strat 12

One of the Chapter 12 Key Leadership Actions that stands out in the Case Scenario is "Sustaining an Effective Organizational Culture." Both founding brothers Mogens and Jack infused a culture of innovation and sustainability. As the firm grew, however, and ownership became spread among 40 family members, that culture became diluted. This case shows that organization culture cannot be a source of competitive advantage as organizations grow.

False

The Walt Disney Company had a plan for succession in the event of the death of Walt Disney. When Walt died before Christmas 1966, the new CEO continued Walt's dream and created innovations that allowed Disney to continue along its path to success with very little interruption.

False

ZW&P's core resources are its financial and technological resources.

False

Effectively managing ZW&P's portfolio of resources (in particular its human and social capital resources) may be its most important strategic leadership task.

True

A CEO may gain power by holding the titles of both CEO and Chairman of the Board.

a. True

As the dynamics of competition accelerate, people are perhaps the only truly sustainable source of competitive advantage.

a. True

Because of the current changing competitive landscape and varying levels of performance, an increasing number of boards of directors are turning to insiders to succeed CEOs.

a. True

Criteria such as asset utilization improvements and changes in employee turnover rates are part of the internal business processes perspective of the balanced scorecard.

a. True

Effectively managing the firm's resource portfolio (financial, human, social, and organizational capital) may be the most important strategic leadership task.

a. True

Employees usually have a strong preference for firms to use the internal managerial labor market when selecting top management team members and the CEO.

a. True

External social capital is increasingly critical to firm success as few if any companies have all the resources to successfully compete against their rivals.

a. True

Firm size, firm age, the executive's tolerance for ambiguity, and his or her commitment to strategic outcomes are all factors that may affect managerial discretion.

a. True

GM's newest CEO, Dan Akerson, is building new capabilities in technology development and marketing, especially in customer service. This is an example of a CEO developing capabilities into core competencies.

a. True

In addition to determining new strategic initiatives, top-level managers also develop the appropriate organizational structure and reward systems of a firm.

a. True

In the past, companies had a preference for insiders to fill top-level management positions because of the desire for continuity and a continuing commitment to the firm's current vision, mission, and chosen strategies.

a. True

Including talent from both the internal and external labor markets increases the likelihood that the firm will be able to form an effective top management team.

a. True

Incremental changes to a firm's culture can be used to implement strategies effectively.

a. True

Internal labor markets consist of the career opportunities for managers within the firm for which they currently work.

a. True

Members with substantive expertise in the firm's core functions and businesses aids the effectiveness of the top management team.

a. True

Rewarding those who use proper channels and procedures to report observed wrongdoings is an example of an action that should be taken by a strategic leader to develop an ethical organizational culture.

a. True

Strategic control focuses on the content of strategic actions rather than their outcomes.

a. True

Strategic leaders are most likely to integrate ethical values into their decisions when the company has explicit ethics codes that are integrated into the business through extensive ethics training.

a. True

Strategic leadership is the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.

a. True

The CEO is the individual with primary responsibility for effective strategic leadership within an organization.

a. True

The CEO of YorkMark, Inc., has an exceptional amount of power in the organization. It is likely the board of directors is composed of sympathetic outside members and insiders who report to the CEO.

a. True

The advantages of long tenure (firm-specific human and social capital, knowledge, and power) seem to outweigh the disadvantages of rigidity and maintaining the status quo.

a. True

The balanced scorecard focuses on both financial and non-financial controls.

a. True

The balanced scorecard's perspective on learning and growth is intended to improve the firm's ability to innovate.

a. True

The decision-making discretion of top-level managers is determined partly by external environmental factors such as the industry structure, the industry's rate of growth, and the degree to which products can be differentiated.

a. True

The firm's core ideology motivates the firm's employees through the company's heritage.

a. True

The firm's envisioned future encourages employees to stretch beyond their expectations of accomplishment and requires significant change and progress to be realized.

a. True

The most critical ability of a strategic leader is the ability to attract and then manage human capital.

a. True

The strategic direction of a firm usually focuses on the coming 3 to 5 years.

a. True

The training of future strategic leaders yields a competitive advantage for a firm, in part because knowledge and skills are necessary for successful execution of strategy.

a. True

Top management team members and CEOs who have long tenure on the team and in the organization have greater influence in board decisions.

a. True

Transformational leadership is the most effective strategic leadership style.

a. True

When the new CEO is from inside the firm and a heterogeneous top management team is in place, the strategy may not change, but innovation is likely to continue.

a. True

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.

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. adhesion to the status quo.

Firms needing to change their strategies should

a. create more heterogeneous top management teams.

A heterogeneous top management team is composed of individuals with

a. different functional backgrounds, experience, and education.

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

The ability to attract and manage ____ may be the most important skill a strategic leader must have.

a. human capital

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

The more heterogeneous the top management team, the

a. more difficult it will be for the team to implement strategies.

The premise of the balanced scorecard is that firms jeopardize future performance possibilities when they

a. overemphasize financial controls and neglect strategic controls.

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.

Organizational controls provide

a. the parameters within which strategies are to be implemented.

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.

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.

