the characteristics of charismatic leaders: they have a vision, they are willing to take personal risks to achieve that vision, they are sensitive to follower needs, and they exhibit extraordinary behaviors. Diff: 1Page Ref: 157 Quest. Category: Concept/Definitional LO: 4 41) Which of the following is not a key characteristic of a charismatic leader?A) sensitivity to follower needs B) unconventional behavior C) vision a nd articulation D) focus on maintaining status quo E) willingness to take risks Answer: D Explanation: D) Charismatic leadership theory, developed by Robert House, is based on the idea that when followers observe certain behaviors displayed by a leader, they view that leader as having extraordinary or even heroic leadership abilities. Recent studies have sought to identify these specific behaviors. Charismatic leaders appear to possess key characteristics, ncluding sensitivity to follower needs, unconventional behavior, vision and articulation, and willingness to take risks. Diff: 2Page Ref: 157 Quest. Category: Concept/Definitional LO: 4 42) Which of the following is true regarding whether charismatic leaders are born or made? A) Charismatic individuals are not born with traits that make them charismatic. B) Charismatic leaders are usually not achievement oriented. C) Charisma cannot be learned. D) Most experts believe individuals can be trained to exhibit charismatic behaviors. E) Personality has shown no link to charismatic leadership.Answer: D Explanation: D) Individuals are born with traits that make them charismatic. Personality is also related to charismatic leadership; charismatic leaders are likely to be extraverted, self-confident, and achievement oriented. Although a small minority thinks charisma is inherited and cannot be learned, most experts believe individuals can be trained to exhibit charismatic behaviors. Diff: 2Page Ref: 158 Quest. Category: Concept/Definitional LO: 4 43) According to evidence, what is the first step a charismatic leader takes to influence followers?A) developing a formal vision statement B) engaging in emotion-inducing and often unconventional behavior C) setting an example for followers through actions and words D) articulating an appealing vision E) communicating high performance expectations Answer: D Explanation: D) Evidence suggests that charismatic leaders follow a four-step process to influence followers. This proce ss begins with articulating an appealing vision, a long-term strategy for attaining a goal by linking the present with a better future for the organization.Desirable visions fit the times and circumstances and reflect the uniqueness of the organization. Diff: 2Page Ref: 158 Quest. Category: Concept/Definitional LO: 4 44) Which of the following is true about the effectiveness of charismatic leadership? A) Research shows scant correlations between charismatic leadership and high performance. B) Charisma may not always be generalizable. C) Charisma appears most successful when the environment is stress-free. D) Charismatic leaders usually surface when the organization is stable and successful.E) Charismatic leadership qualities are best utilized in lower-level management jobs. Answer: B Explanation: B) Research shows impressive correlations between charismatic leadership and high performance and satisfaction among followers. However, charisma may not always be generalizable; its effect iveness may depend on the situation. Charisma appears most successful when the follower's task has an ideological component or the environment includes a high degree of stress and uncertainty. It's more difficult to utilize a person's charismatic leadership qualities in lower-level management jobs.Diff: 2Page Ref: 159 Quest. Category: Concept/Definitional LO: 4 45) Leaders who clarify role and task requirements to accomplish established goals exhibit a(n) _________ style of leadership. A) transformational B) transactional C) charismatic D) authentic E) situational Answer: B Explanation: B) Recent studies, including the Ohio State Studies, Fiedler's model, and path-goal theory, have focused on the differences between transformational leaders and transactional leaders. In contrast to ransformational leaders who inspire their followers to transcend their self-interests for the good of the organization, transactional leaders encourage their followers to achieve goals by defining specifi c goals and task requirements. Diff: 1Page Ref: 160 Quest. Category: Concept/Definitional LO: 4 46) ________ leaders inspire followers to transcend their self-interests for the good of the organization and can have an extraordinary effect on their followers. A) Transformational B) Transactional C) Task oriented D) Laissez-faire E) Transcendental Answer: AExplanation: A) Transformational leaders can have an extraordinary effect on their followers, inspiring them toward selfless goals that benefit the larger organization. These types of leaders inspire their followers by paying attention to their concerns, helping them rethink old problems in new ways, and encouraging them to achieve goals as a group. Diff: 1Page Ref: 160 Quest. Category: Concept/Definitional LO: 4 47) In terms of the full range of leadership model, which leader behavior is the least effective? A) management by exception (active) B) contingent reward C) management by exception (passive) D) individualized consideration E) laissez-faire Answer: E Explanation: E) According to the full range of leadership model, laissez-faire is the most passive and therefore least effective of leader behaviors. Management by exception—active or passive—is slightly better than laissez-faire. Diff: 1Page Ref: 160 Quest. Category: Concept/Definitional LO: 4 48) According to the full range of leadership model, which of the following leader behaviors will enable leaders to motivate followers to perform above expectations and transcend their self-interest for the sake of the organization? A) management by exception (active) B) contingent rewardC) individualized consideration D) management by exception (passive) E) laissez-faire Answer: C Explanation: C) According to the full range of leadership model, leadership behaviors including laissez-faire, management by exception (active or passive), and contingent reward will not get employees to go above and beyond the call of duty. Only with the four styles of tran sformational leadership—individualized consideration, intellectual stimulation, inspirational motivation, and idealized influence—are leaders able to motivate followers to perform above expectations and transcend their self-interest for the sake of the organization.Diff: 1Page Ref: 160 Quest. Category: Concept/Definitional LO: 4 49) Richard is a transactional leader who has just assigned a series of tasks to a project team. Which of the following is most likely to be true about the team's performance under Richard's guidance? A) They will set new standards of productivity for the department, exceeding Richard's expectations. B) They will meet the goals set for them but are unlikely to go beyond those goals. C) They will tend to be unclear about the roles assigned to each team member.D) They will be highly motivated by what they view as Richard's heroic or extraordinary qualities. E) They will tend to put the interests of the company above individual self-interest. Answ er: B Explanation: B) Transactional leaders set goals for their employees and define roles and expectations. Unlike transformational leaders, however, transactional leaders are unlikely to motivate their employees to exceed expectations or go beyond the call of duty. Diff: 3Page Ref: 160 AACSB: Analytic Skills Quest. Category: Application LO: 4 50) Researchers are conducting a study of a company called Acme Corp. which they believe to be led by a transformational leader. Which of the following, if true, would most support the conclusion that Acme's leader is a transformational leader? A) Acme's top managers often disagree over defining the organization's goals. B) Acme's goals tend to be very ambitious and to hold personal value for employees. C) Acme has a centralized decision-making structure. D) Acme's performance has held at average levels for the past three years. E) Acme's compensation plans are designed to reward short-term results. Answer: BExplanation: B) In companies with transformational leaders, followers are more likely to pursue ambitious goals, agree on the strategic goals of the organization, and believe the goals they are pursuing are personally important. There is greater decentralization of responsibility, managers have more propensity to take risks, and compensation plans are geared toward long-term results. All these factors result in superior organizational performance. Diff: 3Page Ref: 160 AACSB: Analytic Skills Quest. Category: Application LO: 4 51) Two companies, Roland Media and Go! Corp, are both headed by ransformational leaders. However, Roland Media showed much greater profitability over a 5-year time period than did Go! Corp. Which of the following best explains why Roland Media performed better than Go! Corp under transformational leadership? A) Roland Media's leader goes through a complex bureaucratic structure, whereas Go! Corp's leader regularly interacts with the company's workforce to make decisions. B) Unlike Go! Corp's em ployees, Roland Media's employees don't readily give up decision-making authority. C) Roland Media is a small, privately held firm, whereas Go!Corp is a large, complex public company. D) Roland Media is headquartered in a low power distance region, whereas Go! Corp is headquartered in a country that is high in power distance. E) Roland Media's employees tend to be more highly individualistic than do Go! Corp's employees. Answer: C Explanation: C) Transformational leadership is most effective in small, privately