MGT 4335 Ch 10
73) What are the four stages of corporate development?
There are four stages of corporate development. Stage I is typified by the entrepreneur, who founds the company to promote an idea. This is a simple structure. Stage II is the functional structure. This is the point when the entrepreneur is replaced by a team of managers who have functional specialization. Stage III is typified by the corporation's managing diverse product lines in numerous industries; it decentralizes the decision-making authority. This is the divisional structure. Stage IV is beyond SBUs. The matrix and the network are two possible candidates for a fourth stage in corporate development—a stage that not only emphasizes horizontal over vertical connections between people and groups, but also organizes work around temporary projects in which sophisticated information systems support collaborative activities.
27) Which market location tactic did Texas Instruments use when they avoided direct competition with Intel by developing cell phones, medical devices, and consumer electronics rather than computers? A) flanking maneuver B) bypass attack C) encirclement D) guerrilla warfare E) frontal assault
A) flanking maneuver
100) Which type of structure enables a corporation to decentralize decision-making to the local subsidiaries? A) geographic-area structure B) product-group structure C) network structure D) matrix structure E) functional structure
A) geographic-area structure
98) Which type of structure was used by Nestle to tailor products to regional differences and to achieve regional coordination? A) geographic-area structure B) network structure C) product-group structure D) international structure E) functional structure
A) geographic-area structure
16) When the return on investment for each division of a corporation is greater than what the return would be if each division were an independent business, that corporation is said to have achieved A) synergy. B) a leveraged buyout. C) its hurdle rate. D) the status of a true conglomerate. E) Stage III.
A) synergy.
77) 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? 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
50) An external block preventing a corporation from moving from one stage to another is A) unfavorable economic conditions. B) strategic myopia. C) organizational inflexibility. D) lack of ability. E) lack of resources.
A) unfavorable economic conditions.
43) Which of the following is not true of a Stage I corporation? A) It is typified by the entrepreneur. B) The entrepreneur tends to make all the important decisions personally. C) The Stage I corporation has little formal structure. D) Planning tends to be long range and progressive. E) The greatest strength of a Stage I corporation is its flexibility and dynamism.
D) Planning tends to be long range and progressive.
2) Which statement below is not true of strategy implementation? 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.
18) According to Goold and Campbell, when companies coordinate the flow of products or services of one unit with that of another unit to reduce inventory, the synergistic effect is known as A) pooled negotiating power. B) shared know-how. C) coordinated strategies. D) economies of scale or scope. E) new business creation.
D) economies of scale or scope.
94) The job design technique that combines tasks to give a worker more of the same type of duties to perform is known as A) job combination. B) job rotation. C) job enrichment. D) job enlargement. E) job motivation.
D) job enlargement.
49) A candidate for a fourth stage in corporate development is the A) conglomerate structure. B) functional structure. C) divisional structure. D) matrix structure. E) hybrid structure.
D) matrix structure.
80) Which structure is often called a virtual organization? A) strategic business units B) functional structure C) divisional structure D) network structure E) matrix structure
D) network structure
24) Which of the following is not an offensive tactic? A) frontal assault B) flanking maneuver C) guerilla warfare D) raising structural barriers E) encirclement
D) raising structural barriers
22) Which of the following is not true of defensive tactics? 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) Defensive tactics include a frontal assault.
E) Defensive tactics include a frontal assault.
56) When the drive of the entrepreneur is no longer enough to keep the Stage I company from floundering, this type of crisis is called 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.
15) The term used in strategic implementation that describes a system of sequential steps or techniques that describe in detail how a particular task or job is to be done is A) a program. B) a guideline. C) a budget. D) a course of action. E) a procedure.
E) a procedure.
52) Stage V in the organizational life cycle is the A) birth stage. B) growth stage. C) maturity stage. D) decline stage. E) death stage.
E) death stage.
4) Who typically implements strategy in large, multi-industry corporations? A) the board of directors B) top management C) middle management D) first level management E) everyone in the organization
E) everyone in the organization
26) Which market location tactic is being used when a company goes head to head with its competitor matching in every category from price to promotion to distribution channel? A) flanking maneuver B) bypass attack C) encirclement D) guerrilla warfare E) frontal assault
E) frontal assault
46) In a Stage I company, if the entrepreneur falters, the company usually flounders. This is labeled by Greiner as a crisis of A) autonomy. B) confidence. C) clarity. D) differentiation. E) leadership.
E) leadership.
