Chapter 12 (Multiple Choice)
1. The ability to attract and manage ____ may be the most important skill a strategic leader must have. a. human capital b. financial resources c. responses to competitors' actions d. investment strategies
A
11. A heterogeneous top management team is composed of individuals with a. different functional backgrounds, experience, and education. b. similar commitments to the organization's core ideology and culture. c. a high level of education and industry expertise. d. long tenure in the organization who have held various functional positions.
A
13. The more heterogeneous the top management team, the a. more difficult it will be for the team to implement strategies. b. more likely it is that the team will be cohesive. c. less innovative the team's decisions will tend to be. d. less diverse the team membership will be.
A
16. An organization's ____ is composed of the key individuals who are responsible for selecting and implementing the firm's strategies. a. top management team b. board of directors c. keiretsu d. governance circle
A
21. Christina is evaluating Maximum Brands as an investment opportunity. She is very concerned about future financial performance by Maximum Brands. Christina does not believe that the CEO can act as a steward. Christina will probably be most concerned if a. there is CEO duality. b. many of the members of the board of directors are outsiders. c. the positions of chairman of the board and CEO are held by different persons. d. there is an independent board leadership structure.
A
25. Which of the following is NOT a benefit to the firm using the internal labor market to select a new CEO? a. Internal hiring results in an increased level of innovation. b. Insiders are familiar with the firm's products, markets, technologies, and operating procedures. c. Use of the internal labor market reduces turnover among existing employees. d. Insiders are more familiar with a firm's operating procedures.
A
26. The CEO/chairman of PharmaPacifica was recently killed in an airplane crash. This tragedy has thrown PharmaPacifica into turmoil as there is no one in the organization qualified to step into the former CEO's shoes. This is an example of a. a failure of succession management. b. managerial hubris. c. the risk inherent in CEO duality. d. excessive reliance on the internal managerial labor market.
A
28. As the organizational environment becomes more complex, heterogeneous, and ambiguous, firms need to a. create more heterogeneous top management teams. b. focus on their core customer base. c. implement transformational leadership. d. emphasize the training and development of internal managerial talent.
A
29. When the top management team is homogeneous and a new CEO is selected from inside the firm, it is a. unlikely that the current strategy will change. b. likely that product innovation will continue. c. likely there will be a change in strategy. d. unlikely the new CEO will have a long tenure.
A
36. The firm of Bergeron has existed for hundreds of years, having made exquisite clocks and watches. In its advertising it refers to clocks the firm made for such past royalty as Marie Antoinette and the Czars of Russia. Employees are constantly reminded of the firm's rich history and its long tradition of excellence of design and execution. Bergeron is motivating its employees through its a. core ideology. b. envisioned future. c. organizational culture. d. business strategy.
A
41. Billy Kroghmen is the son of a very prominent Fortune 500 CEO. Billy has had troubles. He failed out of multiple colleges, universities, and correspondence schools. He finally received his undergraduate degree from a university with only a post office box for an address. He then enrolled in the school's combined graduate accounting and law school programs, graduating with honor with degrees in both areas. After graduation, he twice failed both the CPA and bar exams, managing to set record low scores on the ethics portions of both. Despite these academic setbacks, Billy's career now seems to be thriving. He has been appointed to a number of "blue ribbon" government committees, is on the board of directors of two corporations and one prestigious not-for-profit organization. In at least one instance, a donor credited Billy with the idea for making a large contribution to the not-for-profit. Widespread speculation is that his career advancement is based largely on social relationships through friends and family. We would classify Billy as ____ on ____ capital, and ____ on ____ capital. a. high; social; low; human b. high; human; high; social c. high; human; low; social d. none of these are correct.
A
56. Organizational controls provide a. the parameters within which strategies are to be implemented. b. goals and objectives that must be achieved. c. information on action steps to be taken to implement the corporate strategy. d. managers with guidelines on how to treat employees.
