MGMT 3830 Exam 1, ch.2
A ________ is best described as any activity a firm pursues to explore and develop new products and processes, new markets, or new ventures. A) strategic initiative B) value chain C) supply chain D) corrective action
A
In a large company, who is most responsible for devising the corporate strategy? A) the CEO of the company B) the lower-level employees in the company C) the head of the production department in the company D) the human resource manager in the company
A
After a firm has identified its key stakeholders in stakeholder impact analysis, the immediate next step is to A) recognize the opportunities and threats the stakeholders present. B) identify stakeholders' interests and claims. C) formulate a stakeholder strategy. D) address the stakeholders' concerns.
B
As a part of strategy formulation, a firm's functional strategy primarily concerns questions relating to A) where to compete. B) when to compete. C) how to implement business strategy. D) how to enter target markets.
C
As the legal owners, ________ have the most legitimate claim on a company's profits. A) creditors B) employees C) shareholders D) board members
C
Zenya is the founder of an online service that allows users to rent out spare rooms in their homes. She has hired a number of extremely bright employees whose opinions are central to the company's success in the fast-paced online services industry. Which type of strategic management process would be most likely to fully utilize the strengths embodied by her team and position the company to capitalize upon autonomous actions and serendipity? A) strategic planning B) scenario planning C) strategy as planned emergence D) ad-hoc planning
C
A(n) ________ is best described as the strategic option that top managers decide most closely matches the current reality and which is then executed. A) bottom-up emergent strategy B) executive summary C) realized strategy D) dominant strategic plan
D
Corporate executives at LikeReal, Inc. decide to compete in the remote model airplane industry by making the largest model planes available. By doing this, they completed part of their A) implementation strategy. B) corporate strategy. C) functional strategy. D) business strategy.
D
2) Strategic leaders spend the majority of their time working alone to devise new strategies.
F
A firm is required by society and its shareholders to meet its ethical and philanthropic responsibilities.
F
A firm's resource-allocation process (RAP) has very little effect on its realized strategy.
F
Because they are a crucial component of a firm's success, customers are considered internal stakeholders.
F
It is helpful to break down strategy formulation and strategy implementation into five distinct areas.
F
The autocratic strategic management process exhibited by the former head of Apple, Steve Jobs, is best described as an emergent strategy.
F
In the pyramid of corporate social responsibility, ________ responsibilities are the foundational building block. A) economic B) ethical C) philanthropic D) legal
A
What is a strategic business unit (SBU)? Explain with an example.
Business strategy occurs within strategic business units, or SBUs, the standalone divisions of a larger conglomerate, each with its own profit-and-loss responsibility. Companies can be organized on a geographic or a product basis to form SBUs. An example of a SBU would be the automobile division of a large conglomerate that also manufactures and sells pharmaceuticals, apparel, consumer electronics, and other such products.
Strategic leadership pertains to the use of power and influence by ________ to direct the activities of others when pursuing an organization's goals. A) production workers B) lower-level managers C) external stakeholders D) corporate executives
D
Under the strategy as a planned emergence model, even entry-level employees can help generate strategic initiatives.
T
Discuss the role of lower-level employees in the strategy-as-planned-emergence approach.
Lower-level employees focus mainly on strategy implementation when a firm is using top-down or scenario planning. Any employee (even at the entry level) can have great ideas that might become strategic initiatives with the potential to transform companies. Thus, in the planned emergence process, organizational structure and systems should allow bottom-up strategic initiatives to emerge.
Explain the role of power in the strategic leadership process
Power is defined as the strategic leader's ability to influence the behavior of other organizational members to do things, including things they would not do otherwise. Strategic leaders can draw on position power as vested in their authority, for example, as chief executive officer (CEO), as well as informal power, such as persuasion to influence others when implementing strategy.
What makes scenario planning more flexible than top-down strategic planning?
Similar to top-down strategic planning, scenario planning also uses a rational, scientific approach to the strategy process. In addition, in scenario planning managers envision different scenarios, to anticipate plausible futures. The goal in scenario planning is to create strategic plans that are more flexible, and thus more effective, than those created through the more static strategic planning approach. The circular nature of the scenario-planning model allows for continuous interaction among analysis, formulation, and implementation. Through this interactive process, managers can adjust and modify their actions as new realities emerge. The interdependence among analysis, formulation, and implementation also enhances organizational learning and flexibility.
Define strategic leadership.
