Exam for Strategic Management Part IV

113. Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It supports A. only individual primary activities. B. mostly support activities but does have some impact on primary activities. C. only individual support activities. D. both individual primary and support activities and the entire value chain. Human resource management consists of activities involved in the recruiting, hiring, training, development, and compensation of all types of personnel. It supports both individual primary and support activities and the entire value chain. 114. According to value-chain analysis, which of the following would be considered part of the general administration in a firm? A. information systems B. technology development C. human resource management D. procurement General administration consists of a number of activities, including general management, planning, finance, accounting, legal and government affairs, quality management, and information systems. Administration typically supports the entire value chain and not individual activities. 115. A marketing department that promises delivery faster than the ability of the production department to produce is an example of a lack of understanding of the A. interrelationships among functional areas and firm strategies organizational culture and leadership. B. organizational culture and leadership. C. need to maintain the reputation of the company. D. synergy of the business units. Important to value-chain analysis are interrelationships which are the collaborative and strategic exchange relationships between value-chain activities either (a) within firms or (b) between firms. Strategic exchange relationships involve exchange of resources such as information, people, technology, or money that contribute to the success of the firm. 116. In a retail service industry, which of the following is not a primary value-chain activity? A. purchasing goods B. human resource management C. partnering with vendors D. operating stores Primary value-chain activities include: inbound logistics, operations, outbound logistics, marketing and sales, and service. Human resource management is a support activity. 117. In terms of value chain analysis, a telephone operating company would find that negotiating and maintaining ongoing relations with regulatory bodies are important activities for achieving A. returns on investment. B. customer awareness. C. competitive advantage. D. better employees. Although general administration is sometimes viewed only as overhead, it can be a powerful source of competitive advantage. In a telephone operating company, for example, negotiating and maintaining ongoing relations with regulatory bodies can be among the most important activities for competitive advantage. 118. General administration is sometimes viewed as only _______ but can be a powerful source of competitive advantage. A. income B. value C. overhead D. unimportant Although general administration is sometimes viewed only as overhead, it can be a powerful source of competitive advantage. 119. German truck and trailer manufacturer, Schmitz Cargobull, mainly serves customers that are operators of truck or trailer fleets. What sets the company apart is its expertise in telematics (the integrated application of telecommunications data) to monitor the current state of any Schmitz Cargobull-produced trailer. This is an example of using ________ to enhance customer value and increase _______ position. A. sales; competitive B. operations; marketing C. information technology; competitive D. human resources; marketing Information technology (IT) can also play a key role in enhancing the value that a company can provide its customers and, in turn, increasing its own revenues and profits. Schmitz Cargobull, a German truck and trailer manufacturer, uses IT to further its competitive position. 120. In an interview with Lise Saari, former director of global workforce research at IBM, she notes that HR must be a true partner of the business, with a deep and up-to-date understanding of business realities and objectives, and must ensure HR initiatives fully support them at all points of the value chain. This is an example of A. relationships among activities within the firm and with other stakeholders. B. relationships between firms. C. interrelationships among activities within the firm. D. interrelationships among firms. Managers must not ignore the importance of relationships among value-chain activities. These can be collaborative and strategic exchange relationships between value-chain activities either (a) within firms or (b) between firms. With regard to this example of the Lise Saari interview, this demonstrates interrelationships among activities within the firm. 121. Regarding the value-chain concept, the most important interrelationship is between the organization and its A. board of directors. B. employees. C. management. D. customers. When addressing the value-chain concept, it is important to focus on the interrelationship between the organization and its most important stakeholder, its customers. Some firms find great value by directly incorporating their customers into the value creation process. 122. In contrast to __________ interactions, which allow the firm to gain insights on the needs of a particular customer, ___________ offers the opportunity to leverage the wisdom of a larger crowd. A. consumer; sourcing B. prosumer; outsourcing C. prosumer; crowdsourcing D. marketing; crowdsourcing In contrast to prosumer interactions, which allow the firm to gain insights on the needs of a particular customer, crowdsourcing offers the opportunity to leverage the wisdom of a larger crowd. 