Exam for Strategic Management Part I

Ch1 Multiple Choice Question 92. The text addresses two perspectives of leadership as well as their implications. These two perspectives are A. romantic and unromantic. B. romantic and internal control. C. external control and unromantic. D. romantic and external control. The two perspectives of leadership are the romantic and the external control perspectives. 93. A CEO made a lot of mistakes in assessing the market and the competitive conditions and improperly redesigning the organization into numerous business units. Such errors led to significant performance declines. According to the text, this example illustrates the __________ perspective of leadership. A. external control B. romantic C. internal mechanism D. operational In the romantic view of leadership, the implicit assumption is that the leader is the key force in determining the success (or lack of success) of an organization. This view dominates the popular press in business magazines such as Fortune, BusinessWeek, and Forbes, wherein the CEO is either lauded for the success of the firm or chided for its demise. 94. According to the external control view of leadership, which of the following factors would not be considered an external factor that might positively or negatively affect a firm's success? A. economic downturns B. governmental legislation C. outbreak of war D. company employee morale In the external control view of leadership, external factors are responsible for positively or negatively affecting company success. These external factors often are unanticipated and are not due to the company's leadership. 95. Melvin Alexander, executive director of Principled Solutions Enterprise, a management consulting firm specializing in health care, suggests that environmental changes oblige firms to make strategic changes in order to survive. Which of the following is one of the strategic changes he foresees will occur in the next three to five years? A. changes in the behavior of the health care consumers B. reduction in the number of available medical doctors C. increases in the number of locations of health care facilities D. decreases in information technology investment There will be new strategies to ensure success of the new law (ACA) as well as to achieve projected returns on the large investments made. The new strategies will center on changing the behavior of the health care consumers (e.g., patients, insured beneficiaries). Areas ranging from preventive care to new providers of health care to improved technology will be focal points of the strategies. To ensure success and compliance, there will likely be both carrot and stick incentives for health consumers to comply. 96. According to the text, the strategic management process entails three ongoing processes. They are A. analyses, actions, and synthesis. B. analyses, decisions, and actions. C. analyses, evaluation, and critique. D. analyses, synthesis, and decisions. The strategic management of an organization entails three ongoing processes: analyses, decisions, and actions. 97. Management innovations such as total quality, benchmarking, and business process reengineering cannot lead to sustainable competitive advantage because A. companies that have implemented these techniques have lost money. B. there is no proof that these techniques work. C. they cost too much money and effort to implement. D. every company is trying to implement them. The popular management innovations of the last two decades (total quality, just-in-time, benchmarking, business process reengineering and outsourcing) are all about operational effectiveness. Each of these is important, but none leads to sustainable competitive advantage because everyone is doing them. Strategy is all about being different. 98. The organizational versus the individual rationality perspective suggests that objectives that are A. good for a functional area are always good for the overall organization. B. good for the overall organization are always best for a functional area. C. best for a functional area may not be best for the overall organization. D. best for one functional area will never be best for all functional areas. Strategic management is directed toward overall organizational goals and objectives. Effort must be directed at what is best for the total organization, not just a single functional area. Some authors have referred to this perspective as organizational versus individual rationality. What might look rational or ideal for one functional area, such as operations, may not be in the best interest of the overall firm. 99. The four key attributes of strategic management include the idea that strategy must A. be directed toward overall organizational goals and objectives. B. be focused only on long-term objectives. C. be focused on only one specific area of an organization. D. focus only on competitor strengths. The key attributes of strategic management are that it directs the organization toward overall goals and objectives, includes multiple stakeholders in decision making, needs to incorporate short-term and long-term perspectives, and recognizes trade-offs between efficiency and effectiveness. 100. The four key attributes of strategic management include all of the following except A. including multiple stakeholder interests in decision making. B. incorporating both short-term and long-term perspectives. C. recognizing the trade-offs between effectiveness and efficiency. D. emphasis on the attainment of short-term objectives. The key attributes of strategic management are that it directs the organization toward overall goals and objectives, includes multiple stakeholders in decision making, needs to incorporate short-term and long-term perspectives, and recognizes trade-offs between efficiency and effectiveness. 