Strategic leadership pertains to executives' use of power and influence to direct the activities of others when pursuing an organization's goals.
Executives whose visions and decisions help their companies achieve competitive advantage can be considered strategic leaders.
T
Differentiate between a firm's intended, realized, and emergent strategies.
Top-level executives design an intended strategy—the outcome of a rational and structured, top-down strategic plan. An emergent strategy describes any unplanned strategic initiative undertaken by mid-level employees of their own volition. If successful, emergent strategies have the potential to influence and shape a firm's strategy. A firm's realized strategy is generally a combination of its top-down strategic intentions and bottom-up emergent strategy.
The distribution department at Golden Grains Wheat Company has decided to adopt the FIFO (first in, first out) method of inventory to dispatch its bags of wheat. Which of the following strategies does this scenario best illustrate? A) functional strategy B) corporate strategy C) master strategy D) business strategy
A
Eleanor owns a large portion of Apex Apparel's stock. However, she is not employed by the company. In this scenario, Rachel is the company's A) external stakeholder. B) internal stakeholder. C) creditor. D) customer.
B
In the top-down strategic planning approach, all strategic intelligence and decision-making responsibilities rest primarily on the A) functional managers. B) chief executive officer. C) external stakeholders. D) general manager.
B
Patriot Tools, a company that manufactures industrial tools, incurs higher costs because of its refusal to outsource its manufacturing to countries where labor costs are lower. This reflects Patriot Tools' ________ responsibility. A) economic B) legal C) ethical D) demographic
C
In Strategy Highlight 2.1, what type of strategy did Diana, the Starbucks store manager in southern California, use to develop the new iced beverage for her store? A) She used a rational planning approach to strategy planning. B) She created a dominant strategy plan. C) She used scenario planning. D) She used an emergent strategy.
D
After carefully assessing the market potential for solar-powered mobile devices, the top-level executives of Futuretronics Inc. decided that the company would be launching a line of solar-powered tablets within the next two years. This would mean that the tablet division would need to immediately begin research and development efforts. Which of the following strategies in the planned emergence model does this best illustrate? A) intended strategy B) emergent strategy C) unrealized strategy D) tactical strategy
A
As the CEO of a conglomerate, Eva Morris exhibited her strong commitment toward the company's core value that customers' well-being is more important than profit when she convinced the board of directors to liquidate the company's pesticide subsidiary. The pesticide brand sold by her company was a major revenue earner in lesser-developed nations, but studies indicate that it is a carcinogen. Eva persuaded the board that the company had to be responsible toward society. In this scenario, Eva has demonstrated A) strategic leadership. B) intrapreneurship. C) Machiavellianism. D) individualism.
A
Carlos is the manager of a graphic design firm, and he relies on a top-down strategic management approach to maintain tight control over the activities of his employees. The company has recently started to lose market share to its more innovative competitors, and Carlos wants to encourage his employees to start contributing to the strategy formulation process to make the company more competitive. Which of the following steps should Carlos take? A) Designate Friday afternoons as time for employees to pursue outside interests loosely related to the business. B) Schedule individual meetings with employees and demand that they come prepared with five ideas. C) Take an extended vacation and see how the business naturally reorganizes itself in his absence. D) Allow employees to take whatever approach they feel is appropriate when dealing with customers.
A
Ivan is the founder of a firm producing self-driving vehicles. Because the industry is so new and chaotic, Ivan favors a top-down strategic planning approach in which he exerts strong control over all aspects of the business, from product development and design to manufacturing and marketing. What is wrong with this scenario? A) The self-driving vehicle industry is changing too much for the top-down approach to be effective. B) The top-down approach can only be applied to specific business functions. C) The top-down approach leaves other employees uncertain about their roles in the company. D) The top-down approach is expensive to maintain, leaving the company at a competitive disadvantage.
A
Mercurial Foods is the parent company of several chain restaurants offering a variety of cuisines. The top management at Mercurial has decided to enter the frozen foods industry based on its assessment of the profit potential in that industry. Which of the following strategies does this best illustrate? A) corporate strategy B) business strategy C) functional strategy D) divisional strategy
A
PowerPills is a highly successful vitamin manufacturer. At the close of its most recent fiscal year, the company's balance sheet showed cash holdings of $110 million. Which of the following actions will provide the most benefit for stakeholders? A) Reinvest profits into expanding the company and creating more jobs. B) Reward the CEO with a significant bonus payment. C) Save the excess cash as a precaution against black swan events. D) Buy out the leading competitor to reduce competition and maintain price stability.
