MGMT 455 Chapter 10
A firm's organizational structure is comprised of: Multiple Choice resource strengths and competitive capabilities that allow it to incorporate attributes at lower costs than rivals whose products have similar attributes. the formal and informal arrangement of tasks, responsibilities, lines of authority, and reporting relationships by which the firm is administered. Correct excellent marketing and sales skills to convince buyers to pay a premium price for the attributes/features incorporated in its product. sustainable distinctive competencies to ensure cost reduction and competitiveness. a number of independent functional units involved in some common undertaking, with one unit typically in a more central role.
B
In order to coordinate and control the complex set of activities, managers must ensure: Multiple Choice the organizational structure enables bureaucratic waste and strives for eliminating imposed capacity limitations of the strategy. the various parts of the organizational structure are aligned with one another and also matched to the requirements of the strategy. Correct they have enough employees dedicated to the various functions to attain economies of scale benefits. they can orchestrate the process with forceful administration and political maneuvering. they accommodate situational idiosyncrasies to build a competitively capable organization.
B
The principal managerial components of the strategy execution process include: Multiple Choice deciding how much to spend on employee training. instituting policies and procedures that facilitate strategy execution and tying rewards and incentives to the achievement of strategic and financial targets. Correct doing an effective job of empowering employees. revamping the value chain in a manner calculated to maximize operating efficiency. selecting a capable top management team.
B
Which of the following is NOT a reason why companies might use outsourcing to improve performance of strategy-critical activities? Multiple Choice Improving a company's chances for outclassing rivals in the performance of strategy-critical activities and turning a core competence into a distinctive competence Promoting quick establishment of a total quality culture Correct Speeding internal decision making and shortening the time it takes to respond to changing market conditions Capitalizing on the partnerships with outsiders to enhance its arsenal of capabilities and thus contribute to better strategy execution Helping decrease internal bureaucracies and flatten the organizational structure
B
Delegating greater authority to subordinate managers and employees: Multiple Choice creates a more horizontal or flatter organizational structure with fewer management layers and usually acts to shorten organizational response times. Correct usually slows down decision making because so many more people are involved and it takes longer to reach a consensus on what to do and when to do it. can be a de-motivating factor because it requires people to take responsibility for their decisions and actions. is very risky because it usually results in lots of "bad" decisions on the part of employees, as well as lower levels of financial performance. enhances greater cross-unit coordination and aids the capture of strategic fit benefits across related businesses.
A
A dynamic capability is the: Multiple Choice ongoing capacity to modify existing resources and capabilities to create new ones. Correct improvement evaluation process for eliminating waste in the firm. functional and operating resources management process. ongoing capability to understand and establish a rival commitment to resource alignment. most compelling product or service a firm .
A
Managerial actions to develop core competencies and competitive capabilities internally generally take one of two forms. What are they? Multiple Choice Either strengthening the company's base of skills, knowledge, and experience or coordinating and integrating the efforts of various work groups and departments Correct Either putting in high incentive bonuses to reward individual employees who train hard to develop the desired capability or launching an extensive training effort to develop the capability quickly with newly hired employees Either using benchmarking and the adoption of best practices to imitate a capability that rivals have already developed or empowering a team of employees to develop the capability however they best see fit Either using developed dynamic capabilities or acquiring the capability from outside sources Either by enforcing close cross-business collaboration or by centralizing the performance of functions requiring close coordination at the corporate level
A
Outsourcing value chain activities has such strategy executing advantages as: Multiple Choice less internal bureaucracy, speedier decision making, and quicker responses to changing market conditions. Correct facilitating the empowerment of employees (because there are fewer things to do internally). promoting a total quality management culture. reducing the need to establish a strongly implanted corporate culture. reducing the strategic importance of building valuable core competencies.
A
The implementation process is likely to be hampered by missed deadlines, misdirected efforts, and managerial ineptness, if: a capable results-oriented management team is not in place. Correct the personnel have different management styles. top managers start asking tough, incisive questions. important details require attention. an additional investment in capital projects is required
A
The managerial approach to implementing and executing a strategy should always: Multiple Choice be customized to fit the particulars of a company's situation. Correct involve only minor changes to the existing strategy. require radical strategy changes for successful execution. rely on the active support of frontline employees. focus on market conditions and the company's resources and capabilities.
A
The most important leadership trait in the strategy execution process is: Multiple Choice a strong, confident sense of what to do and how to do it. Correct strong communication skills (both written and verbal) covering motivating intent. strong management skills to ensure a systematic approach to administration. strong organizational skills so as to make actions structured toward results. strong empathy skills when employees run into challenging moments.
