Quiz 4 Review
The typical CEO pay package is composed of ________ long-term incentives. Answers: A) 16% B) 36% C) 27% D) 21% E) 10%
A) 16%
Which of the following is a way in which managers can improve their company's or business unit's EVA? Answers: A) earning more profit without using more capital B) using more capital C) investing capital in multiple low-return projects D) extending their line of credit E) All of these
A) earning more profit without using more capital
According to a study of downsizing in the automobile-related industry, all of the following are problems associated with inappropriate downsizing EXCEPT Answers: A) outsourcing was eliminated. B) blanket offers for early retirement prompted even valuable employees to leave. C) surviving employees experienced decreased morale. D) surviving employees had to do extra work in addition to their own. E) the wrong jobs were eliminated.
A) outsourcing was eliminated.
Downsizing is often used to implement a(n) ________ strategy. Answers: A) retrenchment B) growth C) stability D) hold E) integration
A) retrenchment
Because of the belief that accounting-based numbers such as ROI, ROE, and EPS are not reliable indicators of a corporation's economic value, which method of corporate performance is now preferred? Answers: A) shareholder value B) basic earning power C) price/earnings ratio D) profit margin on sales E) return on assets
A) shareholder value
The inventory turnover ratio is an example of a(n) Answers: A) steering control. B) activity control. C) behavior control. D) output control. E) influencing control.
A) steering control.
The sum total of the activities and choices required for the execution of a strategic plan is known as Answers: A) strategic formulation. B) environmental scanning. C) strategy implementation. D) evaluation and control. E) strategic development.
A) strategic formulation.
There are three distinct phases in the development of a matrix structure. Which is the first phase to occur usually when a new product line is being introduced? Answers: A) temporary cross-functional task forces B) true dual-authority structure C) product/brand management D) immature matrix E) mature matrix
A) temporary cross-functional task forces
What did a study of 173 firms over a 25-year period reveal about CEOs of successful corporations? Answers: A) They tended to have less loyalty than former CEOs, switching companies at a faster pace. B) They tended to have the same functional specialization as the former CEO. C) They tended to be more aggressive in their risk-taking than former CEOs. D) They tended to rely more on skills developed through group decision making. E) They tended to be turnaround specialists.
B) They tended to have the same functional specialization as the former CEO.
Executives with a particular mix of skills and experiences may be classified as an executive type and paired with Answers: A) a specific personal characteristic. B) a specific corporate strategy. C) a certain educational background. D) a specific experience background. E) a specific industry.
B) a specific corporate strategy.
Successful defender firms tend to be headed by CEOs with backgrounds in the areas of Answers: A) research/engineering and general management. B) accounting/finance, manufacturing/production, and general management. C) marketing/sales. D) human resources and strategy. E) purchasing and logistics.
B) accounting/finance, manufacturing/production, and general management.
The strategy implementation tool used to determine what actions are going to be taken, by whom, during what time frame, and with what expected results is called a(n) Answers: A) mission statement. B) action plan. C) MBO. D) TQM. E) succession plan.
B) action plan.
How does job rotation combat the adverse consequences of task specialization? Answers: A) by altering the work to provide the worker with more control over activities B) by moving workers through several jobs, thereby exposing them to increased task variety C) by combining different tasks, thereby giving them more responsibilities D) by giving the worker more autonomy through alterations in the job E) by forming natural work units to provide the worker with more responsibility
B) by moving workers through several jobs, thereby exposing them to increased task variety
Corporations will emphasize all types of controls (output, input, and behavior) when they are following a strategy of Answers: A) conglomerate diversification. B) concentric diversification. C) retrenchment. D) divestment. E) vertical integration.
B) concentric diversification.
Under Stage III, when various units of the company optimize their sales and profits without regard to the overall corporation, the organization may be experiencing a Answers: A) crisis of leadership. B) crisis of control. C) crisis of autonomy. D) crisis of decentralization. E) crisis of empowerment.
B) crisis of control.