A
59. Actions that effective strategic leaders can take to develop an ethical organizational culture include all of the following EXCEPT a. relying on the fundamental goodness of individuals. b. using reward systems that recognize acts of courage. c. communicating goals that describe the firm's ethical standards. d. creating a work environment where individuals are treated with dignity.
A
62. ____ provide information about the results of past actions, but do not communicate the drivers of the firm's future performance. a. Financial controls b. Accounting information systems c. Policies and procedures d. Strategic feedback systems
A
63. The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they a. overemphasize financial controls and neglect strategic controls. b. overemphasize strategic control and neglect financial controls. c. overemphasize strategic and financial controls and neglect ethical controls. d. neglect short-term controls of all kinds in favor of long-term strategic controls.
A
66. In the balanced scorecard framework, ____ controls are used to assess the organization's success in creating a climate that supports change and innovation. a. learning and growth b. financial c. operational d. innovational
A
68. Which of the following is NOT one of the four perspectives in the balanced scorecard framework? a. entrepreneurial b. financial c. customer d. learning and growth
A
17. Normally, the more involved a board of directors is in shaping the firm's strategic direction, the a. more balanced the organization is. b. higher the corporation's performance is. c. more rapidly executive decisions can be make. d. more difficult it becomes to make effective executive decisions.
B
23. An example of the external labor market is the situation where a. an assessment center operated by an external consulting firm evaluates company managers for promotion potential. b. a new vice president of marketing is hired from a competitor. c. the senior vice president of finance is promoted to CEO. d. a vice president of human resources is sent to a university executive MBA program for professional development.
B
27. Monahegan Plasma Company is facing a performance downturn and realizes that a major rethinking of its strategy is in order. Under these circumstances, Monahegan Plasma would benefit from a a. internal CEO with short tenure. b. external CEO with a heterogeneous top management team. c. dual CEO/chairperson with a homogenous top management team. d. CEO with long tenure who has a strong sense of hubris.
B
3. According to the discussion about succession plans for CEOs in the chapter Opening Case, all of the following are correct EXCEPT a. A survey of boards found that 40 percent of firms had no succession plan. b. Apple has a succession plan for CEO Steve Jobs and anticipates an easy transition to a new CEO. c. The identification of Ellen Kullman as a potential CEO at DuPont illustrates a successful succession plan. d. In a survey of boards, more than 50 percent of directors rated their firms as ineffective at succession planning.
B
30. The recent choice of Ursula Burns (chapter Strategic Focus) as CEO of Xerox is an example of internal succession as Burns was previously a senior manager and president at Xerox. Which effect on strategy does this model of succession suggest? a. Strategic change. b. Stable strategy or stable strategy with innovation. c. Ambiguous: possible change in top management team and strategy. d. Strategic change with innovation.
B
31. Which of the following factors most encourages stability in a firm's strategy? a. A new CEO hired from outside the firm but within the industry. b. Internal CEO succession and a homogeneous top management team. c. External CEO succession and a heterogeneous top management team. d. A new CEO hired from outside the industry.
B
39. Omicron Artificial Intelligence has a core competency of being able to respond quickly to competitors' actions and to opportunities in the marketplace. This is an example of competitive a. agility. b. speed. c. flexibility. d. responsiveness.
B
45. The effective development and management of the firm's ____ may be its only sustainable competitive advantage. a. capital base b. human capital c. technology d. organizational culture
B
48. ____ capital increases cooperation among individuals inside and outside the firm. a. Human b. Social c. Visionary d. Cultural
B
51. Which of the following is NOT one of the five dimensions thought to characterize an employee's entrepreneurial mindset? a. autonomy b. reactivity c. risk taking d. innovativeness
B
6. The board of directors for TundraPro, Inc., is searching for a new CEO. The firm is in need of new direction after suffering several years of declining performance and increasingly demoralized management and employees. The board has decided it needs a CEO who can be a transformational leader. To this specific end, the board needs to identify applicants who have a. high levels of honesty, trustworthiness, and integrity. b. high emotional intelligence. c. excellent analytical skills. d. low tolerance for ambiguity.
