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if a monopolist is producing a quantity that generates mc = mr, then profit:

Page 1

Microeconomics: CH 9-10 Take home quiz.

Mark your answers on a Scantron BEFORE class. Bring your Scantron to Class On Monday,

November 26. Be sure to be on time, late Scantron forms will be penalized. Scantron forms

coming in after we complete the review in class cannot be accepted for points.

1. Perfect competition is a model of the market that assumes all of the following EXCEPT:

A) a large number of firms.

B) firms face downward-sloping demand curves.

C) firms produce identical goods.

D) many buyers.

2. Which of the following is true in a perfectly competitive market?

A) One unit of a good or service cannot be differentiated from any other on any basis.

B) Brand preferences exist but are very slight.

C) Barriers to entry are relatively strong.

D) Information is costly.

3. Marginal revenue:

A) is the slope of the average revenue curve.

B) equals the market price in perfect competition.

C) is the change in quantity divided by the change in total revenue.

D) is the price divided by the changes in quantity.

4. A firm’s total output times the price at which it sells that output is:

A) net revenue.

B) total revenue.

C) average revenue.

D) marginal revenue.

5. In perfect competition:

A) price and marginal cost are the same.

B) price and marginal revenue are the same.

C) price and total revenue are the same.

D) total revenue and total variable cost are the same.

Page 2

Use the following to answer questions 6-9:

6. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a

perfectly competitive market. Curve M is the _______ curve.





7. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a

perfectly competitive market. Curve N is the _______ curve.





8. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a

perfectly competitive market. If the market price is P3, the firm will produce quantity

_______ and _______ in the short run.

A) q2; make a profit

B) q1; break even

C) q2; incur a loss

D) q4; incur a loss

9. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a

perfectly competitive market. If the market price is P4:

A) firms will leave the industry and the price will fall in the long run.

B) there will be economic profits in the short run and firms will enter the industry in

the long run driving the market price lower.

C) the market supply curve will shift to the left and price will fall in the long run.

D) the firm will continue producing q3 and will continue to make economic profits in

the long run.

Page 3

Use the following to answer questions 10-11:

10. (Exhibit: A Perfectly Competitive Firm in the Short Run) The lowest price that will

yield zero economic profits is indicated by the price or cost labeled:

A) G.

B) F.

C) E.

D) N.

11. (Exhibit: A Perfectly Competitive Firm in the Short Run) The firm will produce in the

short run if the price is at least the price labeled:

A) F.

B) E.

C) N.

D) P.

Use the following to answer questions 12-13:

12. (Exhibit: Short-Run Costs) At the given price, the most profitable level of output occurs

at quantity:

A) N.

B) P.

C) S.

D) T.

13. (Exhibit: Short-Run Costs) This firm’s supply curve begins at quantity:

A) Q.

B) R.

C) S.

D) T.

Page 4

14. In long-run equilibrium, economic profits in a perfectly competitive industry are:

A) positive.

B) zero.

C) negative.

D) indeterminate.

15. Accountants use only _______ costs in their computations of short-run total cost.

A) opportunity

B) implicit

C) explicit costs

D) variable

16. A monopoly is likely to _______ and _______ than otherwise equivalent competitive


A) produce more; charge more

B) produce less; charge more

C) produce more; charge less

D) produce less; charge less

17. A monopoly is a market characterized by:

A) a product with no close substitutes.

B) a single buyer and several sellers.

C) a large number of small firms.

D) a small number of large firms.

18. The power a firm has to set is own price is called:

A) competition.

B) discrimination.

C) legislative control.

D) monopoly power.

19. A monopoly :

A) takes the market price as given.

B) determines its own price, given its demand curve.

C) achieves nearly the same resource allocation efficiency as perfect competition,

because it competes in the general marketplace for dollars.

D) is characterized by A and B.

20. A natural monopoly exists whenever a single firm:

A) is owned and operated by the federal or local government.

B) is investor owned but granted the exclusive right by the government to operate in a


C) confronts economies of scale over the entire range of production that is relevant to

its market.

D) has gained control over a strategic input of an important production process.

Page 5

Use the following to answer question 21:

21. (Exhibit: Computing Monopoly Profit) The profit-maximizing price is _______ and will

generate total economic profit of _______ .

A) P2; EF

B) P3; the rectangle P1P2FG

C) P3; the rectangle P2P3EF

D) P2; EF Do not pick D

22. If a monopolist is producing a quantity that generates MC < MR, then profit:

A) is maximized.

B) is maximized only if MC = P.

C) can be increased by increasing production.

D) can be increased by decreasing production.

Use the following to answer question 23:

23. (Exhibit: Computing Monopoly Profit) Total economic profit at the profit-maximizing

level of output is:

A) EF.

B) EF times Q.

C) price minus average total cost times the quantity where MR = MC.

D) described by B and C.

Page 6

Use the following to answer question 24:

24. (Exhibit: Demand, Elasticity, and Total Revenue) At point A on the demand curve in

Panel (a), the price elasticity of demand is:

A) greater than -1.

B) equal to -1.

C) less than -1.

D) none of the above.

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selected comparative financial statements of korbin company follow

Assignment Results

ACG 3073: Copy of Managerial Accounting ACG 3073

Chapt 13-ACG 3073

Score: 1.26 out of 100 points (1.26%)

[The fol/owing inrOm1!’tion applies to the questions displayed below.]

Selected comparative financial statements of Bennington Company follow:

BENNINGTON COMPANY Comparative Income Statements

For Years Ended December 31,2012,2011, and 2010 2012 2011

$ 538,907 $ 412,847 324,422 260,919

Sales Cost of goods sold

2010 $ 286,500

183,360 =-,,”.=.-=-= =.==-.=-~

Gross profit 214,485 151,928 103,140 Selling expenses 76,525 56,973 37,818 Administrative expenses 48,502 36,331 23,780


Total expenses 125,027 93,304 61,598 c..-..,-===

Income before taxes 89,458 58,624 41,542 Income taxes 16,639 12,018 8,433

“‘~-==-=–=- ,…~•..===-=-“”

Net income $ 72,819 $ 46,606 $ 33,109~—==—-=-: 5••–· –~ _E=”=-.~~

BENNINGTON COMPANY Comparative Balance Sheets

December 31, 2012, 2011, and 2010 2012 2011

Assets Cu rrent assets Long-term investments Plant assets, net


Q $ 48,691 /p $ 38,095 0>$ 50,924 o 500 4,700

91,831 97,858 57,427′

Total assets $ 140,522 $ 136,453 ~_c=T::-… ~

Liabilities and Equity Current liabilities Common stock Other paid-in capital Retained eamings

20,516 72,000 9,000


20,331 72,000 9,000


$ 136,453Total liabilities and equity $ 140,522


$ 113,051 ::3::::–:::::’::-‘:”::~_

19,784 54,000 6,000


$ 113,051

Page 1 of 4

Nadine Gustave

instructions I help


Assignment Results Page 2 of4

1. award: o out of 33.00 points

Required: 1. Compute each year’s current ratio. (Round your answers to 1 decimal place.)

Current ratio Current ratio Current ratio

538.907″ to 412,847″ to 286,500″ to

48,691 ” 38,095 ” 50,924 “

December 31 , 2012: December 31,2011: December 31, 2010:

It}Sook Links (3)

Worksheet Learning Objective: 13·P1 Explain and apply methods Learning Objective: 13·P3 Define and apply ratioof horizontal analysis. analysis.

Learning Objeclive: 13·P2 Describe and apply methods of vertical analysis.Difficulty: Hard

Required: 1. Compute each year’s current ratio. (Round your answers to 1 decimal place.)

December 31,2012: J December 31, 2011: December 31,2010:

Current ratio Current ratio Current ratio

2.4±0.1 to 1.9±0.1 to 2.6± 0.1 to

1.0 1.0 1.0


Current ratio December 31,2012: $48,6911 $20,516 December31,2011: $38,095/$20,331 December 31,2010: $50,9241 $19,784

2.4 to 1 1.9to 1 2.6 to 1

http://ezto.mhecloud.mcgraw-hill.comlhm.tpx 3/25/2013

Assignment Results Page 3 of 4

award: o out of 33.00

. points 2. Express the income statement data in common-size percents. (Round your answers to 2 decimal

places. Omit the “%” sign in your response.)


Sales Cost of goods sold

Gross profit Selling expenses Administrative expenses

Total expenses

Income before taxes Income taxes

Net income

BENNINGTON COMPANY Common-Size Comparative Income Statements

For Years Ended December 31,2012,2011, and 2010 2012 2011 538,907Ii % 412,487Ii % 324,422Ii 260.919Ii

2010 286,500Ii % 183,360Ii

214,485Ii 76,525Ii 48,502 Ii

103,140Ii 37,818Ii 23,780Ii

75.00 Ii % 30.00 Ii %42,00 Ii %


tt;eBook Links (3) ._———————_._._—–_._._—_. __ ._———- —-

Difficulty: Hard

Learning Objective: 13-P1 Explain and apply methods Learning Objective: 13-P3 Define and apply ratio of horizontal analysis. analysis.

Learning Objective: 13-P2 Describe and apply methods of vertical analysis.

2. Express the income statement data in common-size percents. (Round your answers to 2 decimal places. Omit the “’10” sign in your response.)

Sales Cost of goods sold

Gross profit Selling expenses Administrative expenses

Total expenses

Income before taxes Income taxes

Net income

BENNINGTON COMPANY Common-Size Comparative Income Statements

For Years Ended December 31, 2012, 2011, and 2010 2012 2011 j1OO:00 % j1OifOo %

60..20. ± 0..0.1 I 63.20. ± 0..0.1


2010 I 100.0.0. %

64.0.0. ± 0..0.1I I I I

,==–=-_-:oo,=;;.=.-='”==~::.::=::.’:.==.~=:::::.==.::;.. .. —- ..-=-‘”>’=,”===::.-::>

I 23.20. ± 0..0.1

39.80. ± 0..0.1 14.20. ± 0..0.1 9.0.0. ± 0..0.1

I .”,-,=..:::..c=–“‘–” .:.;;.;,=~-===,=:;;..:;===== ___::;====.”‘:””===:::,

I I I I 21.5D±DDr

36.80. ± 0..0.1 13.80. ± 0..0.1

8.80. ± 0..0.1

36.0.0. ± 0..0.1 13.20. ± 0..0.1

8.30. ± 0..0.1

r 16.6D±D.D1 )14.2oTi’i:01 I 14.5D±D.D1 I 3.0.9 ± 0.0.1 I 2.91 ± 0..0.1 I 2.94 ± 0..0.1


j13.51 ± 0..0.1 % I 11.29 ± 0..0.1 % 11.56 ± 0..0.1 %

http://ezto.mhec1oud.mcgraw-hill.comlh1n.tpx 3/2512013

Assignment Results Page 4 of 4

award: 1.26 out of 34.00 points

3. Express the balance sheet data in trend percents with 2010 as the base year. (Round your answers to 2 decimal places. Leave no cells blank – be certain to enter “0” wherever required. Omit the “%” sign in your response.)


Assets Current assets Long-term investments Plant assets

Total assets

Liabilities and Equity Current liabilities Common stock Other contributed

capital Retained earnings

Total liabilities and equity

LUbBook links (3)


Difficulty: Hard

BENNINGTON COMPANY Balance Sheet Data in Trend Percents December 31.2012,2011, and 2010

2012 2011 2010

40.000% 55.000% 30.000% 0.00 (; 500.000 4.7000

91.831 0 97.858 0 57.4570

47.055.000 987.123.00 0 5.856.000 e:–==-,~ _5.

50.000% 45.000% 85.000% 895.000 2.256.000 8.795.000

586.000 897.00. 854.000

325.000 854.000 898.000

Learning Objective: 13-P1 Explain and apply methods Learning Objective: 13-P3 Define and apply ratio of horizontal analysis. analysis.

Learning Objective: 13-P2 Describe and apply methods of vertical analysis.

3. Express the balance sheet data in trend percents with 2010 as the base year. (Round your answers to 2 decimal places. Leave no cells blank – be certain to enter “0” wherever required. Omit the “%” sign in your response.)


Current assets

Long-term investments

Plant assets

Total assets

Liabilities and Equity

Current liabilities

Common stock

Other contributed capital

Retained earnings

Total liabilities and equity

BENNINGTON COMPANY Balance Sheet Data in Trend Percents December 31, 2012, 2011, and 2010

2012 2011 2010

100.00 ± 0.01 %I 95.62 ± 0.01 % 74.81 ± 0.01 % I 0.00 ± 0.01 10.64 ± 0.01 I 159.91 ± 0.01 170.40 ± 0.01


100.00 ± 0.01

124.30 ± 0.01 120.70 ± 0.01 100.00 ± 0.01

103.70 ± 0.01 % I 102.76 ± 0.01 % I 100.00 ± 0.01 % 133.33 ± 0.01 133.33 ± 0.01 100.00 ± 0.01

150.00 ± 0.01 150.00 ± 0.01 100.00 ± 0.01

117.25 ± 0.01 105.58 ± 0.01 100.00 ± 0.01

124.30 ± 0.01 120.70 ± 0.01 100.00 ± 0.01

C:i: .

©2012 The McGraw·HiII Companies. All rights reserved.

http://e’Z1o,mhec1oud.mcgraw-hill.comlhm.tpx 3/25/2013

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a kanban control system uses a signaling device to regulate jit flows.

Although being lean helps manufacturers hold down costs by keeping stockpiles of components and finished goods low, it can leave them high and dry if production supplies don’t arrive as expected, a risk highlighted by the parts shortages caused by the earthquake and tsunami in Japan. The March 11, 2011, disaster that damaged factories and hobbled ports in Japan has thrown the situation into sharp relief. The disruptions quickly radiated out, putting kinks in the global supply chains of several industries. Auto plants in the midwest United States and electronics factories across Asia scrambled to find substitutes for Japanese-made parts. Many other industries say they are still assessing how the disruptions will filter back to them.


Closer to the Bone


Steps factories are taking to prevent disruptions:

Sources: Commerce Dept.; WSJ reporting.

Just-in-time makes sense, but it makes supply chains vulnerable to disruptions, so what we’re seeing now is theoretical concepts being adapted to meet the practical world. Nobody expects manufacturers to revert to their old ways of piling up masses of parts and products, but many manufacturers may have gotten stretched too thin in recent years.

Source: Adapted from Timothy Aeppel, The Wall Street Journal, April 29, 2011.


Explain what lean production is.


The most significant operations and supply management approach of the past 50 years is lean production. In the context of supply chains, lean production refers to a focus on eliminating as much waste as possible. Moves that are not needed, unnecessary processing steps, and excess inventory in the supply chain are targets for improvement during the learning process. Some consultants in industry have coined the phrase value chain to refer to the concept that each step in the supply chain processes that delivers products and services to customers should create value. If a step does not create value, it should be removed from the process. Lean production may be one of the best tools for implementing green strategies in manufacturing and service processes.

Lean production

Integrated activities designed to achieve high-volume, high-quality production using minimal inventories of raw materials, work-in-process, and finished goods.

The basis of lean thinking came from the just-in-time (JIT) production concepts pioneered in Japan at Toyota. Even though JIT gained worldwide prominence in the 1970s, some of its philosophy can be traced to the early 1900s in the United States. Henry Ford used JIT concepts as he streamlined his moving assembly lines to make automobiles. For example, to eliminate waste, he used the bottom of the packing crates for car seats as the floor board of the car. Although elements of JIT were being used by Japanese industry as early as the 1930s, it was not fully refined until the 1970s when Tai-ichi Ohno of Toyota Motors used JIT to take Toyota’s cars to the forefront of delivery time and quality.

Customer value, in the context of lean production, is defined as something for which the customer is willing to pay. Value-adding activities transform materials and information into something the customer wants. Non–value-adding activities consume resources and do not directly contribute to the end result desired by the customer. Waste, therefore, is defined as anything that does not add value from the customer’s perspective. Examples of process wastes are defective products, overproduction, inventories, excess motion, processing steps, transportation, and waiting.

Customer value

In the context of lean production, something for which the customer is willing to pay.


Anything that does not add value from the customer’s perspective.


exhibit 14.1Lean Production Pull System


Lean production is an integrated set of activities designed to achieve production using minimal inventories of raw materials, work-in-process, and finished goods. Parts arrive at the next workstation “just-in-time” and are completed and move through the process quickly. Lean is also based on the logic that nothing will be produced until it is needed. Exhibit 14.1 illustrates the process. Production need is created by actual demand for the product. When an item is sold, in theory, the market pulls a replacement from the last position in the system—final assembly in this case. This triggers an order to the factory production line, where a worker then pulls another unit from an upstream station in the flow to replace the unit taken. This upstream station then pulls from the next station further upstream and so on back to the release of raw materials. To enable this pull process to work smoothly, lean production demands high levels of quality at each stage of the process, strong vendor relations, and a fairly predictable demand for the end product.

The Toyota Production System

Here we develop the philosophy and elements of lean production developed in Japan and embodied in the Toyota Production System—the benchmark for lean manufacturing. The Toyota Production System was developed to improve quality and productivity and is predicated upon two philosophies that are central to the Japanese culture: elimination of waste and respect for people.1

Elimination of Waste Waste, as defined by Toyota’s past president, Fujio Cho, is “anything other than the minimum amount of equipment, materials, parts, and workers (working time) which are absolutely essential to production.” An expanded lean definition advanced by Fujio Cho identifies seven prominent types of waste to be eliminated from the supply chain: (1) waste from overproduction, (2) waste of waiting time, (3) transportation waste, (4) inventory waste, (5) processing waste, (6) waste of motion, and (7) waste from product defects.2

Respect for People Respect for people is a key to the Toyota Production System. It has traditionally strived to assure lifetime employment for permanent positions and to maintain level payrolls even when business conditions deteriorate. Permanent workers (about one-third of the total workforce of Japan) have job security and tend to be more flexible, remain with a company, and do all they can to help a firm achieve its goals. (Global recessions have caused many Japanese companies to move away from this ideal.)


Company unions at Toyota as well as elsewhere in Japan exist to foster a cooperative relationship with management. All employees receive two bonuses a year in good times. Employees know that if the company performs well, they will get a bonus. This encourages workers to improve productivity. Management views workers as assets, not as human machines. Automation and robotics are used extensively to perform dull or routine jobs so employees are free to focus on important improvement tasks.

Toyota relies heavily on subcontractor networks. Indeed, more than 90 percent of all Japanese companies are part of the supplier network of small firms. Some suppliers are specialists in a narrow field, usually serving multiple customers. Firms have long-term partnerships with their suppliers and customers. Suppliers consider themselves part of a customer’s family.

Lean Supply Chains Processes

The focus of the Toyota Production System is on elimination of waste and respect for people. As the concepts have evolved and become applied to the supply chain, the goal of maximizing customer value has been added. Customer value when considered from the entire supply chain should center on the perspective of the end customer with the goal being to maximize what the customer is willing to pay for a firm’s goods or services. The value stream consists of the value-adding and non– value-adding activities required to design, order, and provide a product or service from concept to launch, order to delivery, and raw materials to customers. This all-inclusive view of the system is a significant expansion of the scope of application of the lean concepts pioneered by Toyota. When applied to supply chains, waste reduction relates to the optimization of the value-adding activities and the elimination of non–value-adding activities that are part of the value stream.

Value stream

These are the value-adding and non– value-adding activities required to design, order, and provide a product from concept to launch, order to delivery, and raw materials to customers.

Waste reduction

The optimization of value-adding activities and elimination of non– value-adding activities that are part of the value stream.

In the following paragraphs we discuss the different components of a supply chain and what would be expected using a lean focus:

Lean Suppliers  Lean suppliers are able to respond to changes. Their prices are generally lower due to the efficiencies of lean processes, and their quality has improved to the point that incoming inspection at the next link is not needed. Lean suppliers deliver on time and their culture is one of continuous improvement. To develop lean suppliers, organizations should include them in their value stream planning. This will help them fix problems and share savings.

Lean Procurement  A key to lean procurement is automation. The term e-procurement relates to automatic transaction, sourcing, bidding and auctions using web-based applications, and the use of software that removes human interaction and integrates with the financial reporting of the firm. Another key to lean procurement is visibility. Suppliers must




be able to “see” into each customer’s operations and customers must be able to “see” into their suppliers’ operations. The overlap of these processes needs to be optimized to maximize value from the end-customer perspective.

Lean Manufacturing  Lean manufacturing systems produce what the customer wants, in the quantity they want, when they want it, and with minimum resources. Applying lean concepts in manufacturing typically presents the greatest opportunities for cost reduction and quality improvement.

Lean Warehousing  This relates to eliminating non–value-added steps and waste in product storage processes. Typical functions include the following: receiving material; putting-away/storing; replenishing inventory; picking inventory; packing for shipment; and shipping. Waste can be found in many warehousing processes including shipping defects, which creates returns; overproduction or overshipment of products; excess inventory, which requires extra space and reduces warehouse efficiency; excess motion and handling; waiting for parts; and inadequate information systems.

Lean Logistics  Lean concepts can be applied to the functions associated with the movement of material through the system. Some of the key areas include optimized mode selection and pooling orders; combined multistop truckloads; optimized routing; cross docking; import/export transportation processes; and backhaul minimization. Just as with the other areas, these logistics functions need to be optimized by eliminating non–value-adding activities while improving the value-adding activities.

Lean Customers  Lean customers have a great understanding of their business needs and specify meaningful requirements. They value speed and flexibility and expect high levels of delivery performance. Lean customers are interested in establishing effective partnerships with their suppliers. Lean customers expect value from the products they purchase and can then provide value to their own customers.

The benefits of a lean supply chain primarily are in the improved responsiveness to the customer. As business conditions change, the supply chain adapts to dynamic needs. The ideal is a culture of rapid change with a bias for change when it is needed. The reduced inventory inherent in a lean supply chain reduces obsolescence and reduces flow time through the value-added processes. The reduced cost along with improved customer service allows the firms using a lean supply chain a significant competitive advantage when competing in the global marketplace.


Illustrate how lean concepts can be applied to supply chain processes.


Looking for ways to improve supply chain processes should be based on ideas that have been proven over time. In the following, we review a set of key principles that can guide the design of lean supply chains. We divide our design principles into three major categories. The first two sets of principles relate to internal production processes. These are the processes that actually create the goods and services within a firm. The third category applies lean concepts to the entire supply chain. These principles include:

1.   Lean layouts

a.   Group technology

b.   Quality at the source

c.   JIT production


2.   Lean production schedules

a.   Uniform plant loading

b.   Kanban production control system

c.   Minimized setup times

3.   Lean supply chains

a.   Specialized plants

b.   Collaboration with suppliers

c.   Building a lean supply chain


Lean Layouts

Lean requires the plant layout be designed to ensure balanced work flow with a minimum of work-in-process inventory. Each workstation is part of a production line, whether or not a physical line actually exists. Capacity is balanced using the same logic for an assembly line, and operations are linked through a pull system. In addition, the system designer must visualize how all aspects of the internal and external logistics system tie to the layout.

Preventive maintenance is emphasized to ensure that flows are not interrupted by downtime or malfunctioning equipment. Preventive maintenance involves periodic inspection and repair designed to keep a machine reliable. Operators perform much of the maintenance because they are most familiar with their machines and because machines are easier to repair, as lean operations favor several simple machines rather than one large complex one.

Preventive maintenance

Periodic inspection and repair designed to keep equipment reliable.

Group Technology Group technology (GT) is a philosophy in which similar parts are grouped into families, and the processes required to make the parts are arranged in a manufacturing cell. Instead of transferring jobs from one specialized department to another, GT considers all operations required to make a part and groups those machines together. Exhibit 14.2 illustrates the difference between the clusters of different machines grouped into cells versus departmental layouts. The group technology cells eliminate movement and queue (waiting) time between operations, reduce inventory, and reduce the number of employees required. Workers, however, must be flexible to run several machines and processes. Due to their advanced skill level, these workers have increased job security.

Group technology

A philosophy in which similar parts are grouped into families, and the processes required to make the parts are arranged in a specialized workcell.

Quality at the Source Quality at the source means do it right the first time and, when something goes wrong, stop the process or assembly line immediately. Factory workers become their own inspectors, personally responsible for the quality of their output. Workers concentrate on one part of the job at a time so quality problems are uncovered. If the

Quality at the source

Philosophy of making factory workers personally responsible for the quality of their output. Workers are expected to make the part correctly the first time and to stop the process immediately if there is a problem.

exhibit 14.2Group Technology versus Departmental Specialty


pace is too fast, if the worker finds a quality problem, or if a safety issue is discovered, the worker is obligated to push a button to stop the line and turn on a visual signal. People from other areas respond to the alarm and the problem. Workers are empowered to do their own maintenance and housekeeping until the problem is fixed.

JIT Production JIT (just-in-time) means producing what is needed when needed and no more. Anything over the minimum amount necessary is viewed as waste because effort and material expended for something not needed now cannot be utilized now. This is in contrast to relying on extra material just in case something goes wrong.

JIT is typically applied to repetitive manufacturing, which is when the same or similar items are made one after another. JIT does not require large volumes and can be applied to any repetitive segments of a business regardless of where they appear. Under JIT the ideal lot size or production batch is one. Although workstations may be geographically dispersed, it is important to minimize transit time and keep transfer quantities small—typically one-tenth of a day’s production. Vendors even ship several times a day to their customers to keep lot sizes small and inventory low. The goal is to drive all inventory queues to zero, thus minimizing inventory investment and shortening lead times.

When inventory levels are low, quality problems become very visible. Exhibit 14.3 illustrates this idea. If the water in a pond represents inventory, the rocks represent problems that could occur in a firm. A high level of water hides the problems (rocks). Management assumes everything is fine, but as the water level drops in an economic downturn, problems are presented. If you deliberately force the water level down (particularly in good economic times), you can expose and correct problems before they cause worse problems. JIT manufacturing exposes problems otherwise hidden by excess inventories and staff.

Lean Production Schedules

As noted earlier, lean production requires a stable schedule over a lengthy time horizon. This is accomplished by level scheduling, freeze windows, and underutilization of capacity. A level schedule is one that requires material to be pulled into final assembly in a pattern uniform enough to allow the various elements of production to respond to pull signals. It does not necessarily mean that the usage of every part on an assembly line is identified hour by hour for days on end; it does mean that a given production system equipped with flexible setups and a fixed amount of material in the pipelines can respond to the dynamic needs of the assembly line.3

Level schedule

A schedule that pulls material into fi nal assembly at a constant rate.

exhibit 14.3Inventory Hides Problems


The term freeze window refers to that period of time during which the schedule is fixed and no further changes are possible. An added benefit of the stable schedule is seen in how parts and components are accounted for in a pull system. Here, the concept of backflush is used where the parts that go into each unit of the product are periodically removed from inventory and accounted for based on the number of units produced. For example, if 1,000 road bicycles are made, 1,000 of the appropriate handlebars, 2,000 tires, one seat, and so forth, are automatically removed from on-hand inventory. This eliminates much of the shop-floor data collection activity, which is required if each part must be tracked and accounted for during production.

Underutilization and overutilization of capacity are controversial features of lean production. Conventional approaches use safety stocks and early deliveries as a hedge against production problems like poor quality, machine failures, and unanticipated bottlenecks in traditional manufacturing. Under lean production, excess labor, machines, and overtime provide the hedge. The excess capacity in labor and equipment that results is much cheaper than carrying excess inventory. When demand is greater than expected, overtime must be used. Often part-time labor is used when additional capacity is needed. During idle periods, personnel can be put to work on other activities such as special projects, work group activities, and workstation housekeeping.

Freeze window

The period of time during which the schedule is fixed and no further changes are possible.


Calculating how many of each part were used in production and using these calculations to adjust actual on-hand inventory balances. This eliminates the need to actually track each part used in production.

Uniform Plant Loading Smoothing the production flow to dampen the reaction waves that normally occur in response to schedule variations is called uniform plant loading. When a change is made in a final assembly, the changes are magnified throughout the line and the supply chain. The only way to eliminate the problem is to make adjustments as small as possible by setting a firm monthly production plan for which the output rate is frozen.

Uniform plant loading

Smoothing the production flow to dampen schedule variation.

Toyota found it could do this by building the same mix of products every day in small quantities. Thus, it always has a total mix available to respond to variations in demand. A Toyota example is shown in Exhibit 14.4. Monthly car style quantities are reduced to daily quantities (assuming a 20-day month) in order to compute a model cycle time (defined here as the time between two identical units being completed on the line). The cycle time figure is used to adjust resources to produce the precise quantity needed. The speed of equipment or of the production line is adjusted so only the needed quantity is produced each day. JIT strives to produce on schedule, on cost, and on quality.

Kanban Production Control Systems

A kanban control system uses a signaling device to regulate JIT flows. Kanban means “sign” or “instruction card” in Japanese. In a paperless control system, containers can be used instead of cards. The cards or containers make up the kanban pull system. The authority to produce or supply additional parts comes from downstream operations. Consider Exhibit 14.5, where we show an assembly line that is supplied with parts by a machine center. The machine center makes two parts, A and B. These two parts are stored in containers that are located next to the assembly line and next to the machine center. Each container next to the assembly line has a withdrawal kanban, and each container next to the machine center has a production kanban. This is often referred to as a two-card kanban system.


A signaling device used to control production.

Kanban pull system

An inventory or production control system that uses a signaling device to regulate flows.

exhibit 14.4Toyota Example of Mixed-Model Production Cycle in a Japanese Assembly Plant

Sequence: Sedan, hardtop, sedan, wagon, sedan, hardtop, sedan, wagon, and so on (one minute apart)



exhibit 14.5Flow of Two Kanbans

When the assembly line takes the first part A from a full container, a worker takes the withdrawal kanban from the container, and takes the card to the machine center storage area. In the machine center area, the worker finds a container of part As, removes the production kanban, and replaces it with the withdrawal kanban. Placement of this card on the container authorizes the movement of the container to the assembly line. The freed production kanban is placed on a rack by the machine center, which authorizes the production of another lot of material. A similar process is followed for part B. The cards on the rack become the dispatch list for the machine center. Cards are not the only way to signal the need for production of a part; other visual methods are possible, as shown in Exhibit 14.6.

The following are some other possible approaches:

Kanban squares. Some companies use marked spaces on the floor or on a table to identify where material should be stored. When the square is empty, the supplying operations are authorized to produce; when the square is full, no parts are needed.

Container system. Sometimes the container itself can be used as a signal device. In this case, an empty container on the factory floor visually signals the need to fill it. The amount of inventory is adjusted by simply adding or removing containers.

Colored golf balls. At a Kawasaki engine plant, when a part used in a subassembly is down to its queue limit, the assembler rolls a colored golf ball down a pipe to the replenishment machine center. This tells the operator which part to make next. Many variations have been developed on this approach.

exhibit 14.6Diagram of Outbound Stockpoint with Warning Signal Marker


The kanban pull approach can be used not only within a manufacturing facility but also between manufacturing facilities (pulling engines and transmissions into an automobile assembly operation, for example) and between manufacturers and external suppliers.


Determining the Number of Kanbans Needed Setting up a kanban control system requires determination of the number of kanban cards (or containers) needed. In a two-card system, we are finding the number of sets of withdrawal and production cards. The kanban cards represent the number of containers of material that flow back and forth between the supplier and the user areas. Each container represents the minimum production lot size to be supplied. The number of containers, therefore, directly controls the amount of work-in-process inventory in the system.

Accurately estimating the lead time needed to produce a container of parts is the key to determining the number of containers. This lead time is a function of the processing time for the container, any waiting time during the production process, and the time required to transport the material to the user. Enough kanbans are needed to cover the expected demand during this lead time plus some additional amount for safety stock. The number of kanban card sets is

Unexpected text node: ‘k’Unexpected text node: ‘k’                      [14.1]


k = Number of kanban card sets

D = Average number of units demanded per period (lead time and demand must be expressed in the same time units)

L = Lead time to replenish an order (expressed in the same units as demand)

S = Safety stock expressed as a percentage of demand during the lead time (this can be based on a service level and variance as shown in Chapter 20).

C = Container size

Observe that a kanban system does not produce zero inventory; rather, it controls the amount of material that can be in process at a time—the number of containers of each item. The kanban system can be easily adjusted to fit the current way the system is operating because card sets can be easily added or removed from the system. If the workers find that they are not able to consistently replenish the item on time, an additional container of material, with the accompanying kanban cards, can be added. If it is found that excess containers of material accumulate, card sets can be easily removed, thus reducing the amount of inventory.

EXAMPLE 14.1: Determining the Number of Kanban Card Sets

Meritor, a company that makes muffler assemblies for the automotive industry, is committed to the use of kanban to pull material through its manufacturing cells. Meritor has designed each cell to fabricate a specific family of muffler products. Fabricating a muffler assembly involves cutting and bending pieces of pipe that are welded to a muffler and a catalytic converter. The mufflers and catalytic converters are pulled into the cell based on current demand. The catalytic converters are made in a specialized cell.

For a step-by-step walkthrough of this example, visit

Catalytic converters are made in batches of 10 units and are moved in special hand carts to the fabrication cells. The catalytic converter cell is designed so that different types of catalytic converters can be made with virtually no setup loss. The cell can respond to an order for a batch of catalytic converters in approximately four hours. Because the catalytic converter cell is right next to the muffler assembly fabrication cell, transportation time is virtually zero.


The muffler assembly fabrication cell averages approximately eight assemblies per hour. Each assembly uses the same catalytic converter. Due to some variability in the process, management has decided to have safety stock equivalent to 10 percent of the needed inventory.

How many kanban sets are needed to manage the replenishment of the catalytic converters?


In this case, the lead time for replenishment of the converters (L) is four hours. The demand (D) for the catalytic converters is eight per hour. Safety stock (S) is 10 percent of the expected demand, and the container size (C) is 10 units.

k=8×4(1+.1)10=35.210=3.52or4setsk=8  × 4(1 + .1)10 = 35.210=3.52 or 4 sets

In this case, we would need four kanban card sets, and we would have four containers of converters in the system. In all cases, when we calculate k, we will round the number up because we always need to work with full containers of parts. When the first unit of a batch of 10 catalytic converters is used in the muffler fabrication cell, a “signal” card is sent to the catalytic converter cell to trigger the production of another batch.

Minimized Setup Times

The reductions in setup and changeover times are necessary to achieve a smooth flow. Exhibit 14.7 shows the relationship between lot size and setup costs. Under a traditional approach, setup cost is treated as a constant, and the optimal order quantity is shown as six. Under the kanban approach, setup cost is significantly reduced and the corresponding optimal order quantity is reduced. In the exhibit, the order quantity has been reduced from six to two under lean methods by employing setup-time–saving procedures. This organization will ultimately strive for a lot size of one.

In a widely cited example from the late 1970s, Toyota teams of press operators producing car hoods and fenders were able to change an 800-ton press in 10 minutes, compared with the average of six hours for U.S. workers and four hours for German workers. (Now, however, such speed is common in most U.S. auto plants.) To achieve such setup time reduction, setups are divided into internal and external activities. Internal setups must be done while a machine

exhibit 14.7Relationship between Lot Size and Setup Cost

Definitions: Holding cost includes the costs of storing inventory and the cost of money tied up in inventory. Setup cost includes the wage costs attributable to workers making the setup, and various administrative and supplies costs. (These are defined in total in Chapter 20, “Inventory Management.”)


is stopped. External setups can be done while the machine is running. Other time-saving devices such as duplicate tool holders also are used to speed setups.

Lean Supply Chains


Building a lean supply chain involves taking a systems approach to integrating the partners. Supply must be coordinated with the need of the production facilities, and production must be tied directly to the demand of the customers for products. The importance of speed and steady consistent flow that is responsive to actual customer demand cannot be overemphasized. Concepts that relate to lean network design are discussed next.

Specialized Plants Small specialized plants rather than large vertically integrated manufacturing facilities are important. Large operations and their inherent bureaucracies are difficult to manage and not in line with the lean philosophy. Plants designed for one purpose can be constructed and operated more economically. These plants need to be linked together so they can be synchronized to one another and to the actual need of the market. Speed and quick response to changes are keys to the success of a lean supply chain.

Collaboration with Suppliers Just as customers and employees are key components of lean systems, suppliers are also important to the process. If a firm shares its projected usage requirements with its vendors, they have a long-run picture of the demands that will be placed on their production and distribution systems. Some vendors are linked online with a customer to share production scheduling and input needs data. This permits them to develop level production systems. Confidence in the supplier or vendor’s delivery commitment allows reductions of buffer inventories. Maintaining stock at a lean level requires frequent deliveries during the day. Some suppliers even deliver directly to a location on the production line and not at a receiving dock. When vendors adopt quality practices, incoming receiving inspections of their products can be bypassed.

Building a Lean Supply Chain A supply chain is the sum total of organizations involved—from raw materials firms through tiers of suppliers to original equipment manufacturers, onward to the ultimate distribution and delivery of the finished product to the customer. Womack and Jones, in their seminal work Lean Thinking, provide the following guidelines for implementing a lean supply chain: 4

•   Value must be defined jointly for each product family along with a target cost based on the customer’s perception of value.

•   All firms along the value stream must make an adequate return on their investments related to the value stream.

•   The firms must work together to identify and eliminate muda (waste).

•   When cost targets are met, the firms along the stream will immediately conduct new analyses to identify remaining muda and set new targets.

•   Every participating firm has the right to examine every activity in every firm relevant to the value stream as part of the joint search for waste.

To summarize: To be lean, everyone’s got to be on the same page!

Value stream mapping

A graphical way to analyze where value is or is not being added as material flows through a process.


Analyze supply chain processes using value stream mapping.


Value stream mapping (VSM) is a special type of flowcharting tool that is valuable for the development of lean processes. The technique is used to visualize product flows through various processing steps. The tool also illustrates information flows that result from the process as well as information used to control flow through the process. The aim of this section is to provide a brief introduction to VSM and to illustrate its use with an example.



To create a lean process, one needs to have a full understanding of the business, including production processes, material flows, and information flows. In this section we discuss this in the context of a production process where a product is being made. VSM is not limited to this context and can be readily applied to service, logistics, distribution, or virtually any type of process.

ln the context of a production process such as a manufacturing plant, the technique is used to identify all of the value-adding as well as non–value-adding processes that materials are subjected to within a plant, from raw material coming into the plant through delivery to the customer. Exhibit 14.8 is a sample map that depicts a production process. With this map, identification of wasteful processes and flows can be made so that they can be modified or eliminated, and the manufacturing system made more productive.

Details explaining the symbols will be discussed later in the section but here it is useful to discuss what the information in the map depicted in Exhibit 14.8 actually means.5 Startng from the left, we see that material is supplied on a weekly basis and deposited in a raw material inventory indicated by the triangle. The average level for this inventory is 2,500 units. This material is run through a five-step process consisting of machining, drilling, cleaning, inspection, and packaging. The machining, drilling, inspection, and packaging processes all use a single operator. Under each of these process symbols is the activity cycle time (CT), changeover time (C/O time to switch from one type of item to another), lot size, available number of seconds per day, and percentage of uptime. The cleaning activity is a multistep process where items are handled on a first-come-first-served basis. In between each process are inventory buffers with the average inventory in these buffers depicted in the exhibit.

exhibit 14.8Manufacturing Process Map


exhibit 14.9Value Stream Mapping Symbols

Information flows are shown on the map. In Exhibit 14.8 we see that production control issues monthly demand forecasts, weekly orders to the supplier, and a weekly production schedule that is managed by the supervisor on a daily basis. Monthly forecasts are provided by the customer and it places its orders on a weekly basis. The time line at the bottom shows the processing time for each production activity (in seconds) together with the average inventory wait time. Adding these times together gives an estimate of the lead time through the entire system.

VSM symbols are somewhat standardized but there are many variations. Several common symbols are depicted in Exhibit 14.9. These are categorized as Process, Material, Information, and General symbols.

Value stream mapping is a two-part process—first depicting the “current state” of the process and second a possible “future state.” Exhibit 14.10 depicts another map of the same process with suggested improvements. The map has been annotated using Kaizen bursts that suggest the areas for improvement. Kaizen is the Japanese philosophy that focuses on continuous improvement. The Kaizen bursts identify specific short-term projects (often referred to as “Kaizen events”) that teams work on to implement changes to the process. In this exhibit we see a totally redesigned process where the individual production operations have been combined into a workcell operated by three employees. In addition, rather than “pushing” material through the system based on weekly schedules generated by production control, the entire process is converted to a pull system that is operated directly in response to customer demand. Note that the lead time in the new system is only 5 days, compared to the 34-day lead time with the old system.


Japanese philosophy that focuses on continuous improvement.

To study another example using value stream mapping (VSM), consider the Solved Problem 2 at the end of the chapter. VSM is a great visual way to analyze an existing system and to find areas where waste can be eliminated. Value stream maps are simple to draw and it is possible to construct the maps totally with paper and pencil. These maps can, however, be more easily constructed using standard office software or graphics packages. Additionally, dedicated VSM software is available from Strategos ( and Systems2win (


exhibit 14.10Analysis Showing Potential Areas for Improving a Process


Apply lean concepts to service processes.


Waste elimination is a reasonable goal in service processes, just as it is in manufacturing processes, but there is a difference in the sources of variation that cause the waste. Manufacturing processes, compared to service processes, are far more controllable. Uncertainty does result from material and labor inputs, but those can be anticipated and controlled to a great extent. The workers, the design of the product, and the production tools are all under the control of operations to a very large extent. If sales and marketing are part of the process, the demand uncertainty also can be reduced.

In contrast, services operate in a sea of uncertainty and variability that is much harder to control. Let’s look at these sources.

•   Uncertainty in task times. The nature of service products is that the execution of each service delivery has some uniqueness. This variability typically leads to a negative exponential distribution of task times. Simply put, this means that while most task executions will fall within some tight range, some executions will take a long time. Consider airplane boarding. There’s uncertainty here, yet Southwest found a way to reduce the uncertainty and achieve faster turnaround times at airports, increasing effective capacity.

•   Uncertainty in demand. While service demand can be forecasted, no forecast is 100 percent perfect. Manufacturers can buffer this forecast uncertainty with some finished goods inventory. The simultaneous production and consumption in services precludes this tactic. The capacity must be available when the demand arises. Think about the number of available tables needed in a restaurant for peak dining hours.


