Exam 2
Calculating quantitative competitive strength ratings for each of a diversified company's business units involves
selecting a set of competitive strength measures, weighting the importance of each measure, rating each business on each strength measure, multiplying the strength ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each business unit to obtain a weighted overall competitive strength score, and using the weighted overall competitive strength scores to evaluate the competitive strength of all the businesses, both individually and as a group.
A superior capability to execute strategy better than rivals is the only path to a potentially sustainable competitive advantage when
rivals can readily copy the successful features of a company's product/service or quickly imitate its actions to attract customers.
Which of the following best characterizes the task of leading the drive for good strategy execution and operating excellence?
staying on top of how well things are going, putting constructive pressure on the organization to achieve good results, and pushing corrective actions to improve strategy execution and achieve the targeted results.
The two best signs of good strategy execution are
whether a company is meeting or beating its performance targets and whether it has attained real proficiency in performing strategy-critical value chain activities.
The tests of whether a diversified company's businesses exhibit resource fit do NOT include
whether the corporate parent has sufficient cash on hand and cash flows from operations to fully fund the needs of its individual businesses and pay dividends to shareholders without having to borrow money or incur long-term debt.
Which one of the following statements about total quality management (TQM) is false?
TQM produces significant results very quickly--the greatest benefits emerge within the first six months.
The standout traits of a high-performance corporate culture include
a "can-do" spirit, pride in doing things right, no-excuses accountability, and a pervasive results-oriented work climate where people go the extra mile to meet or beat stretch objectives.
Which one of the following is not an accurate characterization of a centralized organizational structure?
a centralized organization structure has the advantage of requiring fewer layers of management and facilitating speedier decision-making (as compared to a decentralized organization structure).
Which one of the following statements about the role and influence of a company's core values and ethical standards on its culture is FALSE or INACCURATE?
a company's values statement and code of ethics are particularly valuable in creating a culture and work climate that prevents company personnel from engaging in unethical or socially irresponsible conduct that tarnishes a company's public image and puts its financial performance and market standing at risk.
Which one of the following are typical characteristics of a weak company culture?
a lack of widely-shared and strongly-held values, principles, and behavioral norms.
Which of the following is the best example of unrelated diversification?
a manufacturer of paint products acquiring a retail chain specializing in sports apparel.
Unhealthy company cultures typically have such characteristics as
a politicized internal environment, hostility to change, an insular thinking and an inward focus, a low regard for ethical behavior, unethical and greed-driven behaviors, and/or incompatible, clashing subcultures.
The leadership challenges that top executives face in making corrective adjustments when things are NOT going well include
accurate analysis of the circumstances causing unacceptable performance, the exercise of good business judgment in deciding when corrective adjustments are needed and what adjustments to make, and good implementation of the corrective actions that are initiated.
The statistical thinking underlying Six Sigma is based on the following three principles:
all work is a process, all processes have variability, and all processes create data that explains variability.
Which one of the following is NOT among the things a company's top management should do to fix a problem culture?
appointing a team of high-profile managers and well-regarded employees to design a plan for cultural change and then lead the internal effort to change the culture.
Which of the following is generally NOT among the practices that companies use to staff jobs with the best people they can find and then retain them?
assigning all employees to work teams and empowering the work teams to perform their assigned tasks in whatever manner they see fit.
Which of the following is not a sound guideline for designing and administering an incentive compensation system that truly motivates organization members, inspires their best efforts, and helps sustain high levels of productivity?
base rewards and incentives on group performance rather than individual performance.
Which one of the following is not one of the ways that strong corporate parenting skills and capabilities can help a diversified corporation's business subsidiaries perform at a higher level than they could perform as a stand-alone enterprise?
because the senior executives of a large, diversified corporation have among them many years of experience in a variety of business settings, they are often able to provide first-rate advice and guidance to the heads of the various business subsidiaries on how to improve competitiveness and financial performance and their parenting activities often include identifying, recruiting, and hiring talented managers to run the company's individual businesses.