According to the job characteristics model, how might a manager redesign work to make workers more responsible and accountable for the performance of the job? Answers: A) combine tasks B) form natural work units C) establish client relationships D) vertically load E) open feedback channels
B) form natural work units
During Stage II of the organizational life cycle, the structure most likely to be implemented is Answers: A) entrepreneur-dominated. B) functional management. C) decentralization into profit or investment centers. D) structural surgery. E) dismemberment of structure.
B) functional management.
A study of 79 MNCs revealed that international transfer pricing from one country unit to another is primarily used to Answers: A) evaluate performance. B) minimize taxes. C) increase profits. D) improve communication. E) All of these
B) minimize taxes.
One of the goals to be achieved in strategy implementation is synergy between and among functions and business units. Answers: A) total quality management. B) reengineering. C) management by objectives. D) action planning. E) statistical process control.
B) reengineering.
Which of the following is NOT one of the steps followed in the benchmarking process? Answers: A) Develop tactical programs for closing performance gaps. B) Implement tactical programs, measure the results, and compare the results with those of the best-in-class company. C) Implement activity-based costing. D) Identify the area or process to be examined. E) Calculate the differences among the company's performance measurements and those of the best-in-class company.
C) Implement activity-based costing.
A global MNC should use what type of controls over its foreign units? Answers: A) Management should be given considerable latitude, but be required to meet some predetermined performance targets. B) Management should use a matrix structure allowing some limited autonomy of the foreign unit. C) Management needs to exert tight controls over its many units using a centralized strategic operational decision-making format. D) Management should use a functional approach assigning distinct and separate responsibilities to each department throughout the MNC. E) Management should use a divisional approach assigning goals and targets for each product-group on all its foreign units collectively.
C) Management needs to exert tight controls over its many units using a centralized strategic operational decision-making format.
When AT&T acquired NCR Corporation, the NCR managers were replaced with an AT&T management team. Which management strategy was employed in terms of culture? Answers: A) integration B) separation C) deculturation D) assimilation E) segmentation
C) deculturation
What term describes when activities originally intended to help managers attain corporate objectives become ends in themselves or are adapted to meet ends other than those for which they were intended? Answers: A) economic rationality B) minimal acceptable behavior C) goal displacement D) closed system thinking E) Machiavellianism
C) goal displacement
Which method of managing disparate cultures involves a relatively balanced give-and-take of cultural and managerial practices between the merger partners, and no strong imposition of cultural change on either company? Answers: A) separation B) deculturation C) integration D) assimilation E) segmentation
C) integration
What term refers to the study of individual tasks in an attempt to make them more relevant to the company and to the employee(s)? Answers: A) position matching B) functional duties C) job design D) task conversion E) responsibility shift
C) job design
The job characteristics model is a good example of Answers: A) job rotation. B) job design. C) job enrichment. D) job enlargement. E) All of these
C) job enrichment.
If performance data and activity reports indicate undesirable performance as a result of inappropriate use of the strategic management process, operational managers must Answers: A) immediately notify the board of directors. B) change the strategic management model. C) know about it so that they can correct the employee activity. D) allow sufficient time to pass to verify if it is the process or just the usage that is the problem. E) check the performance data to ensure their accuracy and take two more measurements.
C) know about it so that they can correct the employee activity.
Successful analyzer firms tend to be headed by CEOs with backgrounds in the areas of Answers: A) research/engineering and general management. B) accounting/finance, manufacturing/production, and general management. C) marketing/sales. D) human resources and strategy. E) purchasing and logistics.
C) marketing/sales.
Stage III in the organizational life cycle is the Answers: A) birth stage. B) growth stage. C) maturity stage. D) decline stage. E) death stage.
C) maturity stage.
According to Hofstede, which cultural dimension describes the extent to which a society accepts an unequal distribution of power in organizations? Answers: A) uncertainty avoidance B) masculinity-femininity C) power distance D) individualism-collectivism E) long-term orientation
C) power distance
According to Chandler and others, which factors MUST be closely aligned to avoid the consequences of poor organizational performance? Answers: A) management, workforce, and customers B) operations, marketing, and finance C) strategy, structure, and environment D) rules, goals, and tasks E) hierarchy, contacts, and integrators
C) strategy, structure, and environment
Alfred Chandler, known for his study of large American corporations, concluded that Answers: A) organic structure is best for firms in a changing environment. B) mechanistic structure is best for firms in a changing environment. C) structure follows strategy. D) strategy follows structure. E) strategic business units are the key to effective decentralization.