75) Which structure simultaneously combines functional and product forms at the same level of the organization? A) strategic business units B) simple structure C) network structure D) divisional structure E) matrix structure
E) matrix structure
78) There are three distinct phases in the development of a matrix structure. Which phase occurs when both the functional and product structures become permanent in a true dual-authority structure? A) temporary cross-functional task forces B) true dual-authority structure C) product/brand management D) immature matrix E) mature matrix
E) mature matrix
55) What is the additional phase in the organizational life cycle that may occur sometime during the maturity or decline stages? A) pause phase B) acquisition phase C) recovery phase D) temporal displacement phase E) revival phase
E) revival phase
92) 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)? A) position matching B) functional duties C) job design D) task conversion E) responsibility shift
Answer: C
72) Discuss Chandler's conclusion concerning strategy.
Answer: Chandler concluded that structure follows strategy—that is, changes in corporate strategy lead to changes in organizational structure. He also concluded that organizations follow a pattern of development from one kind of structural arrangement to another as they expand. According to Chandler, these structural changes occur because the old structure, having been pushed too far, has caused inefficiencies that have become too obviously detrimental to bear. Chandler, therefore, proposed the following as the sequence of what occurs: 1. New strategy is created. 2. New administrative problems emerge. 3. Economic performance declines. 4. New appropriate structure is created. 5. Economic performance rises.
101) The geographic-area structure allows the company to introduce and manage a similar line of products around the world.
Answer: FALSE
104) Studies of the performance of reengineering programs show clear, consistent, and overwhelming evidence of success and improved productivity.
Answer: FALSE
107) Reengineering appears to be most useful to changing an entire organization.
Answer: FALSE
34) Once in place, procedures seldom have to be updated to reflect changes in technology or strategy.
Answer: FALSE
38) Job enlargement is the movement of workers through several jobs to increase variety.
Answer: FALSE
39) An offensive tactic usually takes place in the firm's own current market position.
Answer: FALSE
6) Strategy formulation is the sum total of the activities and choices required for the execution of a strategic plan.
Answer: FALSE
61) Firms in the same industry seldom organize themselves in similar ways.
Answer: FALSE
66) Stage III (Divisional Structure) is the point when the entrepreneur is replaced by a team of managers who have functional specialization.
Answer: FALSE
70) The second stage of the organizational life cycle is maturity.
Answer: FALSE
83) Pioneered in the automobile industry, the matrix structure was developed to combine the flexibility of the functional structure with the stability of the product form.
Answer: FALSE
67) In Stage IV, the use of SBUs may result in a red tape crisis in which the corporation has grown too large and complex to be managed through formal programs, and rigid systems and procedures take precedence over problem solving.
Answer: TRUE
68) Stage IV of a corporation could involve a pressure-cooker crisis in which employees in these collaborative organizations will eventually grow emotionally and physically exhausted from the intensity of teamwork and the heavy pressure for innovative solutions.
Answer: TRUE
69) Asking "What would Walt do" at Disney years after his death could present blocks to needed change.
Answer: TRUE
7) Strategy formulation and strategy implementation should be considered as two sides of the same coin.
Answer: TRUE
71) The corporation's life cycle can be extended by managerial and product innovation.
Answer: TRUE
8) Poor implementation is often blamed for strategic failure.
Answer: TRUE
84) When using a network structure, many corporate activities are outsourced.
Answer: TRUE
85) The network structure becomes most useful when the environment of a firm is unstable and is expected to remain so.
Answer: TRUE
9) 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.
Answer: TRUE
64) The greatest weakness of a Stage II corporation is that all its eggs are in one basket.
Answer: TRUE
65) A crisis of control may develop in the Stage III divisional structure.
Answer: TRUE
47) When the people managing diversified product lines in a functionally structured corporation need more decision-making freedom than top management is willing to delegate to them, there is a crisis of A) autonomy. B) confidence. C) clarity. D) differentiation. E) leadership.
A) autonomy.
97) Which type of structure was used by American Cyanamid to introduce and manage a similar line of products throughout the world? A) geographic-area structure B) network structure C) product-group structure D) international structure E) functional structure
97) Which type of structure was used by American Cyanamid to introduce and manage a similar line of products throughout the world? A) geographic-area structure B) network structure C) product-group structure D) international structure E) functional structure
29) What is the last real check a firm has on the feasibility of its selected strategy? A) budget planning B) standard operating procedure development C) exit strategy development D) program development and execution E) tactic developments
A) budget planning
74) How can a corporation's life cycle be extended?