123. In using crowdsourcing as a means to integrate the customer into the value chain, there are some perils to consider. Which of the following is not related to crowdsourcing perils? A. Giving customers the opportunity to tarnish the company brand. B. Asking for consumer input when demand is highly uncertain. C. Repeatedly getting feedback from the same customer. D. Asking for consumer input when demand is certain. Research has identified three areas of particular concern: Strong brand reputation, high demand uncertainty, too many initiatives. 124. Accounting is a sort of transformation process that converts daily records of individual transactions into monthly financial reports. The __________ are the inputs, accounting is the operation that adds value, and ___________ are the outputs. A. transaction records; financial statements B. financial statements; transaction records C. employee records; transaction records D. health records; transaction statements Accounting is a sort of transformation process that converts daily records of individual transactions into monthly financial reports. In this example, the transaction records are the inputs, accounting is the operation that adds value, and financial statements are the outputs. 125. A travel agent adds value by creating an itinerary that includes transportation, accommodations, and activities that are customized to your budget and travel dates. In terms of the value chain analysis, this is an example of a ____________ organization. A. retail B. service C. manufacturing D. travel A travel agent adds value by creating an itinerary that includes transportation, accommodations, and activities that are customized to your budget and travel dates. These are the operations, or transformation processes, of a service organization. 126. For an engineering services firm, ________________ provides inputs, the transformation process is the engineering itself, and innovative designs and practical solutions are the outputs. A. experimentation B. customer support C. research and development D. human resource management For an engineering services firm, research and development provides inputs, the transformation process is the engineering itself, and innovative designs and practical solutions are the outputs. 127. The resource-based view (RBV) of the firm combines the following two perspectives: A. the primary and support activities of the firm. B. the interrelationships among the primary activities of the firm and corporate management. C. the internal analysis of the firm and the external analysis of the industry and competitive environment. D. the industry and the competitive environment. The resource-based view (RBV) of the firm combines two perspectives: (1) the internal analysis of phenomena within a company and (2) an external analysis of the industry and its competitive environment. 128. The three key types of resources that are central to the resource-based view of the firm are A. tangible resources, intangible resources, and organizational structure. B. culture, tangible resources, intangible resources. C. tangible resources, intangible resources, and organizational capabilities. D. tangible resources, intangible resources, and top management. Firm resources are all assets, capabilities, organizational processes, information, and knowledge controlled by a firm that enable it to develop and implement value-creating strategies. The three types of resources are tangible resources, intangible resources and organizational capabilities. 129. In the resource-based view of the firm, examples of tangible resources include A. financial resources, human resources, and firm competencies. B. financial resources, physical resources, and technological resources. C. financial resources, physical resources, and the capacity to combine intangible resources. D. outstanding customer service, innovativeness of products, and reputation. Examples of tangible resources are financial resources, physical resources, organizational resources, and technological resources. 130. _____________ are typically embedded in unique routines and practices that have evolved and accumulated over time such as effective work teams. A. Tangible resources B. Intangible resources C. Reputational resources D. Organizational capabilities Intangible resources are typically embedded in unique routines and practices that have evolved and accumulated over time. These include human resources (e.g., experience and capability of employees, trust, and effectiveness of work teams). 131. Apple combines and packages proven technology in new and innovative ways. This is an example of its use of A. tangible resources. B. intangible resources. C. organizational capabilities. D. strong primary activities. Organizational capabilities are the competencies or skills that a firm employs to transform inputs into outputs. Examples of organizational capabilities are outstanding customer service, excellent product development capabilities, superb innovation processes, and flexibility in manufacturing processes. 132. __________ are the competencies or skills that a firm employs to transform inputs into outputs. A. Tangible resources B. Reputational resources C. Organizational capabilities D. Intangible resources Organizational capabilities are the competencies or skills that a firm employs to transform inputs into outputs. Examples of organizational capabilities are outstanding customer service, excellent product development capabilities, superb innovation processes, and flexibility in manufacturing processes. 133. Which of the following is not an example of organizational capabilities? A. outstanding customer service B. reputation with customers for quality and reliability C. innovativeness of products and services D. ability to hire, motivate, and retain human capital Organizational capabilities are the competencies or skills that a firm employs to transform inputs into outputs. Examples of organizational capabilities are outstanding customer service, excellent product development capabilities, superb innovation processes, and flexibility in manufacturing processes. Reputation with customers for quality and reliability is an intangible resource. 