C) structure follows strategy.
An emphasis on monitoring those few things which must go well to ensure corporate success is reflected in Answers: A) the 60/40 rule. B) the 30/70 rule. C) the 80/20 rule. D) success factors. E) key performance measures.
C) the 80/20 rule.
A survey of 93 Fortune 500 firms found ten major problems that over half of the group experienced when they attempted to implement a strategic change. Which of the following is NOT one of the implementation problems? Answers: A) ineffective coordination of activities B) uncontrollable external environmental factors C) time allocated for implementation was adequate, but was used inappropriately D) poor definition of key implementation tasks and activities E) crises that distracted attention away from implementation
C) time allocated for implementation was adequate, but was used inappropriately
Which statement below is NOT true of strategy implementation? Answers: A) It is the process by which strategies and policies are put into action through the development of programs/tactics, budgets, and procedures. B) Implementation is often considered after strategy has been formulated. C) Strategy implementation is the sum total of the activities and choices required for the execution of a strategic plan. D) Strategy implementation should be kept separate and distinct from that of strategic management. E) Strategy formulation and strategy implementation are two sides of the same coin.
D) Strategy implementation should be kept separate and distinct from that of strategic management.
"TQM" refers to Answers: A) Total Questioning Methods. B) Terrible Quantitative Management. C) Tremulous Qualitative Methodology. D) Total Quality Management. E) Total Quality Methods.
D) Total Quality Management.
All of the following reflect characteristics of a successful integration manager EXCEPT Answers: A) a deep knowledge of the acquiring company. B) a flexible management style. C) an ability to work in cross-functional project teams. D) a propensity to hire likeminded people. E) a willingness to work independently.
D) a propensity to hire likeminded people.
Which type of control specifies how something is to be done through policies, rules, standard operating procedures, and orders from a superior? Answers: A) tactical control B) strategic control C) output control D) behavior control E) functional control
D) behavior control
All of the following are examples of output controls EXCEPT Answers: A) sales quotas. B) specific cost reduction objectives. C) profit objectives. D) getting to work on time. E) surveys of customer satisfaction.
D) getting to work on time.
Behavior substitution occurs when Answers: A) a division or functional unit views itself as a separate entity and refuses to cooperate with other divisions or units in order to keep its performance measures at a high level. B) there is a failure to produce at or near full capacity. C) individuals are placed into positions not suited to their abilities. D) individuals focus more of their attention on those aspects which are measurable than on those which are not. E) managers concentrate too much on short-term performance objectives.
D) individuals focus more of their attention on those aspects which are measurable than on those which are not.
According to Hofstede, which cultural dimension describes the extent to which a society emphasizes the importance of hard work, education, and persistence as well as the importance of thrift? Answers: A) uncertainty avoidance B) masculinity-femininity C) individualism-collectivism D) long-term orientation E) power distance
D) long-term orientation
Which structure is often called a virtual organization? Answers: A) strategic business units B) functional structure C) divisional structure D) network structure E) matrix structure
D) network structure
According to the text, which one of the following is NOT one of the dangers of using primarily foreign nationals to staff managerial positions in subsidiaries? Answers: A) the increased likelihood of suboptimization B) difficulty for the MNC to meet long-term, worldwide objectives C) the ability for communication and coordination becomes increasingly difficult D) promotes anger and jealousy within the nationalistic host government E) problems in coordinating activities of several international subsidiaries leads to problems in operating in a global industry
D) promotes anger and jealousy within the nationalistic host government
The present value of the anticipated future stream of cash flows from the business plus the value of the company if liquidated is referred to as Answers: A) return on assets. B) ROVA. C) earnings per share. D) shareholder value. E) ROI.