101. Effectiveness is often defined as A. doing things right. B. stakeholder satisfaction. C. doing the right thing. D. productivity enhancement. Effectiveness is tailoring actions to the needs of an organization rather than wasting effort, or doing the right thing. 102. In choosing to focus on stakeholders, which of the following will not lead to success for a manager? A. shareholders and employees B. employees and suppliers C. customers and the community at large D. customers only Stakeholders are those individuals, groups, and organizations that have a stake in the success of the organization, including owners (shareholders in a publicly held corporation), employees, customers, suppliers, the community at large, and so on. Managers will not be successful if they focus on a single stakeholder. 103. In strategic management, both the short-term and long-term perspectives need to be considered because A. B. C. D. shareholder value is only measured by short-term returns. shareholders only care about long-term returns. long-term vision precludes the analysis of present operating needs. the creative tension between the two forces managers to develop more successful strategy. Strategic management requires incorporating both short-term and long-term perspectives. Peter Senge, a leading strategic management author, has referred to this need as a creative tension. That is, managers must maintain both a vision for the future of the organization and a focus on its present operating needs. 104. Strategic management involves the recognition of trade-offs between effectiveness and A. cost. B. value. C. return on investment. D. efficiency. Strategic management involves the recognition of trade-offs between effectiveness and efficiency. Some authors have referred to this as the difference between doing the right thing (effectiveness) and doing things right (efficiency). 105. All of the following are ambidextrous behaviors except A. taking initiative and being alert to opportunities beyond the job description. B. being cooperative and seeking opportunities to combine personal efforts with that of others. C. intensely focusing on the responsibilities of one individual and maximizing the output of the department in the organization in which that individual works. D. being brokers, always looking to build internal linkages. Ambidextrous behaviors include the following: (1) Individuals take time and are alert to opportunities beyond the confines of their own jobs; (2) they are cooperative and seek out opportunities to combine their efforts with others; (3) they are brokers, always looking to build internal networks; and (4) they are multitaskers, who are comfortable wearing more than one hat. 106. Ambidextrous behaviors in individuals illustrate how a dual capacity for _______ can be woven into the fabric of an organization at the individual level. A. alignment and adaptability B. alignment and transparency C. alignment and internal linkages D. alignment and efficiency A recent study involving 41 business units in 10 multinational companies identified four ambidextrous behaviors in individuals. Such behaviors are the essence of ambidexterity, and they illustrate how a dual capacity for alignment and adaptability can be woven into the fabric of an organization at the individual level. 107. According to Henry Mintzberg, the final realized strategy of a firm is A. a combination of deliberate and emergent strategies. B. a combination of deliberate and differentiation strategies. C. not deliberate. D. a result of unrealized intended strategy. The final realized strategy of any firm is a combination of deliberate and emergent strategies. 108. __________ may be considered the advance work that must be done in order to effectively formulate and implement strategies. A. Goal setting B. Corporate entrepreneurship C. Strategy analysis D. Organizational design Strategy analysis may be looked upon as the starting point of the strategic management process. It consists of the advance work that must be done in order to effectively formulate and implement strategies. 109. Strategy analysis is the starting point of the strategic management process and consists of the A. B. C. D. analysis only of the vision, mission, and objectives of the firm. analysis of the relevant internal and external environmental factors only. analysis of relevant competitors only. matching of vision, mission, and objectives with the relevant internal and external environmental factors. Strategy analysis may be looked upon as the starting point of the strategic management process. It consists of the advance work that must be done in order to effectively formulate and implement strategies. Many strategies fail because managers may want to formulate and implement strategies without a careful analysis of the overarching goals of the organization and without a thorough analysis of its external and internal environments. 110. Strategy formulation at the business level addresses best how to compete in a given business: A. to attain competitive advantage B. to reduce costs C. to decrease buyer power D. to thwart entry of new rivals Business-level strategy addresses the issue of how to compete in a given business to attain competitive advantage. 