A
What does a good strategy execution require? Multiple Choice A team effort with all managers having strategy executing responsibility in their areas of authority, and making all employees active participants in the strategy execution process Correct Incremental changes to current operating practices be implemented to ensure existing resource capabilities are not impacted too severely Little consensus building, despite the magnitude of the proposed changes, because employees know the benefits gained from the planning process The strategy-critical value chain activities to be simplified so that all company personnel can be cognizant of the benefits of the execution parameters Additional investments in capital projects rather than adding to a company's talent base and building intellectual capital
A
What is the advantage of acquiring capabilities through merger and acquisition? Multiple Choice Speed, since developing new capabilities internally can take many years of effort Correct Empowerment, since you can capture the essence of the capability and refocus the firm Price, as it is always cheaper to buy a whole company and pull out the capabilities individually Assets, as it the basis of the sale Investment, since resources and capabilities are considerable stronger
A
When an organization is referred to as a line and staff structure or a flat structure, it is normally considered: Multiple Choice a simple structure. Correct a functional structure. a matrix structure. a multidivisional structure. a departmental structure.
A
When strategies fail, it is often because of: Multiple Choice poor execution of the strategy. Correct shortfalls exposed with the strategic management design process. inadequate support for the management team responsible for the planning process. secondary operating practices that hinder the required changes. lack of sufficient information about operating systems.
A
Which of the following is TRUE of the capability building process? Multiple Choice It requires two things: (1) developing the ability to do something, however imperfectly or inefficiently, and (2) molding these efforts into an organizational ability and as experience grows and personnel perform the activity consistently well and at an acceptable cost, it is transformed into a tried-and-true competence and as they continue to polish and refine their know-how into further improvements, they then create a real competitive capability. Correct It entails (1) deciding which value chain activities to perform internally and which ones to outsource; and (2) deciding how much authority to centralize at the top and how much to delegate to down-the-line managers and employees. It is essential (1) when the company does not have the ability to create the needed capability internally (perhaps because it is too far afield from its existing capabilities), and (2) when industry conditions, technology, or competitors are moving at such a rapid clip that time is of the essence. Incorrect It involves (1) staffing the organization with people capable of executing the strategy well, (2) developing the resources and building the organizational capabilities needed for successful strategy execution, and (3) creating an organizational structure supportive of the strategy execution process. It must (1) supplement the design with appropriate coordinating mechanisms, and (2) institute whatever networking and communications arrangements are necessary to support effective execution of the firm's strategy.
A
Which of the following is a disadvantage of a centralized organizational structure? Multiple Choice Lengthening response times and discouraging lower-level managers and rank-and-file employees from exercising initiative Correct Losing top-level management control Putting too much decision-making authority in the hands of lower-level company personnel Making it hard to fix accountability when things do not go well and putting the organization at risk when bad decisions are made Impeding cross-unit coordination and the capture of strategic fits Explanation
A
Which of the following statements about outsourcing the performance of value chain activities to outside specialists is FALSE? Multiple Choice Outsourcing support services often has the disadvantage of raising fixed and variable costs. Correct Outsourcing critics contend that shifting responsibility for performing value chain activities to outside specialists can hollow out a company's knowledge base and capabilities, leaving it at the mercy of outsider suppliers, and short of the resource strengths to be a master of its own destiny. Outsourcing the performance of certain value chain activities to able supplierscan add to a company's arsenal of capabilities and contribute to better strategy execution. The real debate surrounding outsourcing is not about whether too much outsourcing risks loss of control but about how to use outsourcing in a manner that produces greater competitiveness.
A
While ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives: Multiple Choice top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units. Correct the pivotal and most decisive strategy-implementing actions are carried out by frontline supervisors who have the day-to-day responsibility of seeing that key activities are done properly. it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail. the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution. the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive.
A
Who is most likely to have strong strategy implementation capabilities? Multiple Choice Michael has a talent for asking tough, incisive questions. Correct Samantha is often sympathetic to her team members' failures. Carl can complete a job in half the time as his colleagues. Lily prefers completing a task by herself. Rodrigo advocates promoting qualified people from within the firm.
A
Management's handling of the strategy implementation/execution process can be considered successful: Multiple Choice when the internal organization develops two or more core competencies in performing value chain activities. if and when the company meets or beats its performance targets and shows good progress in achieving its strategic vision for the company. Correct if the company's culture is strong and strategy-supportive. if management is able to marshal adequate resources to put the strategy in place within 6 to 12 months. if managers and employees express strong support for the company's strategy and long-term direction.