held companies. It is less effective in complex organizations. Transformational leaders are more effective in improving group potency in teams higher in power distance and collectivism.They are less effective when leaders must deal with bureaucratic structures, when employees are highly individualistic, and when employees don't easily give up decision-making authority. Diff: 3Page Ref: 162 AACSB: Analytic Skills Quest. Category: Application LO: 4 52) Which of the following wo uld best serve as evidence to support the conclusion that an individual is an authentic leader? A) The leader is cautious about information sharing and tends to provide updates only to top management. B) In business exchanges, the leader puts the company's bottom line before his or her ideals.C) The leader acts in the company's best interest as long as those interests don't conflict with his personal ambitions. D) The leader constantly questions his or her values. E) The leader inspires a great deal of trust in his or her followers. Answer: E Explanation: E) Authentic leaders know who they are, know what they believe in and value, and act on those values and beliefs openly and candidly. Their followers consider them ethical people. The primary quality produced by authentic leadership, therefore, is trust. Authentic leaders share information, encourage open communication, and stick to their ideals. Diff: 3Page Ref: 163 Quest.Category: Concept/Definitional LO: 4 53) The concept of aut hentic leadership focuses on ________. A) the moral aspects of being a leader B) the unconventional behavior of the leader C) the readiness of followers D) the situational component of leadership E) the transactional aspect of leadership Answer: A Explanation: A) Authentic leaders know who they are, know what they believe in and value, and act on those values and beliefs openly and candidly. Their followers consider them ethical people. This concept is a promising way to think about ethics and trust in leadership because it focuses on the moral aspects of being a leader.Diff: 2Page Ref: 163 Quest. Category: Concept/Definitional LO: 4 54) The concept of socialized charismatic leadership seeks to integrate charismatic leadership with ________ leadership. A) transformational B) production-oriented C) relational D) ethical E) transactional Answer: D Explanation: D) Scholars have tried to integrate ethical and charismatic leadership by advancing the idea of socialized charismatic leaders hip—leadership that conveys other centered (not self centered) values by leaders who model ethical conduct.Socialized charismatic leaders are able to bring employee values in line with their own values through their words and actions. Diff: 1Page Ref: 163 Quest. Category: Concept/Definitional LO: 4 55) ________ is a psychological state that exists when you agree to make yourself vulnerable to another because you have positive expectations about how things are going to turn out. A) Consideration B) Trust C) Empowerment D) Empathy E) Respect Answer: B Explanation: B) Trust is a psychological state that exists when you agree to make yourself vulnerable to another because you have positive expectations about how things are going to turn out.Even though you aren't completely in control of the situation, you are willing to take a chance that the other person will come through for you. Diff: 1Page Ref: 164 Quest. Category: Concept/Definitional LO: 4 56) All of the following are cons equences of a relationship of trust between supervisors and employees, except that ________. A) trust facilitates information sharing B) trusting groups are more effective C) trust discourages taking risks D) trust enhances productivity E) company bottom-lines are positively influenced by trust Answer: CExplanation: C) Trust between supervisors and employees is related to a number of positive employment outcomes. Trust encourages taking risks, facilitates information sharing, and enhances productivity. Trusting groups are more effective. Diff: 2Page Ref: 165 Quest. Category: Concept/Definitional LO: 4 57) Which of the following statements accurately describes the attribution theory of leadership? A) Leadership is merely an attribution people make about other individuals. B) Good leaders attribute their successes to their team or group members. C) Leadership qualities are attributions that are independent of performance.D) The achievement of group goals are rarely attributed to good leadership. E) Leadership is an attribute that individuals are born with. Answer: A Explanation: A) The attribution theory of leadership says leadership is merely an attribution people make about other individuals. Thus we attribute to leaders intelligence, outgoing personality, strong verbal skills, aggressiveness, understanding, and industriousness. At the organizational level, we tend to see leaders, rightly or wrongly, as responsible for extremely negative or extremely positive performance. Diff: 2Page Ref: 165 Quest.Category: Concept/Definitional LO: 5 58) The President of a small Asian country was hailed as a visionary and a genius when the nation's economy burgeoned during his first term in office. However, when the currency and the stock-markets crashed during his government's second term, he was censured as arrogant, elitist, and short-sighted. This scenario reflects the ________ theory of leadership. A) traits B) behavioral C) LMX D) substitutes E) attribution Answer: E Ex planation: E) The attribution theory of leadership says leadership is merely an attribution people make about other individuals.Thus we attribute to leaders intelligence, outgoing personality, strong verbal skills, aggressiveness, understanding, and industriousness. At the organizational level, we tend to see leaders, rightly or wrongly, as responsible for extremely negative or extremely positive performance. Diff: 3Page Ref: 165 AACSB: Analytic Skills Quest. Category: Application LO: 5 59) According to research, which of the following is true about demographic assumptions that are made about leaders? A) Leaders are likely to be assumed to be white. B) White leaders are no more likely to be rated effective than leaders from other racial groups.C) Teams invariably prefer male leaders. D) Teams prefer female leaders when aggressively competing against other teams. E) Teams prefer male leaders when the competition is within teams and calls for improving positive relationships within th e group. Answer: A Explanation: A) Respondents in a study assumed a leader described with no identifying racial information was white at a rate beyond the base rate of white employees in a company. In scenarios where identical leadership situations are described but the leaders' race is manipulated, white leaders are rated as more effective than leaders of other racial groups.Diff: 2Page Ref: 166 Quest. Category: Concept/Definitional LO: 5 60) Zenith Technologies has a very flat organizational system with few managers. Instead, it has a rigid system of clear, formalized goals, clear procedures, and cohesive work groups. In this case, the various components of the organizational system are acting as ________ to formal leadership by replacing the support and ability offered by leaders. A) detriments B) traits C) attributes D) substitutes E) supplements Answer: D Explanation: D) One theory of leadership suggests that in many situations leaders' actions are irrelevant.Experience and tra ining are among the substitutes that can replace the need for a leader's support or ability to create structure. Organizational characteristics such as explicit formalized goals, rigid rules and procedures, and cohesive work groups can also replace formal leadership. Diff: 3Page Ref: 166 AACSB: Analytic Skills Quest. Category: Application LO: 5 61) Trust which is based on a mutual understanding of each other's intentions and appreciation of the other's wants and desires is referred to as ________. A) substitute trustB) identification-based trust C) attributional trust D) assumption-based trust E) socialized trust Answer: B Explanation: B) Identification-based trust, based on a mutual understanding of each other's intentions and appreciation of the other's wants and desires, is particularly difficult to achieve without face-to-face interaction. It's not yet clear whether it's even possible for employees to identify with or trust leaders with whom they communicate only electronically. Diff: 1Page Ref: 167 Quest. Category: Concept/Definitional LO: 5 2) Because he has an internationally based team, Leo and the team do most of their business communications via e-mail. Which of the following represents what is least likely to be true of Leo's experience working with the team in an online environment? A) Leo relies heavily on his written skills to communicate support and inspiration. B) Team members must be particularly adept at reading emotions in others' messages C) Team members tend to have high levels of identification-based trust. D) Negotiations between team members sometimes stall due to lack of trust.E) Leo uses written communication to reinforce what he conveys to team members verbally. Answer: C Explanation: C) Online leaders confront unique challenges, particularly around developing and maintaining trust. Identification-based trust, based on a mutual understanding of each other's intentions and appreciation of the others wants and desires, is particularly difficult to achieve without face-to-face interaction. Leo's team would be least likely to experience high levels of identification-based trust. Online negotiations might also be hindered because parties express lower levels of trust.Diff: 2Page Ref: 167 AACSB: Analytic Skills Quest. Category: Application LO: 5 63) According to the GLOBE project, which of the following is true of the leadership style preferred by Brazilian employees? A) leaders