Strategy Evaluation and Governance Part 1

Strategic Management: A Competitive Advantage Approach Chapter 9 Strategy Evaluation and Governance 1) Competitive advantages are normally the result of superiority in one of three areas. Which of the following is one of them? A) Markets B) Products C) Profits D) Resources E) Revenues Answer: D 2) Adequate and timely ________ is/are the cornerstone of effective strategy evaluation. A) rewards B) feedback C) punishment D) reminders E) prompts Answer: B 3) Competitive advantage is normally the result of superiority in resources, skills, or A) employees. B) position. C) consistency. D) feasibility. E) governance. Answer: B 4) The first activity in the strategy-evaluation process is to A) develop organizational goals. B) examine the underlying bases of a firm's strategy. C) compare expected results with actual results. D) examine the capital structure. E) take corrective actions to ensure that performance conforms to plans. Answer: B 5) ________ advantage tends to be self-sustaining so long as key external and internal factors that underlie it (them) remain(s) stable. A) Resource B) Positional C) Synergy D) Skills E) Capital Answer: B 6) The idea that the positioning of one's ________ can enhance their combined effectiveness is familiar to military theorists, chess players, and diplomats. A) people B) facilities C) profits D) products E) resources Answer: E 7) What is the cornerstone of effective strategy evaluation? A) Adequate and timely feedback B) Quality and quantity of managers C) Smaller ratio of top- to lower-level management D) Evaluation preceding implementation stage E) Punitive corrective actions Answer: A 8) With the passage of time, strategy evaluation is becoming A) increasingly difficult. B) much simpler. C) very convenient. D) an unnecessary activity. E) less important. Answer: A 9) All of the following are reasons strategy evaluation is more difficult today EXCEPT A) a dramatic increase in the environment's complexity. B) the increasing number of variables. C) the increase in the number of both domestic and world events affecting organizations. D) the increasing time span for which planning can be done with any degree of certainty. E) the rapid rate of obsolescence of even the best plans. Answer: D 10) Which of the following is NOT a reason for the increasing difficulty of evaluating strategies? A) Product life cycles are longer. B) Domestic and world economies are less stable. C) Product development cycles are shorter. D) Technological advancement is more rapid. E) Change is occurring more frequently. Answer: A 11) Success today A) guarantees success tomorrow. B) is no guarantee of success tomorrow. C) provides significant assurance of success tomorrow. D) is all that really matters. E) predicts tomorrow's success. Answer: B 12) Modern organizational realities demand many skills of employees. Which of the following is NOT a required skill? A) Flexibility B) Innovation C) Creativity D) Initiative E) Patience Answer: E 13) Strategy-evaluation activities should ideally be performed A) just on a periodic basis. B) only at the onset of a problem. C) on a continuous basis. D) solely upon completion of major projects. E) annually only. Answer: C 14) Comparing expected results with the actual results is the first activity in the strategyevaluation process. Answer: FALSE 15) Adequate and timely feedback is the cornerstone of effective strategy evaluation. Answer: TRUE 16) Strategy evaluation is essential for developing objectives. Answer: FALSE 17) Too much pressure to achieve specific goals can lead to dysfunctional behavior. Answer: TRUE 18) Competitive advantages are normally the result of superiority in one of three areas: feasibility, consistency, or consonance. Answer: FALSE 19) Goal setting is critical to effective strategy evaluation. Answer: FALSE 20) Too much emphasis on evaluating strategies may be expensive and counterproductive. Answer: TRUE 21) Strategy evaluation is becoming increasingly easier with the passage of time, given technological advances. Answer: FALSE 22) The decreasing time span for which planning can be done with any degree of certainty is a reason strategy evaluation is more difficult today. Answer: TRUE 23) Some strategies take years to implement. Answer: TRUE 24) Evaluating strategies on a continuous rather than on a periodic basis allows benchmarks of progress to be established and more effectively monitored. Answer: TRUE 25) It is most effective to conduct strategy evaluation annually, at the end of the fiscal year. Answer: FALSE 26) List and describe briefly the activities in the strategy-evaluation process. Answer: The strategy-evaluation process includes three basic activities. The first is to examine the underlying bases of a firm's strategy. Once this is done, in step two, the expected results are compared with the actual results to identify and determine variances. This analysis leads to the final step of taking corrective action to ensure that performance conforms to plans. 