A
Strategic thinking is different from strategic planning in that A) strategic thinking includes all types of information sources while strategic planning does not. B) strategic thinking relies more on hard data than strategic planning. C) strategic thinking is regimented and confining, whereas strategic planning is more flexible. D) strategic thinking can create an illusion of control, whereas strategic planning avoids this.
A
The CEO of Chyron Media has decided to enter the markets of emerging nations like China and Brazil. This means that the books, magazines, and websites published under the Chyron Media banner would be made available in these nations. Which of the following strategies does this scenario best illustrate? A) corporate strategy B) functional strategy C) business strategy D) divisional strategy
A
The best example of a firm's external stakeholder is a(n) A) government agency that regulates the prices of products manufactured by the firm. B) board member from a wholly-owned foreign subsidiary of the firm. C) shareholder who has invested money in the firm but is not employed by the firm. D) employee of the firm who is responsible for a contract project.
A
The executives at Red Couture Inc. are developing strategic plans to address plausible future situations like rise in the prices of cotton and synthetic fabrics by 20 percent, appreciation in the value of the dollar, increase in the cost of labor by 30 percent, and increase in demand for the company's products. By doing so, the company will be well prepared with its planned responses if any of these situations occurs in the future. Thus, Red Couture is employing ________ as the approach to the development of strategy. A) scenario planning B) top-down strategic planning C) reverse engineering D) pattern recognition
A
The minimum wage in the country of New Morland is $8 an hour. Odion, a restaurant in New Morland's capital city, pays its servers $8 per hour. However, the management of the restaurant feels that this amount is excessive for workers whose only job is to clear tables. By continuing to adhere to the rules set by the government of New Morland, which of the following responsibilities is Odion satisfying? A) legal responsibilities B) philanthropic responsibilities C) ethical responsibilities D) demographic responsibilities
A
Which of the following functions do the general managers in strategic business units primarily perform? A) design generic business strategies based on guidelines received from corporate headquarters B) set overarching strategic objectives to unify the entire conglomerate under one mission C) take responsibility for decisions and actions within a single functional area D) allocate scarce resources among different business divisions
A
Which of the following is an assumption that top-down strategic planning rests on? A) We can predict the future from the past. B) Time cannot be compressed at will. C) Decisions made in the past do not affect our future. D) Change is constant.
A
Which of the following statements is true of strategic initiatives? A) Strategic initiatives can be the result of a response to external trends or come from internal sources. B) When lower-level employees are less empowered, the possibility of strategic initiatives is higher. C) Strategic initiatives result from top-down planning by executives and not through a bottom-up process. D) Random events and accidental happenstances reduce the possibility of strategic initiatives in organizations.
A
Which of the following statements is true of the social responsibilities of a business? A) A firm's ethical responsibilities go beyond its legal responsibilities. B) Shareholders mandatorily require a firm to perform its ethical and philanthropic responsibilities. C) Ethical responsibilities are the foundational building block of a firm's social responsibility. D) Legal responsibilities are often subsumed under the idea of corporate citizenship, reflecting the notion of voluntarily giving back to society.
A
Briefly describe the level-5 leadership pyramid.
According to the Level-5 leadership pyramid, effective strategic leaders go through a natural progression of five different levels. Each level builds upon the previous one; the manager can move on to the next level of leadership only when the current level has been mastered. The five levels are: highly capable individual, contributing team member, competent manager, effective leader, and executive.
What does the upper-echelons theory propagate?
According to the upper-echelons theory, organizational outcomes including strategic choices and performance levels reflect the values of the top management team (the individuals at the upper echelons, or levels, of an organization). The theory states that executives interpret situations through the lens of their unique perspectives, shaped by personal circumstances, values, and experiences. Their leadership actions reflect characteristics of age, education, and career experiences, filtered through personal interpretations of the situations they face. The upper-echelons theory favors the idea that strong leadership is the result of both innate abilities and learning.
A firm is embedded in a multifaceted exchange relationship with a number of diverse internal and external stakeholders. Elaborate on this statement and provide multiple examples of the exchange relationship between a firm and its stakeholders including what each party contributes.