high on consideration B) leaders with a nonparticipative style C) leaders who take self-governing decisions D) leaders who act alone without engaging the group E) task oriented leaders Answer: A Explanation: A) Based on the values of Brazilian employees, leaders in Brazil would need to be team oriented, participative, and humane.Leaders high on consideration who emphasize participative decision making and have high LPC scores would be best suited to managing employees in this culture. Brazilians do not prefer leaders who take self-governing d ecisions and act alone without engaging the group. Diff: 2Page Ref: 168 Quest. Category: Concept/Definitional LO: 6 64) According to the GLOBE project, which of the following is true of the leadership style preferred by employees in France? A) people-oriented leaders B) leaders with high LPC scores C) leaders with a participative decision-making styleD) leaders with high initiating structure E) relationship oriented leaders Answer: D Explanation: D) Compared to U. S. employees, the French have a more bureaucratic view of leaders and are less likely to expect them to be humane and considerate. A leader high on initiating structure (relatively task oriented) will do best and can make decisions in a relatively autocratic manner. A manager who scores high on consideration (people oriented) may find that style backfiring in France. Diff: 2Page Ref: 168 Quest. Category: Concept/Definitional LO: 6 5) According to the GLOBE study on the global implications of leadership, employees in this c ountry are more likely to value team-oriented and participative leadership than U. S. employees. However, since it has a relatively high-power-distance culture, status differences between leaders and followers are expected. Therefore, the leader should ask employees for their opinions, try to minimize conflicts, but not be afraid to take charge and make the final decision (after consulting team members). Identify this country. A) China B) Brazil C) Egypt D) FranceE) Sweden Answer: C Explanation: C) Employees in Egypt are more likely to value team-oriented and participative leadership than U. S. employees. However, Egypt is also a relatively high-power-distance culture, meaning status differences between leaders and followers are expected. So, a manager must be participative yet demonstrate his or her high level of status by asking employees for their opinions, trying to minimize conflicts, and yet not being afraid to take charge and making the final decision (after consulting team m embers). Diff: 2Page Ref: 168Quest. Category: Concept/Definitional LO: 6 66) According to the GLOBE project, which of the following is true of the leadership style preferred by employees in China? A) leaders who are team-oriented and humane B) leaders with high LPC scores C) leaders who take self-governing decisions D) leaders with a moderately participative style E) leaders who act alone without engaging the group Answer: D Explanation: D) According to the GLOBE study, Chinese culture emphasizes being polite, considerate, and unselfish, but it also has a high performance orientation.These two factors suggest consideration and initiating structure may both be important. Although Chinese culture is relatively participative compared to that of the United States, there are also status differences between leaders and employees. This suggests a moderately participative style may work best. Diff: 2Page Ref: 168 Quest. Category: Concept/Definitional LO: 6 Leo supervises a global team of pr oject members based in multiple countries. Maria is Brazilian; Jean-Paul is French, Amit is Egyptian, and Xiang is Chinese. Leo is American and is based in the United States. 7) In the light on the findings of the GLOBE project, which team members can be expected to respond most favorably when Leo exhibits high levels of initiating structure? A) Jean-Paul and Xiang B) Amit and Xiang C) Maria and Jean-Paul D) Amit and Maria E) Xiang and Amit Answer: A Explanation: A) France and China are countries where individuals tend to value initiating structure. The French have a bureaucratic view of leaders and expect leaders to make decisions relatively autocratically. The Chinese have a high performance orientation that emphasizes status differences between employees.Leaders with high initiating structures therefore have better results in these countries. Diff: 3Page Ref: 168 AACSB: Analytic Skills Objective: Behavioral Theories Quest. Category: Application LO: 6 68) Which of the following te am members would be least likely to respond favorably if Leo made project-related decisions independently, without consulting the team? A) Maria B) Jean-Paul C) Amit D) Xiang E) Maria and Jean-Paul Answer: A Explanation: A) Brazilians value participatory decision-making. Maria would thus be least likely to respond favorably to autocratic decision-making onLeo's part. As one Brazilian manager remarked in a research study, â€Å"We do not prefer leaders who take self-governing decisions and act alone without engaging the group. That's part of who we are. † Diff: 3Page Ref: 168 AACSB: Analytic Skills Quest. Category: Application LO: 6 69) The team agrees that a large component of the project will be carried out at the Chinese headquarters, with Xiang responsible for leading that support team. Based on what the GLOBE project concludes about Chinese culture, which of the following leader behaviors would be most effective?A) infrequent decision-making B) highly participatory decisi on-making C) autocratic decision-making D) decision-making without initiating structure E) moderately participatory decision-making Answer: E Explanation: E) Chinese culture emphasizes being polite, considerate, and unselfish, but it also has a high performance orientation. These two factors suggest consideration and initiating structure may both be important. Although Chinese culture is relatively participative compared to that of the United States, there are also status differences between leaders and employees.This suggests a moderately participative style may work best there. Diff: 3Page Ref: 168 AACSB: Analytic Skills Quest. Category: Application LO: 6 70) In carrying out a transformational approach to overseeing the project, Leo strives to implement the universal elements of transformational leadership. He most likely implements all of the following except ________. A) vision B) providing encouragement C) positiveness D) proactiveness E) silent leadership Answer: E Explanation : E) The silence of a leader is very powerful in Japan, but not necessarily in other countries.Silent leadership is, therefore, not considered one of the university elements of transformational leadership. The elements are: vision, foresight, providing encouragement, trustworthiness, dynamism, positiveness, and proactiveness. Diff: 1Page Ref: 168 AACSB: Analytic Skills Quest. Category: Application LO: 6 71) The term leadership is synonymous with management. Answer: FALSE Explanation: Although often used interchangeably, the terms leadership and management have two different meanings. John Kotter of the Harvard Business School argues that management is the ability to cope with complexity.Leadership, by contrast, is defined as the ability to cope with change. Diff: 1Page Ref: 150 Objective: Management and Leadership Quest. Category: Concept/Definitional LO: 1 72) Nonsanctioned leadership is usually less important than formal influence. Answer: FALSE Explanation: Nonsanctioned leadersh ip—the ability to influence that arises outside the formal structure of the organization—is often as important or more important than formal

Southwestern Airlines

Southwest Airlines Co. (â€Å"Southwest†) is a major U. S. airline that primarily provides short Haul high-frequency, point-to-point, and low-fare service. Southwest was incorporated in Texas and commenced operations on June 18, 1971 with three Boeing 737 aircraft Serving three Texas cities; Dallas, Houston, and San Antonio. Today Southwest operates nearly 400 Boeing 737 aircraft to 59 U. S. cities. Southwest has the lowest operating cost structure in the domestic airline industry and consistently offers the lowest and simplest Fares. Southwest also has one of the best overall customer service records. LUV is Southwest’s NYSE symbol, selected to represent the company’s home at Dallas Love Field, as well as the theme of Southwest’s employee and customer relationships Within 30 years, Southwest Airlines has become the fifth largest major airline company in America. It currently operates 520 Boeing 737s throughout the United States. The mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit. It primarily provides short haul, high-frequency, point-to-point, low-fare air transportation service in the United States. The company essentially functions as a â€Å"point-to-point† operation rather than a â€Å"hub and spoke† service like its competitors. This provides for a unique competitive advantage, which has led this company to be a strong performer within the industry. The major success to their continued success is due to their low-cost model, as compared to their competitors, which allows Southwest airlines to differentiate itself from the competition and perpetuates its success and popularity among consumers. When we look at southwestern airlines competitive environment using porters five forces we find that the bargaining powers of Customers in the airlines industry have many options and are price sensitive. If driving is cheaper than flying southwest may lose customers. There are also over 100 carriers in the U. S. market therefore there are many options for customers. The bargaining power of suppliers: Southwest is at the mercy of the labor Unions and Gas suppliers. If these costs become too high then price raises will mandatory. The threat of new entrants: With so many major airlines going bankrupt there is a large supply of airplanes and personnel. This means that it is easier than ever to start up and airline and try and compete with Southwest. The threat of substitute products: Flying has very few substitutes in the U. S. market if you need to be somewhere in a hurry. However there are other forms of transportation including busses, trains, and cars. The intensity of competitive rivalry: There is intense industry competition. Every route is hotly contested with price wars and a grab for customers. Price margins are low, and airlines need to be able to trim costs any way they can. Southwestern airlines has got the following strengths; Southwest's commitment to customer service has led to an excellent track record. They held the unofficial Triple Crown in customer service for three consecutive years. The Triple Crown consists in being the best in on time performance, baggage handling, and customer satisfaction. This is an amazing feat considering no other airlines have held all three components for a single month. Southwest has a major advantage over other airlines because it operates a single type of plane, the Boeing 737. This means that all their pilots, facilities, and crews are trained on any plane that Southwest owns. Southwest also operates a fleet with an average age of 7 years. This means that they have less maintenance problems, and this leads to fewer delays, and higher customer service. Sensible expansion policy. Southwest has developed a very sensible strategy for expansion, paying particular attention not to strain the balance sheet. It has also achieved a national presence through flights to 59 airports in 58 cities. Southwest has been able to become a national airline by strategic expansion to airports where there is less competition. For example, it opened a major operation at Baltimore-Washington International and therefore avoided the presence of other major airlines at Reagan National and Dulles. The continued growth of the Company is testament to the strategic direction taken by management, particularly considering the difficult business environment. Southwest relies on direct ticket booking and does not heavily utilize travel agents this is a cost saver. They also do not have full food service on their flights, leading to a faster turnaround. Southwest also has a unique open seating system, with no assigned seats the planes load faster. Due to a change in passenger profile, business class and first class seats have suffered declining demand. Many companies have been forced to introduce low-cost fare options. Since southwest has been an industry leader and â€Å"ahead of the curve† in providing low cost, standardized travel options, it has no need to change strategy, thus saving on restructuring costs. The Company also benefits from its long establishment in the low-cost airline market, allowing the Company to capitalize on significant customer awareness of the brand. Southwest has a highly efficient operation. The Company was first to introduce to the Airline industry the ten-minute turnaround (between arrival at the gate and departure). This has subsequently increased demand for short flight routes. Strong financials. Southwest has the strongest market capitalization and balance sheet of all rivals in the sector. A market capitalization of $14,022 million accounts for twice the market capitalization of the five largest rivals put together. In the current volatile market, it should allow southwest to overcome short-term downturns in demand more Successfully than the other main carriers. The continued ability of Southwest to produce positive results highlights it among rivals. 2003 saw quarter-over-quarter increases in income, representing 51 consecutive quarterly profit rises. Revenues for the full year 2003, which were $5,937 million, increased 7. 5% against 2002 revenues. Southwest does not fly into major hub airports in most cities, this leads to lower gate costs, less congestion, and quicker turnaround times. Southwest has been marketed as the low price leader, and their planes have been painted in funky colors. Southwest views its major competition as the automobile and not other airlines. Southwest airlines operate a single type of plane B737 in an all coach configuration. They do not offer meals, and do no transfer bags to other airlines leading to lower operating costs. The airline has won the Triple Crown and is setting the industry standard in customer service. Southwest has come under intense competition from United. They are not a full service airline and do not offer the amenities and services for international travelers. They also do not have a higher cost first class option on their planes. Marketing. Southwest is a low-cost carrier. They provide themselves on cost efficiencies, which enable them to offer good service at lower prices to the customer than their competitors. Their marketing strategy was to convey the message that what Southwest had to offer was of value. Southwest markets itself as the only major short-hop, low-fare, and point-to-point carrier in the U. S. airline industry. Their marketing style is known for being unconventional, unique, unpredictable, and attention-getting in order to create and reinforce the Company’s maverick and fun-loving, combative image. They continually look for ways to make their distinctive image come alive and strike a spark in the minds of the consumer. Finance. In the year 2000, Southwest reported its 28th consecutive year of profitability as well as its ninth consecutive year of increased profits. In many years, Southwest was reporting profits while many other airline companies were reporting losses. Southwest is able to maintain and increase their profit margin by keeping costs low, being highly efficient, and creatively cutting costs. One of Southwest’s most important strategies is keeping its costs low and moving customers in above-average times. In an effort to move customers along quickly, Southwest tries to avoid congested airports. Southwest also encourages passengers to make reservations and ticket purchases through their website. By serving smaller airports near major metropolitan areas and in medium-sized cities, Southwest is able to produce better-than-average on-time performance, as well as reducing fuel costs of idle planes waiting for clearance to land. Serving smaller airports also lowers landing fees and terminal gate costs. Southwest’s operative principal is â€Å"employees come first and customers come second. † Southwest employees are â€Å"hired for attitude and trained for skill. † The Company’s strategy is that it can train people to do the tasks and hold the skills that are required, but a person’s attitude is not something that can be changed. The hiring process involves an interviewing approach called â€Å"Target Selection,† which aims at matching people’s traits (or target dimensions) for performing a specific job successfully. New hires are trained at Southwest University for People. Managers trained in this program take leadership courses that emphasize a management style based on coaching and encouraging rather than supervising or enforcing rules. The Company has the lowest turnover rate in the industry, which may be partly due to the fact that 80% to 90% of supervisory positions are filled internally. However just like any organization, despite the fact that they have strengths, south west also has weaknesses which include: Little room for strategic development. The main weakness of the Company results from operating in a highly competitive market, one that is increasingly susceptible to a volatile political environment. The airline industry is highly competitive as to fares, frequent flier benefits, routes, and service. Some carriers competing with Southwest have larger fleets and a more established brand name. Many carry passengers from the major hubs in the U. S. , holding long-standing relationships with key airports. To enter these markets, the corporate strategy of Southwest will have to be adjusted. No established alliances. Certain major U. S. irlines have established marketing alliances with each other, including Northwest Airlines/Continental Airlines, American Airlines/Alaska Airlines and Continental Airlines/America West Airlines. In 2001, AMR Corp. , parent of American Airlines, completed its acquisition of the assets of Trans World Airlines. This puts enormous strain on the Company to maintain its position in the industry while running a smaller fleet. Fully valued share price. Despite Southwest holding the strongest financial position in the airline industry, the stock of the Company is considered fully valued, particularly in the short term. This will disconcert the investor searching for quick gains resulting in the potential loss of capital to its competitors. The strong financial position will apply pressure to the strategic direction of the Company, forcing the directors of Southwest to consciously pursue the same level of growth if they are to maintain investor confidence. South west airlines have got the following opportunities; Southwest’s greatest opportunity is directly related to its greatest strength: to continue to develop its low-cost position in the airline industry. Southwest must maintain an emphasis on low-cost flying, and brand association that has served it well so far. After September 11, customer numbers dwindled due to consumer fears over flying. One way the Company hopes to regain the trust of the public is through lower airfare. In 2002, no fare was more than $399. However, in August 2002, the company reduced fares even further, lowering last-minute fares while maintaining the full schedule of frequent flights in order to further stimulate travel. As of 2003 Southwest was offering fares as low as $39. The