B
Recruiting and retaining capable employees is: Multiple Choice usually much more important to good strategy execution than is assembling a capable top-management team. important because the quality of an organization's people is always an essential ingredient of successful strategy execution. Correct more important during periods of rapid growth than during periods of crisis and attempted turnarounds. an important organization-building element, particularly when it comes to transforming a competence into a core competence or distinctive competence. easily the most critical aspect in building competitively valuable core competencies and capabilities.
B
The paramount aim in building a management team should be to: Multiple Choice select people who are committed to decentralizing decision making and empowering employees. assemble a critical mass of talented managers who can function as agents of change, work well together as a team, and produce organizational results that are dramatically better than what one or two star managers acting individually can achieve. Correct choose managers experienced in controlling costs and flattening the organization structure. select people who have similar management styles, leadership approaches, business philosophies, and personalities. choose managers who believe in having a strong corporate culture and deeply ingrained core values.
B
Which of the following is NOT true of implementing a strategy? Multiple Choice It is critical to ensure strategy-supportive resources and capabilities are in place. The level of personnel competence is irrelevant to proficient strategy execution. Correct It is important to assemble a strong management team. Strengthening the firm's core competencies is a top priority. A poorly structured organization can lead to higher bureaucratic costs.
B
Which structure combines two or more organizational forms, with multiple reporting relationships, and is used to foster cross-unit collaboration? Multiple Choice Matrix structure Incorrect Composite structure Correct Divisional structure Network structure Functional structure
B
A decentralized organizational structure is predicated on the belief that: Multiple Choice top executives should establish a collegial, collaborative culture where decisions are made by general consensus on what to do and when. strict enforcement of detailed procedures backed by rigorous managerial oversight is necessary because company personnel cannot be counted on to act wisely or keep costs to a bare bones level. decision-making authority should be pushed down to the lowest organizational level capable of making timely, informed, and competent decisions. Correct most company personnel have neither the time nor the inclination to direct and properly control the work they are performing and that they lack the knowledge and judgment to make wise decisions about how best to do their work.
C
Core competencies and competitive capabilities are usually: Multiple Choice lodged in the narrow skills and specialized work efforts of a single department, as opposed to the combined expertise and capabilities of specialists scattered across several departments. observed to stem from collaborative efforts with strategic allies. bundles of skills and know-how that most often grow out of the collaborative efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain. Correct found to result in competitive advantage when they involve highly specific technologies and are grounded in a company's own deep technical expertise. built rapidly, usually in conjunction with important product innovations.
C
In companies where intellectual capital is crucial to good strategy execution, which of the following is generally NOT among the practices companies use to establish a talented knowledge base? Multiple Choice Providing promising employees with challenging, interesting, and skill-stretching assignments and also rotating them through jobs that not only have great content but also span functional and geographic boundaries Providing employees promotions, salary increases, performance bonuses, stock options, and other perks Coaching underperformers and benchwarmers to improve their skills and capabilities Correct Encouraging employees to challenge existing ways of doing things, to be creative and innovative in proposing better ways of operating, and to push their ideas for new products or businesses Fostering a stimulating and engaging work environment such that employees will consider the company a great place to work
C
In which of the following steps does updating the company's capabilities to match changing market conditions and customer expectations take place? Multiple Choice Staffing the organization Recruiting and retaining talented employees Acquiring, developing, and strengthening key resources and capabilities Correct Organizing value chain activities and business processes Structuring the organization and work effort
C
One of the big weaknesses of organization structures that do not have cross-business collaboration is: Multiple Choice making it hard to effectively empower employees. making it difficult to have closely related activities report to a single executive. that pieces of strategically relevant activities and capabilities often end up scattered across many departments, with each pursuing its own priorities, projects, and agendas. Correct impeding the use of outsourcing. making it hard to fix managerial accountability for poor results.
C
Sometimes a company can short-circuit the task of building an organizational capability in-house by: Multiple Choice putting in high-incentive bonuses to reward individual employees who train hard to develop the desired capability. launching an extensive training effort to develop the capability quickly with newly hired employees. either acquiring a company that has already developed the capability or else acquiring the desired capability through collaborative efforts with outsiders having the requisite skills, know-how, and expertise. Correct using benchmarking and the adoption of best practices to imitate a capability that rivals have already developed. empowering a team of employees to develop the capability however they best see fit.
