Exam for Strategic Management Part VI

138. Effective leaders can choose a mix of three levers. When motivation is the problem, they can use the ___________ lever, wherein they craft compelling common goals, articulate a strong value of cross-company teamwork, and encourage collaboration in order to send strong signals to lift individual sights beyond their narrow interests toward a common goal. A. T-shaped management B. people C. network D. unification Effective leaders can choose a mix of three levers. When motivation is the problem, they can use the unification lever, wherein they craft compelling common goals, articulate a strong value of cross-company teamwork, and encourage collaboration in order to send strong signals to lift individual sights beyond their narrow interests toward a common goal. 139. The use of information technology (e.g., email) has increased in recent years in many organizations. This has helped to ____________. A. make more effective use of time in every situation B. communicate information efficiently C. restrict social network growth D. create smaller social networks Email is an effective means of communicating a wide variety of information. It is quick, easy, and almost costless. Sharing knowledge and information throughout the organization can be a means of conserving resources, developing products and services, and creating new opportunities. 140. London-based International Power increased firm efficiency by using all but which of the following? A. forwarding email messages only when strictly necessary B. limiting the email message recipient list C. using the telephone D. eliminating email communication The executives underwent training to reduce their email output by taking more deliberate actions. These included not forwarding messages unless strictly necessary, limiting message recipients, and choosing the most efficient form of communication to accomplish the task at hand. A phone call, for example, provides real-time feedback on whether a message is being understood; this is something that is missing with the low-bandwidth email channel. Also, facial expressions and body language make in-person meetings an even richer method of communication. 141. Top executives can use email effectively for all of the following except A. updates on company strategy. B. executive perspectives on key issues. C. overview of the executive work for the month. D. updates on corporate intelligence. Martin Sorrell, chairman of WPP Group PLC, the huge 17 billion USD advertising and public relations firm, is a strong believer in the use of email. He emails all of his employees once a month to discuss how the company is doing, address specific issues, and offer his perspectives on hot issues, such as new business models for the Internet. He believes that it keeps people abreast of what he is working on. Corporate intelligence generally is a market research activity that is shared on a need-to-know list that is different from an email blast across the company. 142. The use of sophisticated information sharing platforms has increased in recent years in many organizations. This has helped to A. facilitate internal and external collaboration. B. keep employees satisfied with social networks. C. override the need for email. D. increase paperwork. Technology can also enable much more sophisticated forms of communication in addition to knowledge sharing. Cisco, for example, launched Integrated Workforce Experience (IWE) in 2010. It is a social business platform designed to facilitate internal and external collaboration and decentralize decision making. 143. The Cisco Integrated Workforce Experience (IWE) platform is a social business platform designed to facilitate __________ and __________ collaboration and decentralize decision making. A. internal; network-side B. external; personal C. external; individual D. internal; external Technology can also enable much more sophisticated forms of communication in addition to knowledge sharing. Cisco, for example, launched Integrated Workforce Experience (IWE) in 2010. It is a social business platform designed to facilitate internal and external collaboration and decentralize decision making. 144. The Cisco Integrated Workforce Experience (IWE) platform makes recommendations based on all of the following except A. what you are doing. B. the role you are in. C. the choices of people like you. D. competitor choices. The Cisco Integrated Workforce Experience (IWE) platform makes recommendations based on what you are doing, the role you are in, and the choices of other people like you. 145. To increase productivity, several key lessons were learned by top management at Londonbased International Power concerning email. Which is not in that list of lessons? A. Executives need to be taught to be more deliberate in their use of email. B. Executives need to set goals for reducing the number of messages sent. C. Executives need to provide weekly feedback. D. Executives need to eliminate email completely. The executive team received weekly reports on both their and the top management team progress. Within three months, team total email output dropped by 54 percent. Even though the other 75 London-based employees received no training, their email output dropped by an even greater amount (64 percent). The result was significant: a savings of 10,400 man-hours, which translates to a 7 percent increase in productivity. The recommendation did not include eliminating email entirely. 