D) shareholder value.
Strategic goals can be accomplished through defining an action plan. Which one of the following is NOT one of the components which make up an action plan? Answers: A) the specific actions to be taken B) who will perform the action C) during what time frame the action will be completed D) where the action will be done E) what are the expected results of the action
D) where the action will be done
According to the text, a complete package for an executive working in another country costs Answers: A) $50,000 to $75,000 annually. B) $100,000 to $200,000 annually. C) $150,000 to 250,000 annually. D) $200,000 to $500,000 annually. E) $300,000 to $1 million annually.
E) $300,000 to $1 million annually.
Which of the following is NOT considered an adequate measure by itself of corporate performance? Answers: A) ROI B) EPSE C) ROE D) operating cash flow E) All of these
E) All of these
Which of the following is true of defensive tactics? Answers: A) Defensive tactics aim to lower the probability of attack. B) Defensive tactics divert attacks to less threatening avenues. C) Defensive tactics lessen the intensity of an attack. D) Defensive tactics reduce short-term profitability to ensure long-term profitability. E) All of these
E) All of these
Which of the following statements is true concerning the career life cycle for top executives? Answers: A) During the early years of executives' tenures, they tend to experiment extensively with product lines to learn about their business. B) It is possible that a current CEO may not be appropriate to implement a new strategy. C) The harvest stage occurs when executives' accumulated knowledge allows them to reduce experimentation and increase performance. D) There is an inverted U-shaped relationship between top executive tenure and the firm's financial performance. E) All of these
E) All of these
Which one of the following is NOT one of the reasons why many executives do not conduct long-run performance evaluations while preferring to focus primarily on short-run performance? Answers: A) They do not realize their importance. B) They are not personally evaluated on a long-term basis. C) They believe short-run considerations are more important than long-run considerations. D) They do not have the time to make a long-run analysis. E) They do not believe in strategic planning.
E) They do not believe in strategic planning.
When the drive of the entrepreneur is no longer enough to keep the Stage I company from floundering, this type of crisis is called Answers: A) a crisis of autonomy. B) a crisis of confidence. C) a crisis of clarity. D) a crisis of differentiation. E) a crisis of leadership.
E) a crisis of leadership.
According to the text, what is the "key" to effective management of change in culture? Answers: A) planning B) operationalization C) evaluation D) staffing E) communication
E) communication
Stage V in the organizational life cycle is the Answers: A) birth stage. B) growth stage. C) maturity stage. D) decline stage. E) death stage.
E) death stage.
All of the following are examples of behavior controls EXCEPT Answers: A) monitoring employees' phone calls. B) monitoring employees' PCs. C) monitoring employees' Internet usage. D) using ISO 14000 Standards Series. E) sales quotas.
E) sales quotas.
Which one of the following is NOT one of the four general methods of managing two different cultures? Answers: A) separation B) deculturation C) integration D) assimilation E) segmentation
E) segmentation
When GE offered its CEO 250,000 performance share units tied to performance targets achieved over five years, it was using which method of matching rewards to the accomplishment of strategic objectives? Answers: A) strategic-funds method B) segmentation method C) long-term evaluation method D) individual evaluation method E) weighted-factor method
E) weighted-factor method
Chandler proposed that the most appropriate CEO for a firm remains constant as the company proceeds through its life cycle. T/F
False
European multinational corporations seldom use people with an international orientation to staff their management positions. T/F
False
Evaluation and control information consists only of performance data. T/F
False
Firms in the same industry seldom organize themselves in similar ways. T/F
False
In one study, 95% of the corporate officers interviewed stated that they use different evaluation techniques for foreign and domestic operations. T/F
False
Job enlargement is the movement of workers through several jobs to increase variety. T/F
False
Pioneered in the automobile industry, the matrix structure was developed to combine the flexibility of the functional structure with the stability of the product formulation. T/F
False
ROI stands for return on incentives. T/F
False
Stage 4 of international development is a multinational corporation with global emphasis denationalizing its operations. T/F
False
Stage III (Divisional Structure) is the point when the entrepreneur is replaced by a team of managers who have functional specialization. T/F
False