•   Customers’ production roles. Both of the above uncertainties have much to do with customer involvement in service operations. Because customers typically have some role to play in the production of a service, variability is introduced based on how well the service provider performs his or her role. Customers usually have to provide information to service agents to initiate service, and they typically have tangible tasks to perform.

Lean production and Six Sigma work best in repeatable, standardized operations. While many services are repeatable, given the above, how well can they be truly standardized? Let’s look at the recent experience of the airline industry.

Airline companies such as Southwest have very efficient operations, and they achieve high ratings in customer satisfaction—until a major storm causes a disruption. Consider the horrible storms that often strike the eastern third of the United States in the spring. Weather is one of those uncertainties that the airlines simply cannot control. Flights will be canceled, and passengers will need to be rebooked. This is an extreme example of demand uncertainty that leads to huge demand spikes.

At the same time, to eliminate waste and become more efficient, airlines have tended to cut capacity and fill flights. Today you seldom fly on a plane that isn’t 90 to 100 percent booked. With few available seats, it can take days to rebook all passengers from flights canceled due to weather. Our point is that there is often a price to pay for being lean, and that price often is at the expense of customer service when unlikely events occur. Whether in a service or manufacturing business, potential trade-offs exist with lean production and must be dealt with.

Many lean techniques have been successfully applied by service firms. Just as in manufacturing, the suitability of each technique and the corresponding work steps depend on the characteristics of the firm’s markets, production and equipment technology, skill sets, and corporate culture. Service firms are not different in this respect. Here are 10 of the more successful techniques applied to service companies:

1.   Organize Problem-Solving Groups Honeywell is extending its use of quality teams from manufacturing into its service operations. Other corporations as diverse as First Bank/Dallas, Standard Meat Company, and MillerCoors Brewing Company are using similar approaches to improve service. British Airways used quality teams as a fundamental part of its strategy to implement new service practices.


2.   Upgrade Housekeeping Good housekeeping means more than winning the clean broom award. It means that only the necessary items are kept in a work area, that there is a place for everything, and that everything is clean and in a constant state of readiness. The employees clean their own areas.

Service organizations such as McDonald’s, Disneyland, and Speedi-Lube have recognized the critical nature of housekeeping. Their dedication to housekeeping has meant that service processes work better, the attitude of continuous improvement is easier to develop, and customers perceive that they are receiving better service.

3.   Upgrade Quality The only cost-effective way to improve quality is to develop reliable process capabilities. Process quality is quality at the source—it guarantees first-time production of consistent and uniform products and services.

McDonald’s is famous for building quality into its service delivery process. It literally “industrialized” the service delivery system so that part-time, casual workers could provide the same eating experience anywhere in the world. Quality doesn’t mean producing the best; it means consistently producing products and services that give the customers their money’s worth.

4.   Clarify Process Flows Clarification of flows, based on JIT themes, can dramatically improve the process performance. Here are three examples:

First, FedEx Corporation changed air flight patterns from origin-to-destination to origin-to-hub, where the freight is transferred to an outbound plane heading for the destination. This revolutionized the air transport industry. Second, the order-entry department of a manufacturing firm converted from functional sub-departments to customer-centered work groups and reduced the order processing lead time from eight to two days. Finally, Supermaids sends in a team of house


cleaners, each with a specific responsibility, to clean a part of each house quickly with parallel processes. Changes in process flows can literally revolutionize service industries.

5.   Revise Equipment and Process Technologies Revising technologies involves evaluation of the equipment and processes for their ability to meet the process requirements, to process consistently within tolerance, and to fit the scale and capacity of the work group.

Speedi-Lube converted the standard service station concept to a specialized lubrication and inspection center by changing the service bays from drive-in to drive-thru and by eliminating the hoists, and instead building pits under the cars where employees have full access to the lubrication areas on the vehicle.

A hospital reduced operating room setup time so that it had the flexibility to perform a wider range of operations without reducing the operating room availability.

6.   Level the Facility Load Service firms synchronize production with demand. They have developed unique approaches to leveling demand so they can avoid making customers wait for service. McDonald’s offers a special breakfast menu in the morning. Retail stores use take-a-number systems. The post office charges more for next-day delivery. These are all examples of the service approach for creating uniform facility loads.

7.   Eliminate Unnecessary Activities A step that does not add value is a candidate for elimination. A step that does add value may be a candidate for reengineering to improve the process consistency or to reduce the time to perform the tasks.

A hospital discovered that significant time was spent during an operation waiting for an instrument that was not available when the operation began. It developed a checklist of instruments required for each category of operation. Speedi-Lube eliminated steps, but also added steps that did not improve the lubrication process but did make customers feel more assured about the work being performed.

8.   Reorganize Physical Configuration Work area configurations frequently require reorganization during a lean implementation. Often manufacturers accomplish this by setting up manufacturing cells to produce items in small lots, synchronous to demand.These cells amount to microfactories inside the plant.

Most service firms are far behind manufacturers in this area. However, a few interesting examples do come out of the service sector. Some hospitals—instead of routing patients all over the building for tests, exams, X-rays, and injections—are reorganizing their services into work groups based on the type of problem. Teams that treat only trauma are common, but other work groups have been formed to treat less immediate conditions like hernias. These amount to microclinics within the hospital facility.

9.   Introduce Demand-Pull Scheduling Due to the nature of service production and consumption, demand-pull (customer-driven) scheduling is necessary for operating a service business. Moreover, many service firms are separating their operations into “back room” and “customer contact” facilities. This approach creates new problems in coordinating schedules between the facilities. The original Wendy’s restaurants were set up so cooks could see cars enter the parking lot. They put a preestablished number of hamburger patties on the grill for each car. This pull system was designed to have a fresh patty on the grill before the customer even placed an order.

10.   Develop Supplier Networks The term supplier networks in the lean context refers to the cooperative association of suppliers and customers working over the long term for mutual benefit. Service firms have not emphasized supplier networks for materials because the service costs are often predominantly labor. Notable exceptions include service organizations like McDonald’s, one of the biggest food products purchasers in the world, which has been developing lean practices. Manpower and other employment agencies have established lean-type relationships with a temporary employment service and a trade school to develop a reliable source of trained assemblers.



LO14-1 Explain what lean production is.


Lean production is a concept that involves improving processes by eliminating waste and excess inventory. The basis for the concept is the just-in-time philosophy pioneered by Toyota. The concept has now been expanded to include all supply chain processes with the intent of creating value for the customer by eliminating all non–value–adding activities.

Key Terms

Lean production


Waste reduction

Customer value

Value stream

LO14-2 Illustrate how lean concepts can be applied to supply chain processes.


Lean concepts can be applied to virtually all the processes in the supply chain. Key areas include production layouts, the scheduling of production, and the design of the supply chain. Flow throughout the supply chain can be managed using just-in-time systems that pull material based on need. The kanban card is an example of this type of system.

Key Terms

Preventive maintenance

Level schedule

Uniform plant loading

Group technology

Freeze window


Quality at the source


Kanban pull system

Key Formula

Determining the number of kanbans

[14.1]      k=DL(1+S)Ck=DL(1+S)C

LO14-3 Analyze supply chain processes using value stream mapping.


Value stream mapping is a flowcharting tool used to visualize flows through a process. A unique feature of the tool is the identification of value-adding and non-value-adding activities together with a time line that shows the processing time for each activity and the process as a whole. The tool can be applied to internal processes, such as production of a product, and also logistics and distribution processes. The goal in value stream mapping is to identify ways to “lean” a process by eliminating waste and creating value for the customer. A short-term project designed to quickly improve a process is referred to as a Kaizen event.

Key Terms

Value stream mapping


LO14-4 Apply lean concepts to service processes.


Just as with production processes, waste elimination and customer value creation are also goals of service processes. One major difference is that services often operate in an environment with more uncertainty that is difficult to control. Many of the lean techniques, though, have been successfully applied by service firms.


Solved Problems


A local hospital wants to set up a kanban system to manage its supply of blood with the regional blood bank. The regional blood bank delivers blood to the hospital each day with a one-day order lead time (an order placed by 6 p.m. today will be delivered tomorrow afternoon). Internally, the hospital purchasing group places orders for blood each day at 5 p.m. Blood is measured by the pint and is shipped in containers that contain six pints. For a particular blood type, the hospital uses an average of 12 pints per day. Due to the critical nature of a blood shortage, the hospital wants to carry a safety stock of two days’ expected supply. How many kanban card sets should the hospital prepare?


This problem is typical of how a real application might look. Using the data given, the variables for this problem are as follows:

D = 12 pints per day (average demand)

L = 1 day (lead time)

S = 200 percent (safety stock, as a fraction this is 2.0)

C = 6 pints (container size)


This indicates that we need to prepare six kanban card sets. Each time a new container of blood (containing six pints) is opened, the card will be sent to purchasing and another six pints of blood will be ordered. When the blood is received, the card will be attached to the new container and moved to the blood storage area.


Value Stream Mapping Example: Bolt Manufacturing 6

A simple example will illustrate the use of value stream mapping. Exhibit 14.11 depicts a bolt manufacturing operation that ships 7,500 bolts per week. The current state map provides cycle time and setup time information for each of the 15 processes used, and it provides inventory levels at each location. The map also depicts information flow between the steel supplier, the bolt customer, and management via production scheduling. The total value-added time, denoted as processing time, is obtained by summing all of the individual value-added contributions at each processing step on the time line. For the example, it equals 28.88 seconds. At each inventory location, lead time is calculated by dividing inventory level by daily production demand, which is 1,500 bolts. Summing all of the lead time produces an overall production lead time of 66.1 days, which is the entire time it takes an individual bolt to make its way through the plant.

There are several possibilities to optimize the current production scenario. Exhibit 14.12 provides a few of these, shown as Kaizen bursts, including eliminating several processing steps, modifying some of the existing processes, and reducing travel distances between processes. Exhibit 14.13, the future state map, illustrates the incorporation of these modifications. As shown, the changes reduce production lead time to 50.89 days, which is a 23 percent reduction. The production scenario could be enhanced even more if pull systems were incorporated at various locations.


exhibit 14.11Current State Map for Bolt Manufacturing Example


exhibit 14.12Potential Process Changes for Bolt Manufacturing Example


exhibit 14.13Future State Map for Bolt Manufacturing Example


Discussion Questions


1.   Is it possible to achieve zero inventories? Why or why not?

2.   One way to help achieve lean production systems is to employ flexible automated manufacturing equipment and automated material handling systems. A natural result of such a move is that fewer people are required in the process, an issue addressed regularly in negotiations with labor unions. Do you think there is a conflict between such a move and the principle of Respect for People in the Toyota Production System?

3.   Can a supply chain become too lean? Explain your answer—using examples if possible.


4.   Why must lean have a stable schedule?

5.   What objections might a marketing manager have to uniform plant loading?

6.   What are the implications for cost accounting of lean production?

7.   What are the roles of suppliers and customers in a lean system?

8.   Explain how cards are used in a kanban system.

9.   In which ways, if any, are the following systems analogous to kanban: returning empty bottles to the supermarket and picking up filled ones; running a hot dog stand at lunch-time; withdrawing money from a checking account; raking leaves into bags?

10.   Why is lean hard to implement in practice?

11.   Explain the relationship between quality and productivity under the lean philosophy.


12.   Stopping waste is a vital part of lean. Using value stream mapping, identify some sources of waste in your home or dorm and discuss how they may be eliminated.

13.   How would you show a pull system in VSM symbols between the blanking and CNC stages of the bolt manufacturing Solved Problem 2?

14.   What is value stream mapping?

15.   What is the purpose of value stream mapping? How can it be achieved?


16.   Will lean work in service environments? Why or why not?

17.   Discuss ways to use lean to improve one of the following: a pizza restaurant, a hospital, or an auto dealership.

Objective Questions


1.   What phrase refers to the idea that all steps in supply chain processes that deliver goods and services to the customer should create value?

2.   What term refers to the optimization of value-adding activities and elimination of non–value-adding activities that are part of a value stream?

3.   List at least four of the seven prominent types of waste that should be eliminated from the supply chain.

4.   What lean concept relates to eliminating non–value-added steps and waste in product storage processes?


5.   What term refers to a schedule that pulls material into final assembly at a constant rate?

6.   The periodic inspection and repair of equipment designed to keep the equipment reliable, thus eliminating unplanned downtime due to malfunctions is called_________.

7.   What term refers to the concept of doing things right the first time and, when problems occur, stopping the process to fix the source of the problem?

8.   In some JIT systems, marked spaces on a table or the floor identify where material should be stored. Supplying operations are signaled to produce more when the space is empty. What are these spaces called?


9.   Under a kanban approach to lean manufacturing, order quantities should be as small as possible. For a part that is manufactured in-house, what part of its manufacturing process needs to be reduced to reduce the optimal order quantity for an item?

10.   A supplier of instrument gauge clusters uses a kanban system to control material flow. The gauge cluster housings are transported five at a time. A fabrication center produces approximately 10 gauges per hour. It takes approximately two hours for the housing to be replenished. Due to variations in processing times, management has decided to keep 20 percent of the needed inventory as safety stock. How many kanban card sets are needed?

11.   Transmissions are delivered to the fabrication line four at a time. It takes one hour for transmissions to be delivered. Approximately four vehicles are produced each hour, and management has decided that 50 percent of expected demand should be maintained as safety stock. How many kanban card sets are needed?

12.   A bottling plant fills 2,400 bottles every two hours. The lead time is 40 minutes and a container accommodates 120 bottles. The safety stock is 10 percent of expected demand. How many kanban cards are needed?

13.   Refer to Example 14.1 as the basis for this problem. Meritor hires a team of consultants. The consultants suggest a partial robotic automation as well as an increase in safety stock to 12.5 percent. Meritor implements these suggestions. The result is an increase in efficiency in both the fabrication of muffler assembly and the making of catalytic converters. The muffler assembly fabrication cell now averages 16 assemblies per hour and the lead time has been decreased to two hours’ response time for a batch of 10 catalytic converters. How many kanban cards are now needed?

14.   Meritor is so pleased with the outcome from previous suggestions that the consultants are invited back for more work. The consultants now suggest a more complete robotic automation of the making of muffler assemblies and also a reduction in container size to eight per container. Meritor implements these suggestions and the result is that the muffler assembly fabrication cell now averages approximately 32 assemblies per hour, and the catalytic converter assembly cell can now respond to an order for a batch of catalytic converters in one hour. The safety stock remains at 12.5 percent. How many kanban cards are needed?


15.   In value stream mapping, what does an arrow in the shape of a lightning bolt mean?

16.   What does a triangle represent in a value stream map?

17.   In a data box on a value stream map, what do the abbreviations CT and C/O mean?

18.   What is used to indicate suggested changes in a process that may lead to improvements in a value stream?


19.   Compared to manufacturing systems, what is it about the environment of service operations that make them much harder to control?

20.   The chapter presents multiple techniques that service firms can use to make their processes leaner. Which technique is demonstrated by a restaurant that offers special discounts midweek to attract more demand during a traditionally slow period?

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explain the five different networking elements creating a connected world.

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What’s in IT for me? The pace of technological change never ceases to amaze as kindergarten classes are now learning PowerPoint and many elementary school children have their own cell phones. What used to take hours to download over a dial-up modem connection can now transfer in a matter of seconds through an invisible, wireless network connection from a computer thousands of miles away. We are living in an increasingly wireless present and hurtling ever faster toward a wireless future. The tipping point of ubiquitous, wireless, handheld, mobile computing is approaching quickly.

As a business student, understanding network infrastructures and wireless technologies allows you to take advantage of mobile workforces. Understanding the benefits and challenges of mobility is a critical skill for busi- ness executives, regardless if you are a novice or a seasoned Fortune 500 employee. By learning about the vari- ous concepts discussed in this chapter, you will develop a better understanding of how business can leverage networking technologies to analyze network types, improve wireless and mobile business processes, and evaluate alternative networking options.

■ W i re l e s s N e t wo rk C a te go ri e s

■ B u s i n e s s A p p l i c a t i o n s o f W i re l e s s N e t wo rk s

■ B e n e f i t s o f B u s i n e s s M o b i l i t y

■ C h a l l e n ge s o f B u s i n e s s M o b i l i t y

SECTION 7.2 Mobility: The Business Value of a Wireless World

■ O ve r v i e w o f a C o n n e c te d Wo rl d

■ B e n e f i t s o f a C o n n e c te d Wo rl d

■ C h a l l e n ge s o f a C o n n e c te d Wo rl d

SECTION 7.1 Connectivity: The Business Value of a Networked World








Networks: Mobile Business 7 C H A P T E R

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The Ironman

Florida-based World Triathlon Corporation (WTC), owner of the Ironman Triathlon World Championship, is in the business of fulfilling the dreams of endurance athletes in one of the world’s most grueling events. The Ironman Triathlon World Championship brings more than 1,700 of the world’s top athletes to rugged Kailua-Kona, Hawaii, for a world championship race every fall. Athletes attempt to swim 2.4 miles, cycle 112 miles, and run a full 26.2-mile marathon—all in a single day. The event features a remote course that threads around the side of an active volcano and offers breath- taking views but also rough terrain, intense heat, and shifting trade winds.

In the past, it was not easy for family and friends to know how a particular athlete was faring in the contest. “As a spectator, you’d see the start, and then the athletes would disappear, and that was pretty much it until the finish line,” recalls Dave Scott, who ran his first triathlon in 1976. Now, however, Ironman is transforming the way audiences and athletes experience the race. By using WiMAX networks to enable remote cameras, the company also raised the bar for professional sports broadcast- ing and spotlighted a technology many say will help bring the next billion users into the Internet community.

Fans worldwide now can find any athlete’s speed and location thanks to high- speed WiMAX broadband connections in various places along the 140-mile course. The company uses radio-frequency identification (RFID) ankle bracelets to track the athletes’ progress and high-bandwidth communications to transmit professional- quality video and other data, making the information accessible on the Ironmanlive .com website.

Networking the course was a challenge due to the same factors that make it chal- lenging for athletes. “We’re on a very rough, rugged course on an island with an active volcano,” explains Dan Gerson, production manager. “It’s hot, it’s windy, and there’s no infrastructure. If you can deploy WiMAX here, you can probably deploy it pretty much anywhere.” Airspan Networks provided the WiMAX infrastructure, using its high-performance base stations and subscriber stations to create a high-performance network backbone capable of transmitting data rates required for top-quality video. The team set up its base station atop the hotel that served as the events’ starting point and finish line, one of the lowest geographical points of the course.

The team was operating in a non-line-of-sight environment, and highly porous volcanic rock absorbed the wireless signals more than other types of rock would. Airspan set up relays on the ridge sides of the volcano, the side of the road, and the

opening case study

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sides of buildings to keep signal fidelity. Cameras in locations without power used generators. This was a wireless deployment in every sense of the word, demonstrat- ing the viability of WiMAX technology. Footage of the athletes could be incorporated into the live webcast, along with pre-event interviews, commentary, and film from cameras on motorcycles and helicopters. WTC produced the broadcast in a live pro- duction studio on-site that streamed the video data to the global servers that run the website.

WTC also set up eight wireless hot spots, including five along the event course and at the finish line. An Internet café was stocked with laptops, providing con- venient wireless access to event information and the site. Two giant-screen displays showed the live program coverage from . Staff used additional mobile devices to manage the race and monitor each athlete’s progress. For example, if athletes needed medical care, the health care team used a PDA to scan their RFID tags and instantly access medical records and local contact information.

Ironman’s transformative use of wireless computing makes sound business sense. It draws larger audiences and higher advertising revenues for WTC and NBC, which uses WTC’s Ironman Triathlon programming in its own broadcast of the event a month or two later. Larger audiences and better experiences for athletes and their families ultimately lead to greater participation in the Ironman Triathlon and its more than two dozen qualifying races, and to increased popularity for the sport. 1

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7.1 Explain the five different networking elements creating a connected world.

7.2 Identify the benefits of a connected world.

7.3 Identify the challenges of a connected world.

OVERVIEW OF A CONNECTED WORLD Computer networks are continuously operating all over the globe supporting our 24/7/365 always on and always connected lifestyles. You are probably using several dif- ferent networks right now without even realizing it. You might be using a school’s net- work to communicate with teachers, a phone network to communicate with friends, and a cable network to watch TV or listen to the radio. Networks enable telecommunications or the exchange of information (voice, text, data, audio, video). The telecommunication industry has morphed from a government-regulated monopoly to a deregulated market where many suppliers ferociously compete. Competing telecommunication companies offer local and global telephony services, satellite service, mobile radio, cable television, cellular phone services, and Internet access (all of which are detailed in this chapter). Businesses everywhere are increasingly using networks to communicate and collaborate with customers, partners, suppliers, and employees. As a manager, you will face many different communication alternatives, and the focus of this chapter is to provide you with an initial understanding of the different networking elements you will someday need to select (see Figure 7.1 ). A detailed technical overview of networking and telecommunica- tions can be found in Appendix B.

Network Categories

The general idea of a network is to allow multiple devices to communicate at the highest achievable speeds and, very importantly, to reduce the cost of connecting. How a par- ticular network achieves these goals depends in part on how it is physically constructed and connected. Networks are categorized based on geographic span: local area net- works, wide area networks, and metropolitan area networks. Today’s business networks include a combination of all three.

A local area network (LAN) connects a group of computers in close proximity, such as in an office building, school, or home. LANs allow sharing of files, printers, games, and other resources. A LAN also often connects to other LANs, and to wide area networks. A wide area network (WAN) spans a large geographic area such as a state, province, or country. Perhaps the best example is the Internet. WANs are essential for carrying out the day-to-day activities of many companies and government organizations, allowing

LO 7.1: Explain the five different networking elements creating a connected world.


Networking Elements Creating a Connected World

Access TechnologiesProvidersCategories


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them to transmit and receive information among their employees, customers, suppli- ers, business partners, and other organizations across cities, regions, and countries and around the world.

WANs often connect multiple smaller networks, such as local area networks or met- ropolitan area networks. A metropolitan area network (MAN) is a large computer net- work usually spanning a city. Most colleges, universities, and large companies that span a campus use an infrastructure supported by a MAN. Figure 7.2 shows the relationships and a few differences between a LAN, WAN, and MAN. A cloud image often represents the Internet or some large network environment.

While LANs, WANs, and MANs all provide users with an accessible and reliable net- work infrastructure, they differ in many dimensions; two of the most important are cost and performance. It is easy to establish a network between two computers in the same room or building, but much more difficult if they are in different states or even countries. This means someone looking to build or support a WAN either pays more or gets less performance, or both.

Network Providers

The largest and most important network, the Internet has evolved into a global informa- tion superhighway. Think of it as a network made up of millions of smaller networks, each with the ability to operate independently of, or in harmony with, the others. Keep- ing the Internet operational is no simple task. No one owns or runs it, but it does have

Network Network

Local Area Network (LAN) Example : City Library

Metropolitan Area Network (MAN) Example: University Campus

West Campus East Campus



Wide Area Network (WAN) Example: Internet

Sydney, Australia London, England


Denver, Colorodo Boston, Massachusetts






Network Categories: LAN, WAN, and MAN

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an organized network topology. The Internet is a hierarchical structure linking different levels of service providers, whose millions of devices, LANs, WANs, and MANs supply all the interconnections. At the top of the hierarchy are national service providers (NSPs), private companies that own and maintain the worldwide backbone that supports the Internet. These include Sprint, Verizon, MCI (previously UUNet/WorldCom), AT&T, NTT, Level3, Qwest, and Cable & Wireless Worldwide. Network access points (NAPs) are traffic exchange points in the routing hierarchy of the Internet that connects NSPs. They typically have regional or national coverage and connect to only a few NSPs. Thus, to reach a large portion of the global Internet, a NAP needs to route traffic through one of the NSPs to which it is connected. 2

One step down in the hierarchy is the regional service provider. Regional service providers (RSPs) offer Internet service by connecting to NSPs, but they also can connect directly to each other. Another level down is the Internet service providers (ISPs), recall from Chapter 3 that an ISP provides access to the Internet for a monthly fee. ISPs vary services provided and available bandwidth rates. ISPs link to RSPs and, if they are geo- graphically close, to other ISPs. Some also connect directly to NSPs, thereby sidestepping the hierarchy. Individuals and companies use local ISPs to connect to the Internet, and large companies tend to connect directly using an RSP. Major ISPs in the United States include AOL, AT&T, Comcast, Earthlink, and NetZero. The further up the hierarchy, the faster the connections and the greater the bandwidth. The backbone shown in Figure 7.3 is greatly simplified, but it illustrates the concept that basic global interconnections are provided by the NSPs, RSPs and ISPs. 3

Network Access Technologies

Performance is the ultimate goal of any computer, computer system, or network. Perfor- mance is directly related to the network’s speed of data transfer and capacity to handle transmission. A network that does not offer adequate performance simply will not get the job done for those who rely on it. Luckily, networks can be upgraded and expanded if performance is inadequate.

We measure network performance in terms of bandwidth, the maximum amount of data that can pass from one point to another in a unit of time. Bandwidth is similar to water traveling through a hose. If the hose is large, water can flow through it quickly.

NSP International Connection

International Connection




















Internet Topology

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Data differs from a hose in that it must travel great distances, especially on a WAN, and not all areas of the network have the same bandwidth. A network essentially has many different hoses of unequal capacity connected together, which will restrict the flow of data when one is smaller than the others. Therefore, the speed of transmission of a net- work is determined by the speed of its smallest bandwidth.

A bit (short for binary digit) is the smallest element of data and has a value of either 0 or 1. Bandwidth is measured in terms of bit rate (or data rate ), the number of bits transferred or received per unit of time. Figure 7.4 represents bandwidth speeds in terms of bit rates.

A modem is a device that enables a computer to transmit and receive data. A connec- tion with a traditional telephone line and a modem, which most residential users had in the 1990s, is called dial-up access. Today, many users in underdeveloped countries and in rural areas in developed countries still use dial-up. It has two drawbacks. First, it is slow, providing a maximum rate of 56 Kbps. (At 56 Kbps, it takes eight minutes to down- load a three-minute song and more than a day to download a two-hour movie.) Second, dial-up modem access ties up the telephone line so the user cannot receive and make phone calls while online. The good news is this is not as big an issue as it once was as many people have cell phones and no longer require using the telephone line for making phone calls. 4

Once the most common connection method worldwide, dial-up is quickly being replaced by broadband. Broadband is a high-speed Internet connection that is always connected. High-speed in this case refers to any bandwidth greater than 2 Mbps. Not long ago, broadband speeds were available only at a premium price to support large companies’ high-traffic networks. Today, inexpensive access is available for home use and small companies.

The two most prevalent types of broadband access are digital subscriber line and cable connection. Digital subscriber line (DSL) allows high-speed digital data trans- mission over standard telephone lines. Consumers typically obtain DSL Internet access from the same company that provides their wired local telephone access, such as AT&T or Qwest. Thus, a customer’s telephone provider is also its ISP, and the telephone line carries both data and telephone signals using a DSL modem.

DSL has two major advantages over dial-up. First, it can transmit and receive data much faster—in the 1 to 2 Mbps range for downloading and 128 Kbps to 1 Mbps for uploading. (Most high-speed connections are designed to download faster than they upload, because most users download more—including viewing Web pages—than they upload.) The second major advantage is that because they have an “always on” connection to their ISP, users can simultaneously talk on the phone and access the Internet. 5

While dial-up and DSL make use of local telephone infrastructure, Internet cable connections provide Internet access using a cable television company’s infrastructure and a special cable modem. Unlike DSL, cable is a shared service, which means every- one in a certain radius, such as a neighborhood, shares the available bandwidth. There- fore, if several users are simultaneously downloading a video file, the actual transfer rate for each will be significantly lower than if only one person were doing so. On average, the available bandwidth using cable can range from 512 Kbps to 50 Mbps for downloading, and 786 Kbps for uploading. 6

In rural areas where neither DSL nor cable is available, a satellite link can connect to the Internet at speeds of more than 1 Mbps. Satellite technologies are discussed in Section 7.2.

Bandwidth Abbreviation Bits per Second (bps) Example

Kilobits Kbps 1 Kbps = 1,000 bps Traditional modem = 56 Kbps

Megabits Mbps 1 Mbps = 1,000 Kbps Traditional Ethernet = 10 Mbps Fast Ethernet = 100 Mbps

Gigabits Gbps 1 Gbps = 1,000 Mbps Gigabit Ethernet = 1,000 Mbps


Bandwidth Speeds

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Another alternative to DSL or cable is dedicated communications lines leased from AT&T or another provider. The most common are T1 lines, a type of data connection able to transmit a digital signal at 1.544 Mpbs. Although this speed might not seem impres- sive, and T1 lines are more expensive than DSL or cable, they are more reliable than either. Each is composed of 24 channels, creating 24 separate connections through one line. If a company has three separate plants that experience a high volume of data traffic, it might make sense to lease lines to connect them all with a reliable high bandwidth. 7

A company must match its needs with Internet access methods. If it always needs high bandwidth access to communicate with customers, partners, or suppliers, a T1 line may be the most cost effective method. Figure 7.5 provides an overview of the main methods for Internet access. The bandwidths there represent average speeds; actual speeds vary depending upon the service provider and other factors such as the type of cabling and speed of the computer. 8

Network Protocols

A protocol is a standard that specifies the format of data as well as the rules to be followed during transmission. Computers using the same protocol can communicate easily, providing accessibility, scalability, and connectability between networks. Net- work access technologies use a standard Internet protocol called transmission control protocol/Internet protocol (TCP/IP), which provides the technical foundation for the public Internet as well as for large numbers of private networks. One of the primary rea- sons for developing TCP/IP was to allow diverse or differing networks to connect and communicate with each other, essentially allowing LANs, WANs, and MANs to grow with each new connection.

TCP (the TCP part of TCP/IP) verifies the correct delivery of data because data can become corrupt when traveling over a network. TCP ensures the size of the data packet is the same throughout its transmission and can even retransmit data until delivered cor- rectly. IP (the IP part of TCP/IP) verifies the data are sent to the correct IP address, num- bers represented by four strings of numbers ranging from 0 to 255 separated by periods. For example, the IP address of is

Here is another way to understand TCP/IP. Consider a letter that needs to go from the University of Denver to Apple’s headquarters in Cupertino, California. TCP makes sure the envelope is delivered and does not get lost along the way. IP acts as the sending and receiving labels, telling the letter carrier where to deliver the envelope and who it was from. The Postal Service mainly uses street addresses and zip codes to get letters to their destinations, which is really what IP does with its addressing method. Figure 7.6 illus- trates this example. However, unlike the Postal Service, which allows multiple people to share the same physical address, each device using an IP address to connect to the Internet must have a unique address or else it could not detect which individual device a request should be sent to.

One of the most valuable characteristics of TCP/IP is how scalable its protocols have proven to be as the Internet has grown from a small network with just a few machines to a huge internetwork with millions of devices. While some changes have been required periodically to support this growth, the core of TCP/IP is the same as it was more than 25 years ago. 9

Access Technology Description Bandwidth Comments

Dial-up On-demand access using a modem and regular telephone line.

Up to 56 Kbps Cheap but slow compared with other technologies.

DSL Always-on connection. Special modem needed.

Download: 1 Mbps to 2 Mbps Upload: 128 Kbps to 1 Mbps

Makes use of the existing local telephone infrastructure.

Cable Always-on connection. Special cable modem and cable line required.

Download: 512 Kbps to 50 Mbps Upload: 786 Kbps

It is a shared resource with other users in the area.

T1 Leased lines for high bandwidth. 1.544 Mbps More expensive than dial-up, DSL, or cable.


Types of Internet Access

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If there is one flaw in TCP/IP, it is the complexity of IP addresses. This is why we use a domain name system (DNS) to convert IP addresses into domains, or identifying labels that use a variety of recognizable naming conventions. Therefore, instead of trying to remember, users can simply specify a domain name to access a computer or website, such as . Figure 7.7 lists the most common Internet domains. 11

The list of domain names is expected to expand in the coming years to include enti- ties such as .pro (for accountants, lawyers, and physicians), .aero (for the air-transport industry), and .museum (for museums). The creation of an .xxx domain was recently approved for pornographic content. Countries also have domain names such as .au (Australia), .fr (France), and .sp (Spain).


Example of TCP/IP






University of Denver

Send Receive


—————— —————— —————— ——————

TCP: Message sent TCP: Message received


University of Denver


Net Neutrality—the great debate has been raging for some time now, with the battle lines clearly drawn. Net neutrality is about ensuring that everyone has equal access to the Internet. It is the founding principle that all consumers should be able to use the Internet and be free to access its resources without any form of discrimination. However, regulation on net neutrality is currently in flux. The Federal Communications Commission (FCC) recently required Comcast to stop slowing down or blocking subscriber access to many peer-to-peer file-sharing sites such as BitTorrent. Users of many peer-to-peer networks often transfer large files, which can be legitimate in nature (such as downloading open source applica- tions) or pirated (such as illegal copies of the latest Hollywood video). Shortly after the FCC ruling, a federal appeals court overturned that decision, unanimously ruling that the agency did not have the legal authority to tell Comcast what to do.

On one side of the debate are the ISPs, such as Comcast, that are building the Internet infrastructure and want to charge customers relative to their use, namely, the amount of bandwidth they consume. The ISPs argue more and more users accessing bandwidth-intense resources provided by the likes of YouTube and Hulu place huge demands on their networks. They want Internet access to move from a flat-rate pricing structure to a metered service. The con- tent providers, such as Google, support the counterargument that if ISPs move toward metered schemes, this may limit the usage of many resources on the Internet such as iTunes and Netflix. A metered service may also stifle the inno- vative opportunities the “open” Internet provides.

Do you agree that the government should control the Internet? Should web- site owners be legally forced to receive or transmit information from competi- tors or other websites they find objectionable? Provide examples of when net neutrality might be good for a business and when net neutrality might be bad for a business. Overall, is net neutrality good or bad for business? 10

Net Neutrality: The Great Debate


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Websites with heavy traffic often have several computers working together to share the load of requests. This offers load balancing and fault tolerance, so when requests are made to a popular site such as , they will not overload a single computer and the site does not go down if one computer fails. A single computer can also have several host names—for instance, if a company is hosting several websites on a single server, much as an ISP works with hosting.

Domain names are essentially rented, with renewable rights, from a domain name registrar, such as . Some registrars only register domain names, while oth- ers provide hosting services for a fee. ICANN (Internet Corporation for Assigning Names and Numbers) is a nonprofit governance and standards organization that certifies all domain name registrars throughout the world. With the certification, each registrar is authorized to register domain names, such as .com, .edu, or .org. 12

Network Convergence

In part due to the explosive use of the Internet and connectivity of TCP/IP, there is a con- vergence of network devices, applications, and services. Consumers, companies, educa- tional institutions, and government agencies extensively engage in texting, Web surfing, videoconference applications, online gaming, and ebusiness. Network convergence is the efficient coexistence of telephone, video, and data communication within a single network, offering convenience and flexibility not possible with separate infrastructures. Almost any type of information can be converted into digital form and exchanged over a network. Network convergence then allows the weaving together of voice, data, and video. The benefits of network convergence allow for multiple services, multiple devices, but one network, one vendor, and one bill, as suggested by Figure 7.8 .


Internet Domains









Reserved for businesses Reserved for commercial organizations and businesses Reserved for accredited postsecondary institutions Reserved for U.S. government agencies Open to any person or entity, but intended for information providers Reserved for U.S. military Open to any person or entity Reserved for nonprofit organizations

Domain Name Use


The Benefits of Network Convergence

Network Convergence

Multiple Services One Provider

• Internet Access • One bill • One point of contact • One customer support center

• VolP • IPTV

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One of the challenges associated with network convergence is using the many differ- ent tools efficiently and productively. Knowing which communication channel—PC, text message, videoconference—to use with each business participant can be a challenge. Unified communications (UC) is the integration of communication channels into a single service. UC integrates communication channels allowing participants to commu- nicate using the method that is most convenient for them. UC merges instant messaging, videoconferencing, email, voice mail, and VoIP. This can decrease the communication costs for a business while enhancing the way individuals communicate and collaborate.

One area experiencing huge growth in network convergence is the use of the Internet for voice transmission. Voice over IP (VoIP) uses IP technology to transmit telephone calls. For the first time in more than 100 years, VoIP is providing an opportunity to bring about significant change in the way people communicate using the telephone. VoIP ser- vice providers—specialists as well as traditional telephone and cable companies and some ISPs—allow users to call anyone with a telephone number, whether local, long dis- tance, cellular, or international.

Two ways to use VoIP for telephone calls are through a Web interface that allows users to make calls from their computer and through a phone attached to a VoIP adapter that links directly to the Internet through a broadband modem. Figure 7.9 illustrates these two ways along with the use of VoIP-enabled phones, bypassing the need for an adapter.

VoIP services include fixed-price unlimited local and long-distance calling plans (at least within the United States and Canada), plus a range of interesting features, such as:

■ The ability to have more than one phone number, including numbers with different area codes.

■ Integrating email and voice mail so users can listen to their voice mail using their computer.

■ The ability to receive personal or business calls via computer, no matter where the user is physically located. 13

The biggest benefit of VoIP is its low cost. Because it relies on the Internet connection, however, service can be affected if the bandwidth is not appropriate or Internet access is not available.

Skype is a perfect example of IP applied to telephone use. Unlike typical VoIP systems that use a client and server infrastructure, Skype uses a peer-to-peer network. Peer-to- peer (P2P) is a computer network that relies on the computing power and bandwidth of the participants in the network rather than a centralized server. Skype’s user directory is distributed among the users in its network, allowing scalability without a complex and expensive centralized infrastructure. Peer-to-peer networks became an overnight sensa- tion years ago through a service called Napster that distributed digital music illegally. Skype has found a way to use this resource to provide value to its users. 14

As the popularity of VoIP grows, governments are becoming more interested in regulating it as they do traditional telephone services. In the United States, the Fed- eral Communications Commission requires compliance among VoIP service providers


VoIP Connectivity

VoIP Phone



Broadband Modem

Broadband Modem

Standard Phone

VoIP Phone



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comparable to those for traditional telephone providers such as support for local num- ber portability, services for the disabled, and law enforcement for surveillance, along with regulatory and other fees.

An exciting and new convergence is occurring in the area of television with Internet Protocol TV (IPTV), which distributes digital video content using IP across the Internet and private IP networks. Comcast provides an example of a private IP network that also acts as a cable TV provider. Traditional television sends all program signals simultane- ously to the television, allowing the user to select the program by selecting a channel. With IPTV, the user selects a channel and the service provider sends only that single pro- gram to the television. Like cable TV, IPTV uses a box that acts like a modem to send and receive the content (see Figure 7.10 ). A few IPTV features include:

■ Support of multiple devices: PCs and televisions can access IPTV services. ■ Interactivity with users: Interactive applications and programs are supported by

IPTV’s two-way communication path.

■ Low bandwidth: IPTV conserves bandwidth because the provider sends only a single channel.

■ Personalization: Users can choose not only what they want to watch, but also when they want to watch it. 15

BENEFITS OF A CONNECTED WORLD Before networks, transferring data between computers was time-consuming and labor- intensive. People had to physically copy data from machine to machine using a disk. Networks offer many advantages for a business including:

■ Sharing resources

■ Providing opportunities

■ Reducing travel

Sharing Resources

Resource sharing makes all applications, equipment (such as a high-volume printer), and data available to anyone on the network, without regard to the physical location of the resource or the user. Sharing physical resources also supports a sustainable MIS infrastructure, allowing companies to be agile, efficient, and responsible at the same time. Cloud computing (see Chapter 5) and virtualization consolidate information as

LO 7.2: Identify the benefits of a connected world.


IPTV Components



IPTV Set Top Box IPTV Service Provider

World TV Broadcasts

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well as systems that enhance the use of shared resources. By using shared resources, cloud computing and virtualization allow for collective computing power, storage, and software, in an on-demand basis.

Perhaps even more important than sharing physical resources is sharing data. Most companies, regardless of size, depend not just on their customer records, inventories, accounts receivable, financial statements, and tax information, but also on their ability to share these, especially with operations in remote locations. Networking with a LAN, WAN, or MAN allows employees to share data quickly and easily and to use applications such as databases and collaboration tools that rely on sharing. By sharing data, networks have made business processes more efficient. For example, as soon as an order is placed, anyone in the company who needs to view it—whether in marketing, purchasing, manu- facturing, shipping, or billing—can do so.

Intranets and extranets let firms share their corporate information securely. An intranet is a restricted network that relies on Internet technologies to provide an Internet-like environment within the company for information sharing, communica- tions, collaboration, Web publishing, and the support of business processes, as sug- gested in Figure 7.11 . This network is protected by security measures such as passwords, encryption, and firewalls, and thus only authorized users can access it. Intranets provide a central location for all kinds of company-related information such as benefits, sched- ules, strategic directions, and employee directories. 17

An extranet is an extension of an intranet that is available only to authorized out- siders, such as customers, partners, and suppliers. Having a common area where these parties can share information with employees about, for instance, order and invoice processing can be a major competitive advantage in product development, cost control, marketing, distribution, and supplier relations. Companies can establish direct private network links among themselves or create private, secure Internet access, in effect a “private tunnel” within the Internet, called a virtual private network (VPN). Figure 7.12 illustrates using a VPN to connect to a corporate server.

Extranets enable customers, suppliers, consultants, subcontractors, business pros- pects, and others to access selected intranet websites and other company network resources that allow the sharing of information. Consultants and contractors can facili- tate the design of new products or services. Suppliers can ensure that the raw materials


As more Internet-related services move beyond delivering content just to the computer, Google wants to bring that content into the living room. In a joint venture, Google is teaming with Sony and Intel to introduce IPTV services either through new Internet accessible TVs or a new set-top box allowing consumers to search for content, browse the Web, view photo albums, and more. Google would provide the needed software, along with advertisement opportunities; Sony would manufacture the new TVs; and Intel would supply the processors that make it all happen. While consumers can already watch TV shows on their computers as well as on a TV, porting Internet content to a HDTV screen seems like the next logical step, which is the magic of IPTV.