company must keep prices as low as possible in order to stimulate demands, and look to edistribute expenses through other areas. Continual streamlining and automation is necessary in order to both aid in cost-cutting and maintain the competitive advantage on which the company brand is based. Southwest has expanded ticket counters and security checkpoints and has increased its airport workforce. The boarding process has been streamlined through replacing the traditional plastic boarding card system with an automated one, and the carrier is in the process of rolling out new self check-in technology. This should result in a reduction of boarding times, and contrast sharply with those carriers that still have extensive queuing. Expand geographically. The market share Southwest holds has grown substantially, particularly since 9/11. Fifty percent of the core market is under control of Southwest and this is expanding. With the increase in the number of cities and networks to which it is linked, southwest could begin to target large city markets and with such a strong brand name, both marketing and PR costs will reduce. Furthermore, the timing appears perfect, if it wishes to capitalize on the pressure currently endured by many of the established carriers. Southwest could strengthen its position through an alliance. Many competitors have reduced share price due to poor financials. Southwest could exploit this through a merger or a favorable acquisition. This could provide an easier route into the major hubs and remove many of the challenges associated with entering new markets. A major threat comes from the unstable airline industry as the result of the 9/11 attacks. Immediately after the terrorist attacks, and in the face of falling demand for air service, most major carriers announced significant service reduction, grounded aircraft, and reduced employee levels. These events negatively impacted industry profits. Despite the absence of subsequent attacks, the political environment remains unstable, throwing into question the airlines’ ability to make long-range strategic plans. Following 9/11, Southwest was able to offset losses through lower jet fuel prices and internal cost reduction initiatives. However, there can be no assurance that Southwest will be able to continue to offset future cost increases resulting from the changing commercial airline environment. Another threat derives from the Company being subject to varying degrees of competition from surface transportation in its short-haul markets, particularly the private automobile. The short-haul air services that compete with surface transportation regard price as a competitive factor for customers. Similarly, frequency and convenience of scheduling, facilities, transportation safety and security procedures, and customer service may be of equal or greater importance to many passengers. These can limit the number of customers who choose southwest. However, southwest airlines need to put up the following strategies; it needs to launch a new promotional campaign. They need to remind customers in the California market that they are the winner of the Triple Crown, and that low cost means high service and customer satisfaction when it comes to Southwest. With lower turnaround times, and fewer delayed flights southwest has great unique selling points. They just need to remind the public about how great an Airline they are. This can be done with more TV ads, and more sponsorship of major sporting events. Southwest also needs to continue to be southwest. They have a winning business model, and have made money every year of their existence. They cannot abandon what their core competencies are. They need to keep prices where they are, or even lower prices, and they advertise that fact to the public. Southwest airlines have been able to successfully implement its fuel hedging strategy to save on fuel expenses in a big way and have the largest hedging position among other carriers. In the second quarter of 2005, Southwest’s unit costs fell by 3. 5% despite a 25% increase in jet fuel costs. During Fiscal year 2003, southwest had much lower fuel expense (0. 12 per ASM) compared to the other airlines with the exception of JetBlue as illustrated in exhibit 1 below. In 2005, 85 per cent of the airline’s fuel needs has been hedged at $26 per barrel. World oil prices in August 2005 reached $68 per barrel. In the second quarter of 2005 alone, Southwest achieved fuel savings of $196 million. The state of the industry also suggests t hat airlines that are hedged have a competitive advantage over the non-hedging airlines. Southwest announced in 2003 that it would add performance-enhancing Blended Winglets to its current and future fleet of Boeing 737-700’s. The visually distinctive Winglets will improve performance by extending the airplane’s range, saving fuel, lowering engine maintenance costs, and reducing takeoff noise. In an overall effort to improve customer’s in-flight experience, in-flight entertainment is something that Southwest is currently evaluating and which JetBlue has been very successful at already because of its introduction in its long-haul flights. In comparison, Southwest has 415 airplanes to consider and that represents an investment decision at a whole new dimension. Additionally, Southwest has to consider how things may fit into their environment. At this point, 60% of its service is still very short haul. Southwest needs to be mindful of the fact that a certain approach that has been successful for its competitor may not be necessarily work to its advantage. In summary, Southwest has long been regarded as a benchmark in its industry for operational excellence. Southwest Airlines is a fine example of a company that is committed to its core competencies – efficient operations to drive its low cost structure, outstanding delivery of customer service and innovative HR management practices. We hope this paper provided a good insight into Southwest operations, as part of its overall strategy, to achieve success and gain competitive advantage. References www. southwest. com] (Southwest airlines official web site www. mba-tutorials/marketing/southwesternairlines. html www. answers. com/topic/southwesternairlines. html Allen, Margaret. â€Å"Ground Controller. † Dallas Business Journal. August 3, 2001 Southwest Airlines: High Tech, Low Costs† – Eweek. com, April 2005

How can sports help kids Research Paper Example | Topics and Well Written Essays - 1000 words

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MULTICS Assignment Example | Topics and Well Written Essays - 250 words

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Gender equity in science Essay Example | Topics and Well Written Essays - 750 words

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Risk identification is an underdeveloped art Discuss and include an overview of risk identification aids and techniques in yo - Essay Example Risk management is the concept that allows the management to look after future uncertainties like that of high inflation, volatility of market, recession, change in market demand, competitors, change in regulations, etc. Therefore it becomes a responsibility of the management to analyze and identify such risks. Otherwise, they may lead to financial turmoil and create issues like liquidity or even bankruptcy (Georges, 2013). Under the financial markets where uncertainties are high and investors expect to receive good returns, a diversified portfolio is maintained by the financial institutions. This is done in order to minimize the exposure to the risk by making investments in both equity funds and fixed deposits. It can also be said that risk management is the mitigation of the uncertainties, hence, allowing better decision making and prediction regarding the future outcome (Alexander, 2001). Risk Identification Risk management is part of the regular management processes and responsib ilities in the organization. It is an ongoing process that continues throughout the life of the project. It is often seen that entities face issues in locating and identifying the risks that may hamper their project or investment. Risk management is the two-step process. ... Other than few general terms of risk, they find it hard to locate the barriers that might hamper the success of their project or entity as a whole. Like risk management, risk identification is also a complete process and different methods or techniques can be used for successful identification (H. & J., 1999). With proper management, it is probable that most of the associated risks can be identified. Before discussion of the risk identification techniques or methods it is important to discuss its purpose, scope and process. Risk identification process Risk identification is a deliberate and a systematic process to identify and document the potential key risks that the organization as a whole might face. The objective is to understand what would be at stake. The risk identification process should cover all the risks irrespective of whether they are in control of the organization or not (Lubka, 2002). It is a diverse process and requires inputs from all the stakeholders of the organiza tion, whether internal or external. Following briefly highlights the risk identification process: Risk identification usually starts before the project is initiated and the number of risks increase as the project matures through the lifecycle (Merna & Al-Thani, 2005). Identification can be of both, operational risks that are associated with the organization as a whole or project risks specific to the project. Methods that the management would be using to identify the risks and set of different sources that would be used to gather the information. It is important that set of risk identification tools and techniques is used Identified risks must be documented and the probability of occurrence of such event evaluated in order to analyze the resources that would be