All stakeholders make specific contributions to a firm, which in turn provides different types of benefits to different stakeholders. Employees contribute their time and talents to the firm, receiving wages and salaries in exchange. Shareholders contribute capital in the hope that the stock will rise and the firm will pay dividends. Communities provide real estate, infrastructure, and public safety. In return, they expect that companies will pay taxes, provide employment, and not pollute the environment. The firm, therefore, is embedded in a multifaceted exchange relationship with a number of diverse internal and external stakeholders. If any of the stakeholders withholds participation in the firm's exchange relationships, it can have severe negative performance implications.
BlueStainless Corp. has been able to gain and sustain a competitive advantage due to its strong relationship with its employees, customers, suppliers, and local communities. The company believes in lifetime employment and ensures that its employees grow along with the company. Investors are more than satisfied with the returns on their investments. Also, 3 percent of the company's profit is spent on community development. With initiatives like these, customers feel privileged to associate themselves with BlueStainless products. This scenario best illustrates the implementation of a A) strategic analysis. B) stakeholder strategy. C) wild card event. D) black swan event.
B
Burke Furnishings is a company that manufactures and sells home furniture. It sources its materials from another country to keep costs low. An assembly line worker in one of its manufacturing centers noticed that there was increasing concern regarding the potential toxicity of the flame-resistant materials used in the furniture. In response, she compiled a list of nontoxic flame-resistant materials that the company could use. When her manager learned about this, he presented the prospect and got it approved from the top management team. This is an example of the A) top-down strategic planning approach. B) planned emergence approach. C) scenario planning process. D) reverse engineering process.
B
Ida has been tasked with formulating the business strategy for Contour Cosmetics' new line of lipsticks. Which of the following ideas would Ida be likely to include in her proposal? A) Open kiosks in shopping centers located in developing countries with rising disposable incomes. B) Promote the lipsticks as the longest-lasting on the market. C) Invest in building an online store for Contour products. D) Reorganize the manufacturing division to gain efficiency.
B
InTex manufactures medical devices. The firm's profitability depends on several variables that are subject to occasional change, including the cost of parts and labor, changes in medical practices, and the price of oil used in both manufacturing and shipping. To account for the potential impact of changes to any of these variables, InTex managers should implement a(n) ________ approach. A) top-down strategic planning B) scenario planning C) upper-echelon D) strategic business units
B
The amount of xylene that can be used in household paint is legally limited to 0.03 percent. Anything beyond this amount is hazardous to health and the environment, and considered a legal offense. Consequently, CW Paints Corp. has vouched to make its products as safe as possible. Therefore, it manufactures xylene-free paints even though this increases its costs and reduces the dividends paid to its shareholders in the long run. Which of the following responsibilities is CW Paints Corp. primarily compromising in this scenario? A) legal responsibilities toward the government B) economic responsibilities toward its shareholders C) philanthropic responsibilities toward the local community D) ethical responsibilities toward the society
B
The former CEO of Sam's Club, a division with its own profit-and-loss responsibility, Rosalind Brewer, reported to Walmart's CEO, C. Douglas McMillon, who as corporate executive oversees Walmart's entire operations. Sam's Club, therefore, is a ________ of Walmart. A) corporate partner B) strategic business unit C) branch office D) house brand manufacturer
B
The founder of T-Square Construction strongly believes in the notion of corporate social responsibility, so he has proposed a number of philanthropic activities that he expects the company to pursue. In order to accomplish this vision, the managers should first A) review all legal codes in the areas in which T-Square operates and ensure all permits are up-to-date. B) ensure that the company is profitable and has a sustainable competitive advantage. C) make sure it is paying employees wages that allow them to live comfortably. D) ask for public input on issues that the company can help address.
B
The production head at the Omnitone Paint Company would frequently stay back after office hours and experiment with new color combinations even though this was part of the new product development team's job. As a result of these experiments, he came up with two new interior paint colors, foggy morning and mint julep. The new colors proved popular among test groups, and quickly became some of Omnitone's best-selling products. Which of the following strategies does this scenario best illustrate? A) intended strategy B) emergent strategy C) unrealized strategy D) tactical strategy
B
To support the rise of emergent strategies, an organization should A) centralize decision making and all other activities. B) empower lower-level employees to take up autonomous actions. C) limit serendipity that is in the form of random events and accidental happenstances. D) rely solely on hard data to formulate strategies.
B
Top-down strategic planning as an approach to the strategic management process will be most effective when the A) environment is constantly changing. B) size of the firm is large. C) probability of black swan events is high. D) top management wants to decentralize decision making.