146. Efficiency killers that London-based International Power identified in their communication using tools from lean manufacturing included A. overproduction and messages. B. underproduction and defects. C. underproduction and ineffective messages. D. overproduction and defects in messages. Rather than using email management tools to address the overflow, the firm took a page from lean manufacturing. It decided to treat communications as though they were an industrial process, targeting efficiency killers such as overproduction and defects (confusing, unnecessary, or ineffective messages, which often simply bred other messages). Believing a reduction in executive outflow would prompt a quick reduction in employee outflow, the executives aimed to cut the number of emails sent by the top team members by 20 percent within four months. 147. The dangers of email include all of the following except A. spreading of rumors. B. almost costless. C. uncontrollable distribution. D. personal time waster. As we all know, email is an effective means of communicating a wide variety of information. It is quick, easy, and almost costless. Of course, it can become a problem when employees use it extensively for personal reasons. We all know how fast jokes or rumors can spread within and across organizations. Email can also cause embarrassment, or worse, if one is not careful. 148. Sharing knowledge and information throughout the organization can be a means of A. conserving products and services. B. continuing with outdated products. C. conserving resources. D. overusing email. Sharing knowledge and information throughout the organization can be a means of conserving resources, developing products and services, and creating new opportunities. 149. Technology can be used to leverage __________ and _____________ within organizations as well as with customers and suppliers beyond their boundaries. A. human capital; intellectual capital B. human capital; knowledge C. knowledge; social capital D. communication; social capital Technology can be used to leverage human capital and knowledge within organizations as well as with customers and suppliers beyond their boundaries. 150. Technology can be used to leverage human capital and knowledge within organizations as well as with ____________ and __________ beyond their boundaries. A. employees; clients B. customers; employees C. customers; suppliers D. employees; suppliers Technology can be used to leverage human capital and knowledge within organizations as well as with customers and suppliers beyond their boundaries. 151. The creation of knowledge assets is typically characterized by A. high upfront costs and subsequent high variable costs. B. high fixed costs and high variable costs. C. high upfront costs and low variable costs. D. low upfront costs and high variable costs. One of the challenges of knowledge-intensive organizations is to capture and codify the knowledge and experience that resides in the heads of its employees. Once a knowledge asset (e.g., a software code or processes) is developed and paid for, it can be reused many times at very low cost, assuming that it doesn't have to be substantially modified each time. 152. Mary Stinson was required to take over a project after the entire team left the company. She was able to reconstruct what the team had accomplished through reading emails exchanged by the members of the team. This is an example of A. inefficient use of information management. B. using explicit knowledge. C. using tacit knowledge. D. using replicated knowledge. Explicit (or codified) knowledge, on the other hand, is knowledge that can be documented, widely distributed, and easily replicated. Here, Mary was able to use knowledge assets created by previous employees to complete the work. 153. Characteristics of e-teams include all of the following except: A. E-team members either work in geographically separated workplaces or may work in the same space but at different times. B. E-teams may have members working in different spaces and time zones. C. Most of the interactions among members of e-teams occur through electronic communication channels. D. E-teams generally perform simple tasks. There are key differences between e-teams and more traditional teams. E-team members either work in geographically separated workplaces or may work in the same space but at different times. E-teams may have members working in different spaces and time zones, as is the case with many multinational teams. Most of the interactions among members of e-teams occur through electronic communication channels. Most e-teams perform very complex tasks and most knowledge-based teams are charged with developing new products, improving organizational processes, and satisfying challenging customer problems. 