134. The ability to hire, motivate, and retain human capital is an example of ________ capabilities in the resource-based view of the firm. A. tangible B. organizational C. management D. design Organizational capabilities are the competencies or skills that a firm employs to transform inputs into outputs. Examples of organizational capabilities are outstanding customer service, excellent product development capabilities, superb innovation processes, and flexibility in manufacturing processes. The ability to hire, motivate, and retain human capital is an example of organizational capabilities in the resource-based view of the firm. 135. In order to be considered strategic resources that contribute competitive advantage, they must have several characteristics. Which of the following is not one of these? A. rare B. valuable C. inexpensive to imitate D. costly to substitute The resource-based view (RBV) of the firm perspective states that company competitive advantages are due to their endowment of strategic resources that are valuable, rare, costly to imitate, and costly to substitute. 136. Which of the following is not a tangible resource? A. technical and scientific skills B. trade secrets, patents, copyrights C. state-of-the art machinery D. company borrowing capacity Tangible resources are assets that are relatively easy to identify. They include the physical and financial assets that an organization uses to create value for its customers. Among them are financial resources, physical resources, organizational resources, and technological resources. 137. Intangible resources are typically embedded in ________ routines and practices that have evolved and accumulated over time. A. rare B. standard C. unique D. obvious Much more difficult for competitors to account for or imitate are intangible resources, which are typically embedded in unique routines and practices that have evolved and accumulated over time. 138. The culture of a firm also may be a resource that provides competitive advantage. Which of these companies might be a good example of this intangible resource? A. Google B. Kmart C. Costco D. Walmart Much more difficult for competitors (and, for that matter, the company managers) to account for or imitate are intangible resources, which are typically embedded in unique routines and practices that have evolved and accumulated over time. The company culture may also be a resource that provides competitive advantage. Google is a good example of a corporate culture that is difficult to imitate. 139. For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. Which of the following is not one of these attributes? A. rare B. valuable C. easy for competitors to substitute D. difficult for competitors to imitate For a resource to provide a firm with the potential for a sustainable competitive advantage, it must have four attributes. First, the resource must be valuable in the sense that it exploits opportunities and/or neutralizes threats in the firm's environment. Second, it must be rare among current and potential competitors of the firm. Third, the resource must be difficult for competitors to imitate. Fourth, the resource must have no strategically equivalent substitutes. 140. A competitive advantage based on inimitability can be sustained for at least some time, if it has the following characteristics: A. psychographic uniqueness, path dependency, causal ambiguity, and substitutability. B. physical uniqueness, path dependency, causal ambiguity, and social complexity. C. rarity, path dependency, causal ambiguity, and social substitutability. D. geographic uniqueness, cause dependency, social ambiguity, and path complexity. An advantage based on inimitability will not last forever. Competitors will eventually discover a way to copy most valuable resources. However, managers can forestall them and sustain profits for a while by developing strategies around resources that have at least one of the following four characteristics: physical uniqueness, path dependency, causal ambiguity, and social complexity. 141. A crash R&D program by one firm cannot replicate a successful technology developed by another firm, when research findings cumulate. This is an example of A. social complexity. B. physical uniqueness. C. path dependency. D. causal ambiguity. Path dependency means that resources are unique and therefore scarce because of all that has happened along the path followed in their development and/or accumulation. A crash R&D program generally cannot replicate a successful technology, when research findings cumulate. These path-dependent conditions build protection for the original resource. The benefits from experience and learning through trial and error cannot be duplicated overnight. 142. A variety of firm resources include interpersonal relations among managers in the firm, its culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon A. path dependency. B. social complexity. C. physical uniqueness. D. tangible resources. Resources of a firm may be imperfectly inimitable, because they reflect a high level of social complexity. A wide variety of firm resources may be considered socially complex. Examples include interpersonal relations among the managers in a firm, its culture, and its reputation with its suppliers and customers. 