B
Trung has been an employee with PureEnergy Inc. for 15 years. He started with an entry-level job, and today he is a manager of an entire division. Over the years, Trung has acquired a reputation for doing the right things in the company. Hence, as an efficient leader, he is capable of effectively communicating and motivating his subordinates to work toward the company's vision and mission. According to the Level-5 leadership pyramid, which is the highest level of leadership Trung has reached so far? A) Level 5 B) Level 4 C) Level 3 D) Level 2
B
Which of the following is typically an economic responsibility of a firm? A) sourcing raw materials from highly developed countries B) paying adequate returns to the firm's stockholders on the capital invested by them C) donating resources, in terms of money and time, toward community development D) helping a nation increase its import of goods and services
B
Which of the following statements is true of corporate strategy? A) The objective of corporate-level strategy is to ensure that the sum of the values of individual business units is greater than the overall corporate value. B) A corporate strategy must be able to create synergies across business units that are quite different. C) Formulating a corporate strategy involves general managers answering questions relating to how to compete in order to achieve superior performance. D) Deciding whether to adopt a differentiation or a cost-leadership strategy is part of formulating the corporate strategy.
B
Which of the following was a key motivator for participants in the Occupy movement of 2011? A) the need for a capitalist economic system B) the issue of income disparity C) the need to reduce government intervention in businesses D) the desire to dump ecologically dangerous products overseas
B
A company uses the planned emergence approach in the development of its strategies. Which of the following is an implication of this? A) The employees will be isolated from the process of setting the company's vision and mission. B) The lower-level employees will be restricted to the tasks involved in strategic implementation. C) The company's organizational structure and systems will be designed to support bottom-up strategic initiatives. D) The top management will create a strategy that is based on hard data alone, rather than an inspiring vision.
C
A traditional top-down strategic planning process typically begins with A) employees at the operational level identifying problems within an organization. B) functional managers formulating functional strategies for their respective departments. C) strategic leaders adjusting a company's vision and mission based on environmental analysis. D) employees who have close contact with customers taking autonomous actions.
C
Blue Billion Inc. is a large company that sells a variety of products such as cosmetics, jewelry, frozen foods, navigation electronics, and airplanes. Apart from this, the company also has a strong presence in the service industry through its chain of dance studios, casinos, and nightclubs. Each of its product divisions operates as an individual business and is responsible for its own profits and losses. Thus, these product divisions under Blue Billion can be referred to as A) limited liability companies. B) functional departments. C) strategic business units. D) corporations.
C
Hannah is the Chief Operating Officer of the startup AppPalace. In which of the following scenarios does Hannah exhibit strategic leadership? A) Hannah directs the company to produce an app for reptile enthusiasts, a community she happens to be a part of. Even though the app ends up losing significant amounts of money, Hannah is proud of the product and uses it every day. B) Citing budget concerns, Hannah ignores the directions from AppPalace's CEO to double the size of the customer support staff. As a result, the company misses its third quarter customer satisfaction target but exceeds its net profit expectations by 5 percent. C) Hannah schedules a meeting with the manager of the marketing department and overcomes his skepticism about a new campaign aimed at customers in the 55+ age group. Over the next three months, AppPalace gains 250,000 new users in that group. D) With a major pitch to potential investors coming up, Hannah works alone for 10 hours a day until she writes the perfect sales pitch. Even though the rest of her team doubts that they can meet the performance goals Hannah has set, she makes the presentation anyway.
C
Molly Hue Apparels Inc. (MHA) had been outsourcing its production to less-developed countries in order to reduce its cost of production. With the emergence of its competitor, Hova Inc., MHA lost its competitive advantage. Hova had its production units in its home country that allowed the company to bring out the latest trends to the market earlier than MHA. Also, MHA frequently suffered due to political instability and lack of intellectual property laws in the outsourced countries. Thus, parts of MHA's strategies became obsolete and it had to relocate its production. What are such obsolete strategies referred to as in the planned emergence model? A) intended strategy B) emergent strategy C) unrealized strategy D) tactical strategy
C
The CEO of Mabel Automobiles was the child of parents who had difficulty making enough money to support their family. As a result, he and his siblings did not have access to many advantages that children from wealthier families had. This CEO, therefore, emphasized making affordable, low-maintenance vehicles that could be bought by low-income households. Which of the following does this example demonstrate? A) dominant strategic planning B) Level-5 leadership pyramid C) upper-echelons theory D) scenario planning
C
The interaction between a firm and its diverse internal and external stakeholders is best described as a(n) A) ergonomic relationship. B) cartel arrangement. C) exchange relationship. D) fiduciary responsibility.