154. There are multiple advantages of e-teams. Which of the following is not an advantage? A. E-teams are less restricted by the geographic constraints that are placed on face-to-face teams. B. E-teams can be more flexible in responding to unanticipated work challenges and opportunities. C. Process losses result from identification and combination activities. D. E-teams can be effective in generating social capital. E-team leaders and key members know how to combine individual contributions in the most effective manner for a coordinated and appropriate response. Group psychologists have termed such activities identification and combination activities, and teams that fail to perform them face a process loss. Process losses prevent teams from reaching high levels of performance because of inefficient interaction dynamics among team members. Such poor dynamics require that some collective energy, time, and effort be devoted to dealing with team inefficiencies, thus diverting the team away from its objectives. 155. There are multiple challenges associated with making effective e-teams. Which of the following is not a challenge? A. Process losses result from identification and combination activities. B. E-teams can be effective in generating social capital. C. The physically dispersed team is susceptible to the risk factors that can create process loss. D. Some collective energy, time, and effort must be devoted to dealing with team inefficiencies. E-teams can be very effective in generating social capital, which is a key lubricant in work transactions and operations. Given the broader boundaries associated with e-teams, members and leaders generally have access to a wider range of social contacts than would be typically available in more traditional face-to-face teams. Such contacts are often connected to a broader scope of clients, customers, constituents, and other key stakeholders. 156. The potential for __________ tends to be more prevalent in e-teams than in traditional teams because the geographic dispersion of members increases the complexity of establishing effective interaction and exchanges. A. team harmony B. trust C. profit losses D. profit gains The potential for process losses tends to be more prevalent in e-teams than in traditional teams because the geographic dispersion of members increases the complexity of establishing effective interaction and exchanges. 157. In general, teams suffer process loss because of ____ cohesion, ___ trust among members, a lack of appropriate norms or standard operating procedures, or a lack of shared understanding among team members about their tasks. A. high; high B. low; high C. high; low D. low; low Teams suffer process loss because of low cohesion, low trust among members, a lack of appropriate norms or standard operating procedures, or a lack of shared understanding among team members about their tasks. 158. Access Health, a call-in medical center, uses technology to capture and share knowledge. When someone calls the center, a registered nurse uses the company clinical decision architecture to assess the caller symptoms, rule out possible conditions, and recommend a home remedy, doctor visit, or trip to the emergency room. This is an example of using A. tacit knowledge. B. a knowledge asset. C. a non-codified asset. D. groupthink. Access Health, a call-in medical center, also uses technology to capture and share knowledge. When someone calls the center, a registered nurse uses the company clinical decision architecture to assess the caller symptoms, rule out possible conditions, and recommend a home remedy, doctor visit, or trip to the emergency room. The company knowledge repository contains algorithms of the symptoms of more than 500 illnesses. 159. When an organization tries to improve cycle times in a manufacturing process, it finds far more value in problem solving shaped by the diverse experiences, perspectives, and learning of a tightly knit team than in a training manual alone. SAP uses these _________ flows to gain competitive advantage. A. knowledge stocks B. knowledge assessments C. knowledge D. tacit When an organization tries to improve cycle times in a manufacturing process, it finds far more value in problem solving shaped by the diverse experiences, perspectives, and learning of a tightly knit team (shared through knowledge flows) than in a training manual (knowledge stocks) alone. SAP uses these knowledge flows to gain competitive advantage. 160. SAP uses ____________ to leverage the expertise and involvement of its users in developing new knowledge and then transmitting it to the entire SAP user community. A. tacit knowledge B. crowdsourcing C. algorithms D. intellectual capital The user community can be a major source of knowledge creation for a firm. Strategy Spotlight 4.6 highlights how SAP, in an example of effective crowdsourcing, has been able to leverage the expertise and involvement of its users to develop new knowledge and transmit it to the entire SAP user community. 