Steering needed resources to execution-critical value chain activities is important because
changes in strategy and efforts to improve execution of an existing strategy typically entail budget reallocation and resource shifting--organizational units that now have a bigger strategy-critical role may need more people, new equipment, additional facilities, and above-average increases in their operating budgets, especially if they need to develop and strengthen particular competencies and capabilities or if they need more resources for other reasons.
Which of the following is NOT among the principal managerial components of the strategy execution process?
communicating the details of the strategy to all employees and training them how to do their jobs in a manner that will promote fast strategy implementation and excellent strategy execution.
Which one of the following is NOT characteristic of an adaptive culture?
company personnel are strongly attached to proven policies, procedures, operating methods, and ways of doing things, but are quite willing to shift to different strategies in order to go on the offensive to outcompete key rivals.
Once a company has diversified into a collection of related or unrelated businesses and concludes that some strategy adjustments are needed, which one of the following is not one of the main strategy options that the company can pursue?
craft new initiatives to more strongly differentiate the various products/services in each of the company's businesses and thereby enhance the competitive power and reputation of the company's brand name.
Which one of the following is NOT part of structuring a company's organization and work effort in ways that promote successful strategy execution?
determining the best way to empower employees and thereby energize the company's work force.
According to the school of ethical relativism,
differing religious beliefs, historic traditions and customs, core values and beliefs, and behavioral norms across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong; as a consequence, whether certain business-related actions or behaviors are ethically right or wrong depends on the prevailing local ethical standards.
Which one of the following is not a part of the business case for why companies should be public spirited and devote time and resources to social responsibility initiatives, environmental sustainability, and good corporate citizenship?
every business has a moral duty to exhibit ordinary decency, civic-mindedness, ethical behavior, contribute to charitable organizations, and display concern for the environment; further, it is morally obligated to urge its employees to do the same.
Which of the following is NOT among the chief advantages of a decentralized organizational structure?
facilitating collaboration and coordination between different organizational units and making it quicker and easier to capture cross-business strategic fits in diversified companies.
Which one of the following is not among the potential advantages of outsourcing the performance of certain value chain activities?
faster empowerment of employees, lower employee turnover, and reduced R&D costs.
Which one of the following is NOT a benefit of prescribing policies and operating procedures to aid management's task of implementing and executing strategy?
helping build employee commitment to adopting best practices and using the tools of TQM, Six Sigma, and business process reengineering to improve the performance of value chain activities.
Which one of the following is NOT a key element of integrative social contracts theory?
integrative social contracts theory rejects the slippery slope of ethical relativism and embraces the "one-size-fits-all" approach of ethical universalism.
A big advantage of related diversification is that
it offers ways for a firm to realize 1 + 1 = 3 benefits because the value chains of the different businesses present opportunities for cross-business transfer of competitively valuable resources and capabilities, combining the related value chain activities of separate businesses into a single operation to achieve lower costs, cross-business use of a potent brand name, and/or cross-business collaboration to create new competitively valuable resources and capabilities.
A company's environmental sustainability strategy concerns
its deliberate actions to protect the environment, provide for the longevity of natural resources, maintain ecological support systems for future generations, and guard against ultimate endangerment of the planet.
The role of benchmarking is to
look outward to find the best practice for performing an activity and then to develop the data for measuring how well a company's own performance of that activity stacks up against the best-practice standard.
Which one of the following is not particularly helpful in perpetuating a company's culture?
maintaining a consistent strategic vision and strategic intent over time and ongoing top management emphasis on building and developing certain specific resource strengths, core competencies, and competitive capabilities.
The term "triple bottom line" refers to
measuring a company's performance in the social responsibility arena and setting formal performance targets in three areas: "profit, people, and planet."