Studies of the performance of reengineering programs show clear, consistent, and overwhelming evidence of success and improved productivity. T/F
False
The over-billing of customers in Sears's auto repair shops was an example of suboptimization. T/F
False
The second stage of the organizational life cycle is maturity. T/F
False
Training and development can be especially important for organizations implementing an overall low cost or differentiation strategy, but not for those in retrenchment. T/F
False
Unlike ROI, managers cannot manipulate the numbers of EVA. T/F
False
While an organization's culture can exert a powerful influence on the behavior of all employees, it can seldom affect a company's ability to shift its strategic direction. T/F
False
A profit center is typically established whenever an organizational unit has control over both its resources and its products or services. T/F
True
According to a survey of Fortune 500 firms, the most frequently cited problem with implementing a strategic change is that implementation took more time than originally planned. T/F
True
According to the 80/20 rule, companies should monitor the 20% of the factors that determine 80% of the results. T/F
True
After programs have been developed, the budget process begins. T/F
True
Among the most important barriers to international trade are the different standards for products and services. T/F
True
An action plan states what actions are going to be taken, by whom, during what time frame, and with what expected results. T/F
True
Benchmarking involves openly learning how others do something better than one's own company so that one not only can imitate, but perhaps even improve on their current techniques. T/F
True
Companies that pursue related diversification strategies through internal development make greater use of interdivisional transfers of people than do companies that grow through unrelated acquisitions. T/F
True
Downsizing refers to the planned elimination of positions or jobs; it is often used to implement retrenchment strategies. T/F
True
ERP software provides instant access to critical information to everyone in the organization from the CEO to the factory floor worker. T/F
True
EVA may eventually replace ROI as the standard performance measure. T/F
True
Enterprise risk management is being adopted because of the increasing amount of environmental uncertainty that can affect an entire corporation. T/F
True
Executive succession is the process of replacing a key top manager. T/F
True
IHOP's CEO, Julia Stewart, built a reputation as a turnaround specialist. T/F
True
ISO 9000 Standards Series, developed by the International Standards Association of Geneva, Switzerland, is an example of a behavior control. T/F
True
Implementation of staffing involves leading through coaching people to use their abilities and skills most effectively and efficiently to achieve organizational objectives. T/F
True
In order to implement reengineering, Hammer suggests that those who use the output of the process perform the reengineering process. T/F
True
Lean Six Sigma incorporates the statistical approach of Six Sigma with the lean manufacturing program originally developed by Toyota. T/F
True
Management audits have been developed to evaluate activities such as corporate social responsibility, functional areas such as the marketing department, and divisions such as the international division. T/F
True
One example of a steering control used by retail stores is the inventory turnover ratio, which shows how hard an investment in inventory is working. T/F
True
One objective of TQM is better, less variable quality of the product and service. T/F
True
Poor implementation is often blamed for strategic failure. T/F
True
Stage IV of a corporation could involve a pressure-cooker crisis. T/F
True
Stickiness and eyeballs are two non-financial performance measures used by Internet business ventures. T/F
True
Succession planning has become the most important topic discussed by boards of directors. T/F
True
TQM is an operational philosophy committed to customer satisfaction and continuous improvement. T/F
True
The balanced scorecard combines financial measures that tell the results of actions already taken with operational measures on customer satisfaction, internal processes, and the corporation's innovation and improvement activities. T/F
True
The concept that structure follows strategy was developed by Alfred Chandler. T/F
True
The evaluation and control process ensures that the company is achieving what it set out to accomplish. T/F
True
The first stage of corporate development is the simple structure. T/F
True
The key to the effective management of change is communication. T/F
True
The matrix of change was designed to help managers decide how quickly change should proceed, in what order changes should take place, whether to start at a new site, and whether the proposed systems are stable and coherent. T/F
True
The radical redesign of business processes to achieve major gains in cost, service, or time is called T/F
True
There is a very strong connection between strategy and training at successful organizations. T/F
True