A corporation's life cycle can be extended by managerial and product innovations. Developing new combinations of existing resources to introduce new products or acquiring new resources through acquisitions can enable firms with declining performance to regain growth—so long as the action is valuable and difficult to imitate. This often occurs during the implementation of a turnaround strategy. A revival phase may occur sometime during the maturity or decline stages.
44) Objectives that are personal and subjective and are typified by an entrepreneurial spirit describe what stage of corporate development? A) Stage I company B) Stage II company C) Stage III company D) Stage IV company E) Stage V company
A) Stage I company
13) The term used in strategic implementation that describes a statement of activities or steps needed to accomplish a plan and whose use is to make the strategy action-oriented is A) a program. B) a guideline. C) a budget. D) a course of action. E) a procedure.
A) a program.
86) What is the matrix structure? What are the three conditions which usually exist when the matrix structure is found?
Answer: In matrix structures, functional and product forms are combined simultaneously at the same level of the organization. Pioneered in the aerospace industry, the matrix structure was developed to combine the stability of the functional structure with the flexibility of the product form. The matrix structure is very useful when the external environment (especially its technological and market aspects) is very complex and changeable. It does, however, produce conflicts revolving around duties, authority, and resource allocation. To the extent that the goals to be achieved are vague and the technology used is poorly understood, a continuous battle for power between product and functional managers is likely. The matrix structure is often found in an organization or within an SBU when the following three conditions exist: 1. Ideas need to be cross-fertilized across projects or products. 2. Resources are scarce. 3. Abilities to process information and to make decisions need to be improved.
108) What is reengineering? What are the principles for reengineering proposed by Michael Hammer?
Answer: Reengineering is the radical redesign of business processes to achieve major gains in cost, service, or time. It is not in itself a type of structure, but it is an effective way to implement a turnaround strategy. Business process reengineering strives to break away from the old rules and procedures that develop and become ingrained in every organization over the years. They may be a combination of policies, rules, and procedures that have never been seriously questioned because they were established years earlier. The principles of reengineering proposed by Michael Hammer are as follows: 1. Organize around outcomes, not tasks. 2. Have those who use the output of the process perform the process. 3. Subsume information-processing work into the real work that produces the information. 4. Treat geographically dispersed resources as though they were centralized. 5. Link parallel activities instead of integrating their results. 6. Put the decision point where the work is performed, and build control into the process. 7. Capture information once and at the source.
40) What is synergy? According to Goold and Campbell, what are the six forms it can take?
Answer: Synergy is said to exist for a divisional corporation if the return on investment of each division is greater than what the return would be if each division were an independent business. Synergy can take place in one of six forms according to Goold and Campbell: 1. Shared know how: combined units often benefit from sharing knowledge or skills. 2. Coordinated strategies: aligning the business strategies of two or more business units may provide a corporation significant advantage by reducing inter-unit competition and developing a coordinated response to common competitors. 3. Shared tangible resources: combined units can sometimes save money by sharing resources. 4. Economies of scale or scope: coordinating the flow of products or services of one unit with that of another unit can reduce inventory, increase capacity utilization, and improve market access. 5. Pooled negotiating power: combined units can combine their purchasing to gain bargaining power over common suppliers to reduce costs and improve quality. 6. New business creation: exchanging knowledge and skills can facilitate new products or services by extracting discrete activities from various units and combining them in a new unit or by establishing joint ventures among internal business units.
10) Those who implement strategy will probably be a much more diverse set of people than those who formulate it.
Answer: TRUE
102) As industries move from being multi-domestic to more globally integrated, multi-national corporations are increasingly switching from the geographic-area to the product-group structure.
Answer: TRUE
103) In order to implement reengineering, Hammer suggests that those who use the output of the process perform the reengineering process.
Answer: TRUE
105) Lean Six Sigma incorporates the statistical approach of Six Sigma with the lean manufacturing program originally developed by Toyota.
Answer: TRUE
106) Rather than attempting to fix existing problems through minor adjustments and the fine-tuning of existing processes, the key to reengineering is to ask, "If this were a new company, how would we run this place?"
Answer: TRUE
11) Many of the people in the organization who are crucial to successful strategy implementation probably have little to do with the development of the corporate and business strategy.
Answer: TRUE
30) The first company to manufacture and sell a new product or service is referred to as a pioneer.
Answer: TRUE
31) The purpose of a program or tactic is to make the strategy action-oriented.
Answer: TRUE
32) After programs have been developed, the budget process begins.
Answer: TRUE
33) Standard operating procedures typically detail the various activities that must be carried out to complete a corporation's programs.