Which one of the following is not a characteristic of a strong culture company?
most companies would have strong cultures were it not for the presence of moderately entrenched subcultures that block the emergence of a strong and well-defined companywide work climate.
A multinational diversification strategy allows a firm to pursue competitive advantage potential in all but one of the following ways:
providing superior opportunity to maximize cross-business financial fit and establish large, well-protected profit sanctuaries in many different countries.
Business process reengineering is a tool for
radically redesigning and streamlining how an activity is performed, with the intent of achieving quantum improvements in performance.
When identifying a diversified company's present corporate strategy, which of the following would not be something to look for?
recent actions in one or more business units to switch to a different competitive approach and pursue a different type of competitive advantage.
Which one of the following is NOT likely to be effective in trying to gain employees' wholehearted commitment to good strategy execution and operating excellence?
regular across-the-board pay increases for all employees and eliminating stress, anxiety, and job insecurity from the work environment.
The process of developing and strengthening capabilities internally
requires first developing the ability to do something, however imperfectly or inefficiently: second, translating this ability into a tried-and-true competence and/or capability by learning to do the activity consistently well and at an acceptable cost; and then continuing to polish, refine, and sharpen performance of the competence or capability, striving not just for ongoing improvements but, ultimately, for best-in-industry or best-in-world proficiency.
One of the most significant contributions to strategy-making in diversified companies that the 9-cell industry attractiveness/competitive strength matrix provides is
strong logic for fully funding the resource needs of competitively strong businesses in attractive industries, investing selectively in businesses with intermediate positions on the grid, and getting rid of competitively weak businesses in unattractive industries unless they generate sizable cash flows that can be redeployed elsewhere or have traits that contribute to the performance of one or more sister businesses.
Which one of the following is NOT one of the major drivers of unethical managerial behavior?
strong motivations among business organizations to outcompete rivals and, hopefully, to achieve a sustainable competitive advantage over rivals.
When industry attractiveness ratings are calculated for each of the industries a multi-business company has diversified into, the results help indicate
the extent to which a diversified company's future overall performance is likely to be dragged down by being in too many unattractive industries (those with slow growth, low profitability, intense competition, or other troubling conditions or characteristics).
The three tests for judging whether a particular move to diversify into a new business can produce added long-term economic value for shareholders are
the industry attractiveness test, the cost-of-entry test, and the better-off test.
Which of the following is not one of the appeals of diversifying into unrelated businesses?
the relative ease of growing shareholder value by capturing cross-business financial synergies that will quickly drive the company's overall financial performance to higher levels.
Which of the following statements about developing competitively valuable resources and capabilities that enable a company to achieve a durable competitive advantage over rivals is false?
the simplest way for a company to achieve a strategy-execution advantage over rivals employing copycat strategies is to outsource more value chain activities than rivals do and thereby achieve lower operating costs (which then gives the company superior capability to underprice the copycat rivals).
Which one of the following statements concerning the risk and fallout of pursuing unethical strategies and tolerance of unethical conduct is false?
the single biggest reason why a company's strategy should be ethical is to avoid damaging the company's business reputation.
According to the school of ethical universalism,
there are certain universal ethical principles or norms that transcend most all cultures, societies, and religions--these include being truthful, demonstrating integrity of character, not cheating, treating people with courtesy and respect, not exposing workers to toxic chemicals and hazardous materials, not selling products known to be harmful or unsafe, and not pillaging or degrading the environment.
Installing well-conceived state-of-the-art operating systems is an important managerial component of implementing and executing strategy because
they enable not only better strategy execution but also strengthen organizational capabilities--sometimes enough to provide a competitive edge over rivals.
A company's pool of resources, competencies, and capabilities need to be dynamically managed and always evolving because
they will grow stale unless they are continually refreshed, modified, or even phased out and replaced in order to stay abreast of ongoing changes in the needs and expectations of customers, ever-evolving competitive conditions, the newly launched offensives of rivals, and a company's own strategic initiatives to outcompete rivals.