However, this is a very crowded playing field with many firms competing for the living room space. Google is competing with the likes of VUDU, TiVo, Yahoo! Connected TV, Netflix, Roku, Rovi, DivX, Apple TV, Xbox 360, Boxee, CinemaNow, Popbox, and many others, with no clear winner, at least not at the moment.

Brainstorm the advantages and disadvantages of associated with IPTV. Do you think Google TV will be successful? Why or why not? 16

Google TV


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necessary for the company to function are in stock and can be delivered in a timely fashion. Customers can access ordering and payment functions and check order sta- tus. The extranet links the company to the outside world in a way that improves its operations.

Extranets provide business value in several ways. First, by relying on Web browsers they make customer and supplier access to company resources easy and fast. Second, they enable a company to customize interactive Web-enabled services for the intended audience, to build and strengthen strategic relationships with customers and suppliers. Finally, extranets can allow and improve collaboration with customers and other busi- ness partners.

Providing Opportunities

Ebusiness can enhance the opportunities of manufacturers that buy parts from a variety of suppliers. Using networks, they can order parts electronically when needed, reducing the need for large inventories and enhancing efficiency.

Networks allow companies to sell to consumers via the Internet too, offering books, clothing, airline tickets, and more. Most midsize and larger companies also have a marketing presence on the Web and provide extensive online information about their


Intranet Uses


Business Operations and Management

Example: Developing custom applications like order

processing, inventory control, and sales management.

Employees within the company can access and run such applications using web browsers from anywhere on

the network whenever needed.

Communications and Collaboration

Example: Using a browser to send and receive email, voice

mail, documents, and web pages to communicate with

others within the organization, as well as externally through

the Internet.

Web Publishing Example:

Newsletters, technical documentations, and product catalogs can be published in a variety of ways, including web

pages, email, and as part of organizational business



Using a VPN


Company Server

Supplier using a VPN

Customer using a VPN

A VPN acts like a “tunnel”

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products and services. The Internet has lowered entry barriers for start-ups and small companies, which can now immediately tap potential customers online without hiring an expensive marketing company.

Reducing Travel

Networks provide the means for videoconferencing. Using this technology, employees at distant locations can meet without spending time and money on travel, while seeing and hearing each other as if they were in the same location. Nor do all employees have to come to the office; some can telecommute using Internet connections for both data and voice and, thanks to intranets and extranets, maintain the same access to information as they do at work. Telecommuting has been greatly enhanced by VPNs, videoconferenc- ing, and VoIP.

CHALLENGES OF A CONNECTED WORLD Networks have created a diverse, yet globally connected world. By eliminating time and distance, networks make it possible to communicate in ways not previously imaginable. Even though networks provide many business advantages, they also create increased challenges in (1) security and (2) social, ethical, and political issues.


Networks are a tempting target for mischief and fraud. A company first has to ensure proper identification of users and authorization of network access. Outside suppliers might be allowed to access production plans via the company’s extranet, for example, but they must not be able to see other information such as financial records. The com- pany should also preserve the integrity of its data; only qualified users should be allowed to change and update data, and only well-specified data. Security problems intensify on the Internet where companies need to guard against fraud, invalid purchases, and mis- appropriation of credit card information.

Two methods for encrypting network traffic on the Web are secure sockets layer and secure hypertext transfer protocol. Secure sockets layer (SSL) is a standard security

LO 7.3: Identify the challenges of a connected world.


ViVu is transforming the way people interact using videoconferencing. The company has several useful services, including VuRoom, which uses a Skype plug-in that allows remote users to collaborate with presentation and desk- top sharing functionalities. The company uses a software-as-a-service (SaaS) model, allowing consumers to purchase a license to host an event of varying size. Teleconference members can participate from any platform (PC or Mac) using a Web browser without having to download any proprietary viewer or needing any special hardware. Attendees only need a regular broadband Internet connection to receive the service. VuRoom can be used for both small videoconferences and big corporate Web-based training sessions. The compa- ny’s flagship service, VuCast, enables meeting organizers to create, publish, and manage large-scale, high-quality video events that can accommodate more than 10,000 participants.

What are the advantages of using videoconferencing? What are the disad- vantages of using videoconferencing? Would you participate in a telecon- ference with 10,000 users? Why or why not? What types of events does ViVu best serve? 18

ViVu Videoconferencing


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technology for establishing an encrypted link between a Web server and a browser, ensuring that all data passed between them remain private. Millions of websites use SSL to protect their online transactions with their customers.

To create an SSL connection, a Web server requires an SSL Certificate, an electronic document that confirms the identity of a website or server and verifies that a public key belongs to a trustworthy individual or company. (Public key is described in Chapter 4.) Typically, an SSL Certificate will contain a domain name, the company name and address, and the expiration date of the certificate and other details. Verisign is the leading Internet Certification Authority that issues SSL Certificates. When a browser connects to a secure site, it retrieves the site’s SSL Certificate, makes sure it has not expired, and confirms a Certification Authority has issued it. If the certificate fails on any one of these validation measures, the browser will display a warning to the end user that the site is not secure. If a website is using SSL, a lock icon appears in the lower right-hand corner of the user’s Web browser.

Secure hypertext transfer protocol (SHTTP or HTTPS) is a combination of HTTP and SSL to provide encryption and secure identification of an Internet server. HTTPS protects against interception of communications, transferring credit card informa- tion safely and securely with special encryption techniques. When a user enters a Web address using https:// the browser will encrypt the message. However, the server receiv- ing the message must be configured to receive HTTPS messages.

In summary, each company needs to create a network security policy that specifies aspects of data integrity availability and confidentiality or privacy as well as account- ability and authorization. With a variety of security methods, such as SSL and SHTTP, a company can protect its most important asset, its data.

Social, Ethical, and Political Issues

Only a small fraction of the world’s population has access to the Internet, and some peo- ple who have had access in the past have lost it due to changes in their circumstances such as unemployment or poverty. Providing network access to those who want or need it helps to level the playing field and removes the digital divide, a worldwide gap giving advantage to those with access to technology. Some organizations are trying to bridge the divide such as the Boston Digital Bridge Foundation, which concentrates on local schoolchildren and their parents, helping to make them knowledgeable about comput- ers, programs, and the Internet. Other organizations provide inexpensive laptops and Internet access in low-income areas in developing countries. 19

Another social issue with networking occurs with newsgroups or blogs where like- minded people can exchange messages. If the topics are technical in nature or sports related such as cycling, few issues arise. Problems can begin when social media feature topics people can be sensitive about, such as politics, religion, or sex, or when someone posts an offensive message to someone else. Different countries have different and even conflicting laws about Internet use, but because the Internet knows no physical bound- aries, communication is hard to regulate, even if anyone could. Some people believe net- work operators should be responsible for the content they carry, just as newspapers and magazines are. Operators, however, feel that like the post office or phone companies, they cannot be expected to police what users say. If they censored messages, how would they avoid violating users’ rights to free speech?

Many employers read and censor employee emails and limit employee access to dis- tracting entertainment such as YouTube and social networks such as Facebook. Spend- ing company time “playing” is not a good use of resources, they believe.

Social issues can even affect the government and its use of networks to snoop on citi- zens. The FBI has installed a system at many ISPs to scan all incoming and outgoing email for nuggets of interest. The system was originally called Carnivore but bad public- ity caused it to be renamed DCS1000. While the name is much more generic, its goal is the same—locate information on illegal activities by spying on millions of people. A common conception associated with networking technologies is “Big Brother is watch- ing!” People are wary of how much information is available on the Internet and how eas- ily it can fall into the wrong hands. 20

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7.4 Explain the different wireless network categories.

7.5 Explain the different wireless network business applications.

7.6 Identify the benefits of business mobility.

7.7 Identify the challenges of business mobility.

WIRELESS NETWORK CATEGORIES As far back as 1896, Italian inventor Guglielmo Marconi demonstrated a wireless tele- graph, and in 1927, the first radiotelephone system began operating between the United States and Great Britain. Automobile-based mobile telephones were offered in 1947. In 1964, the first communications satellite, Telstar, was launched, and soon after, satellite- relayed telephone service and television broadcasts became available. Wireless networks have exploded since then, and newer technologies are now maturing that allow compa- nies and home users alike to take advantage of both wired and wireless networks. 21

Before delving into a discussion of wireless networks, we should distinguish between mobile and wireless, terms that are often use synonymously but actually have differ- ent meanings. Mobile means the technology can travel with the user, for instance, users can download software, email messages, and Web pages onto a laptop or other mobile device for portable reading or reference. Information collected while on the road can be synchronized with a PC or company server. Wireless, on the other hand, refers to any type of operation accomplished without the use of a hard-wired connection. There are many environments in which the network devices are wireless but not mobile, such as wireless home or office networks with stationary PCs and printers. Some forms of mobil- ity do not require a wireless connection; for instance, a worker can use a wired laptop at home, shut down the laptop, drive to work, and attach the laptop to the company’s wired network.

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a man with muscle dysmorphobia is most likely to:

Instructions:  1. Which of the following patterns is least characteristic of conversion  disorder? A) develops gradually over many years B) more common in women C) those with the disorder are also easily hypnotized D) disorder is very rare 2. A patient appeared at the clinic complaining of pain in her knee, shoulder,  and abdomen, nausea and vomiting, blurred vision, and exhaustion. The patient  history revealed that the patient had been going to clinics for years trying to  get treatment for these complaints and a host of other physical symptoms. The  diagnosis was: A) factitious disorder. B) somatization disorder. C) preoccupation disorder. D) body dysmorphic disorder. 3. A woman experiences a mugging and robbery in which her prized poodle is  kidnapped. Eventually the dog is found and returned. However, she is unable to  recall events immediately following the attack, up until the safe return of the  dog. This is a classic example of: A) selective amnesia. B) localized amnesia. C) continuous amnesia. D) generalized amnesia. 4. Suddenly, following a stressful event, a person with dissociative identity  disorder appears to be in pain and looks confused. The person is probably: A) hosting personalities. B) experiencing personality fusion. C) developing a new personality. D) switching personalities. 5. The first step in treating people with dissociative identity disorder is  typically to: A) bond with the primary personality. B) integrate the subpersonalities into a unity. C) establish a contract with the subpersonalities to prevent self-harm. D) provide a forum for the subpersonalities to communicate with one another.

6. Someone who fasts or exercises strenuously following a binge is engaging in: A) compensation. B) purging. C) enmeshment. D) exposure and response prevention. 7. A man displaying muscle dysmorphobia would be especially fearful of: A) abusing steroids. B) gaining excessive muscle mass. C) becoming scrawny. D) compensatory activities. 8. A person’s hands and eyelids are shaking, and that person is experiencing  visual and tactile hallucinations. Of the following, that person is most likely  experiencing: A) Korsakoff’s syndrome. B) narcotic attraction. C) delirium tremens. D) cannabis toxicity.

9. At the “rave,” a student took a drug which caused a great burst of energy,  along with badly distorted visual experiences. Most likely, the drug the  student took was: A) cannabis (smoked). B) cannabis (ingested). C) Xanax. D) Ecstasy. 10. Biologically speaking, drug tolerance is most related to: A) an excess of neurotransmitters combined with the action of the drug itself. B) the decrease in naturally occurring neurotransmitters that have been  replaced by the drug. C) the synergistic effect of the combination of many different drugs. D) loss of the body’s ability to respond to neurotransmitters that are emitted  by the brain.

11. The use of methadone in drug maintenance programs is controversial because  methadone: A) use increases the risk of contracting AIDS. B) costs over $50 a day per person treated. C) produces withdrawal more difficult than heroin withdrawal. D) needs to be taken several times per day in a rigid schedule. 12. A female friend of yours who is happily married says, “I really enjoy sex,  but I especially enjoy ‘getting there;’ foreplay is the best part!” Your friend  is: A) unusual; most women enjoy orgasm better than any other part of sexual  activity. B) unusual; most women enjoy resolution better than any other part of sexual  activity. C) normal; virtually all women enjoy foreplay the most. D) normal; most women enjoy foreplay the most. 13. A 20-year-old man has gone to see a sex therapist about a sexual  dysfunction problem. What is most likely? A) sexual aversion B) inhibited ejaculation C) premature ejaculation D) hypoactive sexual desire 14. A woman who can masturbate or be masturbated to orgasm cannot reach orgasm  during sexual intercourse. Most clinicians would diagnose this woman’s  condition as: A) normal and healthy. B) orgasmic disorder. C) vaginismus. D) dyspareunia. 15. Which of the following statements by a woman is related most strongly to a  higher chance of her experiencing orgasm? A) “My first partner and I weren’t together very long.” B) “I have good emotional involvement with my spouse, and I didn’t have much  emotional involvement with my first partner.” C) “I enjoy erotic fantasies when my spouse and I have sex.” D) “I married my spouse in part because my spouse has a really kinky sense of  humor.” 16. As a way to get attention, a man occasionally dresses as a woman for  costume parties. Is this an example of transvestic fetishism? A) No, it is not even a sexual disorder. B) No, but it is an example of gender identity disorder. C) Yes, it is. D) It might be, if the man is not heterosexual. 17. Recent studies of people with pedophilia show that: A) most have at least one other psychological disorder. B) relapse-prevention training is unsuccessful. C) most victims are boys. D) there is a clear biological cause. 18. Autoerotic asphyxia is a fatal side effect of: A) taking Viagra. B) a masochistic practice. C) cross-dressing. D) a rope fetish. 19. In a very crowded department store during the Christmas rush, a woman  suddenly feels a stranger rubbing his genital area against her thigh. He  continues until the crowd begins to break up, then moves away. The most likely  diagnosis for this man is: A) pedophilia. B) frotteurism. C) sexual masochism. D) hypoxyphilia. 20. Assume autopsies of the brains of deceased individuals who changed their  sex from male to female show that brain structure “X” is about the size it  would have been if the individuals had been born female—and smaller than in  typical males. This would show conclusively that: A) having a small brain structure “X” makes one want to be female. B) behaving like a “typical” female shrinks brain structure “X.” C) there really is no relationship between the size of brain structure “X” and  the sex of individuals. D) there is a relationship between the size of brain structure “X” and the sex  of individuals. 21. The current view of homosexuality by the psychiatric community is that it: A) co-occurs with transsexualism. B) develops from transvestic fetishism. C) is a variant of normal sexual behavior. D) is preceded by childhood gender identity disorder. 22. During which period does pedophilia typically develop? A) adolescence B) early adulthood C) middle adulthood D) late adulthood 23. Which of the following theoretical orientations appears to be most helpful  in understanding the origin of gender identity disorder (Gender Dysphoria–DSM  5)? A) sociocultural B) biological C) family systems D) cognitive 24. A woman thinks she has horribly ugly hair (in fact, she doesn’t). She will  not be seen in public without a scarf over her head. She suffers from ______  disorder. 25. A man has forgotten who he is. He has fled to a different location from the  one he has been living in and is wandering around aimlessly. After a few hours,  he “comes to” and discovers his strange surrounding. Unable to recall how he  got there or what he has been doing, The man appears to be suffering a ______. 26. Psychodynamic theorists believe that dissociative disorders represent an  extreme use of the defense mechanism ______. 27. The use of hypnosis to help people recall forgotten events is called ______. 28. Dental problems are a possible medical complication of long-term ______.

29. In pre-1995 studies of eighth- and ninth-grade girls, 90 percent of the  ______ respondents were unhappy with their bodies, while 70 percent of the  ______ respondents were satisfied with their bodies. 30. The cessation of menstruation common to some anorexic women is known as  ______. 31. Even years after taking LSD for the last time, a user may randomly  experience ______. 32. The best known of the self-help groups for ethyl alcohol abusers is ______. 33. When Melody stopped taking barbiturates, she suffered a period of nausea,  anxiety, and sleep problems. This phenomenon is known as ______. 34. According to some educators, the number one public health hazard for  college students is ______. PART III: Short Answer  35. A friend says to you, “I’m really concerned about my child [a two-year-old]  eventually developing an eating disorder. What should I do and not do?” Please  give your friend 3 research-based advice about avoidable—and possibly  unavoidable—risks for a child developing anorexia nervosa or bulimia nervosa. 36. Please select ONE of the sexual dysfunctions listed below and 1.) define  it; 2.) describe possible causes of the dysfunction and 3.) briefly describe a  course of therapy that would likely be successful for treating the sexual  dysfunction. male erectile disorder premature ejaculation female orgasmic disorder vaginismus

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the term “additional funds needed (afn)” is generally defined as follows:

Question 1

1. The term “additional funds needed (AFN)” is generally defined as follows:

A.The amount of assets required per dollar of sales.
B.Funds that are obtained automatically from routine business transactions.
C.Funds that a firm must raise externally from non-spontaneous sources, i.e., by borrowing or by selling new stock to support operations.
D.A forecasting approach in which the forecasted percentage of sales for each balance sheet account is held constant.
E.The amount of internally generated cash in a given year minus the amount of cash needed to acquire the new assets needed to support growth.

2 points  

Question 2

1. Other things held constant, an increase in the cost of capital will result in a decrease in a project’s IRR.



2 points  

Question 3

1. In the lease versus buy decision, leasing is often preferable

A.because the lessee owns the property at the end of the least term.
B.because the lessee may have greater flexibility in abandoning the project in which the leased property is used than if the lessee bought and owned the asset.
C.because, generally, no down payment is required, and there are no indirect interest costs.
D.because lease obligations do not affect the firm’s risk as seen by investors.
E.because it has no effect on the firm’s ability to borrow to make other investments.

2 points  

Question 4

1. The desire for floating-rate bonds, and consequently their increased usage, arose out of the experience of the early 1980s, when inflation pushed interest rates up to very high levels and thus caused sharp declines in the prices of outstanding bonds.



2 points  

Question 5

1. The cash flows associated with common stock are more difficult to estimate than those related to bonds because stock has a residual claim against the company versus a contractual obligation for a bond.



2 points  

Question 6

1. To finance the construction of a new plant, Pietersen Corporation must raise an additional $10,000,000 of equity capital through the sale of common stock. The firm currently has an EPS of $5.40 and a P/E ratio of 10, with 1,200,000 shares outstanding. If the firm wants its ex-rights price to be $50, what subscription price must it set on the new shares?


2 points  

Question 7

1. “Capital” is sometimes defined as funds supplied to a firm by investors.



2 points  

Question 8

1. Operating leases help to shift the risk of obsolescence from the user to the lessor.



2 points  

Question 9

1. If the current price of a stock is below the strike price, then an option to buy the stock is worthless and will have a zero value.



2 points  

Question 10

1. The tighter the probability distribution of its expected future returns, the greater the risk of a given investment as measured by its standard deviation.



2 points  

Question 11

1. High current and quick ratios always indicate that a firm is managing its liquidity position well.



2 points  

Question 12

1. Two important issues in corporate governance are (1) the rules that cover the board’s ability to fire the CEO and (2) the rules that cover the CEO’s ability to remove members of the board.



2 points  

Question 13

1. Time lines can be constructed in situations where some of the cash flows occur annually but others occur quarterly.



2 points  

Question 14

1. ESOPs were originally designed to help improve worker productivity, but today they are also used to help prevent hostile takeovers.



2 points  

Question 15

1. The owner of a convertible bond owns, in effect, both a bond and a call option.



2 points  

Question 16

1. Heavy use of off-balance sheet lease financing will tend to

A.affect the lessee’s cash flows but only due to tax effects.
B.make a company appear more risky than it actually is because its stated debt ratio will be increased.
C.affect a company’s cash flows but not its degree of risk.
D.make a company appear less risky than it actually is because its stated debt ratio will appear lower.
E.have no effect on either cash flows or risk because the cash flows are already reflected in the income statement.

2 points  

Question 17

1. Which of the following statements is CORRECT?

A.An example of an externality is a situation where a bank opens a new office, and that new office causes deposits in the bank’s other offices to increase.
B.An externality is a situation where a project would have an adverse effect on some other part of the firm’s overall operations. If the project would have a favorable effect on other operations, then this is not an externality.
C.Identifying an externality can never lead to an increase in the calculated NPV.
D.The NPV method automatically deals correctly with externalities, even if the externalities are not specifically identified, but the IRR method does not. This is another reason to favor the NPV.
E.Both the NPV and IRR methods deal correctly with externalities, even if the externalities are not specifically identified. However, the payback method does not.

2 points  

Question 18

1. BLW Corporation is considering the terms to be set on the options it plans to issue to its executives. Which of the following actions would decrease the value of the options, other things held constant?

A.BLW’s stock price becomes more risky (higher variance).
B.BLW’s stock price suddenly increases.
C.The exercise price of the option is increased.
D.The life of the option is increased, i.e., the time until it expires is lengthened.
E.The Federal Reserve takes actions that increase the risk-free rate.

2 points  

Question 19

1. The annual report contains four basic financial statements: the income statement, balance sheet, statement of cash flows, and statement of stockholders’ equity.



2 points  

Question 20

1. Ratio analysis involves analyzing financial statements in order to appraise a firm’s financial position and strength.



2 points  

Question 21

1. The “preferred” feature of preferred stock means that it normally will provide a higher expected return than will common stock.



2 points  

Question 22

1. On the balance sheet, total assets must always equal total liabilities and equity.



2 points  

Question 23

1. If an investment project would make use of land which the firm currently owns, the project should be charged with the opportunity cost of the land.



2 points  

Question 24

1. A proxy is a document giving one party the authority to act for another party, including the power to vote shares of common stock. Proxies can be important tools relating to control of firms.



2 points  

Question 25

1. Which of the following statements is CORRECT?

A.In the statement of cash flows, a decrease in accounts receivable is reported as a use of cash.
B.In the statement of cash flows, a decrease in accounts payable is reported as a use of cash.
C.In the statement of cash flows, a decrease in inventories is reported as a use of cash.
D.In the statement of cash flows, depreciation charges are reported as a use of cash.
E.Dividends do not show up in the statement of cash flows because dividends are considered to be a financing activity, not an operating activity.

2 points  

Question 26

1. Because of improvements in forecasting techniques, estimating the cash flows associated with a project has become the easiest step in the capital budgeting process.



2 points  

Question 27

1. An option is a contract that gives its holder the right to buy or sell an asset at a predetermined price within a specified period of time.



2 points  

Question 28

1. A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock’s current price?


2 points  

Question 29

1. Which of the following could explain why a business might choose to operate as a corporation rather than as a sole proprietorship or a partnership?

A.Corporate investors are exposed to unlimited liability.
B.Corporations generally face relatively few regulations.
C.Corporations generally find it relatively difficult to raise large amounts of capital.
D.Less of a corporation’s income is generally subjected to taxes than would be true if the firm were a partnership.
E.Corporate shareholders escape liability for the firm’s debts, but this factor may be offset by the tax disadvantages of the corporate form of organization.

2 points  

Question 30

1. Taylor Inc. estimates that its average-risk projects have a WACC of 10%, its below-average risk projects have a WACC of 8%, and its above-average risk projects have a WACC of 12%. Which of the following projects (A, B, and C) should the company accept?

A.Project A, which is of average risk and has a return of 9%.
B.None of the projects should be accepted.
C.Project B, which is of below-average risk and has a return of 8.5%.
D.All of the projects should be accepted.
E.Project C, which is of above-average risk and has a return of 11%.

2 points  

Question 31

1. A warrant is an option, and as such it cannot be used as a “sweetener.”



2 points  

Question 32

1. Many leases written today combine the features of operating and financial leases. Such leases are often called “combination leases.”



2 points  

Question 33

1. The common stock of Southern Airlines currently sells for $33, and its 8% convertible debentures (issued at par, or $1,000) sell for $850. Each debenture can be converted into 25 shares of common stock at any time before 2025. What is the conversion value of the bond?


2 points  

Question 34

1. Amram Company’s current ratio is 1.9. Considered alone, which of the following actions would reduce the company’s current ratio?

A.Use cash to reduce short-term notes payable.
B.Borrow using short-term notes payable and use the proceeds to reduce accruals.
C.Use cash to reduce accruals.
D.Use cash to reduce accounts payable.
E.Borrow using short-term notes payable and use the proceeds to reduce long-term debt.

2 points  

Question 35

1. The form of organization for a business is not an important issue, as this decision has very little effect on the income and wealth of the firm’s owners.



2 points  

Question 36

1. Convertible debentures for Kulik Corporation were issued at their $1,000 par value in 2012. At any time prior to maturity on February 1, 2032, a debenture holder can exchange a bond for 25 shares of common stock. What is the conversion price, Pc?


2 points  

Question 37

1. The cost of debt is equal to one minus the marginal tax rate multiplied by the average coupon rate on all outstanding debt.



2 points  

Question 38

1. Which of the following statements is CORRECT, assuming positive interest rates and holding other things constant?

A.Banks A and B offer the same nominal annual rate of interest, but A pays interest quarterly and B pays semiannually. Deposits in Bank B will provide the higher future value if you leave your funds on deposit.
B.If an investment pays 10% interest, compounded annually, its effective annual rate will be less than 10%.
C.A bank loan’s nominal interest rate will always be equal to or less than its effective annual rate.
D.The present value of a 5-year, $250 annuity due will be lower than the PV of a similar ordinary annuity.
E.A 30-year, $150,000 amortized mortgage will have larger monthly payments than an otherwise similar 20-year mortgage.

2 points  

Question 39

1. As a firm’s sales grow, its current assets also tend to increase. For instance, as sales increase, the firm’s inventories generally increase, and purchases of inventories result in more accounts payable. Thus, spontaneous liabilities that reduce AFN arise from transactions brought on by sales increases.



2 points  

Question 40

1. A firm’s AFN must come from external sources. Typical sources include short-term bank loans, long-term bonds, preferred stock, and common stock.



2 points  

Question 41

1. If a firm’s goal is to maximize its earnings per share, this is the best way to maximize the price of the common stock and thus shareholders’ wealth.



2 points  

Question 42

1. Starting to invest early for retirement increases the benefits of compound interest.



2 points  

Question 43

1. If a firm raises capital by selling new bonds, it is called the “issuing firm,” and the coupon rate is generally set equal to the required rate on bonds of equal risk.



2 points  

Question 44

1. Which of the following statements is CORRECT?

A.If a bond’s yield to maturity exceeds its annual coupon, then the bond will trade at a premium.
B.If a coupon bond is selling at a premium, its current yield equals its yield to maturity.
C.If a coupon bond is selling at par, its current yield equals its yield to maturity.
D.If interest rates increase, the price of a 10-year coupon bond will decline by a greater percentage than the price of a 10-year zero coupon bond.
E.If a coupon bond is selling at a discount, its price will continue to decline until it reaches its par value at maturity.

2 points  

Question 45

1. Which of the following statements is most CORRECT?

A.Warrants have an option feature but convertibles do not.
B.One important difference between warrants and convertibles is that convertibles bring in additional funds when they are converted, but exercising warrants does not bring in any additional funds.
C.Warrants can sometimes be detached and traded separately from the debt with which they were issued, but this is unusual.
D.The coupon rate on convertible debt is normally set below the coupon rate that would be set on otherwise similar straight debt even though investing in convertibles is more risky than investing in straight debt.
E.The value of a warrant to buy a safe, stable stock should exceed the value of a warrant to buy a risky, volatile stock, other things held constant.

2 points  

Question 46

1. Which of the following statements is CORRECT?

A.If the returns on two stocks are perfectly positively correlated (i.e., the correlation coefficient is +1.0) and these stocks have identical standard deviations, an equally weighted portfolio of the two stocks will have a standard deviation that is less than that of the individual stocks.
B.A portfolio with a large number of randomly selected stocks would have more market risk than a single stock that has a beta of 0.5, assuming that the stock’s beta was correctly calculated and is stable.
C.If a stock has a negative beta, its expected return must be negative.
D.A portfolio with a large number of randomly selected stocks would have less market risk than a single stock that has a beta of 0.5.
E.According to the CAPM, stocks with higher standard deviations of returns must also have higher expected returns.

2 points  

Question 47

1. Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock, and its beta will be greater than 1.0.



2 points  

Question 48

1. A firm should never accept a project if its acceptance would lead to an increase in the firm’s cost of capital (its WACC).



2 points  

Question 49

1. Projects S and L are equally risky, mutually exclusive, and have normal cash flows. Project S has an IRR of 15%, while Project L’s IRR is 12%. The two projects have the same NPV when the WACC is 7%. Which of the following statements is CORRECT?

A.If the WACC is 10%, both projects will have positive NPVs.
B.Project S’s NPV is more sensitive to changes in WACC than Project L’s.
C.If the WACC is 6%, Project S will have the higher NPV.
D.If the WACC is 10%, both projects will have a negative NPV.
E.If the WACC is 13%, Project S will have the lower NPV.

2 points  

Question 50

1. The optimal distribution policy strikes that balance between current dividends and capital gains that maximizes the firm’s stock price.



2 points  

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unitedhealthcare sacm

Mission (SACM)

Student Guide

16COL3547 Version Date: March 10, 2017

Good health is essential to your academic success.

UnitedHealthcare remains committed to supporting students to ensure they can achieve their academic goals, and we are uniquely qualifi ed to meet that commitment.

Our nationwide networks are robust and highly competitive, our innovative eligibility and administrative systems are built specifi cally to support student health benefi t plans and our employees are dedicated to the needs of the schools and their students.

Within this guide, you will fi nd valuable information about the services available to you. Please note that Medical and Dental services are separate from each other. We recommend you become familiar with this guide and the corresponding resources for medical and dental to learn about your plan and how to use your benefi ts.






Contents UHC at a Glance 3 Welcome to UHCSR 4

Your Medical Coverage – PPO Plan 5 My Account and Access your Medical ID Card 8 Find a Medical Health Care Provider 9 Which provider should I see? 9 Defi nitions 10 Global Emergency Services 12 Telemedicine by HealthiestYou 12 Hospitalization Pre-Admission Notifi cation 13 Submit a Claim for Member Reimbursement 14 How to reach UHC for Medical Information 15

Your Dental Coverage 16 Access your Dental ID Card 17 How to Find a Dental Health Care Provider 17 How to reach UHC for Dental Information 17

Your Vision Coverage 18 ID Card for Vision Benefi ts 19 How to Find a Vision Care Provider 19 How to reach UHC for Vision Information 19

On your home page,

 Medical, Mental Health and Dental Provider Search

 Pharmacy Locator

 Benefi t Information  Details on your medical and dental benefi ts

 SACM Student Guide

 Helpful Information  Create Account Guide

◦ Create/log in to My Account

◦ Download the Mobile App

On your My Account page:

 Network Medical Provider Search

 Dental Provider Search

 View Current Coverage

 View Personal Information

 View/Print/Download/Request ID Card

 View Claims Information

 Submit Accident Details

 Personal Representative Appointment (for authorizing someone to act on your behalf in matters of your benefi t plan)

 Links to Value Added Benefi ts  Global Emergency Services

 HealthiestYou

 UHC Dental

 Message Center  My Messages

 My Documents

(See page 8 for details about creating My Account)

UHC at a Glance Where to fi nd helpful information

For customer service, please call

1-866-808-8461 Monday–Friday

7:00AM–7:00PM CST

Your home page is:

Use it to access your benefi t information, including locating a provider, viewing claims, and other features of your My Account page.

Helpful Links


Welcome to UnitedHealthcare StudentResources (UHCSR)

UHCSR is the dedicated student health division of UnitedHealthcare (UHC). UHCSR will be your fi rst point of contact for all questions. Below is where to fi nd helpful information.

Provider Search

You can search for health care preferred providers online at our website or on your mobile device with our free UHCSR Mobile App.

Benefi t Information

You can fi nd your Student Guide and other helpful information regarding the available services as well as general health information and FAQs at

Account Information

Log into your My Account page on our website at From there you can download your medical ID card, access medical claims information, see any messages sent to you, and access other helpful information.


Your Medical Coverage – PPO Plan A generous health benefit plan is provided by SACM for its students and their dependents. SACM students are covered at 100% for Preferred Provider In-Network care. The UHC network is one of America’s largest health care networks, with over 800,000 network providers. For questions pertaining to your medical benefits, call Customer Service at 1-866-808-8461.

Your medical plan includes:  Doctor office visits and preventive care (routine

physicals, immunizations, cancer screenings)  Diagnostic lab and radiology tests  Vision care  Pharmacy coverage  Inpatient and outpatient care

 Mental health services  Home health care  Maternity care  Short-term rehabilitation (physical, occupational

and speech therapy)  Emergency and urgent care

  Your full summary of benefits is listed below. The benefits are provided by your plan sponsor (SACM) and are subject to change by SACM. A complete description of your benefits and any limitations and exclusions are provided in the SACM Benefits Booklet, Plan Number 2016-1965-1/2.

Eligibility Provisions  Students  Any sponsored Saudi national enrolled in a scholarly program in the United States pursuant to a 

valid student visa issued by the United States  Diplomat or Staff  Any sponsored Saudi national in the United States on a valid visa serving as a Diplomat or Staff of 

the Saudi Government is eligible to be enrolled in the plan.  Dependents  Dependents of insureds that are in an Eligible Class are also eligible to be covered under the plan.  Plan Features  Preferred Provider  Out‐of‐Network Provider  Maximum Benefit  No Overall Maximum Dollar Limit (Per Covered Person, Per Plan Year)  Deductible   $0 ( Per Covered Person, Per Plan Year )  $10,000 ( Per Covered Person, Per Plan Year )  Coinsurance  100% except as noted below  20% except as noted below  Notes on your Benefits Plan 

The Preferred Provider network for this Plan is UnitedHealthcare Choice Plus PPO. 

If care is received from a Preferred Provider any Covered Medical Expenses will be paid at the Preferred Provider level of Benefits.  If a  Preferred Provider is not available in the Network Area, Benefits will be paid at the level of Benefits shown as Preferred Provider Benefits.  If  the Covered Medical Expense is incurred due to a Medical Emergency, Benefits will be paid at the Preferred Provider level of Benefits.  Covered  Medical Expense incurred at a Preferred Provider facility by an Out‐of‐Network Provider will be paid at the Preferred Provider level of Benefits.  In all other situations, reduced or lower Benefits will be provided when an Out‐of‐Network provider is used. 

Benefits will be reimbursed at one hundred percent (100%) of billed charges under the following circumstances:  1) All Covered Medical  Expenses for services rendered in Saudi Arabia; and 2) Covered Medical Expenses when due to a Medical Emergency occurring in any  country outside of the United States. The Plan Deductible will not apply. 

The Benefits payable are as defined in and subject to all provisions of the Benefits Booklet and any endorsements thereto. Benefits are subject  to the Plan Maximum Benefit unless otherwise specifically stated.  Benefits will be paid up to the maximum Benefit for each service as  scheduled below.  All Benefit maximums are combined Preferred Provider and Out‐of‐Network unless otherwise specifically stated. 

Plan Payments  Inpatient  Preferred Provider  Out‐of‐Network Provider  Room & Board:  Preferred Allowance  Usual and Customary Charges  (Includes guest bed and meal trays for adult accompanying a minor while confined as an Inpatient.)  Intensive Care:  Preferred Allowance  Usual and Customary Charges  Hospital Miscellaneous Expense:  Preferred Allowance  Usual and Customary Charges  Routine Newborn Care:  Paid as any other Sickness  Paid as any other Sickness  Surgery:  Preferred Allowance  Usual and Customary Charges  (If two or more procedures are performed through the same incision or in immediate succession at the same operative session, the  maximum amount paid will not exceed 50% of the second procedure and 50% of all subsequent procedure.)   Assistant Surgeon Fees:  Preferred Allowance  Usual and Customary Charges  Anesthetist Services:  Preferred Allowance  Usual and Customary Charges  Registered Nurse’s Services:  Preferred Allowance  Usual and Customary Charges  Physician’s Visits:  Preferred Allowance  Usual and Customary Charges  Pre‐admission Testing:  Preferred Allowance  Usual and Customary Charges 


Outpatient  Preferred Provider  Out‐of‐Network Provider  Surgery:  Preferred Allowance  Usual and Customary Charges  (If two or more procedures are performed through the same incision or in immediate succession at the same operative session, the  maximum amount paid will not exceed 50% of the second procedure and 50% of all subsequent procedure.)   Day Surgery Miscellaneous:  Preferred Allowance  Usual and Customary Charges  (Day Surgery Miscellaneous charges are based on the Outpatient Surgical Facility Charge Index.)  Assistant Surgeon Fees:  Preferred Allowance  Usual and Customary Charges  Anesthetist Services:  Preferred Allowance  Usual and Customary Charges  Physician’s Visits:  Preferred Allowance  Usual and Customary Charges  Physiotherapy:  Preferred Allowance  Usual and Customary Charges  (12 visits maximum (Per Plan Year))  Medical Emergency Expenses:  Preferred Allowance 

$100 Copay per visit  Usual and Customary Charges   $100 Deductible per visit 

(The Copay/per visit Deductible will be waived if admitted to the Hospital.)  (Benefits include the use of the Emergency Room for a non‐emergency Injury or Sickness.)  Diagnostic X‐ray Services:  Preferred Allowance  Usual and Customary Charges  Radiation Therapy:  Preferred Allowance  Usual and Customary Charges  Laboratory Procedures:  Preferred Allowance  Usual and Customary Charges  Tests & Procedures:  Preferred Allowance  Usual and Customary Charges  Injections:  Preferred Allowance  Usual and Customary Charges  Chemotherapy:  Preferred Allowance  Usual and Customary Charges  Prescription Drugs:  Ancillary Charge applies when  prescription is dispensed from a  higher tier at the Covered Person’s  request and a chemically equivalent  prescription drug is available at a  lower tier. 

UnitedHealthcare Pharmacy (UHCP)  $0 Copay per prescription for Tier 1  $0 Copay per prescription for Tier 2   $0 Copay per prescription for Tier 3  up to a 31 day supply per prescription plus any  Ancillary Charge  (Mail order Prescription Drugs through UHCP with a  $0 Copay per prescription plus any Ancillary Charge  up to a 90 day supply per prescription.) 

Usual and Customary Charges 

Other  Preferred Provider  Out‐of‐Network Provider  Ambulance Services:  Preferred Allowance  Usual and Customary Charges  Durable Medical Equipment:  Preferred Allowance  Usual and Customary Charges  Consultant Physician Fees:  Preferred Allowance  Usual and Customary Charges  Dental Treatment:  Preferred Allowance  Usual and Customary Charges  (Includes benefits for Injury to Sound, Natural Teeth, and treatment of cleft lip and cleft palate only.)  Mental Illness Treatment:  Paid as any other Sickness Paid as any other Sickness  Substance Use Disorder Treatment:  Paid as any other Sickness Paid as any other Sickness  Maternity:  Paid as any other Sickness  Paid as any other Sickness  Complications of Pregnancy:  Paid as any other Sickness  Paid as any other Sickness  Preventive Care Services:  Preferred Allowance  Usual and Customary Charges  (Routine Children Physicals: Includes all services given in connection with the exam. Limited to 7 exams in the first 12 months of life, 3 exams in the  second 12 months of life, 3 exams in the third 12 months of life, and 1 exam per calendar year thereafter up to age 18.)  (Routine Adult Physical Exams: Includes all services given in connection with the exam.  Limited to 1 exam per calendar year for adults age 18 and over.)  (Routine Gynecological Exams: Includes all services given in connection with the exam. Limited to 1 exam and pap smear per calendar year.)  (Mammograms:  Unlimited)  (Prostate Specific Antigen (PSA):  Limited to 1 PSA test per calendar year for males age 40 and over.)  (Digital Rectal Exam (DRE):  Limited to 1 DRE per calendar year for males age 40 and over.)  (Cancer Screening:  Limited to 1 flexible sigmoidoscopy and double barium contrast every 5 years.  Limited to 1 colonoscopy every 10 years for adults age  50 and over.)  (Fecal Occult Blood Test:  Limited to 1 per calendar year.)  (Testing for Tuberculosis.)  Reconstructive Breast Surgery  Following Mastectomy: 

Paid as any other Sickness  Paid as any other Sickness 

Diabetes Services:  Paid as any other Sickness  Paid as any other Sickness  Home Health Care:  Preferred Allowance  Usual and Customary Charges  (Unlimited visits per Policy Year.)  Hospice Care:  Preferred Allowance  Usual and Customary Charges  (Inpatient: 30 days lifetime maximum.  Outpatient: $10,000 lifetime maximum.) 


Other (continued)  Preferred Provider  Out‐of‐Network Provider  Inpatient Rehabilitation Facility:  Preferred Allowance  Usual and Customary Charges  Skilled Nursing Facility:  Preferred Allowance  Usual and Customary Charges  Urgent Care Center:  Preferred Allowance   Usual and Customary Charges   Hospital Outpatient Facility or Clinic:  Preferred Allowance  Usual and Customary Charges  Approved Clinical Trials:  Paid as any other Sickness  Paid as any other Sickness  Transplantation Services:  Paid as any other Sickness  Paid as any other Sickness  Acupuncture in Lieu of Anesthesia:  Paid as any other Sickness  Paid as any other Sickness  Hearing Aids:  Preferred Allowance  Usual and Customary Charges  ($3,500 maximum (Per Plan Year). A written prescription is required).  Infertility Services:  Preferred Allowance  Usual and Customary Charges  Medical Foods:  (A written prescription is required.) 

Preferred Allowance  Usual and Customary Charges 

Ostomy Supplies:  Preferred Allowance  Usual and Customary Charges  TMJ Disorder:  Preferred Allowance  Usual and Customary Charges  ($5,000 maximum (Per Plan Year))  Repatriation:  Benefits provided by UnitedHealthcare Global 

or reimbursed by SACM  Benefits provided by UnitedHealthcare Global  or reimbursed by SACM 

Medical Evacuation:  Benefits provided by UnitedHealthcare Global  Benefits provided by UnitedHealthcare Global  Other:  Note Below  Note Below  Spinal Disorder Treatment: Preferred Allowance / Usual and Customary Charges – (Caused by or related a biochemical or nerve disorders of the  spine. Unlimited visits per Plan Year.)  Ear Piercing provided in the Physician’s office for Females age 10 and under: Preferred Allowance / Usual  and Customary Charges.  Treatment for Congenital Defects and Pre‐mature Born Babies: Preferred Allowance / Usual and Customary Charges.   Braille Machines: Preferred Allowance / Usual and Customary Charges ($700 maximum per Plan Year.). Sickle Cell Anemia Testing During  Pregnancy:  Preferred Allowance/Usual and Customary Charges. Obesity Treatment: Paid as any other Sickness / Paid as any other sickness. Routine Hearing Exams:  Preferred Allowance  Usual and Customary Charges  (Includes one audiometric routine exam per Plan Year.) 