161. Software algorithms are a form of _____________ that, once developed and paid for, can be reused many times at a very low cost. A. tacit asset B. intangible asset C. knowledge asset D. social asset Once a knowledge asset (e.g., a software code or a process) is developed and paid for, it can be reused many times at very low cost, assuming that it does not have to be substantially modified each time. 162. When a firm develops a knowledge asset, such as a process, pays for it and reuses it over and over at a very low cost, this adds ___________ for the firm. A. tacit knowledge B. little value C. a competitive advantage D. a recoverable loss Once a knowledge asset (e.g., a software code or a process) is developed and paid for, it can be reused many times at very low cost, assuming that it doesn't have to be substantially modified each time. This adds competitive advantage for a firm. 163. The management of intellectual property involves all of the following except A. copyrights and trademark. B. contracts with confidentiality and non-compete clauses. C. converting explicit knowledge to tacit knowledge. D. patents. The management of intellectual property (IP) involves, besides patents, contracts with confidentiality and non-compete clauses, copyrights, and the development of trademarks. The development of dynamic capabilities is the only avenue providing firms with the ability to reconfigure their knowledge and activities to achieve a sustainable competitive advantage. 164. Dynamic capabilities include all of the following except A. learning and innovating. B. becoming more efficient in operational processes. C. the ability of an organization to challenge the conventional industry in its industry and market. D. continuously adopting new ways of serving the evolving needs of the market. Dynamic capabilities are about the ability of an organization to challenge the conventional wisdom within its industry and market, learn and innovate, adapt to the changing world, and continuously adopt new ways to serve the evolving needs of the market. 165. Which of the following is not an example of an IP-related litigation? A. Apple and HTC sue each other based on patent infringement. B. Apple sues smartphone makers running Android, the Google mobile operating system. C. China is sued by U.S. manufacturers of video games. D. The United States sues to get access to physical plant assets in China. Intellectual property rights are the intangible property owned by a firm in the form of patents, copyrights, trademarks, or trade secrets. 166. Protecting company intellectual property can be difficult because employees become disgruntled and patents A. are expensive. B. cannot be protected. C. expire. D. roll over. Protecting company intellectual property requires a concerted effort on the part of the company. After all, employees become disgruntled and patents expire. The management of intellectual property (IP) involves, besides patents, contracts with confidentiality and noncompete clauses, copyrights, and the development of trademarks. 167. Intellectual property rights are __________ to define and protect than property rights for physical assets (e.g., plant, equipment, and land). A. easier B. more costly C. more difficult D. less difficult Intellectual property rights are more difficult to define and protect than property rights for physical assets (e.g., plant, equipment, and land). 168. IP is characterized by __________ development costs and very ______ marginal costs. A. insignificant; low B. expensive; high C. significant; low D. insignificant; high IP is characterized by significant development costs and very low marginal costs. 169. Unlike ______ assets, intellectual property can be stolen by simply broadcasting it. A. intangible B. hidden C. physical D. expensive Unlike physical assets, intellectual property can be stolen by simply broadcasting it. 170. Using an idea does not prevent others from simultaneously using it for their own benefit. Typically, this is impossible with __________ assets. A. intangible B. strong C. physical D. flimsy Using an idea does not prevent others from simultaneously using it for their own benefit, which is typically impossible with physical assets. Unlike physical assets, intellectual property can be stolen by simply broadcasting it. Recall Napster and MP3 as well as the debates about counterfeit software, music CDs, and DVDs coming from developing countries such as China. 171. Which of the following is an IP-heavy industry? A. automobile sales B. telecommunications C. contract manufacturing D. retailing Given these unique challenges in protecting IP, it comes as no surprise that legal battles over patents become commonplace in IP-heavy industries such as telecommunications. 172. Which of the following is not a dynamic capability? A. the ability to sense and seize new opportunities B. the ability to generate new knowledge C. the ability to reconfigure existing assets D. the ability to submit to conventional industry and market wisdom Dynamic capabilities entail the capacity to build and protect a competitive advantage. This rests on knowledge, assets, competencies, and complementary assets and technologies as well as the ability to sense and seize new opportunities, generate new knowledge, and reconfigure existing assets and capabilities. Dynamic capabilities are about the ability of an organization to challenge the conventional wisdom within its industry and market, learn and innovate, adapt to the changing world, and continuously adopt new ways to serve the evolving needs of the market. 173. Dynamic capabilities include ______ development, alliances, and acquisitions. A. after-market B. product C. idea D. company Examples of dynamic capabilities include product development, strategic decision making, alliances, and acquisitions. 