C
When it is difficult or impossible to out-strategize rivals (beat them with a superior strategy), the other main avenue to competitive advantage is to: Multiple Choice do a better job of empowering employees and flattening the organization structure. outcompete rivals with a stronger corporate culture. out execute them (beat them by performing certain value chain activities in superior fashion). Correct beat them with a healthy corporate culture based on such core values as high ethical standards, a strong sense of corporate social responsibility, and genuine concern for customer well-being. institute a more motivating and cost-efficient compensation and reward system.
C
The organizing challenge of a decentralized structure that stresses employee empowerment is: Multiple Choice how to keep empowered employees from making lots of stupid decisions. establishing a collegial, collaborative culture so that decisions can be made by gaining a quick consensus on what to do and when to do it. how to avoid de-motivating employees (because empowered employees are expected to take responsibility for their actions and decisions). how to exercise control over the actions and decisions of empowered employees so that the business is not put at risk while trying to capture the benefits of empowerment. Correct how to convince lower-level managers and employees that they are empowered.
D
Which of the following is generally NOT among the common practices that companies use to staff jobs with talented people, particularly if intellectual capital greatly aids good strategy execution? Multiple Choice Careful screening and evaluation of job applicants, along with continuous training and retraining programs for employees that continue throughout their careers Rotating people through jobs that not only have great content but also span functional and geographic boundaries Eliminating the bottom 10 percent of the lowest-performing employees each year to increase the overall quality performance metrics to above-average industry standards Correct Encouraging employees to challenge existing ways of doing things, to be creative and innovative in proposing better ways of operating, and to push their ideas for new products or businesses Fostering a stimulating and engaging work environment such that employees will consider the company a great place to work
C
Which of the following is unlikely to be a primary building block in a company's organizational structure? Multiple Choice Functional departments Process and operations departments Empowered employee departments Correct Divisional units performing major processing steps Geographic organizational units
C
Which of the following statements about implementing and executing a new strategy is true? Multiple Choice Executing strategy calls for essentially the same kinds of creative management talent and innovative thinking as does crafting strategy. Executing strategy is chiefly a financially driven process aimed at squeezing the most profit out of conducting daily operations. Executing strategy is a job for a company's whole management team, not just a few senior managers. Correct Executing strategy depends heavily on the caliber of a CEO's business vision, industry and competitive analysis skills, and entrepreneurial creativity. Executing strategy tends to be a simpler, quicker management task to perform as compared to crafting a winning strategy.
C
Which of the following statements about recruiting and retaining capable employees is FALSE? Multiple Choice The quality of an organization's people is always an essential ingredient if critical value chain activities are to be performed competently. Recruiting and retaining capable employees is a particularly important organization-building task in enterprises where superior intellectual capital is a key resource and also a basis for competitive advantage. Recruiting and retaining capable employees are usually much more important to good strategy execution and the achievement of true operating excellence than is assembling a capable top management team. Correct It is very difficult for a company to competently execute its strategy and achieve operating excellence without a large band of capable employees who are actively engaged in the process of making ongoing operating improvements. In many industries, adding to a company's talent base and building intellectual capital is more important to good strategy execution than additional investments in plants, equipment, and capital projects.
C
The rationale for making strategy-critical value chain activities the primary building blocks in a company's organizational scheme is based on the: Multiple Choice much shorter time it takes to build core competencies and competitive capabilities. benefit such an organizational scheme has in reducing costs. benefit such an organizational scheme has in improving the productivity of geographically scattered organizational units. thesis that if activities crucial to strategic success are to have the resources, decision-making influence, and organizational impact, they have to be centerpieces in the organizational scheme. Correct benefit such an organizational scheme has in making the empowerment of employees more effective.
D
Firms generally leverage the expertise of their talent pool in building capabilities by: Multiple Choice updating existing capabilities. establishing a new arsenal of resource capabilities by phasing out existing capabilities. refreshing existing capabilities. augmenting or recombining well-established capabilities with existing resources. Correct building resource capabilities from scratch so it is easy and less time-consuming.
D
How is a functional structure or unitary structure organized? Multiple Choice With a central executive handling all major decisions To lighten the load of senior executives so they can concentrate on value chain action agendas Specifically to manage unrelated diversification opportunities Into functional departments, with departmental managers who report to the CEO and small corporate staff Correct With top-heavy management, and senior executives forming a central office of the chairman
D
Putting together a capable top management team with the right mix of experiences, skills, and abilities: Multiple Choice should take top priority in building competitively valuable core competencies. is particularly important when the firm is pursuing unrelated diversification or making a number of new acquisitions in related businesses. is important in building an organization capable of proficient strategy execution, but is nearly always less crucial than doing a superior job of training and retraining employees. entails filling key managerial slots with smart people who are clear thinkers, good at figuring out what needs to be done, and who are skilled in "making it happen" and delivering good results. Correct is particularly essential for executing a strategy to keep a company's costs lower than rivals and become the industry's low-cost leader.