Sign up for My Account and Access your Medical ID Card

Continuously enrolled SACM members were mailed a new UHCSR medical ID card in December 2016 to the U.S. mailing address that we have on file. If you’re a new member, you should receive your medical card sometime in January 2017.

You can visit to create your MyAccount and download an electronic copy of your UHCSR medical card. You may also download our UHCSR Mobile App from your App Provider so you can have your account information and medical ID card for you and your dependents (if applicable) readily available on your Smart Phone.

Once you’ve created your My Account, just log in with your user name and password at and begin to access your account online, at your own convenience.

Create your account today and:

• View coverage details

• View or print your medical ID card

• Review information about your dental plan

• Review Message Center electronic notifications

• Check Claim status and Explanations of Benefits (EOB)

• Review claims letters

• Search for a preferred provider

• Provide accident details or Personal Representative Appointment

• Review your personal information – if we don’t have your U. S. mailing address, be sure to update it in the SACM Database, through the Ministry of Higher Education student portal/ Safeer as soon as possible.

Creating your My Account is easy!

Visit and click the Create an Account link

Follow the onscreen prompts – you’ll need your First and Last Name, Date of Birth and your Saudi National ID.

Create your user name. Your user name must contain 6 – 30 alphanumeric characters. Verify your email address and submit.

You will receive a return email with a pin that you will use to verify your account and create a password. Your password must have 8-12 characters and include at least three of the following: an uppercase character, a lowercase character, a numeric character (0-9), and a special character (e.g., *, ~, $, etc.).

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How to Find a Medical Health Care Provider Choose a UnitedHealthcare medical provider to help maximize health care dollars and lower out-of-pocket costs. Use the UHCSR Mobile App or go to Click the links under “Search for a Provider”. Or call Customer Service at 866-808-8461.

1. Access your SACM Welcome page at

2. In the Search for a Provider section click the Medical – UHC Choice Plus link

3. Click Change Location and specify a ZIP code or city/state to narrow down the location. Click OK.

4. In the Search box, specify Doctor Name or Specialty, Facility Name, Clinic Name, or Medical Group Name. Click SEARCH. • You may also click the Find Health Care by Category buttons below the Search box to search by

People, Places, Tests and Imaging, Services and Treatments or Care by Condition.

5. Follow the prompts to further refi ne your search criteria. • The search results will indicate the providers’ address, phone number and other details.

Which provider should I see? Sometimes it may be diffi cult to decide if a sudden illness or injury needs immediate emergency care. Choosing the right health setting – Primary Care Physician, Urgent Care, or Emergency Room is important; knowing which provider to see, depending on the medical situation, can save you time and money.

Primary Care Physician When you or a loved one is hurt, you want the best care. Your primary care physician knows you and your health history. He or she can access your medical records. And, he or she can provide you follow-up care or refer you to specialists. If it’s not urgent, it’s usually best to go to your own physician’s offi ce.

Urgent Care Sometimes you may need care fast. But, your Primary Care Physician may be unavailable. You may want to try an urgent care center. They can treat many minor ailments. Chances are, you won’t have to wait as long as at an emergency room. You may pay less, too.

An urgent care center can help with: • Sprains & Strains • Minor broken bones (example: fi nger) • Minor infections • Small cuts • Sore throats • Rashes

Emergency Rooms You may be tempted to go to an emergency room (ER). But, this may not be the best choice. At the ER, true emergencies are treated fi rst. Other cases must wait–sometimes for hours. And, it may cost you more.

Go to an ER for: • Heavy bleeding • Large open wounds • Sudden change in vision • Chest pain • Sudden weakness or trouble talking • Major burns • Severe head and spinal injuries • Diffi culty breathing • Major broken bones


Defi nitions Below, you will fi nd a defi nition of what’s considered a medical emergency for the purpose of plan benefi ts in addition to other relevant terms that will help you navigate your benefi t plan.

ANCILLARY CHARGE means a charge, in addition to the Copayment and/or Coinsurance, that the Covered Person is required to pay when a covered Prescription Drug Product is dispensed at the Covered Person’s or the Physician’s request, when a Chemically Equivalent Prescription Drug Product is available on a lower tier. For Prescription Drug Products from Network Pharmacies, the Ancillary Charge is calculated as the difference between the Prescription Drug Cost or MAC list price for Network Pharmacies for the Prescription Drug Product on the higher tier, and the Prescription Drug Cost or MAC list price of the Chemically Equivalent Prescription Drug Product available on the lower tier.

BENEFITS means Plan payments for Covered Medical Expenses, subject to the terms and conditions of the Plan and any Addendums and/or Amendments.

CLAIMS ADMINISTRATOR OR ADMINISTRATOR means United HealthCare Services, Inc., and its affi liates, which provide certain claim administration services for the Plan.

COINSURANCE means the percentage of Covered Medical Expenses that you must pay.

COPAY/COPAYMENT means a specifi ed dollar amount that the Covered Person is required to pay for certain Covered Medical Expenses.

COVERED MEDICAL EXPENSES means reasonable charges which are: 1) not in excess of Usual and Customary Charges; 2) not in excess of the Preferred Allowance when the Plan includes Preferred Provider Benefi ts and the charges are received from a Preferred Provider; 3) not in excess of the maximum Benefi t amount payable per service as specifi ed in the Schedule of Benefi ts; 4) made for services and supplies not excluded under the Plan; 5) made for services and supplies which are a Medical Necessity; 6) made for services included in the Schedule of Benefi ts; and 7) in excess of the amount stated as a Deductible, if any.

DEDUCTIBLE means if an amount is stated in the Schedule of Benefi ts or any other section of this Plan as a deductible, it shall mean an amount to be subtracted from the amount or amounts otherwise payable as Covered Medical Expenses before payment of any Benefi t is made. The deductible will apply as specifi ed in the Schedule of Benefi ts.

ELECTIVE SURGERY OR ELECTIVE TREATMENT means those health care services or supplies that do not meet the health care need for a Sickness or Injury. Elective surgery or elective treatment includes any service, treatment or supplies that: 1) are deemed by the Plan Sponsor to be research or experimental; or 2) are not recognized and generally accepted medical practices in the United States.

HOSPITAL means a licensed or properly accredited general hospital which: 1) is open at all times; 2) is operated primarily and continuously for the treatment of and surgery for sick and injured persons as inpatients; 3) is under the supervision of a staff of one or more legally qualifi ed Physicians available at all times; 4) continuously provides on the premises 24 hour nursing service by Registered Nurses; 5) provides organized facilities for diagnosis and major surgery on the premises; and 6) is not primarily a clinic, nursing, rest or convalescent home. Hospital also means a licensed alcohol and drug abuse rehabilitation facility and a mental hospital. Alcohol rehabilitation facilities and mental hospitals are not required to provide organized facilities for major surgery on the premises or on a prearranged basis.


INJURY means bodily injury which is all of the following: 1) directly and independently caused by specifi c accidental contact with another body or object. 2) unrelated to any pathological, functional, or structural disorder. 3) a source of loss. 4) treated by a Physician within 30 days after the date of accident. 5) sustained while the Covered Person is covered under this Plan.

All injuries sustained in one accident, including all related conditions and recurrent symptoms of these injuries will be considered one injury. Injury does not include loss which results wholly or in part, directly or indirectly, from disease or other bodily infi rmity. Covered Medical Expenses incurred as a result of an injury that occurred prior to this Plan’s Effective Date will be considered a Sickness under this Plan.

MEDICAL EMERGENCY means the occurrence of a sudden, serious and unexpected Sickness or Injury. In the absence of immediate medical attention, a reasonable person could believe this condition would result in any of the following:

1) Death. 2) Placement of the Covered Person’s health in jeopardy. 3) Serious impairment of bodily functions. 4) Serious dysfunction of any body organ or part. 5) In the case of a pregnant woman, serious jeopardy to the health of the fetus.

Expenses incurred for “Medical Emergency” will be paid only for Sickness or Injury which fulfi lls the above conditions. These expenses will not be paid for minor Injuries or minor Sicknesses.

NETWORK AREA means the 50 mile radius around the local school campus the Covered Person is attending.

OUT OF NETWORK means those providers who have not agreed to any prearranged fee schedules. Covered Persons may incur signifi cant out-of-pocket expenses with these providers. Charges in excess of the amount paid by the Plan are the Covered Person’s responsibility.

PLAN means The Saudi Arabian Cultural Mission Student Health Plan.

PLAN ADMINISTRATOR means The Saudi Arabian Cultural Mission or its designee.

PLAN SPONSOR means The Saudi Arabian Cultural Mission.

PREFERRED PROVIDER means the Physicians, Hospitals and other health care providers who have contracted to provide specifi c medical care at negotiated prices. The Plan offers the network of Preferred Providers which is known as: UnitedHealthcare Choice Plus PPO. The availability of specifi c providers is subject to change without notice. Covered Persons should always confi rm that a Preferred Provider is participating at the time services are required by calling the Administrator at 1-800-767-0700 and/or by asking the provider when making an appointment for services.

SICKNESS means sickness or disease of the Covered Person which causes loss while the Covered Person is covered under this Plan. All related conditions and recurrent symptoms of the same or a similar condition will be considered one sickness. Covered Medical Expenses incurred as a result of an Injury that occurred prior to this Plan’s Effective Date will be considered a sickness under this Plan.

URGENT CARE CENTER means a facility that provides treatment required to prevent serious deterioration of the Covered Person’s health as a result of an unforeseen Sickness, Injury, or the onset of acute or severe symptoms.

USUAL AND CUSTOMARY CHARGES means the lesser of the actual charge or a reasonable charge which is: 1) usual and customary when compared with the charges made for similar services and supplies; and 2) made to persons having similar medical conditions in the locality where service is rendered. The Administrator uses data from FAIR Health, Inc. valued at the 75th percentile to determine Usual and Customary Charges. No payment will be made under this Plan for any expenses incurred which in the judgment of the Administrator are in excess of Usual and Customary Charges.


Global Emergency Services Your global emergency services benefi t through UnitedHealthcare Global is a comprehensive program that provides 24/7 medical and travel assistance to participants who call their Emergency Response Center. A multilingual case manager takes the call and immediately provides assistance. Participants can even call the Emergency Response Center before traveling to get a pre-trip destination report that covers subjects like health and security risks, immunization and vaccination recommendations, crime, culture, weather, and so much more.

Foreign national students studying in the US – You’re eligible for services for the duration of your studies while traveling 100 miles or more from your campus in the US and traveling outside of your home country. You have access to doctors, hospitals, pharmacies, and certain other services when faced with a travel or medical emergency while outside the US.

One phone call to UnitedHealthcare Global connects you to:

 Medical Assistance Services  Medical Evacuation and Repatriation Services  Security and Natural Disaster Evacuation Services  Worldwide Destination Intelligence  Travel Assistance Services  Experienced crisis management professionals  A global network of over 41,000 pre-qualifi ed medical providers

Please visit for the UnitedHealthcare Global brochure which includes service descriptions and program conditions and limitations. To access services, call or email:

Toll-free within the US: 1-877-294-2038 Collect outside the US: 1-410-453-6330 Email:

Telehealth with HealthiestYou We’ve partnered with HealthiestYou to provide you with round-the-clock access to board-certifi ed physicians. SACM members* can connect with a physician via phone and/or video chat** using this nationwide telehealth service. During a physician consult, you will be able to speak to a physician for diagnosis and treatment of many different acute illnesses.

Healthiest You also offers notifi cations via smart phone app – students may receive a notifi cation when they arrive at an Emergency Room or Urgent Care Center. This notifi cation will serve to remind you of your telehealth benefi t that allows you to speak to a doctor without having to sit in a waiting room.

*When services are obtained during the policy effective dates. Non-SACM members will be charged a $40 consultation fee.

**Telephone services and/or video chat availability is determined by state requirements.

To access services:

Toll-free within the US: 1-855-777-4856 Web:


Hospitalization Pre-Admission Notifi cation UnitedHealthcare should be notifi ed of all Hospital admissions:

• Pre-notifi cation of medical non-emergency hospitalizations: The patient, Physician or Hospital should call the phone number on the covered person’s ID card at least fi ve working days prior to a planned admission.

• Notifi cation of medical emergency hospitalizations: The patient, patient’s representative, Physician or Hospital should call the phone number on the covered person’s ID card within two working days of an emergency admission.

UnitedHealthcare is open for Pre-Admission Notifi cation calls from 8:00 a.m. to 6:00 p.m. C.S.T., Monday through Friday. Calls may be left on the Customer Service Department’s voice mail after hours.

Note: Failure to follow the notifi cation procedures will not affect benefi ts otherwise payable under the policy; however, pre-notifi cation is not a guarantee that benefi ts will be paid.


Submit a Claim for Member Reimbursement Use this procedure to be reimbursed for medical claims you paid to out-of-network providers in the U.S. or for care outside the U.S.:

• A claim form is not required.

• All documentation submitted must be legible.

• Provide a copy of the front and back of your ID card as well as the patient information, if different than the primary insured member.

• Medical claims bills must include Provider name, address and phone number, diagnosis code (nature of illness), procedure code (service performed), service date, and cost.

• For prescription claims, provide your receipt or computer printout from the Pharmacy which in- cludes patient name, doctors name, medicine name, date dispensed, quantity, and purchase price.

• Valid proof of payment must also be submitted with your claims, otherwise there may be a delay in claim reimbursement. See below for a list of requirements.

• Mail the claim to the address or below. Be sure to keep a copy for your records.

Valid Proof of Payment: Please submit the following as proof of payment.

• Medical bills and perscriptions paid in cash: ◦ Verification of cash payments detailed on provider letterhead and signed by the Provider.

• Medical bills and perscriptions paid by check: ◦ Copy of front and back of cancelled check

• Medical bills and perscriptions paid with a credit card: ◦ Copy of the credit card statement showing payment for the services billed

Mail Claims to the Claims Administrator: UnitedHealthcare StudentResources P.O. Box 809025 Dallas, TX 75380-9025

If you have any questions, please contact our Customer Service Department:

Phone: 866-808-8461 or ATT Access Code + 866-808-8335 (outside the U.S.) eMail:


How to reach UHC for Medical Information

Our live Customer Service Representatives can be reached Monday through Friday from 7am- 7pm Central Standard Time. After hours, calls are directed to our Interactive Voice Recognition automated system which allows you to check claim status and coverage dates.

Customer Service may also be contacted via e-mail for claims at or for general Customer Service inquiries at Our e-mail team responds to all inquiries within two business days. Correspondence received during business hours is replied to within 3 hours or less.

Customer Service 1-866-808-8461 ATT Access Code + 866-808-8335 (from outside the U.S.)

Mailing Address UnitedHealthcare StudentResources P.O. Box 809025 Dallas, TX 75380-9025




Account Information

Log into www.myuhc to download your dental ID card, access dental claims information, and access other helpful information.

Welcome to UHC Dental A generous dental benefi t plan is provided by SACM for its students and their dependents for care sought inside the U.S. with In-Network providers. SACM students are covered at 100% for In-Network care. The UnitedHealthcare Dental network has over 385,000 dental access points for our members.

Your dental plan includes:

Plan Features Deduc ble $0/$0 Annual Max $2000 Life me Ortho Max $2000

Plan Payments Diagnos c Service Preferred Provider Periodic Oral Evalua on 100% Radiographs 100% Lab and Other Diagnos c Tests 100%

Preven ve Services Preferred Provider Dental Prophylaxis (Cleaning) 100% Fluoride Treatment 100% Sealants 100% Space Maintainers 100%

Basic Services Preferred Provider Restora ons (Amalgams or Composite) 100% Emergency Treatment/General Services 100% Simple Extrac ons 100% Oral Surgery (incl. surgical extrac ons) 100% Periodon cs & Endodon cs 100%

Major Services Preferred Provider Inlays/Onlays/Crowns 100% Dentures and Removable Prosthe cs 100% Fixed Par al Dentures (Bridges) 100%

Orthodon c Services Preferred Provider Orthodon a 100%

Note: There is no out of network dental benefi t.

Did you know?

When SACM members receive dental services from a network dentist, the dentist submits the claim and is paid directly by UHC Dental.


Access your Dental ID Card Your benefi t plan includes Dental benefi ts administered by UHC Dental. If you are a new SACM member, you will receive a dental ID card in the mail. Continuously enrolled SACM members will use the dental ID card initially sent with their 2015 plan materials.

If you do not receive your Dental ID Card in the mail, please review your Personal Information in your UHCSR My Account to verify the information we have in our system. If we don’t have your U. S. mailing address, be sure to update it in the SACM Database, through the Ministry of Higher Education student portal/Safeer as soon as possible. You will not be able to access your Dental ID Card online until we have a U.S. mailing address on fi le.

Once your U.S. Mailing address is updated within our system, your Dental ID Card will automatically be mailed to you at your U.S. address.

Upon receipt of your Dental ID Card, please go to and register so that you can access your Dental benefi ts, locate a dentist, request a replacement or print a temporary Dental ID Card. You may also access this link within UHCSR My Account on the ID Card and Dental Plan pages.

How to Find a Dental Health Care Provider Your plan includes in-network Dental administered through UHC Dental. You will need to select an In-Network Dental provider to ensure that your dental claims are paid with no cost to you.

1. Go to 2. In the Search for a Provider section, select the Dental – National Options PPO link 3. Select Location, Dentist Name or Practice Name to begin your search 4. Complete your search criteria and click Search 5. The Search results will indicate the provider’s address, phone number and other details 6. You may also print, email or export your search results

You may also search for dental providers through your UHCSR My Account or at Note: you will need your dental ID card to register at

How to reach UHC for Dental Information Our live Customer Service Representatives can be reached Monday through Friday from 7am-10pm Central Standard Time.

Customer Service 1-877-881-8825



Account Information

Log into to access your ID card, claims information and other helpful information.

Welcome to UHC Vision UnitedHealthcare has been trusted for more than 50 years to deliver affordable, innovative vision care solutions through experienced, customer-focused people and the nation’s most accessible, diversifi ed vision care network.

In-network, covered-in-full benefi ts (up to the plan allowance and after applicable copay) include a com- prehensive exam, eye glasses with standard single vision, lined bifocal, lined trifocal, or lenticular lenses, standard scratch-resistant coating* and the frame, or contact lenses in lieu of eyeglasses.

Your vision plan includes:

Benefi t Frequency Comprehensive Exam(s) Once per calendar year Spectacle Lenses Once per two calendar years Frames Once per two calendar years Contact Lenses in Lieu of Eyeglasses Once per two calendar years

In-Network Services Copays Exams $0 Materials $0 Vision Care Supplies 100% up to $200 maximum to be used towards the purchase of eye glass lenses, frames, and contact lenses every two calendar years

Discounts Laser Vision – UnitedHealthcare has partnered with the Laser Vision Network of America (LVNA) to provide our members with access to discounted laser vision correc on providers. Members receive 15% off usual and customary pricing or 5% off promo onal pricing at more than 550 network provider loca ons and even greater discounts through set pricing at LasikPlus loca ons. For more informa on, call 1-888-563-4497 or visit us at Addi onal Material – At a par cipa ng network provider you will re- ceive up to a 20% discount on an addi onal pair of eyeglasses or contact lenses. This program is available a er your vision benefi ts have been exhausted. Please note that this discount shall not be considered insur- ance, and that UnitedHealthcare shall neither pay nor reimburse the provider or member for any funds owed or spent. Addi onal materials do not have to be purchased at the me of ini al material purchase. Hearing Aids – As a UnitedHealthcare plan member, you can save on high-quality hearing aids when you buy them from hi HealthInnova- ons™. To fi nd out more go to hiHealthInnova When placing

your order use promo code myVision to get the special price discount.

*On all orders processed through a company owned and contracted Lab network.

Did you know?

When SACM members receive vision services from a network provider, the provider submits the claim and is paid directly by UHC.


ID Card for Vision Benefi ts

In order to take advantage of these vision benefi ts, simply show your medical ID card to your vision provider. No separate vision ID card is necessary.

How to Find a Vision Care Provider Your plan includes in-network vision care administered through UHC. You will need to select an In-Network vision care provider to ensure that your vision claims are paid with no cost to you.

1. Go to

2. The provider link is on the left side of the page, at the bottom

 You do not need to register to fi nd a provider

3. Complete your search criteria and click Search

4. The Search results will indicate the provider’s address, phone number and other details

How to reach UHC for Vision Information Our live Customer Service Representatives can be reached Monday through Friday from 7am-10pm Central Standard Time.

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the service a homeowner performs when she mows her yard is not included in gdp because

Page 1

              Question 1. 1. (TCO 1) Opportunity cost is best defined as (Points : 4) 
       marginal cost minus marginal benefit.
       the time spent on an economic activity.
       the value of the best forgone alternative.
       the money cost of an economic decision.

Question 2. 2. (TCO1) Money is not considered to be an economic resource because (Points : 4) 
       as such, it is not productive.
       money is not a free gift of nature.
       money is made by man.
       idle money balances do not earn interest income.

Question 3. 3. (TCO1) A point outside the production possibilities curve is (Points : 4) 
       attainable, but there is not full employment.
       attainable, but there is not optimal allocation.
       unattainable because the economy is inefficient.
       unattainable because of limited resources.

Question 4. 4. (TCO1) In a command system (Points : 4) 
       self-interest guides and commands individuals to pursue actions that lead them toward achieving their goals.
       the head of each family decides what to do with the family’s resources.
       the government makes production and allocation decisions.
       market traders command what outputs are produced and how they are allocated.

Question 5. 5. (TCO 2) The demand curve is a representation of the relationship between the quantity of a product demanded and (Points : 4) 

Question 6. 6. (TCO 2) What combination of changes would most likely decrease the equilibrium price? (Points : 4) 
       When supply decreases and demand increases
       When demand increases and supply increases
       When demand decreases and supply decreases
       When supply increases and demand decreases

Question 7. 7. (TCO 2) You are the sales manager for a software company and have been informed that the price elasticity of demand for your most popular software is less than one.  To increase total revenues, you should (Points : 4) 
       increase the price of the software.
       decrease the price of the software.
       hold the price of the software constant.
       increase the supply of the software.

Question 8. 8. (TCO 2) Which of the following factors will make the demand for a product relatively elastic? (Points : 4) 
       There are few substitutes.
       The time interval considered is long.
       The good is considered a necessity.
       Purchases of the good require a small portion of consumers’ budgets.

Question 9. 9. (TCO 2) Which is true for a purely competitive firm in short-run equilibrium? (Points : 4) 
       The firm is making only normal profits.
       The firm’s marginal cost is greater than its marginal revenue.
       The firm’s marginal revenue is equal to its marginal cost.
       A decrease in output would lead to a rise in profits.

Question 10. 10. (TCO 2) Which case below best represents a case of price discrimination? (Points : 4) 
       An insurance company offers discounts to safe drivers.
       A major airline sells tickets to senior citizens at lower prices than to other passengers.
       A professional baseball team pays two players with identical batting averages different salaries.
       A utility company charges less for electricity used during “off-peak” hours, when it does not have to operate its less-efficient generating plants.

Question 11. 11. (TCO 3) A cartel is (Points : 4) 
       a form of covert collusion.
       legal in the United States.
       always successful in raising profits.
       a formal agreement among firms to collude.

Question 12. 12. (TCO 3) In the short run, output (Points : 4) 
       is absolutely fixed.
       can vary as the result of using a fixed amount of plant and equipment more or less intensively.
       may be altered by varying the size of plant and equipment which now exist in the industry.
       can vary as the result of changing the size of existing plants and by new firms entering or leaving the industry.

Question 13. 13. (TCO 4) A recession is a decline in (Points : 4) 
       the inflation rate that lasts six months or longer.
       the unemployment rate that lasts six months or longer.
       real GDP that lasts six months or longer.
       potential GDP that lasts six months or longer.

Question 14. 14. (TCO 4) Official unemployment rate statistics may (Points : 4) 
       overstate the amount of unemployment by including part-time workers in the calculations.
       understate the amount of unemployment by excluding part-time workers in the calculations.
       overstate the amount of unemployment because of the presence of “discouraged” workers who are not actively seeking employment.
       understate the amount of unemployment because of the presence of “discouraged” workers who are not actively seeking employment.

Question 15. 15. (TCO 4) GDP is the market value of (Points : 4) 
       resources (land, labor, capita, and entrepreneurship) in an economy in a given year.
       all final goods and services produced in an economy in a given year.
       consumption and investment spending in an economy in a given year.
       all output produced and accumulated over the years.

Question 16. 16. (TCO 4) The service a homeowner performs when she mows her yard is not included in GDP because (Points : 4) 
       this is a nonmarket transaction.
       this is a nonproduction activity.
       this is a noninvestment transaction.
       multiple counting would be involved.

Question 17. 17. (TCO 6) The goal of expansionary fiscal policy is to increase (Points : 4) 
       the price level.
       aggregate supply.
       real GDP.

Question 18. 18. (TCO 6) Refer to the graph.  What combination would most likely cause a shift from AD1 to AD3? 

 Graph Description  (Points : 4) 
       Increases in taxes and government spending
       Decrease in taxes and increase in government spending
       Increase in taxes and decrease in government spending
       Decreases in taxes and government spending

Question 19. 19. (TCO 6) Which of the following serves as an automatic stabilizer in the economy? (Points : 4) 
       Interest rates
       Exchange rates
       Inflation rate
       Progressive income tax

Question 20. 20. (TCO 6) The lag between the time the need for fiscal action is recognized and the time action is taken is referred to as the (Points : 4) 
       crowding-out lag.
       recognition lag.
       operational lag.
       administrative lag.

page 2

 1. (TCO 5) An increase in aggregate demand is most likely to be caused by a decrease in (Points : 4) 
       the wealth of consumers.
       consumer and business confidence.
       expected returns on investment.
       the tax rates on household income.

Question 2. 2. (TCO 5) The upward slope of the short-run aggregate supply curve is based on the assumption that (Points : 4) 
       wages and other resource prices do not respond to price level changes.
       wages and other resource prices do respond to price level changes.
       prices of output do not respond to price level changes.
       prices of inputs are flexible while prices of outputs are fixed.

Question 3. 3. (TCO 5) Which would most likely increase aggregate supply? (Points : 4) 
       An increase in the prices of imported products
       An increase in productivity
       A decrease in business subsidies
       A decrease in personal taxes

Question 4. 4. (TCO 5) With cost-push inflation in the short run, there will be (Points : 4) 
       an increase in real GDP.
       a leftward shift in the aggregate demand curve.
       a decrease in real GDP.
       a decrease in unemployment.

Question 5. 5. (TCO 6) With an MPS of .3, the MPC will be (Points : 4) 
       1 – .3.
       .3 – 1.

Question 6. 6. (TCO 7) The M1 money supply is composed of (Points : 4) 
       all coins and paper money held by the general public and the banks.
       bank deposits of households and business firms.
       bank deposits and mutual funds.
       checkable deposits and currency in circulation.

Question 7. 7. (TCO 7) Which of the following “backs” the value of money in the United States? (Points : 4) 
       Gold stored in the Federal Reserve Bank of New York
       Acceptability of it as a medium of exchange
       Willingness of foreign government to hold U.S. dollars
       Size of the budget surplus in the U.S. government

Question 8. 8. (TCO 7) How many members can serve on the Board of Governors of the Federal Reserve System? (Points : 4) 

Question 9. 9. (TCO 7) Which of the following is the most important function of the Federal Reserve System? (Points : 4) 
       Setting reserve requirements
       Controlling the money supply
       Lending money to banks and thrifts
       Acting as fiscal agent for the U.S. government

Question 10. 10. (TCO 7) Money is “created” when (Points : 4) 
       a depositor gets cash from the bank’s ATM.
       a bank accepts deposits from its customers.
       people receive loans from their banks.
       people spend the incomes that they receive.

Question 11. 11. (TCO 7) The establishment of a federal deposit insurance program resulted from the (Points : 4) 
       establishment of the Federal Reserve System in 1913.
       speculation during World War I.
       stock market crash of 1987.
       bank panics of 1930-1933.

Question 12. 12. (TCO 7) Which monetary policy tool was created in response to the financial crisis of 2007-2008? (Points : 4) 
       Discount rate
       Term auction facility
       Target federal funds rate
       Open market operations

Question 13. 13. (TCO 7) The most frequently used monetary device for achieving price stability is: (Points : 4) 
       open market operations.
       the discount rate.
       the reserve ratio.
       the prime interest rate.

Question 14. 14. (TCO 8) Which of the following products is a leading import of the United States? (Points : 4) 
       Generating equipment

Question 15. 15. (TCO 8) The principal concept behind comparative advantage is that a nation should (Points : 4) 
       maximize its volume of trade with other nations.
       use tariffs and quotas to protect the production of vital products for the nation.
       concentrate production on those products for which it has the lowest domestic opportunity cost.
       strive to be self-sufficient in the production of essential goods and services.

Question 16. 16. (TCO 8) If a nation imposes a tariff on an imported product, then the nation will experience a(n) (Points : 4) 
       decrease in total supply and an increase in the price of the product.
       decrease in demand and a decrease in the price of the product.
       decrease in supply of, and an increase in demand for, the product.
       increase in supply of, and a decrease in demand for, the product.

Question 17. 17. (TCO 8) If a nation agrees to set an upper limit on the total amount of a product that it exports to another nation, then this situation would be an example of (Points : 4) 
       an import quota.
       a revenue tariff.
       a protective tariff.
       a voluntary export restriction.

Question 18. 18. (TCO 8) Tariffs and import quotas would benefit the following groups, except (Points : 4) 
       consumers of the product.
       domestic producers of the product.
       workers in domestic firms producing the product.
       the government of the importing country.

Question 19. 19. (TCO 8) Which organization meets regularly to establish rules and settle disputes related to international trade? (Points : 4) 
       The United Nations Commission on Trade Law
       The United Nations Conference on Trade and Development
       The World Trade Organization
       The Federal Reserve Board

Question 20. 20. (TCO 9) French and German farmers wanting to buy equipment from an American manufacturer based in the U.S. will be (Points : 4) 
       supplying dollars and also supplying euros in the foreign exchange market.
       demanding dollars and also demanding euros in the foreign exchange market.
       supplying dollars and demanding euros in the foreign exchange market.
       supplying euros and demanding dollars in the foreign exchange market.

Page 3

              Question 1. 1. (TCO 9) In the balance of payments statement, a current account surplus will be matched by a (Points : 4) 
       capital and financial accounts deficit.
       capital and financial accounts surplus.
       trade deficit.
       trade surplus.

Question 2. 2. (TCO 9) If the United States wants to regain ownership of domestic assets sold to foreigners, it will have to (Points : 4) 
       increase domestic consumption.
       increase its national debt.
       export more than it imports.
       import more than it exports.

Question 3. 3. (TCO 9) If a Japanese importer could buy $1,000 U.S. for 122,000 yen, the rate of exchange for $1 would be (Points : 4) 
       8.19 yen.
       122 yen.
       820 yen.
       1,220 yen.

Question 4. 4. (TCO 9) If the exchange rate is $1 = 0.7841 euro, then a French DVD priced at 20 euros would cost an American buyer (excluding taxes and other fees) (Points : 4) 

Question 5. 5. (TCO 9) The monetary system for conducting international trade is usually described as a system of (Points : 4) 
       fixed exchange rates.
       freely floating exchange rates.
       a managed gold standard.
       managed floating exchange rates.

Question 6. 6. (TCO 8) a) Do protectionist policies benefit producers, consumers, workers, or the government?  Explain.  b) Explain how the “Buy American” theme hurts Americans. (Points : 40)

Question 7. 7.
(TCO 6) a) Identify the four major tools of monetary policy.  b) Describe how changes in the Fed’s major policy tools leads to [1] expansionary and [2] restrictive or contractionay monetary policies.

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how spatial organization affects visual perception

Create an 8- to 10-slide Microsoft® PowerPoint® presentation on spatial organization.

Describe the following:

  • The concept of spatial organization
  • How spatial organization affects visual perception
  • How perception influences behavior

Format your presentation consistent with APA guidelines.

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when css is coded in the body of the web page as an attribute of an html tag it is called ________.

Which of the following is the CSS property used to set the background color of a webpage?

Question 2

1 / 1 pts

Which of the following is the correct order of the rules of precedence, from outermost to innermost, that applies CSS to a webpage?

Question 3

0 / 1 pts

Which CSS property configures the font typeface?

Question 4

1 / 1 pts

Which CSS property can be used to configure italic text?

Question 5

1 / 1 pts

Which CSS property configures the color of text?

Question 6

1 / 1 pts

Which CSS property configures the size of text?

Question 7

Question 8

1 / 1 pts

CSS was first proposed as a standard by the W3C in ________.

Question 9

1 / 1 pts

An External Style Sheet uses the ________ file extension.

Question 10

Question 11

1 / 1 pts

To apply a style to a certain group of elements on a web page, configure a CSS ________.

Question 12

1 / 1 pts

The declaration property used to set the text color on a web page is:

Question 13

1 / 1 pts

Select the items below that can be used as a CSS Selector.

Question 14

1 / 1 pts

When CSS is coded in the body of the web page as an attribute of an HTML tag it is called ________.

Question 15

1 / 1 pts

Cascading Style Sheet rules are comprised of:

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included under the definition of employees for futa purposes are

1. A federal unemployment tax is levied on:A) employees only.B) both employers and employees.C) employers only.D) government employers only.E) no one.2.For FUTA purposes, an employer can be any one of the following except:A) an individual.B) a partnership.C) a trust.D) a corporation.E) All of these can be employers.3.Included under the definition of employees for FUTA purposes are:A) independent contractors.B) insurance agents paid solely on commission.C) student nurses.D) officers of a corporation.E) members of partnerships.4.Which of the following is not a factor considered in determining coverage of interstate employees?A) Location of base of operationsB) Place where work is localizedC) Location of company’s payroll departmentD) Location of employee’s residenceE) Location of place from which operations are controlled5.An aspect of the interstate reciprocal arrangement concerns:A) the status of Americans working overseas.B) the taxability of dismissal payments.C) the determination of an employer’s experience rating.D) the transfer of an employee from one state to another during the year.E) none of these.6.Which of the following types of payments are not taxable wages for federal unemployment tax?A) Retirement payB) Cash prizes and awards for doing outstanding workC) Dismissal payD) Bonuses as remuneration for servicesE) Payment under a guaranteed annual wage plan7.Which of the following payments are taxable payments for federal unemployment tax?A) Christmas gifts, excluding noncash gifts of nominal valueB) Caddy feesC) Courtesy discounts to employees and their familiesD) Workers’ compensation paymentsE) Value of meals and lodging furnished employees for the convenience of the employer8.If the employer is tardy in paying the state contributions, the credit against the federal tax is limited to what percent of the late payments that would have been allowed as a credit if the contributions had been paid on time?A) 6.2B) 90C) 5.13D) 20E) 09.Which of the following provides for a reduction in the employer’s state unemployment tax rate based on the employer’s experience with the risk of unemployment?A) Voluntary contributionB) Title XII advancesC) Pooled-fund lawsD) Experience-rating planE) None of these10.Voluntary contributions to a state’s unemployment department are:A) allowed in all states.B) designed to increase an employer’s reserve account in order to lower the employer’s contribution rate.C) capable of being paid at any time with no time limit.D) returned to the employer at the end of the following year.E) sent directly to the IRS.11.If the employer has made timely deposits that pay the FUTA tax liability in full, the filing of Form 940 can be delayed until:A) December 31.B) February 15.C) February 10.D) February 1.E) March 31.12.The person who is not an authorized signer of Form 940 is:A) the individual, if a sole proprietorship.B) the accountant from the company’s independent auditing firm.C) the president, if a corporation.D) a fiduciary, if a trust.E) All of these are authorized signers.13.When making a deposit of FUTA taxes, the employer must make the deposit by the:A) end of the month after the quarter.B) 15th of the month after the quarter.C) 10th of the month after the quarter.D) same day of the FICA and FIT deposits.14.An employer must deposit the quarterly FUTA tax liability if the liability is more than:A) $3,000.B) $500.C) $1,000.D) $1.E) $100.15.In order to avoid a credit reduction for Title XII advances, a state must repay the loans by:A) the end of the year of the loans.B) the end of the year the credit reduction is scheduled to take effect.C) the end of the third year after the year of the loans.D) November 10 of the year the credit reduction is scheduled to take effect.E) June 30 of the year after the loans.
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victor magagna ucsd

POLI 113A: East Asian Thought in Comparative Perspective

Prof. Victor Magagna∗

Fall 2018 MWF | 12:00 & 13:00 | Price Theater

Course Description

The purpose of this course is to provide students with an analytic introduction to East Asian political thought

and culture from 551 BC to the present.

Assignments and Grades

Course grades are based on one take home midterm exam (worth 40% of the final grade) and one take home

final exam (worth 60%). Both exams must be submitted digitally via the Turnitin assignment link on TritonEd. No hard copy will be required.

Plagiarism will not be tolerated. If you have questions about what constitutes plagiarism, please visit the UCSD academic integrity office’s website at

If you need help writing these essays, you are encouraged to make an appointment with the UCSD writing

center ( Specific deadlines, instructions, and

submission guidelines will be announced when the exam prompts are posted to TritonEd. The midterm

prompts are included on the final page of this document.

Course Resources

Lectures will be available via podcast at Prof. Magagna’s notes from each

lecture will be posted to TritonEd as well.


Weeks 1 – 5:

• Yao, X. 2000. An Introduction to Confucianism. Cambridge University Press. (Read entire book.)

• C.C. Tsai. 2018. The Analects: An Illustrated Edition. Princeton University Press. (Read entire book.)

Weeks 6 – 10:

• de Bary, W.T. et al. 1999. Sources of Chinese Tradition, Volume 1: From Earliest Times to 1600. Columbia University Press. (Read sections on Mencius, Xunzi, Confucius and the Analects, plus either Zhu Xi or

Wang Yangming sections.) ∗Office: SSB 375; Phone: (858) 337-1926.


Teaching Assistants

The TAs for this course are Mariana Carvalho Barbosa, Todd Levinson, Stan Oklobdzija, Michael Seese, and

Liesel Spangler. The TAs will not hold regular office hours. At least one TA will be present at every lecture;

students are encouraged to approach the TA with questions either before or after the class session.

Please send all email communication to Michael Seese at

Midterm Exam


• The midterm exam is due Friday, 9 November at 2:00pm.

• You will be required to submit a digital copy of your paper to the Turnitin link on TritonEd. Please retain a copy of your submission confirmation, in case there are any technical issues with your submission.

• Please write 6–7 pages for each response, except for Prompt 1. If you select Prompt 1, you must write 8–10 pages.

• Use standard formatting with:

– Double spacing,

– 11 or 12 point font (Times, Helvetica, Calibri, etc.),

– 1 inch margins,

– No more than 1 inch of space dedicated to title and header,

– No extraneous space between paragraphs or headers.

• Please include the number of the prompt you are responding to.

• Cite lecture and class readings where appropriate;

– Include a bibliography and in-text citations,

– You may use any standard citation style, (MLA, APA, Chicago, etc.),

– Please do not use outside sources,

– Plagiarism will not be tolerated.

• Please do not include pictures, charts, or figures in your responses. Please do not copy / paste lecture notes into the text of your response.

• Please stay on topic.

• You must turn your exam in by the deadline to receive full credit. Any late exams (even by 1 minute late) will incur a penalty.

– Papers will be penalized by 13 of a letter grade for each day late (e.g., A– −→ B+, etc.). – The system will not accept late submissions. If you need to turn your paper in after the deadline,

please email a .pdf copy to


Choose and respond to one of the prompts below.

1. Explain the paradox of proper order and illustrate it with the work of the district magistrate. (8-10 pages, source: lectures)

2. Explain the core concepts of East Asian thought. (6-7 pages, sources: Yao and lectures)

3. Explain the Analects used in the lectures and the illustrated Analects. (6-7 page, sources: lectures, Illustrated Analects)

4. Explain the problem of elite regulation. (6-7 pages, sources: lectures, de Bary, Yao)

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in 1921, hermann rorschach introduced what has become the most widely used ____________ test.


Enduring Issues in Personality

Studying Personality

Psychodynamic Theories • Sigmund Freud • Carl Jung • Alfred Adler • Karen Horney • Erik Erikson

• A Psychodynamic View of Jaylene Smith

• Evaluating Psychodynamic Theories

Humanistic Personality Theories • Carl Rogers • A Humanistic View of

Jaylene Smith

• Evaluating Humanistic Theories

Trait Theories • The Big Five • A Trait View of Jaylene Smith • Evaluating Trait Theories Cognitive–Social Learning Theories • Expectancies, Self-Efficacy,

and Locus of Control

• A Cognitive–Social Learning View of Jaylene Smith

• Evaluating Cognitive–Social Learning Theories

Personality Assessment • The Personal Interview • Direct Observation • Objective Tests • Projective Tests



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Thirty-year-old Jaylene Smith is a talented physician whomeets with a psychologist because she is troubled by cer-tain aspects of her social life. Acquaintances describe Jay in glowing terms, saying she is highly motivated, intelligent, attractive, and charming. But Jay feels terribly insecure and anxious. When the psychologist asked her to pick out some self- descriptive adjectives, she selected “introverted,” “shy,” “inad- equate,” and “unhappy.”

Jay was the firstborn in a family of two boys and one girl. Her father is a quiet, gentle medical researcher. His work often allowed him to study at home, so he had extensive contact with his children when they were young. He loved all his children, but clearly favored Jay. His ambitions and goals for her were extremely high; and as she matured, he responded to her every need and demand almost immediately and with full conviction. Their relationship remains as close today as it was during Jay’s childhood.