B
69. According to the chapter Strategic Focus, all of the following are leadership actions of Mike Duke, the new CEO of Wal-Mart EXCEPT a. Emphasizing high standards of excellence for the company's resources and people. b. A greater emphasis on domestic markets and less emphasis on international markets especially given the failures of Wal-Mart in Germany and Korea. c. Increase the speed and enlarge Wal-Mart's commitment to sustainability. d. Go back to Wal-Mart's roots with a primary focus on providing value at the lowest possible price.
B
8. All of the following are external environmental sources that affect managerial discretion EXCEPT a. industry structure. b. corporate culture. c. market growth rate. d. potential for product differentiation.
B
10. The top management team is composed of the a. heterogeneous group of advisors selected by the CEO. b. CEO and chairperson of the board. c. key managers who are responsible for selecting and implementing a firm's strategy. d. officers listed in a firm's annual report and the board of directors.
C
14. Which of the following is NOT associated with heterogeneous top management teams? a. higher firm performance b. innovation and strategic change c. diminished debate among top managers d. better strategic decisions
C
18. A CEO gains power from all of the following circumstances EXCEPT a. when many of the outside directors are appointed by the CEO. b. when the CEO is also the chairman of the board. c. when tenure of the top management team is shorter than the tenure of the board. d. the fact that inside board members report to the CEO.
C
20. Which of the statements about CEO duality is FALSE? a. CEO duality is associated with high CEO power. b. CEO duality has been blamed for slow response to change by the organization. c. CEO duality is relatively rare in the U.S. except in large Fortune 500 firms. d. If the CEO acts a steward, CEO duality facilitates effective decisions and actions.
C
24. A CEO's breadth of knowledge base is constrained by a. his or her relationship with the board of directors. b. whether he or she is also the chairperson of the board of directors. c. his or her long tenure with the firm. d. the level of social capital in the firm.
C
34. Determining the strategic direction for the firm refers to developing a. a balanced scorecard. b. a tactical response to threats and opportunities. c. a specific image and character. d. competitive agility and speed.
C
37. GE performed exceptionally well under Jack Welch, the former CEO of GE. Jeffery Immelt, the new CEO, has made changes to the firm's corporate-level strategy and structure. His changes have been made even more difficult because GE is experiencing performance problems partly the result of the difficult economic climate. Immelt can expect a. a smooth transition to the new organizational strategy because of the organizational slack generated by Jack Welch. b. to replace the entire top management team because once individuals commit to a core ideology and an envisioned future, they are unlikely to change. c. some resistance by organizational stakeholders who are accustomed to Jack Welch and the high performance which he brought to GE. d. that he will inherit the "iconic aura" surrounding Jack Welch, which will give him credibility with GE's stakeholders.
C
38. Exploiting and developing core competencies is part of the key strategic leadership action "Effectively Managing the Firm's Resource Portfolio." Which of the following is most important for developing and using core competencies? a. extensive financial assets. b. transformational leadership. c. high-quality human capital. d. an ethical organizational culture.
C
4. The primary responsibility for effective strategic leadership of the organization rests with the a. board of directors. b. top management team. c. CEO. d. stakeholders.
C
44. Faced with declining enrollment and increased competition from not-for-profit organizations offering inexpensive art courses for new hobbyists, the for-profit Delta Academy of Art has steadfastly stayed true to its mission of offering high-quality classical art instruction for both beginners and advanced artists at high tuition. Delta has been noted for the excellence of its artistic training for decades. This is an example of a. competitive agility. b. lack of an envisioned future. c. competence becoming a liability. d. failure to have a clear core ideology.
C
46. To successfully implement a firm's strategy, the workforce must be viewed as a a. variable cost. b. depreciating asset. c. resource to be maximized. d. renewable asset.