111. Corporate level strategy focuses on what businesses to compete in and A. how business can be managed to achieve synergy. B. how business can be managed to reduce synergy. C. how the firm can work as a stand-alone entity. D. how the firm can create more value by operating alone. Corporate-level strategy focuses on two issues: (a) what businesses to compete in and (b) how businesses can be managed to achieve synergy; that is, they create more value by working together than by operating as stand-alone businesses. 112. Corporate-level strategy looks at how to manage the ______ of its businesses to create synergies. A. portfolio B. stock prices C. competitors D. market pricing Corporate-level strategy addresses a portfolio (or group) of businesses of the firm. It addresses: (1) What business (or businesses) should we compete in and (2) How can we manage this portfolio of businesses to create synergies among the businesses. 113. Entering foreign markets requires firms to ascertain foremost how they will attain A. market share. B. low costs. C. competitive advantage. D. low returns on investment. When firms enter foreign markets, they face both opportunities and pitfalls. Managers must decide not only on the most appropriate entry strategy but also how they will go about attaining competitive advantages in international markets. 114. New value creation is a major engine for economic growth and is the main focus of _______________ strategy. A. portfolio B. corporate-level C. business-level D. entrepreneurial Entrepreneurial activity aimed at new value creation is a major engine for economic growth. In order for entrepreneurial initiatives to succeed, viable opportunities must be recognized and effective strategies must be formulated. 115. Two types of strategic control that firms must exercise for good strategy implementation are A. informational and confrontational. B. confrontational and behavioral. C. behavioral and financial. D. informational and behavioral. Firms must exercise two types of strategic control. First, informational control requires that organizations continually monitor and scan the environment and respond to threats and opportunities. Second, behavioral control involves the proper balance of rewards and incentives as well as cultures and boundaries (or constraints). 116. Effective organizational design means that firms must have ________ that are consistent with their strategy. A. designs and plans B. organizational structures and designs C. adopters and designs D. adopters and plans Firms must have organizational structures and designs that are consistent with their strategy. In the rapidly changing competitive environments today, firms must ensure that their organizational boundaries (those internal to the firm and external) are more flexible and permeable. 117. Learning organizations permit the entire organization to benefit from ____________ talents. A. internal and external B. individual and collective C. internal and collective D. external and individual Given rapid and unpredictable change, leaders must create a learning organization so that the entire organization can benefit from individual and collective talents. 118. Effective leaders set a direction and develop an organization so that it is committed to excellence and ___________ behavior. A. performant B. strategic C. ethical D. positive Effective leaders set a direction, design the organization, and develop an organization that is committed to excellence and ethical behavior. 119. Strategies should be formulated that enhance foremost the ____________ capacity of a firm. A. innovative B. learning C. implementation D. business-level Firms must continually improve and grow as well as find new ways to renew their organizations. Corporate entrepreneurship and innovation provide firms with new opportunities, and strategies should be formulated that enhance the innovative capacity of the firm. 120. The three participants in corporate governance are the shareholders, A. board of directors, and employees. B. labor unions, and employees. C. board of directors, and management. D. banks and lending institutions, and management. The primary participants in corporate governance are: (1) the shareholders, (2) the management (led by the chief executive officer), and (3) the board of directors. 121. While working to prioritize and fulfill their responsibilities, members of the board of directors of an organization should A. represent their own interests. B. represent the interests of the shareholders. C. direct all actions of the CEO. D. emphasize the importance of short-term goals. The board of directors (BOD) consists of the elected representatives of the shareholders charged with ensuring that the interests and motives of management are aligned with those of the owners (i.e., shareholders). 122. Members of boards of directors are A. appointed by the Securities and Exchange Commission. B. elected by the shareholders as their representatives. C. elected by the public. D. only allowed to serve one term of four years. The board of directors (BOD) consists of the elected representatives of the shareholders charged with ensuring that the interests and motives of management are aligned with those of the owners (i.e., shareholders). 