Jay’s mother worked long hours away from home as a store manager and consequently saw her children primarily at night and on an occasional free weekend. When she came home, Mrs. Smith was tired and had little energy for “nonessential” interactions with her children. She had always been career ori- ented, but she experienced considerable conflict and frustration trying to reconcile her roles as mother, housekeeper, and finan- cial provider. Mrs. Smith was usually amiable toward all her children but tended to argue more with Jay, until the bickering subsided when Jay was about 6 or 7 years of age. Today, their relationship is cordial but lacks the closeness apparent between Jay and Dr. Smith. Interactions between Dr. and Mrs. Smith were sometimes marred by stormy outbursts over seem- ingly trivial matters. These episodes were always followed by periods of mutual silence lasting for days.

Jay was very jealous of her first brother, born when she was 2 years old. Her parents recall that Jay sometimes staged


temper tantrums when the new infant demanded and received a lot of attention (especially from Mrs. Smith). The temper tantrums intensified when Jay’s second brother was born, just 1 year later. As time passed, the brothers formed an alliance to try to undermine Jay’s supreme position with their father. Jay only became closer to her father, and her relationships with her brothers were marked by greater-than-average jealousy and rivalry from early childhood to the present.

Throughout elementary, junior high, and high school, Jay was popular and did well academically. Early on, she decided on a career in medicine. Yet, off and on between the ages of 8 and 17, she had strong feelings of loneliness, depression, insecurity, and confusion—feelings common enough during this age period, but stronger than in most youngsters and very distressing to Jay.

Jay’s college days were a period of great personal growth, but several unsuccessful romantic involvements caused her much pain. The failure to achieve a stable and long-lasting rela- tionship persisted after college and troubled Jay greatly. Although even-tempered in most circumstances, Jay often had an explosive fit of anger that ended each important romantic relationship that she had. “What is wrong with me?” she would ask herself. “Why do I find it impossible to maintain a serious relationship for any length of time?”

In medical school, her conflicts crept into her conscious- ness periodically: “I don’t deserve to be a doctor”; “I won’t pass my exams”; “Who am I, and what do I want from life?”

How can we describe and understand Jaylene Smith’s person- ality? How did she become who she is? Why does she feel insecure and uncertain despite her obvious success? Why do her friends see her as charming and attractive, though she describes herself as introverted and inadequate? These are the kinds of questions that personality psychologists are likely to ask about Jay—and the kinds of questions we will try to answer in this chapter.

ENDURING ISSUES IN PERSONALITY As we explore the topic of personality in this chapter, the enduring issues that interest psychologists emerge at several points. The very concept of personality implies that our behavior differs in significant ways from that of other people (diversity–universality) and that our behavior in part reflects our personality as opposed to the situations in which we find ourselves (person–situation). We will also assess the extent to which personality is a result of inheritance, rather than a reflection of life experiences (nature–nurture). Finally, we will consider the extent to which personality changes as we grow older (stability–change).

STUDYING PERSONALITY What do psychologists mean when they talk about personality?

Many psychologists define personality as an individual’s unique pattern of thoughts, feel- ings, and behaviors that persists over time and across situations. There are two important parts to this definition. On the one hand, personality refers to unique differences—those

L E A R N I N G O B J E C T I V E • Define personality. Explain the

difference between describing personality (in particular trait theory) and understanding the causes of personality (psychodynamic, humanistic, and cognitive–social learning theories).

personality An individual’s unique pattern of thoughts, feelings, and behaviors that persists over time and across situations.


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pleasure principle According to Freud, the way in which the id seeks immediate gratification of an instinct.

336 Chapter 10

aspects that distinguish a person from everyone else. On the other hand, the definition asserts that personality is relatively stable and enduring—that these unique differences per- sist through time and across situations.

Psychologists vary in their approach to the study of personality. Some set out to iden- tify the most important characteristics of personality, whereas others seek to understand why there are differences in personality. Among the latter group, some consider the family to be the most important factor in personality development, whereas others emphasize the importance of influences outside the family. Still others see personality as the product of how we think about ourselves and our experiences. In this chapter, we explore representa- tive theories of these various approaches. We see how each theoretical paradigm sheds light on the personality of Jaylene Smith. Finally, we will evaluate the strengths and weaknesses of each approach and will see how psychologists go about assessing personality.

PSYCHODYNAMIC THEORIES What ideas do all psychodynamic theories have in common?

Psychodynamic theories see behavior as the product of internal psychological forces that often operate outside our conscious awareness. Freud drew on the physics of his day to coin the term psychodynamics: As thermodynamics is the study of heat and mechanical energy and the way that one may be transformed into the other, psychodynamics is the study of psychic energy and the way that it is transformed and expressed in behavior. Although psy- chodynamic theorists disagree about the exact nature of this psychic energy, the following five propositions are central to all psychodynamic theories and have withstood the tests of time (Huprich & Keaschuk, 2006; Westen, 1998):

1. Much of mental life is unconscious; as a result, people may behave in ways that they themselves do not understand.

2. Mental processes (such as emotions, motivations, and thoughts) operate in paral- lel and thus may lead to conflicting feelings.

3. Not only do stable personality patterns begin to form in childhood, but early expe- riences also strongly affect personality development.

4. Our mental representations of ourselves, of others, and of our relationships tend to guide our interactions with other people.

5. Personality development involves learning to regulate sexual and aggressive feel- ings as well as becoming socially interdependent rather than dependent.

Sigmund Freud When Freud proposed that sexual instinct is the basis of behavior, how was he defining “sexual instinct”?

To this day, Sigmund Freud (1856–1939) is the best known and most influential of the psy- chodynamic theorists (Solms, 2004). As we saw in Chapter 1, “The Science of Psychology,” Freud created an entirely new perspective on the study of human behavior. Up to his time, the field of psychology had focused on thoughts and feelings of which we are aware. In a radical departure, Freud stressed the unconscious—the ideas, thoughts, and feelings of which we are not normally aware (Zwettler-Otte, 2008). Freud’s ideas form the basis of psychoanalysis, a term that refers both to his particular psychodynamic theory of person- ality and to the form of therapy that he invented.

According to Freud, human behavior is based on unconscious instincts, or drives. Some instincts are aggressive and destructive; others, such as hunger, thirst, self-preservation, and sex, are necessary to the survival of the individual and the species. Freud used the term sexual instinct to refer not just to erotic sexuality, but to the craving for pleasure of all kinds. He used the term libido for the energy generated by the sexual instinct. As we will see, Freud regarded the sexual instinct as the most critical factor in the development of personality.

L E A R N I N G O B J E C T I V E S • Describe the five propositions that

are central to all psychodynamic personality theories.

• Describe Freud’s theory of personality, including the concepts of sexual instinct, libido, id, ego, superego, and pleasure principle versus reality principle. Summarize Freud’s stages of development and the consequences of fixation at a particular stage.

• Compare and contrast Freud’s theory, Carl Jung’s theory, Adler’s theory, Horney’s theory, and Erikson’s theory of personality.

• Explain how contemporary psychologists view the contributions and limitations of the psychodynamic perspective.

psychoanalysis The theory of personality Freud developed, as well as the form of therapy he invented.

unconscious In Freud’s theory, all the ideas, thoughts, and feelings of which we are not and normally cannot become aware.

libido According to Freud, the energy generated by the sexual instinct.

id In Freud’s theory of personality, the collection of unconscious urges and desires that continually seek expression.

reality principle According to Freud, the way in which the ego seeks to satisfy instinctual demands safely and effectively in the real world.

ego Freud’s term for the part of the personality that mediates between environmental demands (reality), conscience (superego), and instinctual needs (id); now often used as a synonym for “self.”

superego According to Freud, the social and parental standards the individual has internalized; the conscience and the ego ideal.

ego ideal The part of the superego that consists of standards of what one would like to be.


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Personality 337

How Personality is Structured Freud theorized that personality is formed around three structures: the id, the ego, and the superego. The id is the only structure present at birth and is completely unconscious. (See Figure 10–1.) Consisting of all the unconscious urges and desires that continually seek expression, it operates according to the pleasure principle—that is, it tries to obtain immediate pleasure and to avoid pain. As soon as an instinct arises, the id seeks to gratify it. Because the id is not in contact with the real world, however, it has only two ways of obtaining gratification. One way is by reflex actions, such as coughing, which immediately relieve unpleasant sensations. The other is through fan- tasy, or wish fulfillment: A person forms a mental image of an object or a situation that par- tially satisfies the instinct and relieves the uncomfortable feeling. This kind of thought occurs most often in dreams and daydreams, but it may take other forms. For instance, if someone insults you and you spend the next half hour imagining clever retorts, you are engaging in wish fulfillment.

Mental images of this kind provide fleeting relief, but they cannot fully satisfy most needs. For example, just thinking about being with someone you love is a poor substitute for actually being with that person. Therefore, the id by itself is not very effective at gratifying instincts. It must link to reality if it is to relieve its discomfort. The id’s link to reality is the ego.

Freud conceived of the ego as the psychic mechanism that controls all thinking and reasoning activities. The ego operates partly con- sciously, partly preconsciously, and partly uncon- sciously. (“Preconscious” refers to material that is not currently in awareness but can easily be recalled.) The ego seeks to satisfy the id’s drives in the external world. But instead of acting according to the pleasure principle, the ego oper- ates by the reality principle: By means of intelli- gent reasoning, the ego tries to delay satisfying the id’s desires until it can do so safely and suc- cessfully. For example, if you are thirsty, your ego will attempt to determine how effectively and safely to quench your thirst. (See Figure 10–2.)

A personality consisting only of ego and id would be completely selfish. It would behave effectively, but unsociably. Fully adult behavior is governed not only by reality, but also by the individual’s conscience or by the moral stan- dards developed through interaction with par- ents and society. Freud called this moral watchdog the superego.

The superego is not present at birth. In fact, in Freud’s view young children are amoral and do whatever is pleasurable. As we mature, how- ever, we adopt as our own the judgments of our parents about what is “good” and “bad.” In time, the external restraint applied by our par- ents gives way to our own internal self-restraint. The superego, eventually acting as our conscience, takes over the task of observing and guiding the ego, just as the parents once observed and guided the child. In addition, the superego compares the ego’s actions with an ego ideal of perfection and then rewards or punishes the ego accordingly. Like the ego, the superego works at the conscious, preconscious, and unconscious levels.

Ideally, our id, ego, and superego work in harmony, with the ego satisfying the demands of the id in a reasonable manner that is approved by the superego. We are then free to love and hate and to express our emotions sensibly and without guilt. When our id is dominant, our instincts are unbridled and we are likely to endanger both ourselves and society. When our superego dominates, our behavior is checked too tightly and we are inclined to judge ourselves too harshly or too quickly, impairing our ability to act on our own behalf and enjoy ourselves.

Figure 10–1 The structural relationship formed by the id, ego, and superego. Freud’s conception of personality is often depicted as an iceberg to illustrate how the vast workings of the mind occur beneath its surface. Notice that the ego is partly conscious, partly unconscious, and partly preconscious; it derives knowledge of the external world through the senses. The superego also works at all three levels. But the id is an enirely uncon- scious structure. Source: Adapted from New Introductory Lectures on Psychoanalysis by Sigmund Freud, 1933. New York: Carlton House.

Unconscious: Well below the surface of awareness

Preconscious: Material that can be easily recalled

Id Pleasure principle Unconscious urges and desires

Ego Self Reality principle

Superego Ego ideal Moral guardian

Conscious: Ideas, thoughts, and feelings of which we are aware


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338 Chapter 10

How Personality Devel- ops Freud’s theory of personal- ity development focuses on the way in which we satisfy the sexual instinct during the course of life. As infants mature, their libido becomes focused on various sensitive parts of the body during sequential stages of development. If a child is deprived of pleasure (or allowed too much gratification) from the part of the body that dominates a certain stage, some sexual energy may remain permanently tied to that part of the body, instead of moving on in normal sequence to give the individual a fully integrated personality. This is called fixation and, as we shall see, Freud believed that it leads

to immature forms of sexuality and to certain characteristic personality traits. Let’s look more closely at the psychosexual stages that Freud identified and their presumed relation- ship to personality development.

In the oral stage (birth to 18 months), infants, who depend completely on other peo- ple to satisfy their needs, relieve sexual tension by sucking and swallowing; when their baby teeth come in, they obtain oral pleasure from chewing and biting. According to Freud, infants who receive too much oral gratification at this stage grow into overly optimistic and dependent adults; they are likely to lack confidence and to be gullible. Those who receive too little gratification may turn into pessimistic and hostile people later in life who are sar- castic and argumentative.

During the anal stage (roughly 18 months to 31/2 years), the primary source of sexual pleasure shifts from the mouth to the anus. Just about the time children begin to derive plea- sure from holding in and excreting feces, toilet training takes place, and they must learn to regulate this new pleasure in ways that are acceptable to their superego. In Freud’s view, if par- ents are too strict in toilet training, some children throw temper tantrums and may live in self-destructive ways as adults. Others are likely to become obstinate, stingy, and excessively orderly. If parents are too lenient, their children may become messy, unorganized, and sloppy.

When children reach the phallic stage (after age 3), they discover their genitals and develop a marked attachment to the parent of the opposite sex while becoming jealous of the same-sex parent. In boys, Freud called this the Oedipus complex, after the character in Greek mythology who killed his father and married his mother. Girls go through a corre- sponding Electra complex, involving possessive love for their father and jealousy toward their mother. Most children eventually resolve these conflicts by identifying with the parent of the same sex. However, Freud contended that fixation at this stage leads to vanity and egotism in adult life, with men boasting of their sexual prowess and treating women with contempt, and with women becoming flirtatious and promiscuous. Phallic fixation may also prompt feelings of low self-esteem, shyness, and worthlessness.

At the end of the phallic period, Freud believed, children lose interest in sexual behav- ior and enter a latency period. During this period, which begins around the age of 5 or 6 and lasts until age 12 or 13, boys play with boys, girls play with girls, and neither sex takes much interest in the other.

At puberty, the individual enters the last psychosexual stage, the genital stage. Sexual impulses reawaken and, ideally, the quest for immediate gratification of these desires yields to mature sexuality in which postponed gratification, a sense of responsibility, and caring for others all play a part.

fixation According to Freud, a partial or complete halt at some point in the individual’s psychosexual development.

oral stage First stage in Freud’s theory of personality development, in which the infant’s erotic feelings center on the mouth, lips, and tongue.

anal stage Second stage in Freud’s theory of personality development, in which a child’s erotic feelings center on the anus and on elimination.

phallic stage Third stage in Freud’s theory of personality development, in which erotic feelings center on the genitals.

Oedipus complex and Electra complex According to Freud, a child’s sexual attachment to the parent of the opposite sex and jealousy toward the parent of the same sex; generally occurs in the phallic stage.

latency period In Freud’s theory of personality, a period in which the child appears to have no interest in the other sex; occurs after the phallic stage.

genital stage In Freud’s theory of personality development, the final stage of normal adult sexual development, which is usually marked by mature sexuality.

Figure 10–2 How Freud conceived the workings of the pleasure and reality principles. Note that according to the reality principle, the ego uses rational thought to postpone the grati- fication of the id until its desires can be satis- fied safely.

Unpleasure in the id

Release of discomfort by first available


External stimulus

Pleasure in the id

Increasing discomfort

in the id

Internal stimulus

External stimulus

Internal stimulus

Unpleasure in the id

Rational thought of ego

Release of discomfort by

safest and best available means

Pleasure in the id

Increasing discomfort

in the id

How the Pleasure Principle Works

How the Reality Principle Works


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Personality 339

Freud is certainly not without his critics. As we will see, even members of Freud’s own psychoanalytic school did not completely endorse his emphasis on sexuality. Contempo- rary psychodynamic theorists tend to put greater emphasis on the ego and its attempts to gain mastery over the world. Finally, some critics have suggested that male and female per- sonality development occur in very different ways, and that Freud’s male-centered theory sheds little if any light on female personality development (Zeedyk & Greemwood, 2008).

Carl Jung How did Carl Jung’s view of the unconscious differ from that of Freud?

Carl Jung (1875–1961) agreed with many of Freud’s tenets, including his emphasis on the role of the unconscious in human behavior, but he expanded the role of the unconscious. Jung contended that libido represents all life forces, not just pleasure-seeking. And where Freud viewed the id as a “cauldron of seething excitations” that the ego has to control, Jung saw the unconscious as the ego’s source of strength and vitality. He also believed that the unconscious consists of the personal unconscious and the collective unconscious. The personal unconscious includes our repressed thoughts, forgotten experiences, and undevel- oped ideas, which may enter consciousness if an incident or a sensation triggers their recall.

Diversity–Universality Universal Human Archetypes The collective unconscious, Jung’s most original concept, comprises memories and behav- ior patterns that are inherited from past generations and therefore are shared by all humans. Just as the human body is the product of millions of years of evolution, so too, according to Jung, is the human mind. Over millennia, it has developed “thought forms,” or collective memories, of experiences that people have had in common since prehistoric times. He called these thought forms archetypes. Archetypes appear in our thoughts as mental images. Because all people have mothers, for example, the archetype of “mother” is universally associated with the image of one’s own mother, with Mother Earth, and with a protective presence.

Jung felt that specific archetypes play special roles in shaping personality. The persona (an archetype whose meaning stems from the Latin word for “mask”) is the element of our personality that we project to other people—a shell that grows around our inner self. For some people, the public self so predominates that they lose touch with their inner feelings, leading to personality maladjustments. ■ personal unconscious In Jung’s theory of

personality, one of the two levels of the unconscious; it contains the individual’s repressed thoughts, forgotten experiences, and undeveloped ideas.

introverts According to Jung, people who usually focus on their own thoughts and feelings.

extraverts According to Jung, people who usually focus on social life and the external world instead of on their internal experience.

Jung also divided people into two general attitude types—introverts and extraverts. Extraverts turn their attention to the external world. They are “joiners” who take an active interest in other people and in the events going on around them. Introverts are more caught up in their own private worlds. They tend to be unsociable and lack confidence in dealing with other people. Everyone, Jung felt, possesses some aspects of both attitude types, but one is usually dominant.

Jung further divided people into rational individuals, who regulate their actions by thinking and feeling, and irrational individuals, who base their actions on perceptions, whether through the senses (sensation) or through unconscious processes (intuition). Most people exhibit all four psychological functions: thinking, feeling, sensing, and intuit- ing. Jung felt, however, that one or more of these functions is usually dominant. Thus, the thinking person is rational and logical, and decides on the basis of facts. The feeling person is sensitive to his or her surroundings, acts tactfully, and has a balanced sense of values. The sensing type relies primarily on surface perceptions and rarely uses imagination or deeper understanding. And the intuitive type sees beyond obvious solutions and facts to consider future possibilities.

archetypes In Jung’s theory of personality, thought forms common to all human beings, stored in the collective unconscious.

collective unconscious In Jung’s theory of personality, the level of the unconscious that is inherited and common to all members of a species.

According to Carl Jung, we all inherit from our ancestors collective memories or “thought forms” that people have had in com- mon since the dawn of human evolution. The image of a motherlike figure with protective, embracing arms is one such primordial thought form that stems from the important, nurturing role of women throughout human history. This thought form is depicted here in this Bulgarian clay figure of a goddess that dates back some six or seven thousand years.

persona According to Jung, our public self, the mask we wear to represent ourselves to others.


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compensation According to Adler, the person’s effort to overcome imagined or real personal weaknesses.

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While Freud emphasized the primacy of the sexual instincts, Jung stressed people’s rational and spiritual qualities. And while Freud considered develop- ment to be shaped in childhood, Jung thought that psychic development comes to fruition only during middle age. Jung brought a sense of historical continuity to his theories, tracing the roots of human personality back through our ancestral past; yet he also contended that a person moves constantly toward self-realization—toward blending all parts of the personality into a harmonious whole.

Alfred Adler What did Alfred Adler believe was the major determinant of personality?

Alfred Adler (1870–1937) disagreed sharply with Freud’s concept of the conflict between the selfish id and the morality-based superego. To Adler, people possess

innate positive motives and they strive for personal and social perfection. One of his earli- est theories grew out of personal experience: As a child, Adler was frail and almost died of pneumonia at the age of 5. This early brush with death led him to believe that personality develops through the individual’s attempt to overcome physical weaknesses, an effort he called compensation.

Adler later modified and broadened his views, contending that people seek to over- come feelings of inferiority that may or may not have a basis in reality. He thought that such feelings often spark positive development and personal growth. Still, some people become so fixated on their feelings of inferiority that they become paralyzed and develop what Adler called an inferiority complex. Later in his life, Adler again shifted his theoretical emphasis in a more positive direction suggesting that people strive both for personal per- fection and for the perfection of the society to which they belong.

The emphasis Adler placed on positive, socially constructive goals and on striving for perfection is in marked contrast to Freud’s pessimistic vision of the selfish person locked into eternal conflict with society. Because of this emphasis, Adler has been hailed by many psychologists as the father of humanistic psychology (Cain, 2002), a topic we will explore in greater depth later in this chapter.

Karen Horney What major contributions did Karen Horney make to the psychodynamic perspective?

Karen Horney (1885–1952), another psychodynamic personality theorist greatly indebted to Freud, nevertheless took issue with some of his most prominent ideas, espe- cially his analysis of women and his emphasis on sexual instincts. Based on her experi- ence as a practicing therapist in Germany and the United States, Horney concluded that environmental and social factors are the most important influences in shaping personal- ity; and among these, the most pivotal are the human relationships we experience as chil- dren (W. B. Smith, 2007).

In Horney’s view, Freud overemphasized the sex drive, resulting in a distorted picture of human relationships. Horney believed that sexuality does figure in the development of personality, but nonsexual factors—such as the need for a sense of basic security and the person’s response to real or imagined threats—play an even larger role. For example, all people share the need to feel loved and nurtured by their parents, regardless of any sexual feelings they might have about them. Conversely, parents’ protective feelings toward their children emerge not only from biological forces but also from the value that society places on the nurturance of children.

A contemporary representation from U.S. cul- ture of the Jungian archetype of the Wise Old Man can be seen in Albus Dumbledore (from the movies based on J. K. Rowling’s Harry Potter series).

22-time Grammy Award winner Stevie Won- der, who cultivated particularly acute audi- tory abilities, illustrates what Alfred Adler referred to as compensation.

Source: © 2000, Mike Twohy from All Rights Reserved.


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Karen Horney, a psychotherapist during the first half of the 20th century, disagreed with Freud’s emphasis on sexual instincts. She considered environmental and social factors, especially the relationships we have as chil- dren, to be the most important influences on personality.

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For Horney, anxiety—an individual’s reaction to real or imagined dangers—is a pow- erful motivating force. Whereas Freud believed that anxiety usually emerges from uncon- scious sexual conflicts, Horney stressed that feelings of anxiety also originate in a variety of nonsexual contexts. For example, in childhood anxiety arises because children depend on adults for their very survival. Insecure about receiving continued nurturance and protec- tion, children develop inner protections, or defenses, that provide both satisfaction and security. They experience more anxiety when those defenses are threatened.

In adulthood, anxiety and insecurity can lead to neurotic lifestyles that that may help to deal with emotional problems and ensure safety but only at the expense of personal independence (Horney, 1937). Some people develop an overriding need to give in or sub- mit to others and feel safe only when receiving their protection and guidance. Others deal with basic feelings of insecurity and anxiety by adopting a hostile and domineering man- ner. Still others withdraw from other people, as if saying “If I withdraw, nothing can hurt me.” In contrast, well-adjusted people deal with anxiety without becoming trapped in neu- rotic lifestyles because their childhood environment enabled them to satisfy their basic emotional needs.

inferiority complex In Adler’s theory, the fixation on feelings of personal inferiority that results in emotional and social paralysis.

Stability–Change Is Biology Destiny? Horney’s conviction that social and cultural forces are far more important than biological ones had a profound effect on her views of human development. For example, in contrast to Freud’s view that personality is largely formed by the end of childhood, Horney believed that adults can continue to develop and change throughout life by coming to understand the source of their basic anxiety and trying to eliminate neurotic anxiety. Horney also opened the way to a more constructive and optimistic understanding of male and female personality. She emphasized that culture, rather than anatomy, determines many of the characteristics that differentiate women from men. For example, if women feel dissatisfied with their gender or men are overly aggressive, the explanation is likely to be found in their social status and social roles, not in their anatomy; and fortunately, social status and social roles can be changed. Indeed, she was a forerunner of contemporary thinkers who believe that we can change culture and society and, in the process, transform human relationships (Gilman, 2001). ■

Erik Erikson, another psychodynamic theorist, also stressed the importance of parent–child relationships for shaping personality. His eight-stage theory of personality develop- ment is still influential today.

Erik Erikson Erikson’s theory focused less on unconscious conflict and more on what factors?

Like Horney, Erik Erikson—a psychodynamic theorist who studied with Freud in Vienna—took a socially oriented view of personality development. While Erikson agreed with much of Freud’s thinking on sexual development and the influence of libidinal needs on personality, he put much greater emphasis on the quality of parent–child relationships. According to Erikson, only if children feel competent and valuable, in their own eyes and in society’s view, will they develop a secure sense of identity. In this way, Erikson shifted the focus of Freud’s personality theory to ego development.

Whereas Freud’s stages of personality development ended with adolescence, Erikson believed that personality continues to develop and change throughout life. But in contrast to Horney, he believed that the various stages of life present a variety of different chal- lenges. Success in dealing with early challenges lays the groundwork for effective adjust- ment at later stages. Conversely, failure to resolve early crises makes later adjustment more difficult. In Chapter 9 (“Life-Span Development”) we explored each of Erikson’s stages in considerable detail. Figure 10–3 provides a concise comparison of Erikson’s and Freud’s stages of personality development.


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342 Chapter 10

A Psychodynamic View of Jaylene Smith How would a psychodynamic theorist view the personality of Jaylene Smith?

According to Freud, personality characteristics such as insecurity, introversion, and feelings of inadequacy and worthlessness often arise from fixation at the phallic stage of develop- ment. Thus, had Freud been Jaylene’s therapist, he would probably have concluded that Jay has not yet effectively resolved her Electra complex. Working from this premise, he would have hypothesized that Jay’s relationship with her father was either very distant and unsat- isfying or unusually close and gratifying. We know, of course, that it was the latter.

In all likelihood, Freud would also have asserted that at around age 5 or 6, Jay had become aware that she could not actually marry her father and do away with her mother, as he would say she wished to do. This possibility might account for the fact that fights between Jay and her mother subsided when Jay was about 6 or 7 years of age. Moreover, we know that shortly thereafter, Jay began to experience “strong feelings of loneliness, depression, insecu- rity, and confusion.” Clearly, something important happened in Jay’s life when she was 6 or 7.

Finally, the continued coolness of Jay’s relationship with her mother and the unusual closeness with her father would probably have confirmed Freud’s suspicion that Jay has still not satisfactorily resolved her Electra complex. Freud would have predicted that Jay would have problems making the progression to mature sexual relationships with other men. Jay, of course, is very much aware that she has problems relating to men, at least when these

relationships get “serious.” And what does Erikson’s theory tell us about

Jaylene Smith’s personality? Recall that for Erikson, one’s success in dealing with later developmental crises depends on how effectively one has resolved earlier crises. Because Jay is having great difficulty in dealing with intimacy (Stage 6), he would have sug- gested that she is still struggling with problems from earlier developmental stages. Erikson would have looked for the source of these problems in the qual- ity of Jay’s relationship with others. We know that her mother subtly communicated her own frustra- tion and dissatisfaction to her children and spent lit- tle time on “nonessential” interactions with them.

Figure 10–3 Erikson’s eight stages of personality development. Each stage involves its own developmental crisis, whose resolution is crucial to adjustment in successive stages. The first five of the eight stages correspond to Freud’s stages of personality development. Source: Figure, “Erickson’s Stages of Personality Development” from Childhood and Society by Erik H. Erikson. Copyright 1950, © 1963 by W. W. Norton & Company, Inc. Renewed 1978, 1991 by Erik H. Erikson. Used by permission of W. W. Norton & Company, Inc. and Random House Ltd., UK.







Young adulthood



1 2 3 4 5 6 7 8

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Erikson’s stages of personality development

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stagnation Ego

integrity vs. despair


Freud’s original theory was based on case studies of his patients; and the lit-erature on psychoanalysis consists mainly of case studies—descriptions ofindividual cases of psychopathology, probable causes, and their treatment. Today, however, psychological science depends increasingly on experimental evidence and biological explanations for mental phenomena. Review the five basic concepts of psychodynamic theory described by Westen on page 336 and think about what kinds of evidence might convince you that they are indeed cor- rect. What evidence would lead you to conclude that they are not in fact correct?


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Personality 343

These feelings and behavior patterns would not have instilled in a child the kind of basic trust and sense of security that Erikson believed are essential to the first stage of develop- ment. In addition, her relationship with her mother and brothers continued to be less than fully satisfactory. It is not surprising, then, that Jay had some difficulty working through subsequent developmental crises. Although she developed a close and caring relationship with her father, Jay was surely aware that his affection partly depended on her fulfilling the dreams, ambitions, and goals that he had for her.

Evaluating Psychodynamic Theories How do modern psychologists view the contributions and limitations of the psychodynamic perspective?

Freud’s emphasis on the fact that we are not always—or even often—aware of the real causes of our behavior has fundamentally changed the way people view themselves and others. Freud’s ideas have also had a lasting impact on history, literature, and the arts (Krugler, 2004). Yet, Freud was a product of his time and place. Critics who contend his theory reflects a sexist view of women have pointed out that he was apparently unable to imagine a con- nection between his female patients’ sense of inferiority and their subordinate position in society. Psychodynamic views have also been criticized as lacking a scientific basis in that they are based largely on retrospective (backward-looking) accounts of a limited sample of individuals who have sought treatment, rather than on research with “healthy” individuals.

Although it is often difficult to translate psychodynamic personality theories into hypotheses that can be tested experimentally (Cloninger, 2003; Holt, 2003), Freud’s theory has received limited confirmation from research (Leichsenring, 2005). For example, people with eating disorders often have oral personalities (J. Perry, Silvera, & Rosenvinge, 2002). Orally fixated people generally eat and drink too much, tend to mention oral images when interpret- ing inkblot tests, and also seem to depend heavily on others, as Freud predicted (Fisher & Greenberg, 1985). Moreover, research confirms an association between specific personality types in childhood and later development of psychological problems. For example, a child with an inhibited temperament is more likely to develop social anxiety disorder as an adult (Gladstone, Parker, Mitchell, Wilhelm, & Malhi, 2005). The effectiveness of psychoanalysis as a therapy has also been cited as evidence in support of Freud’s theories (Leichsenring, 2005). Still, as we shall see in Chapter 13,“Therapies,”psychoanalysis does not seem to be any more or less effective than therapies based on other theories (J. A. Carter, 2006).

Freud’s theories have clearly expanded our understanding of personality, or they would not still be so vigorously debated today, more than 100 years after he proposed them. Whatever their merit as science, psychodynamic theories attempt to explain the root causes of all human behavior. The sheer magnitude of this undertaking helps to account for their lasting attractiveness.


Match the following Jungian terms with the appropriate definition. 1. 2.


4. According to Alfred Adler, a person with a fixation on or belief in a negative characteristic has an ___________. They may try to overcome their perceived weakness through ____________.

5. Horney believed that ____________ is a stronger source of emotional disturbance than sexual urges.

persona a. typical mental image or mythical representation collective unconscious b. memories and behavior patterns inherited from

past generations archetype c. aspect of the personality by which one is

known to other people

Answers:1. c.2. b.3. a.4. inferiority complex; compensation.5. anxiety.

Quick Review on MyPsychLab

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HUMANISTIC PERSONALITY THEORIES What are the major ways that humanistic personality theory differs from psychodynamic theories?

Freud believed that personality grows out of the resolution of unconscious conflicts and developmental crises. Many of his followers—including some who modified his theory and others who broke away from his circle—also embraced this basic viewpoint. But in the the- ory of Alfred Adler, we glimpsed a very different view of human nature. Adler focused on forces that contribute to positive growth and a move toward personal perfection. For these reasons, Adler is sometimes called the first humanistic personality theorist.

Humanistic personality theory emphasizes that we are positively motivated and progress toward higher levels of functioning—in other words, there is more to human exis- tence than dealing with hidden conflicts. Humanistic psychologists believe that life is a process of opening ourselves to the world around us and experiencing joy in living. They stress people’s potential for growth and change as well as the ways they experience their lives right now, rather than dwelling on how they felt or acted in the past. Finally, humanists also believe that given reasonable life conditions, people will develop in desirable directions (Cloninger, 2003; Criswell, 2003). Adler’s concept of striving for perfection laid the ground- work for later humanistic personality theorists such as Abraham Maslow and Carl Rogers. We discussed Maslow’s theory of the hierarchy of needs leading to self-actualization in Chapter 8, “Motivation and Emotion.” We now turn to Rogers’s theory of self-actualization.

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in organizational structures, integrator roles serve mainly as:

370 Part Four Organizational Processes

repeatability,” says Valve’s employee handbook. “But when you’re an entertainment

company that’s spent the last decade going out of its way to recruit the most

intelligent, innovative, talented people on Earth, telling them to sit at a desk and do

what they’re told obliterates 99 percent of their value.”1

Valve Corporation’s organizational structure is different from that of most companies, but this design seems to serve the game maker and entertainment firm’s strategic objectives. Organizational structure refers to the division of labor and the patterns of coordination, communication, workflow, and formal power that direct organizational activities. It for- mally dictates what activities receive the most attention, as well as financial, power, and in- formation resources. At Valve, for example, power and resources flow mainly to teams, which have almost complete autonomy over their work objectives and work processes.

Although the topic of organizational structure typically conjures up images of an organiza- tional chart, this diagram is only part of the puzzle. Organizational structure includes these reporting relationships, but it also relates to job design, information flow, work standards and rules, team dynamics, and power relationships. As such, the organization’s structure is an im- portant instrument in an executive’s toolkit for organizational change, because it establishes new communication patterns and aligns employee behavior with the corporate vision.2

This chapter begins by introducing the two fundamental processes in organizational struc- ture: division of labor and coordination. This is followed by a detailed investigation of the four main elements of organizational structure: span of control, centralization, formalization, and departmentalization. The latter part of this chapter examines the contingencies of organiza- tional design, including external environment, organizational size, technology, and strategy.

Division of Labor and Coordination All organizational structures include two fundamental requirements: the division of labor into distinct tasks and the coordination of that labor so that employees are able to accom- plish common goals.3 Organizations are groups of people who work interdependently to- ward some purpose. To efficiently accomplish their goals, these groups typically divide the work into manageable chunks, particularly when there are many different tasks to perform. They also introduce various coordinating mechanisms to ensure that everyone is working effectively toward the same objectives.

DIVISION OF LABOR Division of labor refers to the subdivision of work into separate jobs assigned to different people. Subdivided work leads to job specialization, because each job now includes a narrow subset of the tasks necessary to complete the product or service. Although Valve Corpora- tion’s leaders don’t do the organizing, employees self-organize into project teams, and members of each team agree to the tasks they should perform. Valve encourages its staff to become multiskilled, but most people gravitate toward one area of expertise or another. As companies get larger, this horizontal division of labor is usually accompanied by a vertical division of labor: Some people are assigned the task of supervising employees, others are re- sponsible for managing those supervisors, and so on. Valve has been able to avoid (or limit) this vertical division of labor by relying on employees to manage themselves and each other. But even Valve has team leaders who coordinate the work, as well as marketing and strategy leaders who guide and support employees’ decisions on these matters.

Why do companies divide the work into several jobs? As we described in Chapter 6, job specialization increases work efficiency.4 Job incumbents can master their tasks quickly because work cycles are shorter. Less time is wasted changing from one task to another. Training costs are reduced because employees require fewer physical and mental skills to

organizational structure The division of labor and patterns of coordination, communication, workflow, and formal power that direct organizational activities.

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Chapter Thirteen Designing Organizational Structures 371

accomplish the assigned work. Finally, job specialization makes it easier to match people with specific aptitudes or skills to the jobs for which they are best suited. Although one per- son working alone might be able to design a new online game, doing so would take much longer than having the work divided among several people with the required diversity of skills. Some employees are talented at thinking up innovative storylines, whereas others are better at preparing online drawings or working through financial costs.

COORDINATING WORK ACTIVITIES When people divide work among themselves, they require coordinating mechanisms to ensure that everyone works in concert. Coordination is so closely connected to the division of labor that the optimal level of specialization is limited by the feasibility of coordinating the work. In other words, an organization’s ability to divide work among people depends on how well those people can coordinate with each other. Otherwise, individual effort is wasted due to misalign- ment, duplication, and mistiming of tasks. Coordination also tends to become more expensive and difficult as the division of labor increases. Therefore, companies specialize jobs only to the point at which it isn’t too costly or challenging to coordinate the people in those jobs.5

Every organization—from the two-person corner convenience store to the largest corporate entity—uses one or more of the following coordinating mechanisms:6 informal communication, formal hierarchy, and standardization (see Exhibit 13.1). These forms of coordination align the work of staff within the same department as well as across work units. These coordinating mechanisms are also critical when several organizations work together, such as in joint ventures and humanitarian aid programs.7

Coordination Through Informal Communication All organizations rely on infor- mal communication as a coordinating mechanism. This process includes sharing information on mutual tasks and forming common mental models so that employees synchronize work activities using the same mental road map.8 Informal communication is vital in nonroutine

Visit for activities and test questions to help you learn about coordinating mechanisms and other organizational structure topics.


EXHIBIT 13.1 Coordinating Mechanisms in Organizations

Sources: Based on information in J. Galbraith, Designing Complex Organizations (Reading, MA: Addison-Wesley, 1973), pp. 8–19; H. Mintzberg, The Structur- ing of Organizations (Englewood Cliffs, NJ: Prentice Hall, 1979), Ch. 1; D. A. Nadler and M. L. Tushman, Competing by Design: The Power of Organizational Architecture (New York: Oxford University Press, 1997), Ch. 6.

Sharing information on mutual tasks; forming common mental models to synchronize work activities

Assigning legitimate power to individuals, who then use this power to direct work processes and allocate resources

Creating routine patterns of behavior or output

• Direct communication • Liaison roles • Integrator roles • Temporary teams

• Direct supervision • Formal communication channels

• Standardized skills • Standardized processes • Standardized output

Informal communication

Formal hierarchy


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372 Part Four Organizational Processes

and ambiguous situations, because employees need to exchange a large volume of information through face-to-face communication and other media-rich channels. Valve Corporation relies heavily on informal communication as a coordinating mechanism. Employees organize them- selves into teams and physically move close to each other to communicate directly, often on projects that typically enter uncharted territory.

Although coordination through informal communication is easiest in small firms, infor- mation technologies have further enabled this coordinating mechanism in large organiza- tions.9 Companies employing thousands of people also support informal communication by keeping each production site small. Magna International, the global auto parts manufac- turer, keeps its plants at a maximum size of around 200 employees. Magna’s leaders believe that employees have difficulty remembering others’ names in plants that are any larger, a situation that makes informal communication more difficult as a coordinating mechanism.10

Larger organizations also encourage coordination through informal communication by assigning liaison roles to employees, who are expected to communicate and share informa- tion with coworkers in other work units. When coordination is required among several work units, companies create integrator roles. These people are responsible for coordinating a work process by encouraging employees in each work unit to share information and informally coordinate work activities. Integrators do not have authority over the people involved in that process, so they must rely on persuasion and commitment. Brand managers for luxury per- fumes have integrator roles because they ensure that the work of fragrance developers, bottle designers, advertising creatives, production, and other groups are aligned with the brand’s image and meaning.11

Another way that larger organizations encourage coordination through informal commu- nication is by organizing employees from several departments into temporary teams. Tem- porary cross-functional teams give employees more authority and opportunity to coordinate through informal communication. This process is now common in vehicle design. As the design engineer begins work on product specifications, team members from manufacturing, engineering, marketing, purchasing, and other departments are able to provide immediate feedback, as well as begin their contribution to the process. Without the informal coordina- tion available through teams, the preliminary car design would pass from one department to the next—a much slower process.12

Coordination Through Formal Hierarchy Informal communication is the most flexible form of coordination, but it can become chaotic as the number of employees increases. Consequently, as organizations grow, they rely increasingly on a second coordinating mechanism: for- mal hierarchy.13 Hierarchy assigns legiti- mate power to individuals, who then use this power to direct work processes and allocate resources. In other words, work is coordinated through direct supervision— the chain of command.

A century ago, management scholars applauded the formal hierarchy as the best coordinating mechanism for large organizations. They argued that organiza- tions were most effective when managers exercised their authority and employees received orders from only one supervisor. The chain of command—in which

of 524 U.S. employees surveyed say they occasionally or frequently feel micromanaged by their boss.

of 500 U.S. employees surveyed say they work for a “micromanager.”

of 150 senior executives surveyed from the 1,000 largest American companies identify micromanaging as having the most negative impact on employee morale (third highest factor, after lack of communication and recognition).

of 11,045 U.S. employees surveyed identify micromanagement as the most significant barrier to their productivity.

31% of 97,000 employees surveyed in 30 countries describe their company’s leadership as oppressive or authoritative.

Coordination Through Micromanagement14

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Chapter Thirteen Designing Organizational Structures 373

information flows across work units only by going through supervisors and managers—was viewed as the backbone of organizational strength.

Although still important, formal hierarchy is much less popular today. One problem, which Valve’s cofounders have tried to avoid, is that hierarchical organizations are not as agile for coordination in complex and novel situations. Communicating through the chain of command is rarely as fast or accurate as direct communication between employ- ees. Another concern with formal hierarchy is that managers are able to closely supervise only a limited number of employees. As the business grows, the number of supervisors and layers of management must increase, resulting in a costly bureaucracy. Finally, today’s workforce demands more autonomy over work and more involvement in company deci- sions. Formal hierarchy coordination processes tend to conflict with employee autonomy and involvement.

Coordination Through Standardization Standardization, the third means of coordination, involves creating routine patterns of behavior or output. This coordinating mechanism takes three distinct forms:

• Standardized processes. The quality and consistency of a product or service can often be improved by standardizing work activities through job descriptions and procedures.15 For example, flow charts represent a standardized process coordinating mechanism. This coordinating mechanism works best when the task is routine (e.g., mass produc- tion) or simple (e.g., stocking shelves), but it is less effective in nonroutine and complex work such as product design (which Valve employees do).

• Standardized outputs. This form of standardization involves ensuring that individuals and work units have clearly defined goals and output measures (e.g., customer satis- faction, production efficiency). For instance, to coordinate the work of salespeople, companies assign sales targets rather than specific behaviors.

