Strategic Management - Chapter 2 Practice
Which of the following types of questions does scenario planning ask?
"What if?"
Which statements about vision statements and firm performance are true?
Effective vision statements can provide a foundation for creating competitive advantage. Vision statements and firm performance are sometimes associated with one another.
Why are businesses with product-oriented vision statements often less effective than businesses with customer-oriented vision statements?
Product-oriented companies have less flexibility to meet consumer needs.
True or false: Smart strategic leaders devise ways to make sure that their employees feel invested in the firm's vision.
True
In the strategic management process, which basic principle must be defined first?
Vision
What is the typical result of cognitive limitations?
We choose the option that is "good enough" and satisfies immediate needs.
Studies show that CEOs spend the majority of their time ______.
meeting people face-to-face
Top-down strategy is derived from ______.
military strategy
A _____outlines what an organization does, while a vision outlines what the organization wants to do.
mission
An organization's ______ is what an organization actually does, including the products and services it plans to provide and the markets in which it will compete
mission
An organization's ______ is what an organization actually does, including the products and services it plans to provide and the markets in which it will compete.
mission
What are cognitive biases?
obstacles in thinking that result in systematic errors in decision making and hinder rational thinking
Which of the following is an important part of strategic leadership and is the strategic leader's ability to influence and direct individuals to do things?
power
A ______ vision statement defines a business by describing the goods or services it produces or offers.
product-oriented
The type of vision statement that tends to limit a manager's flexibility and ability to adapt is the ______ vision statement.
product-oriented
The type of vision statement that tends to limit a manager's flexibility and ability to adapt is the ______ vision statement. problem-solving
product-oriented
What type of vision statement focuses on the good or service provided?
product-oriented
Serena is the CEO of an online retailer. She and her immediate staff have decided to implement a company-wide marketing strategy to improve online sales in Central and South America. What type of strategic approach is Serena engaging in?
top-down strategic planning
According to upper-echelons theory, the way strategic leaders of a firm interpret a situation is influenced by which of the following?
the values and experiences of the firm's leaders
Which theory proposes that when faced with decisions, we tend to satisfice rather than optimize?
theory of bounded rationality
Which strategy addresses the question of how to compete?
business
Rank the following levels of the level-5 leadership pyramid, placing the highest level at the top. Effective Leader Contributing Team Leader Competent Manager Highly Capable Individual Executive
1 Executive 2 Effective Leader 3 Competent Manager 4 Contributing Team Member 5 Highly Capable Individual
Place in order from first to last the steps in the devil's advocacy decision framework. (Place the first step at the top.)
1. Team 1 formulates a course of action. 2. Team 2 questions the assumptions of and critiques the proposed course of action. 3. Team 1 revises the proposed course of action based on the input from Team 2. 4. Team 2 questions the assumptions of and critiques the revised course of action, and Team 1 makes additional revisions. 5. Team 1 and 2 agree upon a course of action.
Which of the following best describes an illusion of control?
A belief that a strategic plan will address any scenario
Why is employee involvement crucial when developing an inspiring vision and mission? (Check all that apply.)
Because belief in the vision and mission statements motivates employees. Because employees may develop helpful strategic initiatives.
Which of the following is a term used to describe a highly unlikely event that has a significant impact on society?
Black swan event
Which of the following leads to systematic errors in decision making and hinders rational thinking?
Cognitive Biases
Which cognitive bias refers to people's tendency to seek out information that aligns with their existing beliefs?
Confirmation Bias
A statement of guiding principles that typically provides very specific ethical considerations is a(n) ______.
Core values statement
In the strategy process, questions concerning WHERE to compete, such as the industry or market, is referred to as ______ strategy.
Corporate
What method for improving strategic decision making involves having a separate team or individual carefully analyze and critique the underlying assumptions and potential downsides of a proposed course of action?
Devil's advocacy
What does the Frappuccino story illustrate about the strategic management process?
Emergent strategies can be very successful.
True or false: Emergent strategy is planned.
False
According to Daniel Kahneman and Amos Tversky, System 1 is analytical, logical, and deliberate.
False..Reason: System 2 decision making is analytical, logical, and deliberate.
______ strategy answers questions regarding how to implement the business strategy.
Functional
Which of the following are questions that managers are likely to ask when beginning the strategic management process? (Check all that apply.
How can we achieve our goals? What do we ultimately hope to achieve? What are our values?
Which of the following are questions that managers are likely to ask when beginning the strategic management process? (Check all that apply.)
How can we achieve our goals? What do we ultimately hope to achieve? What are our values?
Which statement best describes escalating commitment?
Individuals acting as decision makers continue to support and invest in a project despite feedback indicating that it will fail.
Which statement best describes the confirmation bias? Individuals use simple analogies to explain complex problems, even though the ideas in question may be very different from each other. Individuals search only for information that confirms their existing beliefs and ignore evidence that contradicts those beliefs. Individuals reach conclusions based on a small sample size or otherwise limited data, thereby violating the law of large numbers. Individuals automatically agree with a leader without critically evaluating or challenging the leader's views and assumptions.
Individuals search only for information that confirms their existing beliefs and ignore evidence that contradicts those beliefs.
Which statement best describes the cognitive bias known as reason by analogy?
Individuals use simple examples to explain complex problems, even though the ideas in question may be very different from each other.
A black swan event has which of the following characteristics?
It has a major impact on society.
What should a successful vision do for an organization? (Check all that apply.)
It should inspire employees. It should make employees feel that their work is important.
