Chapter 2

Who is ultimately responsible for the results that a company strategy produces?

The chief executive officer (CEO)

Which mission statement is written in the most effective manner?

"To provide nutritious food at an affordable price, served with a smile"

Which elements form part of a company's strategic plan?

Basic business model Company direction Intended competitive moves

Which of the following should managers do when a company faces sudden market changes or obstacles?

Be innovative Adapt quickly

Which of the following are NOT likely to happen if a company's financial objectives are met or exceeded?

Revenues will decrease. The company will go into bankruptcy. Senior executives will be fired.

Why should the mission statement NOT focus on the company's goal of making a profit?

The mission statement should define "who we are and what we do." All commercial businesses aim to make a profit. Making a profit is best seen as a result of the company's actual mission.

When setting objectives, which types of performance targets must be established?

Strategic Financial

While developing a strategic vision, a company's managers might change which of the following?

The products the company will offer The markets in which the company will compete The type of customers the company will serve

Who would be most often involved in the crafting and implementation of functional strategies?

The general manager of the business The people in charge of each function

Who is primarily responsible for crafting and implementing business strategy in a multi-business organization?

The head of each business unit

Top executives can unify the various strategies within a company by telling lower managers and other personnel about which of the following?

The major components of the corporate strategy The organization's vision The organization's objectives

Masterful strategies come from ______.

doing things differently from competitors where it counts—out-innovating them, being more efficient, adapting faster—rather than running with the herd.

Organizing and guiding a new business activity is called ______.

entrepreneurship

A well-crafted vision statement should ______

explain where top executives plan to take the company in the future

A toy-making business is part of a larger corporation that owns various other businesses. The toy-making business unit decides to increase its production of board games. This is an example of a(n) ______.

functional-area strategy

To mobilize employee support for a new strategic vision for a company, executives should ______.

give convincing reasons for taking the organization in a new direction

The most demanding and lengthy part of the strategy management process is ______.

implementing the strategy

When conditions outside or inside the company change enough to cause substantial disruptions, managers should ______.

reevaluate the organization's direction and strategy

Employees at various levels within an organization are best served by performance objectives that ______.

relate specifically to what their departments are doing

Strategic performance is measured by the rise and fall of a company's ______.

competitiveness

As a company strategy is implemented, it will typically ______.

work well in some areas and not so well in others

What will a typical strategic plan accomplish?

-Allocate resources that will help implement the plan. -Establish a time period for accomplishing goals.

What is a company slogan?

A brief phrase that summarizes the company's vision

Which of the following are developed during the first stage in crafting a company strategy?

A set of core values A strategic vision A mission statement

To implement a strategy, what elements will a manager usually need to assemble?

Adequate resources for activities critical to strategic success Information and operating systems Personnel with appropriate skills and expertise

Within the hierarchy of a company, a number of strategies are likely to have been developed and implemented by various people. Under what circumstances will the company perform most effectively?

All the strategies are unified. All employees understand the company's long-term direction. Top executives clearly communicate a company's strategy to company personnel.

What are strategic objectives primarily concerned with?

An organization's competitive position An organization's market standing

Which of the following are short-term objectives?

Annual objectives Quarterly objectives

Which of the following should a manager do to implement a strategic plan?

Build and strengthen competitive capabilities Direct organizational change Motivate employees

During the final stage of developing and implementing a company strategy, what factors often cause the company to adjust its objectives or mission statement?

Changing conditions New opportunities New ideas

Which factors do managers consider when establishing performance objectives?

Competition from other businesses Economic conditions within the industry The company's internal capabilities

Better financial performance typically results from which of the following?

Competitive advantage A stronger market standing More competitive vitality

To produce a value statement for a new company, what will management typically do?

Consider feedback from employees Write an initial draft and have employees read it

When management discovers that there are strategic conflicts among the various levels of an organization, what should management do?

Consider which low-level strategies might be changed to accommodate high-level strategies. Ensure all conflicts are resolved. Adapt high-level strategies to incorporate more appealing ideas from lower levels.

What entrepreneurial skills help managers craft and implement a successful company strategy?

Daring to be innovative Adjusting the strategy as conditions shift Noticing signs that the business climate is changing

An organization should set performance targets for which of the following?

Each of the organization's separate businesses Each of the organization's individual work units Each of the organization's product lines

When a company strives to achieve an extreme stretch goal but fails because the goal was simply too difficult, what will most likely happen?

Employees will lose their motivation.

What are the obligations of a company's board of directors?

Evaluating the company's direction and strategy Evaluating the strategic leadership abilities of the CEO Overseeing the company's financial accounting and financial reporting practices

Who is the target audience of an organization's strategic vision statement?

Everyone in the organization

Which of the following are true about how the content of a company's strategic plan is typically shared with different audiences?

Excerpts of the plan are posted on the company website. A summary of the plan is published in the company's annual report. The plan is circulated to the managers within the company.

Which statements are true about companies where core values are taken seriously?

Executives demonstrate the values in their own behavior. Executives attempt to make the values an integral part of the corporate culture.

What are the best tactics for convincing lower-level managers and employees to support the company's strategic vision?

Explaining why the company is taking a particular direction Sharing updates and progress reports

Members of an organization are most likely to support a new strategic vision if the document does which of the following?

Explains where the organization is going and why Is distributed throughout the organization Is explained by top executives to as many people as possible

True or false: The crafting and implementing of company strategy is exclusively a function of the top management of an organization.