• Standardized skills. When work activities are too complex to standardize through processes or goals, companies often coordinate work effort by extensively training employees or hiring people who have learned precise role behaviors from educational programs. Valve Corporation relies on coordination through standardized skills. It carefully hires people for their skills in software engineering, animation, and related fields, so they can perform tasks without job descriptions or precise guidelines. Training is also a form of standardization through skills. Many companies have in-house training programs where employees learn how to perform tasks consistent with company expectations.

The division of labor and coordination of work represent the two fundamental ingredients of all organizations. But how work is divided, which coordinating mechanisms are empha- sized, who makes decisions, and other issues are related to the four elements of organiza- tional structure that we discuss over the next two sections of this chapter.

Elements of Organizational Structure Organizational structure has four elements that apply to every organization. This section introduces three of them: span of control, centralization, and formalization. The fourth element—departmentalization—is presented in the next section.

Which organizational structure do you prefer? Visit connect. to identify your organizational structure and help you learn about this topic.

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SPAN OF CONTROL Chief executive officers are much busier today managing their direct reports than they were two or three decades ago. In the 1980s, an average of five people (typically vice-presidents) reported directly to the CEOs of Fortune 500 companies. By the end of the 1990s, this span of control increased an average of 6.5 direct reports. Today, CEOs of the largest U.S. firms have an average of 10 direct reports, double the number a few decades earlier. This increase reflects the fact that most Fortune 500 companies are far more complex today. They operate in many markets, have more variety of products, and employ people with a broader array of technical specialties. Each of these types of variation demand top-level attention, so there are more people reporting directly to the chief executive.16

Span of control (also called span of management) refers to the number of people directly reporting to the next level in the hierarchy. A narrow span of control exists when very few people report directly to a manager, whereas a wide span exists when a manager has many direct reports.17 A century ago, French engineer and management scholar Henri Fayol strongly recommended a relatively narrow span of control, typically no more than 20 em- ployees per supervisor and six supervisors per manager. Fayol championed formal hierarchy as the primary coordinating mechanism, so he believed that supervisors should closely mon- itor and coach employees. His views were similar to those of Napoleon, who declared that senior military leaders should have no more than five officers directly reporting to them. These prescriptions were based on the belief that managers simply could not monitor and control any more subordinates closely enough.18

Today, we know better. The best-performing manufacturing plants currently have an average of 38 production employees per supervisor (see Exhibit 13.2).19 What’s the secret here? Did Fayol, Napoleon, and others miscalculate the optimal span of control? The answer is that those sympathetic to hierarchical control believed that employees should perform the physical tasks, whereas supervisors and other management personnel should make the decisions and monitor employees to make sure they performed their tasks. In contrast, the best-performing manufacturing operations today rely on self-directed teams, so direct supervision (formal hierarchy) is supplemented with other coordinating

Figures represent the average number of direct reports per manager. “Max.” figures represent the maximum spans of control recommended by Napoleon Bonaparte, Henri Fayol, and Lindall Urwick. “Min.” figure represents the minimum span of control recommended by Tom Peters. “Goal” figures represent span of control targets that the U.S. government and the State of Iowa have tried to achieve. The State of Texas figure represents the span of control mandated by law. The Saratoga Institute figure is the average span of control among U.S. companies surveyed. The Best U.S. Plants figure is the average span of control in American manufacturing facilities identified by Industry Week magazine as the most effective. “Actual” figures are spans of control in the city of Seattle, State of Oregon, Multnomah County (including Portland, Oregon), State of Iowa, and Fedex Corporation in the years indicated.

Napoleon (Max. mgt.: 1815) Oregon (Actual: 2011)

Fayol (Max. mgt.: 1916) Urwick (Max. mgt.: 1937)

Seattle (Actual: 2005) Saratoga Institute (Survey: 2001) Multnomah County (Actual: 2009)

Texas State (Law: 2003) Iowa State (Actual: 2007)

Iowa State (Goal: 2007) U.S. Gov’t (Goal: 1999)

Fayol (Max. nonmgt.: 1916) Fedex (Actual: 2008)

Tom Peters (Min.: 1988) Best U.S. plants (Survey: 2000)

5 5.7

6 6

6.8 7.02

8.2 11 11

12 15

20 25 25


0 2010 30 40


Recommended, Actual, and Enforced Spans of Control20

span of control The number of people directly reporting to the next level in the hierarchy.

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Chapter Thirteen Designing Organizational Structures 375

mechanisms. Self-directed teams coordinate mainly through informal communication and various forms of standardization (i.e., training and processes), so formal hierarchy plays more of a supporting role.

Many firms that employ doctors, lawyers, and other professionals also have a wider span of control because these staff members coordinate their work mainly through standardized skills. For example, more than two dozen people report directly to Cindy Zollinger, co- founder and president of the Boston-based litigation-consulting firm Cornerstone Research. Zollinger explains that this large number of direct reports is possible because she leads pro- fessional staff who don’t require close supervision. “They largely run themselves,” Zollinger explains. “I help them in dealing with obstacles they face, or in making the most of oppor- tunities that they find.”21

A second factor influencing the best span of control is whether employees perform rou- tine tasks. A wider span of control is possible when employees perform routine jobs, because they require less direction or advice from supervisors. A narrow span of control is necessary when employees perform novel or complex tasks, because these employees tend to require more supervisory decisions and coaching. This principle is illustrated in a survey of property and casualty insurers. The average span of control in commercial-policy processing depart- ments is around 15 employees per supervisor, whereas the span of control is 6.1 in claims service and 5.5 in commercial underwriting. Staff members in the latter two departments perform more technical work, so they have more novel and complex tasks, which requires more supervisor involvement. Commercial-policy processing, on the other hand, is like pro- duction work. Tasks are routine and have few exceptions, so managers have less coordinating to do with each employee.22

A third influence on span of control is the degree of interdependence among employees within the department or team.23 Generally, a narrow span of control is necessary where employees perform highly interdependent work with others. More supervision is required for highly interdependent jobs because employees tend to experience more conflict with each other, which requires more of a manager’s time to resolve. Also, employees are less clear on their personal work performance in highly interdependent tasks, so supervisors spend more time providing coaching and feedback.

Tall versus Flat Structures Span of control is interconnected with organizational size (number of employees) and the number of layers in the organizational hierarchy. Consider two companies with the same number of employees. If Company A has a wider span of control (more direct reports per manager) than Company B, then Company A necessarily has fewer layers of management (i.e., a flatter structure). The reason for this relationship is that a com- pany with a wider span of control has more employees per supervisor, more supervisors for each middle manager, and so on. This larger number of direct reports, compared to a company with a narrower span of control, is possible only by removing layers of management.

The interconnection of span of control, organizational size (number of employees), and number of management layers has important implications for companies. Organizations employ more people as they grow, which means they must widen the span of control, build a taller hierarchy, or both. Most companies end up building taller structures, because they

rely on direct supervision to some extent as a coordinating mechanism, and there are limits to how many people each manager can coordinate.

Unfortunately, building a taller hierarchy (more layers of management) creates problems. One concern is that executives in tall structures tend to re- ceive lower-quality and less timely information. People tend to filter, distort, and simplify information before it is passed to higher levels in the hierarchy, because they are motivated to frame the information in a positive light or summarize it more efficiently. In contrast, information receives less manipula- tion in flat hierarchies and is often received much more quickly than in tall hierarchies. “Any new idea condemned to struggle upward through multiple levels of rigidly hierarchical, risk-averse management is an idea that won’t see

KenGen, Kenya’s leading electricity generation company, had more than 15 layers of hierarchy a few years ago. Today, the company’s 1,500 employees are organized in a hierarchy with only 6 layers: the chief executive, executive directors, senior managers, chief officers, front line management, and nonmanagement staff. “This flatter structure has reduced bureaucracy, and it has also improved teamwork,” explains KenGen executive Simon Ngure.24

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376 Part Four Organizational Processes

daylight . . . until it’s too late,” warned Chrysler Corp. CEO Sergio Marchionne when he restructured the company.25

A second problem is that taller structures have higher overhead costs. With more manag- ers per employee, tall hierarchies necessarily have more people administering the company, thereby reducing the percentage of staff who are actually making the product or providing the service. A third issue with tall hierarchies is that employees usually feel less empowered and engaged in their work. Hierarchies are power structures, so more levels of hierarchy tend to draw power away from people at the bottom of that hierarchy. The size of the hierarchy itself tends to focus power around managers rather than employees.26

These problems have prompted companies to remove one or more levels in the organiza- tional hierarchy.27 This “delayering” recently occurred at Sandvik, the Swedish manufacturer of tools and equipment for mining and other industries. “We had as much as 13 layers in the company between me as CEO and the most junior worker in the Company,” says Sandvik CEO Olof Faxander. “We’ve flattened that [so we] only have up to seven layers in the Company.”28 At the same time, critics warn that cutting back middle management may do more harm than good.


Business leaders face the ongoing challenge of preventing their organization from ballooning into a fat bureaucracy with too many layers of middle managers. Indeed, it has become a mantra for incoming CEOs to gallantly state they will “delayer” or “flatten” the corporate hierarchy, usually as part of a larger mandate to “empower” the workforce. As we describe in this chapter, there are several valid argu- ments for minimizing the corporate hierarchy, particularly by cutting back middle management. As companies employ more managers, they increase overhead costs and have a lower percentage of people actually generating revenue by making products or providing services. A taller hierarchy also undermines effective communication between frontline staff—who receive valuable knowledge about the external environment—and the top executive team. Middle managers have a tendency to distort, simplify, and filter information as it passes from them to higher authorities in the company. A third reason for cutting back middle management is that they absorb organizational power. As compa- nies add more layers, they remove more power that might have been assigned directly to frontline employees. In other words, tall hierarchies potentially undermine employee empowerment. These concerns seem logical, but slashing the hierarchy can have several unexpected consequences that outweigh any bene- fits. In fact, a growing chorus of management experts warn about several negative long-term consequences of cutting out too much middle management.29

Critics of delayering point out that all companies need manag- ers to translate corporate strategy into coherent daily operations.

“Middle managers are the link between your mission and execu- tion,” advises a senior hospital executive. “They turn our strategy into action and get everyone on the same page.”30 Furthermore, managers are needed to make quick decisions, coach employees, and help resolve conflicts. These valuable functions are under- served when the span of control becomes too wide. Delayering increases the number of direct reports per man- ager and thus significantly increases management workload and corresponding levels of stress. Managers partly reduce the work- load by learning to give subordinates more autonomy rather than micromanaging them. However, this role adjustment itself is stressful (same responsibility, but less authority or control). Com- panies often increase the span of control beyond the point at which many managers are capable of coaching or leading their direct reports. A third concern is that delayering results in fewer managerial jobs, so companies have less maneuverability to develop mana- gerial skills. Promotions are also riskier, because they involve a larger jump in responsibility in flatter, compared with taller, hierar- chies. Furthermore, having fewer promotion opportunities means that managers experience more career plateauing, which re- duces their motivation and loyalty. Chopping back managerial ca- reer structures also sends a signal that managers are no longer valued. “Delayering has had an adverse effect on morale, produc- tivity, and performance,” argues a senior government executive. “Disenfranchising middle management creates negative percep- tions and lower commitment to the organization with consequent reluctance to accept responsibility.”31

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Chapter Thirteen Designing Organizational Structures 377

CENTRALIZATION AND DECENTRALIZATION Centralization means that formal decision-making authority is held by a small group of people, typically those at the top of the organizational hierarchy. Most organizations begin with centralized structures, as the founder makes most of the decisions and tries to direct the business toward his or her vision. As organizations grow, however, they diversify, and their environments become more complex. Senior executives aren’t able to process all the deci- sions that significantly influence the business. Consequently, larger organizations typically decentralize; that is, they disperse decision authority and power throughout the organization.

The optimal level of centralization or decentralization depends on several contingencies that we will examine later in this chapter. However, different degrees of decentralization can occur simultaneously in different parts of an organization. For instance, the sales, market- ing, and operations units at Google are fairly centralized, whereas the engineering areas are much more decentralized so they can develop new products without top-down control. Likewise, 7-Eleven relies on both centralization and decentralization in different parts of the organization. It centralizes decisions about information technology and supplier purchasing to improve buying power, increase cost efficiencies, and minimize complexity across the or- ganization. Yet it decentralizes local inventory decisions to store managers, because they have the best information about their customers and can respond quickly to local market needs. “We could never predict a busload of football players on a Friday night, but the store man- ager can,” explains a 7-Eleven executive.32

FORMALIZATION Formalization is the degree to which organizations standard- ize behavior through rules, procedures, formal training, and related mechanisms.34 In other words, companies become more formalized as they increasingly rely on various forms of standardization to coordinate work. McDonald’s Restaurants and most other efficient fast-food chains typically have a high

Samsonite, the Swiss-based luggage company, recently abandoned its centralized organizational structure by delegating more power to country managers. The reason? “We’ve learned that all of our customers are more different than similar,” explains Samsonite chief financial officer Kyle Gendreau. Rather than follow global marketing and distribution practices dictated by head office, country managers are now “empowered” to apply practices that best serve their local markets. “Letting people be entrepreneurial on the ground drives growth,” says Gendreau. “It’s really paying off for us.”33

centralization The degree to which formal decision authority is held by a small group of people, typically those at the top of the organizational hierarchy.

formalization The degree to which organizations standardize behavior through rules, procedures, formal training, and related mechanisms.

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378 Part Four Organizational Processes

degree of formalization because they rely on the standardization of work processes as a coordi- nating mechanism. Employees have precisely defined roles, right down to how much mustard should be dispensed, how many pickles should be applied, and how long each hamburger should be cooked.

Older companies tend to become more formalized because work activities become rou- tinized, making them easier to document in standardized practices. Larger companies also tend to have more formalization because direct supervision and informal communication among employees do not operate as easily when large numbers of people are involved. External influences, such as government safety legislation and strict accounting rules, also encourage formalization.

Formalization may increase efficiency and compliance, but it can also create prob- lems.35 Rules and procedures reduce organizational flexibility, so employees follow pre- scribed behaviors even when the situation clearly calls for a customized response. High levels of formalization tend to undermine organizational learning and creativity. Some work rules become so convoluted that organizational efficiency would decline if they were actually followed as prescribed. Formalization is also a source of job dissatisfaction and work stress. Finally, rules and procedures have been known to take on a life of their own in some organizations. They become the focus of attention, rather than the organi- zation’s ultimate objectives of producing a product or service and serving dominant stakeholders.

MECHANISTIC VERSUS ORGANIC STRUCTURES We discussed span of control, centralization, and formalization together because they cluster around two broader organizational forms: mechanistic and organic structures (see Exhibit 13.3).36 A mechanistic structure is characterized by a narrow span of control and high degree of formalization and centralization. Mechanistic structures have many rules and procedures, limited decision making at lower levels, tall hierarchies of people in special- ized roles, and vertical rather than horizontal communication flows. Tasks are rigidly defined and are altered only when sanctioned by higher authorities.

Companies with an organic structure have the opposite characteristics. They operate with a wide span of control, decentralized decision making, and little formalization. Tasks are fluid, adjusting to new situations and organizational needs. Valve Corporation, which was described at the beginning of this chapter, has a highly organic structure. With at most two layers (some claim it has one layer, and therefore no hierarchy), Valve’s span of control is about as wide as a company can get. Decision making is decentralized down to teams and individuals. “Three people at the company can ship anything,” says Greg Coomer, one of

Valve’s earliest employees. He explains that any employee alone can launch a product without permission, but the company encourages at least three people because “the work gets better if you just check with a couple of people before you decide to push a button.”37 Valve also has mini- mal formalization. The company doesn’t have job descrip- tions and seems to have few lists of procedures for hiring, buying, or other activities.

Does your job require a mechanistic or organic structure? Visit connect. to estimate whether the type of work you perform is better suited to one or the other of these organizational structures.

mechanistic structure An organizational structure with a narrow span of control and a high degree of formalization and centralization.

organic structure An organizational structure with a wide span of control, little formalization, and decentralized decision making.

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Chapter Thirteen Designing Organizational Structures 379

As a general rule, mechanistic structures operate better in stable environments because they rely on efficiency and routine behaviors. Organic structures work better in rapidly changing (i.e., dynamic) environments because they are more flexible and responsive to the changes. Organic structures are also more compatible with organizational learning and high-performance workplaces because they emphasize information sharing and an empow- ered workforce rather than hierarchy and status.38 However, the effectiveness of organic structures depends on how well employees have developed their roles and expertise.39 With- out these conditions, employees are unable to coordinate effectively, resulting in errors and gross inefficiencies.

Forms of Departmentalization Span of control, centralization, and formalization are important elements of organiza- tional structure, but most people think about organizational charts when the discussion of organizational structure arises. The organizational chart represents the fourth element in the structuring of organizations, called departmentalization. Departmentalization specifies how employees and their activities are grouped together. It is a fundamental strategy for coordinating organizational activities because it influences organizational behavior in the following ways:40

• Departmentalization establishes the chain of command—the system of common supervision among positions and units within the organization. It frames the mem- bership of formal work teams and typically determines which positions and units must share resources. Thus, departmentalization establishes interdependencies among employees and subunits.

• Departmentalization focuses people around common mental models or ways of thinking, such as serving clients, developing products, or supporting a particular skill set. This focus is typically anchored around the common budgets and measures of performance assigned to employees within each departmental unit.

• Departmentalization encourages specific people and work units to coordinate through informal communication. With common supervision and resources, members within each configuration typically work near each other, so they can use frequent and informal interaction to get the work done.

Visit for activities and test questions to help you learn about the different forms of departmentalization.

Narrow span of control Wide span of control High centralization High decentralization High formalization Low formalization


Contrasting Mechanistic and Organic Organizational Structures

LO 13-3

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380 Part Four Organizational Processes

There are almost as many organizational charts as there are businesses, but the six most common pure types of departmentalization are simple, functional, divisional, team-based, matrix, and network.

SIMPLE STRUCTURE Most companies begin with a simple structure.41 They employ only a few people and typi- cally offer only one distinct product or service. There is minimal hierarchy—usually just employees reporting to the owners. Employees perform broadly defined roles because there are insufficient economies of scale to assign them to specialized jobs. The simple structure is highly flexible and minimizes the walls that form between employees in other structures. However, the simple structure usually depends on the owner’s direct supervision to coordi- nate work activities, so it is very difficult to operate as the company grows and becomes more complex.

FUNCTIONAL STRUCTURE As organizations grow, they typically shift from a simple structure to a functional structure. Even after they adopt more complex organizational structures (which we discuss later), they will have a functional structure at some level of the hierarchy. A functional structure orga- nizes employees around specific knowledge or other resources (see Exhibit 13.4). Employees with marketing expertise are grouped into a marketing unit, those with production skills are located in manufacturing, engineers are found in product development, and so on. Organi- zations with functional structures are typically centralized to coordinate their activities effectively.

Evaluating the Functional Structure The functional structure creates special- ized pools of talent that typically serve everyone in the organization. This provides more economies of scale than are possible if functional specialists are spread over different parts of the organization. It increases employee identity with the specialization or profession. Direct supervision is easier in functional structures, because managers oversee people with common issues and expertise.42

The functional structure also has limitations.43 Grouping employees around their skills tends to focus attention on those skills and related professional needs, rather than on the company’s product, service, or client needs. Unless people are transferred from one function to the next, they might not develop a broader understanding of the business. Compared with other structures, the functional structure usually produces higher dysfunctional conflict and poorer coordination in serving clients or developing products. These problems occur because employees need to work with coworkers in other departments to complete organi- zational tasks, yet they have different subgoals and mental models of ideal work. Together, these problems require substantial formal controls and coordination when people are orga- nized around functions.

Chief executive

Manufacturing Design Administration Marketing


A Functional Organizational Structure

functional structure An organizational structure in which employees are organized around specific knowledge or other resources.

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Chapter Thirteen Designing Organizational Structures 381

DIVISIONAL STRUCTURE The divisional structure (sometimes called the multidivisional or M-form structure) groups employees around geographic areas, outputs (products or services), or clients. Exhibit 13.5 illustrates these three variations of divisional structure.45 The geographic divisional structure organizes employees around distinct regions of the country or world. Exhibit 13.5(a) illus- trates a geographic divisional structure adopted by Barrick Gold Corporation, the world’s largest gold-mining company. The product/service divisional structure organizes employees around distinct outputs. Exhibit 13.5(b) illustrates a simplified version of this type of struc- ture at Philips. The Dutch electronics company divides its workforce mainly into three divi- sions: health care products, lighting products, and consumer products. (Philips also has a fourth organizational group consisting of the research and design functions.) The client divisional structure organizes employees around specific customer groups. Exhibit 13.5(c) illustrates a customer-focused divisional structure similar to one adopted by the U.S. Inter- nal Revenue Service.46

Toyota Shifts Gears from a Functional to Regional Structure44

Over the past few years, Toyota Motor Company has received scathing criticism for its ineffective handling of cars that sud- denly accelerated. Some drivers reported that the company- designed floor mats pressed on the gas pedal, causing their car to suddenly speed up. Others argued that the electronic systems in the pedal were faulty. Toyota allegedly ignored the early complaints or attributed them mainly to driver error when the problem could not be replicated by its engineers. The National Highway Traffic Safety Administration (NHTSA) grew increasingly frustrated with Toyota’s public deni- als, but even more so with its slow response to the problems. It fined Toyota four times in recent years (some were the maxi- mum fine allowed) for failing to report problems to the govern- ment regulator or for being too slow to recall faulty vehicles. Tensions became particularly strained after the NHTSA told Toyota to recall vehicles with faulty floor mats. The company issued the recall, but also announced that the NHTSA had concluded that “no defect exists” in the recalled vehicles. The next day, the NHTSA issued its own statement, saying that Toyota’s announcement was “inaccurate and misleading.” How could one of the largest and most respected auto- makers in the world get into this situation? Whether through its own reflection or external pressure, Toyota commissioned a special panel of independent experts to find the answer. The panel offered recommendations regarding mechanical and electrical engineering, supplier product quality, and processes to address issues of quality and safety. But the panel’s main conclusion was that Toyota’s slow and inappropriate responses were mostly due to its organizational structure. In particular, the review panel reported that Toyota was mainly organized around functional units (sales, engineering, manufacturing) and that the heads of these units in each re- gion reported directly to headquarters in Japan. Toyota did not

have structural integration around regions, so its centralized functional structure resulted in silos of knowledge and slower decision making. The panel concluded: “Toyota’s tightly- controlled global structure: (1) hindered information sharing and contributed to miscommunication; and (2) delayed response time to quality and safety issues, fueling criticism that Toyota was being unresponsive to regulators and customers.” Toyota CEO Akio Toyoda agreed that Toyota’s functional structure should be replaced with a geographic divisionalized structure. “Dealing with our overseas operations on a regional basis, rather than a functional basis, will enable us to conduct decision making on a more-comprehensive basis.” Two years after the panel’s report, Toyota introduced a new organiza- tional structure that refocused power from functions to geo- graphic regions. “Integrating Toyota’s North America affiliates under a more unified and streamlined management structure will significantly enhance local responsibility over operations, clarify decision-making and strengthen our customer-first focus,” says James Lentz, who has become president of Toyota’s North American business.

global connections 13.1

divisional structure An organizational structure in which employees are organized around geographic areas, outputs (products or services), or clients.

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382 Part Four Organizational Processes

Which form of divisional structure should large organizations adopt? The answer de- pends mainly on the primary source of environmental diversity or uncertainty.47 Suppose an organization has one type of product sold to people across the country. If customers have different needs across regions, or if state governments impose different regulations on the product, then a geographic structure would be best to be more vigilant of this diversity. On the other hand, if the company sells several types of products across the country and customer preferences and government regulations are similar everywhere, then a product structure would likely work best.

Coca-Cola, Nestlé, and many other food and beverage companies are organized mainly around geographic regions because consumer tastes and preferred marketing strategies vary considerably around the world. Even though McDonald’s makes the same Big Mac throughout the world, the company has more fish products in Hong Kong and more vegetarian products in India, in line with traditional diets in those countries. Philips, on the other hand, is organized around products because consumer preferences around the world are similar within each product group. Hospitals from Geneva, Switzerland, to Santiago, Chile, buy similar medical equipment from Philips, whereas the manufacturing and marketing of these products are quite different from Philips’s consumer electronics business.

Commissioner (chief executive)

Wage & investment (individual taxpayers)

Small business & self-employed

Large & mid-sized business

Tax-exempt & government entities

Chief executive officer

Health care Lighting products Consumer


(a) Geographic divisional structure

(b) Product divisional structure

(c) Client divisional structure

Chief executive officer

North America

South America

Australia/ Pacific


EXHIBIT 13.5 Three Types of Divisional Structure

Note: Diagram (a) shows a global geographic divisional structure similar to Barrick Gold Corp.; diagram (b) is similar to the product divisions at Philips; diagram (c) is similar to the customer-focused structure at the U.S. Internal Revenue Service.

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Chapter Thirteen Designing Organizational Structures 383

Many companies are moving away from structures that organize people around geo- graphic clusters.48 One reason is that clients can purchase products online and communicate with businesses from almost anywhere in the world, so local representation is becoming less critical. Reduced geographic variation is another reason for the shift away from geographic structures; freer trade has reduced government intervention, and consumer preferences for many products and services are becoming more similar (converging) around the world. The third reason is that large companies increasingly have global business customers who de- mand one global point of purchase, not one in every country or region.

Globally Integrated Enterprise The shift away from geographic and toward prod- uct or client-based divisional structures reflects the trend toward the globally integrated enterprise (GIE).49 As the label implies, a globally integrated enterprise connects work pro- cesses around the world, rather than replicating them within each country or region. This type of organization typically organizes people around product or client divisions. Even functional units—production, marketing, design, human resources, and so on—serve the company worldwide rather than within specific geographic clusters. These functions are sensitive to cultural and market differences and have local representation to support that sensitivity. However, local representatives are associates of a global function rather than a local subsidiary copied across several regions. Indeed, a GIE is marked by a dramatic increase in virtual teamwork, because employees are assigned global projects and ongoing responsibilities for work units that transcend geographic boundaries.

At the core of the GIE model is the notion that companies should move their operations where the people with the best skill set and cost efficiencies are located. IBM senior execu- tive Michael Cannon-Brookes describes the GIE structure using IBM’s business in Japan as an example: “Under our GIE model, we now have the HR for IBM Japan done in Manila, accounts receivable done in Shanghai, the accounting done in Kuala Lumpur, procurement in Shenzhen, and the customer service help desk is in Brisbane. That is true global integra- tion, and it is also optimal for our Japan business.”50

Evaluating the Divisional Structure The divisional organizational structure is a building-block structure; it accommodates growth relatively easily and focuses employee attention on products or customers rather than tasks. Different products, services, or clients can be accommodated by sprouting new divisions. This structure also directs employee attention to customers and products, rather than to their own specialized knowl- edge.51 These advantages are offset by a number of limitations. First, the divisional struc- ture tends to duplicate resources, such as production equipment and engineering or information technology expertise. Also, unless the division is quite large, resources are not used as efficiently as they are in functional structures where resources are pooled across the entire organization. The divisional structure also creates silos of knowledge. Expertise is spread across several autonomous business units, which reduces the ability and perhaps motivation of the people in one division to share their knowledge with counterparts in other divisions. In contrast, a functional structure groups experts together, thereby sup- porting knowledge sharing.

Finally, the preferred divisional structure depends on the company’s primary source of environmental diversity or uncertainty. This principle seems to be applied easily enough at Coca-Cola, McDonald’s, and Philips, but many global organizations experience diversity and uncertainty in terms of geography, product, and clients. Consequently, some organiza- tions revise their structures back and forth or create complex structures that attempt to give all three dimensions equal status. This waffling generates further complications, because organizational structure decisions shift power and status among executives. If the company switches from a geographic to a product structure, people who lead the geographic fiefdoms suddenly get demoted under the product chiefs. In short, leaders of global organizations struggle to find the best divisional structure, often resulting in the departure of some execu- tives and frustration among those who remain.

globally integrated enterprise An organizational structure in which work processes and executive functions are distributed around the world through global centers, rather than developed in a home country and replicated in satellite countries or regions.

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384 Part Four Organizational Processes


W. L. Gore & Associates employs 9,500 people but no managers. That’s because the Newark, Delaware–based manufacturer of fabrics (Gore-Tex®), electronics, industrial, and medical products has adopted an organizational structure where most employees (called “associates”) are organized around self-directed teams. Day-to-day decisions are decentralized to these teams, which are formed around idea champions and plenty of shared leadership. “Your team is your boss, because you don’t want to let them down,” says Diane Davidson, who works in Gore’s fashion products group. “Everyone’s your boss, and no one’s your boss.”52

TEAM-BASED STRUCTURE We began this chapter describing Valve Corporation, the Bellevue, Washington, games soft- ware and entertainment company with an unusual organizational structure. Valve’s structure is decidedly flat (minimal hierarchy), but it is perhaps best described as a completely team- based organizational structure. A team-based organizational structure is built around self-directed teams that complete an entire piece of work, such as manufacturing a product or developing an electronic game. This type of structure is usually organic. There is a wide span of control because teams operate with minimal supervision. In extreme situations such as at Valve, there is no formal leader, just someone selected by other team members to help coordinate the work and liaise with top management.

Team structures are highly decentralized because almost all day-to-day decisions are made by team members rather than someone further up the organizational hierarchy. Many team- based structures also have low formalization, because teams are given relatively few rules about how to organize their work. Instead, executives assign quality and quantity output targets, and often productivity improvement goals, to each team. Teams are then encouraged to use available resources and their own initiative to achieve those objectives.

Team-based structures are usually found within the manufacturing or service opera- tions of larger divisional structures. Several GE Aircraft Engines plants are organized as team-based structures, but these plants operate within GE’s larger divisional structure. However, a small number of firms apply the team-based structure from top to bottom, including W. L. Gore & Associates, Semco SA, and Valve Corporation, where almost all associates work in teams.

Evaluating the Team-Based Structure The team-based structure has gained popularity because it tends to be flexible and responsive in turbulent environments.53 It can reduce costs, because teams have less reliance on formal hierarchy (direct supervision). A cross-functional team structure improves communication and cooperation across tradi- tional boundaries. With greater autonomy, this structure also allows quicker and more informed decision making.54 For this reason, some hospitals have shifted from functional departments to cross-functional teams. Teams composed of nurses, radiologists, anesthe- tists, a pharmacology representative, possibly social workers, a rehabilitation therapist, and other specialists communicate and coordinate more efficiently, thereby reducing delays and errors.55

Contrasted with these benefits, the team-based structure can be costly to maintain, due to the need for ongoing interpersonal skills training. Teamwork potentially takes more time to coordinate than formal hierarchy during the early stages of team development. Employees may experience more stress due to increased ambiguity in their roles. Team leaders also ex- perience more stress due to increased conflict, loss of functional power, and unclear career progression ladders. In addition, team structures suffer from duplication of resources and potential competition (and lack of resource sharing) across teams.56

team-based organizational structure An organizational structure built around self-directed teams that complete an entire piece of work.

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Chapter Thirteen Designing Organizational Structures 385

MATRIX STRUCTURE ABB Group, one of the world’s largest power and automation technology engineering firms, has five product divisions, such as power products and process automation. It employs more than 140,000 people across 100 countries, so the global giant also has eight regional groups (North America, IMEA, and so forth). What organizational structure would work best for ABB? For example, should the head of power products in North America report to the worldwide head of power products in Zurich, Switzerland, or to the head of North American operations?

For ABB, the answer is to have the regional product leaders report to both the regional chiefs and the product chiefs back at global headquarters. In other words, ABB has a matrix structure, which overlays two structures (such as a geographic divisional and product struc- ture) to leverage the benefits of both.57 Exhibit 13.6 shows a geographic–product matrix structure, which is a simplified version of ABB’s structure. The dots represent the individu- als who have two bosses. For example, the head of power products in North America reports to both the worldwide head of the product group and to the head of North American operations.

A common mistaken belief is that everyone in this type of matrix organizational structure reports to two bosses. In reality, only managers at one level in the organization (typically country-specific product managers) report to two bosses. For example, though the manager responsible for power products in North America reports to both the worldwide head of the product group and to the head of North American operations, employees below that country product leader report to only a manager in North America.

matrix structure An organizational structure that overlays two structures (such as a geographic divisional and a product structure) to leverage the benefits of both.

Note: This diagram is for illustrative purposes only. ABB’s structure has eight regional groups rather than the five shown here. It also has four non-matrixed functional groups reporting directly to the CEO. Also, this diagram assumes ABB has a pure matrix structure, where both product and regional chiefs have equal power, whereas either the regional or product groups might have more direct line authority.

North America

Product Groups

Regional Groups

South America

Europe Middle East, Africa/India

Asia Pacific

Power Products

Process Automation

Low Voltage Products

Power Systems

Discrete Automation and Motion

Product leader in that region

EXHIBIT 13.6 Matrix Organizational Structure Similar to ABB Group

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386 Part Four Organizational Processes

The geographic-product matrix structure is likely the most common matrix design among global companies. For instance, Nestlé, Procter & Gamble, and Shell have variations of this matrix structure, because these firms recognize that regional groups and products/ services groups are equally important. Other variations of matrix structures also exist in global businesses, however. Macquarie Group overlays client groups (e.g., securities, invest- ment funds, and currencies/commodities) with four functional groups (risk management, legal/governance, financial management, and corporate operations).58

Global organizations tend to have complex designs that combine different types of struc- tures, so a “pure” matrix design is relatively uncommon. A pure matrix gives equal power to leaders of both groups (regions and products, for example), but some companies give more power to one set of groups while the other set of groups has “dotted line” or advisory author- ity. So, although ABB’s head of power products has two bosses, one of them might have more final say or line authority than the other. Some companies also deviate from the pure matrix structure by applying it only to some regions. One such example is Cummins Inc., which is mainly organized around product divisions but has a matrix structure in China, India, and Russia. These markets are large, with high potential, and are potentially less visi- ble to headquarters, so the country leaders are given as much authority as the product lead- ers within those regions. “I think in China there’s still enough lack of transparency, there’s still enough uniqueness to the market that having some kind of coordination across business units gets the greatest synergies,” explains Michael Barbalas, China president of Goodrich Corporation.59

So far, we have described matrix structures for global or otherwise large and complex organizations. Another type of matrix structure overlays functional units with project teams and exists in small or large companies.60 Bioware adopted this project-functional matrix structure soon after the Canadian electronic games company was born a decade ago. Most Bioware employees have two managers. One manager leads the specific project where employees are assigned, such as Star Wars, Baldur’s Gate, and Dragon Age; the other man- ager is head of the employee’s functional specialization, such as art, programming, audio, quality assurance, and design.61 Employees are assigned permanently to their functional unit but physically work with the temporary project team. When the project nears com- pletion, the functional boss reassigns employees in his or her functional specialization to another project.

Evaluating the Matrix Structure The functional–project matrix structure usually makes very good use of resources and expertise, making it ideal for project-based organi- zations with fluctuating workloads. When properly managed, it improves communication efficiency, project flexibility, and innovation, compared with purely functional or divi- sional designs. It focuses employees on serving clients or creating products yet keeps peo- ple organized around their specialization, so knowledge sharing improves and resources are used more efficiently. Matrix structures for global organizations (e.g., geographic– product structure) are also a logical choice when, as in the case of ABB Group, two differ- ent dimensions (regions and products) are equally important. Structures determine executive power and what should receive priority; the matrix structure works best when the business environment is complex and two different dimensions deserve equal atten- tion and integration. Executives who have worked in a global matrix also say they have more freedom, likely because their two bosses are more advisory and less command and control focused.62

In spite of these advantages, the matrix structure has several well-known problems.63 One concern is that it increases conflict among managers who equally share power. Employees working at the matrix level have two bosses and, consequently, two sets of priorities that aren’t always aligned. Project leaders might squabble with functional leaders regarding the assignment of specific employees to projects as well as regarding the employee’s technical competence. However, successful companies manage this conflict by developing and pro- moting leaders who can work effectively in matrix structures. “Of course there’s potential for

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Chapter Thirteen Designing Organizational Structures 387

Hana Financial Group reorganized around a matrix structure that overlaps its client businesses (retail banking, brokerage, insurance) with product groups (money management, investments, bonds). The Korean bank says the new structure has noticeably improved collaboration across businesses and produced better financial results. However, Korea’s financial supervisory service (FSS) claims Hana’s matrix structure is also partly responsible for widespread embezzlement of gift certificates for tourists at about 60 bank branches. “In a matrix structure, marketing, performance reviews, and the power to make decisions on personnel lies with the head of the business unit, while internal control and risk management are the responsibility of the affiliated company’s CEO,” explains a high-ranking FSS official. “This can lead to a blind spot in management.”65

friction,” says Chandrasekhar Sripada, human resources head at IBM India. “In fact, one of the prerequisites to attaining a leadership position at IBM is the ability to function in a matrix structure.”64

Ambiguous accountability is another challenge with matrix structures. In a functional or divisional structure, one manager is responsible for everything, even the most unexpected issues. But in a matrix structure, the unusual problems don’t get resolved because neither manager takes ownership of them.66 Due to this ambiguous accountability, matrix structures have been blamed for corporate ethical misconduct, such as embezzlement at Hana Finan- cial Group in Korea and massive bribes at Siemens AG in Germany. Oracle president Mark Hurd warned of this problem a few years ago when he was CEO of Hewlett-Packard: “The more accountable I can make you, the easier it is for you to show you’re a great performer,” says Hurd. “The more I use a matrix, the easier I make it to blame someone else.”67 The combination of dysfunctional conflict and ambiguous accountability in matrix structures also explains why some employees experience more stress and some managers are less satis- fied with their work arrangements.

NETWORK STRUCTURE BMW AG and Daimler AG aren’t eager to let you know this, but some of their vehicles, designed and constructed with Germanic precision, are neither designed nor constructed by them or in Germany. Much of BMW’s X3, for example, was designed by Magna Steyr in Austria. Magna also manufactured the vehicle in Austria, until BMW transferred this work to its manufacturing plant in the United States. The contract manufacturer also builds Daimler’s off-road G-class Mercedes. Both BMW and Daimler Benz are hub organizations that own and market their respective brands, whereas Magna and other suppliers are spokes around the hub that provide production, engineering, and other services that get the auto firms’ luxury products to customers.68

BMW, Daimler, and many other organizations are moving toward a network structure as they design and build a product or serve a client through an alliance of several organiza- tions.69 As Exhibit 13.7 illustrates, this collaborative structure typically consists of several satellite organizations bee-hived around a hub or core firm. The core firm orchestrates the network process and provides one or two other core competencies, such as marketing or

network structure An alliance of several organizations for the purpose of creating a product or serving a client.

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388 Part Four Organizational Processes

product development. In our example, BMW or Mercedes is the hub that provides market- ing and management, whereas other firms perform many other functions. The core firm might be the main contact with customers, but most of the product or service delivery and support activities are farmed out to satellite organizations located anywhere in the world. Extranets (web-based networks with partners) and other technologies ensure that informa- tion flows easily and openly between the core firm and its array of satellites.70

One of the main forces pushing toward a network structure is the recognition that an organization has only a few core competencies. A core competency is a knowledge base that resides throughout the organization and provides a strategic advantage. As companies dis- cover their core competency, they outsource noncritical tasks to other organizations that have a core competency at performing those tasks. For instance, BMW decided long ago that facilities management is not one of its core competencies, so it outsourced this function from its British engine plant to Dalkia, which specializes in facility maintenance and energy management.71

Companies are also more likely to form network structures when technology is changing quickly and production processes are complex or varied.72 Many firms cannot keep up with the hyperfast changes in information technology, so they have outsourced their entire infor- mation system departments to IBM, HP Enterprise Business, and other firms that specialize in information system services. Similarly, many high-technology firms form networks with Flextronics, Celestica, and other electronic equipment manufacturers that have expertise in diverse production processes.

Evaluating the Network Structure Organizational behavior theorists have long argued that organizational leaders must develop a metaphor of organizations as plasma-like organisms rather than rigid machines.73 Network structures come close to the organism metaphor because they offer the flexibility to realign their structure with changing environ- mental requirements. If customers demand a new product or service, the core firm forms new alliances with other firms offering the appropriate resources. For example, by working with Magna International, BMW was probably able to develop and launch the X3 vehicle

Marketing partner (USA)


Assembly partner


Call center partner (India)

Accounting partner (USA)

Product development

partner (France)

Package design partner



A Network Organizational Structure

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Chapter Thirteen Designing Organizational Structures 389

much sooner than would have been the case if it had performed these tasks on its own. When BMW needs a different type of manufacturing, it isn’t saddled with nonessential fa- cilities and resources. Network structures also offer efficiencies because the core firm be- comes globally competitive as it shops worldwide for subcontractors with the best people and the best technology at the best price. Indeed, the pressures of global competition have made network structures more vital, and computer-based information technology has made them possible.74

A potential disadvantage of network structures is that they expose the core firm to market forces. Other companies may bid up the price for subcontractors, whereas the short-term cost would be lower if the company hired its own employees to perform the same function. An- other problem is that although information technology makes worldwide communication much easier, it will never replace the degree of control organizations have when manufactur- ing, marketing, and other functions are in-house. The core firm can use arm’s-length incentives and contract provisions to maintain the subcontractor’s quality, but these actions are relatively crude compared with maintaining the quality of work performed by in-house employees.

Contingencies of Organizational Design Most organizational behavior theories and concepts have contingencies: Ideas that work well in one situation might not work as well in another situation. This contingency approach is certainly relevant when choosing the most appropriate organizational structure.75 In this section, we introduce four contingencies of organizational design: external environment, size, technology, and strategy.