123. An organization is responsible to many different entities. In order to meet the demands of these groups, organizations must participate in stakeholder management. Stakeholder management means that A. interests of the stockholders are not the only interests that matter. B. stakeholders are second in importance to the stockholders. C. stakeholders and managers inevitably work at cross-purposes. D. all stakeholders receive financial rewards. Stakeholder management is the strategy of the firm for recognizing and responding to the interests of all its salient stakeholders. 124. Stakeholders are A. a new way to describe stockholders. B. individuals, groups, and organizations who have a stake in the success of the organization. C. creditors who hold a lien on the assets of the organization. D. attorneys and their clients who sue the organization. A stakeholder can be defined as an individual or group that is inside or outside the company and has a stake in and can influence organizational performance. Each stakeholder group makes various claims on the company. 125. Procter and Gamble has perfected a technique for compacting cleaning powder into a liquid concentration. Consumers, retailers, shipping and wholesalers, and environmentalists all have benefited from the resulting change in consumer shopping habits and the revolution in industry supply-chain economics. According to the text, this is an example of A. zero-sum relationship among stakeholders. B. stakeholder symbiosis. C. rewarding stakeholders. D. emphasizing financial returns. Organizations can achieve mutual benefit through stakeholder symbiosis, which recognizes that stakeholders are dependent upon each other for their success and well-being. 126. There are several perspectives of competition. One perspective is zero-sum thinking. Zerosum thinking means that A. all parts of the organization gain at no loss. B. in order for someone to gain others must experience no gain or benefit. C. one can only gain at the expense of someone else. D. everyone in the organization shares gains and losses equally. In the zero-sum view, the role of management is to look upon the various stakeholders as competing for the resources of the organization. In essence, the gain of one individual or group is the loss of another individual or group. 127. Managers should do more than focus on short-term financial performance. One concept that helps managers do this is stakeholder symbiosis. This means that A. stakeholders are dependent on each other for their success. B. stakeholders look out for their individual interests. C. one can only gain at the expense of someone else. D. all stakeholders want to maximize shareholder returns. Organizations can achieve mutual benefit through stakeholder symbiosis, which recognizes that stakeholders are dependent upon each other for their success and well-being. 128. Employee stakeholders are concerned with A. taxes, warranties, and regulations. B. wages, benefits, and job security. C. good citizenship behavior. D. dividends. Employees as a stakeholder group are concerned with wages, benefits, safe working environment, and job security. 129. Stockholders as a stakeholder group are interested primarily by A. payment of interest and repayment of principal. B. value and warranties. C. dividends and capital appreciation. D. taxes and compliance with regulations. Stockholders are interested in dividends and capital appreciation. 130. The Sustainable Apparel Coalition accounts for more than one-third of the global A. apparel and washing product industry. B. consumer product industry. C. refinery industry. D. apparel and footwear industry. The SAC now has approximately 145 members, representing brands, retailers, suppliers, and other organizations that together account for more than one-third of the global apparel and footwear industry. 131. Wall Street executives have received excessive bonus pay in the past. This concerns which of the following stakeholder groups most directly? A. government B. suppliers C. creditors D. stockholders For example, JPMorgan CEO Jamie Dimon was the highest-paid banker with $23.1 million in compensation, an 11 percent increase from the previous year. The shareholders of the firm did not do as well, because the stock fell 20 percent. 132. Supplier stakeholders are concerned with A. assurance of a continued relationship with the firm. B. employee benefits. C. safe working conditions. D. capital appreciation. Supplier stakeholders are concerned with on-time payment and assurance of a continued relationship with the firm. 133. Community stakeholders are concerned primarily with A. product warranties. B. corporate citizenship behavior. C. capital appreciation. D. repayment of principal. Community stakeholders are concerned with good citizenship behavior such as charities, employment, and not polluting the environment. 134. Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility, which is the A. B. C. D. expectation that business will strive to improve the overall welfare of society. idea that organizations are solely responsible to local citizens. fact that court costs could impact the financial bottom line. idea that businesses are responsible for maintaining a healthy social climate for their employees. Social responsibility is the expectation that businesses or individuals will strive to improve the overall welfare of society. From the perspective of a business, this means that managers must take active steps to make society better by virtue of the business being in existence. 135. According to the text, the triple bottom line approach to corporate accounting includes which three components? A. financial, environmental, and customer B. financial, organizational, and customer C. financial, environmental, and social D. financial, organizational, and psychological Many companies are now measuring what has been called a triple bottom line. This involves assessing financial, social, and environmental performance. 