143. All of the following are examples of socially complex organizational phenomena except A. a firm's culture. B. complex physical technology. C. interpersonal relations among a firm's managers. D. leadership and trust. Social complexity is a characteristic of the resources of a firm that is costly to imitate because the social engineering required is beyond the capability of competitors, including interpersonal relations among managers, organizational culture, and reputation with suppliers and customers. 144. A resource is valuable and rare but neither difficult to imitate nor without substitutes. This should enable the firm to attain A. no competitive advantage. B. a temporary competitive advantage. C. competitive parity. D. a sustainable competitive advantage. Resources and capabilities must be rare and valuable as well as difficult to imitate or substitute in order for a firm to attain competitive advantages that are sustainable over time. When a resource is valuable and rare but neither difficult to imitate nor without substitutes, it is likely to result in a temporary competitive advantage. 145. Employees will be able to obtain a proportionately high level of profits they generate (relative to the firm) if A. suppliers are loyal to the firm. B. their expertise is firm-specific. C. the cost to the firm of replacing them is high. D. the firm's resources are path dependent. Several factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits, including if they generate high employee replacement costs. If employee skills are idiosyncratic and rare (a source of resource-based advantages), they should have high bargaining power based on the high cost required by the firm to replace them. 146. Which of the following is not a factor that helps to explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate? A. Employees have high bargaining power. B. The cost of employee replacement is high. C. The cost of exit is high for an employee. D. Managers have low bargaining power. Four factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate: employee bargaining power, employee replacement cost, employee exit costs, and manager bargaining power. Manager power is based on how well they create resource-based advantages. They are generally charged with creating value through the process of organizing, coordinating, and leveraging employees as well as other forms of capital such as plant, equipment, and financial capital. Such activities provide managers with sources of information that may not be readily available to others. 147. Amazon Prime is credited for helping to increase the Amazon stock price by nearly 300 percent from 2008 to 2010. This competitive advantage is known as A. causal ambiguity. B. product rarity. C. service validity. D. substitutability. Causal ambiguity means that would-be competitors may be thwarted because it is impossible to disentangle the causes (or possible explanations) of either what the valuable resource is or how it can be re-created. The continued success of Amazon as the largest global online marketplace is an example of competitive advantage through causal ambiguity. Competitors recently tried to imitate the Amazon free shipping strategy, but with limited success. The reason is that Amazon has developed an array of interrelated elements of strategy which their rivals find too difficult to imitate. 148. Four factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate. Which is not one of these factors? A. employee bargaining power B. employee replacement cost C. employee exit costs D. competitor bargaining power Four factors help explain the extent to which employees and managers will be able to obtain a proportionately high level of the profits that they generate: employee, bargaining power, employee replacement cost, employee exit costs, and manager bargaining power. 149. Which of the following groups generally is charged with creating value through the process of organizing, coordinating, and leveraging employees as well as other forms of capital such as plant, equipment, and financial capital? A. unions B. boards of directors C. managers D. stakeholders Manager power is based on how well they create resource-based advantages. They are generally charged with creating value through the process of organizing, coordinating, and leveraging employees as well as other forms of capital such as plant, equipment, and financial capital. Such activities provide managers with sources of information that may not be readily available to others. 150. Raymond Ozzie, the software designer who was critical in the development of Lotus Notes, was able to dictate the terms under which IBM acquired Lotus. This illustrates that he had ______ bargaining power based on the ________ cost required by the firm to replace him. A. low; low B. low; high C. high; low D. high; high If employee skills are idiosyncratic and rare (a source of resource-based advantages), they should have high bargaining power based on the high cost required by the firm to replace them. For example, Raymond Ozzie, the software designer who was critical in the development of Lotus Notes, was able to dictate the terms under which IBM acquired Lotus. 151. Historical comparisons provide information to managers about changes in the competitive position of a firm. Historical comparisons often are misleading A. if the overall strategy of the firm is the same. B. if the firm shows constant growth. C. in periods of recession or economic boom. D. if the firm's stock is publicly traded. Exhibit 3.9 illustrates a 10-year period of return on sales (ROS) for a hypothetical company. As indicated by the dotted trend lines, the rate of growth (or decline) differs substantially over time periods, and periods of recession and economic boom may make the trends unreliable. 