EXTERNAL ENVIRONMENT The best structure for an organization depends on its external environment. The external environment includes anything outside the organization, including most stakeholders (e.g., clients, suppliers, government), resources (e.g., raw materials, human resources, informa- tion, finances), and competitors. Four characteristics of external environments influence the type of organizational structure best suited to a particular situation: dynamism, complexity, diversity, and hostility.76

Dynamic versus Stable Environments Dynamic environments have a high rate of change, leading to novel situations and a lack of identifiable patterns. Organic struc- tures in which employees are experienced and coordinate well in teams are better suited to dynamic environments, so the organization can adapt more quickly to changes.77 In con- trast, stable environments are characterized by regular cycles of activity and steady changes in supply and demand for inputs and outputs. Events are more predictable, enabling the firm to apply rules and procedures. Mechanistic structures are more efficient when the environment is predictable, so they tend to be more profitable than organic structures in these conditions.

Complex versus Simple Environments Complex environments have many elements, whereas simple environments have few things to monitor. As an example, a major university library operates in a more complex environment than a small-town public library.

Visit for activities and test questions to help you learn about the contingencies of organizational structure.

LO 13-4

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390 Part Four Organizational Processes

For more than four decades, Nucor Corporation proudly maintained a lean, flat organizational structure with only four management layers: supervisors, functional managers, plant managers, and CEO. The CEO could directly manage more than two dozen plant managers because they operated as independent businesses. Today, Nucor is America’s largest steelmaker, employing 20,000 people at more than four dozen facilities worldwide. Managing so many direct reports would overwhelm most executives, so Nucor then-CEO (now chairman) Dan DiMicco reluctantly added five executive vice presidents, creating another layer of management. “I needed to be free to make decisions on trade battles,” says DiMicco apologetically.81

The university library’s clients require several types of services—book borrowing, online full-text databases, research centers, course reserve collections, and so on. A small-town pub- lic library has fewer of these demands placed on it. The more complex the environment, the more decentralized the organization should become. Decentralization is a logical choice for complex environments, because decisions are pushed down to people and subunits with the necessary information to make informed choices.

Diverse versus Integrated Environments Organizations located in diverse en- vironments have a greater variety of products or services, clients, and regions. In contrast, an integrated environment has only one client, product, and geographic area. The more diver- sified the environment, the more the firm needs to use a divisional structure aligned with that diversity. If it sells a single product around the world, a geographic divisional structure would align best with the firm’s geographic diversity, for example.

Hostile versus Munificent Environments Firms located in a hostile environ- ment face resource scarcity and more competition in the marketplace. Hostile environ- ments are typically dynamic, because they reduce the predictability of access to resources and demand for outputs. Organic structures tend to be best in hostile environments. However, when the environment is extremely hostile—such as a severe shortage of sup- plies or lower market share—organizations tend to temporarily centralize so that deci- sions can be made more quickly and executives feel more comfortable being in control.78 Ironically, centralization may result in lower-quality decisions during organizational crises, because top management has less information, particularly when the environment is complex.

ORGANIZATIONAL SIZE Larger organizations adopt different structures than do smaller organizations, for good rea- son.79 As the number of employees increases, job specialization increases, due to the greater division of labor. The greater division of labor requires more elaborate coordinating mecha- nisms. Thus, larger firms make greater use of standardization (particularly work processes and outcomes) to coordinate work activities. These coordinating mechanisms create an ad- ministrative hierarchy and greater formalization. Historically, larger organizations make less use of informal communication as a coordinating mechanism. However, emerging informa- tion technologies and an increased emphasis on empowerment have caused informal com- munication to regain its importance in large firms.80

Larger organizations also tend to be more decentralized. Executives have neither suffi- cient time nor expertise to process all the decisions that significantly influence the business as it grows. Therefore, decision-making authority is pushed down to lower levels, where employees can make decisions about issues within their narrower range of responsibility.

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Chapter Thirteen Designing Organizational Structures 391

13-1 Describe three types of coordination in organiza- tional structures.

Organizational structure is the division of labor, as well as the patterns of coordination, communication, workflow, and formal power, that direct organizational activities. All organizational structures divide labor into distinct tasks and coordinate that labor to accomplish common goals. The primary means of coordination are informal communication, formal hierarchy, and standardization.

13-2 Discuss the role and effects of span of control, central- ization, and formalization, and relate these elements to organic and mechanistic organizational structures.

The four basic elements of organizational structure are span of control, centralization, formalization, and departmentalization. The optimal span of control—the number of people directly reporting to the next level in the hierarchy—depends on what coordinating mechanisms are present other than formal hierarchy, whether employees perform routine tasks, and how

chapter summary

TECHNOLOGY Technology is another factor to consider when designing the best organizational structure for the situation.82 Technology refers to the mechanisms or processes an organization relies on to make its products or services. In other words, technology isn’t just the equipment used to make something; it also includes how the production process is physically arranged and how the production work is divided among employees. One technological contingency is vari- ability—the number of exceptions to standard procedure that tend to occur. In work pro- cesses with low variability, jobs are routine and follow standard operating procedures. Another contingency is analyzability—the predictability or difficulty of the required work. The less analyzable the work, the more it requires experts with sufficient discretion to ad- dress the work challenges (see Chapter 6).

An organic, rather than a mechanistic, structure should be introduced when employees perform tasks with high variability and low analyzability, such as in a research setting. Em- ployees in these settings face unique situations with little opportunity for repetition. In contrast, a mechanistic structure is preferred where the technology has low variability and high analyzability, such as an assembly line. The work is routine and highly predictable, an ideal situation for a mechanistic structure to operate efficiently.

ORGANIZATIONAL STRATEGY Organizational strategy refers to the way the organization positions itself in its setting in relation to its stakeholders, given the organization’s resources, capabilities, and mission.83 In other words, strategy represents the decisions and actions applied to achieve the organiza- tion’s goals. Although size, technology, and environment influence the optimal organiza- tional structure, these contingencies do not necessarily determine structure. Instead, corporate leaders formulate and implement strategies that shape both the characteristics of these contingencies and the organization’s resulting structure.

This concept is summed up with the simple phrase, “structure follows strategy.”84 Orga- nizational leaders decide how large to grow and which technologies to use. They take steps to define and manipulate their environments, rather than let the organization’s fate be en- tirely determined by external influences. Furthermore, organizational structures don’t evolve as a natural response to environmental conditions; they result from conscious human deci- sions. Thus, organizational strategy influences both the contingencies of structure and the structure itself.

If a company’s strategy is to compete through innovation, a more organic structure would be preferred, because it is easier for employees to share knowledge and be creative. If a com- pany chooses a low-cost strategy, a mechanistic structure is preferred, because it maximizes production and service efficiency.85 Overall, it is now apparent that organizational structure is influenced by size, technology, and environment, but the organization’s strategy may re- shape these elements and loosen their connection to organizational structure.

organizational strategy The way the organization positions itself in its setting in relation to its stakeholders, given the organization’s resources, capabilities, and mission.

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critical thinking questions 1. Valve Corporation’s organizational structure was described

at the beginning of this chapter. What coordinating mecha- nism is likely most common in this organization? Describe the extent and form in which the other two types of coordi- nation might be apparent at Valve.

2. Think about the business school or other organizational unit whose classes you are currently attending. What is the dominant coordinating mechanism used to guide or control the instructor? Why is this coordinating mechanism used the most here?

3. Administrative theorists concluded many decades ago that the most effective organizations have a narrow span of con- trol. Yet today’s top-performing manufacturing firms have a wide span of control. Why is this possible? Under what

circumstances, if any, should manufacturing firms have a narrow span of control?

4. Leaders of large organizations struggle to identify the best level and types of centralization and decentralization. What should companies consider when determining the degree of decentralization?

5. Diversified Technologies, Inc. (DTI), makes four types of products, each type to be sold to different types of clients. For example, one product is sold exclusively to automobile repair shops, whereas another is used mainly in hospitals. Expectations within each client group are surprisingly simi- lar throughout the world. The company has separate mar- keting, product design, and manufacturing facilities in Asia, North America, Europe, and South America because, until

centralization, p. 377 divisional structure, p. 381 formalization, p. 377 functional structure, p. 380 globally integrated enterprise, p. 383

matrix structure, p. 385 mechanistic structure, p. 378 network structure, p. 387 organic structure, p. 378 organizational strategy, p. 391

organizational structure, p. 370 span of control, p. 374 team-based organizational structure, p. 384

key terms

much interdependence there is among employees within the department. Centralization occurs when formal decision authority is held by a small group of people, typically senior executives. Many companies decentralize as they become larger and more com- plex, but some sections of the company may remain centralized while other sections decentralize. Formalization is the degree to which organizations standardize behavior through rules, proce- dures, formal training, and related mechanisms. Companies be- come more formalized as they get older and larger. Formalization tends to reduce organizational flexibility, organizational learn- ing, creativity, and job satisfaction. Span of control, centralization, and formalization cluster into mechanistic and organic structures. Mechanistic structures are characterized by a narrow span of control and a high degree of formalization and centralization. Companies with an organic structure have the opposite characteristics.

13-3 Identify and evaluate six types of departmentalization. Departmentalization specifies how employees and their activi- ties are grouped together. It establishes the chain of command, focuses people around common mental models, and encourages coordination through informal communication among people and subunits. A simple structure employs few people, has mini- mal hierarchy, and typically offers one distinct product or ser- vice. A functional structure organizes employees around specific knowledge or other resources. This structure fosters greater spe- cialization and improves direct supervision, but it weakens the focus on serving clients or developing products.

A divisional structure groups employees around geographic areas, clients, or outputs. This structure accommodates growth and focuses employee attention on products or customers rather than tasks. However, this structure also duplicates resources and creates silos of knowledge. Team-based structures are very flat, with low formalization, and organize self-directed teams around work processes rather than functional specialties. The matrix structure combines two structures to leverage the benefits of both types. However, this approach requires more coordination than functional or pure divisional structures, may dilute ac- countability, and increases conflict. A network structure is an alliance of several organizations for the purpose of creating a product or serving a client.

13-4 Explain the relevance of the external environment, organizational size, technology, and strategy for de- signing an organizational structure.

The best organizational structure depends on whether the en- vironment is dynamic or stable, complex or simple, diverse or integrated, and hostile or munificent. Another contingency is the organization’s size. Larger organizations need to become more decentralized and more formalized. The work unit’s technology—including variability of work and analyzability of problems—influences whether it should adopt an organic or mechanistic structure. These contingencies influence but do not necessarily determine structure. Instead, corporate leaders formulate and implement strategies that shape both the characteristics of these contingencies and the organization’s resulting structure.

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CASE STUDY: MERRITT’S BAKERY In 1979, Larry and Bobbie Merritt bought The Cake Box, a small business located in a tiny 450-foot store in Tulsa, Oklahoma. The couple were the only employees. “I would make cakes and Bobbie would come in and decorate them,” Larry recalls. Bobbie Merritt was already skilled in decorating cakes, whereas baking was a new occupation for Larry Merritt, who previously worked as a discount store manager. So, Larry spent hours pouring over baking books in the local library and testing recipes through trial-and-error experimentation. “I threw away a lot of ingredients that first year,” he recalls. Sales were initially slow. Then, a doughnut shop around the corner was put up for sale, and its owner made it possible for the Merritts to buy that business. They moved to the larger location and changed the company’s name to Merritt’s Bakery to reflect the broader variety of products sold. The Merritts hired their first two employees, who performed front-of-store sales and service. Over the next decade, Merritt’s Bakery’s physical space doubled and its revenues increased 13-fold. The company employed 20 people by the time it made its next move. In 1993, Merritt’s Bakery moved to a 6,000-foot location across the street. The business became so popular that cus- tomers were lining up down the street to buy its fresh-baked goods. “That looks like success to a lot of people, but that was failure,” says Bobbie Merritt. The problem was that the couple didn’t want to delegate production to employees, but they couldn’t produce their baked goods or decorate their carefully crafted cakes fast enough to keep up with demand. “We felt like failures because we had to work those 20 hours (per day),” she reflects. At some point, the Merritts realized that they had to be- come business owners and managers rather than bakers. They devised a plan to grow the business and drew up an organiza- tional structure that formalized roles and responsibilities. When a second Merritt’s Bakery store opened across town in 2001, each store was assigned a manager, a person in charge of baking production, another in charge of cake decorating and pastries, and someone responsible for sales. A third store opened a few years later. Larry worked on maintaining quality by training bakery staff at each store. “Because it is so difficult to find qualified bakers nowadays, I want to spend more time teaching and developing our products,” he said at the time.

Christian Merritt, one of Larry and Bobbie’s sons, joined the business in 2000 and now runs the business. An engineer by training with experience in the telecommunications in- dustry, Christian soon developed flow charts that describe precise procedures for most work activities, ranging from simple store-front tasks (cashiering) to unusual events such as a power outage. These documents standardized work ac- tivities to maintain quality with less reliance on direct super- vision. Christian also introduced computer systems to pool information across stores about how much inventory exists, which products are selling quickly, and how much demand exists for Merritt’s famous custom cakes. The information improved decision making about production, staffing, and purchasing without having to directly contact or manage each store as closely. In late 2007, Merritt’s Bakery opened a dedicated pro- duction center near the original store and moved all produc- tion staff into the building, affectionately called “the Fort.” The centralized production facility reduced costs by remov- ing duplication of staff and equipment, provided more con- sistent quality, and allowed the stores to have more front store space for customers. Merritt’s Bakery also refined its training programs, from the initial orientation session to a series for modules on spe- cific skills. For example, front-of-store staff complete a series of clinics that add up to 20 hours of training. The company also introduced special selection processes so people with the right personality and skills are hired into these jobs. Employ- ees at Merritt’s production facility receive decorator training through a graduated program over a longer time. One or two managers at the production site closely coach up to five new hires. Today, Merritt’s Bakery employs more than 80 people, in- cluding production managers, store managers, and a market- ing director. Two-thirds of the business is in the creation of cakes for birthdays, weddings, and other events, but the com- pany also has three busy and popular stores across Tulsa. “We’re just now getting the pieces in place to start to treat Merritt’s Bakery like a business, with a lot of parts that we manage from a distance,” says Christian Merritt. “We’re pres- ent but detached; we have our hands in a lot of things, but it’s in managing stores instead of operating them.”

recently, each jurisdiction had unique regulations governing the production and sales of these products. However, several governments have begun the process of deregulating the products that DTI designs and manufactures, and trade agreements have opened several markets to foreign-made products. Which form of departmentalization might be best for DTI if deregulation and trade agreements occur?

6. Mechanistic and organic structures are two organizational forms. How do the three types of coordination mechanisms operate through these forms?

7. From an employee perspective, what are the advantages and disadvantages of working in a matrix structure?

8. Suppose you have been hired as a consultant to diagnose the environmental characteristics of your college or university. How would you describe the school’s external environment? Is the school’s existing structure appropriate for this environment?

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WHAT ORGANIZATIONAL STRUCTURE DO YOU PREFER? PURPOSE This exercise is designed to help you under- stand how an organization’s structure influences the personal needs and values of people working in that structure.

INSTRUCTIONS Personal values influence how com- fortable you are working in different organizational struc- tures. You might prefer an organization with clearly defined rules or no rules at all. You might prefer a firm where almost any employee can make important decisions or one where

important decisions are screened by senior executives. Read each statement on the next page and indicate the extent to which you would like to work in an organization with that characteristic. When finished, use the scoring key in Appen- dix B at the end of the book to calculate your results. This self- assessment should be completed alone so that you can assess yourself honestly without concerns of social comparison. Class discussion will focus on the elements of organizational design and their relationship to personal needs and values.

TEAM EXERCISE: THE CLUB ED EXERCISE Cheryl Harvey and Kim Morouney, Wilfred Laurier University

PURPOSE This exercise is designed to help you under- stand the issues to consider when designing organizations at various stages of growth.

MATERIALS Each student team should have enough overhead transparencies or flip chart sheets to display several organizational charts.

INSTRUCTIONS Each team discusses the scenario. The first scenario is presented in the following text. The instruc- tor will facilitate discussion and notify teams when to begin the next step. The exercise and debriefing require approxi- mately 90 minutes, though using fewer scenarios can reduce the time somewhat.

Step 1: Students are placed in teams (typically four or five people).

Step 2: After reading Scenario #1, each team will design an organizational chart (departmentalization) that is most appropriate for this situation. Students should be able to describe the type of structure drawn and explain why it is appropriate. The structure should be drawn on an overhead transparency or flip chart for others to see during later class discussion. The instructor will set a fixed time (e.g., 15 min- utes) to complete this task.

Scenario #1 Determined never to shovel snow again, you are establishing a new resort business on a small Caribbean island. The resort is under construction and is scheduled to open one year from now. You decide it is time to draw up an organizational chart for this new venture, called Club Ed.

Step 3: At the end of the time allowed, the instructor will present Scenario #2 and each team will be asked to draw an- other organizational chart to suit that situation. Again, stu- dents should be able to describe the type of structure drawn and explain why it is appropriate.

Step 4: At the end of the time allowed, the instructor will present Scenario #3, and each team will be asked to draw another organizational chart to suit that situation.

Step 5: Depending on the time available, the instructor might present a fourth scenario. The class will gather to pres- ent their designs for each scenario. During each presentation, teams should describe the type of structure drawn and ex- plain why it is appropriate.

Source: Adapted from C. Harvey and K. Morouney, Journal of Management Education 22 ( June 1998), pp. 425–429. Used with permission of the authors.

Discussion Questions 1. How have the division and coordination of labor evolved

at Merritt’s Bakery from its beginnings to today? 2. Describe how span of control, centralization, and formal-

ization have changed at Merritt’s Bakery over the years. Is the company’s organizational structure today more mech- anistic or organic? Are these three organizational struc- ture elements well-suited to the company in their current form? Why or why not?

3. What form of departmentalization currently exists at Merritt’s Bakery? Would you recommend this form of departmentalization to this company? Why or why not?

Sources: S. Cherry, “Not Without Its Merritt’s,” Tulsa World, 13 April 2001, 19; D. Blossom, “Bakery Has Recipe for Success,” Tulsa World, 28 October 2002, A7; M. Reynolds, “A Difficult Choice Pays Off for Merritt’s Bakery,” Modern Baking, March 2010, 39; “Flour Power,” Tulsa People, May 2011. Information also was collected from the company’s website, http://www.

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mycsu portal

Unit VIII Case Study

To read the case study below, you must first log into the myCSU Student Portal and access the Business Source Complete database found in the CSU Online Library.

Bodolica, V., & Waxi, M. (2007). Chicago food and beverage company: The challenges of managing international assignments. Journal of the International Academy for Case Studies, 13(3), 31-42.

Please answer the following questions after reading the case study:

1. Which staffing framework do you recognize in this case study? Explain its characteristics and the advantages to using this type of framework?

2. Would this type of staffing framework affect Paul’s ability to get things done? Why, or why not?

3. Explain if any of the other staffing frameworks would be any better? What can you recommend to the company’s

headquarters in this sense?

4. Why does Paul want this job? Is Paul a good candidate for this expatriate position?

5. What comments can you make on expatriate management in general? And what comments can you make on the

expatriate recruitment policy in particular?

6. What are the different expatriate compensation methods you recognized in the text? What are the advantages and disadvantages of these different expatriate compensation methods?

7. What do you suggest to the U.S. headquarters’ human resources manager in order to improve the expatriate satisfaction/compensation?

Your submission should be a minimum of three pages in length in APA style; however, a title page, a running head, and an abstract are not required. Be sure to cite and reference all quoted or paraphrased material appropriately in APA style.

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intra-action: women artists from the harn collection

Final research project: Art + diversity in your community:  Please note that you are *not* obligated to visit the the Harn Museum in order to complete this project. Everything you will need is available online. For remote students and students who live off campus, consider Gainesville your ‘virtual’ community as you interact with your fellow Gainesville students every week in this course.

As a final project, students will be required to produce a 5-image (minimum), 2000-word (minimum) research project highlighting diversity in the student’s art ‘community’ (UF community)–specifically, a collection or exhibition of non-Western art in the Harn Museum UF. These can include works from one collection (Asia, Africa, etc.) or works from multiple non-Western collections or exhibitions (current, future or past) in the Harn. If you chose works from multiple collections, be sure to tie them together thematically in relation to diversity in Gainesville. In keeping with our diversity theme, you are also welcome to choose American women artists of color–the Harn has had several exhibitions devoted to women of color, including Mirror, Mirror…Portraits of Frida Kahlo and Intra-Action: Women Artists from the Harn Collection (Links to an external site.)Links to an external site. (Links to an external site.)Links to an external site.. Your 5 principle images must come from Harn collections. Your art objects may be selected from past or current Harn exhibitions. You may include additional images (beyond your main 5) outside Harn collections for comparison and contrast. Please note that some exhibits have more published information at the Harn website than others. This is a research project, so you’re expected, as necessary, to research your chosen works by accessing other sources other than the Harn website. For those students on campus, you are strongly encourage to visit the Harn and take full advantage of the resources available at the Harn’s Bishop Study Center. 

*Important:  Your paper should include footnotes, endnotes or in-text (parenthetical) citations + a bibliography. Any information/ideas/concepts borrowed from or inspired by any source (website, article, book) must be cited with a footnote, endnote or in-text citation.

*Please note that this project was designed with remote, off-campus students in mind. As a Gainesville student, you are a member of the Gainesville community–even if digitally. You commune weekly with fellow Gainesville students in the discussion boards for this class. All Harn collections are available at their website. Gainesville/UF demographics can be easily researched on the web. Librarians at the Harn Bishop Study Center are available to assist students with research in their collections. Remote students can reach the Bishop via email and phone. See ‘Research Help’ link below or go to

*Beware of plagiarism! Any information, words or ideas (quoted or paraphrased) taken from any source need to be properly cited. Use footnotes, endnotes or in-text citations. Your paper will also include a bibliography. Use ‘Citation Guide’ link below for one of multiple accepted footnote/endnote and bibliography styles. 

  • Art has the power to influence. Art reflects the cultural concerns of the community that sponsors it. With this in mind, investigate how the Harn’s non-Western art collection(s) impact/influence/reflect (or doesn’t impact/influence/reflect) diversity in Gainesville. This is a research paper and your information should be properly researched and documented. Consult Harn resources provided below for information about its collections.
  • You may use your own photographs or photos provided at the Harn website or online. All images should be properly labelled. Your paper should be uploaded as a single Word doc with properly labelled, embedded images. You should include a bibliography or reference page at the end of your paper that includes all your sources. You may research works from different collections, or the works from one collection.
  • This is a coherent research paper, NOT an exhibition catalogue. I DO NOT WANT IMAGES WITH INDIVIDUAL DESCRIPTIONS, LIKE A CATALOGUE. Instead, construct a research paper, with an introduction, body and conclusion. Your paper should include a bibliography or references page. Your paper should include a thesis statement or key theme/argument. Your images should support your argument and serve as the focus of your narrative. 
  • See sample papers, below. These serve merely as sample guidelines per my *minimum* expectations for an ‘A’ grade for this project. These papers were kindly provided with the author’s permission. The formats shown in either sample paper is preferred, but not required. You may use whatever format or style guide you prefer, so long as your paper is consistent in its format. You are *not* obligated to include section titles, as shown in the sample papers. You should, however, include some form of introduction, body and conclusion. 
  • For this project, students will be expected to identify a culturally diverse art collection in the Harn, and analyze ways in which this art reflects the artist’s or group’s cultural heritage. Students should contrast this heritage with their own experience. Students should discuss the ways in which the art collection contributes to/engages diversity and cultural awareness of groups in their own community/digital community of UF Gainesville.
  • Papers should reflect material discussed and learned in class, especially topics covered in the diversity discussion boards.
  • When discussing diversity in Gainesville, do not generalize. Research actual relevant ethnic/racial/gender statistics and demographics, readily available online. 
  • The collection you write about should be properly researched. Resources for research of museum collections are available to students at the Harn. Researched or quoted material should be properly cited. Any citation style is acceptable, such as MLA or Chicago. See citation guide, below, for Chicago.
  • Images should be properly labelled with artist, title and date. Photo source or credits not required.
  • Be sure to have a look at the rubric criteria, below, for which you will be assessed. Once your paper has been graded, be sure to read the comments/feedback embedded in the rubric, and/or provided in the comment bubble below your grade.
  • Students should be prepared to identify, communicate and analyze the following outcomes for content, communication and critical thinking: (1) identify, describe and explain values, attitudes and norms, as reflected in the visual culture of the group(s) under question; (2) analyze and discuss the ways in which social roles and status affect these different groups, their opportunities and constraints–as contrasted with the dominant white authority of the United States and the student’s own experience; (3) use appropriate art historical terms, concepts and approaches for analysis of artworks used as examples.









Diversity Project RubricDiversity Project RubricCriteriaRatingsPtsThis criterion is linked to a Learning OutcomeCOLLEGE LEVEL WRITING + ENGLISH2.0 ptsExcellent essay no mistakes grammar/punct/spelling1.8 ptsGreat essay; a few mistakes in gram/punct/spell1.6 ptsVery good essay; multiple mistakes in gram/punct/spell1.4 ptsGood/okay essay with multiple mistakes in gram/punct/spell1.0 ptsEssay needs major revision in gram/punct/spell2.0 pts
This criterion is linked to a Learning OutcomeINCLUDED AT LEAST FIVE RELEVANT IMAGES (.25 each)1.25 ptsFive images1.0 ptsFour images0.75 ptsThree images0.5 ptsTwo images0.25 ptsOne image0.0 ptsNo images1.25 pts
This criterion is linked to a Learning OutcomeFIVE PROPER IMAGE LABELS (.25 each)1.25 ptsFive labels1.0 ptsFour labels0.75 ptsThree labels0.5 ptsTwo labels0.25 ptsOne label0.0 ptsNo labels1.25 pts
This criterion is linked to a Learning OutcomeREQUIRED LENGTH (1) + LOGICAL/CONSISTENT FORM (.5)1.5 ptsRequired length/logical form1.0 ptsToo short and/or inconsistent form0.5 ptsVery short/no effort in form1.5 pts
This criterion is linked to a Learning OutcomeBIBLIOGRAPHY + PROPER USE OF CITATIONS1.0 ptsExcellent use of citations/Excellent bibliography0.8 ptsGood use of citations and bibliography with some mistakes0.5 ptsInconsistent use of citations and/or poorly formed bibliography0.0 ptsNo citations or sources1.0 pts
This criterion is linked to a Learning OutcomeCRITICALLY ENGAGED, DETAILED APPROACH TO THE MATERIAL2.0 ptsVery engaged/strong critical approach1.75 ptsEngaged with critical approach1.5 ptsSomewhat engaged with okay approach1.0 ptsNot very engaged but with okay approach0.75 ptsSort of engaged but not critical0.5 ptsNot engaged/not critical2.0 pts
This criterion is linked to a Learning OutcomeOVERALL QUALITY + EFFORT1.0 ptsExcellent quality and/or effort0.8 ptsVery good quality and/or effort0.6 ptsGood quality and/or effort0.4 ptsOkay quality and/or effort0.2 ptsMarginal quality and/or effort1.0 pts
This criterion is linked to a Learning OutcomeDiversity – Contentview longer descriptionthreshold: 1.0 pts1.0 ptsMastery. The student interprets and applies the terminology, concepts, methodologies and theories used within diverse texts.0.0 ptsNon-mastery. The student does not interpret and apply the terminology, concepts, methodologies and theories used within diverse texts.—  This criterion is linked to a Learning OutcomeDiversity – Critical Thiningview longer descriptionthreshold: 1.0 pts1.0 ptsMastery – The student considers the issues from multiple perspectives, logically analyzes evidence from credible, relevant sources, and develops reasoned conclusions.0.0 ptsNon-Mastery – The student does not consider the issues from multiple perspectives, does not logically analyze evidence from credible, relevant sources, or does not develop reasoned conclusions.—  This criterion is linked to a Learning OutcomeHumanities – Communicationview longer descriptionthreshold: 1.0 pts1.0 ptsMastery – The student expresses ideas in a convincing, organized, clear, coherent manner that is nearly error free and uses a style and language appropriate to the subject area.0.0 ptsNon-Mastery – The student does not express ideas in a convincing, organized, clear, coherent manner that is nearly error free, or uses a style or language that is not appropriate to the subject area.—  This criterion is linked to a Learning OutcomeHumanities – Contentview longer descriptionthreshold: 1.0 pts1.0 ptsMastery – The student interprets and applies the terminology, concepts, methodologies and theories used within the subject area.0.0 ptsNon-Mastery – The student does not interpret or apply the terminology, concepts, methodologies or theories used within the subject area.—  This criterion is linked to a Learning OutcomeHumanities – Critical Thinkingview longer descriptionthreshold: 1.0 pts1.0 ptsMastery – The student considers the issues from multiple perspectives, logically analyzes evidence from credible, relevant sources, and develops reasoned conclusions.0.0 ptsNon-Mastery – The student does not consider the issues from multiple perspectives, does not logically analyze evidence from credible, relevant sources, or does not develop reasoned conclusions.

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concept development practice page 33 2

Does anyone have the answers to concept development practice page 33-1 and 33-2?

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aarón se despierta a las siete, pero no se levanta hasta las siete y cuarto.

Select Select the item that does not belong. 1. mirror shampoo makeup shaving cream 2. bathing showering washing put 3. toilet shower sink slippers 4. alarm clock wake up soap wake up 5. then hands face hair Sort Order the events from 1 to 5. 1. 1 2 3 4 5 Aaron He wakes up at seven, but does not get up until seven-fifteen. 2. 1 2 3 4 5 She puts on her clothes and eats breakfast (breakfast). 3. 1 2 3 4 5 Go to the bathroom and shower; then shaves. 4. 1 2 3 4 5 Before dressing, brush your hair. 5. 1 2 3 4 5 He brushes his teeth, puts on his shoes and finally leaves for his classes Logical or illogical? Indicate whether each statement is logical or illogical. 1. After bathing, Alfredo needs an alarm clock. logical illogical 2.Valentina gets up, he dresses and finally he showers. Logical illogical 3. The girl washes her hair with shampoo. logical illogical 4.Before eating, the boys put their hands. Logical illogical 5. Mrs. Bustamante washes her face and then puts on makeup. logical illogical Analogies Complete the analogies. Follow the model Washbasin model: wash: shower: showering 1. getting up: lying down: waking up: 2. brushing your teeth: toothpaste :: washing your hands: 3.asleep: falling asleep :: waking up: 4. shaving cream: shaving: : clothing: 5. at night: in the morning :: after: Prayers Complete the sentences. 1.When it’s hot, my friends and I … 2.In the spring … 3.The buttons … 4.You go to the travel agency because … 5.If ​​it snows … 6. When I am on vacation, … Questions Answer the questions using complete sentences. 1. What is today’s date? 2. What station is it? You like? Why? 3. Do you prefer the beach or the countryside? Why? 4. Do you and your friends travel a lot? Where? How do you prefer to travel? At the hotel Write a conversation between a hotel receptionist and a guest arriving at the hotel. Include references to the weather and the date, the guest’s room and luggage, two nearby activities, and ways to get there.

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jerry falwell library database

UNIV 104 article evaluation Assignment

Doing research is not for the faint of heart. It takes careful thought and planning, diligence, and a detective’s mindset. Carefully review Chapter 8 in your textbook before starting this assignment.

Locate > evaluate > use

This assignment will guide you through the steps of locating a credible source for a topic for a pretend paper. You will find an article, evaluate the article, and demonstrate that you can properly cite your article. You MUST use the Jerry Falwell Library for your research.Also, be sure to watch the videos that are integrated throughout the assignment as they will provide you with valuable information. All yellow boxes must be addressed, and don’t forget to sign your name at the bottom of the assignment.

STEP 1: Preparing to Search

Topic Selection

Mark your topic selection with an “X”Time Management☐Learning PreferencesAdult Learning Theory☐Academic Integrity

Finding your Focus

It is important to define your topic by determining your focus and selecting keywords to help narrow your search. Otherwise, you will end up with millions of possible articles.

What specific aspect of this topic are you interested in researching?Ex.: The topic of academic integrity can be narrowed to avoiding plagiarism, integrity in the online classroom, or cheat sites.What are you hoping to find regarding your topic?
Determining Keywords – VIDEO TUTORIAL
List the three keywords or phrases that first come to mind to use as search terms.Hint: The general term/phrase listed above should be included as one of your five keywordsList the keywords or phrases, separated by commas.
List four other synonyms or different phrases that you might also use in your search.Consider using a thesaurus or finding keywords / phrases from the results of your initial searchesList synonyms or additional phrasing, again separated by commas.

STEP 2: Locating a Source

Now that you have focused your topic and determined your possible search terms, it is time to locate and evaluate an article for your pretend research paper. Don’t forget to use the Jerry Falwell Library.

Using the Library Databases – VIDEO TUTORIAL
Find a Database to use· If you are familiar with the databases, choose one that is specific to your topic.· If you are unfamiliar with the databases, try using a general one like Academic Search Complete or ProQuest CentralEnter name of database used here
Select one of your keywords and run a preliminary search.
How many sources did your initial search return?Enter the number of results here


Did you find thousands or millions of results? Even if your search only returned a couple thousand or a few hundred, that is too many to look through. You must work to narrow results to focus on the specific aspect of your topic. Your article must be relevant to your SPECIFIC topic; you don’t want just ANY article that mentions your broad topic.

Narrowing and Using Filters – VIDEO TUTORIAL
Each database offers various filters, usually on the left side of the screen. Adjust the date options to the last five years and check the box that returns full-text articles. Be sure to set your search parameters to look for peer-reviewed articles only, not e-books, newspapers, or videos.List all filters and parameters that you used in your search
Try out some Boolean Operators or Wildcards. Hint – find search tips here .Describe the tools that you used to limit your results
It is usually necessary to alter search terms. Try out a few different ones to see which is most efficient and relevant.List your most effective search terms here
Continue to repeat your search, adjusting your search terms, tools, and parameters until you get a manageable number of results.How many results did you have in your final, most narrowed search?Enter the number of results from your FINAL search
~ Choose one relevant, focused article to use in your pretend paper~
What is the title of your article?Article Name
What is the name of the journal in which your article was published?Publication Name
Paste the permalink for this article in the box. Use this tutorial if you are unsure how to locate or create the permalink: the permalink here.
How does this article relate to your specific topic? Provide details.Article’s relation to the overall topic

Step 3: Evaluating the Article

Evaluating Sources –VIDEO TUTORIAL


In what year was your article published?Enter Year hereIs this a current article?☐ Yes ☐ No
Why is it important that your source was published within the last 5 years?Importance regarding article’s publication date

Author’s Credibility

Who is/are the author(s)?Author(s)
How is/are the author(s) qualified to write this article? You may need to conduct a Google search to find out more about your author(s). Look at experience, education, etc.Author’s or authors’ qualifications

Peer Review

What is peer-review and why is it important?Define peer review and explain its importance
Is your article peer-reviewed?How do you know?Yes No Explain your response


Does the article include references to other publications? If so, how many?This information is often available on the article information page.☐ Yes ☐ NoEnter # hereIs this a scholarly article or a popular article?☐ Scholarly (journals, technical publication, etc.)☐ Popular (magazine, trade journal, etc.)
Is the language technical and full of jargon or more general in nature? Provide an example (direct quote).☐ Technical ☐ GeneralProvide a direct quote from the article proving its technical or general style


Do(es) the author(s) display any bias?☐ Yes ☐ NoExplain your response.
Do(es) the author(s) address alternative viewpoints?☐ Yes ☐ NoExplain your response.
Is the article objective or subjective?Explain your response.

Summative Evaluation

Based on the answers above, would this be considered a credible, scholarly source that could work for your pretend paper?Why or why not?☐ Yes☐ NoExplain why this article would or would not work for your pretend paper.

Using the Article

Avoiding plagiarism involves knowing how to properly cite any source information that is used inside your paper. Here is one of the best websites for APA formatting: Purdue OWL
In-Text Citation
Two things to know:1. A signal phrase is necessary to distinguish between the writer’s thoughts and those of a source (utilized for direct quote, summary, or paraphrase). APA signal phrases use author’s last name(s), the year of publication, and past-tense verbs that should fit the context of the paper. Examples include:A. As Smith (2004) concluded,B. Johnson and Wales (2011) also asserted thatC. According to Stevens (2014),2. APA requires that a page number be provided for all directly quoted material. It belongs in parenthesis after the quoted material but before the period. Examples include:A. (p. 171).B. (Smith, 2004, p. 171).SAMPLE APA in-text use with signal phrase, quotation and ending citation:Miars and Ford (2012) argued that “time management is one of the key foundations regarding student success” (p. 24).
Select a specific quotation from your selected article and show how you would integrate the quote into your paper using a signal phrase, proper punctuation, and APA in-text citation.Create a signal phrase, properly write a direct quote, and end with an ending citation.
Reference Entry
In addition to properly citing sources within the paper, you must also properly cite the source on the Reference Page so others can confirm your research. The reference entry contains publication information for the entire article as well as a DOI (digital object identifier), permalink or database name to identify the retrieval source.· SAMPLE APA reference citation with DOI:Sagarin, B. J., & Lawler-Sagarin, K. A. (2005). Critically evaluating competing theories: An exercise based on the Kitty Genovese murder. Teaching of Psychology, 32(3), 167–169. s15328023top3203_8· SAMPLE APA reference citation without DOI:Reitzes, D. C., & Mutran, E. J. (2004). The transition to retirement: Stages and factors that influence retirement adjustment. International Journal of Aging and Human Development, 59(1), 63-84. Retrieved from Academic Search Complete
Create an APA reference entry for your selected article.Note: Many databases have a “cite” function that will give you a good start to your entry, but be sure to double-check the details with proper APA formatting.Additional help regarding APA citations can be found using the links at Purdue OWL: the citation for this article using proper APA formatting

The above work was completed by the person whose name appears below: ☐ Yes ☐ No

Name: Enter Your Name Here. Date: Click or tap to enter a date.

Submit this assignment by 11:59 p.m. (ET) on Monday of Module/Week 5.

Page 1 of 6

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los señores suárez llegaron al restaurante a las ocho y (seguir) al camarero a una mesa.


Select the answer that best completes each sentence.

1.Paulino asks for the   (dish)  (menu)  to the waiter.

2. The dish of the day is   (salmon) (tuna).

3.Pillar orders   (milk) (water) mineral to drink.

4. Paul wants a soda   (orange) (lemon).

5.Paulino today prefers (chop) (salmon).

6. They say that the meat in that restaurant is very   (bad) (tasty).

7.Pilar eat salmon with   (mushrooms) (carrots).

Sort out

Assign the appropriate category to each word.

1.   (dinner) (lunch) (breakfast) rice with chicken

2.   (dinner) (lunch) (breakfast)  coffee with milk

3.    (dinner)  (lunch)   (breakfast) cereals

4.   (dinner) (lunch) (breakfast) asparagus

5.    (dinner) (lunch) (breakfast) eggs

6.    (dinner)   (lunch) (breakfast) refreshment

7.    (dinner) (lunch) (breakfast) ham  sandwich 

8.    (dinner) (lunch) (breakfast)  grapes

Select the item that does not belong






















 pork chop









Logical or illogical?

Indicate whether each statement is logical or illogical

1. I am thirsty; I’m going to drink a pepper juice.



2.Normally, sausages are meat, chicken or pork.



3. We eat the salad with butter.



4.Generally, the owner of a restaurant does not serve the dishes.



5. Lemon is a vegetable.



6. If you want to snack, you can eat a fruit.



To complete

Fill in the blanks with the correct form of the words from the list. Four words will not be used.

 Lobster beans chicken  menu 

try recommending  know  tasty / a

1.-And your friend Cristina, do you eat____________?

-No, she does not like seafood at all.

2.-I do not know this restaurant. Can you recommend a main course?

-Yes. You must _____________   the steak with onion. Is very________________ .

3.-Do you like soup?

-MMM yes. ____________________ a lot of garlic

Try it!

Complete the table with the correct form of the preterite.

Model me (serve)

I served 

Infinitive   I   you   Ud./él/ella   us / as   Uds./ellas 

get   – tu__________      nosotros_____________       ellas________________       

say goodbye   – she_____________   us_______________ them_________________      

sleep-I ________________   you___________________   she_____________________         

to fall asleep-      nostories _________________ them_________________________   

die-your ___________________ she__________________________         

ask – I_____________  your_____________ she____________   the las______________      


repeat-I ____________ you_______________ she_____________   them_________________  

follow-me _____________ she____________other_____________they_____________       

feel-she ___________________ them________________________      

server-your _____________________ nostors__________ them_____________________         

get dressed-she ________________ us_______________ellas__________________        

To complete

Complete these sentences to describe what happened last night at El Famoso restaurant.

1. Paula and Humberto Suárez arrived at El Famoso restaurant at eight o’clock and   (follow) the waiter to a table in the non-smoking section.

2. Mr. Suarez ______________   (ask) a pork chop.

3. Mrs. Suárez ______________   (prefer) try the shrimp.

4.To drink, both_____________   (ask for) red wine.

5.The waiter__________________   (repeat) the order (the order) to confirm it.

6.The meal took a long time (it took a long time) to arrive and Mr. Suárez _____________   (to fall asleep) waiting for the food.

7. At half past nine the waiter will _________________   (serve) the food.

8. After eating the chop, Mr. Suárez _________________   (feeling) very bad.

9. Poor Mr. Suarez … why not _______________ (order) the shrimp?


Complete the sentences with the preterite of a verb that ends (ends) in -ir.

Model Daniel and Carolina / serving / food

Daniel and Carolina served the food

6. we / follow / talking kitchen

7.Francisco / prefer / fish to meat

8. Children / fall asleep / in the restaurant

9. my parents / get / the best fruit on the market

10. you / do not ask / the specialty of the house


Complete the sentences with the preterite of a verb that ends (ends) in -ir.

Get  decide to  dress

1. Last night Pilar and Guillermo______________   dine in an elegant restaurant.

2.Guillermo _______________   with a very elegant gray suit and Pilar with a fashionable dress.

3.Guillermo ___________________   a taxi without any problem.

4. Unfortunately, the taxi driver ___________________ take the longest road to the restaurant.

asleep  asking  prefer to  follow

5.Tardaron so long (They took so long) to get that Pilar almost (almost) _______________   , and Guillermo thought: – Oh, I’m starving!

6. At the restaurant, Pilar and Guillermo____________________   the waiter at a table near the window.

7.Guillermo __________________   a steak and rice.

8.Pillar ________________   try the grilled salmon with french fries.