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Nike - Recent Enviromental Changes Essay Example for Free

Nike Recent Enviromental Changes Essay INTRODUCTION Founded in 1968 in Oregon, Nikes business activities involve design, development and the worldwide marketing of high quality apparel, equipment, footwear and accessory products. Nike sells to approximately 140 countries around the world and currently boasts an approximate revenue of $8,776,900,000 These revenues are based on product sales of shoes, clothing, and other sports products. Advertising expenditures currently total $223,300,000 and include the following allocations: $64,975,000 for network television, $31,447,000 for consumer magazines, $7,700,000 for spot television, $343,000 for newspapers, $134,000 for outdoor postings, and $36,000 for radio. (Reed Elsevier) Most footwear products are made outside of USA. However apparel products are produced in the USA and abroad. (www.statcan.ca) In this article we will try to explore the interaction between the company Nike and its external business environment, as well as the internal strengths and weaknesses of the company. We will attempt to discover some of the significant changes and events in the external environment that have occurred in the last 5 years and have directly impacted Nike. We will describe how the company adapted and responded to these changes and what the effects of these events were. Also we will identify and describe some of Nikes internal strengths and weaknesses. CHANGES AND EVENTS IN THE EXTERNAL ENVIRONMENT INTERNATIONAL CRISES One of the most recent global environmental changes are the events of September 11th 2001, when airplanes crashed into each of the World Trade Center towers in New York, the Pentagon near Washington, D.C., and near Pittsburgh, P.A. (www.geocities.com/Athens/Acropolis/5232/) U.S. government officials reported that the crashes were a coordinated terrorist attack. Since this catastrophe was not expected, no one was ready to respond to it. Cole Haan store (owned by Nike), located in the World Trade Center plaza has been completely demolished. However, all of approximately 250-260 Nike and Cole Haan employees based in New York are safe and accounted for. In addition, no Nike employees were on board any of the planes involved in the terrorist attacks in New York, Pennsylvania and at the Pentagon. (www.centrum.sk) After closing on Tuesday, September 11th, and Wednesday, September 12th, all  other Nike and Cole Haan stores in New York and Washington D.C. are open. (www.nike.com) This disas ter affected not only the American people but also the world economy and many areas of business, including Nike Inc. The value of American dollar dropped rapidly and is recovering very slowly. Nike has a large amount of their products in inventory, which they are unable to sell and are preparing to cut down the production. This would mean a significant downsizing in number of employees. (www.geocities.com/Athens/Acropolis/5232/) Many consumers have reduced their travel to certain retail destinations; in general consumers are purchasing few non-essential products. Nike expects lower sales and profits over the next several months as consumers closely monitor the U.S. attacks on Afghanistan. (www.nike.com) When a military campaign, like the one in Afghanistan, brings new developments or intensifies, U.S. consumers buy less, prompting retailers to become more cautious with their product orders. These events caused a 12 percent decline in shares since September 11th of Nike Inc., the industrys leader. (www.nike.com) The company said the September 11th attacks on the United States have disrupted most of its long-range strategy plans. Analysts have predicted a modest decrease in quarterly earnings estimates for Nike. They also said they expect fourth-quarter 2001 sales to be hurt by the slowdown in consumer s pending.(www.msn.com) Decline and slow recovery of Nikes stock since Sept. 11th 2001 (www.moneycentral.msn.co.uk) The company expects to scale back advertising and production next year. (www.nike.com) Nike, as a global company, is now focusing its efforts on assisting in the relief efforts and in heeding President Bushs directive to regain business as quickly as possible. (www.sme.sk) Both local and national Red Cross agencies have identified immediate financial support as their most critical need. For that reason, the Nike Foundation has been collecting contributions from individual Nike employees and factory partners across the country and throughout the world. Through matching funds, Nike is making a $1 million contribution to the American Red Cross and a variety of other local relief organizations through matching funds of employees and factory partners. In addition, Nike partner factories in Asia, Feng Tay and Pou Chen, have donated $100,000 each to the American Red Cross. (www.nike.com) Nike also is working with relief agencies in New York, Washington D.C. and Pennsylvania  to provide do nations of Nike products for victims who are affected by these tragic circumstances, as well as for those involved in the rescue and recovery efforts. These donations include more than 14,000 t-shirts, 11,400 pairs of socks, 1,200 pairs of Nike ACG work boots, 1,000 towels, plus hundreds of pairs of shoes, warm-ups, jackets, sweat shirts and gym bags for rescue workers to store their personal belongings. (www.sme.sk) (www.nike.com) Nike and Niketown New York will continue to coordinate with relief and government agencies and provide as many requested products as possible for fire and rescue personnel. Already, more than $300,000 Nike products have been delivered or are on their way to New York relief agencies. (www.nike.com) Nike US employees participated in a Red Cross blood drive on Sept. 24-25 at its Beaverton-based world headquarters and Oct. 1st and Oct. 5th in its Memphis distribution center location. Nike also has donated money to pat for airtime for two 30-second advertisements to the Red Cross during the Oct. 7 broadcast of the World Cup qualifying match between Team USA and Jamaica on ABC, as well as purchasing space the West 4th wall in Manhattan for advertisements. (www.nike.com) The previous numbers indicate Nikes response to this huge global change from social as well as from the business point of view. Nikes donations as a response to the events of Sept. 11th 2001 Organization Amount Designation American Red Cross $250,000 ($106,000 from Nike employees globally) Relief efforts in NY, Washington, DC, and Pennsylvania PBA Widows and Childrens Police Relief Fund c/o Police Benevolence Association $175,000 Assistance to NY families for burial costs and family survival expenses UFA Widows Childrens Fund c/o Uniformed Fire Fighters Assn $175,000 Assistance to NY families for burial costs and family survival expenses Federal Employee Education Assistance Fund $100,000 Assistance to families for burial costs and family survival expenses International Association of Fire Fighters $50,000 Assistance to NY families for burial costs and family survival expenses New York State Fraternal Order of Police WTC Fund $50,000 Assistance to NY families for burial costs and family survival expenses Catholic Charities USA $50,000 Immediate counseling and family services for those impacted by NY disast ers United Methodist Committee on Relief $50,000 Immediate counseling and family services for  those impacted by NY disasters Mercy Corps Comfort for Kids Project $25,000 Helping children and families in NY and Washington DC Misc. contingency fund $75,000 Programs and organizations promoting racial and religious healing and community building efforts Total Reported Cash Donations $1 million (www.nike.com) E-BUSINESS As the modern world changes through advances in technology, the global market economy also changes, affecting global businesses such as Nike Inc. Technological changes in the form of machines and mechanical inventions affected the economy during the industrial revolution, but today the advances are more in computer technology. The first computer was produced in the US approximately 50 years ago and was the size of a large room needing its own electric power plant and cost a million dollars to build. This gigantic computer could only do simple calculations. Computers have since decreased greatly in size and cost and increased in productivity and capabilities. In the 1980s there were big improvements in microprocessors, which allowed for the huge technological advances of the 90s. Computers are now part of many households and almost every family in the developed world has a computer. The top personal computer now costs between $2500 and $3500 compared to the larger models earlier in th e past century. The Internet has also been expanding globally and has changed our world into and global village. The first version of the net was developed in 1969, during the Cold War by the US department of defense as a communication in case of nuclear attack. The net became available in the 1980s for email and Internet chats, but improvements in HTML in the 1990s sparked the birth of a new way of communication and business (www.freespace.virgin.net/g.hirst/). A recent survey calculated 120 million users of the net worldwide and numbers are still growing at an enormous rate. The development quick loading and the fast moving Internet attracted people to do more things on the Internet. One of the new advances of the Internet is an E-business. Many people are now ordering goods and services over the Internet. One other use of Internet is also advertisement. Recently, Nike has been trying to find new markets and consumers. One huge innovation to get closer to the