Identify a Difference Between the Crisis Stage and the Dissolution

question 13

Multiple Choice

Identify a difference between the crisis stage and the dissolution stage of organizational decline.

• A) Decline is reversible at the crisis stage, whereas it is irreversible at the dissolution stage.
• B) The crisis stage is the first stage of organizational decline, whereas the dissolution stage is the fifth stage of organizational decline.
• C) In the crisis stage, management announces belt-tightening plans designed to cut costs, increase efficiency, and restore profits, whereas in the dissolution stage, management recognizes the need to change but still takes no action.
• D) In the crisis stage, managers fail to recognize the internal or external changes that will harm their organizations, whereas in the dissolution stage, managers assume that if they just run a tighter ship, company performance will return to previous levels.

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Definitions:

Operating Income

Earnings from a firm's core business operations, excluding deductions of interest and tax.

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from the total revenue, representing the profit made before deducting operating expenses.

Gross Profit

The difference between sales revenue and the cost of goods sold before accounting for operating expenses, interest, and taxes.

Merchandising Business

A type of business that purchases goods at wholesale prices and sells the same goods at retail prices to end-users or customers.