An emphasis on strategic controls encourages managers to be risk averse.

b. False

Compared to homogeneous top management teams, heterogeneous top management teams with an internally promoted CEO are more likely to change their firm's strategies when necessary and to support innovation.

b. False

Competitive aggressiveness, proactiveness, risk aversion, innovativeness, and autonomy are the five dimensions characterizing the entrepreneurial mind-set.

b. False

Financial controls provide feedback about the outcomes of the firm's past actions and predictions about the results of the firm's future actions.

b. False

For 15 years, Edward was a compensation specialist at a mid-sized firm. He was laid off when the firm experienced financial setbacks. Edward has decided to open his own business as a compensation consultant to small firms. He can expect that his main source of human capital will be a bank line of credit.

b. False

Organizational culture is a complex set of ideologies, symbols, and core values that are shared throughout the firm, but its development is so subtle and poorly understood that top managers cannot influence its content.

b. False

Selection of an insider as a new CEO indicates a firm's desire to encourage innovation and strategic change.

b. False

The Chapter 12 Strategic Focus reports on recent surveys which found that about 90 percent of boards of corporations had a succession plan for their CEOs.

b. False

The experience that results from long tenure in a firm is known to extend the breadth of an executive's knowledge base.

b. False

The more heterogeneous and the larger the top management team, the easier it is to implement strategy effectively.

b. False

The more homogeneous a top management team, the more likely those managers will be innovative and willing to pursue strategic change.

b. False

The underlying premise of the balanced scorecard is that firms jeopardize their future performance possibilities when strategic controls are emphasized at the expense of financial controls.

b. False

To influence employees' judgment and behavior, ethical practices must shape the firm's decision-making process, but should be a peripheral part of organizational culture.

b. False

Typically, a vice president would NOT be considered to hold a high enough position to be included in the top management team of an organization.

b. False

When a new CEO is selected from outside the firm, a change of strategy is likely, especially if the top management team is homogenous and highly cohesive.

b. False

______ capital increases cooperation among individuals inside and outside the firm.

b. Social

An example of the external labor market is the situation where

b. a new vice president of marketing is hired from a competitor.

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(n)

b. external CEO with a heterogeneous top management team.

Normally, the more involved a board of directors is in shaping the firm's strategic direction, the

b. higher the corporation's performance is.

The effective development and management of the firm's ___ may be its only sustainable competitive advantage.

b. human capital

Which of the following factors most encourages stability in a firm's strategy?

b. internal CEO succession and a homogeneous top management team

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

c. Both A and B are correct.

Which of the statements about CEO duality is FALSE?

c. CEO duality is relatively rare in the U.S. except in large Fortune 500 firms.

The primary responsibility for effective strategic leadership of the organization rests with the

c. CEO.

Shaping and reinforcing a new organizational culture requires all of the following EXCEPT

c. adherence to the firm's traditional core values.

The _____ is a framework firms can use to verify that they have established both strategic and financial controls to

c. balanced scorecard

Which of the following is NOT a factor that determines the amount of a manager's decision discretion?

c. cohesiveness of the board of directors

Strategic control focuses on the _____ of strategic actions, whereas financial controls focus on the _____ of strategic actions.

c. content; outcomes

Which of the following is NOT associated with heterogeneous top management teams?

c. diminished debate among top managers

A CEO's breadth of knowledge base is constrained by

c. his or her long tenure with the firm.

Criteria for reevaluating internal business processes using the balanced scorecard include all of the following EXCEPT

c. increases in employee skills.

The top management team is composed of the

c. key individuals who are responsible for selecting and implementing a firm's strategy.

Four perspectives are integrated to form the balanced scorecard framework. The financial perspective focuses on the view of the firm by the

c. shareholder.

Determining the strategic direction of a firm involves

c. specifying the vision and the strategy to achieve that vision over time.

A characteristic of the manager that may affect managerial discretion is his/her

c. tolerance for ambiguity.

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?

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

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's 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?

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.

Which of the following statements is TRUE regarding effective organizational cultures?

d. Organizational culture can be a source of competitive advantage because it influences employee behavior and how the firm's conducts its business.

Which key strategic leadership action plays a key role in influencing how the firm conducts its business and regulates and controls employees' behavior?

d. Sustaining an Effective Organizational Culture.

Which of the following will increase the probability that a lower-level manager will become a successful strategic leader?

d. Training and development programs.

Which of the following is NOT related to a CEO having long tenure in his or her position?

d. a broader knowledge base

Research shows that ____ is the most effective means of ensuring that employees comply with the firm's ethical requirements

d. a value-based culture

The Enron employee who reported the financial manipulations at the company to her superiors can be considered to have engaged in

d. an act of courage.

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

d. competitive autonomy.

Two key strategic leadership actions include

d. determining strategic direction and establishing balanced organizational controls.

The goal of investing in human capital is to

d. develop a workforce capable of continuous learning.

Human capital refers to

d. knowledge and skills of the firm's work force.

All of the following are correct about the status of CEO succession (Chapter 12 Strategic Focus) EXCEPT

d. over 90 percent of firms have succession plans.

Competitive aggressiveness describes a firm's

d. propensity to take actions that allow it to outperform rivals consistently and substantially.

The most effective leadership style is leadership.

d. transformational