C
What is the strategic management process? A) The CEO decides who the product managers will be for a company. B) The CEO defines the main problems facing a company. C) Strategic leaders design a method to formulate and implement strategy. D) Strategic leaders focus on creating a vision that reflects the company's strategy.
C
When the strong dictatorial rule in Backenstein unexpectedly collapsed due to the shocking death of the royal family in an explosion, the nation's economy experienced drastic changes. The laws became more restrictive, the country lost many locally produced resources and products, and the distribution of wealth became inequitable. The unexpected event that led to these changes can best be described as a(n) ________ event. A) extinction B) wild card C) black swan D) miracle
C
Which of the following best qualifies as a firm's internal stakeholder? A) an auditor assigned to the firm by a federal government agency B) a labor union with whom the firm's employees can affiliate C) a manager taking care of the firm's operations in a foreign market D) a competitor manufacturing the same products as that of the firm
C
Which of the following methods of developing a strategy best illustrates scenario planning? A) Based on the previous year's profits, the CEO of Solva Inc. decided to adopt an expansion strategy in its home market. B) A sales person at MP Foods Inc. suggested that the company should introduce an organic version of its gelato to cater to the needs of the increasingly health-conscious population. C) The managers at Lyon Clothing Inc. formulated a strategy that is able to handle small to medium to large increases in the prices of cotton in the future. D) The CEO of BCT Inc., a large conglomerate, has decided to enter the South American market based on the competitor's success in the same market.
C
Which of the following scenarios best illustrates a good stakeholder strategy? A) VP Inc. follows a strategy in which maximization of the shareholder's wealth is the primary concern of the managers. B) Carrvero Inc. ensures that its employees are paid the least in the industry so that its external stakeholders can get the best price. C) PA Corp. distributes only 40 percent of its annual profit after taxes to shareholders, while the remaining is invested for further research, and distributed among employees and the local community. D) Gen Pharma Corp. ensures that it fully exploits free natural resources, so that most of its profits go to shareholders in the form of dividends.
C
Who formulates a company's corporate strategy? What is the objective of this strategy?
Corporate executives at headquarters formulate corporate strategy. Corporate executives need to decide in which industries, markets, and geographies their companies should compete. They need to formulate a strategy that can create synergies across business units that may be quite different, and determine the boundaries of the firm by deciding whether to enter certain industries and markets and whether to sell certain divisions. They are responsible for setting overarching strategic objectives and allocating scarce resources among different business divisions, monitoring performance, and making adjustments to the overall portfolio of businesses as needed. The objective of corporate-level strategy is to increase overall corporate value so that it is higher than the sum of the individual business units.
What are the arguments against top-down strategic planning and scenario planning?
Critics of top-down and scenario planning argue that strategic planning is not the same as strategic thinking. In fact, they argue the strategic planning processes are often too regimented and confining. As such, they do not allow for the necessary strategic thinking. Managers doing strategic planning may also fall prey to an illusion of control—that is, the hard numbers in a strategic plan can convey a false sense of security. According to critics of strategic planning, in order to be successful, a strategy should be based on an inspiring vision and not on hard data alone. They advise that managers should focus on all types of information sources, including soft sources that can generate new insights, such as personal experience or the experience of front-line employees.
Due to political instability in the country of East Gerdon, the strategic leaders at the headquarters of Mako Manufacturing have decided to close all production facilities in the country until stability returns. Mako's managers have formulated a ________-level strategy. A) business B) divisional C) functional D) corporate
D
Due to several black swan events in the past, the A) shareholders of public companies have become more confident in investing their resources in businesses. B) need for corporate governance and transparency has decreased within various industries. C) nations around the globe have explicitly appreciated and accepted capitalism as an economic system. D) implicit trust relationship between the corporate world and society at large has deteriorated.
D
In the final step of the stakeholder impact analysis, a firm A) identifies its stakeholders' interests and claims. B) differentiates its internal stakeholders from its external stakeholders. C) recognizes the opportunities and threats stakeholders present. D) decides a course of action to address the stakeholders' concerns.