Answer: TRUE
35) One of the goals to be achieved in strategy implementation is synergy between and among functions and business units.
Answer: TRUE
36) Successful late movers tend to be large firms with considerable resources and related experience.
Answer: TRUE
37) Microbreweries that make beer for sale for local customers use guerilla warfare against national brewers like Anheuser-Busch.
Answer: TRUE
57) Stage IV of a corporation could involve a pressure-cooker crisis.
Answer: TRUE
58) Any change in corporate strategy is very likely to require some sort of change in the way an organization is structured and in the kind of skills needed in particular positions.
Answer: TRUE
59) The concept that structure follows strategy was developed by Alfred Chandler.
Answer: TRUE
60) Research generally supports Chandler's proposition that structure follows strategy as well as the reverse proposition that structure influences strategy.
Answer: TRUE
62) The first stage of corporate development is the simple structure.
Answer: TRUE
63) The greatest strengths of a Stage I corporation are its flexibility and dynamism.
Answer: TRUE
87) Discuss the network structure.
Answer: The network structure is an example of what could be termed a "non-structure" by its virtual elimination of in-house business functions. Many activities are outsourced. A corporation organized in this manner is often called a virtual organization because it is composed of a series of project groups or collaborations linked by constantly changing nonhierarchical, cobweb-like electronic networks. It becomes most useful when the environment of a firm is unstable and expected to remain so.
76) Which of the following is not descriptive of the matrix structure? A) People from functional units are often assigned on a temporary basis to product units. B) Although employees often work on one or more product units, they maintain only one direct supervisor. C) The matrix structure is very useful when the external environment is very uncertain. D) The matrix structure can produce conflicts revolving around duties, authority, and resource allocation. E) The matrix structure was developed to combine the stability of functional structure with the flexibility of the product form.
B) Although employees often work on one or more product units, they maintain only one direct
91) The program which incorporates the statistical approach of Six Sigma with the lean manufacturing program originally developed by Toyota is known as A) reengineering. B) Lean Six Sigma. C) job enlargement. D) just-in-time. E) flexible manufacturing.
B) Lean Six Sigma.
45) A corporation run by a team of managers with functional specializations and which successfully operates in one industry is said to be a A) Stage I company. B) Stage II company. C) Stage III company. D) Stage IV company. E) Stage V company.
B) Stage II company.
95) How does job rotation combat the adverse consequences of task specialization? 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
25) Which market location tactic is being used when a company attempts to cut the market out from under the established defender by offering a new type of product that makes the competitor's product unnecessary? A) flanking maneuver B) bypass attack C) encirclement D) guerrilla warfare E) frontal assault Answer: B
B) bypass attack
48) In Stage III of a corporation, when various units of the company optimize their sales and profits without regard to the overall corporation, the organization may be experiencing a crisis of A) leadership. B) control. C) autonomy. D) decentralization. E) empowerment.
B) control.
20) When Kimberly-Clark introduced Huggies disposable diapers against Procter & Gamble's market leading Pampers, they were using the offensive tactic known as a(n) A) flanking maneuver. B) frontal assault. C) encirclement. D) bypass attack. E) guerilla attack.
B) frontal assault.
53) During Stage II of the organizational life cycle, the structure most likely to be implemented is A) entrepreneur-dominated. B) functional management. C) decentralization into profit or investment centers. D) structural surgery. E) dismemberment of structure. Answer: B
B) functional management.
14) The innovative bottle design of Ecologic Brands was influenced by a pulp tray used to ship A) soda. B) iPhones. C) beer. D) yogurt. E) reusable totes.
B) iPhones.
93) The movement of workers through several jobs to increase variety is referred to as A) job combination. B) job rotation. C) job enrichment. D) job enlargement. E) job motivation.
B) job rotation.
23) Which defensive tactic was used by Southwest Airlines when deliberately keeping their prices low and constantly investing in cost-reducing measures? A) guerilla warfare B) lower the inducement for attack C) encirclement D) raise structural barriers E) increase expected retaliation
B) lower the inducement for attack
90) Which of the following is not a principle of reengineering identified by Hammer? A) puts the decision point where the work is performed B) organizes around tasks, not outcomes C) treats geographically dispersed resources as though they were centralized D) links parallel activities E) captures information once at the source
B) organizes around tasks, not outcomes
99) Which type of structure enables a corporation to centralize decision-making along product lines and to reduce costs? A) geographic-area structure B) product-group structure C) network structure D) matrix structure E) functional structure
B) product-group structure
89) The radical redesign of business processes to achieve major gains in cost, service, or time is called A) total quality management. B) reengineering. C) management by objectives. D) action planning. E) statistical process control.