174. The best protection for intellectual property in the long run is likely to be the development of A. new products. B. stronger patents. C. dynamic capabilities. D. international patents. In the last section we discussed the increasing importance of protecting company intellectual property. Although traditional approaches such as patents, copyrights, and trademarks are important, the development of dynamic capabilities may be the best protection in the long run. Ch5 Multiple Choice Questions 89. The primary aim of strategic management at the business level is A. maximizing risk-return tradeoffs through diversification. B. achieving competitive advantage. C. maximizing differentiation of products and/or services. D. achieving a low cost position. How firms compete with each other and how they attain and sustain competitive advantages goes to the heart of strategic management. In short, the key issue becomes to identify why some firms outperform others and enjoy such advantages over time. 90. Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize which generic strategy? A. differentiation B. differentiation focus C. stuck-in-the-middle D. overall cost leadership Examples of overall cost leadership within primary value chain activities may involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities may include expertise in process engineering (technology development). 91. A manufacturing business pursuing cost leadership is likely to A. focus on a narrow market segment. B. use advertising to build brand image. C. rely on experience effects to raise efficiency. D. put heavy emphasis on product engineering. Key to an overall cost leadership strategy is the experience curve, which refers to how business learns to lower costs as it gains experience with production processes. With experience, unit costs of production decline as output increases in most industries. 92. One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by A. spreading out a given expense or investment over a greater volume. B. hiring more experienced personnel. C. repeating a process until a task becomes easier. D. competing in an industry for a long time. Key to an overall cost leadership strategy is the experience curve, which refers to how business learns to lower costs as it gains experience with production processes. With experience, unit costs of production decline as output increases in most industries. 93. With experience, unit costs of production decline as _________ increases in most industries. A. costs B. volume C. price D. output With experience, unit costs of production decline as output increases in most industries. The experience curve, developed by the Boston Consulting Group in 1968, is a way of looking at efficiency gains that come with experience. For a range of products, as cumulative experience doubles, costs and labor hours needed to produce a unit of product decline by 10 to 30 percent. 94. Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform A. B. C. D. at about the same level as firms that achieve either cost or differentiation advantages. higher than firms that achieve either a cost or a differentiation advantage. about the same as firms that are stuck-in-the-middle. lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages. Research supports the notion that firms that identify with one or more of the forms of competitive advantage outperform those that do not. There has been a rich history of strategic management research addressing this topic. One study found that businesses combining multiple forms of competitive advantage (differentiation and overall cost leadership) outperformed businesses that used only a single form. 95. Global logistics firms such as DHL Supply Chain and Global Forwarding or C. H. Robinson Worldwide compete using an overall cost leadership strategy in primary activities such as A. effective layout of receiving dock operations. B. effective use of automated technology to reduce scrappage rates. C. minimize costs associated with employee turnover through effective policies. D. standardized accounting practices to minimize personnel required. Inbound logistics is a primary activity in the value chain. These global logistics firms strive to achieve cost advantages through the design of their receiving dock operations, among other operation design features. 96. Overhead costs associated with the number of layers of management in a firm are part of the _________ activities of the value chain. A. human resources management B. operations C. firm infrastructure D. marketing and sales Exhibit 5.3 draws on the value-chain concept to provide examples of how a firm can attain an overall cost leadership strategy in its primary and support activities. Reducing management layers to reduce overhead costs is the support activity associated with the firm infrastructure. 97. Renault has found a way to generate high profits on low-priced cards by using simple designs that incorporate components from older car designs and a no-discount retail policy. They are using a(n) ______________ strategy. A. differentiation B. overall cost leadership C. focus D. broad differentiation Overall cost leadership requires a tight set of interrelated tactics that include: aggressive construction of efficient-scale facilities and vigorous pursuit of cost reductions from experience.