D
Organic Food Inc., a multinational company, relies on its media partner Radio Plus to regularly advertise its offers, sales, and new products. Radio Plus is invested in this relationship because it generates most of its revenue from advertising Organic Food's products. In this scenario, Radio Plus is Organic Food Inc.'s A) stockholder. B) workforce. C) internal stakeholder. D) external stakeholder.
D
Pear Tree Electronics is a large conglomerate that operates in 17 different countries. The corporate executives at the headquarters have decided that the company's objective for the next two years will be to increase its customer equity, or the value of potential future revenues generated by all its customers in a lifetime. Based on this guideline received from the top management team, the product leader of the home audio division has decided to adopt a cost-leadership strategy in all his 17 units. Thus, the decision made by the product leader best illustrates a ________ strategy. A) corporate B) functional C) grand D) business
D
Perpetual Batteries recently came under criticism when a newspaper article revealed that the company's production plant had leaked a chemical compound into a sensitive wetland ecosystem. Although use of the chemical was not technically prohibited by law, the local government levied a small fine for cleaning up the spill. Environmental groups, however, argued that continued use of the chemical was damaging to the local wildlife and threatened to organize a boycott against Perpetual Batteries. What should Perpetual Batteries do to ensure that it meets its ethical responsibilities? A) Pay the fine levied by the local government and resume operations. B) Move its production facilities to an area that is less concerned with environmental issues. C) Take out an advertisement arguing that use of the chemical is perfectly legal. D) Design batteries without the chemical and market them as environmentally friendly.
D
Strategies developed at the departmental level, such as the accounting, human resources, production, and marketing departments, within a strategic business unit are referred to as ________ strategies. A) grand B) corporate C) business D) functional
D
The first step in stakeholder impact analysis involves A) formulating a stakeholder strategy to balance the different needs of various stakeholders. B) identifying the opportunities and threats the stakeholders present. C) describing the economic, legal, ethical, and philanthropic responsibilities of the firm toward society. D) identifying the stakeholders that currently have, or potentially can have, a material effect on a company.
D
To implement specific business strategies, general managers of strategic business units rely on A) external stakeholders. B) corporate executives. C) strategic leaders. D) functional managers.
D
TriCorp is a major financial services corporation. With the CEO of TriCorp preparing to retire, several top managers are vying for the position. Jared considers himself to be a leading candidate. He not only has advanced degrees from business schools and more than a decade of experience working for TriCorp, but he also has personally ensured that his division has exceeded its performance benchmarks over the past three years, even though many of his employees are dissatisfied because they feel they are stagnating in their jobs. According to the level 5 leadership pyramid, why has Jared failed to exhibit the qualities of a level-5 leader? A) His individual skills are not well developed. B) His actions do not match the organization's strategy. C) He lacks the organizational ability to accomplish the organization's goals. D) He is not able to help others reach their full potential.
D
Understanding the Resource Allocation Process (RAP) will have large effects on shaping a firm's realized strategy. Which of the following is an example of such an allocation of resources? A) Starbucks' launch of iced drinks B) Teach For America's mission statement C) Merck's voluntary withdrawal of Vioxx from the market D) Intel's rule to "maximize margin-per-wafer-start"
D
Vincente, a retired CEO, invests capital in a start-up company that creates budgeting software. He mentors the entrepreneur and the employees of the company because he wants the company to perform well and survive in the market. Thus, Vincente is the start-up company's A) headhunter. B) category captain. C) employee. D) stakeholder.
D
Which of following practices of a firm satisfies its ethical responsibilities? A) using plastic as the packaging material though it is harmful to the environment, yet legal B) outsourcing production to a less developed country and paying wages that are below its own country's accepted minimum wages C) using advertising and other forms of promotion to endorse luxurious lifestyles D) selling vaccines at a subsidized price in a less developed country even though this results in reduced shareholder returns
D
Which of the following best describes a Level 5 manager in the Level-5 leadership pyramid? A) Connie is an employee who just started her career at DK Inc.; she has already been appreciated for her knowledge and skills in the new company. B) Dmitri is an employee at Infinite Circle Inc.; he has helped his team achieve their targets by contributing to the team's efforts. C) Luigi is part of the marketing team at RT Corp.; he has been given the charge of managing a team of three, so he will be promoted to a manager's position next month. D) Asoka is the CEO of Green Machines Inc.; he has helped his company in gaining and sustaining a competitive advantage through ethical decision making.