B) reengineering.
17) Which form of synergy was demonstrated when P&G purchased Gillette to combine P&G's knowledge of the female consumer with Gillette's knowledge of the male consumer? A) shared tangible resources B) shared know-how C) coordinated strategies D) economies of scale E) new business creation
B) shared know-how
81) Which of the following is not descriptive of a network structure? A) The network organization is a series of independent firms or business units linked together through design, production, and marketing. B) Independent inventors and entertainment companies often use the network structure. C) The network structure typically is located in a large, single building or areas with many work projects in operation on the site. D) The network structure provides an organization with increased flexibility and adaptability to cope with rapid technological changes. E) The network structure is particularly suited to coping with the shifting patterns of international trade and competition.
C) The network structure typically is located in a large, single building or areas with many work projects in operation on the site.
21) When Yamaha entered the market with a broader range of pianos, keyboards, and other musical instruments, it was using which offensive tactic? A) flanking maneuver B) frontal assault C) encirclement D) bypass attack E) guerilla attack
C) encirclement
96) In an attempt to "think globally, act locally," companies are decentralizing operations that are culturally oriented and closest to the customers such as A) marketing. B) R&D. C) finance. D) information systems. E) accounting.
C) finance.
28) Which defensive tactic did P&G use when they test marketed their liquid bleach product in an attempt to scare Clorox into retreating from their detergent market? A) lower the inducement for attack B) bypass attack C) increase expected retaliation D) flanking maneuver E) raise structural barriers
C) increase expected retaliation
88) The job characteristics model is a good example of A) job rotation. B) job design. C) job enrichment. D) job enlargement. E) all of the above
C) job enrichment.
54) During Stage V of the organizational life cycle, the popular strategy is A) concentration in a niche. B) horizontal and vertical growth. C) liquidation or bankruptcy. D) concentric and conglomerate diversification. E) profit strategy followed by retrenchment.
C) liquidation or bankruptcy.
51) Stage III in the organizational life cycle is the A) birth stage. B) growth stage. C) maturity stage. D) decline stage. E) death stage.
C) maturity stage.
82) An organization that is composed of cells that can operate alone but that can interact with other cells to produce a more potent and competent business mechanism is referred to as a(n) A) reengineered organization. B) virtual organization. C) modular organization. D) network organization. E) ongoing organization.
C) modular organization.
79) Which structure is described as a "non-structure" by its virtual elimination of in-house business functions? A) strategic business units B) functional structure C) network structure D) divisional structure E) matrix structure
C) network structure
1) The sum total of the activities and choices required for the execution of a strategic plan is known as A) strategic formulation. B) environmental scanning. C) strategy implementation. D) evaluation and control. E) strategic development.
C) strategy implementation.
42) According to Chandler and others, which factors MUST be closely aligned to avoid the consequences of poor organizational performance? 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
41) Alfred Chandler, known for his study of large American corporations, concluded that 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.
3) 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? 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
5) It is advisable to have management from all levels participate in the strategy formulation process A) because it is a legal requirement. B) because collective bargaining agreements often mandate worker participation. C) to gain an insight as to what work needs to be done and to gain cooperation in the implementation of the strategy. D) because it is part of their job responsibilities to provide input regarding their respective area of expertise. E) because it helps boost the self-image and ego of all managers to be asked for advice.
C) to gain an insight as to what work needs to be done and to gain cooperation in the implementation of the strategy.
19) According to Goold and Campbell, which of the following is not one of the forms that synergy can take? A) shared know-how B) coordinated strategies C) value chain creation D) pooled negotiating power E) economies of scale or scope
C) value chain creation
12) What is strategy implementation? What questions must strategy makers consider to begin the implementation process?
Strategy implementation is the sum total of the activities and choices required for the execution of a strategic plan. It is the process by which objectives, strategies, and policies are put into action through the development of programs and tactics, budgets, and procedures. Implementation should be evaluated as strategy is being formulated, although many companies separate the two. Implementation is the key part of strategic management, for without implementation, we have nothing. Strategy formulation and strategy implementation should be considered as two sides of the same coin. Poor implementation has been blamed for a number of strategic failures. Merger and acquisitions activities are clear types of very visible implementations. To begin the implementation process, strategy makers must consider these questions: Who are the people who will carry out the strategic plan? What must be done to align the company's operations in the new intended direction? How is everyone going to work together to do what is needed?