27) Explain why strategy evaluation can be a complex and sensitive undertaking. Answer: Too much emphasis on evaluating strategies may be expensive and counterproductive. No one likes to be evaluated too closely. The more managers attempt to evaluate the behavior of others, the less control they have. Yet, too little or no evaluation can create even worse problems. Strategy evaluation is essential to ensure that stated objectives are being achieved. Strategists need to create an organizational culture where strategy evaluation is viewed as an opportunity to make the firm better, and so the firm can compete better and everyone in the firm can do better, sharing in the firm's increased profitability. 28) What are some of the reasons why strategy evaluation is becoming increasingly difficult with the passage of time? Answer: Possible answers include: Domestic and world economies were more stable in years past; product life cycles were longer; product development cycles were longer; technological advancement was slower; change occurred less frequently; there were fewer competitors; foreign companies were generally weak; and there were more regulated industries. Other reasons include the following trends: a dramatic increase in the environment's complexity; the increasing difficulty of predicting the future with accuracy; the increasing number of variables; the rapid rate of obsolescence of even the best plans; the increase in the number of both domestic and world events affecting organizations; and the decreasing time span for which planning can be done with any degree of certainty. 29) Which of the following is the first activity in strategy evaluation? A) Examining the underlying bases of current strategies B) Measuring organizational performance C) Taking corrective actions D) Monitoring the external environment E) Monitoring the internal environment Answer: A 30) Corrective actions are almost always ________ except when external and internal factors have not significantly changed and the firm is progressing satisfactorily toward achieving stated objectives. A) unnecessary B) needed C) undesirable D) prohibitively expensive E) futile Answer: B 31) If you discover during the course of strategy evaluation that major changes have occurred in the firm's internal strategic position, you should A) continue on the present strategic course. B) wait until the next quarter to see if things revert. C) take corrective actions. D) follow the original strategic plan. E) acquire additional capital. Answer: C 32) A revised ________ should focus on changes in the organization's management, marketing, finance and accounting, production and operations, research and development (R&D), and management information systems (MIS) strengths and weaknesses. A) mission B) IFE Matrix C) vision D) EFE Matrix E) EPM Matrix Answer: B 33) A revised ________ should indicate how effective a firm's strategies have been in response to key opportunities and threats. A) IFE Matrix B) mission C) EFE Matrix D) vision E) CPM Matrix Answer: C 34) Which of the following is NOT included in measuring organizational performance? A) Comparing results to competitors' expectations B) Examining progress being made toward meeting stated objectives C) Investigating deviations from plans D) Evaluating individual performance E) Comparing expected results to actual results Answer: A 35) Which of the following is NOT a corrective action a company might take to correct unfavorable variances? A) Divesting a division B) Revising objectives C) Raising capital with stock or debt D) Allocating resources differently E) Taking punitive action Answer: E 36) ________ are quantitative criteria commonly used to evaluate strategies. A) Cash budgets B) Balanced Scorecards C) Capital Asset Pricing Models D) Financial ratios E) Present value strategic analyses Answer: D 37) Which of these is a potential problem associated with using only quantitative criteria for selecting strategies? A) Most quantitative criteria are geared to long-term objectives rather than annual objectives. B) Different accounting methods can provide different results on many quantitative criteria. C) Intuitive judgments are almost never used in deriving quantitative criteria. D) Quantitative criteria include human factors that may be underlying causes of declining performance. E) Quantitative criteria are not useful for comparisons of the firm's performance over different periods of time. Answer: B 38) Financial ratios are used to compare a firm's performance over different time periods, to compare the firm's performance