D
Which of the following strategies best illustrates a generic business strategy? A) a cost-cutting strategy that corporate executives in the headquarters want all business units of a large conglomerate to implement B) a strategy to use monetary incentives to motivate employees working on a project C) a decision to computerize a firm's database in order to improve customer service D) a decision to niche market the jewelry sold by a company while the apparel division under the same company sells its products through mass marketing
D
Which of the following summarizes the difference between corporate strategy and business strategy? A) Corporate strategy deals with how to compete; business strategy deals with where to compete. B) Corporate strategy deals with when to compete; business strategy deals with how to compete. C) Corporate strategy deals with how to compete; business strategy deals with when to compete. D) Corporate strategy deals with where to compete; business strategy deals with how to compete.
D
Who among the following is responsible for making business strategies in a large conglomerate? A) the board of directors at the headquarters B) the shareholder of the company C) the lower-level employees in the company D) the general managers of individual business units
D
Windmill Inc., a vendor, regularly supplies capacitors to Inland Electronics for use in its products. Therefore, Windmill Inc. is Inland Electronics' A) internal stakeholder. B) director. C) shareholder. D) external stakeholder.
D
Yuki is part of a sales team. He effectively coordinates his tasks with others in the team and willingly contributes to their efforts in achieving the team's objectives. Thus, Yuki is in ________ of the Level-5 leadership pyramid. A) Level 5 B) Level 4 C) Level 3 D) Level 2
D
Describe the traditional top-down strategic planning process.
In the traditional top-down strategic planning process, strategic planners first provide careful analyses of internal and external data and apply it to all quantifiable areas: prices, costs, margins, market demand, head count, and production runs. Five-year plans, revisited regularly, predict future sales based on anticipated future growth. Top executives tie the allocation of the annual corporate budget to the strategic plan and monitor ongoing performance accordingly. Based on a careful analysis of these data, top managers reconfirm or adjust the company's vision, mission, and values before formulating corporate, business, and functional strategies. Appropriate organizational structures and controls as well as governance mechanisms aid in effective implementation. In this process, the formulation of strategy is separate from implementation, and thinking about strategy is separate from doing it. Information flows one way only: top-down. At times, strategic leaders impose their visions onto a company's strategy, structure, and culture from the top down in order to create and enact a desired future state.
Who are a firm's stakeholders?
Stakeholders are organizations, groups, and individuals who can affect or be affected by a firm's actions. Stakeholders have a vested claim or interest in the performance and continued survival of the firm. Stakeholders can be grouped by whether they are internal or external to a firm. All stakeholders make specific contributions to a firm, which in turn provides different types of benefits to different stakeholders.
A surprise event that leads to a change in strategic initiatives, such as the accidental discovery of a new use for an existing product, is known as serendipity.
T
An employee lacking some of the innate abilities to be a top-level manager can still become an effective strategic leader through hard work and experience.
T
Discuss the pyramid of corporate social responsibility (CSR).
The pyramid summarizes the four components of corporate social responsibility. Economic responsibilities are the foundational building block, followed by legal, ethical, and philanthropic responsibilities. Society and shareholders require economic and legal responsibilities. Ethical and philanthropic responsibilities result from a society's expectations toward business. The pyramid of CSR symbolizes the need for firms to carefully balance their social responsibilities. Doing so ensures not only effective strategy implementation, but also long-term viability.
What is meant by corporate social responsibility (CSR)?
To identify a firm's responsibilities toward its stakeholders, scholars have advanced the notion of corporate social responsibility (CSR). This framework helps firms recognize and address the economic, legal, ethical, and philanthropic expectations that society has of the business enterprise at a given point in time. CSR goes beyond the notion of encouraging businesses to "just be nice." Instead, managers need to realize that society grants shareholders the right and privilege to create a publicly traded stock company, and therefore the firm owes something to society. Moreover, CSR provides managers with a conceptual model that more completely describes a society's expectations and can guide strategic decision making more effectively.
What is the drawback in top-down strategic planning?
Top-down strategic planning rests on the assumption that the future can be predicted from the past. The approach works reasonably well when the environment does not change much. One major shortcoming of the strategic planning approach is that the future cannot be easily known. Strategic leaders' visions of the future can be downright wrong; unforeseen events can make even the most scientifically developed and formalized plans obsolete. Thus, many companies are now using a more flexible approach in their strategic management process.