9. Also they____________________   some cocktails.

decide to  ask to  feel  server

10.The waiter told them_________________   cocktails and some hors d’oeuvres.

11.The food was late to arrive, and Guillermo_______________   order another cocktail.

12. After the second cocktail, Guillermo_________________   quite well.

13.Finally, two waiters arrived and told them   the food to Guillermo and Pilar.

14. Guillermo and Pilar ate everything and then ________________   a flan for dessert.

to decide to  say goodbye to  fall asleep to  die  ask

15. After the dessert, they____________ two glasses of Sherry wine.

16.Finally, they______________   go home.

17. The waiter________________   courteously of his clients.

18.Then Pilar_______________   really in the taxi.

19.When he got home, Guillermo woke her up by saying: Look at that___________   really this time!

20. And you do not________________   of hunger! Answered Pilar

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management could determine the amounts due from customers by examining which ledger account?

1.  Which of the following is not a step in the accounting process?





2.  Which of the following statements about users of accounting information is incorrect?

Regulatory authorities are internal users.

Present creditors are external users.

Management is an internal user.

Taxing authorities are external users.

3.  The first step in solving an ethical dilemma is to

identify and analyze the principal elements in the situation.

recognize an ethical situation and the ethical issues involved.

weigh the impact of each alternative on various stakeholders.

Identify the alternatives.

4.  The historical cost principle states that

assets should be initially recorded at cost and adjusted when the fair value changes. 

only transaction data capable of being expressed in terms of money be included in the accounting records. 

activities of an entity are to be kept separate and distinct from its owner. 

assets should be recorded at their cost.

5.  Which of the following statements about basic assumptions is correct?

The economic entity assumption states that there should be a particular unit of accountability. 

The monetary unit assumption enables accounting to measure employee morale. 

Partnerships are not economic entities. 

Basic assumptions are the same as accounting principles.

6.  Liabilities of a company would not include

accounts payable. 

accounts receivable. 

salaries and wages payable. 

notes payable.

7.  Performing services on account will

increase assets and decrease owner’s equity. 

increase assets and increase liabilities. 

increase liabilities and increase owner’s equity. 

increase assets and increase owner’s equity.

8.  All of the following descriptions about an account are true except

An account may be part of a manual or a computerized accounting system. 

An account is a source document. 

An account has a title. 

An account has a debit and credit side.

9.  When a company earns revenues, owner’s equity increases.



10.  The first step in the recording process is to

enter in a journal. 

prepare a trial balance. 

prepare the financial statements. 

analyze each transaction for its effect on the accounts.

11.  An entry that requires more than two accounts is a compound entry.



12.  Management could determine the amounts due from customers by examining which ledger account?


Accounts Payable 

Service Revenue 

Accounts Receivable

13.  Posting

is accomplished by examining ledger accounts and seeing which ones need updating. 

involves transferring all debits and credits on a journal page to the trial balance. 

accumulates the effects of journalized transactions in the individual accounts.

14.  A trial balance would only help in detecting which one of the following errors?

A transaction that is not journalized. 

Offsetting errors made in recording the transaction. 

A transposition error when transferring the debit side of the journal entry to the ledger. 

A journal entry that is posted twice.

15.  Which of the following time periods would not be referred to as an interim period?





16.  The revenue recognition principle dictates that revenue should be recognized in the accounting records

when services are performed. 

when cash is received. 

at the end of the month. 

in the period that income taxes are paid.

17.  An adjusting entry always affects

an expense account and a revenue account. 

an asset account and a revenue account. 

an asset account and a liability account. 

an income statement account and a balance sheet account.

18.  Accumulated Depreciation is an asset account.



19.  Clark Real Estate signed a four-month note payable in the amount of $8,000 on September 1. The note requires interest at an annual rate of 12%. The amount of interest to be accrued at the end of September is





20.  The adjusted trial balance is prepared

after the financial statements are prepared. 

after the balance sheet is prepared. 

after the adjusting entries are prepared and posted to the ledger. 

to prove no errors have been made during the accounting period.

21.  If a company initially records the purchase of supplies to the Supplies Expense account, the amount of the adjusting entry made at the end of an accounting period will be equal to

the supplies on hand at the end of the period. 

the supplies used during the period. 

the supplies purchased during the period. 

the supplies not paid for by the end of the period.

22.  Companies journalize the adjustments after they complete the worksheet but before preparing the financial statements.



23.  The Owner’s Drawings account is closed through the Income Summary account.



24.  The purpose of the post-closing trial balance is to

prove that no mistakes were made. 

prove the equality of the balance sheet account balances that are carried forward into the next accounting period. 

list all the balance sheet accounts in alphabetical order for easy reference. 

prove the equality of the income statement account balances that are carried forward into the next accounting period.

25.  Which of the following steps in the accounting cycle may be performed more frequently than annually?

journalize closing entries

post closing entries 

prepare a trial balance 

prepare a post-closing trial balance

26.  Correcting entries

affect income statement accounts only. 

affect balance sheet accounts only. 

may involve any combination of accounts in need of correction. 

always affect at least one balance sheet account and one income statement account.

27.  Current liabilities are obligations that are reasonably expected to be paid from existing current assets or through the creation of other current liabilities.



28.  Use of reversing entries

simplifies the recording of subsequent transactions. 

is a required step in the accounting cycle. 

is required for all adjusting entries. 

changes the amount reported in the financial statements.

29.  In a perpetual inventory system, a company determines the cost of goods sold each time a sale occurs.



30.  Stine Company purchased merchandise with an invoice price of $2,000 and credit terms of 1/10, n/30. Assuming a 365 day year, what is the implied annual interest rate inherent in the credit terms?





31.  In a perpetual inventory system, the Cost of Goods Sold account is used

only when a cash sale of merchandise occurs. 

only when a credit sale of merchandise occurs. 

only when a sale of merchandise occurs. 

whenever there is a sale of merchandise or a return of merchandise sold.

32.  In preparing closing entries for a merchandiser, the Income Summary account will be credited for the balance of

Sales Discounts. 


Sales Revenue. 


33.  Indicate which one of the following would appear on the income statement of both a merchandiser and a service company.

Sales revenue 

Operating expenses 

Cost of goods sold 

Gross profit

34.  Which of the following accounts will appear in the trial balance of a merchandising company but not a service company?

Salaries and Wages Expense. 


Accumulated Depreciation – Equipment. 

Owner’s Drawings.

35.  Which one of the following transactions is recorded with the same entry in a perpetual and a periodic inventory system?

Payment of freight costs on a purchase 

Sale of merchandise on credit 

Cash received on account with a discount 

Return of merchandise sold

36.  When the terms of sale are FOB shipping point, ownership of the goods remains with the seller until the goods reach the buyer.



37.  The FIFO method assumes that the earliest goods purchased are the first to be sold.



38.  In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

LIFO method. 

average cost method. 

FIFO method. 

tax method.

39.  The lower-of-cost–or-market basis of valuing inventories is an example of

the historical cost principle. 




40.  Understating beginning inventory will understate

net income. 


cost of goods sold. 

owner’s equity.

41.  Inventory turnover is calculated by dividing cost of goods sold by

average inventory. 

365 days. 

beginning inventory. 

ending inventory.

42.  A new average cost is computed each time a purchase is made in the

average cost method.

all of these methods. 

moving-average cost method. 

weighted-average cost method.

43.  The consistent application of an inventory costing method is essential for





44.  Understating beginning inventory will understate

owner’s equity. 

cost of goods sold. 


net income.

45.  Disclosures about inventory should include each of the following except the

basis of accounting. 

costing method. 

quantity of inventory. 

major inventory classifications.

pay someone to write my paper research paper for sale write my paper for me

minerals that crystallize directly from seawater are examples of ________.


Earth Science 14th Edition By Tarbuck And Lutgens –Test Bank
Earth Science, 14e (Tarbuck/Lutgens)

Chapter 1   Introduction to Earth Science

1) What are the basic differences between the disciplines of physical and historical geology?

  1. A) Physical geology is the study of fossils and sequences of rock strata; historical geology is the study of how rocks and minerals were used in the past.
  2. B) Historical geology involves the study of rock strata, fossils, and geologic events, utilizing the geologic time scale as a reference; physical geology includes the study of how rocks form and of how erosion shapes the land surface.
  3. C) Physical geology involves the study of rock strata, fossils, and deposition in relation to plate movements in the geologic past; historical geology charts how and where the plates were moving in the past.
  4. D) none of the above—physical geology and historical geology are essentially the same.

Answer:  B

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

2) The study of Earth’s atmosphere is known as ________.

  1. A) astronomy
  2. B) oceanography
  3. C) meteorology
  4. D) cosmology

Answer:  C

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

3) Which science is not used within the Earth sciences?

  1. A) Chemistry
  2. B) Physics
  3. C) Biology
  4. D) Mathematics
  5. E) None of the above; Earth Science makes use of all of these sciences.

Answer:  E

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Application/Analysis

4) Oceanography is the study of the oceans and geology is the study of the earth, so what is meteorology?

  1. A) the study of meteors
  2. B) the study of the Sun’s impact on the upper atmosphere
  3. C) the study of the atmosphere
  4. D) the study of how to be a TV newscaster

Answer:  C

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

5) Sedimentary rocks with marine fossils are exposed at the top of Mt. Everest.  Which scientists would make most use of this observation in their study?

  1. A) Meteorologists, because they could use the fossils as a guide to ancient climates
  2. B) Geologists, because their elevation is related to physical geology and fossils are related to Earth history
  3. C) Oceanographers, because the fossils can tell us about periods when the earth was covered with water to the height of Mt. Everest
  4. D) Astronomers, because they can study how life came from outer space to Earth

Answer:  B

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

6) Hurricanes and tornados are natural disasters.  What branch of the Earth sciences studies the origin of these phenomena?

  1. A) Meteorology
  2. B) Geology
  3. C) Oceanography
  4. D) Astronomy

Answer:  A

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

7) Hurricanes are natural disasters.  Which branch of the Earth sciences studies the impact of this phenomenon on coastal environments?

  1. A) Meteorology
  2. B) Geology
  3. C) Oceanography
  4. D) Astronomy

Answer:  B

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

8) Tsunamis and earthquakes have killed millions of people during human history.  What branch of the Earth sciences is the main group that studies these phenomena?

  1. A) Meteorology
  2. B) Geology
  3. C) Oceanography
  4. D) Astronomy

Answer:  B

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

9) If you want to buy a house in an area and you are worried there may be an earthquake hazard, who would be the best person to ask for advice on this hazard?

  1. A) a civil engineer
  2. B) a geologist
  3. C) a physicist
  4. D) an astrologer

Answer:  B

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

10) The earth is estimated to be approximately 4.6 billion years old.  Life appeared early in the history of Earth, but metazoans (multicelled organisms) did not appear until about 600 million years ago.  If the history of Earth were compressed into a single year, when would metazoans appear?

  1. A) late September
  2. B) late November
  3. C) mid-December
  4. D) late January

Answer:  B

Diff: 1

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Application/Analysis

11) Which of the following would not typically be considered an Earth Science study?

  1. A) studies of volcanic eruptions
  2. B) studies of impact craters on the moon
  3. C) studies of acid mine waters and the bacteria that live in those waters
  4. D) chemical refining of petroleum

Answer:  D

Diff: 2

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension; Application/Analysis

12) Climate change is a well-known human problem and remains controversial despite widespread scientific agreement on the issue.  Although most scientists are familiar with the issues, if you were a congressman and wanted an informed analysis of the problem, which of the following would be most likely to give you the most complete analysis?

  1. A) an astronomer
  2. B) a meteorologist with knowledge of oceanography
  3. C) a geologist with knowledge of astronomy
  4. D) a physicist

Answer:  B

Diff: 2

Topic:  1.1 What Is Earth Science

Bloom’s Taxonomy:  Knowledge/Comprehension

13) A ________ is a well-tested and widely accepted view that best explains certain scientific observations.

  1. A) hypothesis
  2. B) generalization
  3. C) law
  4. D) theory

Answer:  D

Diff: 1

Topic:  1.2 The Nature of Scientific Inquiry

Bloom’s Taxonomy:  Knowledge/Comprehension

14) The primary goal of Earth Science is ________.

  1. A) to develop things that will benefit mankind
  2. B) to identify the patterns in nature and use that information to predict the future
  3. C) to locate resources
  4. D) to protect the environment

Answer:  B

Diff: 1

Topic:  1.2 The Nature of Scientific Inquiry

Bloom’s Taxonomy:  Knowledge/Comprehension

15) All of the following are possible steps of scientific investigation except for ________.

  1. A) the collection of scientific facts through observation and measurement
  2. B) assumption of conclusions without prior experimentation or observation
  3. C) the development of one or more working hypotheses or models to explain facts
  4. D) development of observations and experiments to test the hypotheses

Answer:  B

Diff: 1

Topic:  1.2 The Nature of Scientific Inquiry

Bloom’s Taxonomy:  Application/Analysis

16) Which of the following is not necessary for a hypothesis to be accepted by the scientific community?

  1. A) It must be testable.
  2. B) It must predict something other than the observations it was based on.
  3. C) There must be alternative hypotheses proposed.
  4. D) It must be based on observations or facts.

Answer:  C

Diff: 1

Topic:  1.2 The Nature of Scientific Inquiry

Bloom’s Taxonomy:  Knowledge/Comprehension

17) The ________ explains how our solar system probably formed from a giant cloud of gases and dispersed solid particles.

  1. A) protogalactic theory
  2. B) nebular theory
  3. C) extrastellar solar hypothesis
  4. D) planetary compression theory

Answer:  B

Diff: 1

Topic:  1.3 Early Evolution of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

18) Which of the following is not a planet?

  1. A) Europa
  2. B) Venus
  3. C) Saturn
  4. D) Neptune

Answer:  A

Diff: 1

Topic:  1.3 Early Evolution of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

19) In the television series “Cosmos” the astronomer Carl Sagan used to say, “We are all made of star stuff.”  What did he mean by that?

  1. A) All of the chemical elements were formed during the big bang when the universe began, so we are like the stars.
  2. B) We all have to potential to be stars.
  3. C) All of the chemical elements in our solar system were forged in an ancient star that went supernova.
  4. D) The earth has incorporated large amounts of chemical material from the solar wind, so our bodies carry this material.

Answer:  C

Diff: 2

Topic:  1.3 Early Evolution of Earth

Bloom’s Taxonomy:  Application/Analysis

20) In the proto-solar system nebula, gravity pulled matter together to form larger bodies. As they collided, what happened to these bodies?

  1. A) Oblique collisions caused individual bodies to spin.
  2. B) The objects broke apart to form asteroids, much like a neutron colliding with a heavy atom produces fission.
  3. C) The objects temporarily broke apart and then reformed into large objects, cooling rapidly during the breakup period.
  4. D) Immense heat was released within the colliding bodies as gravitational potential energy was converted to heat.

Answer:  D

Diff: 2

Topic:  1.3 Early Evolution of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

21) Light elements like hydrogen and helium form a large percentage of the outer planets and Sun is made up primarily of hydrogen.  Why are these elements nearly absent from the inner planets?

  1. A) The Sun captured all of the hydrogen during its formation.
  2. B) These light elements are blown away from the inner planets by the solar wind.
  3. C) It is a mystery that has never been solved by science.
  4. D) Hydrogen and helium have all been bound up by chemical reactions on the inner planets and are held in rock.

Answer:  B

Diff: 2

Topic:  1.3 Early Evolution of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

22) Comets are made up primarily of ________.

  1. A) iron-nickel alloys
  2. B) silicate minerals, like rocks on Earth
  3. C) frozen hydrogen
  4. D) frozen water, carbon dioxide, and methane

Answer:  D

Diff: 2

Topic:  1.3 Early Evolution of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

23) The Oort cloud is ________.

  1. A) an unusual type of cloud formed when meteorites strike the earth
  2. B) another name for the inner solar system, just before the Sun became hot enough for nuclear fusion
  3. C) the outer solar system where planetesimals, rocky debris and comets orbit outside beyond the outer planets but cross into the inner solar system at times
  4. D) the asteroid belt

Answer:  C

Diff: 2

Topic:  1.3 Early Evolution of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

24) The ________ refers to the sum total of all life on Earth.

  1. A) hydrosphere
  2. B) atmosphere
  3. C) biosphere
  4. D) geosphere

Answer:  C

Diff: 1

Topic:  1.4 Earth’s Spheres

Bloom’s Taxonomy:  Knowledge/Comprehension

25) The ________ refers to the water-dominated parts of the earth.

  1. A) hydrosphere
  2. B) atmosphere
  3. C) biosphere
  4. D) geosphere

Answer:  A

Diff: 1

Topic:  1.4 Earth’s Spheres

Bloom’s Taxonomy:  Knowledge/Comprehension

26) The largest of Earth’s spheres is the ________.

  1. A) hydrosphere
  2. B) atmosphere
  3. C) geosphere
  4. D) biosphere

Answer:  C

Diff: 1

Topic:  1.4 Earth’s Spheres

Bloom’s Taxonomy:  Knowledge/Comprehension

27) Soil belongs to the ________.

  1. A) hydrosphere
  2. B) atmosphere
  3. C) geosphere
  4. D) biosphere
  5. E) All of the above

Answer:  E

Diff: 1

Topic:  1.4 Earth’s Spheres

Bloom’s Taxonomy:  Knowledge/Comprehension

28) The exchange of energy between the surface of the earth, the atmosphere, and space causes ________.

  1. A) topography
  2. B) temperature
  3. C) weather
  4. D) glaciers

Answer:  C

Diff: 1

Topic:  1.4 Earth’s Spheres

Bloom’s Taxonomy:  Knowledge/Comprehension

29) In correct order from the center outward, Earth includes which units?

  1. A) core, inner mantle, outer mantle, crust
  2. B) inner core, outer core, mantle, crust
  3. C) inner core, crust, mantle, hydrosphere
  4. D) core, crust, mantle, hydrosphere

Answer:  B

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

30) The composition of the earth’s inner core is thought to be ________.

  1. A) basalt
  2. B) granite
  3. C) peridotite
  4. D) solid iron-nickel alloy

Answer:  D

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

31) The asthenosphere is actually a part of the ________ of the earth.

  1. A) outer core
  2. B) crust
  3. C) inner core
  4. D) mantle

Answer:  D

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

32) The ________ is thought to be a liquid, metallic region in the earth’s interior.

  1. A) inner core
  2. B) lithosphere
  3. C) mantle
  4. D) outer core

Answer:  D

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

33) The ________ is the thinnest layer of the earth.

  1. A) crust
  2. B) outer core
  3. C) mantle
  4. D) inner core

Answer:  A

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

34) The ________ forms the relatively cool, brittle tectonic plates.

  1. A) asthenosphere
  2. B) lithosphere
  3. C) astrosphere
  4. D) eosphere

Answer:  B

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

35) Which of the following energy sources is thought to drive the lateral motions of Earth’s lithospheric plates?

  1. A) gravitational attractive forces of the Sun and Moon
  2. B) electrical and magnetic fields localized in the inner core
  3. C) heat transfer between the earth’s interior and the surface of the earth
  4. D) swirling movements of the molten iron particles in the outer core

Answer:  C

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

36) Convergent plate boundaries are ________.

  1. A) sites where cold, downgoing convective cells, the plates, descent into the mantle
  2. B) sites where heat from the earth’s interior is vented to the surface as volcanos
  3. C) areas where two plates slide laterally past one another, generating earthquakes, like the San Andrea fault
  4. D) sites of supervolcanos like Yellowstone

Answer:  A

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

37) Oceanic crust is generated at ________.

  1. A) hot spots on the sea floor, like Iceland
  2. B) spreading ridges
  3. C) convergent plate margins
  4. D) transform plate margins

Answer:  B

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

38) Continental shields and platforms represent ________.

  1. A) sites where continents collide, analogous to warriors clashing shields
  2. B) names given to Paleozoic mountain belts
  3. C) sedimentary basins with inland seas shaped like a shield, like Hudson’s bay
  4. D) areas in the interior of continents that have not experienced mountain building for billions of years

Answer:  D

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere; Fig. 1.21

Bloom’s Taxonomy:  Knowledge/Comprehension

39) Which of the following layers in the earth has the highest density?

  1. A) Lithosphere
  2. B) Asthenosphere
  3. C) Lower mantle
  4. D) Outer Core

Answer:  D

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

40) The Andes Mountains in South America are formed by ________.

  1. A) subduction
  2. B) sea floor spreading
  3. C) back-arc contraction
  4. D) continental collision

Answer:  A

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

41) The Himalayan Mountains and adjacent Tibet are a mountain system formed by ________.

  1. A) subduction
  2. B) sea floor spreading
  3. C) back-arc contraction
  4. D) continental collision

Answer:  D

Diff: 1

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

42) Which of the following is a reasonable approximation of the rate that plates move?

  1. A) the rate of growth of human hair or fingernails
  2. B) the speed a turtle walks
  3. C) the speed of a mountain glacier
  4. D) the speed of deep ocean currents

Answer:  A

Diff: 2

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

43) What two chemical elements are most abundant in the deep interior of the earth?

  1. A) iron and magnesium
  2. B) magnesium and oxygen
  3. C) hydrogen and helium
  4. D) silicon and oxygen

Answer:  A

Diff: 2

Topic:  1.5 A Closer Look at the Geosphere

Bloom’s Taxonomy:  Knowledge/Comprehension

44) A major cause of the differences in elevation between ocean basins and continents is ________.

  1. A) viscosity
  2. B) temperature
  3. C) density
  4. D) mass

Answer:  C

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

45) Ocean floor averages about ________ km depth below sea level.

  1. A) 2
  2. B) 4
  3. C) 6
  4. D) 8

Answer:  B

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

46) Ocean crust is denser than continental crust because ocean crust is ________.

  1. A) composed primarily of basalt
  2. B) composed primarily of granite
  3. C) thicker than continental crust
  4. D) thinner than continental crust

Answer:  A

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

47) Flat, stable areas of continental crust tend to be located ________.

  1. A) along coastlines
  2. B) near desert regions
  3. C) in the interior of continents
  4. D) in areas that receive large amounts of rainfall

Answer:  C

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

48) Major mountain belts on the earth are ________.

  1. A) older than smaller mountain belts because they have had enough time to grow large
  2. B) located around the Pacific Ocean
  3. C) over 10 km high
  4. D) made of granite because it is low density and allows for maximum growth

Answer:  B

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

49) Shield areas in continental interiors are characterized by ________.

  1. A) linear chains of mountains less than 100 million years old
  2. B) flat areas that include rocks older than 1 billion years old
  3. C) flat river valleys that cut through older mountain ranges
  4. D) ancient coastal regions that have become abandoned and eroded

Answer:  B

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

50) Which of the following is not considered to be part of a typical ocean basin?

  1. A) a linear chain of volcanoes
  2. B) large expanses of flat plains
  3. C) granitic intrusions
  4. D) deep canyons

Answer:  C

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

51) Deep ocean trenches typically are not located adjacent to ________.

  1. A) transform plate boundaries
  2. B) volcanic island arc chains
  3. C) young continental mountains
  4. D) abyssal plains

Answer:  A

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

52) Long oceanic mountain chains typically are characterized by ________.

  1. A) highly deformed sedimentary rocks
  2. B) granitic plutons and batholiths
  3. C) layers of igneous rocks
  4. D) rocks older than 1 billion years old

Answer:  C

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

53) Active mountain belts are most likely to be found ________.

  1. A) along the margins of continents
  2. B) in the interior regions of continents
  3. C) scattered throughout continents
  4. D) along only the eastern margins of continents

Answer:  A

Diff: 1

Topic:  1.6 The Face of Earth

Bloom’s Taxonomy:  Knowledge/Comprehension

54) The continental shelf is located ________.

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most of the $193 billion annually drained from the u.s. economy by drug use is spent on

Section 4 Study Guide

1. What is the most commonly used illicit drug among persons aged 12 and older?  A. cocaine B. alcohol C. heroin D. methamphetamine E. marijuana

2. The highest rates of illicit drug use occur among adults aged  A. 16 to 17. B. 18 to 20. C. 21 to 25. D. 26 to 29.

3. Which of the following is NOT a reason people take drugs?  A. to improve nutrition B. to relieve pain C. to fit in D. to cope with stress

4. Which region of the U.S. tends to see the highest rates of illicit drug use, based on results from a 2010 survey?  A. Northeast B. South C. Midwest D. West

5. Which of the following statements is true regarding nonmedical drug use in the United States by individuals aged 12 or older?  A. More than 47 percent have used an illicit drug in their lifetime. B. About 70 percent have tried illicit drugs other than marijuana. C. About 3 percent are current users of illicit drugs. D. Less than 5 million people have used prescription-type drugs illicitly.

6. Which of the following identifies a drug or drugs?  A. aspirin B. nicotine, aspirin, and caffeine C. nicotine D. nicotine and caffeine E. caffeine

7. Which of the following is a term used to refer to a substance that causes changes in brain chemistry and alters consciousness, perception, mood, and thought?  A. substance B. psychoactive drug C. drug of abuse D. pharmaceutical drug

8. Compared to other routes of administration, ________ is the most complicated way for a drug to enter the bloodstream.  A. transdermal absorption B. subcutaneous injection C. intravenous injection D. oral consumption E. inhalation

9. Which of the following statements about the effects of drugs on the brain is FALSE?  A. Eventually, a drug addict is not able to experience pleasure from anything—not even the drug being abused. B. Addictive drugs activate the pleasure and reward circuit. C. The parts of the brain involved in rational thought are not affected. D. Drugs that bind to endorphin receptors reduce pain.

10. Paco has come to depend on heroin to be able to function normally. A few weeks ago, he attempted to cut himself off, but he experienced severe diarrhea. Paco’s case illustrates which of the following concepts?  A. drug overdose B. withdrawal symptom C. drug tolerance D. psychological dependence

11. Most drugs are taken  A. by injection. B. orally. C. through the nose. D. by applying a patch to the skin.

12. Which of the following routes of drug administration represents the fastest way for a drug to reach the brain?  A. intravenous injection B. oral C. through the nose D. by applying a patch to the skin

13. One indicator of physiological dependence is the development of  A. acne. B. stomach pain. C. tolerance. D. sleep apnea.

14. Probably the most popular psychoactive drug is  A. nicotine. B. caffeine. C. marijuana. D. alcohol. E. Rohypnol.

15. Which of the following is a central nervous system stimulant?  A. LSD B. OxyContin C. caffeine D. barbiturates

16. Which of the following is a central nervous system depressant?  A. Xanax B. heroin C. amphetamines D. Ritalin

17. Which drugs have effects similar to the response evoked during the fight-or-flight reaction?  A. stimulants B. depressants C. opiates D. inhalants E. anabolic steroids

18. Amphetamines fall under which category of drugs?  A. stimulants B. depressants C. opiates D. inhalants E. hallucinogens

19. Which of the following statements is true about cocaine?  A. Cocaine hydrochloride powder produces a higher rate of dependence than crack cocaine. B. Cocaine is a powerful central nervous system opiate. C. Cocaine may cause users to become overweight. D. Cocaine’s effects appear almost immediately after a single dose and disappear within a few minutes or hours.

20. Which drug provides individuals a heightened sense of empathy and closeness to those around them?  A. morphine B. methamphetamine C. MDMA (Ecstasy) D. LSD

21. Common date rape drugs include which of the following?  A. MDMA B. Valium C. Rohypnol D. opium

22. Which of the following associations is NOT correct?  A. amphetamines—narcolepsy B. methamphetamine—ADHD C. opioids—pain D. benzodiazepines—anxiety

23. Which type of drug can be obtained from common household products and causes widespread and long-lasting brain damage in chronic users?  A. depressants B. inhalants C. barbiturates D. amphetamines

24. Which of the following drugs was used during the Civil War and became known as “the soldier’s disease”?  A. heroin B. cocaine C. morphine D. marijuana

25. Which of the following statements is true regarding opioids?  A. Opium originated in Europe. B. Opium has a long history of medical use for the treatment of diarrhea and dehydration. C. The opioid heroin is a less potent drug developed from morphine. D. Opioids are nonaddictive.

26. Pain reduction is most associated with which type of drug?  A. benzodiazepines B. amphetamines C. opioids D. hallucinogens

27. Which type of drug has no role in health care?  A. opiates B. hallucinogens C. inhalants D. stimulants E. depressants

28. Phencyclidine, commonly known as PCP, is which type of drug?  A. anabolic steroid B. stimulant C. inhalant D. hallucinogen E. opiate

29. Which of the following is a hallucinogen?  A. OxyContin B. LSD C. Viagra D. Valium

30. Which of the following is a possible long-term effect of marijuana?  A. decreased reaction time B. increased sexual pleasure C. development of chronic bronchitis D. addiction and dependence

31. Most of the $193 billion annually drained from the U.S. economy by drug use is spent on  A. research. B. health care and justice system costs. C. border control. D. treatment programs.

32. Which of the following is a demand reduction strategy in the war on drugs?  A. preventing distribution B. spraying heroin fields C. interdiction D. treatment programs

33. Which of the following is NOT considered a harm reduction strategy?  A. needle exchange program B. incarceration C. controlled availability D. medicalization

34. The most effective approaches to drug abuse prevention on college campuses include all of the following strategies EXCEPT  A. engaging parents. B. engaging the media. C. providing alternative activities. D. intervening with at-risk-students.

35. More than 47 percent of people aged 12 or older have used an illicit drug during their lifetime.  True    False

36. Abuse of prescription pain relievers by college students increased by 343 percent between 1993 and 2005.  True    False

37. Abuse of prescription stimulants such as Ritalin and Adderall by college students actually decreased between 1993 and 2005.  True    False

38. Illicit drug use is more prevalent in rural counties than in urbanized counties.  True    False

39. Most individuals who abuse prescription drugs get them from a friend or relative for free.  True    False

40. The federal government, at this time, does not regulate the use of herbal remedies.  True    False

41. The route of administration may have a profound effect on the speed and efficiency with which a drug acts.  True    False

42. If a person’s biochemical state is already altered by another drug, the effect of a drug can be changed.  True    False

43. Neuroscientists have found that many addictive drugs, such as cocaine, marijuana, opioids, alcohol, and nicotine, affect a pleasure and reward circuit lying deep inside the brain.  True    False

44. Recovery from a drug addiction is a matter of willpower to abstain from using the substance.  True    False

45. Multiple areas of a person’s life, including the social, emotional, and psychological aspects, must be addressed before recovery from a drug addiction can occur.  True    False

46. Following continued use of amphetamines, users’ attempts to stop may cause them to sleep for 24 hours, be depressed for days, and/or have thoughts of death.  True    False

47. Side effects of GHB, a common date-rape drug, may include hyperactivity, increased heart rate, raised blood pressure, and amnesia.  True    False

48. Regardless of the negative possibilities, benzodiazepines are an important part of treatment for those struggling with anxiety disorders.  True    False

49. There is no evidence that heroin results in any long-term damage to the body.  True    False

50. Hallucinogens produce intensification and distortion of visual and auditory perception.  True    False

51. LSD is easily recognizable by its smell and taste.  True    False

52. LSD does not produce compulsive drug-seeking behaviors, and physiological withdrawal symptoms do not occur when use is stopped.  True    False

53. Individuals who use large quantities of marijuana may experience problems with memory, learning, distorted perception, loss of coordination, difficulty in problem solving, and increased heart rate.  True    False

54. Marijuana smoke contains more carcinogens than does tobacco smoke.  True    False

55. Among drug use prevention strategies, the primary prevention programs most closely target the subgroups that are at greatest risk for use or abuse.  True    False

56. More than half of the people in prison are dependent on or abusers of alcohol/drugs.  True    False

57. Treatment is a more effective strategy for reducing drug use than locking up dealers or cutting off supplies at our borders.  True    False

58. Harm reduction strategies are based on the same set of assumptions as supply and demand reduction strategies in the war on drugs.  True    False

59. Most experts agree that drug treatment is a one-time, short-term process that rarely leads to relapse.  True    False

60. One drink is defined by the National Institute on Alcohol Abuse and Alcoholism as ______ ounce(s) of alcohol.  A. 1.0 B. 0.5 C. 1.5 D. 2.0

61. Which of the following statements is true about ethnic differences in alcohol use?  A. Whites are more likely to abstain from alcohol use than African Americans. B. Hispanic men and Hispanic women have similar alcohol consumption rates. C. Alcohol consumption is higher among Asian Americans than among White Americans. D. Socioeconomic and environmental factors influence ethnic differences in alcohol use.

62. Which population group tends to drink very little or abstain from alcohol because of a biological reaction to alcohol?  A. Asian Americans B. African Americans C. Native Americans D. Hispanic Americans E. Latino Americans

63. All of the following factors speed the absorption of alcohol, EXCEPT  A. alcohol concentration in the drink. B. carbonation. C. anger. D. nicotine.

64. All of the following slow down the absorption of alcohol into the bloodstream, EXCEPT  A. food. B. water. C. stress. D. smoking.

65. You drank far too much last night, and as a result this morning you feel like you have a bad case of the flu. The best way to cope with your hangover is to  A. eat a large meal. B. drink small quantities of alcohol. C. take a painkiller and rest until you feel better. D. engage in an activity that increases your heart rate.

66. Travis passed out on the floor after a drinking contest, and now you can’t wake him. The best thing you can do for him is  A. call 911. B. carry him to a bed. C. roll him onto his side. D. cover him with a warm blanket.

67. Which of the following is true of alcohol-induced cirrhosis?  A. Its effects can be reversed by about 30 days’ abstinence from drinking. B. It can occur without symptoms in some people. C. It begins at the moment a person takes his or her first drink. D. It usually takes about 10 years of steady, heavy drinking for cirrhosis to develop.

68. Alcohol use is a factor in about ________ of suicides in the United States.  A. one-eighth B. one-third C. two-thirds D. three-quarters

69. One practice that has substantially increased compliance with drunk driving laws is  A. tax increases. B. server liability laws. C. sobriety checkpoints. D. raising the legal drinking age.

70. The smoking rate for adults in the United States has leveled off at approximately ______ percent.  A. 8 B. 13 C. 20 D. 41 E. 54

71. Which of the following statements about tobacco is true?  A. Tobacco use among college students is declining. B. Tobacco smoke contains dozens of cancer-causing substances. C. The higher one’s educational achievements, the more likely one is to smoke. D. Cigarettes account for about 50 percent of the tobacco sold in the United States.

72. Which of the following substances in tobacco smoke is most closely associated with oxygen deprivation to the heart?  A. hydrogen cyanide B. nitrous oxide C. carbon monoxide D. nicotine E. tar

73. Which of the following is true of cigar smoking?  A. Most cigar smokers inhale the smoke. B. Cigars present a rather low cancer risk. C. Cigars contain more nicotine than cigarettes. D. Cigar smoke is less harmful than cigarette smoke.

74. Key reinforcers of nicotine addiction to cigarettes include all of the following EXCEPT  A. nicotine’s ability to alleviate withdrawal symptoms. B. a reduction in feelings of anxiety and depression. C. increased dopamine levels in the brain. D. relief from cold and flu symptoms.

75. Which of the following statements about the short-term effects of smoking on the body is true?  A. Nicotine stimulates the production of urine. B. The effects of nicotine peak in about two minutes. C. Nicotine reaches the brain in about 60 seconds. D. Nicotine causes constriction of blood vessels.

76. Approximately ______ percent of lung cancer deaths are caused by smoking.  A. 32 B. 49 C. 66 D. 87

77. Which of the following statements is true about smoking cessation?  A. Mucous production is among the last things to change following smoking cessation. B. Quitting after age 70 has little effect on health or longevity. C. Blood circulation decreases in most people after they quit smoking. D. The risk of smoking-related heart attack can fall by half within a year.

78. The average number of attempts required for successful smoking cessation is  A. two. B. seven. C. eleven. D. sixteen.

79. About 65 percent of American adults drink, at least occasionally.  True    False

80. College binge drinkers are more likely to meet the Diagnostic and Statistical Manual of Mental Disorders criteria for alcohol abuse and alcohol dependence 10 years after college.  True    False

81. The majority of alcohol that enters the body is absorbed into the stomach.  True    False

82. A 150-pound person with more lean body tissue will have a lower blood alcohol concentration (BAC) than a 150-pound person with high body fat who drinks the same amount of alcohol.  True    False

83. It usually takes at least ten years of steady, heavy drinking to develop cirrhosis.  True    False

84. Long-term alcohol abuse is associated with an overall decline in intellect.  True    False

85. Alcohol drinking has been shown to be a factor in about one-third of suicides.  True    False

86. Every day, an additional 4,000 teenagers under age 18 light up their first cigarette.  True    False

87. One in three Americans smokes.  True    False

88. Smoking is more common among African Americans than among any other ethnic group.  True    False

89. In the brain, nicotine stimulates the release of endorphins.  True    False

90. Cigars have more tobacco and nicotine per unit than do cigarettes.  True    False

91. Individuals who stop smoking typically lose between 7 and 10 pounds until they adjust to not having nicotine in their system.  True    False

92. Smoking is the largest single preventable cause of illness and premature death in North America.  True    False

93. Smoking delays menopause by approximately five years.  True    False

94. Smoking reduces the effectiveness of some medications, particularly anti-anxiety drugs and penicillin.  True    False

95. Individuals who quit smoking before age 50 cut their risk of dying within the next 15 years in half.  True    False

96. Consumption of cigarettes decreases as they become more expensive through taxation and other such measures.  True    False

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which of the following is true regarding a restrictive adjectival clause?

Sentence Skills

When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam.

Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.

1. The following sentence is an example of which primary English sentence pattern? The toddler tossed his father the ball.

A. Pronoun+ subject+ interrogative verb

B. Subject+ action verb + direct object

C. Subject+ action verb+ indirect object+ direct object

D. Subject+ verb +object +object complement

2. Which of the following is a complex sentence that contains a dependent adverbial clause?

A. Mark expects the photo to arrive in damaged condition.

B. Mark expects the photo to arrive late.

C. Mark expects the photo to arrive on Tuesday.

D. Mark expects the photo to arrive when the letter arrives.

3. What is the simple subject in this sentence?

The Saturn rocket made travel to the moon possible.

A. travel B. rocket C. moon D. Saturn

4. A split infinitive is an infinitive that

A. has a word between “to” and the verb.

B. must have a subject.

C. is used as an adjective or a noun.

D. is used without the word “to.”

5. One of the following sentences contains an independent clause and a dependent clause, which makes it a complex sentence. Which is the complex sentence?

A. After the rain ended, the sky became blue.

B. I hesitated a moment, but her smile gave me courage.

C. I came home; I saw an envelope in the mailbox.

D. Jenny was the largest elephant in the circus.

6. Which sentence uses correct parallel construction?

A. Most people enjoy ice cream and the plant grows.

B. The painter wore glasses, gloves, and boots.

C. You can either talk to the manager about your problem or writing a letter to the president of the company.

D. Anyone who is going to work here will have to be athletic, an intelligent person, and have a good sense of humor.

7. What is the simple predicate of the following sentence? The Saturn rocket made travel to the moon possible.

A. Made B. Travel C. Possible D. Moon

8. Which of the following is a fragment?

A. The truth can be unpleasant.

B. The rams locked horns, and the tourists watched them from far away.

C. The dancer floated across the stage.

D. The canoe with the blue stripes.

9. Which of the following pairs of ideas could be combined into a compound sentence? (Remember that only related ideas should be joined into a compound sentence.)

A. The days became longer. The children could play outside later.

B. The street lights were dim. The play was a success.

C. The weather had changed. The house seemed deserted.

D. We watched the news on television. The girls walked quickly to school.

10. In the sentence “I want to sleep when I’m tired,” the words “to sleep” are a/an

A. prepositional phrase. B. predicate adjective. C. indirect object.

D. infinitive phrase.

11. In which sentence are the italicized words a dependent clause? (A dependent clause can’t stand as a sentence on its own.)

A. She went swimming, and her brother went boating.

B. She wanted to leave early, or she wanted to stay overnight.

C. She became angry, but she would not leave without her brother.

D. The diving board broke when she jumped into the pool.

12. In which sentence are the italicized words a dangling modifier? (A dangling modifier is a phrase that

has no word in the sentence to modify.)

A. Resting on the sea bottom, the old trunk held many coins.

B. Not knowing the danger, the soldiers marched into the trap. C. Arriving ten minutes late, the store was closed for the night. D. Flying beneath the cloud, the pilot could see the airport.

13. Which of the following statements is true? A. A phrase is a group of related words; a clause is not. B. A phrase has a subject and a verb; a clause does not. C. A clause has a subject and a verb; a phrase does not. D. A clause is a group of related words; a phrase is not.

14. Which sentence contains repetitious words that should be left out?

A. The bright star is visible to the eye.

B. The star will soon disappear.

C. The star was visible centuries ago.

D. The bright star is visible.

15. How could you combine the following two sentences into a complex sentence with a dependent adjectival clause?

The boy wore a green coat. He carried his sister home.

A. The boy carried home his sister’s green coat.

B. The boy wore a green coat; he carried his sister home.

C. The boy wore a green coat, and he carried his sister home.

D. The boy who wore a green coat carried his sister home.

16. Which of the following choices best describes the error in this sentence?

The man is a scientist with a keen sense of observation and who dedicates long hours in the lab.

A. Uneven parallelism B. Misplaced modifier C. Fragment

D. Dangling modifier

17. Which one of the following statements is an example of a complex sentence?

A. The crescent moon is a symbol of Islam.

B. The earth was spinning when Lucas first saw Lucille.

C. Neap tide is the best time for digging clams.

D. Sparrows at the bird feeder compete for seeds.

18. Which sentence contains words in italics that form a gerund phrase? (A gerund is a verb form used the same way as a noun.)

A. Winning the race demanded speed and endurance.

B. The laughing boy sat down.

C. I am going home.

D. An interesting novel provides good entertainment.

19. Which of the following is true regarding a restrictive adjectival clause?

A. It will be set off by commas.

B. It will follow a proper noun.

C. It will follow a general noun and is not set off by commas.

D. It will typically include the relative pronoun which.

20. Which one of the following sentences is punctuated correctly?

A. The sea calmed but no boats left shore. B. The sea calmed, but no boats left shore. C. The sea calmed; but no boats, left shore. D. The sea, calmed, but no boats, left shore.

End of exam