152. The best measure of company ability to meet imminent financial obligations is known as the A. debt ratio. B. profit margin. C. total asset turnover. D. current ratio. According to Exhibit 3.8, short-term solvency ratios are also known as liquidity ratios. The best measure of the ability of a company to meet imminent financial obligations is the current ratio, the ratio of current assets to current liabilities. 153. Which of the following would be most difficult to assess? A. the liquidity position of a firm B. market share growth C. the legitimacy and reputation of a firm D. the efficiency with which a firm utilizes its assets The legitimacy and reputation of a firm are harder to assess, because there is no simple mathematical formula to compute them. 154. Which of these categories of financial ratios is used to measure the ability of a firm to meet its short-term financial obligations? A. liquidity ratios B. profitability ratios C. activity ratios D. leverage ratios Short-term solvency ratios are also known as liquidity ratios. These ratios are used to assess the ability of a company to meet imminent financial obligations. 155. Ratios that reflect whether or not a firm is efficiently using its resources are known as A. turnover ratios. B. leverage ratios. C. liquidity ratios. D. profitability ratios. Asset utilization (or turnover) ratios are one measure of whether a firm is efficiently using its resources. 156. Which of the following is a profitability ratio? A. current ratio B. total debt ratio C. total asset turnover D. return on equity Profitability ratios include: profit margin, return on assets, and return on equity. 157. Financial ratio analysis measures the performance of the firm based on all but which of the following? A. balance sheet B. market valuation C. income statement D. industry comparison Financial ratio analysis a technique for measuring the performance of a firm according to its balance sheet, income statement, and market valuation. 158. Comparing your firm with all other firms in your industry assesses _________ performance. A. excessive B. consistent C. relative D. non-comparable Comparing your firm with all other firms in your industry assesses relative performance. Banks often use such comparisons when evaluating company creditworthiness. 159. Making comparisons between a firm and its most direct rivals is useful because firms within the same strategic industry group have _______ strategies. A. different B. the same C. similar D. relative Firms with similar strategies are members of a strategic group in an industry. Furthermore, competition is more intense among competitors within groups than across groups. Thus, you can gain valuable insights into the financial and competitive position of a firm, if you make comparisons between a firm and its most direct rivals. 160. In making the decision to enter the pharmaceutical industry, a company would not need to consider which of the following? A. historical comparisons B. comparisons with industry norms C. comparisons with key competitors D. comparisons with non-competitors The financial position of a firm should not be analyzed in isolation. Important reference points are needed. We will address some issues that must be taken into account to make financial analysis more meaningful: historical comparisons, comparisons with industry norms, and comparisons with key competitors. 161. A firm that takes on too much long-term debt to finance operations will see an immediate impact on its indicators of _______ financial leverage. A. short-term B. long-term C. relative D. comparable a firm that takes on too much long-term debt to finance operations will see an immediate impact on its indicators of long-term financial leverage. 162. Apple Inc. reported revenues of 171 billion USD and net income of 37 billion USD in 2012. These figures represent a stunning annual growth in revenue and net income of 57 percent and 43 percent, respectively, for the 2011 to 2013 time period. This information indicates the importance of using __________ to evaluate company financial performance. A. financial ratios B. industry norms C. historical comparisons D. competitor analysis When evaluating company financial performance, it is very useful to compare its financial position over time. This provides a means of evaluating trends. For example, Apple Inc. reported revenues of 171 billion USD and net income of 37 billion USD in 2012. These figures represent a stunning annual growth in revenue and net income of 57 percent and 43 percent, respectively, for the 2011 to 2013 time period. Had Apple's revenues and net income in 2013 been 80 billion USD and 20 billion USD, respectively, it would still be a very large and highly profitable enterprise. However, such performance would have significantly damaged Apples market valuation and reputation as well as the careers of many of its executives. 163. The balanced scorecard provides top managers with a __________ view of the business. A. detailed and complex B. simple and routine C. fast but comprehensive D. long-term financial A balanced scorecard provides top managers with a fast but comprehensive view of the business. In a nutshell, it includes financial measures that reflect the results of actions already taken, but it complements these indicators with measures of customer satisfaction, internal processes, and the innovation and improvement activities of the organization. 164. The balanced scorecard, developed by Kaplan and Norton, helps to integrate A. financial analysis and the reputation of a firm. B. intangible resources and operational measures. C. financial analysis and stakeholder perspectives. D. short-term perspectives and strategic positioning. The balanced scorecard enables managers to consider their business from four key perspectives: customer, internal, innovation and learning, and financial. 