C
53. The CEO of Icon Image Associates wishes to radically change the corporate culture of the firm. She knows that she must convince others at Icon Image of the necessity for the culture change and gain their active support. The CEO knows that the key players in energizing the culture change and fostering alignment with the new strategic vision are a. the members of the board of directors. b. top management team members. c. middle managers. d. rank-and-file employees.
C
55. Shaping and reinforcing a new organizational culture requires all of the following EXCEPT a. effective communication. b. effective performance appraisals. c. adherence to the firm's traditional core values. d. an appropriate reward system.
C
61. The ____ is a framework firms can use to verify that they have established both strategic and financial controls to assess their performance. a. managerial model b. holistic control system c. balanced scorecard d. internal auditing system
C
64. Four perspectives are integrated to form the balanced scorecard framework. The financial perspective focuses on the view of the firm by the a. customer. b. employee. c. shareholder. d. general society.
C
65. Strategic control focuses on the ________ of strategic actions whereas financial controls focus on the _____ of strategic actions. a. revenues; costs b. long-term financial outcomes; short-term financial performance c. content; outcomes d. outcomes; content
C
67. Criteria for reevaluating internal business processes using the balanced scorecard include all of the following EXCEPT a. asset utilization improvements. b. improvements in employee morale. c. increases in employee skills. d. changes in turnover rates.
C
7. Which of the following is NOT a factor that determines the amount of a manager's decision discretion? a. characteristics of the manager b. characteristics of the organization c. cohesiveness of the board of directors d. the external environmental
C
9. A characteristic of the manager that may affect managerial discretion is his/her a. amount of industry experience. b. level of education. c. tolerance for ambiguity. d. length of tenure.
C
12. Executive headhunters have approached Charles about taking the position of senior vice president of marketing for a well-known company. Although this company has been highly successful since 1995, Charles has heard persistent rumors of overly aggressive marketing tactics, questionable reporting of sales data, and an atmosphere of intolerance of criticism. The CEO is a powerful and charismatic individual, who built the company from a small regional firm to an international powerhouse in only a decade. The other top managers have been hand-picked by the CEO, as have a number of the members of the board of directors. The salary for this position is very high and includes generous stock options. It would be a major step up in Charles' career and would position him to move to CEO of another company in the future. Charles has prided himself on his high moral values and is viewed as an exceptionally ethical person by his peers. What should Charles do? a. Charles should take the job because he can effect real change in the culture of the organization, and take advantage of the personal financial and career opportunities. b. Charles should realize that personal moral values and the realities of the corporate world differ in both quality and degree. Consequently, he can take a job in an ethically borderline company without tainting his personal moral standing. c. Charles should not rely on rumors to dissuade him from making an advantageous career decision. d. Charles should not take the job because the culture of the organization is set by the CEO and other top managers. He would have little influence on the organizational culture as one of many top managers.
D
15. Recently, Sony selected Sir Howard Stringer as CEO. Sir Howard is not Japanese and he was not a Sony employee before his selection. Which of the following statements is FALSE? a. Sony's top management team will be more heterogeneous with the addition of Sir Howard. b. Sir Howard will have a broader perspective of the firm and its competitive environment than would a Sony insider. c. If Sony's top management team is homogeneous, Sir Howard's future impact on Sony's strategy is ambiguous. d. The decision-making process on Sony's top management team will be smoother and faster with the addition of Sir Howard.
D
19. CEO duality refers to a. firms where there is both a president and a CEO. b. CEOs who sit on the board of directors of other firms. c. CEOs who hold office in more than one company. d. the situation where the CEO is also chairperson of the board of directors.
D
2. As noted in the chapter Opening Case, the average tenure of CEOs has ___________ in recent years. a. been limited to a three year term in most corporations b. remained about the same c. become longer d. become shorter
D
22. Which of the following is NOT related to a CEO having long tenure in his or her position? a. more effective strategic control b. greater influence on board decisions c. more limited perspective d. high level of innovation
D
32. The failure of organizations to use the pool of managerial talents held by women can best be termed a. deliberate policy of discrimination. b. lack of assertiveness by women managers. c. managerial isolation from social trends. d. an opportunity cost for firms.