D
The approach to identifying the items needed to be placed on management's action agenda of the strategy execution plan always involves: Multiple Choice generalized activities that will underscore the particulars of the company's situation. some definitive managerial recipe for successful strategy execution that works for all company situations and all types of strategies, or that works for all types of managers. a set of unimportant managerial tasks that must be covered no matter what the circumstances. senior management's judgment about how to proceed in light of prevailing circumstances. Correct a high-end differentiation strategy for proficient implementation and execution.
D
Which of the following statements about developing organizational competencies and capabilities is FALSE? Multiple Choice Core competencies or capabilities are most often bundles of skills and know-how that grow out of the combined efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain. Evolving changes in customer needs and competitive conditions often require tweaking and adjusting a company's portfolio of competencies and intellectual capital to keep its capabilities freshly honed and on the cutting edge. Normally, core competencies and competitive capabilities emerge incrementally as a company (1) acts to bolster skills that contributed to earlier successes, or (2) acts to respond to customer problems, new technological or market opportunities, and the competitive maneuvers of rivals. Building organizational capabilities is best and most cost-effectively accomplished by hiring a cadre of people with the right talent and expertise, putting them together in a single work group, and then teaming the work group with key strategic allies/partners to mesh the skills, expertise, and competencies needed to perform the desired capabilities with some proficiency. Correct The key to leveraging a core competence into a distinctive competence (or transforming a capability into a competitively superior capability) is concentrating more effort and talent than rivals on deepening and strengthening the competence or capability so as to achieve the dominance needed for competitive advantage.
D
A disadvantage of the centralized organization is that it: Multiple Choice lengthens response times by those closest to the market conditions because they must seek approval for their actions. does not encourage responsibility among lower-level managers and rank-and-file employees. discourages lower-level managers and rank-and-file employees from exercising any initiative. diverts authority away from those closest to, and most knowledgeable about, the situation for actions. results in higher-level managers being unaware of actions taken by empowered personnel under their supervision. correct
E
Accessing capabilities through an external source can be accomplished through all of these EXCEPT: Multiple Choice outsourcing, but depends on what can safely be delegated to outside suppliers. joint ventures, which depend on how well the partners will work together. strategic alliances, which should be selected as much for management style, culture, and goals as for their resources and capabilities. learning-based collaborative partnerships for the purpose of learning how the partner does things, internalizing its methods, and thereby acquiring its capabilities. promoting qualified people with the right know-how in a timely and cost-effective manner.
E
Executing strategy is a make-things-happen task that tests a manager's ability to perform all of the following EXCEPT: Multiple Choice manage the people, talents, and business processes of an operations-driven activities company. direct organizational change and achieve continuous improvement in operations and business processes. create and nurture a strategy-supportive culture. Incorrect meet or beat performance targets consistently. focus on market conditions and the company's resources and capabilities. Correct
E
In formulating an action agenda to implement and execute a new or different strategy, the place for managers to begin is with: Multiple Choice the task of revising and enhancing the company's core competencies. choosing which leadership style to employ in trying to carry out the strategy successfully. evaluating whether existing policies and procedures are adequately strategy-supportive. allocating more resources to strategy-critical parts of the business. a probing assessment of what the organization must do differently and better to carry out the strategy successfully.
E
The most common approaches to capability building include all of the following, EXCEPT: Multiple Choice developing capabilities internally. acquiring capabilities through mergers and acquisitions. accessing capabilities via collaborative partnerships. renewing capabilities to align with customer expectations. coaching average performers to improve their skills. correct
E
Which of the following is NOT a characteristic of a network structure? Multiple Choice It ensures that the right partners are included and the activities are coordinated. It encourages a more effective collaboration and cooperation among partners. It includes a hand-picked, integrated network of suppliers. Incorrect It is an arrangement of independent organizations involved in a common undertaking. It established that no one firm has a central control over the others.
E
Which of the following is part of strategy-supportive resources and capabilities? Multiple Choice Recruiting and retaining talented employees Incorrect Instituting organizational arrangements Establishing lines of authority Creating reporting relationships Deciding how much authority to delegate Correct
E