to industry averages, and to compare a firm's performance with A) overall business standards. B) projected goals. C) the performance of suppliers. D) non-financial ratios. E) the performance of competitors. Answer: E 39) Most quantitative criteria are geared to ________ objectives rather than to ________ objectives. A) top-management; employee B) short-term; annual C) annual; long-term D) environmental; community E) long-term; short-term Answer: C 40) A firm takes corrective actions during strategy evaluation. Which of the following is NOT a type of corrective action? A) Alter strategies B) Replace one or more key individuals C) Revise objectives D) Divest a division E) Take on more debt Answer: E 41) According to author Alvin Toffler, what occurs when the nature, types, and speed of changes overpower an individual's or organization's ability and capacity to adapt? A) Corporate insecurity B) Corrective actions C) Future shock D) Corporate agility E) Projected performance Answer: C 42) Corrective actions are expected to A) strengthen an organization's competitive position in its industry. B) streamline asset holdings. C) have no risk. D) involve abandoning existing strategies. E) help decrease debt. Answer: A 43) Research suggests that which of the following is one of the best ways to overcome individuals' resistance to change in strategy evaluation? A) Participation B) Command-and-control C) Laissez-faire system D) Rational argument E) Emotional reactions Answer: A 44) According to researchers, all of the following encourage individuals to accept change EXCEPT A) having a cognitive understanding of the changes. B) having a sense of control over the situation. C) having an awareness that necessary actions are going to be taken to implement change. D) participating in strategy-evaluation activities. E) being overpowered by the nature, types, and speed of changes. Answer: E 45) Corrective action should do all of the following EXCEPT A) capitalize upon internal strengths. B) avoid external opportunities. C) avoid, reduce, or mitigate external threats. D) improve internal weaknesses. E) strengthen an organization's competitive position. Answer: B 46) Changes in the organization's management, marketing, finance and accounting, production and operations, research and development (R&D), and management information systems (MIS) strengths and weaknesses should all be points of focus of a revised EFE Matrix in strategy evaluation. Answer: FALSE 47) In strategy evaluation, a revised IFE Matrix should indicate how effective a firm's strategies have been in response to key opportunities and threats. Answer: FALSE 48) Strengths, weaknesses, opportunities, cost and threats that represent the bases of current strategies should continually be monitored for change because it is not really a question of whether these factors will change, but rather when they will change and in what ways. Answer: TRUE 49) When measuring organizational performance, a comparison should be made between expected results and actual results. Answer: TRUE 50) Criteria for evaluating strategies should be measurable and easily verifiable. Answer: TRUE 51) Financial ratios are rarely used as criteria to evaluate strategies. Answer: FALSE 52) Measuring organizational performance includes comparing expected results to actual results, investigating deviations from plans, evaluating individual performance, and examining progress being made toward meeting stated objectives. Answer: TRUE 53) Intuitive judgments are almost always involved in deriving quantitative criteria. Answer: TRUE 54) Most quantitative evaluation criteria are geared to long-term objectives rather than annual objectives. Answer: FALSE 55) Measuring organizational performance requires making changes to reposition a firm competitively for the future. Answer: FALSE 56) Taking corrective actions, requires making changes to competitively reposition a firm for the future. Answer: TRUE 57) Taking corrective actions does not necessarily mean that existing strategies will be abandoned, or even that new strategies must be formulated. Answer: TRUE 58) Corrective action in strategy evaluation is necessary to keep an organization on track toward achieving stated objectives. Answer: TRUE 59) Alvin Toffler argues that environments are becoming so dynamic and complex that they threaten people and organizations with future shock, in his thought-provoking books entitled Future Shock and The Third Wave. Answer: TRUE 60) According to Alvin Toffler, future shock occurs when the nature, type, and speed of changes overpower an individual's or organization's ability and capacity to adapt. Answer: TRUE 61) According to research, participation in strategy-evaluation activities is one of the best ways to overcome resistance to change. Answer: TRUE