Correct Answer: A

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

Correct Answer: D

(Organizational decline loss of effectiveness and efficiency coupled with inflexibility) may lead to downsizing, merger, reorganization, or liquidation. It results from decreased demand, resource limitations, or mismanagement. One characteristic of a declining organization is lack of innovation. Moreover, the most important cause of organizational decline is management complacency. In turn, a characteristic of management complacency is lack of innovation. Consequently, the CEO should encourage innovation at all levels. Also, downsizing has many negative effects. The enlightened view is that employees are not readily disposable commodities, but rather valuable resources who should be terminated only as a last resort. This view seeks alternatives to involuntary termination. One such alternative is a voluntary retirement program that offers accelerated retirement benefits, severance allowances, or other compensation.

Correct Answer:

Michael E. Porter, a leader in the field of strategic management, has developed a comprehensive model of the structure of industries and competition. One feature is his analysis of the five competitive forces that determine long-term profitability measured by long-term return on investment. This analysis determines the attractiveness of an industry. The five forces are (1) the degree of rivalry among existing firms; (2) threats of, and barriers to, entry; (3) the threat of substitute products or services; (4) the threat of buyers' bargaining power; and (5) the threat of suppliers' bargaining power.

Correct Answer: B

Correct Answer: C