D
33. Two key strategic leadership actions include a. monitoring the hiring of key employees and focusing on growth but not learning initiatives. b. designing and then implementing the balanced scorecard. c. setting appropriate financial targets and establishing an effective business level synergy. d. determining strategic direction and establishing balanced organizational controls.
D
35. The CEO of CLEO, Inc., in all her communications to employees consistently refers to her dream of CLEO becoming the company of choice for employee assistance programs. She keeps this theme uppermost and it is reflected in the firm's motto, the title of its Web newsletter, and even on the company t-shirts and mugs. This is an example of the firm's a. core ideology. b. organizational culture. c. strategy. d. envisioned future.
D
40. Human capital refers to a. the net present value of the future competencies of the workforce. b. the amount of money purchasers of the firm would pay for the continuing employment of the present workforce. c. the value-added that the firm's workforce contributes to each product produced or service rendered. d. knowledge and skills of the firm's work force.
D
42. The goal of investing in human capital is to a. increase the number of employees in the firm. b. reduce organizational slack. c. maximize current productivity per employee. d. develop a workforce capable of continuous learning.
D
43. Which of the following will increase the probability that a lower-level manager will become a successful strategic leader? a. appointing many outside board members. b. increasing the firm's sales. c. increasing the homogeneity of the top management team. d. training and development programs.
D
47. Clarita Cosmetics is confronting a decline in sales due largely to a general economic downturn. The top management team is debating whether to lay off employees. In the debate, the following statements are made. Which of the statements is FALSE? a. If Clarita Cosmetics lays off a large number of employees, there will be a significant loss of human capital that will cause further downturns in the firm's performance. b. A moderate-sized layoff at Clarita Cosmetics will probably improve firm performance. c. If Clarita Cosmetics restructures, it ought to increase investments in training and development. d. A layoff will increase the slack at Clarita Cosmetics and allow the firm to absorb the increased number of errors employees may make until they learn their new tasks.
D
49. Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior? a. Effectively Managing the Firm's Resource Portfolio. b. Determining Strategic Direction. c. Regulating and Controlling Employees. d. Sustaining an Effective Organizational Culture.
D
5. The most effective leadership style is ____ leadership. a. pragmatic b. charismatic c. inspirational d. transformational
D
50. Which of the following statements is TRUE regarding effective organizational cultures? a. Once a corporate culture is developed, strategic leaders can focus on other activities. b. A strategy that is historically new for a firm should be implemented by incremental changes in the organization's culture. c. A central task of strategic leaders is to revise the corporate culture on an annual basis after analyzing the changes occurring in the competitive environment. d. Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm's conducts its business.
D
52. The top management team at Ingenuity, Inc., has assigned a team of scientists to a multi-year project to investigate the viability of growing large amounts of fur from cloned cells of minks and foxes to produce no-kill fur products for coats and other clothing items. This idea would satisfy all the dimensions of the entrepreneurial orientation EXCEPT a. innovativeness. b. risk taking. c. proactiveness. d. competitive autonomy.
D
54. Competitive aggressiveness describes a firm's a. tendency to engage in new ideas and creative processes. b. willingness to allow employees to take actions free of organizational constraints. c. ability to be a leader in the marketplace. d. propensity to take actions that allow it to outperform rivals consistently and substantially.
D
57. Research shows that ____________ is the most effective means of ensuring that employees comply with the firm's ethical requirements. a. a written code of ethics b. a statement in the firm's mission statement c. a speech on ethics by the CEO of the company d. a value-based culture
D
58. Managerial actions that support development of an ethical organizational culture include all of the following EXCEPT a. establishing a code of conduct. b. disseminating the code of conduct to all stakeholders to inform them of the firm's ethical standards and practices. c. creating a work environment in which people are treated with dignity. d. disciplining whistle-blowers.
D
60. The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in a. managerial opportunism. b. white-collar crime. c. vindictive disloyalty. d. an act of courage.
D