customer is through the Internet. The Internet makes information available to people all around the world. Nikes web page is designed to entertain the visitor through innovative, colourful graphics; to inform the potential customer of Nikes activities; and promote  and sell their products through the E-shop. The Nike accommodates to the world trend of Internet and shopping over the Internet. They made their own web-shop where visiting customers can easily find the product, which they are looking for. This is a great way to improve future business of the company as Internet business is improving so quickly. It is also important to put a lot of effort and quality into the services offering through the Internet to make a good reputation about the services and name of the company. (www.niketown.com) GOVERNMENT REGULATIONS, LAWS AND TRADE BARRIERS In 1994, the EU commission imposed quotas on certain types of footwear manufactured in China. Special Technology Athletic Footwear, footwear designed for use in sporting activities, met certain technical criteria and footwear having a CIF (cost, in surance and freight) price above 9 EUROs was excluded from these quotas. All other footwear produced by Nike falls under the quotas. However Nike feels that the quotas have not material effect on their business. (www.nike.com) In 1995 the EU commission initiated two anti-dumping legislations covering footwear imported from China, Indonesia and Thailand. In 1997 and 1998, the commission imposed definite anti-dumping duties on certain synthetic, textile and leather upper footwear originating from China Indonesia and Thailand. These anti-dumping duties have exclusions for STAF footwear, sports footwear and footwear with the CIF above 5,6 EUROs. (www.nike.com) This means the anti-dumping duties apply only to low cost footwear, which means that Nike can distribute most products except children shoes and low cost sandals. However Nike shifted the production of these types of footwear to other countries and therefore the anti-dumping duties have not had a material affect on their business. (www.centrum.sk) If the EU measures become more restrictive Nike recommends that the European subsidiaries consider shifting the production of footwear to other countries in order to maintain competitive pricing. Nike continues to closely monitor international restrictions and maintain a multi-country sourcing strategy and contingency plans. Nike believes that their major competitors are in the similar position. (www.pravda.sk) NEW MARKETS AND CONSUMER TRENDS Revenue for the past three years of Nikes international (non-US) and US market (www.nikebiz.com) Over the past 4-5 years many new markets have opened for Nike, not only from the geographical point of view and expansions outside the US but also from the customer demand and trends perspective.  (www.centrum.sk) As the concept of the global village is becoming reality, more unexploded markets are opening up. Nike divides its global business into four regions: the United States, Europe, Asia Pacific, and the Americas. (www.nike.com) While each reg ion increased revenue in the fiscal year 2001, most of its growth came from the new unexplored markets outside. In the last seven years, Nike has built many international branch offices and subsidiaries as a response to the changing market. These are located in: Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Hungary, Indonesia, India, Ireland, Italy, Japan, Korea, Malaysia, Mexico, New Zealand, The Netherlands, Norway, Peoples Republic of China, The Philippines, Poland, Portugal, Singapore, Slovenia, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and Vietnam. (www.nike.com) Percentage of footwear production in specific countries The European market for athletic footwear and apparel continues to flourish. Every day, new shops open with a commitment to presentation and service that NIKE emphasizes. Nike feels the emotional connection growing in Europe is similar to the one NIKE created in the U.S. 20 years ago. (www.nike.com) Nikes Asian market is very profitable but als o very demanding one. This market depends on authentic sports positioning and the ability to deliver technology-based performance products. Nikes attempt to fulfill these criteria has so far been very successful. Nike is especially enthusiastic about the World Cup coming to Japan and Korea in 2002. They hope this will provide them with a great opportunity to influence their soccer success in Asia. (www.nike.com) The most competitive and developed market in the world for Nike is the USA. Revenues in this market grow at two percent per year. Although Nike has been struggling in some areas of this market, it continues to lead the athletic footwear market in share and product innovation. Apparel in the U.S. is slowly making its way back to the market after couple of tough quarters in the past 2 years. U.S. Apparel is currently up 9% in revenue for the year and is starting to stabilize in the second half of fiscal 2001. (www.nike.com) Changes that have occurred in customer demand are directly proportional to the present trends of people. According to recent researches, American kids have only 25 percent of their  daily life considered as free time, compared to about 40 percent in 1981. (www.nike.com) For a sports company this means less demand for leisure time clothes, footwear and equipment. According to statistics, athletic footwear sales have shown a decrease in the third quarter. This fact represents back-to-school sales, indicating less interest by the crucial teenage market as it moves toward different looks in the footwear area. This may be explained by an overall shift of interest and fashion in this market from sports toward entertainment, music, and celebrities. A recent trend in the athletic footwear business shows that several of the large corporations are losing market share due to the declining sales in traditional markets. As aerobics, fitness and cross training markets decline there is a shift to non-traditional sports. By 1998, the publicity for a market in brown shoes had passed. Brown shoes never impacted the athletic footwear market as predicted. Instead, hiking, off-trail and fashion footwear continue to show strong growth, with many athletic footwear companies expanding into those areas. (www.nike.com) It is predicted that the market for athletic footwear has peaked and is now declining and leveling off at a production level of about 300 million pairs. Fashion driven spikes often occur, such as in 1995 where a production level of 345 million pairs was reached. This is viewed as a bonus for the industry. (www.nike.com) Retailers will thrive at the 300 million pair a year production level by working with retailers to consolidate store locations, manage inventories and maximize sell-through. The continued trend over the last five years is the consumers willingness to pay, on average, higher prices for athletic footwear. (www.proquest.com) IMPORTANT FINANCIAL EVENTS The financial interactions between countries and governments affect the profits of the large corporations such as Nike and the retail values of their products. In North America transactions are often measured in US dollars. This common currency makes transactions easier between countries. In the European Union, 15 different countries must convert their different currencies when doing business with other countries. This often accounts for increased retail prices in international goods and services. On January 1st 1999, 11 of the 15 members countries of the European Union  established permanent conversion rates between their existing currencies and the new EURO, the new common currency of the European union. Until the end of the transition period, public and private parties may pay for goods and services using the countries original currency or the EURO. Starting January 2002, the EURO will be the official currency of the EU and the original currencies will be completely withdrawn from circulation by June 30th 2002. (www.nike.com) Since January 1998 Nike has been researching the complications and affects of the transitions to the EURO. Nikes devoted project team has made modifications to inform technology systems supporting the market, management, invoicing, pay roles and cash management functions in order to make their conversion smooth. Nike believes that the introduction of the EURO will eliminate inequalities in exchange rates between countries although differences in cost between countries and different tax rates will still affect price differences at the retail level. Over the past three years Nike has been actively working to asses and adjust a practices in pricing to operate effectively under this new currency. (www.nike.com) The cost of adapting Nikes systems and practices to the use of the EURO total approximately 8 millions US dollars and was generally related to the modification of their existing systems. Nike also believes that the change of currency will not have an impact on the financial conditions of results of operation. (www.nikebiz.com) INTERNAL STRENGTHS AND WEAKNESSES STRENGTHS Decision Making Nikes strongest weapon is decision-making. Their managerial team has been able to make decisions specific to their needs and although not all the time, most of the time they were right. They combined rationality, intuition and experience to come up with the best decisions ever made in this market. To prove the above, we can just look at some of their well-known choices made in the past. Nike managers decided to rely on globalization and externalization of risk through wholly or partly-owned subsidiaries. (www.nike.com) The fact that they have subsidiaries all over the world helps them to become more flexible and partially getting rid of potential risk. Their flexibility is proved by the