136. Demands for greater corporate responsibility have accelerated today. They focus on issues such as A. labor standards and environmental sustainability. B. taxation. C. product benefits. D. service benefits. Today, demands for greater corporate responsibility have accelerated. These include corporate critics, social investors, activists, and, increasingly, customers who claim to assess corporate responsibility when making purchasing decisions. Such demands go well beyond product and service quality. They include a focus on issues such as labor standards, environmental sustainability, financial and accounting reporting, procurement, and environmental practices. 137. A key stakeholder group that is particularly susceptible to corporate social responsibility (CSR) initiatives is A. suppliers. B. rivals. C. government agencies. D. consumers. A key stakeholder group that appears to be particularly susceptible to corporate social responsibility (CSR) initiatives is customers. Surveys indicate a strong positive relationship between CSR behaviors and consumer reaction to products and services of a firm. 138. According to the Corporate Citizenship poll conducted by Cone Communications, most Americans say they would be likely to switch brands to one associated with a good cause, if there are similarities between A. price and availability. B. availability and quality. C. price and quality. D. price and durability. A Corporate Citizenship poll conducted by Cone Communications found that 84 percent of Americans say they would be likely to switch brands to one associated with a good cause, if price and quality are similar. 139. According to a CEO survey by Accenture, __________________ are not mutually exclusive corporate goals. A. quality and profitability B. sustainability and profitability C. ROI and quality D. availability and ROI A CEO survey on sustainability by Accenture debunks the notion that sustainability and profitability are mutually exclusive corporate goals. The study found that sustainability is being increasingly recognized as a source of cost efficiencies and revenue growth. 140. The Clorox Green Works line of plant-based cleaning materials captured 42 percent of the natural cleaning products market in its first year. This is an example of the benefit of A. sustainability efforts. B. cost reduction efforts. C. marketing programs. D. process management. In days past, many sustainability efforts would have been the result of government prodding or public pressure, or would have been undertaken for PR purposes. Some well-known firms have benefited financially from such initiatives. 141. Northrup Grumman saved $2 million in energy costs at a single facility by installing reflective roofs and fluorescent lighting, replacing old equipment, and making minor temperature and humidity-level adjustments. This is an example of the benefit of A. increasing revenue efforts. B. marketing programs. C. sustainability efforts. D. process management. In days past, many sustainability efforts would have been the result of government prodding or public pressure, or would have been undertaken for PR purposes. Some well-known firms have benefited financially from such initiatives. 142. The Fairmont Royal York in Toronto invested $25,000 in an energy conservation program to replace leaky steam traps and fix leaks, which resulted in an annual savings of over $200,000. This is an example of a sustainability effort to A. increase innovation. B. decrease revenue. C. lower costs. D. increase customers. In days past, many sustainability efforts would have been the result of government prodding or public pressure, or would have been undertaken for PR purposes. Some well-known firms have benefited financially from such initiatives. Executives know better. They realize that green, our convenient euphemism for sustainability, is the color of money. This is an example of a sustainability effort to lower costs. 143. The ROI on sustainability efforts can be difficult to quantify because A. an excess of necessary data for accurate calculation is readily available. B. benefits from such projects are tangible. C. the payback period is on a different time frame. D. the payback period is on the same time frame. The ROIs on sustainability projects are often very difficult to quantify for a number of reasons. Among these are: (1) The data necessary to calculate ROI accurately are often not available when it comes to sustainability projects; (2) Many of the benefits from such projects are intangible; and (3) The payback period is on a different time frame. 144. Sustainability programs often find their success beyond company boundaries, thus ______ systems and _____ metrics cannot capture all of the relevant numbers. A. external; bio B. internal; process C. external; external D. internal; internal The data necessary to calculate ROI accurately are often not available when it comes to sustainability projects. However, sustainability programs may often find their success beyond company boundaries, so internal systems and process metrics cannot capture all the relevant numbers. 145. Traditional financial models are built around relatively easy-to-measure, monetized results; whereas, the benefits of sustainability projects involve A. clear tangibles. B. clear intangibles. C. fuzzy tangibles. D. fuzzy intangibles. Traditional financial models are built around relatively easy-to-measure, monetized results. Yet many of the benefits of sustainability projects involve fuzzy intangibles, such as the goodwill that can enhance firm brand equity. 