165. The balanced scorecard enables managers to consider their business from all of the following perspectives except A. customer perspective. B. internal perspective. C. innovation and learning perspective. D. ethical perspective. The balanced scorecard enables managers to consider their business from four key perspectives: customer, internal, innovation and learning, and financial. 166. An important implication of the balanced scorecard approach is that A. managers need to recognize that satisfaction of stockholder demands is their primary job. B. the emphasis on customer satisfaction and financial goals are only a means to that end. C. managers should not look at their job as primarily balancing stakeholder demands. D. gains in financial performance must come at a cost of employee satisfaction. A key implication is that managers do not need to look at their job as balancing stakeholder demands. The balanced scorecard provides a win-win approach, increasing satisfaction among a wide variety of organizational stakeholders, including employees (at all levels), customers, and stockholders. 167. The financial perspective of the balanced scorecard answers which of the following questions? A. How do customers see us? B. What must we excel at? C. How do we look to shareholders? D. Can we continue to improve and create value? Measures of financial performance indicate whether the company strategy, implementation, and execution are indeed contributing to bottom-line improvement. This interests the shareholder. 168. The innovation and learning perspective of the balanced scorecard answers which of the following questions? A. How do customers see us? B. What must we excel at? C. How do we look to shareholders? D. Can we continue to improve and create value? Given the rapid rate of markets, technologies, and global competition, the criteria for success are constantly changing. To survive and prosper, managers must make frequent changes to existing products and services as well as introduce entirely new products with expanded capabilities. The company ability to do well from an innovation and learning perspective is more dependent on its intangible than tangible assets. 169. The customer perspective of the balanced scorecard answers which of the following questions? A. How do customers see us? B. What must we excel at? C. How do we look to shareholders? D. Can we continue to improve and create value? Clearly, how a company is performing from the customer perspective is a top priority for management. The balanced scorecard requires that managers translate their general mission statements on customer service into specific measures that reflect the factors that really matter to customers. 170. The internal business perspective of the balanced scorecard answers which of the following questions? A. How do customers see us? B. What must we excel at? C. How do we look to shareholders? D. Can we continue to improve and create value? The internal measures should reflect business processes that have the greatest impact on customer satisfaction. These include factors that affect cycle time, quality, employee skills, and productivity. 171. The internal measures should reflect business processes that have ______ impact on customer satisfaction. These include factors that affect cycle time, quality, employee skills, and productivity. A. the least B. variable C. the most D. potential The internal measures should reflect business processes that have the greatest impact on customer satisfaction. These include factors that affect cycle time, quality, employee skills, and productivity. 172. From the innovation and learning perspective, survival is dependent upon managers making _________ changes to existing products and services as well as introduce entirely new products with expanded capabilities. A. few B. no C. frequent D. rare Given the rapid rate of markets, technologies, and global competition, the criteria for success are constantly changing. To survive and prosper, managers must make frequent changes to existing products and services as well as introduce entirely new products with expanded capabilities. 173. If managers do not recognize from the beginning that the balanced scorecard is not a _________ and fail to commit to it long term, the organization will be disappointed. A. panacea B. quick fix C. marketing ploy D. cheap solution There is general agreement that there is nothing inherently wrong with the concept of the balanced scorecard. The key limitation is that some executives may view it as a quick fix that can be easily installed. If managers do not recognize this from the beginning and fail to commit to it long term, the organization will be disappointed. 174. With the total performance indicators in place at Sears, it can evaluate if a single store improves its employee attitude by 5 percent and therefore predict with confidence that if the revenue growth in the district as a whole is 5 percent, the revenue growth in this particular store would be 5.5 percent. This is an example of the _______ perspective of the balanced scorecard. A. customer B. internal business C. financial D. innovation and learning Sears, the retailer, found a strong causal relationship between employee attitudes, customer attitudes, and financial outcomes. Through an ongoing study, Sears developed what it calls its total performance indicators (TPI) which is a set of indicators for assessing its performance with customers, employees, and investors. The Sears quantitative model has shown that a 5 percent improvement in employee attitudes leads to a 1.3 percent improvement in customer satisfaction, which in turn drives a 0.5 percent improvement in revenue. Thus, if a single store improved its employee attitude by 5 percent, Sears could predict with confidence that if the revenue growth in the district as a whole were 5 percent, the revenue growth in this particular store would be 5.5 percent.