diversity of sports areas they are involved in, which has also turned out to be a great decision since Nike is dominating most of these markets. (www.nike.com) This company is able to manufacture products for a dozen of different sports and still keep the top quality in all of them. Fr om the  start, the managers of Nike decided to count on customer satisfaction and total quality of their products, realizing the social expectations that lied upon their shoulders. They have believed that quality outweighs the extra amount of money spent on manufacturing of the best products on the market. One of the most important decisions of Nikes management was advertising. They spent large amounts of money on commercials, which have in the long term paid back in multiples. They have used famous athletes to promote their brand, which is considered a great strategic plan. Also they decided to involve in various social activities. Their extraordinary advertising has helped them to develop the well-known image they have. (www.msn.com) The owners of the company visualized, gave the company a form, set their goals and then they tried to achieve them. They hired the right personnel and they motivated them by generally higher wages than their competitors were offering. They also involved their employees in initiating and implementing change. According to these employees, Nike allowed them to gain self confidence, express their creativity, and involve in making decisions that need not only the expertise of a manager but also an experience of a worker. (www.nike.com) Looking at the present results of Nikes decisions, this kind of empowerment has shown to be a great choice. Research and Development Efforts Nike believes that the key factor of its success originates from their research and development efforts. (www.nike.com) They emphasize the technical innovation in the design of their products to achieve their manufacturing goals, which are to create products capable of reducing injury, increasing athletes performance and maximizing comfort. Of course, Nike pays a lot of attention to their products design respectively to the present trends. (www.sgma.com) Since these criteria require a specific expertise, recruitment is one of the most important managerial issues of Nike. Looking at their past, we have to admit that they have succeeded in this with excellence. Nike has own staff of specialists in the areas of biomechanics, exercise physiology, engineering, industrial design and others. They also have committees specialized on research and advisory. These committees are made of top-level athletes, coaches, trainers, equipment managers, orthopedics, podiatrists and other experts. (www.nike.com) These people use their expertise and experience to  help Nike on its way to improvement. They help them to develop new better products and improve upon present products. They also consult the company about designs, materials, and concept for product improvement. Athletes hired or sponsored by Nike test-prove the companys products during the development process. These facts are strongly held within the company and Nike is proud to include them in their reports (www.nikebiz.com). WEAKNESSES Ability To Respond And Adapt To Changes Since Nike is a consumer products company, the demand for their products highly depends on popularity of different sports and activities and the changing trends. Therefore they should be able to respond to these changes in costumer preferences and quickly adapt to them. This company must adjust their existing products, develop new ones, and create styles that are specific to the trends. (www.sgma.com) They also have to make an effort to influence sports and fitness preferences through aggressive marketing. This kind of environment is very unstable and puts one against many different sources of risk. If you fail to react quickly to such changes it will show up on your sales and profits reports. Since Nike has been occupying the top of the sports equipment manufacturers chart for a long time they are getting used to their strategies, which are now becoming habits. (www.nike.com) This may be very useful in some cases but according to analysts, ove r time, organizations develop and lock into ways of doing business, in spite of changing conditions. Nikes strategy has been to dominate only the markets that are relatively safe and tend to be very profitable since it has become the worlds leader in this market. (www.nike.com) Despite their great decision making abilities this has turned out to be a very poor choice. For example, Nike did not respond to the growing market of aerobics and fitness training because it seemed too small to be worth that much attention. (www.sgma.com) However, Reebok developed a line of aerobics and fitness equipment which has met a lot of popularity among the customers. Since then, Reebok has been leading this market, which is currently the area of their main interest. (www.sgma.com) This was an example of a slow response to environmental changes. However, there are areas where Nike responded quickly and still was not quite successful. For example, soccer is currently the number 1 sport in the world and is currently dominated by the brand Adidas.  (www.fisonline.com) Even though Nike soccer equipment qualitatively meets the Adidas products, Nike has not been able to take over this market. So what was wrong with their reaction? To dominate such a large market you have to be more aggressive and be able to gain customers attention. (www.sgma.com) Nikes failure in the soccer market is generally seen as the lack of interest, aggressivity and creativity in this area of business. (www.referaty.sk) Growth Company That Has Not Grown Fiscal year 2001 was an above average year for Nike. However, it was not great even though they finished hard in the fourth quarter. This year was fairly similar to the last four years. During that time Nike has been a growth company that has not grown. Until the end of the fiscal year 1997 everything was going great for Nike. From 1994 to 1997 this company went from being a strong company with growing market share and $3 billion in revenues to one with dominant market share and revenues over $9 billion. (www.nike.com) Everyth ing seemed to be going perfect for Nike, they were successful in everything they touched and they were growing rapidly. At the end of the fiscal year 1997 they found themselves in a position where employees were euphoric, but overworked since there was not enough of them. To keep this enthusiasm going they hired more people and continued on their path to becoming a truly global company. (www.sgma.com) Since they realized that this couldnt be accomplished over few years they were trying to be the best at everything they were doing as well as building a strong team for the future. (www.nike.com) This was exactly the point where their growth has frozen and never started again. They penetrated new markets successfully, but were not able to keep up the standards they had set before. They focused on new areas of business so much that they forgot to do the old simple things right. (www.sgma.com) Despite all these efforts the industry was standing still. There were different reasons for this such as the U.S. market hitting the recession point, Nike launching a massive 3-year supply chain overhaul and the tough period in the Asian economy. (www.nike.com) The U.S. market recession point was well expected since this market had grown so fast. Nike launching the m assive 3-year supply chain overhaul, which was well in advance of the competition, was not a productive strategy in short-term but its benefits are supposed to show up in the fiscal year 2002. (www.nike.com) Lastly the downside of the Asian economy was also predictable since this is  a market with big turnovers and risks. However, it was not expected to influence Nike as much as it did. Great companies are able to deal with such events and keep on growing. Nike managers did not pay enough attention to these facts and that was the main reason of their growth halt. (www.sgma.com) Even though Nike is currently growing in some areas of market, such as Europe, Asia, Latin America and the soccer and golf markets, overall they are standing still. (www.nike.com) Year 2001 is the proof of the above. In this year Nike forgot to compete mid- and low-priced footwear in the U.S. and they were not able to match their orders and production well, in which they were very successful in the past. Now, Nike has to face a big decision. They can accept the problems they have and let their business go slowly down, or keep excelling in some things, be average in others and stay at the point where they are now.  However, the best choice for Nike would be to find the solutions to their problems and start growing again. (www.msn.com) (www.sgma.com) CONCLUSION Nikes environment is very unstable and exposures companies to unexpected risks. Generally, Nike has been able to respond to these changes (except few exceptions) by their creativity and flexibility. This company tries to prevent a direct impact of these changes on them by externalizing risk. Despite these facts, Nikes expansion is not as significant as it is expected to be. This is caused by some of their internal weakness and external changes. However, they still remain number 1 in the world footwear market. (Company Profiles For Students) BIBLIOGRAPHY 1. Company Profiles For Students vol.2 m-z 1999 1st ed. P. 944-949 2. www.proquest.com 3. www.geocities.com/Athens/Acropolis/5232/ 4. www.sgma.com 5. www.centrum.sk 6. www.zoznam.sk 7. www.freespace.virgin.net/g.hirst 8. www.fisonline.com 9. www.statcan.ca 10. www.moneycentral.msn.co.uk 11. www.msn.com 12. www.nike.com 13. www.niketown.com 14. www.nikebiz.com 15. www.sme.sk 16. www.pravda.sk 17. www.referat.sk 18. Reed Elsevier, 2000