Which of the following statements about scenario planning is true?
It starts with a top-down approach.
Which level of strategic leader presents a convincing vision and mission that helps groups improve their performance?
Level 4
Which conditions are most likely to foster a positive relationship between vision statements and firm performance?
Organizational structures align with the vision statements. Internal stakeholders are invested in defining the vision. The vision statements are customer-oriented.
______ describe(s) random events, pleasant surprises, and accidental happenstances that can have a profound impact on a firm's strategic initiatives.
Serendipity
What are the approaches that can be utilized when strategizing for competitive advantage?
Strategic Planning Scenario Planning Strategy as Planned Emergence
Which of the following statements is correct? Strategic initiatives are always the result of a bottom-up process. Strategic initiatives can be the result of top-down planning or a bottom-up process. Strategic initiatives generally lead to financial success. Strategic initiatives are always the result of top-down planning.
Strategic initiatives can be the result of top-down planning or a bottom-up process.
Mission
The mission focuses on how the company can accomplish their goals.
What distinguishes a Level-5 leader from other levels of leaders?
They create enduring greatness.
Which term refers to strategic initiatives that lower-level employees undertake of their own volition, typically in response to unanticipated events?
autonomous actions
A(n) ______ can help employees feel that they are doing something worthwhile and are part of something important and meaningful.
aspirational vision
In the strategy process, questions concerning HOW to compete, such as through differentiation, are referred to as _____ strategy.
business
All of the following are sources of strategic initiatives except ______.
consumer demand
A(n) ______ is a statement of principles to guide an organization as it works to achieve its vision and fulfill its mission.
core values statement
A ______ vision statement defines a company by describing its interest in developing solutions to consumer problems.
customer-oriented
A company with a ______ vision statement tends to be more flexible and more likely to succeed.
customer-oriented
What is the primary focus of a customer-oriented vision statement?
developing goods and services that solve consumer problems
Strategic commitments tend to be which of the following?
difficult to reverse costly
According to the Level-5 Pyramid, a Level-4 leader is also referred to as a(n) ______.
effective leader
The story concerning the discovery of Starbucks' Frappuccino is an example of a(n) ______ strategy, or an unplanned strategic initiative that originated at the bottom and moved to the top.
emergent
A common cognitive bias is ______, which is when decision makers continue to support and invest in a project, even after receiving feedback indicating that it is likely to fail.
escalating commitment
A core values statement provides information to employees regarding the company's ______
ethics and morals
According to the Level-5 pyramid, which level of leadership has the fewest members?
executives
An inspiring vision helps employees ______.
find meaning in their work.
Jennie is the CEO of an information technology company. Based on the data that her researchers have compiled, she feels confident that her strategic plan for the company will be successful in the future, regardless of what happens. Based on this information, it seems that Jennie ______.
has an illusion of control
The Level-5 leadership pyramid is a conceptual framework that shows ______.
how leaders develop
Strategy ______ concerns the organization, coordination, and integration of how work gets done.
implementation
A(n) __________ strategy is the outcome of a rational and structured, top-down strategic plan.
intended
Research about how CEOs spend their days suggests that CEOs spend most of their time ______.
interacting with others
The executives of a computer software company developed an intended strategy to make the company more competitive. The company's ultimate ______ strategy contained elements not only of the intended strategy but also unplanned elements from a(n) ______ strategy.
realized; emergent
What cognitive bias involves using simple examples to make sense out of complex problems, even though the things being compared may be very different on a deeper level?
reason by analogy
Larry, the owner of small hotel resort, would like to advertise his hotel in major American newspapers and magazines as a part of his larger strategy. However, he doesn't have enough money to do so. One day, he meets Todd, the owner of a group of newspapers and magazines, who offers him advertising space in his publications on the condition that Larry provide him with a free stay at the hotel. This is an example of which of the following?
serendipity
A strategic business unit (SBU) is defined as a(n) ______
standalone division of a larger conglomerate
What are autonomous actions?
strategic initiatives that lower-level employees undertake of their own volition, often in response to unanticipated events
Which of the following are three approaches that strategic leaders rely on to formulate and implement strategy?
strategic planning strategy as planned emergence scenario planning
Which of the following is the least formal approach to setting the strategy process?
strategy as planned emergence
Functional strategy is primarily concerned with ______.
strategy implementation
a powerful strategic commitment assures
that steps are taken to achieve the mission
Which of the following is the conceptual framework developed by Jim Collins that describes the progression of leadership through distinct, sequential levels?
the Level-5 leadership pyramid
What is System 1 of the brain according to Daniel Kahneman and Amos Tverksy?
the brain's default mode
Strategy Implementation primarily involves which of the following?
the organization, coordination, and integration of how work gets done
Both strategy formulation and strategy implementation are aspects of ______.
the strategy process
What is strategic leadership?
the use of influence and power by executives to direct the activities of individuals while pursing an organization's goals
If parts of a firm's intended strategy fall by the wayside, it is referred to as
unrealized strategy.
According to the ______, effective leadership is the outcome of certain intrinsic talents as well as education.
upper-echelons theory
In crafting a strategic management plan, leaders must first determine the company's long-term objective. This means leaders must first define the organization's ______.
vision
Which of the following terms best describes an organization's primary objective and what it ultimately wants to accomplish?
vision
Strategy formulation concerns the choice of strategy in terms of ______ to compete.
where and how
Corporate strategy concerns questions related to ______
where to compete
Which of the following are addressed during corporate strategy formulation?
which geographic location to compete in which industry to compete in which market to compete in