146. The case for sustainability projects needs to be made on the basis of a more holistic and comprehensive understanding of all the _____________ benefits. A. measurable and unmeasurable B. financial and physical C. tangible and intangible D. measurable and physical Clearly, the case for sustainability projects needs to be made on the basis of a more holistic and comprehensive understanding of all the tangible and intangible benefits rather than whether or not they meet existing hurdle rates for traditional investment projects. For example, 3M uses a lower hurdle rate for pollution prevention projects. 147. Some benefits of sustainability projects include A. reducing risks. B. lagging behind regulations. C. displeasing communities. D. ignoring employee morale. The intangible benefits of sustainability projects such as reducing risks, staying ahead of regulations, pleasing communities, and enhancing employee morale are substantial, even when they are difficult to quantify. 148. Many organizations have a large number of functional areas with very diverse and sometimes competing interests. Such organizations will be most effective if A. each functional area focuses on achieving their own goals. B. goals are defined at the bottom and implemented at the top. C. functional areas work together to attain overall goals. D. management and employees have separate goals. Strategic management requires managers to take an integrative view of the organization and assess how all of the functional areas and activities fit together to help an organization achieve its goals and objectives. This cannot be accomplished if only the top managers in the organization take an integrative, strategic perspective of issues facing the firm and everyone else fends for themselves in their independent, isolated functional areas. Instead, people throughout the organization must strive toward overall goals. 149. Strategy formulation and implementation is a challenging ongoing process. To be effective, it should not involve A. the CEO and the board of directors. B. the board of directors, CEO, and CFO. C. rivals. D. line and staff managers. To develop and mobilize people and other assets, leaders are needed throughout the organization. No longer can organizations be effective if the top does the thinking and the rest of the organization does the work. People throughout the organization must strive toward overall goals. 150. The text argues that a strategic perspective in an organization should be emphasized A. at the top of the organization. B. at the middle of the organization. C. throughout the organization. D. from the bottom up. No longer can organizations be effective if the top does the thinking and the rest of the organization does the work. People throughout the organization must strive toward overall goals. 151. Peter Senge, of MIT, recognized three types of leaders. __________ are individuals that, although having little positional power and formal authority, generate their power through the conviction and clarity of their ideas. A. Local line leaders B. Executive leaders C. Internal networkers D. Shop floor leaders Internal networkers, although they have little positional power and formal authority, generate their power through the conviction and clarity of their ideas. 152. Peter Senge, of MIT, recognized three types of leaders. These individuals champion and guide ideas, create a learning infrastructure, and establish a domain for taking action. A. local line leaders B. executive leaders C. internal networkers D. shop floor leaders Executive leaders champion and guide ideas, create a learning infrastructure, and establish a domain for taking action. 153. Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should emerge at which level(s) of an organization? A. only at the top B. in the middle C. throughout the organization D. only during times of change To develop and mobilize people and other assets, leaders are needed throughout the organization. 154. Local line leaders have __________ responsibility. A. local B. executive C. profit-and-loss D. no Local line leaders have significant profit-and-loss responsibility. 155. Internal networks generate their power through the _____________ of their ideas. A. validity and correctness B. conviction and clarity C. validation and recognition D. approval and awareness Internal networkers have little positional power and formal authority, but generate their power through the conviction and clarity of their ideas. 156. Executive leaders champion and guide ideas by A. reinforcing ideas that did not work. B. creating a learning infrastructure. C. validating their formal authority. D. increasing their personal power. Executive leaders champion and guide ideas, create a learning infrastructure, and establish a domain for taking action. 157. Richard Branson, founder of the Virgin Group, empowers his companies through a(n) _______ structure in which anyone can bring forth new ideas. A. formal B. hierarchal C. multi-level D. informal Richard Branson, founder of the Virgin Group, whose core businesses include retail operations, hotels, communications, and an airline, is well known for creating an informal structure and culture where anyone in the organization can be involved in generating and acting upon new business ideas.