False

If a company's board of directors is strong and independent, what should it be able to do?

Guide and judge the CEO and other executives Certify to shareholders that the CEO is performing as the board expects Stop management from taking actions that are too risky or inappropriate

A company mission statement should do which of the following?

Identify the company's customers or markets Establish the company's own identity Specify what services and products the company offers

Business strategy, in contrast to corporate strategy, involves which of the following?

Improving the performance of individual business units Strengthening the market position of individual business units

Financial objectives are important for doing which of the following?

Increasing profit margins Increasing revenue Achieving shareholder satisfaction

Why is a well-designed strategic vision important to an organization?

It helps top executives clarify their sense of direction. It helps managers coordinate efforts toward common goals. It motivates personnel at all levels to help achieve the vision.

Which statements are true of a company's strategic vision?

It is crafted by the company's top managers. It steers the organization in a specific direction. It explains why the vision makes sound business sense.

Which statements about a company's goal-setting process are true?

It should be a top-down process. It should coordinate the efforts of each organizational unit. It should involve all organizational units within the company.

Which statements are true about assessing the effectiveness of a strategic plan?

Managers should evaluate how the strategy is working throughout the company. Managers should make adjustments in areas that aren't working well and continue strategies that are succeeding. Managers should search diligently for ways the strategy can be improved

To ensure that employees will help execute the company's strategy, what should a manager do?

Managers should reward employees when they achieve performance goals. Managers should encourage a company culture that will help the strategy succeed. Managers should provide leadership to keep the strategy moving forward.

Which of the following are part of the fifth and final stage for crafting and executing a company's strategy?

Monitoring developments Adjusting the mission statement Evaluating performance

Which actions are often helpful for a company when it adopts a value statement?

Posting the finished values statement on the company's website Combining its values, vision, and mission in one document

Long-term objectives are intended to do which of the following?

Prevent a nearsighted management philosophy Prompt action now to improve the organization's performance later

Which of the following should the organizational units within a company do?

Produce results that help the company achieve its performance targets Know their strategic role within the company See themselves as part of a team that includes the entire company

To measure how well a company is moving in the intended direction, it is important to ______.

Set objectives

Operating strategies are designed to manage which of the following?

Specific activities, such as Internet sales Key units, such as distribution centers

The balanced-scorecard approach measures which of the following?

Strategic objectives Financial objectives

Sometimes a company's CEO is the main person who develops the organization's strategy. This most often happens in which of the following situations?

The CEO is the founder of a company that grew into a larger corporation. The CEO is the owner and manager of a small company. The CEO has particularly strong strategic leadership skills.

Which of the following groups is primarily responsible for challenging a chief executive officer (CEO) who is acting inappropriately in that position?

The board of directors

In which of the following situations is an adjustment of a company's strategy most likely needed?

The company faces a drop in its market position. The company repeatedly fails to achieve performance goals.

Why might top executives involve lower-level managers in crafting and implementing a company strategy?

The company's operations are spread across various industries and geographic areas. The managers know more details about the operation of their specific operating units than the executives do. The organization is so big and complex that top management cannot keep track of all the parts that make up the strategy.

What is described by a company's mission statement?

The company's present purpose The company's present business

Why do some companies state their core values but make little effort to ensure that individual personnel and the company in general will abide by them?

The statement about values serves only to make the company look good.

Which document spells out the direction a company will take as it anticipates future developments?

The strategic vision

It is generally best for companies to craft objectives that have which of the following features?

They can be measured. They include a deadline for achieving the objective.

Why are stretch objectives helpful?

They help an organization perform at its full potential. They prevent employees from settling for a comfortable level of performance. They motivate employees to be more productive.

Which statements are true about specific, measurable goals?

They help an organization remain focused on what it is trying to accomplish. They motivate personnel to try harder. They help an organization track its progress.

Why do companies designate a set of core values? (Choose every correct answer.)

To encourage certain beliefs, traits, and behavioral norms To guide the company as it pursues its vision and mission To guide the behavior of personnel

When charting a company's direction, why do managers set objectives?

To establish performance targets that the managers hope to achieve, using the company's mission and vision

What purposes are served by a company slogan?

To motivate personnel to overcome obstacles To help employees maintain focus on the company's purpose To define the organization's direction

What is the role of a company's board of directors?

To oversee top executives and ensure that they craft and implement an effective strategy To ensure that the company is operating in the best interests of shareholders and other stakeholders

What is the purpose of a company's strategic vision?

To steer the company toward long-term growth and profits

Under what circumstances would an extreme stretch goal involving radical expectations be most likely to succeed?

When the company has plenty of resources available When the company's recent performance has been strong

What is a stretch objective?

a performance target that will require significant effort to achieve

A measurement system that links financial performance goals with strategic goals is called a ______

balanced scorecard

Typically, a company's strategy making must ______.

begin at the top of a company

Honor, integrity, teamwork, superior customer service, and innovation are examples of company ______.

core values

The manager of a plant that produces canned goods and is owned by a food and beverage company develops a strategy for updating its production lines while maintaining its quality controls. This is an example of a(n) ______.

operating strategy

What are lagging indicators?

performance measurements resulting from decisions and activities in the past

In a small, privately owned company, the strategic plan is most likely something that the owner has ______.

pondered without writing down

The primary purpose of a vision statement is to ______.

provide the company with a sense of direction

The most reliable leading indicators are ______.

strategic outcomes that measure competitiveness and market position

A sense of "where we are going" is called the company's ______.

strategic vision